HomeMy WebLinkAbout15 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 20171'tY O
rk:aAGENDA REPORT
MEETING DATE: JANUARY 16, 2018
TO: JEFFREY C. PARKER, CITY MANAGER
Agenda Item
Reviewed.-
City
eviewed.City Manager
Finance Direc
FROM: JOHN A. BUCHANAN, ACTING FINANCE DIRECTOR
JENNY LEISZ, DEPUTY DIRECTOR - FINANCIAL SERVICES
15
SUBJECT: COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR
ENDED JUNE 30, 2017
WIN 11S C
The City engages an independent certified public accounting firm to complete an annual
audit of the City's financial records. There are a number of reports such as the
Comprehensive Annual Financial Report (CAFR), produced as a result of the annual audit
and there are actions that are required by the City's governing board (City Council) to
meet the requirements of various auditing standards, such as meeting with the auditing
firm that conducted the audit to discuss the audit and internal control issues.
RECOMMENDATION:
1. Receive and file the CAFR for the year ended June 30, 2017.
2. Discuss the audit and internal controls with the independent certified public
accounting firm, White Nelson Diehl Evans LLP, who conducted the audit.
FISCAL IMPACT:
The independent certified public accounting firm that the City contracted with to complete
the annual audit is White Nelson Diehl Evans LLP. Total cost of the annual audit was
$37,220. Of this amount, $18,610 was charged to the Water Enterprise Fund; and
$18,610 was charged to the General Fund. In addition, $4,450 was paid to CaIPERS and
charged to the General Fund for required GASB 68 information related to pension
liabilities and expenses.
BACKGROUND:
Each year state and local governments prepare a financial report on assets, liabilities,
revenues, and expenditures in a standardized format that must conform to the
Governmental Accounting Standards Board (GASB) accounting and financial reporting
standards. This financial report is called the CAFR. Most people have heard of the budget,
which is the document that plans and authorizes the spending of money. The CAFR
describes what actually was spent and the status of assets and liabilities at the end of the
fiscal year. The CAFR is published annually as best practice for local governments and
serves as evidence of transparency and full disclosure of the City's financial position to
citizens and other stakeholders, including credit rating agencies, providing SEC required
disclosure to investors, and other interested parties.
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2017
Page 2 of 4
The reports that were produced for the fiscal year ending June 30, 2017 are the CAFR; the
City State Controllers report; and the report of the auditor's consideration of the City's
internal control over financial reporting and on their tests of its compliance with certain
provisions of laws, regulations, contracts, grant agreements, and other matters.
The CAFR is a thorough and detailed presentation of the City's financial condition. It reports
on the City's activities and balances for each fiscal year in three major sections:
1. Introductory Section — includes elected and administrative officials, letter of
transmittal, organizational chart, and GFOA Certificate of Achievement for
Excellence in Financial Reporting.
2. Financial Section — includes the independent auditor's report, management's
discussion and analysis (MD & A), notes to the financial statements; required
supplementary information, combining financial statements, and schedules.
a. Government -wide financial statements — long-term view of City finances;
includes all assets such as buildings, streets, and long-term debt
b. Governmental funds financial statements — more of a current activity type
view; only cash and items expected to be liquidated and current liabilities to
be paid
3. Statistical Section — includes additional financial, economic, and demographic
information.
For local governments, the annual external financial audit provides assurance that the
financial statements are not materially misstated. Whether you are an investor in bonds, a
taxpayer, or a Council member, you need assurance that the City's accounting reports are
reliable. The audit firm is also required to provide an annual Management Letter, which
highlights any weaknesses in the City's practices and procedures which might affect the
financial statements, if weaknesses have come to the firm's attention in the course of the
financial audit. The Management Letter also offers comments and recommendations
intended to improve internal control or operating efficiency.
FINANCIAL HIGHLIGHTS:
General Fund financial highlights for the year ended June 30, 2017 (see page 13 of the
Management's Discussion and Analysis section of the 2017 CAFR) are as follows:
• General Fund revenues were $122.6 million, $62.5 million higher than the prior fiscal
year due to the following significant one-time revenues received in fiscal year 2017:
o Gains on sale of Land Held for Resale of $17.6 million were received from
Flight Venture LLC for the development of modern creative office space and
supporting retail, and $6.2 million from Regency Center for the development
of a neighborhood shopping center within the former Marine Corps Air Station
known as the Legacy.
o Profit participation totaling $23.5 million was received due to the sale of homes
in the Greenwood development at the Legacy.
o Developer Contribution of $16.8 million was received due to Project Fair
Share Contributions in conjunction with the sale of Land Held for Resale at
the Legacy of $10.3 million from Regency Center, and $6.5 million from Flight
Venture LLC.
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2017
Page 3 of 4
The City's General Fund total expenditures were $92.2 million, an increase of $24.3
million over the prior year's expenditures due to the following:
o $15 million advance to Tustin Unified School District (TUSD) for the planning
and design of the 6-12 School Project per the School Facilities
Implementation, Funding, and Mitigation Agreement. Per the terms of the
agreement, the City plans to fund an additional $50 million over the next 12
months.
o $5.6 million increase in capital outlay primarily due to construction costs at the
Legacy development, including grading related to the new TUSD school site.
o $1.6 million for a new environmental insurance policy at Tustin Legacy.
o $1.4 million in required maintenance of effort (MOE) per the adopted budget.
o $1.2 million in commissions paid at settlement forthe sale of 39 acres at Tustin
Legacy to Flight Venture LCC.
Total revenues of $122.6 million exceeded total expenditures and transfers by $34.9
million. Therefore, the General Fund's fund balance of $186.9 million as of June 30,
2016 increased to $221.8 million as of June 30, 2017. Of the $221.8 million, $84.3
million are nonspendable funds primarily due to a total of $83.9 million in Land Held
for Resale; $35 million are legally restricted funds for backbone infrastructure at the
Tustin Legacy development, and $102.5 million are unassigned and/or spendable
funds not contained in other classifications.
Budgeted General Fund balances used in day-to-day operations which comprise a portion
of the unassigned fund balance discussed above are as follows:
Of the audited $102.5 million unassigned fund balance, the General Fund (fund 100)
ending cash balance was $30 million, compared with the projected ending cash
balance of $22.4 million as of the last budget update in June 2017. A large portion
of the $7.6 million positive variance was due to a transfer in from land sale proceeds
(budgeted in fund 189) totaling $4.1 million for the annual principal payment due to
the Successor Agency to the Tustin Redevelopment Agency, and the receipt in July
2016 of the final payment of $2.9 million under the sales and use tax triple flip which
was accrued as a receivable in fiscal year 2016 (not budgeted in fiscal year 2017).
Discussion of other smaller variances contributing to the overall change in fund
balance will be available at the mid -year budget review planned for February.
Other Financial Highlights for the year ended June 30, 2017 are as follows:
• The City's assets, which encompass all Governmental and Business -Type Activities
(i.e. General Fund, Special Revenue Funds, Capital Projects Funds, and the Water
Enterprise Fund) and deferred out flows of resources as of June 30, 2017, exceeded
its liabilities by $775.4 million (net position). Net position gives a picture of the City's
long-term financial situation. For example, net position includes receivables that may
not be collected for years and liabilities for employee leave time which may not be
used for years. Net position consists of $513.9 million net investment in capital
assets, $102 million in restricted net position, and $159.5 million in unrestricted net
position.
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2017
Page 4 of 4
The City's total net position increased by $52 million primarily due to the receipt of
$31.3 million in earned profit participation from CalAtlantic Homes for residential
housing sales in the Greenwood development at Tustin Legacy. Also contributing to
the increase are the gains on sale of Land Held for Resale of $17.6 million, and $6.2
million discussed previously.
The City's long-term debt increased $6.4 million due mostly to the increase in pension
liabilities of $12.6 million. This increase was comprised of increases for both the
Safety (police) Plans and the Miscellaneous (all other) plans of $7.2 million and $5.4
million respectively. The increases were due mostly to the interest on the total
pension liability which accrues at the rate of 7.65% as determined by CalPERS.
These increases were offset by a decrease of $9.1 million in Due to Successor
Agency to the Tustin Community Redevelopment Agency, resulting from debt
forgiveness of $5 million and the $4.1 million annual payment discussed previously.
The final payment of $3.2 million was made in December 2017.
A more thorough discussion of the financial activities for the year ended June 30, 2017 is
presented in the MD & A.
The City did not have any audit findings or material misstatements.
Jew y Leisz
eputy Director - Financial Services
J4inag
Buchanan
inance Director
Attachments: CAFR for the year ended June 30, 2017
Management Letter
Governmental Auditing Standards Letter
Appropriations Limit Worksheet
CITY OF TUSTI N
Comprehensive Annual Financial Report
CAFR
For the year ended June 30, 2017
/provide effeetive, high-quality serviees that }foster safety, quality of life, and economic vitality throughout our community
CITY OF TUSTIN, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
WITH REPORT ON AUDIT
BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2017
Prepared By: Finance Department
CITY OF TUSTIN
TABLE OF CONTENTS
For the year ended June 30, 2017
INTRODUCTORY SECTION:
Page
Number
Elected and Administrative Officials i
Letter of Transmittal iii
Organization Chart xi
GFOA Certificate of Achievement for Excellence in Financial Reporting xii
FINANCIAL SECTION:
Independent Auditors' Report 1
Management's Discussion and Analysis
(Required Supplementary Information - Unaudited) 5
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Position 19
Statement of Activities 20
Fund Financial Statements:
Governmental Funds:
Balance Sheet 22
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position 23
Statement of Revenues, Expenditures and Changes in Fund Balances 24
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 25
Proprietary Fund:
Statement of Net Position 26
Statement of Revenues, Expenses and Changes in Net Position 27
Statement of Cash Flows 28
Fiduciary Funds:
Statement of Fiduciary Net Position 30
Statement of Changes in Fiduciary Net Position 31
Notes to Basic Financial Statements 33
CITY OF TUSTIN
TABLE OF CONTENTS
(CONTINUED)
For the year ended June 30, 2017
Page
Number
REQUIRED SUPPLEMENTARY INFORMATION: 93
Safety Plan
Schedule of Proportionate Share of the Net Pension Liability
95
Schedule of Contributions
96
Miscellaneous Plan:
Schedule of Changes in the Net Pension Liability and Related Ratios
97
Schedule of Contributions
98
Other Post -Employment Benefit Plan:
Schedule of Funding Progress
99
Budgetary Comparison Schedules:
111
General Fund
100
Measure M Special Revenue Fund
101
Note to Required Supplementary Information
102
SUPPLEMENTARY INFORMATION: 103
Other Governmental Funds:
105
Combining Balance Sheet
106
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
108
Schedules of Revenues, Expenditures and Changes in Fund
Balance - Budget and Actual:
Gas Tax Special Revenue Fund
110
Park Acquisition and Development Special Revenue Fund
111
Asset Forfeiture Special Revenue Fund
112
Air Quality Special Revenue Fund
113
Supplemental Law Enforcement Special Revenue Fund
114
Housing Authority Special Revenue Fund
115
Special Tax B Special Revenue Fund
116
Agency Funds: 117
Combining Statement of Assets and Liabilities 118
Combining Statement of Changes in Assets and Liabilities 119
CITY OF TUSTIN
TABLE OF CONTENTS
(CONTINUED)
For the year ended June 30, 2017
Page
Number
STATISTICAL SECTION (UNAUDITED): 121
Description of Statistical Section Contents 123
Financial Trends
Net Position by Component - Last Ten Fiscal Years 124
Changes in Net Position - Expenses and Program Revenues - Last Ten Fiscal Years 126
Changes in Net Position - General Revenues - Last Ten Fiscal Years 128
Fund Balances of Governmental Funds - Last Ten Fiscal Years 130
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 132
Revenue Capacity:
Assessed Value and Estimated Actual Values of Taxable Property - Last Ten Fiscal Years 134
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 136
Principal Property Taxpayers - Current Year and Ten Years Ago 138
Property Tax Levies and Collections - Last Ten Fiscal Years 139
Debt Capacity
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 140
Ratio of General Bonded Debt Outstanding - Last Ten Fiscal Years 142
Overlapping Debt Schedule 143
Legal Debt Margin Information - Last Ten Fiscal Years 144
Pledged -Revenue Coverage - Last Ten Fiscal Years 146
Demographic and Economic Information:
Demographic and Economic Statistics - Last Ten Calendar Years 148
Principal Employers - Current Year and Ten Years Ago 149
Operating Information
Full -Time City Employees by Function - Last Ten Fiscal Years 150
Capital Asset Statistics by Function - Last Ten Fiscal Years 151
Water District Schedules for Revenue Capacity:
Water Consumption by Customer Type - Last Ten Fiscal Years 152
Water Rates - Last Ten Fiscal Years 154
Water Customers - Current Year and Ten Years Ago 155
CITY OF TUSTIN
Elected and Administrative Officials
MAYOR
Dr. Alan Bernstein
CITY COUNCIL
Al Murray, Mayor Pro Tem
Rebecca "Beckie" Gomez
Charles E. "Chuck" Puckett
Letitia Clark
AUDIT COMMISSION
R. Lawrence Friend, Chair
Robert Ammann, Chair Pro Tem
Colin Deering
Daniel Erickson
Craig Shimomura
CITY MANAGER/CITY TREASURER
David E. Kendig
City Attorney
Elizabeth A. Binsack
Director, Community
Development
John A. Buchanan
Director, Economic
Development/Acting
Director, Finance
Jeffrey C. Parker
DEPUTY CITY MANAGER
Matthew S. West
-i-
Erica N. Rabe
City Clerk
Charles Celano
Chief of Police
Derick Yasuda
Director of
Human Resources
David Wilson
Director, Parks and
Recreation Services
Douglas S. Stack
Director, Public Works
City Engineer
The page left blank intentionally
Finance Department
December 12, 2017
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
CITIZENS OF THE CITY OF TUSTIN
City of Tustin
Tustin, California 92780
TUSTIN
HISTORY
BUILDING OUR FUTURE
HONORING OUR PAST
The Comprehensive Annual Financial Report (CAFR) of the City of Tustin for the fiscal year
ended June 30, 2017, is hereby submitted. These statements have been prepared in conformity
with generally accepted accounting principles (GAAP) and audited in accordance with generally
accepted auditing standards by an independent public accounting firm of licensed certified public
accountants.
The report consists of management's representations concerning the finances of the City of Tustin.
Responsibility for both the accuracy of the data, and the completeness and fairness of the
presentation, including all disclosures, rests with management. To provide a reasonable basis for
making these representations, management has established an internal control framework that is
designed both to protect the government's assets from loss, theft, or misuse and to compile
sufficient reliable information for the preparation of the financial statements in conformity with
GAAP. Because the cost of internal controls should not outweigh their benefits, the City's
framework of internal controls has been designed to provide reasonable, rather than absolute
assurance that the financial statements will be free from material misstatement.
As management, we assert that, to the best of our knowledge and belief, the enclosed data is
accurate in all material respects and is reported in a manner designed to fairly present the financial
position and results of operations of the various funds and component units of the City of Tustin.
All disclosures necessary to enable the reader to gain an understanding of the City's financial
activities have been included.
The City of Tustin's financial statements for the year ended June 30, 2017, have been audited by
White Nelson Diehl Evans LLP, an independent public accounting firm of licensed certified public
accountants. The independent auditor concluded, based upon the audit, that there was a reasonable
basis for rendering an unmodified opinion that the City of Tustin's financial statements for the
fiscal year ended June 30, 2017, are fairly presented in conformity with GAAP. The independent
auditor's report is presented as the first component of the financial section of this report.
iii
300 Centennial Way, Tustin, CA 92780 0 P: (714) 573-3060 • F: (714) 832-0825 9 www.tustinca.org
GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statements in the form of Management's Discussion and Analysis
(MD&A). This letter of transmittal is designed to complement the MD&A and should be read in
conjunction with it. The City of Tustin's MD&A can be found immediately following the report
of the independent auditors.
PROFILE OF THE CITY OF TUSTIN
The City of Tustin is located in the central part of Orange County, about forty miles southeast of
Los Angeles and eighty miles north of San Diego, at the intersection of the 5 and 55 Freeways. Tustin
covers over eleven square miles and adjoins the cities of Orange, Santa Ana, and Irvine. The State of
California Department of Finance has estimated the City's January 1, 2017 population at 82,372, a
0.4% decrease from 2016. There were 8 cities in Orange County showing minor decreases in
population, with most cities and counties throughout the state experiencing increases in population.
The County of Orange experienced a 0.7% increase in population. While Tustin is surrounded by
much of the County's main industrial employment, it is essentially a residential community.
The City was incorporated under the General Laws of the State of California in 1927 as the "City of
Tustin". Government was by a five -member elected City Council. The Council/Administrator form
of city government was adopted in 1965 and was modified to the Council/Manager form in 1981.
Council members serve staggered, four-year terms, with a two consecutive term limit. The Mayor
is selected by the City Council from among its membership and serves a one-year term. The City
Manager is appointed by the City Council to carry out the policies and direction of the City
Council, oversee the day-to-day operations of the City, and appoint department heads.
Tustin is a full-service City. The services provided by the City include police, street and park
maintenance, water, recreation, traffic/transportation, public improvements, planning, zoning, and
general administrative services. The City contracts with the Orange County Fire Authority for fire
suppression services. Also included in the City's overall operations are the Tustin Public Financing
Authority and the City of Tustin Housing Authority (Housing Authority). The activities of both
entities are included in these financial statements. Additional information for the Tustin Public
Financing Authority and the Tustin Housing Authority is available in Note 1 of the Notes to Basic
Financial Statements.
The key element of the City's financial management process is the development and approval of
the biannual budget. The two-year budget for the City is part of our strategic plan to enhance
financial sustainability. Council adopted this type of budget to improve our financial projections
and to focus on programs essential to providing quality services to our community. This document
is available on our City website at www.tustinca.org. The City Council conducts various open
budget workshops as necessary and adopts the budget at a noticed public meeting. The budget is
prepared pursuant to generally accepted accounting principles (GAAP) and is balanced by fund.
u+i
The level of appropriations is controlled by the City Council for each fund. The City Council
approves budgeted appropriations annually. The City Manager is authorized to transfer
appropriations within the . fund between the various programs and/or departments. Budgetary
control is maintained by a real-time financial reporting system. Budget -to -actual comparisons are
provided through display or reports and through budget controls set within the purchasing and
accounts payable modules for each individual governmental fund for which an appropriated annual
budget has been adopted. For the General Fund, this comparison is presented on page 100 as part
of the required supplementary information, and for nonmajor governmental funds, this comparison
is presented on pages 110-116 as part of the other supplementary information for the governmental
funds. Successor Agency expenses are restricted by the State of California Department of Finance
(DOF) to enforceable obligations. The enforceable obligations are approved annually by the DOF
through the submission of a Recognized Obligation Payment Schedule. The Successor Agency is
presented as a Private Purpose Trust Fund on pages 30-31.
ECONOMIC OUTLOOK
The State of California has maintained a stable economy since the economic downturn. The
statewide unemployment rate has dropped from 5.5% in October 2016 to 4.9% for October 2017,
which is 0.8% higher than the United States unemployment rate of 4.1% for October 2017. The
Orange County unemployment rate has decreased 0.5% from October 2016 to 3.7% for October
2017. The City's sales tax revenue continues to be the largest continuing revenue source for the
General Fund. It is 43% of total General Fund revenues, excluding the significant one-time
proceeds received in fiscal year 2017 related to land sales at Tustin Legacy. Annual sales tax
revenue increased from fiscal year 2015-2016 to fiscal year 2016-2017 to $25.1 million. The
projected sales tax revenue for fiscal year 2017-2018 and fiscal year 2018-2019 is expected to
increase over fiscal year 2016-2017 by 3.1 %. A 3.1 % increase in sales tax revenue over the next
two fiscal years reflects a healthy stable economy. Staff is comfortable with the projected amounts
for fiscal year 2017-18 and 2018-19, but also mindful of the fact that sales tax trends must be
carefully monitored throughout the year. Property tax revenue is the second largest General Fund
revenue source (42% of total revenues). Property tax revenue for fiscal year 2017-18 and 2018-
19 reflects a 2.4% increase for each year based on information from the City's property tax
consultants and information from the County Assessor. This is a positive trend because property
tax revenue was relatively flat several years ago. As with sales tax, property tax will be carefully
monitored throughout the year.
Development at the Marine Corp Air Station Base also referred to as The Legacy continues to
move forward. Staff is monitoring the costs of providing public services and maintaining streets,
sidewalks, and parks which are funded by the service tax provided by the various Community
v
Facility Districts. Lincoln Properties is developing Phase 1 of Flight at Tustin Legacy, a 400,000 -
square -foot creative office campus which invites collaborative, non-traditional workspaces. Flight
will feature several amenities, including a market food hall with chef -driven food and beverage
concepts, a 6,000 -square -foot conference center for meetings and special events, and direct access
to Tustin Legacy Park creating a dynamic indoor/outdoor environment. When built -out, Flight
will be home to approximately 4,500 employees, which will have a multiplier effect that reaches
beyond the boundaries of Flight. Legacy Park, a City -owned passive park with trails and open
space areas, will ultimately connect all of Tustin Legacy from the Metrolink Station to the corner
of Red Hill Avenue and Barranca Avenue. Flight will assist in benefiting the City in balancing
job growth with housing needs.
Regency Centers is currently developing the Village at Tustin Legacy. The 22 -acre neighborhood
commercial center will be comprised of two major components:
• A retail center anchored by a Blue Ribbon Stater Bros., CVS, Bank of America, Chipotle,
and Dunkin' Donuts.
• A medical plaza with a medical center and an acute care hospital/rehabilitation facility.
Hoag Memorial Hospital Presbyterian, as a component of this medical center, is building
a new 60,000 -square -foot medical office building at The Village at Tustin Legacy.
The City Council continues to take a proactive approach for maintaining the. City's healthy
financial position by monitoring revenues and expenses. We anticipate that General Fund
revenues will increase slightly over the next two fiscal years by approximately 3.5% from fiscal
year 2016-17 which requires managing expenditures to balance the budget and continue to provide
core City services. Estimated expenditures for fiscal year 2017-18 are about the same as the budget
in fiscal year 2016-17. The City expects a $1.2 million deficit for fiscal year 2017-18 to be funded
with planned use of excess reserves, bringing the projected General Fund reserve percentage to
35.3%, which is well above the 20% City policy. Budgeted expenditures for fiscal year 2018-19
show an increase of about $1.9 million over the fiscal year 2016-17. Again, this is expected to be
funded with excess reserves, bringing the reserve percentage to 29.9%. City Council will be
reviewing the City's financial condition during the mid -year budget review in February 2018.
A major factor facing the sustainability of future budgets is our effort to address the City's pensions
and unfunded liabilities. The City Council has directed staff to develop a strategy to significantly
reduce or eliminate our unfunded liability. By accomplishing this, we will reduce the annual
impact to the General Fund, insuring the financial stability necessary to provide quality services
to our community.
The other major operating fund is the Water Enterprise Fund. The last several years of drought
and drought enforcement have reduced revenues and expenditures in the Water Enterprise Fund.
A
After years of strict- regulations, the Governor has declared an end to the drought emergency. This
does not mean that California residents should not continue to be responsible with water use. In
this vein, the Tustin City Council has implemented permanent water restrictions and has given
water customers more watering days. Staff is anticipating that revenues and expenditures will
increase as Tustin water customers begin using more water. The final year of the water rate
increase from the 2010 five-year program was fiscal year 2014-15. Due to the complications of
the serious drought California is experiencing and in light of the recent court ruling regarding
Proposition 218 and tiered rates, staff will analyze the need for another possible rate adjustment
program and provide the information to City Council during fiscal year 2017-18.
ACCOMPLISHMENTS AND FUTURE PROJECTS
During fiscal year 2017 the City refunded the bond issues for the 2011 Water Revenue Bonds,
taking advantage of the lower interest rate environment and decreasing total debt service
requirements by $3.8 million over the life of the bonds. Also during fiscal year 2017, the Successor
Agency to the Tustin Redevelopment Agency refunded the 2010 Housing Tax Allocation Bonds
and the 2010 MCAS Tax Allocation Bonds, again taking advantage of the lower interest rates,
resulting in cost savings of $11.9 million over the life of the bonds.
Major capital improvement projects completed include the following:
• Heritage Park Playground Renovation
• City Council Chamber Renovation
• Annual Major Building Maintenance (Accessibility Improvements, Replace HVAC Units,
Repair Tile Roofs)
• Annual Roadway and Public Infrastructure Maintenance Program (MOE)
• Laurelwood Curb Ramp Construction
• Detention Basin Landscaping and Water Quality Installation at the corner of Red Hill Avenue
and Barranca Parkway
• Park Avenue Extension from Victory Road to Moffett Drive
• TUSD School Site Grading
• Grading of the City Property Adjacent to the TUSD Site, future Legacy Road, future Moffett
Drive, and Tustin Ranch Road
The City's capital projects for fiscal year 2017-2018 are budgeted at $136 million. The budget reflects
a substantial increase in capital improvement projects funded by Legacy Backbone Infrastructure
Funds and proceeds from sale of land at the Legacy Development. Other funding sources for the
capital projects include former Redevelopment Agency Bond proceeds, Water Revenue Bond
proceeds, water revenues, gas tax, Park Development Funds, Measure M2, Community Facility Bond
vii
proceeds, and Community Development Block Grants. Major capital projects for fiscal year 2017-
2018 include:
• Annual Roadway and Public Infrastructure Maintenance Program (MOE)
• Veterans Sports Park at Tustin Legacy
• Victory Road Extension: Red Hill Avenue to Armstrong Avenue (formerly Bell Avenue)
• Armstrong Avenue Extension: Warner Avenue to Barranca Parkway
• Peters Canyon Channel Improvements
• Moffett Drive Extension from Park Avenue to east of Peters Canyon Channel
• Red Hill Avenue Widening between Barranca Parkway and Warner Avenue
• Red Hill Avenue Widening between Warner Avenue and Edinger Avenue
• Red Hill Avenue Median Improvements between Barranca Parkway and north of Valencia
Avenue
• Legacy Park between Barranca Parkway and Armstrong Avenue
• Flight Way (formerly Aston) Extension between Barranca Parkway and Legacy Park
• South Hangar Renovation — Phase I
• Moffett Drive Extension from Future Legacy Road Extension to Park Avenue
• Legacy Road (formerly Kensington Park Drive) Extension from Valencia Avenue to Future
Moffett Drive Extension
• Park Avenue Widening between Tustin Ranch Road and Warner Avenue
• Westbound El Camino Real at Tustin Ranch Road Improvement
• Traffic Control Facilities — Main Street Improvements
• Median Landscape Rehabilitation
• Street Light LED Conversion Project
• Emergency Operations Center and City Maintenance Yard
• Annual Major Park Maintenance
• Simon Ranch Reservoir, Booster Pump Station and Pipeline Replacement
• Northwest Well Site Acquisition
AWARDS
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 Tustin for its
Comprehensive Annual Financial Report for the fiscal year ended June 30, 2016. This was the
thirtieth consecutive year that the government has achieved this prestigious award. In order to be
awarded a Certificate of Achievement, a government must publish an easily readable and
efficiently organized comprehensive annual financial report. This report must satisfy both
generally accepted accounting principles and applicable legal requirements.
viii
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program's
requirements and we are submitting it to GFOA to determine its eligibility for another certificate.
ACKNOWLEDGMENTS.
I wish to express my appreciation to the entire Finance Department staff for their contribution to the
department during the year. Their efforts are reflected in this report and in other documents resulting
from the annual audit process. Special thanks are due to Sean Tran, Deputy Director — Administrative
Services, Glenda Babbitt, Management Analyst, Andrea Campbell, Senior Accountant, Sharon Ting,
Accountant, the finance staff, and consultant Melissa Shirah, C.P.A. Their significance in preparing
the final financial documents is reflected in the quality of this report.
The Mayor and members of the City Council are to be commended for their interest and support in
conducting the financial operations of the City in a responsible and progressive manner.
Respectfully submitted,
Jo A. Buchanan
ing Finance Director
lx
D
ifer L sz
Deputy Director — Financial Se' ces
The page left blank intentionally
-x-
CITIZENS OF
TUSTIN
MAYOR
CITY COUNCIL
CITY MANAGER
LOCAL GOVERNMENT
CITY ATTORNEY
FY 2016-2017
SUCCESSOR AGENCY TO THE TUSTIN
REDEVELOPMENT AGENCY
COORDINATION AND
COOPERATION
POLICE DEPUTY CITY PRIVATE
MANAGER UTILITIES
Cable T.V.
Electricity
Natural Gas
Telephone
PUBLIC WORKS HUMAN
RESOURCES
CONTRACT
SERVICES
Fire
COMMUNITY Recuse
DEVELOPMENT
FINANCE Animal Control
PARKS & ECONOMIC
RECREATION DEVELOPMENT
CITY CLERK
SPECIAL
DISTRICTS
Library
Lighting
Sewers
Flood Control
Re -Assessment
District 95-1
CFD's
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Prespoted to
City of Tustin
California
For its Comprehensive Annual
Financial Report
for the Fiscl Year Ended
4
June 30, 2416
*/Or 44 -PA* -.-V
Executive J,)jrector/CEO
INDEPENDENT AUDITORS' REPORT
Honorable City Council
of the City of Tustin
Tustin, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business -type activity, each major fund, and the aggregate remaining fund information of the City of
Tustin (the City), as of and for the year ended June 30, 2017, and the related notes to the basic
financial statements, which collectively comprise the City's basic financial statements as listed in the
table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors' Responsibility
Our responsibility is to express opinions on these basic financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the basic financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the basic financial statements. The procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditors consider internal control relevant to the City's
preparation and fair presentation of the financial statements 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, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
-1-
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
Opinions
In our opinion, the basic financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activity, each major
fund, and the aggregate remaining fund information of the City of Tustin, as of June 30, 2017, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, the safety plan schedule of proportionate share of the net
pension liability and the schedule of contributions, the miscellaneous plan schedule of changes in the
net pension liability and related ratios and the schedule of contributions, the other post -employment
benefit plan schedule of funding progress, and the budgetary comparison schedules for the general
fund and major special revenue fund, identified as Required Supplementary Information (RSI) in the
accompanying table of contents, be presented to supplement the basic financial statements. Such
information, 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 RSI in accordance with auditing standards generally accepted
in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained during the
audit of the basic financial statements. We do not express an opinion or provide any assurance on the
RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any assurance.
Other 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 introductory section, combining and
individual nonmajor fund financial statements (supplementary information), and statistical section are
presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The supplementary information, as listed in the table of contents, 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. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the supplementary information is fairly stated in all material respects in
relation to the basic financial statements as a whole.
-2-
Other Matters (Continued)
Other Information (Continued)
The introductory and statistical sections have not been subjected to the auditing procedures applied in
the audit of the basic financial statements and, accordingly, we do not express an opinion or provide
any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 12, 2017, 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 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
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
December 12, 2017
-3-
The page left blank intentionally
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
As management of the City of Tustin, California (City), we offer readers of the City of Tustin's financial
statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended
June 30, 2017. We encourage readers to consider the information presented here in conjunction with additional
information that we have furnished in our letter of transmittal, which can be found in the introductory section of
this report, and with the City's financial statements.
Financial Highlights
• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of
resources at June 30, 2017, by $775.4 million (net position). Net position consists of $513.9 million
invested in capital assets, $102 million in restricted net position and $159.5 million in unrestricted net
position.
The government's total net position increased by $52 million during the fiscal year ended June 30, 2017.
The primary reason for the increase is $31.3 million in earned profit participation from CalAtlantic
Homes for residential housing sales in the Greenwood development at Tustin Legacy. Also contributing
to the increase is the gain on sale of land held for resale of $17.6 million for the development of modern
creative office space and supporting retail from Flight Venture LLC, and $6.2 million for the
development of a neighborhood shopping center from Regency Center within the former Marine Corps
Air Station known as the Legacy.
• As of June 30, 2017, the City's governmental funds reported combined ending fund balances of $293.3
million, an increase of $25.1 million in comparison with the prior year. The increase in ending fund
balances is primarily due to the gain on sale of land held for resale discussed above. Approximately
$84.3 million is nonspendable; $86 million is restricted; and $20.4 million is assigned.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The
City's basic financial statements consist of three components: 1) government -wide financial statements, 2) fund
financial statements, and 3) notes to the basic financial statements. This report also contains required
supplementary and other supplementary information in addition to the basic financial statements themselves.
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the City's
finances, in a manner similar to a private -sector business.
The statement of net position presents information on all of the City's assets and liabilities and deferred
inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in
net position may serve as a useful indicator of whether the financial position of the City is improving or
deteriorating.
The statement of activities presents information showing how the government's net position changed during the
most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to
the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in
this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes
and earned but unused vacation leave).
-5-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Government -wide Financial Statements (Continued)
Government -wide financial statements distinguish City governmental activities that are principally supported by
taxes and intergovernmental revenues from other business -type activities that are intended to recover all or a
significant portion of their costs through user fees and charges. Governmental activities of the City, and the
Tustin Public Financing Authority, a blended component unit, include general government, public safety,
community services, and public works. Business -type activity of the City is the Water Utility.
The government -wide financial statements can be found immediately following this discussion and analysis.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses fund
accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of
the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government -wide financial statements. However, unlike the government -wide
financial statements, governmental fund financial statements focus on near-term inflows and ou flows of
spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is
useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government -wide financial statements. By doing so, readers may better
understand the long-term impact of the government's near-term financing decisions. Both the Governmental
Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund
Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental
activities.
The City maintains various individual governmental funds organized by their type (special revenue, debt service
and capital projects funds). Information is presented separately in the Governmental Funds Balance Sheet and
in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances. The General
Fund and Measure M Special Revenue Fund are considered to be major funds. Data from other governmental
funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor
governmental funds is provided in the form of combining statements elsewhere in this report.
The City adopts a bi-annual appropriated budget for its General Fund and the Special Revenue Funds to
demonstrate compliance with the annual budget law. Budgetary comparison schedules have been provided to
demonstrate compliance with this budget requirement elsewhere in this report.
The governmental funds financial statements can be found immediately following the government -wide
financial statements.
Proprietary funds. The City of Tustin maintains one type of proprietary (Enterprise) fund. This enterprise fund
is used to report the same functions presented as business -type activities in the government -wide financial
statements. The City uses an enterprise fund to account for its Water Utility.
The proprietary fund financial statements can be found immediately following the governmental funds financial
statements.
M
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Fund Financial Statements (Continued)
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the government -wide financial statement, because the
resources of those funds are not available to support the City's own programs. The City utilizes a private -
purpose trust fund to account for the assets, liabilities and activities of the Successor Agency. The Successor
Agency was created on February 1, 2012 with the dissolution of the Tustin Community Redevelopment Agency.
The second fiduciary fund is an agency fund which is used to account for the assets of Community Facility
Districts 04-1, 06-1, 07-1, 13-1, and 2014-1. The fiduciary funds financial statements can be found immediately
following the proprietary fund financial statements.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full understanding
of the data provided in the government -wide and fund financial statements. The notes to the basic financial
statements can be found immediately following the fiduciary funds financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required
supplementary information which includes a Budgetary Comparison Schedule for the General Fund and
Measure M Special Revenue Fund, schedules outlining the pension liabilities, contributions and funding status
for the City's defined benefit pension plan and other post -employment healthcare benefits plan. Required
supplementary information can be found immediately following the notes to the basic financial statements.
The combining statements referred to earlier in connection with nonmajor governmental funds are presented for
all nonmajor Special Revenue Funds and nonmajor Capital Projects Funds. These combining and individual
fund statements and schedules can be found immediately following the required supplementary information.
Government -wide Financial Analysis
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.
The largest portion of the City's net position (67 percent) reflects its investment in capital assets (e.g., land,
buildings, and improvements other than buildings, equipment, infrastructure, and construction in progress), less
any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide
services to citizens; consequently, these assets are not available for future spending. Although the City's
investment in its capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be used to
liquidate these liabilities.
7-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Government -wide Financial Analysis (Continued)
Assets:
Current and other assets
Capital assets
Total Assets
Deferred Outflows of Resources
Liabilities:
Current liabilities
Non -Current liabilities
Total Liabilities
Deferred Inflows of
Resources
Net Position:
Net investment in capital assets
Restricted
Unrestricted
Total Net Position
483.2
City of Tustin
25.5 23.3 508.7
513.9
Summary
of Net Position
- - 95.2
102.0
107.3
As of June 30, 2017
12.2 15.1 119.5
159.5
685.7
(in millions of dollars)
$37.7 $38.4 $723.4
S775.4
Governmental Business -Type
Activities Activities
Total
2016
2017 2016 2017
2016
2017
$282.9
$323.9 $37.2 $34.7
$320.1
$358.6
483.3
490.6 48.8 48.7
532.1
539.3
766.2
814.5 86.0 83.4
852.2
897.9
4_7
13.3 0_6 4_3
5_3
17.6
13.5
16.2 4.6 3.5
18.1
19.7
67.6
72.3 44.1 45.7
111.7
118.0
81.1
88.5 48.7 49.2
129.8
137.7
4_1
2_3 0_2 0_1
4_3
2_4
483.2
490.6
25.5 23.3 508.7
513.9
95.2
102.0
- - 95.2
102.0
107.3
144.4
12.2 15.1 119.5
159.5
685.7
$737.0
$37.7 $38.4 $723.4
S775.4
Total
% Chane
2016-2017
5.4%
(6.1%)
7.2%
Governmental activities. Net position of the City's governmental activities increased 7.5% to $737 million, of
which $490.6 million is invested in capital assets such as equipment, buildings, and infrastructure. Of the
remaining total, $102 million is restricted to specifically stipulated spending agreements originated by law,
contract, or other agreements with external parties. The remaining $144.4 million is subject to designation for
specific purposes as approved by the City Council, and may be used to meet the City's ongoing obligations.
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Government -wide Financial Analysis (Continued)
20.0
24.5
-
-
City of Tustin
24.5
Public safety
27.8
34.6
Summary of Changes in Net Position
-
27.8
34.6
Public works
For the Year Ended June 30, 2017
24.8
-
-
47.3
(in millions of dollars)
Community services
7.9
19.5
-
Governmental Business -Type
7.9
19.5
Total
-
Activities Activities
Total
16.7
% Change
16.7
2016 2017 2016 2017
2016
2017
2016-2017
Revenues:
118.6
120.1 1.3%
Change in net position, before
12.8
Program revenues:
1.5
0.7
14.3
47.0
Charges for services
$7.8 $6.2 $16.5 $17.1
$24.3
$23.3
Operating grants & contributions
2.7 2.7 - -
2.7
2.7
Capital grants and contributions
48.7 26.6 - -
48.7
26.6
Contribution of capital assets from
General revenues:
Taxes
20.2 28.4 - -
20.2
28.4
-
Sales taxes shared state revenues
24.5 25.1 - -
24.5
25.1
Motor vehicle taxes
6.8 - - -
6.8
-
Earnings on investments
2.4 0.6 0.5 0.1
2.9
0.7
Miscellaneous
2.7 4.6 0.1 0.2
2.8
4.8
-
Gain on sale of assets
- 24.2 - -
-
24.2
Special Item:
Profit Participation
- 31.3 - _
=
31.3
Total Revenues
115.8 149.7 17.1 17.4
132.9
167.1
25.7%
Expenses
General government
20.0
24.5
-
-
20.0
24.5
Public safety
27.8
34.6
-
-
27.8
34.6
Public works
47.3
24.8
-
-
47.3
24.8
Community services
7.9
19.5
-
-
7.9
19.5
Water
-
-
15.6
16.7
15.6
16.7
Total Expenses
103.0
103.4
15.6
16.7
118.6
120.1 1.3%
Change in net position, before
12.8
46.3
1.5
0.7
14.3
47.0
extraordinary item and special item
Extraordinary Items:
Contribution of capital assets from
Successor Agency
1.6
-
-
-
1.6
Repayment of funds from
Successor Agency to City of Tustin's
Housing Authority
1.0
-
-
-
1.0
Special Item:
Reduction in debt to Successor
Agency
-
5_0
-
_
-
5_0
Change in net position
15.4
51.3
1.5
0.7
17.0
52.0
Net Position - Beginning
670.3
685.7
36.1
37.7
706.4
723.4
Net Position - Ending
$685.7
$737.0
$37.7
$38.4
$723.4
$775.4 7.2%
M
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Government -wide Financial Analysis (Continued)
In governmental activities, the increase in net position of $51.3 million is primarily due to the following reasons:
• Deferred outflows related to pension plans increased $8.6 million mostly due to the increase in the net
differences between projected and actual earnings on plan investments.
Total governmental assets increased $48.3 million, mostly due to $31.3 million in earned profit
participation from CalAtlantic Homes for residential housing sales in the Greenwood development at
Tustin Legacy. Also contributing to the increase are gains on the sale of land held for resale of $17.6
million from Flight Venture LLC for the development of modern creative office space and supporting
retail, and $6.2 million from Regency Center for the development of a neighborhood shopping center
within the former Marine Corps Air Station known as the Legacy.
• Deferred inflows of resources decreased $1.8 million mostly due to changes in assumptions.
Governmental liabilities increased $7.4 million mostly due to the long-term liabilities for pension and
OPEB (Other Post Employment Benefits). Pension and OPEB liabilities increased about $13.4 million
due to the interest on the total pension liability. That increase was offset by a reduction of $8.2 million
Due to the Successor Agency, resulting from debt forgiveness of $5 million and the annual payment of
$3.2 million per the terms of the settlement agreement with the DOF (Department of Finance). Short-
term liabilities account for about $2.2 million of the increase due to higher developer deposits and
accounts payable resulting from increased construction costs.
Overall, governmental revenues increased $33.9 million from prior year. The primary reasons for the increase
were significant revenues recognized in fiscal year 2017 from the profit participation and sale of Land Held for
Resale discussed above. This was offset by a decrease in Capital grants and contributions of $22.1 million from
fiscal year 2016 primarily due to the receipt in the prior year of $26.4 million from the issuance of bonds for
CFD 14-1 within the former Marine Corps Air Station known as the Legacy.
Charges for services decreased $1.6 million during fiscal year 2017 primarily due to the decrease in the Public
Works classification. This decrease was due to increased building activity in fiscal year 2016 that resulted in
higher plan check fees and building permits, and park in lieu fees which generated about $0.8 million in
revenue. Taxes increased $8.2 million primarily due to the reclassification of property tax in lieu of VLF from
motor vehicle taxes to taxes. The City received $7.1 million in property tax in lieu of VLF (Vehicle License
Fee) for fiscal year 2017. The Property Tax in lieu of VLF is determined by the growth in gross assessed
valuation. The City has seen a growth in its property tax in lieu of VLF revenues due in part to the development
of the former Marine Corp Air Station, known as Tustin Legacy. There were also minor increases in other types
of tax revenue including property taxes, special services, franchise, transient occupancy, and business license.
Sales tax revenues increased $0.6 million due to vibrant and stable economic conditions. In general, increases in
several market sectors outweighed declines in others. The growth in Autos and Transportation continue to lead
other market sectors. The current economic outlook is optimistic and reflects an increase in the sale of taxable
goods.
-10-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Government -wide Financial Analysis (Continued)
Earnings on investments decreased $1.8 million from fiscal year 2016 mostly due to an unfavorable market
adjustment of $0.9 million recorded at June 30, 2017. The remainder of the decrease during fiscal year 2017
was caused by lower average cash balances and the decrease in the weighted average maturity. The average
cash balance for fiscal year 2016-17 was $185 million with an average weighted portfolio yield of 1.07% and
average weighted days to maturity of 471 days. The average cash balance for fiscal year 2015-16 was $191
million, with an average weighted portfolio yield of 0.96% and average weighted days to maturity of 673 days.
The decrease in the weighted average maturity was primarily caused by the decision to increase liquidity in the
portfolio (higher balances in Local Agency Investment Fund (LAIF) and California Asset Management Program
(CAMP)). This is due to planned outflows in the near term for the new TUSD school building project ($50
million) and various capital projects primarily within the Legacy development. The average weighted portfolio
yield was up slightly (0.11%) due to the continued rising interest rate environment.
Miscellaneous revenue increased $1.9 million, mostly due to a $1.4 million increase in the City's Maintenance
of Effort requirement to receive Measure M sales tax revenue from the Orange County Transportation Authority
(funded by budgeted General Government expenditures); the sale of two properties owned by the Tustin
Housing Authority resulting in a gain on sale of land held for resale of $0.5 million (14542 Newport Ave., Unit
3 and 27 Look Out Lane); and other one-time revenues.
Overall Governmental expenses increased $0.4 million from the prior year. Community Services expenses
increased $11.6 million from prior year due to a $15 million advance to Tustin Unified School District (TUSD)
for the planning and design of the 6-12 School Project per the School Facilities Implementation, Funding, and
Mitigation Agreement. Per the terms of the agreement, the City plans to fund an additional $50 million over the
next 12 months.
General Government expenses increased $4.5 million from fiscal year 2016 mostly due to the following: $1.6
million for a new environmental insurance policy at Tustin Legacy; $1.2 million in commissions paid at
settlement for the sale of 39 acres at Tustin Legacy to Flight Venture LCC; and $1.4 million in required
Maintenance of Effort (MOE) and per the adopted budget (referred to above).
Public Safety expenses increased $6.8 million from prior year due to the following: $1.9 million increase in
liability claims primarily the result of three significant cases; $2.2 million increase due to larger percentage of
the pooled net pension liability; $1.3 million primarily due to reclassification of pension contributions reported
in General Government expenses in prior years (change in billing method by Ca1PERS). Other smaller
increases contributing to the overall increase were related to contract fire services with Orange County Fire
Authority, compensation, and overtime.
Public Works expenses decreased $22.5 million from prior year mostly due to higher costs in fiscal year 2016 in
construction costs, primarily for OCFCD (Orange County Flood Control District) channel improvements, wet
and dry utilities, City of Sana Ana improvements, Irvine Ranch Water District improvements, and City of Irvine
infrastructure.
Contributing to the increase in net position is a Special Item for Reduction in Debt to Successor Agency of $5
million resulting from debt forgiveness of $5 million per the terms of a new settlement agreement with the
Department of Finance (see Due to Successor Agency to the Tustin Community Redevelopment Agency
footnote number 9 on page 63 for more information). Partially offsetting the Special Item is a decrease in
Extraordinary Items totaling $2.6 million due to the contribution in fiscal year 2016 of capital assets from the
SATCRDA of $1.6 million and repayment of funds from the Successor Agency to the City of Tustin's Housing
Authority of $1.0 million.
-11-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Government -wide Financial Analysis (Continued)
Business -Type activities net position increased $0.7 million from prior year. Charges for services increased
$0.6 million from fiscal year 2016 due to increased water consumption caused by the easing of drought
restrictions and less voluntary water saving over the past year. Water operation costs increased $1.1 million
primarily due to higher costs from the Orange County Water District for water basin replenishment. The
increase in this cost is correlated to the increase in consumption.
Financial Analysis of the Government's Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related legal
requirements.
The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and
balances of spendable resources. Such information may be useful in assessing the City's financing
requirements.
As of the end of the current fiscal year, the City's governmental funds reported total combined ending fund
balances of $293.3 million, an increase of $25.1 million in comparison with the prior year. The increase is
primarily due to the gain on sale of land held for resale totaling $24.2 million from the sale of land at the Legacy
development. In addition, the City received $23.5 million in profit participation due to the sale of homes in the
Greenwood development at the Legacy. Approximately $84.3 million (28.8%) of the City's governmental fund
balance constitutes nonspendable fund balance. Of the nonspendable amount, $83.9 million is Land Held for
Resale. The remainder of the fund balance consists of $86 million in restricted funds, $20.4 million assigned to
capital projects, and $102.5 million in unassigned funds.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund
balance of the General Fund was $102.5 million, while total fund balance was $221.8 million. As a measure of
the General Fund's liquidity, it may be useful to compare unassigned fund balance to total fund expenditures.
Unassigned fund balance represents 111% of the total General Fund expenditures.
-12-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Financial Analysis of the Government's Funds (Continued)
Expenditures
General government
City of Tustin
23.0
Public safety
Summary of Changes in Fund Balances - General
Fund
Public works
6.5
For the Year Ended June 30, 2017
Community services
7.0
18.4
(in millions of dollars)
3.4
9.0
Debt service
4.1
4.1
Total
67.9
92.2 35.8%
Excess of Revenues Over
% Change
2016
2017
2016-2017
Revenues:
Net transfers
Taxes
$48.0
$50.0
-
Charges for services
2.3
2.0
Intergovernmental
3.2
1.6
Fines and forfeitures
1.0
1.0
Licenses and permits
1.3
0.9
Other
4.3
3.0
Developer contribution
-
16.8
Profit participation
-
23.5
Gain on sale of land held for resale
-
23.8
Total Revenues
60.1
122.6
104%
Expenditures
General government
19.1
23.0
Public safety
27.8
30.6
Public works
6.5
7.0
Community services
7.0
18.4
Capital outlay
3.4
9.0
Debt service
4.1
4.1
Total Expenses
67.9
92.2 35.8%
Excess of Revenues Over
(Under) Expenditures
(7.8)
30.4
Other Financing Sources (Uses):
Net transfers
5.3
4.1
Capital lease issued
-
0.4
Special Item
ka.ql
Net Change in Fund Balance
t36.51
34.9 195.6%
-13-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Financial Analysis of the Government's Funds (Continued)
Transactions impacting revenues in the General Fund were as follows:
• Property tax revenue totaled about $24.4 million reflecting an increase of approximately $8.2 million
primarily due to the reclassification of property tax in lieu of VLF from motor vehicle taxes to taxes.
The City received $7.1 million in property tax in lieu of VLF for fiscal year 2017. The Property Tax in
lieu of VLF is determined by the growth in gross assessed valuation. The City has seen a growth in its
property tax in lieu of VLF revenues due in part to the development of the former Marine Corp Air
Station, known as Tustin Legacy. The remainder of the increase of about $1.1 million is due to the
increase in property values.
• Sales tax revenue increased $0.6 million due to vibrant and stable economic conditions. In general,
increases in several market sectors outweighed declines in others. The growth in Autos and
Transportation continues to lead other market sectors. The current economic outlook is optimistic and
reflects an increase in the sale of taxable goods.
• Intergovernmental revenue decreased $1.6 million from fiscal year 2016 primarily due to an adjustment
in 2016 to recognize deposits for TSIP Area A -B as revenue.
• License and Permits decreased $0.4 million due to the decrease in building permits from prior year.
Overall building activity was higher in fiscal year 2016.
• Other Revenue decreased $1.3 million from prior year primarily due to an unfavorable market
adjustment for investments.
• As stated previously the Gain on Sale of Land Held for Resale increased $23.8 million from prior fiscal
year due to the sale of Land Held for Resale in the Legacy development.
• The increase in Profit Participation of $23.5 million is due to the sale of homes in the Greenwood
development at the Legacy.
• The increase in Developer Contribution of $16.8 million was due to Project Fair Share Contributions in
conjunction with the sale of land held for resale at the Legacy of $10.3 million from Regency Center
and $6.5 million from Flight Venture LLC.
Changes in General Fund expenditures from previous fiscal year, by function, occurred as follows during the
year ended June 30, 2017:
• General Government expenditures increased $3.9 million from prior year mostly due to $1.6 million for
a new environmental insurance policy at Tustin Legacy; $1.2 million in commissions paid at settlement
for the sale of 39 acres at Tustin Legacy to Flight Venture LCC; and $1.4 million in required
maintenance of effort (MOE) per the adopted budget.
• Public safety expenditures increased $2.8 million from prior year primarily due to the reclassification of
$1.3 million in pension contributions reported in General Government expenses in prior years (change
in billing method by Ca1PERS). Other smaller increases contributing to the overall increase were
related to contract fire services with Orange County Fire Authority, compensation, and overtime.
• Community Services expenditures increased $11.4 million due to a $15 million advance to Tustin
Unified School District (TUSD) for the planning and design of the 6-12 School Project per the School
Facilities Implementation, Funding, and Mitigation Agreement. Per the terms of the agreement, the City
plans to fund an additional $50 million over the next 12 months.
• Public Work expenditures increased $0.5 million due to salary increases.
• Capital Outlay increased $5.6 million primarily due to construction costs at the Legacy development,
including grading related to the new TUSD school site.
• Net Transfers decreased $1.2 million from prior year mostly due to the transfer in fiscal year 2016 from
the CFD Construction Capital Projects Fund totaling $1.6 million to repay amounts transferred to cover
negative cash in prior years (See Note 4).
-14-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Financial Analysis of the Government's Funds (Continued)
Changes in General Fund Expenditures (Continued):
The Special Item in fiscal year 2016 totaling negative $34 million is the reclassification of Land Held
for Resale for 310 acres of land at the Legacy development to be given to another governmental agency
and to be used for parks and roads. In addition, the Valencia Parcels (about 5 acres) were reclassified
due to a change in the intended use of the property. These parcels will be retained by the City and will
be used to create the new Veterans Sports Park. These transactions resulted in a reduction in the fund
balance for the governmental funds and an increase in land in the government -wide statement of net
position.
The Measure M Special Revenue Fund's increase in excess of revenues over expenditures of $0.7 million is
primarily due to higher costs in fiscal year 2016 for the Peters Canyon Channel Improvements.
General Fund Budgetary Highlights
Differences between the General Fund actual revenues and amended budgeted revenues were $42.1 million
primarily due to unbudgeted profit participation and developer contributions during fiscal year 2017. The
amended budgeted expenditures were $106.8 million, an increase in appropriations of $6.4 million from the
original budgeted expenditures of $100.4 million. The increase in appropriations was due to increased costs
associated with development and improvement of the City's infrastructure and parks which include: Heritage
Park Playground Renovation ($15,000), Peppertree Park Lighting Project ($143,911), Moffett Drive Bridge and
Roadway Construction ($867,376), Purchase of Enhanced Police Safety Equipment and Personnel Assessment
(PD Personnel Assessment $75,000, Body Worn Camera, In -Car Video $670,613, and Enhanced Police Safety
Equipment $148,326), a new environmental insurance policy at Tustin Legacy ($1,577,969), and the acquisition
of SCE (Southern California Edison) -Owned Street Lights ($1,786,665).
Actual General Fund expenditures were less than the amended budgeted amount of $106.8 million by $14.6
million due to appropriations for capital projects spanning multiple years, such as Moffett Drive Extensions
(various segments), South Hangar renovation and study, and Legacy Road extension.
Financial Analysis of the Proprietary Funds
The City has one proprietary fund which is the Water Enterprise Fund. Total revenues for the Water Fund
exceeded total expenses by $0.7 million, resulting in an increase in net position during fiscal year 2017, from
$37.7 million as of June 30, 2016, to $38.4 million as of June 30, 2017.
Operating revenues increased slightly from $16.5 million in fiscal year 2016 to $17.1 million in 2017, due to
increased water consumption resulting from the easing of water conservation efforts. Related operating costs
increased $1.1 million from prior fiscal year, due to higher costs from the Orange County Water District for
water basin replenishment due to the increase in consumption.
-15-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Capital Asset and Debt Administration
Capital Assets
The City's investment in capital assets for its governmental and business -type activities as of June 30, 2017
amounts to $539.3 million, net of accumulated depreciation. This investment in capital assets includes land,
buildings and system improvements, machinery and equipment, park facilities, roads, highways, and bridges.
Land
Right of way
Construction in progress
Buildings and improvements
Machinery and equipment
Infrastructure
Property, plant and equipment
City of Tustin
Summary of Changes in Capital Assets
For the Year Ended June 30, 2017
(in millions of dollars)
Governmental
Activities
2016 2017
$86.2 $86.2
43.8 43.8
28.5 40.8
78.8 77.0
4.7 6.6
241.2 236.1
Business -Type
Activities
2016 2017
$1.2 $1.2
8.1 9.7
4.3 4.1
35.2 33.8
Total
Total % Change
2016 2017 2016-2017
$87.4 $87.4
43.8 43.8
36.6 50.5
83.1
81.1
4.7
6.6
241.2
236.1
35.2
33.8
Total Capital Assets, Net $483.2 $490.5 $48.8 $48.8 $532.0 $539.3 1.4%
Total capital assets increased $7.3 million during fiscal year 2017. There was an increase in construction in
progress of about $13.9 million due to continued construction at the following major projects: Sports Park and
Linear Park at the Legacy development, City Corporate Yard Facilities, Detention Basin Landscaping and Water
Quality at Red Hill / Barranca, Victory Road Extension - Red Hill to Armstrong, Moffet Drive Extension - Park
Ave. to Peters Channel, and Drill and Install Wellhead -Edinger Ave. Well. In addition, three major construction
projects were completed during FY 2017: Park Ave. Extension from Victory Road to Moffett Drive, FY 2016
Roadway Rehabilitation and Sidewalk Repair, and Council Chamber Renovation. Machinery and equipment
additions totaled $3.3 million mostly due to new Police Motorola dispatch consoles and portable radios ($1.4
million) and the Council chamber audio/visual equipment upgrade ($0.5 million). Infrastructure additions
totaled $3.2 million mostly due to completion of the FY 2016 Roadway Rehabilitation and Sidewalk Repair
Project. Additions to buildings and improvements totaled $0.8 million due to the Council Chamber Renovation.
These increases were offset by depreciation of about $13.5 million.
Additional information on the City's capital assets can be found in the notes to the basic financial statements
section of this report (beginning on page 55).
-16-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Long-term Debt
At the end of the current fiscal year, the City had total outstanding long-term liabilities of $118 million. Of this
amount, $42.5 million are secured solely by specified revenue sources such as property tax increment and water
service charges.
City of Tustin
Summary of Changes in Long -Term Liabilities
For the Year Ended June 30, 2017
(in millions of dollars)
Bonds payable
Due to Successor Agency to the
Tustin Community
Redevelopment Agency
Claims and judgments
Postemployment
benefits obligation
Termination benefits
Compensated absences
Lease Payable
Pension liabilities
Total Outstanding Debt
Governmental Business -Type
Activities Activities
2016 2017 2016 2017
$- $- $41.6 $42.5
Total
Total % Change
2016 2017 2016-2017
$41.6 $42.5
12.3
3.2
- - 12.3
3.2
4.8
5.5
- - 4.8
5.5
7.2
8.7
- - 7.2
8.7
0.6
-
- - 0.6
-
3.1
3.1
0.2 0.2 3.3
3.3
-
0.4
- - -
0.4
39.5
51.4
2_3 3_0 41.8
54.4
67.5
$72.3
$44.1 $45.7 $111.6
$118.0 5.7%
Overall, long-term debt increased $6.4 million from the prior year balances mostly due to the increase in
pension liabilities of $12.6 million. This increase in pension liabilities was comprised of increases for both the
Safety (police) Plans and the Miscellaneous (all other) plans of $7.1 million and $5.4 million respectively. The
increases were mostly due to the interest on the total pension liability which accrues at the rate determined by
Ca1PERS of 7.65%. There was also an increase in the postemployment benefits obligation of $1.5 million due
to the actuarially determined required contribution exceeding the contributions made during the year. These
increases were offset by a decrease of $9.1 million in Due to Successor Agency to the Tustin Community
Redevelopment Agency, resulting from debt forgiveness of $5 million and a $4.1 million annual payment per
the terms of a settlement agreement with the Department of Finance. The final payment of $3.2 million will be
made in December 2017.
Additional information on the City's long-term debt can be found in the notes to the basic financial statements
section of this report starting on page 57.
-17-
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2017
Next Year's Budget and Rates
The City Council adopted the fiscal year 2017-2018 Budget with total appropriations of $249.3 million which
includes $134.9 million of capital outlay. The General Fund fiscal year 2017-2018 estimated revenues are $58.8
million and budgeted appropriations are $60 million resulting in an estimated operating deficit of $1.2 million.
The operating deficit will be covered by planned use of excess General Fund reserves. The appropriations are
$0.3 million lower than the prior year's appropriation. The primary reason for the decrease in appropriations is
due to all departments adjusting their needs to ensure the budget balanced without impairing core City Services.
Overall, the appropriations are consistent with fiscal year 2017. There were no fee increases as part of the
preparation and adoption of the fiscal year 2017-18 budget.
Requests for Information
This financial report is designed to provide a general overview of the City's finances for all those with an
interest in the government's finances. Questions concerning any of the information provided in this report or
requests for additional financial information should be addressed to the Finance Director, City of Tustin, 300
Centennial Way, Tustin, California, 92780.
CITY OF TUSTIN
STATEMENT OF NET POSITION
ASSETS:
Cash and investments
Receivables:
Accounts
Interest
Loans
Notes
Allowance for uncollectibles
Internal balances
Prepaid items and deposits
Land held for resale
Restricted assets:
Cash and investments
Capital assets:
Not being depreciated
Being depreciated, net
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
Deferred amounts on pension plans
TOTAL DEFERRED OUTFLOWS OF RESOURCES
LIABILITIES:
Accounts payable and accrued liabilities
Interest payable
Deposits payable
Unearned revenue
Noncurrent liabilities:
Due within one year
Due in more than one year
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES:
Deferred amounts on pension plans
NET POSITION:
Net investment in capital assets
Restricted for:
Community services
Public safety
Public works
Unrestricted
TOTAL NET POSITION
See accompanying notes to basic financial statements.
June 30, 2017
-19-
Governmental
Business -type
Activities
Activity
Total
$ 157,019,524
$ 18,000,732
$ 175,020,256
12,173,738
2,968,645
15,142,383
379,774
45,709
425,483
881,263
-
881,263
7,831,903
7,831,903
(546,186)
(546,186)
435,588
42,257
477,845
83,911,082
-
83,911,082
61,886,110
13,528,036
75,414,146
170,831,055
10,833,293
181,664,348
319,743,592
37,929,002
357,672,594
814,547,443
83,347,674
897,895,117
-
3,486,398
3,486,398
13,325,584
826,798
14,152,382
13,325,584
4,313,196
17,638,780
8,794,332
2,480,043
11,274,375
-
383,974
383,974
7,443,795
584,782
8,028,577
16,773
-
16,773
11, 599,997
1,046,367
12,646,364
60,677,946
44,680,396
105,358,342
88,532,843
49,175,562
137,708,405
2,294,753
103,179
2,397,932
490,574,647
23,252,432
513,827,079
2,511,782
-
2,511,782
276,193
276,193
99,239,878
-
99,239,878
144,442,931
15,129,697
159,572,628
$ 737,045,431
$ 38,382,129
$ 775,427,560
CITY OF TUSTIN
STATEMENT OF ACTIVITIES
For the year ended June 30, 2017
Functions/programs Expenses
Governmental activities:
General government $ 24,504,764
Public safety 34,611,078
Public works 24,822,480
Community services 19,524,660
Interest on long-term liabilities 5,802
Total governmental activities 103,468,784
Business -type activity:
Water 16,654,429
Total $ 120,123,213
See accompanying notes to basic financial statements.
Program Revenues
Charges
Operating
Capital
for
Grants and
Grants and
Services
Contributions
Contributions
$ 1,979,211
$ 47,902
$ -
1,255,299
277,897
-
1,861,045
1,635,923
26,298,588
1,101,294
780,418
237,105
6,196,849 2,742,140 26,535,693
17,100,836 - -
$ 23,297,685 $ 2,742,140 $ 26,535,693
General revenues:
Taxes:
Property
Franchise
Transient occupancy
Business license
Sales taxes shared state revenues
Motor vehicle taxes shared state revenues
Earnings on investments
Gain on sale of land held for resale
Profit participation
Miscellaneous
Total general revenues
Change in net position, before
special item
Special item:
Reduction in debt to Successor Agency
Change in net position
NET POSITION AT BEGINNING OF YEAR
NET POSITION AT END OF YEAR
-20-
Net (Expense) Revenue and
Chances in Net Position
Governmental Business -type
Activities Activity Total
$ (22,477,651) $ - $ (22,477,651)
(33,077,882) - (33,077,882)
4,973,076 - 4,973,076
(17,405,843) - (17,405,843)
(5,802) - (5,802)
(67,994,102) - (67,994,102)
- 446,407 446,407
(67,994,102) 446,407 (67,547,695)
24,437,717
-
24,437,717
1,931,185
-
1,931,185
1,609,318
-
1,609,318
420,684
-
420,684
25,133,146
-
25,133,146
37,056
-
37,056
611,964
108,669
720,633
24,241,261
-
24,241,261
31,327,612
-
31,327,612
4,594,651
155,845
4,750,496
114,344,594
264,514
114,609,108
46,350,492
710,921
47,061,413
5,000,000
-
5,000,000
51,350,492
710,921
52,061,413
685,694,939
37,671,208
723,366,147
$ 737,045,431
$ 38,382,129
$ 775,427,560
-21-
CITY OF TUSTIN
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2017
See accompanying notes to basic financial statements.
-22-
Measure M
Other
Total
Special Revenue
Governmental
Governmental
General
Fund
Funds
Funds
ASSETS
Cash and investments
$ 109,475,670
$
5,232,535
$
42,311,319
$ 157,019,524
Restricted cash and investments
34,968,951
-
26,917,159
61,886,110
Receivables:
Accounts
5,566,035
5,663,706
943,997
12,173,738
Interest
226,912
8,104
144,758
379,774
Loans
497,467
-
383,796
881,263
Notes
7,831,903
-
-
7,831,903
Allowance for uncollectibles
(512,391)
-
(33,795)
(546,186)
Prepaid items and deposits
433,666
-
1,922
435,588
Land held for resale
83,911,082
-
-
83,911,082
TOTAL ASSETS
$ 242,399,295
$
10,904,345
$
70,669,156
$ 323,972,796
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
LIABILITIES:
Accounts payable and accrued liabilities
$ 5,938,987
$
222,705
$
2,632,640
$ 8,794,332
Deposits payable
6,687,024
-
756,771
7,443,795
Unearned revenue
-
-
16,773
16,773
TOTAL LIABILITIES
12,626,011
222,705
3,406,184
16,254,900
DEFERRED INFLOWS OF RESOURCES:
Unavailable revenue
8,009,031
5,400,504
1,063,542
14,473,077
FUND BALANCES:
Nonspendable
84,344,748
-
1,922
84,346,670
Restricted
34,901,943
5,281,136
45,788,572
85,971,651
Assigned
-
-
20,408,936
20,408,936
Unassigned
102,517,562
-
-
102,517,562
TOTAL FUND BALANCES
221,764,253
5,281,136
66,199,430
293,244,819
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$ 242,399,295
$
10,904,345
$
70,669,156
$ 323,972,796
See accompanying notes to basic financial statements.
-22-
CITY OF TUSTIN
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
June 30, 2017
Fund balances - total governmental funds $ 293,244,819
Amounts reported for governmental activities in the Statement of Net Position are
different because:
Capital assets net of depreciation have not been included as financial resources in
governmental funds. 490,574,647
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, 2017 are:
Claims and judgments payable
$ (5,523,351)
Compensated absences payable
(3,116,825)
Due to Successor Agency
(3,202,341)
Post employment benefits obligation
(8,733,323)
Capital lease payable
(340,324)
Total long-term liabilities
(20,916,164)
Pension related debt applicable to the City's governmental activites 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 pensions
are only reported in the Statement of Net Position as the changes in these amounts
effects only the government -wide statements for governmental activities:
Deferred outflows of resources 13,325,584
Deferred inflows of resources (2,294,753)
Pension liability (51,361,779)
(40,330,948)
Other long-term assets are not available to pay for current period expenditures
and, therefore, are reported as unavailable revenue in the governmental
funds balance sheet. 14,473,077
Net position of governmental activities $ 737,045,431
See accompanying notes to basic financial statements.
-23 -
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
REVENUES:
Taxes
Licenses and permits
Fines and forfeitures
Investment income
Intergovernmental revenue
Charges for services
Rental income
Other revenue
Developer contribution
Profit participation
Gain on sale of land held for resale
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Public safety
Public works
Community services
Capital outlay
Debt service:
Principal retirement
Interest expense
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
Capital lease issued
TOTAL OTHER FINANCING
SOURCES (USES)
NET CHANGE IN FUND BALANCES
For the year ended June 30, 2017
23,005,830
Measure M
Other
Total
30,631,067
Special Revenue
Governmental
Governmental
General
Fund
Funds
Funds
$ 49,958,547
$ -
$ -
$ 49,958,547
853,990
-
-
853,990
953,665
-
-
953,665
337,746
20,063
251,079
608,888
1,555,744
2,627,491
6,066,063
10,249,298
1,979,850
-
20,010
1,999,860
1,303,724
-
238,557
1,542,281
1,523,798
637
4,325,502
5,849,937
16,804,964
-
-
16,804,964
23,495,709
-
-
23,495,709
23,788,238
-
453,023
24,241,261
111 GGG 07G
I7AQ 101
11 ZGA 11A
1Zr- GGQ AOO
23,005,830
3,922
1,043,163
24,052,915
30,631,067
-
102,457
30,733,524
7,040,652
-
551,224
7,591,876
18,365,414
-
361,843
18,727,257
9,004,457
1,558,658
16,094,062
26,657,177
4,129,203
-
-
4,129,203
5,802
-
-
5,802
92,182,425
1,562,580
18,152,749
111,897,754
30,373,550
1,085,611
(6,798,515)
24,660,646
4,180,410
-
61,799
4,242,209
(61,799)
(105,230)
(4,075,180)
(4,242,209)
368,356
-
-
368,356
4,486,967
(105,230)
(4,013,381)
368,356
34,860,517
980,381
(10,811,896)
25,029,002
FUND BALANCES - BEGINNING OF YEAR 186,903,736 4,300,755 77,011,326 268,215,817
FUND BALANCES - END OF YEAR $ 221,764,253 $ 5,281,136 $ 66,199,430 $ 293,244,819
See accompanying notes to basic financial statements.
-24-
CITY OF TUSTIN
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the year ended June 30, 2017
Net change in fund balances - total governmental funds $ 25,029,002
Amounts reported for governmental activities in the Statement of Activities are different
because:
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities, the cost of those assets is allocated over their estimated
useful lives as depreciation expense. This is the amount by which capital
expenditures and contributions exceeded depreciation and disposition of capital
assets in the current period:
Capital outlay
$ 19,556,459
Disposition of capital assets
(424,606)
Depreciation expense
(11,786,341) 7,345,512
The issuance of long-term debt provides current financial resources to governmental
funds, while the repayment of the principal of long term -debt and changes in other
long-term liabilities affects the current financial resources of governmental funds.
Neither transaction, however, has any effect on net position. This amount is the
net effect of these differences in the treatment of long-term liabilities:
Principal payment
4,129,203
Capital lease issued
(368,356)
Reduction in debt to Succeesor Agency
5,000,000
Postemployment benefits obligation
(1,570,689)
Claims and judgments payable
(738,150)
Compensated absences payable
22,810
Termination benefits payable
660,426 7,135,244
Pension expense reported in the governmental funds includes the annual required
contributions. 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 (1,420,142)
Some revenues reported in the Statement of Activities are not considered to be available
to finance current expenditures and therefore are reported as available revenues in
the governmental funds:
Net change in unavailable revenue 13,260,876
Change in net position of governmental activities $ 51,350,492
See accompanying notes to basic financial statements.
-25-
CITY OF TUSTIN
STATEMENT OF NET POSITION
PROPRIETARY FUND
June 30, 2017
ASSETS:
CURRENT ASSETS:
Cash and investments
Accounts receivable
Interest receivable
Prepaid items
Restricted cash and investments
TOTAL CURRENT ASSETS
NONCURRENT ASSETS:
Capital assets:
Not being depreciated
Being depreciated, net
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
Deferred amounts on pension plans
TOTAL DEFERRED OUTFLOWS OF RESOURCES
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
Deposits payable
Compensated absences payable
Interest payable
Bonds payable
TOTAL CURRENT LIABILITIES
LONG-TERM LIABILITIES:
Compensated absences payable
Bonds payable
Net pension liability
TOTAL LONG-TERM LIABILITIES
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES:
Deferred amounts on pension plans
NET POSITION:
Net investment in capital assets
Unrestricted
TOTAL NET POSITION
See accompanying notes to basic financial statements.
-26-
Business -type
Activity
Water
Enterprise
Fund
$ 18,000,732
2,968,645
45,709
42,257
13,528,036
34,585,379
10,833,293
37,929,002
48,762,295
83,347,674
3,486,398
826,798
4,313,196
2,480,043
584,782
201,367
383,974
845,000
4,495,166
22,374
41,679,297
2,978,725
44,680,396
49,175,562
103,179
23,252,432
15,129,697
$ 38,382,129
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUND
For the year ended June 30, 2017
OPERATING REVENUES:
Charges for services
OPERATING EXPENSES:
Personnel services
Purchased water
Maintenance and operation
Depreciation and amortization
TOTAL OPERATING EXPENSES
OPERATING INCOME
NONOPERATING REVENUES (EXPENSES):
Investment income
Other income
Interest expense and other fiscal charges
TOTAL NONOPERATING REVENUES (EXPENSES)
CHANGE IN NET POSITION
NET POSITION AT BEGINNING OF YEAR
NET POSITION AT END OF YEAR
See accompanying notes to basic financial statements.
-27-
Business -type
Activity
Water
Enterprise
Fund
$ 17,100,836
3,203,733
5,975,184
3,853,781
1,833,732
14,866,430
2,234,406
108,669
155,845
(1,787,999)
(1,523,485)
710,921
37,671,208
$ 38,382,129
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
For the year ended June 30, 2017
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,212,377
CASH FLOWS FROM CAPITAL AND
Business -type
RELATED FINANCING ACTIVITIES:
Activity
Acquisition of capital assets
Water
Principal paid on bonds
Enterprise
Payment to refunding bond escrow agent
Fund
CASH FLOWS FROM OPERATING ACTIVITIES:
21,515,000
Receipts from customers
$ 17,230,443
Payments to suppliers
(9,668,662)
Payments to other funds for services
(1,200,000)
Payments to employees
(3,149,404)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,212,377
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets
(1,417,435)
Principal paid on bonds
(815,000)
Payment to refunding bond escrow agent
(24,287,475)
Proceeds from issuance of bonds
21,515,000
Premium from issuance of bonds
1,189,965
Bond issue costs
(286,744)
Interest paid
(1,777,455)
NET CASH USED BY CAPITAL
AND RELATED FINANCING ACTIVITIES (5,879,144)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income 109,012
NET CASH PROVIDED BY
INVESTING ACTIVITIES 109,012
NET DECREASE IN CASH
AND CASH EQUIVALENTS (2,557,755)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 34,086,523
CASH AND CASH EQUIVALENTS - END OF YEAR $ 31,528,768
CASH AND CASH EQUIVALENTS:
Cash and investments - current assets $ 18,000,732
Cash and investments - restricted assets 13,528,036
TOTAL CASH AND CASH EQUIVALENTS $ 31,528,768
See accompanying notes to basic financial statements. (Continued)
-28-
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
(CONTINUED)
For the year ended June 30, 2017
Business -type
Activity
Water
Enterprise
Fund
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income
$ 2,234,406
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation and amortization
1,833,732
Other nonoperating income
155,845
Change in assets and liabilities:
(Increase) decrease in accounts receivable
(48,249)
(Increase) decrease in prepaid items
(16,222)
(Increase) decrease in deferred ouflows of resources
(549,278)
Increase (decrease) in accounts payable and accrued liabilities
(1,006,538)
Increase (decrease) in deposits payable
22,012
Increase (decrease) in compensated absences
22,794
Increase (decrease) in termination benefits payable
(14,787)
Increase (decrease) in net pension liability
707,517
Increase (decrease) in deferred inflows of resources
(128,855)
NET CASH PROVIDED BY OPERATING ACTIVITIES
$ 3,212,377
See accompanying notes to basic financial statements.
-29-
CITY OF TUSTIN
STATEMENT OF FIDUCIARY NET POSITION
ASSETS:
Cash and investments
Restricted cash and investments
Receivables:
Taxes
Due from City of Tustin
Prepaid items and deposits
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
LIABILITIES:
Accounts payable
Interest payable
Due to bondholders
Long-term liabilities:
Due within one year
Due in more than one year
TOTAL LIABILITIES
NET POSITION:
Held in trust
See accompanying notes to basic financial statements.
June 30, 2017
-30-
Successor Agency
to the
Tustin Community
Redevelopment Agency
Private Purpose Agency
Trust Fund Funds
$ 2,894,215 $ -
69 11,421,736
- 62,501
3,202,341 -
5,563 -
6,102,188 $ 11,484,237
7,171,137
354 $ 1,956
717,042 -
- 11,482,281
5,227,341 -
60,246,109 -
66,190,846 $ 11,484,237
$ (52,917,521)
CITY OF TUSTIN
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
For the year ended June 30, 2017
CHANGE IN NET POSITION
BEFORE SPECIAL ITEMS 985,599
SPECIAL ITEMS:
Gain from reduction in note payable to County 5,000,000
Loss in reduction in amounts due from the City (5,000,000)
TOTAL SPECIAL ITEMS -
CHANGE IN NET POSITION
NET POSITION - BEGINNING OF YEAR
NET POSITION - END OF YEAR
See accompanying notes to basic financial statements.
-31-
985,599
(53,903,120)
$ (52,917,521)
Successor Agency
to the
Tustin Community
Redevelopment Agency
Private Purpose
Trust Fund
ADDITIONS:
Tax revenue
$ 4,101,171
Contribution from the City of Tustin
3,431
Investment income
2,852
TOTAL ADDITIONS
4,107,454
DEDUCTIONS:
Administrative expenses
250,000
Community services
39,131
Bond issuance costs
693,568
Interest
2,139,156
TOTAL DEDUCTIONS
3,121,855
CHANGE IN NET POSITION
BEFORE SPECIAL ITEMS 985,599
SPECIAL ITEMS:
Gain from reduction in note payable to County 5,000,000
Loss in reduction in amounts due from the City (5,000,000)
TOTAL SPECIAL ITEMS -
CHANGE IN NET POSITION
NET POSITION - BEGINNING OF YEAR
NET POSITION - END OF YEAR
See accompanying notes to basic financial statements.
-31-
985,599
(53,903,120)
$ (52,917,521)
The page left blank intentionally
-32-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. The Financial Reporting Entity:
The City of Tustin (City) was incorporated in 1927 as a "General Law" City governed by an
elected five -member city council. As required by accounting principles generally accepted in
the United States of America, these financial statements present the City of Tustin (the primary
government) and its component units. The component units discussed below are included in the
City's reporting entity because of the significance of their operational or financial relationship
with the City. These entities are legally separate from each other. However, the City of Tustin's
elected officials have a continuing full or partial accountability for fiscal matters of the other
entities. The financial reporting entity consists of: (1) the City, (2) organizations for which the
City is financially accountable, and (3) organizations for which the nature and significance of
their relationship with the City are such that exclusion would cause the City's financial
statements to be misleading or incomplete.
An organization is fiscally dependent on the primary government if it is unable to adopt its
budget, levy taxes, or set rates or charges, or issue bonded debt without approval by the
primary government. In a blended presentation, a component unit's balances and transactions
are reported in a manner similar to the balances and transactions of the City. Component units
are presented on a blended basis when the component unit's governing body is substantially the
same as the City's or the component unit provides services almost entirely to the City.
Blended Component Units
The Tustin Public Financing Authority (the Authority) is a joint powers authority organized
pursuant to the State of California Government Code, Section 6500. The Authority exists under
a Joint Exercise of Power Agreement dated May 1, 1995. The members of the City Council
constitute the members of the Board of Directors of the Authority. The Authority is authorized
to borrow money for the purpose of financing the acquisition of bonds, notes, and other
obligations of, or for the purpose of making loans to the City and/or to refinance outstanding
obligations of the City or Assessment Districts of the City.
The City of Tustin Housing Authority (the Housing Authority) was established by the City
Council in 2011, and is responsible for the administration of providing affordable housing in
the City. The Housing Authority is governed by a five -member Board of Directors which
consists of members of the City Council, which designates management and has full
accountability for the Housing Authority's financial affairs. The Housing Authority's financial
transactions are reported in the Special Revenue Funds.
-33 -
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
a. The Financial Reporting Entity (Continued):
Since the City Council serves as the governing board for these component units and
management of the City has operational responsibility for these component units, all of the
City's component units are considered to be blended component units. Blended component
units, although legally separate entities, are in substance, part of the City's operations and so
data from these units are reported within the funds of the primary government. These
component units do not issue separate component unit financial statements.
b. Government -wide and Fund Financial Statements:
The government -wide financial statements (i.e., the statement of net position and the statement
of activities) report information about the reporting government as a whole, except for its
fiduciary activities. All fiduciary activities are reported only in the fund financial statements.
Governmental activities, which normally are supported by taxes and intergovernmental
revenues, are reported separately from business -type activities, which rely to a significant
extent on fees and charges for support. Likewise, the primary government (including its
blended component units) is reported separately from discretely presented component units for
which the primary government is financially accountable. The City has no discretely presented
component units.
Certain eliminations have been made as prescribed by Governmental Accounting Standards
Board (GASB) Statement No. 34 in regards to interfund activities, payables and receivables.
All internal balances in the statement of net position have been eliminated except those
representing balances between the governmental activities and the business -type activity, which
are presented as internal balances and eliminated in the total primary government column. In
the statement of activities, inter -fund services have been eliminated; however, those
transactions between governmental and business -type activity have not been eliminated.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or segment.
Taxes and other items not properly included among program revenues are reported instead as
general revenues.
-34-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
b. Government -wide and Fund Financial Statements (Continued):
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, deferred outflows of resources, liabilities, deferred inflows 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.
Separate financial statements for the City's governmental, proprietary, and fiduciary funds are
presented after the government -wide financial statements. These statements display information
about major funds individually and other governmental funds in the aggregate for governmental
funds. Fiduciary fund statements, even though excluded from the government -wide financial
statements, include financial information for private purpose trust funds and agency funds.
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation:
The government -wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and
fiduciary private purpose trust fund (fiduciary agency funds do not have a measurement focus)
financial statements. Under the economic resources measurement focus, all assets, deferred
outflows of resources, liabilities, and deferred inflows of resources (whether current or
noncurrent) associated with their activity are included on their statements of net position.
Operating statements present increases (revenues) and decreases (expenses) in total net
position. Under the accrual basis of accounting, revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash
flows.
Proprietary funds result from providing services and producing and delivering goods.
Nonexchange transactions, in which the City gives (or receives) value without directly
receiving (or giving) equal value in exchange include taxes, grants, entitlements, and donations.
Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all
the eligibility requirements have been satisfied. Property taxes are recognized as revenue in the
year for which they are levied. Operating revenues are those that result from providing services.
Operating expenses for proprietary funds include the cost of sales and services, administrative
expenses, and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as nonoperating revenues and expenses.
-35 -
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued):
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Under the current financial
resources measurement focus, only current assets, current liabilities, and deferred inflows of
resources are generally included on their balance sheets. The reported fund balance (net current
assets) is considered to be a measure of "available spendable resources". Governmental fund
operating statements present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets. Accordingly, they are said to
present a summary of sources and uses of "available spendable resources" during a period.
Noncurrent portions of long-term receivables due to governmental funds are reported on their
balance sheets in spite of their spending measurement focus.
Under the modified accrual basis of accounting, revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the government considers revenues to be available if they are
collected within 60 days of the end of the current fiscal period. Expenditures generally are
recorded when a liability is incurred, except for principal and interest on long-term liabilities,
claims and judgments, and compensated absences, which are recognized as expenditures to the
extent they have matured. Capital asset acquisitions are reported as expenditures in
governmental funds. Proceeds of long-term liabilities are reported as other financing sources.
Property taxes, franchise taxes, licenses, intergovernmental revenue and interest associated
with the current fiscal period are all considered to be susceptible to accrual and so have been
recognized as revenues of the current fiscal period. All other revenue items are considered to be
measurable and available only when cash is received by the government.
The City's fiduciary funds consist of a private purpose trust fund, which is reported using the
economic resources measurement focus, and the agency funds which have no measurement
focus, but utilize the accrual basis for reporting its assets and liabilities.
All governmental activities, business -type activity and fund financial statements of the City
follow Governmental Accounting Standards Board (GASB) pronouncements.
When both restricted and unrestricted resources are available for use, it is the City's policy to
use restricted resources first, then unrestricted resources as they are needed.
-36-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued):
Fund Classifications
The funds designated as major funds are determined by a mathematical calculation. The City
reports the following major governmental funds:
The General Fund is the primary operating fund of the City and is used to account for all
revenues and expenditures that are not required to be accounted for in another fund.
The Measure M Special Revenue Fund is used to account for monies received from the County
for street and maintenance projects.
The City reports the following major proprietary fund:
The Water Enterprise Fund is used to account for the City's water service operations to
residents and businesses.
The City's fund structure also includes the following fund types:
Governmental Funds
Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
restricted by law or administrative action for a specified purpose.
Capital Projects Funds are used to account for financial resources to be used for the acquisition
or construction of major capital facilities.
Fiduciary Funds
Private Purpose Trust Fund is used to account for the activities of the Successor Agency to the
Tustin Community Redevelopment Agency.
Agency Funds are used to account for assets held by the City in a trustee capacity or as an
agent for individuals, private organizations and other governments. Agency funds are custodial
in nature (assets equal liabilities) and do not involve measurement of results of operations. The
agency funds are used to account for taxes received for special assessments debt for which the
City is not obligated.
-37-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
d. New Accounting Pronouncements:
Current Year Standards
GASB 74 - Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans,
effective for periods beginning after June 15, 2016, and did not impact the City.
GASB 77 - Tax Abatement Disclosure, effective for periods beginning after
December 15, 2015, and did not impact the City.
GASB 79 - Certain External Investment Pools and Pool Participants, contains certain
provisions on portfolio quality, custodial credit risk, and shadow pricing, effective for periods
beginning after December 15, 2015, and did not impact the City.
GASB 80 - Blending Requirements for Certain Component Units, effective for periods
beginning after June 15, 2016, and did not impact the City.
Pending Accounting Standards
GASB has issued the following statements, which may impact the City's financial reporting
requirements in the future:
• GASB 75 -Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions, effective for periods beginning after June 15, 2017.
• GASB 81 - Irrevocable Split -Interest Agreements, effective for periods beginning after
December 15, 2016.
• GASB 82 - Pension Issues, effective for periods beginning after June 15, 2016, except for
certain provisions on selection of assumptions, which are effective in the first reporting
period in which the measurement date of the pension liability is on or after June 15, 2017.
• GASB 84 -Fiduciary Activities, effective for periods beginning after December 15, 2018.
• GASB 85 -Omnibus 2017, effective for periods beginning after June 15, 2017.
• GASB 86 - Certain Debt Extinguishment Issues, effective for periods beginning after
June 15, 2017.
0 GASB 87 - Leases, effective for periods beginning after December 15, 2019.
1
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity:
Cash, Cash Equivalents and Investments
Investments are stated at fair value (the value at which a financial instrument would be
exchanged in a current transaction between willing parties other than a forced or liquidation
sale), except for certain investments which have a remaining life of less than one year when
purchased and investment contracts, which are stated at amortized cost.
The City's proprietary fund participates in the pooling of City-wide cash and investments.
Amounts held in the City pool are available to the fund on demand and are considered to be
cash and cash equivalents for statement of cash flow purposes. Investments not held in the City
pool that are short-term investments with original maturities of three months or less from the
date of acquisition are considered cash and cash equivalents.
Capital Assets
Capital assets (including infrastructure) are recorded at cost where historical records are
available and at an estimated original cost where no historical records exist. Contributed capital
assets are valued at acquisition value at the date of contribution. Capital asset purchases (other
than infrastructure) in excess of $10,000 are capitalized if they have an expected useful life of
five years or more. Infrastructure assets with a cost exceeding $150,000 are capitalized.
Capital assets include additions to public domain (infrastructure), certain improvements
including pavement, curb and gutter, sidewalks, traffic control devices, streetlights, sewers,
storm drains, bridges, and right-of-way corridors within the City.
Capital assets used in operations are depreciated over their estimated useful lives using the
straight-line method in the government -wide financial statements and in the fund financial
statements of the enterprise fund. Depreciation is charged as an expense against operations and
accumulated depreciation is reported on the respective statement of net position. The lives used
for depreciation purposes of each capital asset class are:
Buildings 5 - 40 years
Improvements other than buildings 5 - 40 years
Property and plant 5 - 40 years
Machinery and equipment 4 - 10 years
Infrastructure 25 - 75 years
-39-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued):
Deferred Outflows/Inflows 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 ou�flows of resources, represents a consumption of net
position that applies to future periods and so will not be recognized as an outflow of resources
(expense/expenditure) until that time. The City has the following items that qualify for
reporting in this category:
• Deferred charge on refunding, net of accumulated amortization, reported in the
government -wide statement of net position and the proprietary fund financial
statements. A deferred charge on refunding results from the difference in the carrying
value of refunded debt and its reacquisition price. This amount is deferred and
amortized over the shorter of the life of the refunded or refunding debt.
• Deferred outflow related to pensions. This amount is equal to employer contributions
made after the measurement date of the net pension liability.
• Deferred outflow related to pensions for differences between expected and actual
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 with pensions
through the plans.
• Deferred outflow related to pensions for the changes in proportion and differences
between employer contributions and the proportionate share of contributions. These
amounts are amortized over a closed period equal to the average of the expected
remaining service lives of all employees that are provided with pensions through the
plans.
• Deferred outflow related to pensions resulting from the difference in projected and
actual earnings on investments of the pension plans fiduciary net position. These
amounts are amortized over five years.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued):
Deferred Outflows/Inflows of Resources (Continued)
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
position that applies to future periods and will not be recognized as an inflow of resources
(revenue) until that time. The City has the following items that qualify for reporting in this
category:
• Deferred inflow from unavailable revenue, which arises only under a modified accrual
basis of accounting, is reported only in the governmental funds balance sheet. The
governmental funds report unavailable revenues from grants. These amounts are
deferred and recognized as an inflow of resources in the period that the amounts
become available.
• Deferred inflow related to pensions for differences between expected and actual
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 with pensions
through the plans.
• Deferred inflow from pensions resulting from changes in assumptions. These amounts
are amortized over a closed period equal to the average expected remaining service
lives of all employees that are provided with pensions through the plans.
• Deferred inflow related to pensions for the changes in proportion and differences
between employer contributions and the proportionate share of contributions. These
amounts are amortized over a closed period equal to the average of the expected
remaining service lives of all employees that are provided with pensions through the
plans.
-41-
1
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued):
Land Held for Resale
Land held for resale is carried at the lower of cost or estimated realizable value determined only
upon the execution of a disposition and development agreement.
Property Taxes
Under California law, property taxes are assessed and collected by the counties up to 1% of
assessed value, plus other increases approved by the voters. The property taxes go into a pool,
and are then allocated to the cities based on complex formulas. The City accrues as revenues
only those taxes which are received within 60 days after year end in the fund financial
statements.
Property Tax Calendar
Property taxes are assessed and collected each fiscal year according to the following property
tax calendar:
Lien date
January 1st
Levy period
July 1st to June 30th
Levy date
On or before 4th Monday in September
Due date
November 1st - 1st installment
February 1st - 2" d installment
Collection date
December 10th - 1st installment
April 10th - 2" d installment
Interest and penalties are assessed after the collection date.
Compensated Absences
All vested vacation and compensatory leave time is recognized as an expense and as a liability
in the proprietary type fund at the time the liability vests. Governmental fund types recognize
the vested vacation and compensatory time as an expenditure in the current year to the extent it
is paid during the year or is due and payable at year-end. For governmental activities,
compensated absences are primarily liquidated from the general fund. Any additional accrued
vacation and compensatory time relating to governmental funds and amounts relating to the
proprietary fund type are included as long-term liabilities within the statement of net position.
-42-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued):
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'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.
f. Use of Estimates:
The preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the statement of net position date, and reported amounts of revenues and
expenses during the reporting period. Estimates are used to determine depreciation expense, the
allowance for doubtful accounts and certain liabilities. Actual results may differ from those
estimates.
2. CASH AND INVESTMENTS:
Cash and Investments
Cash and investments as of June 30, 2017, are classified in the accompanying financial statements
as follows:
Statement of Net Position:
Cash and investments $ 175,020,256
Restricted cash and investments 75,414,146
Fiduciary Funds:
Cash and investments 2,894,215
Restricted cash and investments 11,421,805
Total Cash and Investments 264.750.422
-43 -
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
2. CASH AND INVESTMENTS (CONTINUED):
Cash and Investments (Continued)
Cash and investments as of June 30, 2017, consist of the following:
Cash on hand $ 11,000
Deposits with financial institutions 28,624,293
Investments 236,115,129
Total Cash and Investments 264.750.422
Investments Authorized by the California Government Code and the City's Investment
Policy
The table below identifies the investment types that are authorized for the City. The table also
identifies certain provisions of the City's investment policy that address interest rate risk and
concentration of credit risk. This table does not address investments of debt proceeds held by fiscal
agents 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.
Investment Types
Authorized by the City's Policy
Negotiable certificates of deposit
Prime quality commercial paper
Government sponsored pools
(LAIF, mutual funds)
Commercial bank time drafts
(Bankers acceptances)
Medium-term notes
Municipal and state securities
Federal agency bonds or notes
United States (U.S). Treasury securities
Money market funds
Repurchase agreements
N/A - Not Applicable
Maturity
None
270 days
N/A
Maximum
Percentage
of Portfolio
30%
25%
None
Maximum
Investment
in One Issuer
None
None
None
180 days
25%
30%
5 years
15%
None
None
15%
5%
5 years
75%
None
5 years
None
None
N/A
None
None
1 year
None
None
* Average weighted maturity shall not exceed ninety (90) days if commercial paper exceeds
fifteen (15) percent of total portfolio assets.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
2. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustees is 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 and concentration of credit risk.
Authorized Investment Types
U.S. Treasury Obligations
U.S. Government Sponsored
Agency Securities
Banker's Acceptances
Commercial Paper
Money Market Mutual Funds
Investment Contracts
Certificates of Deposit
Corporate Notes
Repurchase Agreements
N/A - Not Applicable
Disclosures Relating to Interest Rate Risk
Maximum
Maturity
None
Maximum
Maximum
Percentage
Investment
of Portfolio
in One Issuer
None None
None
None
None
270 days
None
None
180 days
None
None
N/A
None
None
30 years
None
None
None
None
None
None
None
None
None
None
None
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the City manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity
needed for operations.
-45-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
2. CASH AND INVESTMENTS (CONTINUED):
Disclosures Relating to Interest Rate Risk (Continued)
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:
Remaining Maturity
1Year 1-2 2-3
3-4
4-5
Investment Type or Less Years Years
Years
Years
Total
U.S. Treasury Notes S 20,464,207 S 6,970,860 S - S
- S
S 27,435,067
U.S. Government Sponsored
Agency Securities:
Federal National Mortgage
Association (FNMA) 1,998,326 - 6,919,867
3,790,397
-
12,708,590
Federal Home Loan Bank (FHLB) - 1,993,840 -
2,488,297
7,486,483
11,968,620
Federal Home Loan Mortgage
Corporation (FHLMC) 5,983,298 991,562 1,999,462
2,531,219
5,978,438
17,483,979
Federal Farm Credit Bank (FFCB) 2,995,867 - 1,984,316
8,486,412
1,991,224
15,457,819
Local Agency Investment Pool (LAIF) 25,747,088 -
-
-
25,747,088
California Asset Management Program(CAMP) 23,522,004
23,522,004
Orange County Investment Pool 10,546,172
10,546,172
Negotiable Certificates of Deposit 2,977,439 4,216,887 11,913,834
4,689,449
3,426,511
27,224,120
Medium-term Notes 5,120,987 3,996,633 2,011,301
4,522,842
1,996,338
17,648,101
Municipal Bonds 1,999,640 - 2,991,890
1,018,130
2,010,170
8,019,830
Held by Fiscal Agents:
Money Market Mutual Funds 38.353.739 -
-
-
38.353.739
L132,70 -8767L-18 .169.782 S 27.820.670 27526.746 S 22.889.164 L236
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
2. CASH AND INVESTMENTS (CONTINUED):
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the minimum rating required by (where
applicable) the California Government Code, the City's investment policy, or debt agreements, and
the Standard & Poor's actual rating as of year end for each investment type.
N/A - Not Applicable
The ratings for the "Other" category above are as follows:
Medium-term Notes:
AA- $ 1,006,940
A- 1,988,753
A 2,123, 974
A+ 2,510,346
Aaa* 999,600
8.629.613
Municipal Bonds: CAMP:
AA- 8,019,830 AAAm 23,522,004
*Moody's rating as the note is not rated by Standard & Poor's
-47-
Total
Minimum
Exempt
as of
Legal
from
Not
Investment Tvne
June 30, 2017
Ratine
Disclosure
AAA
AA+
AA Other
Rated
U.S. Treasury Notes
$ 27,435,067
N/A
$27,435,067
$
$ -
$ $
$
U.S. Government Sponsored
Agency Securities:
FNMA
12,708,590
N/A
-
12,708,590
FHLB
11,968,620
N/A
11,968,620
FHLMC
17,483,979
N/A
17,483,979
FFCB
15,457,819
N/A
15,457,819
-
LAIF
25,747,088
N/A
-
25,747,088
CAMP
23,522,004
N/A
23,522,004
-
Orange County Investment Pool
10,546,172
N/A
-
10,546,172
Negotiable Certificates
ofDeposit
27,224,120
N/A
-
-
27,224,120
Medium-termNotes17,648,101
A
4,010,967
4,009,594
997,927 8,629,613
-
Municipal Bonds
8,019,830
A
-
-
- 8,019,830
Held by Fiscal Agents:
Money Market Mutual Funds
38.353.739
A
38.353.739
Total
$ 236,115,129
$27435067
$42364706
$61628602
$ 997927 $40171447
$63517380
N/A - Not Applicable
The ratings for the "Other" category above are as follows:
Medium-term Notes:
AA- $ 1,006,940
A- 1,988,753
A 2,123, 974
A+ 2,510,346
Aaa* 999,600
8.629.613
Municipal Bonds: CAMP:
AA- 8,019,830 AAAm 23,522,004
*Moody's rating as the note is not rated by Standard & Poor's
-47-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
2. CASH AND INVESTMENTS (CONTINUED):
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any
one issuer beyond that stipulated by the California Government Code. Investments in any one
issuer that represent 5% or more of total City's investments are as follows:
Issuer
Federal National Mortgage Association
Federal Home Loan Bank
Federal Home Loan Mortgage Corporation
Federal Farm Credit Bank
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, an investor 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, an investor 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 secures deposits made by
state or local governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The market
value of the pledged securities in the collateral pool must equal at least 110% of the total amount
deposited by the public agencies. California law also allows financial institutions to secure City
deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public
deposits.
Reported
Investment Type
Amount
United States Government
Sponsored Agency Securities
$
12,708,590
United States Government
Sponsored Agency Securities
$
11,968,620
United States Government
Sponsored Agency Securities
$
17,483,979
United States Government
Sponsored Agency Securities
$
15,457,819
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, an investor 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, an investor 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 secures deposits made by
state or local governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The market
value of the pledged securities in the collateral pool must equal at least 110% of the total amount
deposited by the public agencies. California law also allows financial institutions to secure City
deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public
deposits.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
2. CASH AND INVESTMENTS (CONTINUED):
Custodial Credit Risk (Continued)
As of June 30, 2017, none of the City's deposits with financial institutions in excess of federal
depository insurance limits were held in uncollateralized accounts.
As of June 30, 2017, the City's investments in the following investment types were held by the
same broker-dealer (counterparty) that was used by the City to buy the securities:
Investment 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 LAW for
the entire LAW 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.
Investment in California Asset Management Program (CAMP)
The City is a voluntary participant in the California Asset Management Program (CAMP) that is
regulated by the California Government Code. 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 CAMP for the entire CAMP portfolio (in relation to the
amortized cost of that portfolio). The balance available for withdrawal is based on the accounting
records maintained by CAMP, which are recorded on an amortized cost basis.
Carrying
Investment Type
Value
U.S. Treasury Notes
$ 27,435,067
U.S. Government Sponsored
Agency Securities
57,619,008
Medium-term Notes
17,648,101
Municipal Bonds
8,019,830
Negotiable Certificates of Deposit
27,224,120
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 LAW for
the entire LAW 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.
Investment in California Asset Management Program (CAMP)
The City is a voluntary participant in the California Asset Management Program (CAMP) that is
regulated by the California Government Code. 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 CAMP for the entire CAMP portfolio (in relation to the
amortized cost of that portfolio). The balance available for withdrawal is based on the accounting
records maintained by CAMP, which are recorded on an amortized cost basis.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
2. CASH AND INVESTMENTS (CONTINUED):
Investment in County Investment Pool
The Orange County Investment Pool Fund (OCIP) is a pooled investment fund program governed
by the Orange County Board of Supervisors, and is administered by the Orange County Treasurer
and Tax Collector. Investments in OCIP are highly liquid as deposits and withdrawal can be made
at any time without penalty. The City's fair value of its share in the pool is the same value of the
pool shares, which amounted to $10,546,172. Information on OCIP's use of derivative securities
in its investment portfolio and OCIP's and the City's exposure to credit, market, or legal risk is not
available.
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, and Level 3 inputs are significant
unobservable inputs.
The City has the following recurring fair value measurements as of June 30, 2017:
Quoted
Prices
Level 1
U.S. Treasury Notes
U.S. Government Sponsored
Agency Securities:
FNMA
FHLB
FHLMC
FFCB
Negotiable Certificates of Deposit
Medium-term Notes
Municipal Bonds
Total Leveled Investments
Local Agency Investment Pool*
CAMP*
Orange County Investment Pool*
Held by Fiscal Agents:
Money Market Mutual Funds*
Total Investment Portfolio
* Not subject to fair value measurements.
-50-
Observable
Inputs
Level 2
$ 27,435,067
12,708,590
11,968,620
17,483,979
15,457,819
27,224,120
17,648,101
8,019,830
137.946.126
Unobservable
Inputs
Level 3
Total
$ 27,435,067
12,708,590
11,968,620
17,483,979
15,457,819
27,224,120
17,648,101
8,019,830
137,946,126
25,747,088
23,522,004
10,546,172
38,353,739
236.115.129
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
3. LOANS AND NOTES RECEIVABLE:
Multi -Family Development Loan: A bridge loan was provided to a senior apartment developer to
assist in the development of 53 affordable rental units. The total outstanding balance as of
June 30, 2017, was $350,000.
Home Improvement Loans: Home improvement loans were provided to low and moderate income
households (rental and ownership). These deferred loans are due upon sale, refinance, or when the
rental units are no longer available as affordable units. Term is 30 years. The total outstanding
balance as of June 30, 2017, was $33,795. An allowance of $33,795 has been recorded to reflect
the amount of the loans not expected to be collectible.
Orange County Rescue Mission: On February 10, 2015, the City entered into an agreement with
the Orange County Rescue Mission (OCRM), whereby the City agreed to convey two residential
buildings to the OCRM to be used for housing for homeless veterans. In exchange, the OCRM
executed a promissory note to the City in the amount of $533,000. The note is payable after
30 years with 3% interest. For every year that the OCRM uses the property for homeless veterans
housing, the promissory note and any accrued interest will be forgiven by 1/30th. Should the
OCRM successfully utilize the properties for homeless veterans housing for all 30 years in which
the note is in effect, as stipulated in the deed of trust, it will owe no money to the City. The total
outstanding balance at June 30, 2017, including accrued interest of $14,923 was $512,391. An
allowance of $512,391 has been recorded to reflect the amount of the note not expected to be
collectible.
Cal Atlantic Homes: In August 2014, the City had sold land to Cal Atlantic Homes under a
Disposition and Development Agreement (DDA) dated August 15, 2014. The original DDA was
entered into with Standard Pacific, which merged with Ryland in 2015 to create Cal Atlantic
Homes. The DDA required an interim payment of 75% within 30 days of completion of 350 homes
and the remaining 25% of payment based on the profitability as defined in the DDA. The total
estimated profit is the DDA's estimate at $31,327,613 of which $23,495,709 was received in the
fiscal year with the balance of $7,831,903 recorded as a note receivable due within 30 days of the
final sale of the 375th residence.
-51-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
4. INTERFUND TRANSFERS:
The composition of interfund transfers for the year ended June 30, 2017, is as follows:
Transfers In Transfers Out Amount
General Fund Measure M Special Revenue Fund $ 105,230
Other Governmental Funds 4,075,180
Other Governmental Funds General Fund
61,799
4,242,209
The transfers during the fiscal year ended June 30, 2017, were for the following purposes:
A transfer from the Measure M Special Revenue Fund totaling $105,230 to the General Fund to
pay for services provided for Measure M.
A transfer from the other governmental funds totaling $48,064 to the General Fund was made to
repay amounts transferred to cover negative cash in prior years.
A transfer from other governmental funds totaling $3,477,116 to the General Fund to pay for
public safety services provided for the Special Tax B area.
A transfer from other governmental funds totaling $550,000 was made to the General Fund per the
adopted budget for fiscal year 2016-17.
The General Fund transferred $61,799 to the other governmental funds to eliminate negative cash
until reimbursement is received from the fiscal agent.
5. LAND HELD FOR RESALE:
Land held for resale as of June 30, 2017, consisted of the following:
Pacific Park* $ 30,787,557
South A Street property 131,818
Tustin Legacy 52,991,707
Total Land Held for Resale 83.911.082
*Pacific Park includes several parcels bordered by Del Amo, Valencia, Edinger and Newport Avenue.
During the fiscal year 2016-17, the City sold land held for resale for the Tustin Legacy (see Note 6)
for a gain of $23,788,238. In addition, additional property held for resale by the Housing Authority
was sold for a gain of $453,023.
-52-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
6. LAND TRANSFER FROM THE UNITED STATES GOVERNMENT:
On May 13, 2002, the City entered into an agreement with the United States of America (the
Government) wherein the Government agreed to convey to the City a portion of the former Marine
Corps Air Station Tustin (MCAS Tustin). The transfer is pursuant to the authority provided by
Section 2905(b)4 of the Defense Base Closure and Realignment Act of 1990, as amended, and the
implementing regulations of the Department of Defense to convey surplus property at a closing
installation to the local redevelopment authority at no cost for economic development purposes.
The real properties, consisting of approximately 1,153 acres of land located within the bounds of
the former MCAS Tustin, were conveyed to the City in multiple parcels, by separate conveyances.
Parcel Group I, (consisting of approximately 977 acres), was conveyed to the City on
May 14, 2002. A portion of Parcel Group I (consisting of approximately 23 acres) was conveyed to
the City during fiscal year 2003 and the remainder was conveyed to the City in fiscal year 2004.
Conveyance of Parcel Group II (consisting of a total of 49 acres) was conveyed in September 2006
and May and July 2003. Conveyance of Parcel Group III (consisting of approximately 18 acres)
and Parcel Group IV (consisting of approximately 119 acres) were conveyed in September 2006
and April 2008, respectively. As part of the agreement, the City also received certain personal
property and utilities on the base. The land parcels were recorded at their estimated fair values at
the dates of conveyance.
Subsequent to the conveyance of properties from the Government, the Agreement required the City
to convey approximately 22 acres to Santa Ana Unified School District (SAUSD), 15 acres to
Rancho Santiago Community College District (RSCCD) and 65 acres to South Orange County
Community College District (SOCCCD) subject to certain conditions as detailed in the agreement
with the Government and the terms and conditions of the settlement and release agreements
between the City and SAUSD and the City and the RSCCD.
The SAUSD declined the conveyance of the land from the City and instead of receiving the land,
the SAUSD was paid $60,000,000 under an agreement dated December 20, 2002. The City
conveyed the RSCCD parcel during fiscal year 2003. Conveyance of the SOCCCD parcel
happened in fiscal year 2004.
On May 21, 2013, the City Council approved a General Plan Amendment, MCAS Tustin Specific
Plan Amendment, Development Agreement, and Agreement for Exchange of Real Property with
the SOCCCD. The Exchange Agreement delineates the terms and processes associated with the
exchange of the ultimate ownership of approximately 89 acres of land within Planning Area 1 of
Tustin Legacy. The City of Irvine has identified concerns about that project's traffic impacts in
Irvine, and about the traffic analysis of projects in the MCAS Tustin Specific Plan area generally.
In July 2013, the City entered into a settlement agreement with the City of Irvine which allowed
the City to proceed with the Exchange Agreement. The transfer of the parcels occurred
August 2014 and was considered an even exchange.
-53 -
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
6. LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED):
The City also entered into a separate agreement with the SOCCCD in July 2014 to acquire the
Valencia Parcels, approximately 5 acres of land, for $1,083,220 less a demolition credit of
$500,000.
In August 2014, the City sold 74 acres of the land to a developer for $56,000,000 resulting in a gain
on land held for resale of $48,136,121.
In February 2015, the City entered into an Exchange Agreement with the United States of America
Department of Army. The Exchange Agreement delineates the terms associated with the exchange
of the ultimate ownership of approximately 15 acres of usable land and improvements. The
transfer of the property occurred in April 2015 and was determined to be of equivalent value.
In fiscal year 2015-16, the City reclassified 310 acres of the land held for resale related to the land
transfer from the United States Government to land to be used for government purposes. The
reclassification was for land to be given to another governmental agency and to be used for parks
and roads. In addition, the Valencia Parcels (about 5 acres) were reclassified due to a change in the
intended use of the property. These parcels were retained by the City and will be used to create the
new veteran's sports park. As a result, land held for resale was reduced by $34,026,499 in the
General Fund and is reported as land in the government -wide statement of net position.
In July 2016, the City sold 20.96 acres of the land to a developer for $8,300,000 resulting in a gain
on land held for resale of $6,167,009.
In June 2017, the City sold 17.54 acres of land to a developer for $18,292,602 resulting in a gain
on land held for resale of $17,621,229.
The recorded value of the remaining parcels as of June 30, 2017, was $52,991,707. The value was
based on an assumption that most of the land will be sold in a bulk sale to a single developer and
the remaining property not sold will be park space or conveyed to other governmental agencies.
-54-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
7. CAPITAL ASSETS:
A summary of changes in the Governmental Activities capital assets for the year ended
June 30, 2017, is as follows:
Capital assets, being depreciated
Buildings
Balance at
Balance at
74,466,210
July 1, 2016
Additions Deletions June 30, 2017
Capital assets, not being depreciated:
28,609,604
Machinery and equipment
Land
$ 86,241,894
$ - $ - $ 86,241,894
Right of way
43,758,156
- - 43,758,156
Construction in progress
28,525,314
17,964,334 (5,658,643) 40,831,005
Total capital assets, not
(118,283,690)
being depreciated
being depreciated
158,525,364
17,964,334 (5,658,643) 170,831,055
Capital assets, being depreciated
Buildings
73,711,246
754,964 -
74,466,210
Improvements other than buildings
28,609,604
- -
28,609,604
Machinery and equipment
17,685,661
3,258,252 (2,643,745)
18,300,168
Infrastructure
353,249,750
3,237,552 (2,091,253)
354,396,049
Total capital assets,
(7,936,941)
1,674,472
(118,283,690)
being depreciated
473,256,261
7,250,768 (4,734,998)
475,772,031
Less accumulated depreciation for
Buildings
(16,996,468)
(1,515,880)
-
(18,512,348)
Improvements other than buildings
(6,541,850)
(1,000,915)
-
(7,542,765)
Machinery and equipment
(12,992,951)
(1,332,605)
2,635,920
(11,689,636)
Infrastructure
(112,021,221)
(7,936,941)
1,674,472
(118,283,690)
Total accumulated depreciation
(148,552,490)
(11,786,341)
4,310,392
(156,028,439)
Total capital assets,
being depreciated, net
324,703,771
(4,535,573)
(424,606)
319,743,592
Total governmental activities
capital assets, net
$ 483,229,135
$ 13,428,761
S --t6 .083249)
$ 490,574,647
-55-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
7. CAPITAL ASSETS (CONTINUED):
Depreciation expense was charged to functions/programs of the governmental activities as follows:
General government $ 255,533
Public safety 528,054
Public works 10,258,157
Community services 744,597
11.786.341
A summary of changes in the Business -type Activity capital assets for the year ended
June 30, 2017, is as follows:
Capital assets, not being depreciated
Land
Construction in progress
Total capital assets,
not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Property, plant and equipment
Total capital assets,
being depreciated
Balance at Balance at
July 1, 2016 Additions Deletions June 30, 2017
$ 1,177,216 $ - $
8,060,446 1,595,631 _
9,237,662 1,595,631
9,500,377
58,085,554
67,585,931
Less accumulated depreciation for:
Buildings and improvements (5,198,782) (209,209)
Property, plant and equipment (22,776,688) (1,472,250)
Total accumulated depreciation (27,975,470) (1,681,459)
Total capital assets, being
depreciated, net
Total business -type activity
capital assets, net
39,610,461 (1,681,459)
$ 1,177,216
9,656,077
10,833,293
9,500,377
58,085,554
67,585,931
(5,407,991)
(24,248,938)
(29,656,929)
37,929,002
48,848,123 (85.828) $ - 48,762295
During the fiscal year ended June 30, 2017, the City capitalized interest of $178,196.
-56-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
8. LONG-TERM LIABILITIES:
A summary of long-term liability activity for the year ended June 30, 2017, is as follows:
Governmental activities:
Due to Successor Agency to
the Tustin Community
Redevelopment Agency (Note 9) $
Pension liability (Note 10c)
Postemployment benefits
Balance at Balance at Due Within
July 1, 2016 Additions Deletions June 30, 2017 One Year
12,303,512 $ - $ (9,101,171) $ 3,202,341 $ 3,202,341
39,498,526 11,863,253 - 51,361,779 -
obligation (Note 11)
7,162,634
2,202,000
(631,311)
8,733,323
-
Claims and judgments (Note 13)
4,785,201
5,013,246
(4,275,096)
5,523,351
5,523,351
Lease payable
-
368,356
(28,032)
340,324
69,162
Termination benefits
660,426
-
(660,426)
-
-
Compensated absences
3,139,635
2,533,639
(2,556,449)
3,116,825
2,805,143
Total governmental
activities long-term
liabilities
67.549.934
21980.494
(17.252.485)
72.277 943
L11,599.997
Business -type activity:
2011 Water
Revenue bonds $
20,760,000
$ -
$ (20,760,000)Bond
premium
253,711
-
(253,711)
-
-
2012 Refunding Water
Revenue bonds
6,020,000
-
(770,000)
5,250,000
795,000
Bond premium
551,858
-
(81,757)
470,101
-
2013 Water
Revenue bonds
13,955,000
-
(45,000)
13,910,000
50,000
Bond premium
107,474
-
(3,944)
103,530
-
2016 Water Refunding
Revenue bonds
-
21,515,000
-
21,515,000
-
Bond premium
-
1,315,120
(39,454)
1,275,666
-
Pension liability (Note 10c)
2,271,208
707,517
-
2,978,725
-
Termination benefits
14,787
-
(14,787)
-
-
Compensated absences
200,947
216,401
(193,607)
223,741
201,367
Total business -type
activity long-term
liabilities $
44,134,985
L-21154 ,038
$ (22,162,260) $
45,726,763
$ 1,046,367
-57-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
8. LONG-TERM LIABILITIES (CONTINUED):
Governmental Activities
Lease Payable
The City entered into a lease to finance equipment with a present value of $368,356, using an
interest rate of 3.9%. The lease term is for a period of 60 months with monthly payments of $6,767.
Total payments made during the year amount to $33,836 which included interest payments of
$5,804 and principal payments of $28,032. At June 30, 2017, the outstanding principal amount was
$340,324.
The following is a schedule, by year, of future minimum lease payments and the present value of
the net minimum lease payment for the capital lease as of June 30, 2017.
Year
Minimum
Ending
Lease
June 30,
Payments
2018
$ 81,207
2019
81,207
2020
81,207
2021
81,207
2022
47,370
372,198
Less: amounts representing interest
(31,874
Present value of net minimum lease payments
$ 340,324
The assets acquired through the capital lease are as follows:
Equipment $ 368,356
Less: accumulated depreciation (36,836)
$ 331,520
Business -type Activity
2011 Water Revenue Bonds
On May 25, 2011, the Public Financing Authority issued $20,760,000, 2011 Water Revenue
Bonds. The Bonds were issued to finance certain water system improvements. The Bonds were
refunded in advance using the bond proceeds from the 2016 Water Revenue Refunding Bonds.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
8. LONG-TERM LIABILITIES (CONTINUED):
Business -type Activity (Continued)
2012 Refunding Water Revenue Bonds
On March 27, 2
Bonds were issu
prepay certain
Enterprise.
012, the City issued $8,910,
ed to provide funds to defe
outstanding notes payable
000, 2012 Refunding Water Reven
ase the 2003 Refunding Water Rev(
incurred to finance improvements
ue Bonds. The
nue Bonds and
to the Water
The Bonds are payable in annual installments ranging from $710,000 to $960,000 until maturity on
April 1, 2023. Interest is payable semiannually on April 1 and October 1, with rates ranging from
2.0% to 4.0% per annum.
The defeasance resulted in a difference between the reacquisition price and the net carrying amount
of the old debt of $594,664. The difference reported in the accompanying statements as a deferred
outflow of resources, is being charged to interest expense through 2023. The remaining balance at
June 30, 2017, is $310,848.
The City has pledged net revenues received from the operation of Water Enterprise to repay the
outstanding debt service. The net revenues are the amount of the gross revenues received less the
amount of maintenance and operation costs, which include management, personnel, services,
equipment, repair and other necessary costs of maintaining and operating the Water Enterprise. The
City has covenanted to fix, prescribe, revise and collect rates, fees and charges for the services and
facility furnished by the Water Enterprise during each fiscal year which are sufficient to yield net
revenues, at least equal to 120% of the annual debt service on the bonds. At June 30, 2017, total
interest and principal remaining on the bonds is $5,975,450. During the fiscal year, the total
interest expense incurred was $228,075, principal payments were $770,000, and net revenues were
$4,332,652.
The annual debt service requirements to amortize the bonds are as follows:
Year Ending
June 30,
2018
2019
2020
2021
2022
2023
Add: Premium
Totals
Principal
$ 795,000
830,000
860,000
885,000
920,000
960.000
5,250,000
470.101
Interest
$ 197,275
165,475
138,500
110,600
75,200
38.400
725,450
Total
$ 992,275
995,475
998,500
995,600
995,200
998.400
5,975,450
470.101
5,720,101 $ 725,450 6.445.551
-59-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
8. LONG-TERM LIABILITIES (CONTINUED):
Business -type Activity (Continued)
2013 Water Revenue Bonds
On April 1, 2014, the City issued $14,045,000, 2013 Water Revenue Bonds. The Bonds were
issued to finance certain water system improvements. The Bonds are payable in annual installments
ranging from $45,000 to $2,615,000 until maturity on April 1, 2043. Interest is payable
semiannually on April 1 and October 1, with rates ranging from 2.0% to 5.00% per annum.
The City has pledged net revenues received from the operation of Water Enterprise to repay the
outstanding debt service. The net revenues are the amount of the gross revenues received less the
amount of maintenance and operation costs, which include management, personnel, services,
equipment, repair and other necessary costs of maintaining and operating the Water Enterprise. The
City has covenanted to fix, prescribe, revise and collect rates, fees and charges for the services and
facility furnished by the Water Enterprise during each fiscal year which are sufficient to yield net
revenues, at least equal to 120% of the annual debt service on the bonds. At June 30, 2017, total
interest and principal remaining on the bonds is $26,987,012. During the fiscal year, the total
interest expense incurred was $652,220, principal payments were $45,000, and net revenues were
$4,332,652.
The annual debt service requirements to amortize the bonds are as follows:
Year Ending
June 30,
2018
2019
2020
2021
2022
2023-2027
2028-2032
2033-2037
2038-2042
2043
Add: Premium
Totals
Principal
$ 50,000
50,000
50,000
55,000
55,000
1,415,000
2,065,000
2,545,000
5,010,000
2,615,000
13,910,000
103,530
Interest
$ 651,320
650,320
648,320
646,320
643,570
3,114,985
2,747,844
2,263,863
1,581,164
129,306
13,077,012
Total
$ 701,320
700,320
698,320
701,320
698,570
4,529,985
4,812,844
4,808,863
6,591,164
2,744,306
26,987,012
103,530
14,013,530 13.077.012 27.090,542
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
8. LONG-TERM LIABILITIES (CONTINUED):
Business -type Activity (Continued)
2016 Water Refunding Revenue Bonds
On September 28, 2016, the City issued $21,515,000, 2016 Water Refunding Revenue Bonds. The
Bonds were issued to provide funds to defease the 2011 Water Revenue Bonds and pay the costs of
issuing the bonds. The 2016 Water Refunding Revenue Bonds proceeds were invested in an escrow
fund with a trustee to pay interest and principal on the 2011 Water Revenue Bonds until
April 1, 2021 and to redeem all 2011 Bonds in full on April 1, 2021. As of June 30, 2017, the
defeased 2011 Bonds have a remaining outstanding balance of $20,760,000. The City refunded the
2011 Water Revenue Bonds to reduce its total debt service payments over 24 years by $3,807,199
and to obtain an economic gain (difference between the present values of the old and new debt) of
$2,450,244.
The Bonds are payable in annual installments ranging from $905,000 to $1,540,000 until maturity
on April 1, 2041. Interest is payable semiannually on April 1 and October 1, with rates ranging
from 2.0% to 4.0% per annum.
The defeasance resulted in a difference between the reacquisition price and the net carrying amount
of the old debt of $3,273,764. The difference reported in the accompanying statements as a
deferred outflow of resources, is being charged to interest expense through 2041. The remaining
balance at June 30, 2017, is $3,175,550.
The City has pledged net revenues received from the operation of Water Enterprise to repay the
outstanding debt service. The net revenues are the amount of the gross revenues received less the
amount of maintenance and operation costs, which include management, personnel, services,
equipment, repair and other necessary costs of maintaining and operating the Water Enterprise. The
City has covenanted to fix, prescribe, revise and collect rates, fees and charges for the services and
facility furnished by the Water Enterprise during each fiscal year which are sufficient to yield net
revenues, at least equal to 120% of the annual debt service on the bonds. At June 30, 2017, total
interest and principal remaining on the bonds is $32,766,463. During the fiscal year, the total
interest expense incurred was $349,378, no principal payment due, and net revenues were
$4,332,652.
-61-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
8. LONG-TERM LIABILITIES (CONTINUED):
Business -type Activity (Continued)
2016 Water Refunding Revenue Bonds (Continued)
The annual debt service requirements to amortize the bonds are as follows:
Year Ending
June 30,
2018
2019
2020
2021
2022
2023-2027
2028-2032
2033-2037
2038-2042
Add: Premium
Totals
Principal
3,755,000
5,390,000
6,455,000
5,915,000
21,515,000
1,275,666
Interest
$ 687,300
687,300
687,300
687,300
687,300
3,304,700
2,565,563
1,494,850
449,850
11,251,463
Total
$ 687,300
687,300
687,300
687,300
687,300
7,059,700
7,955,563
7,949,850
6,364,850
32,766,463
1,275,666
22.790.666 11251.463 34.042.129
-62-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
9. DUE TO SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCY:
On December 31, 2008, the City entered into a promissory note with the former Redevelopment
Agency in the amount of $18,881,750. The City promised to pay the former Redevelopment
Agency on December 1, 2013, the principal amount of $18,881,750 with interest accrued thereon
from December 30, 2008 to the maturity date at the rate of 4.25% per annum, compounded
semiannually on June 1 and December 1 in each year, commencing June 1, 2009. Effective
February 1, 2012, the former Redevelopment Agency was dissolved and the promissory note was
transferred to the Successor Agency to the Tustin Community Redevelopment Agency. The City
has negotiated with the State Department of Finance (DOF) to allow for the Local Agency
Investment Fund (LAIF) interest rate to be used as the effective interest and to pay the debt off
over four to five years. The DOF agreed to allow the LAIF interest rate at the time the City entered
into the promissory note with the former Redevelopment Agency which was 2.54% and also
agreed to five installment payments with the first payment due within seven days of the City
accepting DOF's offer. With the effective flat interest rate of 2.54% compounded annually the
total amount payable to the Successor Agency to the Tustin Community Redevelopment Agency
was $21,404,683. The City signed the settlement agreement on December 9, 2014, and the first
installment payment totaling $5,000,000 was made within the required time period. As of
June 30, 2016, the outstanding balance was $12,303,512. The agreement was amended on
July 12, 2016. In the amended agreement the amount due of $12,303,512 was reduced by
$5,000,000 to $7,303,512 with $4,101,171 due December 31, 2016 and $3,202,341 due
December 31, 2017. The reduction in debt to the Successor Agency is reported as a special item in
the government -wide financial statements. The $4,101,171 payment was paid early by the City on
August 17, 2016, bringing the remaining balance due down to $3,202,341.
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's
separate Safety (police) and Miscellaneous (all other) Plans. The Miscellaneous Plan is an
agent multiple -employer defined benefit pension plan, and the Safety Plan is a cost-sharing
multiple employer defined benefit pension plan. Both of these Plans are 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 City resolution. Ca1PERS 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 Ca1PERS
website.
-63 -
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
a. General Information about the Pension Plans (Continued):
Benefits Provided
Ca1PERS provides service retirement and disability retirement benefits, annual cost of living
adjustments and death benefits to plan members, who must be public employees or their
beneficiaries. Benefits are based on three factors: service credit (up to one year of service per
fiscal year), benefit factor (based on plan and age at retirement), and final compensation
(highest pensionable compensation for a consecutive 12 or 36 month period, depending on
plan). Members with five years of total service are eligible to retire at age 50 to 62 with
statutorily reduced benefits. Members of all but one plan available to employees are eligible to
retire upon reaching age 50 and attaining 5 years of service credit. PEPRA Miscellaneous
members (membership date on or after January 1, 2013) are eligible to retire upon reaching
age 52 and attaining 5 years of service. All members are eligible for non -duty disability
retirement benefits after 5 years of service. Safety members are eligible for industrial disability
retirement benefits, regardless of age or years of service, if they are determined to be
industrially disabled within the meaning of the retirement law. The survivors of members are
eligible for the Basic Death Benefit, the 1957 Survivor Benefit, and/or the 1959 Survivor
Benefit. The survivors of Safety members who die prior to retirement are also eligible for the
Pre -Retirement Option 2W Death Benefit and, if the member is actively employed and dies in
the course of duty, the Special Death Benefit. Each plan provides retirees with a cost -of -living
adjustment of up to 2% per year.
The Plans' provisions and benefits in effect at June 30, 2017, are summarized as follows:
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of
eligible compensation
Required employee contribution rates
Required employer contribution rates
Prior to
January 1, 2012
2%@55
5 years of service
monthly for life
50+
2%
7%
14.258%
Miscellaneous
January 1, 2012 to On or After
December 31, 2012 January 1, 2013
2%460 2%462
5 years of service 5 years of service
monthly for life monthly for life
50+ 52+
2% 2%
7% 5.75%
14.258% 5.703%
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
a. General Information about the Pension Plans (Continued):
Benefits Provided (Continued)
The Plans' provisions and benefits in effect at June 30, 2017, are summarized as follows:
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of
eligible compensation
Required employee contribution rates
Required employer contribution rates:
Normal cost rate
Payment of unfunded liability
Employees Covered
Safety
Prior to January 1, 2012 to On or After
January 1, 2012 December 31, 2012 January 1, 2013
3%450 2%450 2.7%457
5 years of service 5 years of service 5 years of service
monthly for life monthly for life monthly for life
50+ 50+ 50+
3% 2% 2.7%
9% 9% 11.5%
19.536% 14.785% 12.082%
$ 1,166,535 $ - $ -
At June 30, 2017, the following employees were covered by the benefit terms for the
Miscellaneous Plan:
Inactive employees or beneficiaries
currently receiving benefits
Inactive employees entitled to but
not yet receiving benefits
Active employees
Total
-65 -
Miscellaneous
I
293
234
707
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
a. General Information about the Pension Plans (Continued):
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 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. For governmental funds, the
contributions to the pension plans are generally made from the general fund.
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, 2016, using an annual actuarial valuation as of June 30, 2015 rolled forward to
June 30, 2016 using standard update procedures. A summary of principal assumptions and
methods used to determine the net pension liability is shown below.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
b. Net Pension Liability (Continued):
Actuarial Assumptions
The total pension liabilities in the June 30, 2015 actuarial valuations were determined using the
following actuarial assumptions:
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Projected Salary Increase
Mortality Rate Table
Post Retirement Benefit Income
Miscellaneous
June 30, 2015
June 30, 2016
Entry -Age Normal
Cost Method
7.65%
2.75%
(1)
(2)
(3)
Safety
June 30, 2015
June 30, 2016
Entry -Age Normal
Cost Method
7.65%
2.75%
(1)
(2)
(3)
(1) Varies by entery age and service.
(2) The probabilities of mortality are derived using CalPERS' membership data for all funds.
The mortality table used was developed based on CalPERS' specific data. The table
includes 20 years of mortality improvements using Society of Actuaries Scale BB. For
more details on this table, please refer to the 2014 experience study report.
(3) Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on
Purchasing Power applies, 2.75% thereafter.
All other actuarial assumptions used in the June 30, 2015 valuation were based on the results of
an actuarial experience study for the period from 1997 to 2011, including updates to salary
increase, mortality and retirement rates. The Experience Study report can be obtained at the
CalPERS website under Forms and Publications.
-67-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
b. Net Pension Liability (Continued):
Change of Assumptions
There were no changes of assumptions during the measurement period June 30, 2016. Deferred
inflows of resources for changes of assumptions presented in the financial statements represent
the unamortized portion of the changes of assumptions related to prior measurement periods.
Discount Rate
The discount rate used to measure the total pension liability was 7.65% for each Plan. To
determine whether the municipal bond rate should be used in the calculation of a discount rate
for each plan, Ca1PERS stress tested plans that would most likely result in a discount rate that
would be different from the actuarially assumed discount rate. Based on the testing of the
Plans, the tests revealed the assets would not run out. Therefore, the current 7.65% discount
rate is appropriate and the use of the municipal bond rate calculation is not deemed necessary.
The long term expected discount rate of 7.65% is applied to all plans in the Public Employees
Retirement Fund (PERF). The cash flows used in the testing were developed assuming that
both members and employers will make their required contributions on time and as scheduled
in all future years. The stress test results are presented in a detailed report called "GASB
Crossover Testing Report" that can be obtained from the Ca1PERS website under the GASB 68
section.
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, Ca1PERS took into account both
short-term and long-term market return expectations as well as the expected pension fund
(PERF) cash flows. Taking into account historical returns of all the Public Employees
Retirement Funds' asset classes (which includes the agent plan and two cost-sharing plans or
PERF A, B, and C funds), expected compound (geometric) returns were calculated over the
short-term (first 10 years) and the long-term (11-60 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 PERF fund. The expected rate of return was set by calculating
the single equivalent expected return that arrived at the same present value of benefits for cash
flows as the one calculated using both short-term and long-term returns. The expected rate of
return was then set equivalent to the single equivalent rate calculated above and rounded down
to the nearest one quarter of one percent.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
b. Net Pension Liability (Continued):
Discount Rate (Continued)
The table below reflects the long-term expected real rate of return by asset class. The rate of
return was calculated using the capital market assumptions applied to determine the discount
rate and asset allocation. The target allocation shown was adopted by the Ca1PERS Board
effective on July 1, 2015.
Asset Class
Global Equity
Global Fixed Income
Inflation Sensitive
Private Equity
Real Estate
Infrastructure and Forestland
Liquidity
Total
New
Strategic
Allocation
51.00%
20.00%
6.00%
10.00%
10.00%
2.00%
1.00%
100.00%
(a) An expected inflation of 2.5% used for this period
(b) An expected inflation of 3.0% used for this period
Subsequent Events
Real Return
Years
1-10(a)
5.25%
0.99%
0.45%
6.83%
4.50%
4.50%
-0.55%
Real Return
Years
11+ (b)
5.71%
2.43%
3.36%
6.95%
5.13%
5.09%
-1.05%
In December 2016, CalPERS' Board of Directors voted to lower the discount rate used in its
actuarial valuations from 7.5% to 7.0% over three fiscal years, beginning in fiscal year 2018.
The change in the discount rate will affect the contribution rates for employers beginning in
fiscal year 2019, and result in increases to employers' normal costs and unfunded actuarial
liabilities. For the GASB Statement 68 accounting valuations, the discount rate will move
straight to 7% starting with the June 30, 2017 measurement date reports and will result in an
increase to employer's total pension liabilities.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
c. Changes in the Net Pension Liability:
The changes in the net pension liability for the Miscellaneous Plan, using the measurement date
of June 30, 2016, are as follows:
Balance at June 30, 2015
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total pension liability
Differences between actual and
expected experience
Changes in assumptions
Changes in benefit terms
Plan to plan resource movement
Contribution - employer
Contribution - employee
Net investment income
Administrative expenses
Benefit payments, including refunds
of employee contributions
Net Changes
Increase (Decrease)
Total Plan Net Pension
Pension Fiduciary Liability
Liability Net Position (Asset)
$ 97,170,750 $ 79,699,922 $ 17,470,828
1,840,275 - 1,840,275
7,306,376 - 7,306,376
(531,595) - (531,595)
- 1,850,072
(1,850,072)
- 998,937
(998,937)
- 372,172
(372,172)
- (48,573)
48,573
(4,102,189) (4,102,189)
4,512,867 (929,581)
5,442,448
Balance at June 30, 2016
(Measurement Date) $ 101,683,617 $ 78,770,341 $ 22,913,276
-70-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
c. Changes in the Net Pension Liability (Continued):
As of June 30, 2017, the City reported net pension liabilities for its proportionate share of the
net pension liability for the Safety Plan as follows:
Safety
Proportionate
Share of Net
Pension Liability
$ 31,427,228
The City's net pension liability for each Plan is measured as the proportionate share of the net
pension liability. The net pension liability of each of the Plans is measured as of June 30, 2016,
and the total pension liability for each Plan used to calculate the net pension liability was
determined by an actuarial valuation as of June 30, 2015 rolled forward to June 30, 2016 using
standard update procedures. The City's proportionate share of the net pension liability was
based on a projection of the City's long-term share of contributions to the pension plans
relative to the projected contributions of all participating employers, actuarially determined.
The City's proportionate share of the net pension liability for each Plan as of June 30, 2015
and 2016 was as follows:
Safety
Proportion - June 30, 2015 0.58972%
Proportion - June 30, 2016 0.60679%
Change - Increase (Decrease) 0.01707%
-71-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
c. Changes in the Net Pension Liability (Continued):
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 Ca1PERS financial reports.
-72-
Miscellaneous
Safety
1% Decrease
6.65%
6.65%
Net Pension Liability
$ 36,972,840
$ 48,238,477
Current Discount Rate
7.65%
7.65%
Net Pension Liability
$ 22,913,276
$ 31,427,228
1% Increase
8.65%
8.65%
Net Pension Liability
$ 11,353,487
$ 17,626,917
Pension Plan Fiduciary Net Position
Detailed information about each pension plan's fiduciary net position is available in the
separately issued Ca1PERS financial reports.
-72-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions:
For the year ended June 30, 2017, the City recognized pension expense of $2,107,707 and
$4,226,418 for the Miscellaneous and Safety Plans, respectively. At June 30, 2017, the City
reported deferred outflows of resources and deferred inflows of resources related to pensions
from the following sources:
Pension contributions subsequent to measurement date
Differences between actual and expected experience
Change in assumptions
Net differences between projected and actual
earnings on plan investments
Total
Miscellaneous
Deferred Deferred
Outflows Inflows
of Resources of Resources
$ 1,881,701 $ -
117,216 (334,708)
- (458,979)
4,361,071 -
Safety
Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date
$ 3,002,977
Differences between actual and expected experience
-
Change in assumptions
-
Change in employer's proportion and differences
between the employer's contributions and the
employer's proportionate share of contributions
213,858
Net differences between projected and actual
earnings on plan investments
4,575,559
Total
$ 7,792,394
-73 -
(213,603)
(931,326)
(459,316)
$ (1,604,245)
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
10. PENSION PLANS (CONTINUED):
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
(Continued):
$1,881,701 and $3,002,977 reported in the Miscellaneous and Safety Plans, respectively, 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 year ending June 30, 2018. Other
amounts reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized as pension expense as follows:
Year
Ending
June 30,
Miscellaneous
2018
$ 85,695
2019
486,524
2020
1,981,256
2021
1,131,125
2022
-
Thereafter
-
e. Payable to the Pension Plans:
Safety
$ (2,405)
25,930
1,970,497
1,191,150
At June 30, 2017, the City had no outstanding amount of contributions to the pension plans
required for the year ended June 30, 2017.
11. POST -EMPLOYMENT HEALTH CARE BENEFITS:
Plan Description
The City provides other post -employment benefits (OPEB) to retired employees in the form of a
contribution towards their medical premiums under the PERS health plan, a single -employer
defined benefit plan which provides medical insurance benefits to eligible retirees in accordance
with various labor agreements. Survivor benefits are not provided. The City's OPEB plan does not
issue a separate stand-alone report.
-74-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
11. POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED):
Eligibility
Employees hired prior to July 1, 2011 are eligible for retiree health benefits if they retire from the
City on or after age 50 (unless disabled), with five years of service and are eligible for a PERS
pension and are enrolled in a PERS retiree health plan. Employees hired after June 30, 2011 are
eligible for retiree health benefits if they retire from the City on or after age 50 (unless disabled),
with ten years of service and are eligible for a PERS pension and are enrolled in a PERS retiree
health plan. The benefits are available only to employees who retire from the City. Membership of
the plan consisted of the following at June 30, 2017:
Police
Police General Management Confidential Support Total
Retirees Receiving
Benefits 41 26 24 1 6 98
Eligible Active
Employees 87 98 46 6 38 275
The above table does not reflect current retirees not enrolled in the PERS health plan who may be
eligible to enroll in the plan at a later date.
Funding Policy
The City's current contributions are made on a pay-as-you-go basis. As of July 1, 2015, the City's
monthly contribution rate was $250 for the Confidential, General, and Police Support groups; $350
for the Police and Management group. For the year ended June 30, 2017, the City paid $631,311 in
contributions, from the general fund, for postemployment health care benefits. Current active
employees are not required to contribute any portion towards these benefits.
Annual OPEB Cost and Net OPEB Obligation. - The City's annual OPEB cost (expense) is
calculated based on the annual required contribution of the employer (ARC), an amount actuarially
determined. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) not
to exceed thirty years.
-75 -
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
11. POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED):
Funding Policy (Continued)
The City's ARC for the year ended June 30, 2017 was $2,632,000. The following table shows the
components of the City's annual OPEB cost for the year, the amount actually contributed to the
plan, and changes in the City's net OPEB obligation:
Increase in net
OPEB obligation
Net OPEB obligation,
beginning
Net OPEB obligation,
ending
488,055 607,947 207,023 36,617 231,047 1,570,689
2,266,896 2,370,701 1,060,468 405,792 1,058,777 7,162,634
1 2.754.951 & 2.978.648 $ 1.267.491 $ 442,409 $ 1.289.824 $ 8,733,323
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB obligation for 2017 and the two preceding years were as follows:
Fiscal
Annual
Year
Police
Ended
Police General
Management Confidential
Support Total
ARC
$ 903,207 $ 874,981
$ 493,941 $ 49,394
$ 310,477 $ 2,632,000
Interest on net
OPEB obligation
93,684 90,756
51,233 5,123
32,204 273,000
Adjustment to ARC
(241,244) (233,705)
(131,930) (13,193)
(82,928) (703,000)
Annual OPEB cost
755,647 732,032
413,244 41,324
259,753 2,202,000
Contributions made
(267,592) (124,085)
(206,221) (4,707)
(28,706) (631,311)
Increase in net
OPEB obligation
Net OPEB obligation,
beginning
Net OPEB obligation,
ending
488,055 607,947 207,023 36,617 231,047 1,570,689
2,266,896 2,370,701 1,060,468 405,792 1,058,777 7,162,634
1 2.754.951 & 2.978.648 $ 1.267.491 $ 442,409 $ 1.289.824 $ 8,733,323
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB obligation for 2017 and the two preceding years were as follows:
Fiscal
Annual
Year
OPEB
Ended
Cost
6/30/15
$ 1,142,391
6/30/16
2,084,000
6/30/17
2,202,000
-76-
Percentage of
Annual OPEB
Cost Contributed
36.62%
29.54%
28.67%
Net
OPEB
Oblivation
$ 5,694,218
7,162,634
8,733,323
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
11. POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED):
Funding Status and Progress
As of June 30, 2015, the most recent valuation date, the actuarial accrued liability for benefits was
$19.79 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued
liability (UAAL) of $19.79 million and a funded ratio (actuarial value of assets as a percentage of
the actuarial accrued liability) of 0%. The covered payroll (annual payroll of active employees) was
$22.23 million and the ratio of the UAAL to the covered payroll was 89.0%. Actuarial valuations
of an ongoing plan involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded
status of the plan and the annual required contributions of the employer are subject to continual
revision as actual results are compared with past expectations and new estimates are made about
the future. The schedule of funding progress, presented as required supplementary information
following the notes to the financial statements, presents multi-year trend information about whether
the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liabilities for the benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan
as understood by the employer and the plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing of benefit costs between employer
and plan members to that point. The actuarial methods and assumptions used include techniques
that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the
actuarial assets, consistent with the long-term perspective of the calculations.
The required contribution for the fiscal year 2017 was determined as part of the June 30, 2015
actuarial valuation. The actuarial cost method used for determining the benefit obligations is the
entry age normal cost method. The actuarial assumptions included a 4.00% investment rate of
return (which is based on assumed long-term investment return on plan assets and on the City's
assets, as appropriate), annual inflation rate of 3%, annual payroll increase of 3.25% and an annual
healthcare cost trend rate at 7.0% in 2017 decreasing by .5% to 5.0% in 2021. The UAAL is being
amortized as a level percentage of projected payroll over a closed period of 15 years.
-77-
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
12. IRS SECTION 457 DEFERRED COMPENSATION PLAN:
In accordance with federal law, all part-time employees must be enrolled in Social Security or
another "qualified" retirement plan. Since the City does not participate in Social Security,
part-time employees are enrolled in the City's IRS Section 457 deferred compensation plan.
Nationwide Retirement Solutions, Inc. acts as the third party administrative services provider for
the defined contribution plan. Employees are required to contribute 5.5% of salary to the deferred
compensation plan every pay period. The City contributes an additional 2% of salary, for a total
contribution of 7.5%. Council established the plan by resolution in fiscal year 2011-2012, and has
the authority to amend contribution requirements. Contributions to the participants account must
equal at least 7.5% of the participant's compensation, or such other minimum amount as required
for the plan to be considered a retirement system under applicable government code and legal
requirements. Total contributions to the plan during fiscal year 2017 were $72,493.
13. SELF-INSURANCE PROGRAM/RISK POOL:
The City uses a combination of insured and self-insured programs to finance its property and
casualty risk. The City is self-insured for worker's compensation, automotive, and general liability
risks. Excess liability coverage for the City's self-insurance retention of $250,000 per occurrence is
provided through a risk sharing pool, the California Insurance Pool Authority (CIPA). The CIPA
provides excess liability coverage above $2,000,000 per occurrence and $40,000,000 annual
aggregate. The City's self-insurance retention limit is $400,000 per occurrence for worker's
compensation claims. Worker's compensation claims which exceed the self-insurance retention are
insured by CIPA up to the California statutory limit for worker's compensation. Property and
employment practices liability risk are financed through insurance contracts and have various
limits and deductibles.
The City is a member of CIPA in order to jointly purchase insurance coverage and to share costs
for professional risk management, claim administration, and group purchasing of insurance
products with ten other Orange County cities. Members may be assessed the difference between
the funds available and the $40,000,000 annual aggregate in proportion to their annual premium.
CIPA uses independent actuaries and underwriters to determine premiums and help set insurance
limits and deductible levels.
The pool is managed by an independent general manager and contracted legal advisers. Two
internal subcommittees are made up of City members to provide direction on underwriting and
claims activities. The Governing Board of CIPA is comprised of one member from each
participating City and is responsible for the selection of the independent general manager, legal
counsel, and electing subcommittee members. The financial statements of the CIPA are available at
the administrative office located at 240 Newport Center Drive, Suite 210, Newport Beach,
California.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
13. SELF-INSURANCE PROGRAM/RISK POOL (CONTINUED):
The government retains a risk of loss, due to the fact that actual losses may exceed estimated
claims or coverage amounts. Settled claims have not exceeded any of the City's coverage amounts
in any of the last three fiscal years, and there were no reductions in the City's coverage during the
year ended June 30, 2017. At June 30, 2017, estimated claims payable of $5,523,351, which
includes a provision for incurred but not reported claims and loss adjustment expenses, are reported
as a long-term liability.
Changes in the balances of claims liabilities for the years ended June 30, 2016 and 2017, including
a provision for incurred but not reported claims and loss adjustment expenses, were as follows:
June 30,
2016
2017
Beginning
Balance
$ 5,148,755
4,785,201
Additions
$ 2,389,008
5,013,246
14. SPECIAL ASSESSMENT DISTRICTS' BONDS:
Deletions
$ 2,752,562
4,275,096
Ending
Balance
$ 4,785,201
5,523,351
Special assessment districts exist in various parts of the City to provide improvements to properties
located in those districts. Properties are assessed for the cost of improvements; these assessments
are payable over the term of the debt issued to finance the improvements and must be sufficient to
repay this debt. The bonds listed below were issued pursuant to the Refunding Act of 1984 for the
1915 Improvement Act Bonds and the Improvement Bond Act of 1915 and are the liabilities of the
property owners and are secured by liens against the assessed property. The City Treasurer acts as
an agent for collection of principal and interest payments by the property owners and remittance of
such monies to bondholders.
Neither the faith and credit nor the general taxing power of the City have been pledged to the
payment of the bonds. Therefore, none of the following special assessment bonds have been
included in the accompanying financial statements.
District Bonds
Community Facilities District 04-1, 2013
Community Facilities District 06-1, 2015A
Community Facilities District 06-1, 2015B
Community Facilities District 07-1, 2015A
Community Facilities District 07-1, 2015B
Community Facilities District 2014-01, 2015A
-79-
Amount
of Issue
$ 9,350,000
49,740,000
2,735,000
13,155,000
1,500,000
27,665,000
104.145.000
Outstanding
June 30, 2017
$ 8,470,000
47,905,000
2,670,000
13,155,000
1,040,000
27,360,000
100.600.000
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
14. SPECIAL ASSESSMENT DISTRICTS' BONDS (CONTINUED):
In May 2013, the City issued $9,350,000 of Special Tax Refunding Bonds, Series 2013 to, to
refund in full and defease the City of Tustin Community Facilities District No. 04-1 Special Tax
Bonds, Series 2004. The 2004 series were originally issued to facilitate the new infrastructure
construction on the former MCAS being converted into various public, housing, commercial and
educational uses. The proceeds of the bonds will be used to pay the cost and expense of acquisition
and construction of certain public facilities necessary for the development of the Tustin Legacy
District, fund the reserve account, pay capitalized interest on bonds through September 1, 2032,
and pay costs of issuing the Series 2013 Bonds. Serial current interest bonds will mature from
September 1, 2032 to September 1, 2032. Term current interest bonds will mature on
September 1, 2014, with mandatory sinking payments from September 1, 2030 through
September 1, 2032. Interest maturity rates of the current interest bonds range from 2.00% at
September 1, 2014 to 5.00% at September 1, 2028 - and current term interest bonds are 5.375%
and 5.50% on their respective maturity dates. At June 30, 2017, the outstanding amount of the
Special Tax Refunding Bonds, Series 2013 was $8,470,000.
In November 2015, the City issued $27,665,000 Community Facilities District No. 2014-01
Special Tax Bonds, Series 2015A (CFD 2014-01 2015A Special Tax Bonds). The CFD 2014-01
2015A Special Tax Bonds were issued to finance certain infrastructure improvements and school
facilities, fund a reserve account, and pay for costs of issuance and administrative costs. Serial
current interest bonds will mature from September 1, 2016 to September 1, 2035 with interest rates
ranging from 2.0% to 5.0%. Term current interest bonds will mature on September 1, 2040 and
September 1, 2045, with mandatory sinking payments from September 1, 2036 through
September 1, 2045 with interest rates of 5.0%. At June 30, 2017, the outstanding amount of the
CFD 2014-01 2015A Special Tax Bonds was $27,360,000.
In December 2015, the City issued $13,155,000 Community Facilities District No. 07-1 Special
Tax Refunding Bonds, Series 2015A (CFD 07-1 2015A Refunding Bonds). The CFD 07-1 2015A
Refunding Bonds were issued to refund in full and defease the CFD 07-1 Series 2007 Bonds. Serial
bonds will mature from September 1, 2021 to September 1, 2025 with interest rates ranging from
2.5% to 3.125%. Term current interest bonds will mature on September 1, 2030 and
September 1, 2037, with mandatory sinking payments from September 1, 2030 through
September 1, 2037 with interest rates of 5.00%. The City's refunding of the CFD 07-1 Series 2007
Bonds resulted in a decrease of its total debt service payments by $2,152,849 and an economic gain
(difference between the present values of the old and new debt) of $1,423,246. At June 30, 2017,
the outstanding amount of the CFD 07-1 2015A Refunding Bonds was $13,155,000.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
14. SPECIAL ASSESSMENT DISTRICTS' BONDS (CONTINUED):
In December 2015, the City issued $1,500,000 Community Facilities District No. 07-1 Special Tax
Bonds, Series 2015B (CFD 07-1 Special Tax 2015B Bonds). The CFD 07-1 Special Tax 2015B
Bonds were issued to finance public improvements, fund a reserve account and pay for costs of
issuance. Serial bonds will mature from September 1, 2016 to September 1, 2020 with interest rates
ranging from 2.00% to 2.25%. At June 30, 2017, the outstanding amount of the CFD 07-1 Special
Tax 2015B Bonds was $1,040,000.
In November 2015, the City issued $49,740,000 Community Facilities District No. 06-1 Special
Tax Refunding Bonds, Series 2015A (CFD 06-01 2015A Refunding Bonds). The CFD 06-01
2015A Refunding Bonds were issued to refund in full and defease the CFD No 06-1 Series 2007A
Bonds and Special Tax Bonds 2010. Serial current bonds will mature from September 1, 2016 to
September 1, 2035 with interest rates ranging from 2.0% to 5.0%. Term current interest bonds will
mature on September 1, 2037 with an interest rate of 5.00%, September 1, 2037 with an interest
rate of 3.75% and September 1, 2039 with an interest rate of 4.0% with mandatory sinking fund
payments due September 1, 2036 through September 1, 2039. The City's refunding of the
CFD No. 06-1 Series 2007A Bonds and Special Tax Bonds 2010 resulted in a decrease of its total
debt service payments by $15,726,836 and an economic gain (difference between the present
values of the old and new debt) of $7,020,039. At June 30, 2017, the outstanding amount of the
CFD 06-01 2015A Refunding Bonds was $47,905,000.
In November 2015, the City issued $2,735,000 Community Facilities District No. 06-1 Special Tax
Bonds, Series 2015B (CFD 06-1 Special Tax 2015B Bonds). The CFD 06-1 Special Tax 2015B
Bonds were issued to finance public improvements, fund a reserve account and pay for costs of
issuance. Serial current bonds will mature from September 1, 2016 to September 1, 2033 with
interest rates ranging from 2.0% to 3.75%. Term current interest bonds will mature on
September 1, 2035 with an interest rate of 3.75%, and September 1, 2037 with an interest rate of
3.75% with mandatory sinking fund payments due September 1, 2035 through September 1, 2037.
At June 30, 2017, the outstanding amount of the CFD 06-1 Special Tax 2015B Bonds was
$2,670,000.
Neither the general taxing power of the City nor the faith or credit of the PFA or the City have been
pledged to the payment of the bonds. Therefore, the bonds have not been included in the
accompanying financial statements.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
15. GOVERNMENTAL FUND BALANCE CLASSIFICATIONS:
The fund balances reported on the fund statements consist of the following categories:
Nonspendable - This classification includes amounts that cannot be spent because they are either
(a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted - This classification includes amounts that can be spent only for specific purposes
stipulated by constitution, external resource providers or through enabling legislation.
Committed - This classification includes amounts that can be used only for the specific purposes
determined by a formal action of the City's highest level of decision-making authority. The City
Council is the highest level of decision-making authority for the City that can, by adoption of an
ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation
imposed by the ordinance remains in place until a similar action is taken (the adoption of another
ordinance) to remove or revise the limitation.
Assigned - This classification includes amounts that are intended to be used for specific purposes
as indicated by City Council or by persons to whom City Council has delegated the authority to
assign amounts for specific purposes. City Council has not delegated such authority.
Unassigned - This classification includes the residual balance for the City's general fund including
all spendable amounts not contained in other classifications. Negative fund balance in
governmental funds, after determining the fund balance classifications described above, is also
reported as unassigned fund balance. The general fund is the only fund that reports a positive
unassigned fund balance amount.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund
balances are available, the City's policy is to apply restricted fund balance first.
When an expenditure is incurred for purposes for which committed, assigned or unassigned fund
balances are available, the City's policy is to apply committed fund balance first, then assigned
fund balance, and finally unassigned fund balance.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
15. GOVERNMENTAL FUND BALANCE CLASSIFICATIONS (CONTINUED):
Nonspendable:
Prepaid items
Land held for resale
Restricted for:
Capital projects (1)
Public safety program
Housing projects
Assigned to:
Capital projects (2)
Unassigned
Measure M Other Total
General Special Revenue Governmental Governmental
Fund Fund Funds Funds
$ 433,666 $
83,911,082
34,901,943
102,537,263 _
- $ 1,922 $ 435,588
- - 83,911,082
5,281,136 43,002,579
- 276,193
- 2,509,800
- 20,408,936
83,185,658
276,193
2,509,800
20,408,936
102,537,263
Total fund balances 221.783.954 5.281.136 66.199.430 293.264.520
(1) The General Fund balance restricted for capital projects ($34,901,943) is comprised of funds
legally restricted for backbone infrastructure at the Tustin Legacy development. The other
governmental funds (CFD Construction Capital Project) fund balance restricted for capital
projects ($26,729,587) is comprised of bond proceeds restricted for uses specified in the bond
indenture. A majority of the fund balance restricted for capital projects in the Measure M
Special Revenue Fund ($5,281,136) and other governmental funds ($16,272,992) includes State
gas taxes restricted for allowable street -related purposes and developer fees to improve City
parks.
(2) The other governmental funds (MCAS 2010 Capital Projects) fund balance assigned to capital
projects ($16,054,280) is for financing development activities within or for the benefit of the
MCAS -Tustin redevelopment project area as indicated by the 2010 MCAS Bond indenture.
The other governmental funds balance assigned to capital projects ($4,354,656) is to be used
for specific projects indicated in the adopted budget.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
16. OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES:
Excess of Expenditures over Appropriations:
Variance with
Budget Actual Final Budget
Other Governmental Funds:
Air Quality Special Revenue Fund $ 198,000 $ 198,172 $ (172)
Supplemental Law Enforcement
Special Revenue Fund 108,600 113,512 (4,912)
17. JOINT POWERS AUTHORITY:
Orange County Fire Authority
In January 1995, the City of Tustin entered into a joint powers agreement with the Cities of Buena
Park, Cypress, Dana Point, Irvine, Laguna Hills, Laguna Niguel, Lake Forest, La Palma, Los
Alamitos, Mission Viejo, Placentia, San Clemente, San Juan Capistrano, Seal Beach, Stanton, Villa
Park, and Yorba Linda and the County of Orange (County) to create the Orange County Fire
Authority. The purpose of the Authority is to provide for mutual fire protection, prevention, and
suppression services and related and incidental services including, but not limited to, emergency
medical and transport services, as well as providing facilities and personnel for such services.
The effective date of formation was March 1, 1995. The Authority's governing board consists of
one representative from each City and two from the County. The operations of the Authority are
funded with structural fire fees collected by the County through the property tax roll for the
unincorporated area and on behalf of all member cities except for the Cities of Stanton, Tustin, San
Clemente, Buena Park, Placentia, and Seal Beach. The County pays all structural fees it collects to
the Authority. The Cities of Stanton, Tustin, San Clemente, Buena Park, Placentia, and Seal Beach
are considered "cash contract cities" and, accordingly, make cash contributions based on the
Authority's annual budget.
The financial statements of the Orange County Fire Authority are available at 1 Fire Authority
Road, Irvine, California.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
18. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT
AGENCIES:
On June 29, 2011, Assembly Bills lx 26 (the Dissolution Act) and lx 27 were enacted as part of
the fiscal year 2011-12 state budget package, which dissolved the redevelopment agency.
On June 27, 2012, as part of the fiscal year 2012-13 state budget package, the Legislature passed
and the Governor signed AB 1484, which made technical and substantive amendments to the
Dissolution Act based on experience to -date at the state and local level in implementing the
Dissolution Act.
In September 2015, the Legislature passed and the Governor signed SB 107, which made
additional changes to the Dissolution Act.
Under the Dissolution Act, each California redevelopment agency (each Dissolved RDA) was
dissolved as of February 1, 2012, and the sponsoring community that formed the Dissolved RDA,
together with other designated entities, have initiated the process under the Dissolution Act to
unwind the affairs of the Dissolved RDA. A Successor Agency was created for each Dissolved
RDA which is the sponsoring community of the Dissolved RDA unless it elected not to serve as
the Successor Agency. On September 20, 2011, the City elected to serve as the Successor Agency
to the Tustin Community Redevelopment Agency.
The Dissolution Act also created oversight boards which monitor the activities of the successor
agencies. The roles of the successor agencies and oversight boards are to administer the wind down
of each Dissolved RDA which includes making payments due on enforceable obligations,
disposing of the assets (other than housing assets) and remitting the unencumbered balances of the
Dissolved RDAs to the County Auditor -Controller for distribution to the affected taxing entities.
The Dissolution Act allowed the sponsoring community that formed the Dissolved RDA to elect to
assume the housing functions and take over the certain housing assets of the Dissolved RDA. If the
sponsoring community does not elect to become the Successor Housing Agency and assume the
Dissolved RDA's housing functions, such housing functions and all related housing assets will be
transferred to the local housing authority in the jurisdiction.
AB 1484 modified and provided some clarifications on the treatment of housing assets under the
Dissolution Act. The Tustin Housing Authority elected on January 17, 2012 to serve as the
Housing Successor Agency.
As of the date of dissolution, the housing assets, obligations, and activities of the Dissolved RDA
have been transferred and are reported in the Housing Authority Special Revenue Fund in the
financial statements of the City. All other assets, obligations, and activities of the Dissolved RDA
have been transferred and are reported in a fiduciary fund (private -purpose trust fund) in the
financial statements of the City.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
18. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT
AGENCIES (CONTINUED):
In the current and future fiscal years, the Successor Agency will only be allocated revenue from the
County of Orange in the amount that is necessary to pay the estimated annual installment payments
on enforceable obligations of the Dissolved RDA until all enforceable obligations of the Dissolved
RDA have been paid in full and all assets have been liquidated.
19. SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
DISCLOSURES:
The assets and liabilities of the former redevelopment agency were transferred to the Successor
Agency to the Tustin Community Redevelopment Agency on February 1, 2012 as a result of the
dissolution of the former redevelopment agency. The City is acting in a fiduciary capacity for the
assets and liabilities. Disclosures related to these transactions are as follows:
Due from the City of Tustin
On December 31, 2008, the City entered into a promissory note with the former Redevelopment
Agency in the amount of $18,881,750. The City promised to pay the former Redevelopment
Agency on December 1, 2013, the principal amount of $18,881,750 with interest accrued thereon
from December 30, 2008 to the maturity date at the rate of 4.25% per annum, compounded
semiannually on June 1 and December 1 in each year, commencing June 1, 2009. Effective
February 1, 2012, the former Redevelopment Agency was dissolved and the promissory note was
transferred to the Successor Agency to the Tustin Community Redevelopment Agency. The City
has negotiated with the State Department of Finance (DOF) to allow for the Local Agency
Investment Fund (LAIF) interest rate as the effective interest and to pay the debt off over four to
five years. The DOF agreed to allow the LAIF interest rate at the time the City entered into the
promissory note with the former Redevelopment Agency which was 2.54% and also agreed to five
installment payments with the first payment due within seven days of the City accepting DOF's
offer. With the effective flat interest rate of 2.54% compounded annually the total amount payable
to the Successor Agency to the Tustin Community Redevelopment Agency was $21,404,683. The
City signed the settlement agreement on December 9, 2014, and the first installment payment
totaling $5,000,000 was made within the required time period. As of June 30, 2016, the
outstanding balance was $12,303,512. The agreement was amended on July 12, 2016. In the
amended agreement the amount due of $12,303,512 was reduced by $5,000,000 to $7,303,512 with
$4,101,171 due December 31, 2016 and $3,202,341 due December 31, 2017. The reduction in the
receivable due from the City of Tustin is reported as a special item - loss in reduction in amounts
due from the City. The $4,101,171 payment was paid early by the City on August 17, 2016,
bringing the remaining balance due down to $3,202,341.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
19. SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
DISCLOSURES (CONTINUED):
Long -Term Liabilities
A summary of long-term liabilities activity for the year ended June 30, 2017, is as follows:
Total long-term liabilities $ 73.045.803 $ 62.466916 $ (70.039.269) $ 65.473.450 $ 5.227.341
Tax Allocation Bonds Payable
2010 Housing Tax Allocation Bonds
On March 1, 2010, the Tustin Community Redevelopment Agency issued $26,170,000 Tax
Allocation Housing Bonds, Series 2010 to refinance low and moderate income housing activities
throughout the geographic boundaries of the City and, in particular, to repay a reimbursement
obligation from the Agency to the City, relating to the City's write down of land for use for
affordable housing purposes. In September 2016, the 2010 Housing Tax Allocation Bonds were
refunded in advance using the bond proceeds from the 2016 Tax Allocation Bonds.
2010 MCAS Tax Allocation Bonds
On October 27, 2010, the Tustin Community Redevelopment Agency issued $44,170,000 Tax
Allocation Bonds, Series 2010 for the purpose of financing redevelopment activities within or for
the benefit of the Agency's MCAS -Tustin Redevelopment Project Area. In September 2016, the
2010 MCAS Tax Allocation Bonds were refunded in advance using the bond proceeds from the
2016 Tax Allocation Bonds.
Balance at
Balance at
Due Within
July 1, 2016 Additions
Deletions
June 30, 2017
One Year
Tax allocation bonds
$ 61,385,000 $ 55,940,000
$ (61,385,000)
$ 55,940,000
$ 2,025,000
Unamortized premium
81,836 6,526,916
(277,643)
6,331,109
-
Unamortized discount
(724,545) -
724,545
-
-
Note payable to
County Auditor Controller
12.303.512 -
(9.101.171)
3.202.341
3.202.341
Total long-term liabilities $ 73.045.803 $ 62.466916 $ (70.039.269) $ 65.473.450 $ 5.227.341
Tax Allocation Bonds Payable
2010 Housing Tax Allocation Bonds
On March 1, 2010, the Tustin Community Redevelopment Agency issued $26,170,000 Tax
Allocation Housing Bonds, Series 2010 to refinance low and moderate income housing activities
throughout the geographic boundaries of the City and, in particular, to repay a reimbursement
obligation from the Agency to the City, relating to the City's write down of land for use for
affordable housing purposes. In September 2016, the 2010 Housing Tax Allocation Bonds were
refunded in advance using the bond proceeds from the 2016 Tax Allocation Bonds.
2010 MCAS Tax Allocation Bonds
On October 27, 2010, the Tustin Community Redevelopment Agency issued $44,170,000 Tax
Allocation Bonds, Series 2010 for the purpose of financing redevelopment activities within or for
the benefit of the Agency's MCAS -Tustin Redevelopment Project Area. In September 2016, the
2010 MCAS Tax Allocation Bonds were refunded in advance using the bond proceeds from the
2016 Tax Allocation Bonds.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
19. SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
DISCLOSURES (CONTINUED):
Long -Term Liabilities (Continued)
Tax Allocation Bonds Payable (Continued)
2016 Tax Allocation Refunding Bonds
On September 29, 2016, the Successor Agency to the Tustin Community Redevelopment Agency
issued $55,940,000 Refunding Tax Allocation Bonds, Series 2016 (2016 Bonds) for the purpose of
refunding in advance the remaining outstanding amount of $21,225,000 2010 Housing Bonds and
the remaining outstanding amount of $40,160,000 MCAS 2010 Redevelopment Bonds and pay for
a surety bond insurance policy and costs of issuance of the bonds. The 2016 Bonds proceeds were
invested in escrow funds (20 10 Housing Escrow Fund and 2010 Redevelopment Escrow Fund)
with a trustee which together will pay interest and principal on the 2010 Housing Bonds up to and
including September 1, 2020 and to redeem the then outstanding 2010 Housing Bonds in full on
September 1, 2020; and pay interest and principal on the MCAS 2010 Redevelopment Bonds up to
and including September 1, 2018 and to redeem the then outstanding MCAS 2010 Redevelopment
Bonds in full on September 1, 2018. As of June 30, 2017 the amount of defeased 2010 Housing
Bonds outstanding was $20,410,000 and the amount of the defeased MCAS 2010 Redevelopment
Bonds outstanding was $39,255,000.
The 2016 Bonds are payable in annual installments ranging from $2,025,000 to $2,925,000
commencing on September 1, 2017. Interest is payable semiannually on March 1 and September 1,
with rates ranging from 4.0% to 5.25% per annum. The bonds maturing on or after
September 1, 2027, are subject to optional redemption prior to maturity, as a whole or in part, from
any available source of funds, at a redemption price equal to the principal amount thereof, together
with accrued interest to the date fixed for redemption, without premium
The defeasance resulted in a difference between the reacquisition price and the net carrying amount
of the old debt of $7,392,925. The difference reported in the accompanying statements as a
deferred outflow of resources, is being charged to interest expense through 2040. The remaining
balance at June 30, 2017, is $7,171,137.
The Successor Agency refunded the Revenue Bonds to reduce its total debt service payments over
24 years by $11,930,030 and to obtain an economic gain (difference between the present values of
the old and new debt) of $7,819,940.
At June 30, 2017, the 2016 Tax Allocation Refunding Bonds outstanding balance was
$55,940,000.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
19. SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
DISCLOSURES (CONTINUED):
Long -Term Liabilities (Continued)
Tax Allocation Bonds Payable (Continued)
2016 Tax Allocation Refunding Bonds (Continued)
The annual debt service requirements to amortize the tax allocation bonds are as follows:
Year Ending
June 30,
2018
2019
2020
2021
2022
2023-2027
2028-2032
2033-2037
2038-2041
Totals
Principal
$ 2,025,000
1,830,000
1,895,000
1,965,000
2,050,000
11,560,000
11,395,000
12,420,000
10,800,000
55.940.000
Interest
$ 2,130,875
2,083,175
2,017,825
1,940,625
1,860,325
7,930,125
5,090,688
2,780,175
627,150
26.460.963
Total
$ 4,155,875
3,913,175
3,912,825
3,905,625
3,910,325
19,490,125
16,485,688
15,200,175
11,427,150
82.400.963
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
19. SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY
DISCLOSURES (CONTINUED):
Long -Term Liabilities (Continued)
Note Payable to County Auditor Controller
As part of the dissolution process AB 1484 required the Successor Agency to have due diligence
reviews of both the low and moderate income housing funds and all other funds to be completed by
October 15, 2012 and January 15, 2013 to compute the funds (cash) which were not needed by the
Successor Agency to be retained to pay for existing enforceable obligations. These funds were to
be remitted to the CAC after the DOF completed its review of the due diligence reviews. The
Successor Agency remitted $14,317,623 to the County Auditor -Controller (CAC) on
December 18, 2012 for the low and moderate income housing funds due diligence review. The
amount due to the CAC for the Other Funds due diligence review is $28,295,637, of which
$6,418,355 was remitted by the Successor Agency on May 10, 2013. The City negotiated with the
State Department of Finance (DOF) to allow for the Local Agency Investment Fund (LAIF)
interest rate as the effective interest and to pay the debt off over four to five years. The DOF
agreed to allow the LAIF interest rate of 2.54% which was in effect at the time the City entered
into the promissory note with the former Redevelopment Agency and has agreed to installment
payments over four years after the first payment due within seven days of the City accepting
DOF's offer. With the effective flat interest rate of 2.54% compounded annually the total amount
receivable from the City and payable to CAC as of June 30, 2014 was $21,404,683. The City
signed the settlement agreement on December 9, 2014, and the first installment payment totaling
$5,000,000 was made within the required time period. As of June 30, 2016, the outstanding
balance was $12,303,512. The agreement was amended on July 12, 2016. In the amended
agreement the amount due of $12,303,512 was reduced by $5,000,000 to $7,303,512 with
$4,101,171 due December 31, 2016 and $3,202,341 due December 31, 2017. The reduction in the
note payable to the County is reported as a special item - gain from reduction in note payable to
County. The $4,101,171 payment was paid early by the City on August 17, 2016, bringing the
remaining balance due down to $3,202,341.
CITY OF TUSTIN
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2017
20. SCHOOL FACILITIES IMPLEMENTATION COMMITMENT:
In August 2015, the City entered into a school facilities implementation, funding and migration
agreement, and related site conveyance agreement with the Tustin Unified School District (TUSD)
as well as a joint community facilities agreement with TUSD and Standard Pacific that provides a
framework for development of grades 6-12 schools on the 40 -acre designated site, along with the
opening of Heritage Elementary School as a magnet elementary site in the fall of 2016. The
estimated cost to complete the project is $75,117,850. In order to facilitate the implementation
plan, the City will advance funds to the project development with three different approaches. First,
the City advanced $4 million in October 2015. Second, the City will deposit an additional
$15 million in the project development account which occurred on August 1, 2016. Third, the City
will have the option to advance additional funds for the entire project or just certain projects. The
City also issued 2014-1 Community Facilities District Special Tax Bonds, Series 2015A, totaling
$27,665,000. Of the $27,665,000, $7,892,722 are available to be spent on school facilities.
21. COMMITMENTS AND CONTINGENCIES:
There are certain legal actions pending against the City which have arisen in the normal course of
operations. In the opinion of management and the City Attorney, the ultimate resolution of such
actions is not expected to have a significant impact, if any, on the financial statements or operations
of the City.
22. SUBSEQUENT EVENTS:
In October 2017, the City conveyed approximately 40 acres of the former Marine Corps Air Station
Tustin (MCAS Tustin) to the Tustin Unified School District for the establishment of the grades 6-
12 schools facility project in accordance with the site conveyance agreement referred to in Note 20.
In preparing these financial statements, the City has evaluated other events and transactions for
potential recognition or disclosure through December 12, 2017, the date the financial statements
were available to be issued.
-91-
The page left blank intentionally
-92-
REQUIRED SUPPLEMENTARY INFORMATION
-93 -
The page left blank intentionally
CITY OF TUSTIN
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended
June 30, 2017
June 30, 2016
June 30, 2015
Measurement period
June 30, 2016
June 30, 2015
June 30, 2014
Plan's proportion of the net pension liability
0.36319%
0.35401%
0.41499%
Plan's proportionate share of the net pension liability
$ 31,427,228
$ 24,298,906
$ 25,822,675
Plan's covered - employee payroll
$ 10,013,168
$ 9,495,434
$ 9,640,345
Plan's proportionate share of the net pension liability as
a percentage of covered - employee payroll
313.86%
255.90%
267.86%
Plan's proportionate share of the fiduciary net position as
a percentage of the Plan's total pension liability
74.06%
78.40%
79.82%
Plan's proportionate share of aggregate employer contributions
$ 3,193,318
$ 3,182,851
$ 2,544,912
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Changes in Assumptions:
From fiscal year June 30, 2015 to June 30, 2016:
GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan
investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for
the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June
30, 2015 measurement date is without reduction of pension plan administrative expense.
From fiscal year June 30, 2016 to June 30, 2017:
There were no changes in assumptions.
* - Fiscal year 2015 was the 1 st year of implementation, therefore only three years are shown. Additional years' information
will be displayed as it becomes available.
-95-
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended
June 30, 2017
June 30, 2016
June 30, 2015
Contractually required contribution (actuarially determined)
$ 3,002,977
$ 2,708,192
$ 3,045,919
Contributions in relation to the actuarially determined contributions
(3,002,977)
(2,708,192)
(7,049,591)
Contribution deficiency (excess)
$ -
$ -
$ (4,003,672)
Covered - employee payroll
$ 10,443,467
$ 10,013,668
$ 9,495,434
Contributions as a percentage of covered - employee payroll
28.75%
27.04%
74.24%
Notes to Schedule:
Valuation Date 6/30/2014 6/30/2013 6/30/2012
Methods and Assumptions Used to Determine Contribution Rates:
Single and agent employers Entry age**
Amortization method Level percentage of payroll, closed*
Asset valuation method Market Value***
Inflation 2.75%**
Salary increases Depending on age, service and type of employment*
Investment rate of return 7.50%, net of pension plan investment expense, including inflation*
Retirement age 50 years 3%450, 2%450 and 2.7%457**
Mortality Mortality assumptions are based on mortality rates resulting from the most recent
CalPERS Experience Study adopted by the CalPERS Board.**
* - Fiscal year 2015 was the 1 st year of implementation, therefore only three years are shown. Additional years' information
will be displayed as it becomes available.
* * - The valuation for June 30, 2012 and 2013 (applicable to fiscal years ended June 30, 2015 and 2016, respectively)
included the same actuarial assumptions.
*** - The valuation for June 30, 2012 (applicable to fiscal year ended June 30, 2015) valued assets using a 15 Year
Smoothed Market method. The market value asset valuation method was utilized for the June 30, 2013 and 2014
valuations (applicable to fiscal years ended June 30, 2016 and 2017, respectively).
-96-
CITY OF TUSTIN
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
Fiscal year ended
Measurement period
Total Pension Liability:
Service cost
Interest on total pension liability
Differences between expected and actual experience
Changes in assumptions
Changes in benefit terms
Benefit payments, including refunds of employee contributions
Net Change in Total Pension Liability
Total Pension Liability - Beginning of Year
Total Pension Liability - End of Year (a)
Plan Fiduciary Net Position:
Contributions - employer
Contributions - employee
Net investment income
Benefit payments
Plan to plan resource movement
Administrative expense
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning of Year
Plan Fiduciary Net Position - End of Year (b)
Net Pension Liability - Ending (a) -(b)
Plan fiduciary net position as a percentage of the
total pension liability
Covered - employee payroll
Net pension liability as percentage of
covered- employee payroll
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2016
June 30, 2015
June 30, 2014
$ 1,840,275
$ 1,779,008
$ 1,747,494
7,306,376
6,982,672
6,613,765
(531,595)
452,122
-
-
(1,770,351)
-
(4,102,189)
(3,956,389)
(3,974,724)
4,512,867
3,487,062
4,386,535
97,170,750
93,683,688
89,297,153
$ 101,683,617
$ 97,170,750
$ 93,683,688
$ 1,850,072
$ 1,503,081
$ 1,379,562
998,937
905,331
962,617
372,172
1,753,374
11,900,167
(4,102,189)
(3,956,389)
(3,974,724)
-
(114)
-
(48,573)
(89,714)
--
(929,581)
115,569
10,267,622
79,699,922
79,584,353
69,316,731
$ 78,770,341
$ 79,699,922
$ 79,584,353
$ 22,913,276
$ 17,470,828
$ 14,099,335
77.47%
82.02%
84.95%
$ 13,828,003 $ 12,847,036 $ 12,270,014
165.70% 135.99% 114.91%
Changes in Assumptions:
From fiscal year June 30, 2015 to June 30, 2016:
GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan
investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for
the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June
30, 2015 measurement date is without reduction of pension plan administrative expense.
From fiscal year June 30, 2016 to June 30, 2017:
There were no changes in assumptions.
* - Fiscal year 2015 was the 1 st year of implementation, therefore only three years are shown. Additional years' information
will be displayed as it becomes available.
-97-
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
Fiscal year ended
June 30, 2017
June 30, 2016
June 30, 2015
Actuarially determined contribution
$ 1,881,701
$ 1,850,100
$ 1,503,081
Contributions in relation to the actuarially determined contributions
(1,881,701)
(1,850,100)
(1,503,081)
Contribution deficiency (excess)
$ -
$ -
$ -
Covered - employee payroll
$ 14,684,868
$ 13,828,003
$ 12,847,036
Contributions as a percentage of covered - employee payroll
12.81%
13.38%
11.70%
Notes to Schedule:
Valuation Date 6/30/2014 6/30/2013 6/30/2012
Methods and Assumptions Used to Determine Contribution Rates:
Single and agent employers Entry age**
Amortization method Level percentage of payroll, closed*
Asset valuation method Market Value***
Inflation 2.75%**
Salary increases Depending on age, service and type of employment*
Investment rate of return 7.50%, net of pension plan investment expense, including inflation*
Retirement age 50 years 2%455 and 2%460, 52 years 2%462**
Mortality Mortality assumptions are based on mortality rates resulting from the most recent CalPERS
Experience Study adopted by the CalPERS Board.**
* - Fiscal year 2015 was the 1 st year of implementation, therefore only three years are shown. Additional years
information will be displayed as it becomes available.
* * - The valuation for June 30, 2012 and 2013 (applicable to fiscal years ended June 30, 2015 and 2016, respectively)
included the same actuarial assumptions.
*** - The valuation for June 30, 2012 (applicable to fiscal year ended June 30, 2015) valued assets using a 15 Year
Smoothed Market method. The market value asset valuation method was utilized for the June 30, 2013 and 2014
valuations (applicable to fiscal years ended June 30, 2016 and 2017, respectively).
-98-
CITY OF TUSTIN
SCHEDULE OF FUNDING PROGRESS
OTHER POST -EMPLOYMENT BENEFIT PLAN
For the year ended June 30, 2017
-99-
Actuarial
Actuarial
Value
Accrued
Unfunded
UAAL as a
Actuarial
of Assets
Liability
AAL
Funded
Covered
% of
Valuation
(AVA)
(AAL)
(UAAL)
Ratio
Payroll
Payroll
Date
(a)
(b)
(b) - (a)
(a)/(b)
(c)
[(b)-(a)]/(c)
06/30/09
$ -
$ 8,584,000 $
8,584,000
0.00%
$ 23,150,000
37.08%
06/30/11
-
9,801,000
9,801,000
0.00%
21,515,000
45.55%
06/30/13
-
12,047,000
12,047,000
0.00%
20,346,000
59.21%
06/30/15
-
19,794,000
19,794,000
0.00%
22,227,000
89.05%
-99-
CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
REVENUES:
Taxes
Licenses and permits
Fines and forfeitures
Investment income
Intergovernmental
Charges for services
Rental income
Other revenue
Developer contribution
Profit participation
Gain on land held for resale
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Public safety
Public works
Community services
Capital outlay
Debt service:
Principal retirement
Interest expense
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
Capital lease issued
TOTAL OTHER
FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCE
For the year ended June 30, 2017
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 49,923,900 $ 49,923,900 $ 49,958,547 $ 34,647
609,300
609,300
853,990
244,690
776,000
776,000
953,665
177,665
196,000
196,000
337,746
141,746
2,911,200
2,911,200
1,555,744
(1,355,456)
2,595,200
2,595,200
1,979,850
(615,350)
1,009,500
1,009,500
1,303,724
294,224
1,137,100
1,137,100
1,523,798
386,698
-
-
16,804,964
16,804,964
-
-
23,495,709
23,495,709
21,305,600
On AL') Onn
21,305,600
On AL') onn
23,788,238
1'1'1 GGG n -7C
2,482,638
Al nn) 177
20,303,865
24,140,048
23,005,830
1,134,218
32,346,200
32,747,806
30,631,067
2,116,739
7,308,000
8,156,008
7,040,652
1,115,356
3,677,350
3,753,850
18,365,414
(14,611,564)
36,779,050
38,015,566
9,004,457
29,011,109
-
-
4,129,203
(4,129,203)
-
-
5,802
(5,802)
100,414,465
106,813,278
92,182,425
14,630,853
(19,950,665)
(26,349,478)
30,373,550
56,723,028
3,273,700
3,273,700
4,180,410
906,710
-
-
(61,799)
(61,799)
-
-
368,356
368,356
3,273,700
3,273,700
4,486,967
1,213,267
(16,676,965)
(23,075,778)
34,860,517
57,936,295
FUND BALANCE - BEGINNING OF YEAR 186,903,736 186,903,736 186,903,736 -
FUND BALANCE - END OF YEAR $ 170,226,771 $ 163,827,958 $ 221,764,253 $ 57,936,295
See accompanying note to required supplementary information.
-100-
CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
MEASURE M SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
Other revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING USES:
Transfers out
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2017
- - 3,922 (3,922)
9,629,001 9,629,001 1,558,658 8,070,343
9,629,001 9,629,001 1,562,580 8,066,421
(390,513) (390,513) 1,085,611 1,476,124
(39,000) (39,000) (105,230) (66,230)
(429,513) (429,513) 980,381 1,409,894
4,300,755 4,300,755 4,300,755 -
$ 3,871,242 $ 3,871,242 $ 5,281,136 $ 1,409,894
See accompanying note to required supplementary information.
- 101 -
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
$ 2,000 $ 2,000
$ 20,063
$ 18,063
9,236,488 9,236,488
2,627,491
(6,608,997)
- -
637
637
9,238,488 9,238,488
2,648,191
(6,590,297)
- - 3,922 (3,922)
9,629,001 9,629,001 1,558,658 8,070,343
9,629,001 9,629,001 1,562,580 8,066,421
(390,513) (390,513) 1,085,611 1,476,124
(39,000) (39,000) (105,230) (66,230)
(429,513) (429,513) 980,381 1,409,894
4,300,755 4,300,755 4,300,755 -
$ 3,871,242 $ 3,871,242 $ 5,281,136 $ 1,409,894
See accompanying note to required supplementary information.
- 101 -
CITY OF TUSTIN
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
June 30, 2017
1. BUDGETS AND BUDGETARY ACCOUNTING:
The City follows these procedures in establishing the budgets.
(1) The annual budget is adopted by the City Council after the holding of a hearing and provides
for the general operation of the City. The operating budget includes proposed expenditures and
the means of financing them.
(2) The City Council approves total budgeted appropriations and any amendments to
appropriations throughout the year. This "appropriated budget" covers City expenditures in all
governmental funds, except for capital improvement projects carried forward from prior years.
The City Manager is authorized to transfer budgeted amounts between departments. Actual
expenditures may not exceed budgeted appropriations at the fund level. Budget figures used in
the accompanying required supplementary information are the original and final adjusted
amounts.
(3) Formal budgetary integration is employed as a management control device during the year.
Commitments for materials and services, such as purchase orders and contracts, are recorded as
encumbrances to assist in controlling expenditures. Capital projects appropriations are an
automatic supplemental appropriation for the next year. All others lapse unless they are
encumbered at year-end or re -appropriated through the formal budget process. There were no
outstanding encumbrances at year-end.
(4) Annual budgets are adopted for the General and Special Revenue Funds on a basis substantially
consistent with accounting principles generally accepted in the United States of America.
Accordingly, actual revenues and expenditures can be compared with related budgeted amounts
without any significant reconciling items. No budgetary comparisons are presented for the
City's Proprietary Funds as the City is not legally required to adopt budgets for these fund
types. Budgetary comparisons of Capital Projects Funds are primarily "long-term" budgets,
which emphasize capital outlay plans extending over one year. Because of the long-term nature
of these budgets, "annual" budget comparisons are not considered meaningful and accordingly,
no budgetary information is provided.
-102-
SUPPLEMENTARY INFORMATION
-103-
The page left blank intentionally
-104-
CITY OF TUSTIN
OTHER GOVERNMENTAL FUNDS
June 30, 2017
SPECIAL REVENUE FUNDS
The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
restricted by law or administrative action for a specific purpose.
Gas Tax - This fund accounts for revenues and expenditures apportioned under the Street and
Highways Code of the State of California. Expenditures may be made for any street -related purpose
allowable under the Code.
Park Acquisition and Development - This fund is used to account for fees received from developers to
develop the City's park system.
Asset Forfeiture - This fund is used to account for monies received from the Federal government that
are used for special law enforcement purchases.
Air Quality - This fund is used to account for funds received from South Coast Air Quality
Management District to be used for reducing pollution.
Supplemental Law Enforcement - This law was established under Government Code Section 30061
enacted by A133229, Chapter 134, of the 1996 Statutes and is an appropriation from the State Budget
for the "Citizen Option for Public Safety Program". This fund can only be used for police front line
municipal activities that provide police services to the City in prevention of drug abuse, crime
prevention, and community awareness programs.
Housing Authority - This fund is used to account for revenues and associated expenditures to be used
for increasing or improving low and moderate income housing.
Special Tax B - This fund is used to account for Special Tax B perpetual tax levied on taxable property
in the Tustin Legacy to pay for authorized services and administrative expenses.
CAPITAL PROJECTS FUNDS
The Capital Projects Funds are used to account for financial resources to be used for the acquisition or
construction of major capital facilities.
Construction 95-1 - This fund accounts for infrastructure improvements to the Tustin 95-1 Area.
Other Capital Projects - This fund is used to account for capital projects which are not funded by a
specific source.
WAS 2010 - This fund is used to account for capital project costs at the Marine Corps Air Station.
CFD Construction - This fund is used to account for construction and improvements to the Tustin
Legacy area.
-105-
CITY OF TUSTIN
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2017
LIABILITIES:
Special Revenue Funds
Accounts payable and accrued liabilities
$ 278,134
Park
7 $
10 $
6,792
Deposits payable
-
Acquisition
-
-
Supplemental
Uneamred revenue
-
and
Asset
Air
Law
TOTAL LIABILITIES
Gas Tax
Development
Forfeiture
Quality
Enforcement
ASSETS
Cash and investments
$ 5,292,877
$ 8,594,132
$ 124,821 $
178,524
$ 147,188
Restricted cash and investments
-
-
-
-
-
Receivables:
-
-
-
-
-
Accounts
144,680
13,802
-
26,851
3,857
Interest
8,197
13,309
194
276
228
Loans
-
-
-
-
-
Allowance for uncollectibles
Prepaid items and deposits
-
-
-
-
-
TOTAL ASSETS
$ 5,445,754
$ 8,621,243
$ 125,015 $
205,651
$ 151,273
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
LIABILITIES:
Accounts payable and accrued liabilities
$ 278,134
$ 239,971 $
7 $
10 $
6,792
Deposits payable
-
-
-
-
-
Uneamred revenue
-
16,773
-
-
TOTAL LIABILITIES
278,134
256,744
7
10
6,792
DEFERRED INFLOWS OF RESOURCES:
Unavailable revenue
-
-
-
-
FUND BALANCES:
Nonspendable
-
-
-
-
-
Restricted
5,167,620
8,364,499
125,008
205,641
144,481
Assigned
-
-
-
-
-
TOTAL FUND BALANCES
5,167,620
8,364,499
125,008
205,641
144,481
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$ 5,445,754
$ 8,621,243 $
125,015 $
205,651 $
151,273
-106-
Special Revenue
Funds (Continued) Capital Projects Funds
Total
Other Other
Housing Construction Capital MCAS CFD Governmental
Authority Special Tax B 95-1 Projects 2010 Construction Funds
$ 2,542,767 $ $ 2,535,172 $ 5,877,952 $ 16,616,513 $ 401,373 $ 42,311,319
- - - - 26,917,159 26,917,159
- 6,704 748,103 - 943,997
87,717 - 9,103 25,734 144,758
383,796 - - 383,796
(33,795) (33,795)
1,922 - - - - - 1,922
$ 2,982,407 $ 6,704 $ 2,535,172 $ 6,635,158 $ 16,642,247 $ 27,318,532 $ 70,669,156
$ 36,847 $ $ $ 893,967 $ 587,967 $ 588,945 $ 2,632,640
- 756,771 - - 756,771
- - - - 16,773
36,847 1,650,738 587,967 588,945 3,406,184
433,778 629,764 - - 1,063,542
1,922 - - - 1,922
2,509,860 6,704 2,535,172 - - 26,729,587 45,788,572
- - - 4,354,656 16,054,280 - 20,408,936
2,511,782 6,704 2,535,172 4,354,656 16,054,280 26,729,587 66,199,430
$ 2,982,407 $ 6,704 $ 2,535,172 $ 6,635,158 $ 16,642,247 $ 27,318,532 $ 70,669,156
-107-
CITY OF TUSTIN
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
REVENUES:
Investm ent income
Intergovernmental revenue
Charges for services
Rental income
Other revenue
Gain on sale of land held for resale
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Public safety
Public works
Community services
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES -
BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
For the year ended June 30, 2017
Special Revenue Funds
Park
Acquisition Supplemental
and Asset Air Law
Gas Tax Development Forfeiture Quality Enforcement
$ 18,087 $ 31,495 $ 337 $ 647 $ 561
1,601,001 662,477 70,277 105,629 149,623
- 20,010 - - -
- 238,557
2,683 -
1,621,771 952,539 70,614 106,276 150,184
775,135
55,780
927,035
1,020,054
1,702,170
1,075,834
(80,399) (123,295)
(80,399) (123,295)
71 172 -
- - 102,457
- 198,000 11,055
71 198,172 113,512
70,543 (91,896) 36,672
70,543 (91,896) 36,672
5,248,019 8,487,794 54,465 297,537 107,809
$ 5,167,620 $ 8,364,499 $ 125,008 $ 205,641 $ 144,481
-108-
Special Revenue
Funds (Continued)
Capital Projects Funds
Total
Other
Other
Housing
Construction Capital MCAS
CFD
Governmental
Authority Special Tax B
95-1 Projects 2010
Construction
Funds
$ 11,724 $ -
$ $ 19,998 $ 57,915
$ 110,315
$ 251,079
- 3,477,056
- -
-
6,066,063
-
20,010
-
- -
-
238,557
19,682
1,127 3,968,089 2,898
331,023
4,325,502
453,023
- - -
-
453,023
484,429 3,477,056 1,127 3,988,087 60,813 441,338 11,354,234
3,566 208,439 1,043,163
- - - 102,457
- 551,224 551,224
361,843 - - - 361,843
- 5,570,583 4,386,407 3,980,928 16,094,062
361,843 5,574,149 4,937,631 4,189,367 18,152,749
122,586 3,477,056 1,127 (1,586,062) (4,876,818) (3,748,029) (6,798,515)
61,799 61,799
(3,477,116) (550,000) (48,064) (4,075,180)
- (3,477,116) (550,000) 13,735 (4,013,381)
122,586 (60) (548,873) (1,586,062) (4,876,818) (3,734,294) (10,811,896)
2,389,196 6,764 3,084,045 5,940,718 20,931,098 30,463,881 77,011,326
$ 2,511,782 $ 6,704 $ 2,535,172 $ 4,354,656 $ 16,054,280 $ 26,729,587 $ 66,199,430
- 109-
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GAS TAX SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
Other revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2017
958,450
958,450
Variance with
183,315
1,587,400
Final Budget
Budgeted Amounts
660,365
Positive
Original Final
Actual
(Negative)
$ - $ -
$ 18,087
$ 18,087
1,635,600 1,635,600
1,601,001
(34,599)
- -
2,683
2,683
1,635,600 1,635,600
1,621,771
(13,829)
958,450
958,450
775,135
183,315
1,587,400
1,587,400
927,035
660,365
2,545,850
2,545,850
1,702,170
843,680
(910,250)
(910,250)
(80,399)
829,851
5,248,019
5,248,019
5,248,019
-
$ 4,337,769
$ 4,337,769
$ 5,167,620
$ 829,851
- 110 -
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
PARK ACQUISITION AND DEVELOPMENT SPECIAL REVENUE FUND
For the year ended June 30, 2017
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ 55,000
$ 55,000
$ 31,495
$ (23,505)
Intergovernmental revenue
-
-
662,477
662,477
Charges for services
15,000
15,000
20,010
5,010
Rental income
140,000
140,000
238,557
98,557
TOTAL REVENUES
210,000
210,000
952,539
742,539
EXPENDITURES:
Current:
General government
-
-
55,780
(55,780)
Capital outlay
6,421,825
6,436,825
1,020,054
5,416,771
TOTAL EXPENDITURES
6,421,825
6,436,825
1,075,834
5,360,991
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
(6,211,825)
(6,226,825)
(123,295)
6,103,530
FUND BALANCE - BEGINNING OF YEAR
8,487,794
8,487,794
8,487,794
-
FUND BALANCE - END OF YEAR
$ 2,275,969
$ 2,260,969
$ 8,364,499
$ 6,103,530
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
ASSET FORFEITURE SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2017
38,758 38,758 71 38,687
108,085 108,085 70,543 (37,542)
54,465 54,465 54,465 -
$ 162,550 $ 162,550 $ 125,008 $ (37,542)
- 112 -
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual (Negative)
$ 1,000 $ 1,000
$ 337 $ (663)
145,843 145,843
70,277 (75,566)
146,843 146,843
70,614 (76,229)
38,758 38,758 71 38,687
108,085 108,085 70,543 (37,542)
54,465 54,465 54,465 -
$ 162,550 $ 162,550 $ 125,008 $ (37,542)
- 112 -
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
AIR QUALITY SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
ijon9]j:�_jw_rr�:aM6'jg]MM'J:r_�:j
For the year ended June 30, 2017
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 100 $ 100 $ 647 $ 547
82,000 82,000 105,629 23,629
82,100 82,100 106,276 24,176
- - 172 (172)
198,000 198,000 198,000 -
198,000 198,000 198,172 (172)
(115,900) (115,900) (91,896) 24,004
297,537 297,537 297,537 -
$ 181,637 $ 181,637 $ 205,641 $ 24,004
-113-
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SUPPLEMENTAL LAW ENFORCEMENT SPECIAL REVENUE FUND
For the year ended June 30, 2017
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
REVENUES:
Investment income $ - $ - $ 561 $ 561
Intergovernmental revenue 100,000 100,000 149,623 49,623
TOTAL REVENUES 100,000 100,000 150,184 50,184
EXPENDITURES:
Current:
Public safety 108,600 108,600 102,457 6,143
Capital outlay - - 11,055 (11,055)
TOTAL EXPENDITURES 108,600 108,600 113,512 (4,912)
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (8,600) (8,600) 36,672 45,272
FUND BALANCE - BEGINNING OF YEAR 107,809 107,809 107,809 -
FUND BALANCE - END OF YEAR $ 99,209 $ 99,209 $ 144,481 $ 45,272
- 114 -
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
HOUSING AUTHORITY SPECIAL REVENUE FUND
REVENUES:
Investment income
Other revenue
Gain on sale of land held for resale
TOTAL REVENUES
EXPENDITURES:
Current:
Community services
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2017
Budgeted Amounts
Original Final
4,200 4,200
4,200 4,200
367,345 367,345 361,843 5,502
(363,145) (363,145) 122,586 485,731
2,389,196 2,389,196 2,389,196 -
$ 2,026,051 $ 2,026,051 $ 2,511,782 $ 485,731
-115 -
Variance with
Final Budget
Positive
Actual
(Negative)
$ 11,724
$ 11,724
19,682
15,482
453,023
453,023
484,429
480,229
367,345 367,345 361,843 5,502
(363,145) (363,145) 122,586 485,731
2,389,196 2,389,196 2,389,196 -
$ 2,026,051 $ 2,026,051 $ 2,511,782 $ 485,731
-115 -
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SPECIAL TAX B SPECIAL REVENUE FUND
REVENUES:
Intergovernmental revenue
OTHER FINANCING USES:
Transfers out
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING OF YEAR
ijon9]j:�_jw_rr�:aM6'jg]MM'J:r_�:j
For the year ended June 30, 2017
Budgeted Amounts
Original Final
$ 3,376,200 $ 3,376,200
Actual
$ 3,477,056
Variance with
Final Budget
Positive
(Negative)
$ 100,856
(3,200,000) (3,200,000) (3,477,116) (277,116)
176,200 176,200 (60) (176,260)
6,764 6,764 6,764 -
$ 182,964 $ 182,964 $ 6,704 $ (176,260)
-116 -
CITY OF TUSTIN
AGENCY FUNDS
June 30, 2017
Agency Funds are used to account for assets held by the City in a trustee capacity or as an agent for
individual, private organizations and other governments.
Community Facilities District 04-01 - This fund records the deposit of monies held to pay the debt
service requirements of the community facilities district.
Community Facilities District 06-01 - This fund records the deposit of monies held to pay the debt
service requirements of the community facilities district.
Community Facilities District 07-01 - This fund records the deposit of monies held to pay the debt
service requirements of the community facilities district.
Community Facilities District 13-01 - This fund records the deposit of monies held to pay the debt
service requirements of the community facilities district.
Community Facilities District 2014-1 - This fund records the deposit of monies held to pay the debt
service requirements of the community facilities district.
- 117 -
CITY OF TUSTIN
COMBINING STATEMENT OF ASSETS AND LIABILITIES
ALL AGENCY FUNDS
June 30, 2017
- 118 -
Community
Community
Community
Community
Community
Facilities
Facilities
Facilities
Facilities
Facilities
District
District
District
District
District
04-01
06-01
07-01
13-01
2014-1
Total
ASSETS
Restricted cash and investments
$ 1,066,627
$ 5,563,584
$
1,609,311
$
$ 3,182,214
$
11,421,736
Taxes receivable
10,128
31,966
-
20,407
62,501
TOTAL ASSETS
$ 1,076,755
$ 5,595,550
$
1,609,311
$
$ 3,202,621
$
11,484,237
LIABILITIES
Accounts payable
$
$
$
976
$
980
$
$
1,956
Due to bondholders
1,076,755
5,595,550
1,608,335
(980)
3,202,621
11,482,281
TOTAL LIABILITIES
$ 1,076,755
$ 5,595,550
$
1,609,311
$
$ 3,202,621
$
11,484,237
- 118 -
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
For the year ended June 30, 2017
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
COMMUNITY FACILITIES DISTRICT 06-01
ASSETS:
Cash and investments
Restricted cash and investments
Taxes receivable
TOTAL ASSETS
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
COMMUNITY FACILITIES DISTRICT 07-01
ASSETS:
$ - $ 693,282 $ 693,282 $ -
1,083,457 1,307,298 1,314,000 1,076,755
$ 1,083,457 $ 2,000,580 $ 2,007,282 $ 1,076,755
$ 7,902 $ 5,154,399 $ 5,162,301 $ -
6,712,608 3,196,956 4,345,980 5,563,584
49,379 31,966 49,379 31,966
$ 6,769,889 $ 8,383,321 $ 9,557,660 $ 5,595,550
$ - $ 3,181,810 $ 3,181,810 $ -
6,769,889 5,209,173 6,383,512 5,595,550
$ 6,769,889 $ 8,390,983 $ 9,565,322 $ 5,595,550
Cash and investments
Balance
9,870
$
Balance
$
July 1, 2016
Additions
Deletions
June 30, 2017
COMMUNITY FACILITIES DISTRICT 04-01
1,835,892
884,207
ASSETS:
1,609,311
TOTAL ASSETS
$
Cash and investments
$ 14,133
$ 1,296,806
$ 1,310,939
$ -
Restricted cash and investments
1,062,260
693,646
689,279
1,066,627
Taxes receivable
7,064
10,128
7,064
10,128
TOTAL ASSETS
$ 1,083,457
$ 2,000,580
$ 2,007,282
$ 1,076,755
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
COMMUNITY FACILITIES DISTRICT 06-01
ASSETS:
Cash and investments
Restricted cash and investments
Taxes receivable
TOTAL ASSETS
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
COMMUNITY FACILITIES DISTRICT 07-01
ASSETS:
$ - $ 693,282 $ 693,282 $ -
1,083,457 1,307,298 1,314,000 1,076,755
$ 1,083,457 $ 2,000,580 $ 2,007,282 $ 1,076,755
$ 7,902 $ 5,154,399 $ 5,162,301 $ -
6,712,608 3,196,956 4,345,980 5,563,584
49,379 31,966 49,379 31,966
$ 6,769,889 $ 8,383,321 $ 9,557,660 $ 5,595,550
$ - $ 3,181,810 $ 3,181,810 $ -
6,769,889 5,209,173 6,383,512 5,595,550
$ 6,769,889 $ 8,390,983 $ 9,565,322 $ 5,595,550
Cash and investments
$
9,870
$
1,116,541
$
1,126,411
$
-
Restricted cash and investments
1,835,892
884,207
1,110,788
1,609,311
TOTAL ASSETS
$
1,845,762
$
2,000,748
$
2,237,199
$
1,609,311
LIABILITIES:
Accounts payable
$
-
$
895,063
$
894,087
$
976
Due to bondholders
1,845,762
1,128,058
1,365,485
1,608,335
TOTAL LIABILITIES
$
1,845,762
$
2,023,121
$
2,259,572
$
1,609,311
(Continued)
- 119 -
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
(CONTINUED)
For the year ended June 30, 2017
Balance Balance
July 1, 2016 Additions Deletions June 30, 2017
COMMUNITY FACILITIES DISTRICT 13-01
ASSETS:
Cash and investments
$
- $
221,458
$
221,458
$ -
TOTAL ASSETS
$
- $
221,458
$
221,458
$ -
LIABILITIES:
Accounts payable
$
981 $
3,917
$
3,918
$ 980
Due to bondholders
(981)
221,458
221,457
(980)
TOTAL LIABILITIES
$
- $
225,375
$
225,375
$ -
COMMUNITY FACILITIES DISTRICT 2014-01
ASSETS:
Cash and investments
Restricted cash and investments
Taxes receivable
TOTAL ASSETS
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
TOTAL ALL AGENCY FUNDS
ASSETS:
Cash and investments
Restricted cash and investments
Taxes receivable
TOTAL ASSETS
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
$ 30,197 $ 1,506,234 $ 1,536,431 $ -
3,288,376 1,508,424 1,614,586 3,182,214
22,392 20,407 22,392 20,407
$ 3,340,965 $ 3,035,065 $ 3,173,409 $ 3,202,621
$ - $ 1,499,377 $ 1,499,377 $ -
3,340,965 1,537,425 1,675,769 3,202,621
$ 3,340,965 $ 3,036,802 $ 3,175,146 $ 3,202,621
$ 62,102 $ 9,295,438 $ 9,357,540 $ -
12,899,136 6,283,233 7,760,633 11,421,736
78,835 62,501 78,835 62,501
$ 13,040,073 $ 15,641,172 $ 17,197,008 $ 11,484,237
$ 981 $ 6,273,449 $ 6,272,474 $ 1,956
$ 13,040,073 $ 15,676,861 $ 17,232,697 $ 11,484,237
-120-
STATISTICAL SECTION
- 121 -
The page left blank intentionally
-122-
DESCRIPTION OF STATISTICAL SECTION CONTENTS
June 30, 2017
This part of the City of Tustin's Comprehensive Annual Financial Report 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.
Contents: Pages
Financial Trends - These schedules contain trend information to help the
reader understand how the City's financial performance and well-being have
changed over time. 124
Revenue Capacity - These schedules contain information to help the reader
assess the City's most significant local revenue source, the property tax. 134
Debt Capacity - These schedules present information to help the reader assess
the affordability of the City's current levels of outstanding debt and the City's
ability to issue additional debt in the future. 140
Demographic and Economic Information - These schedules offer demographic
and economic indicators to help the reader understand the environment within
which the City's financial activities take place. 148
Operating Information - These schedules contain service and infrastructure
data to help the reader understand how the information in the City's financial
report relates to the services the City provides and the activities it performs. 150
Sources:
Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports for the relevant year.
-123-
CITY OF TUSTIN
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
-124-
Fiscal Year
2008
2009
2010
2011
Governmental activities:
Net investment in capital assets
$ 343,062,465
$ 357,299,104
$ 360,282,692
$ 378,911,546
Restricted
161,669,815
145,602,640
135,670,302
116,718,495
Unrestricted
(14,320,020)
104,037,153
114,737,049
116,545,351
Total governmental activities net position
$ 490,412,260
$ 606,938,897
$ 610,690,043
$ 612,175,392
Business -type activities:
Net investment in capital assets
$ 22,267,386
$ 24,964,824
$ 24,541,113
$ 20,872,492
Restricted
-
1,191,694
-
-
Unrestricted
172,421,511
1,981,499
1,851,666
5,541,672
Total business -type activities net position
$ 194,688,897
$ 28,138,017
$ 26,392,779
$ 26,414,164
Primary government:
Net investment in capital assets
$ 365,329,851
$ 382,263,928
$ 384,823,805
$ 399,784,038
Restricted
161,669,815
146,794,334
135,670,302
116,718,495
Unrestricted
158,101,491
106,018,652
116,588,715
122,087,023
Total primary government net position
$ 685,101,157
$ 635,076,914
$ 637,082,822
$ 638,589,556
-124-
Fiscal Year
2012 2013 2014 2015 2016 2017
$ 412,683,460 $ 431,761,288 $ 461,673,323 $ 456,649,085 $ 483,229,135 $ 490,574,647
47,727,966 54,367,385 36,693,458 72,929,522 95,241,025 102,027,853
147,513,249 177,532,888 93,877,440 140,727,040 107,224,779 144,442,931
$ 607,924,675 $ 663,661,561 $ 592,244,221 $ 670,305,647 $ 685,694,939 $ 737,045,431
$ 25,479,160 $ 24,171,745 $ 23,657,878 $ 24,270,718 $ 25,443,651 $ 23,252,432
2,795,701 7,094,771 8,326,340 11,845,734 12,227,557 15,129,697
$ 28,274,861 $ 31,266,516 $ 31,984,218 $ 36,116,452 $ 37,671,208 $ 38,382,129
$ 438,162,620 $ 455,933,033 $ 485,331,201 $ 480,919,803 $ 508,672,786 $ 513,827,079
47,727,966 54,367,385 36,693,458 72,929,522 95,241,025 102,027,853
150,308,950 184,627,659 102,203,780 152,572,774 119,452,336 159,572,628
$ 636,199,536 $ 694,928,077 $ 624,228,439 $ 706,422,099 $ 723,366,147 $ 775,427,560
-125-
CITY OF TUSTIN
CHANGES IN NET POSITION
EXPENSES AND PROGRAM REVENUES
Expenses:
Governmental activities:
General government
Public safety
Public works
Community services
Interest on long-term debt
Total governmental activities expenses
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
�nnQ �nnn 1n1n 1)ni1
$ 8,668,759
$ 8,499,303
$ 7,802,579
$ 7,854,361
27,875,230
29,126,019
27,277,141
28,622,807
30,814,898
22,102,002
20,816,686
19,809,907
3,442,833
5,112,770
12,742,391
13,150,089
4,715,026
3,566,782
4,087,839
4,814,598
75,516,746
68,406,876
72,726,636
74,251,762
Business -type activities:
Water 11,870,706 12,569,331 11,938,146 12,578,667
Tustin Legacy 1,279,802 1,259,093 - -
Total business -type activities expenses 13,150,508 13,828,424 11,938,146 12,578,667
Program revenues:
Governmental activities:
Charges for services:
General government
Public safety
Public works
Community services
Operating grants and contributions
Capital grants and contributions
Total governmental activities
program revenues
Business -type activities:
Charges for services:
Water
Tustin Legacy
Capital grants and contributions
Total business -type activities
program revenues
Net revenues (expenses):
Governmental activities
Business -type activities
Total net revenues (expenses)
2,716,432
1,694,464
1,404,925
1,109,150
2,749,660
2,136,772
1,168,348
1,196,830
1,688,753
2,374,308
3,761,321
3,508,904
929,548
897,386
957,545
969,006
3,831,037
4,253,442
3,403,411
3,441,281
79,210,370
18,865,776
6,287,231
3,395,929
91,125,800
30,222,148
16,982,781
13,621,100
10,923,061 11,281,679
34,370 22,587
28,299,036 -
zo nr-7 i i znn 'V,�
10,594,471
in ron n'71
12,422,746
V) n)) 7A r-
$ 15,609,054
$ (38,184,728)
$ (55,743,855)
$ (60,630,662)
26,105,959
(2,524,158)
(1,343,675)
(155,921)
$ 41,715,013
$ (40,708,886)
$ (57,087,530)
$ (60,786,583)
-126-
Fiscal Year
2012 2013 2014 2015 2016 2017
$ 12,266,470
$ 18,705,913
$ 14,825,780
$ 17,121,057
$ 20,023,280
$ 24,504,764
28,800,773
30,702,298
28,440,799
29,886,284
27,779,830
34,611,078
20,765,854
15,087,234
49,538,371
34,435,214
47,326,664
24,822,480
7,078,104
3,201,865
3,498,460
3,699,059
7,869,124
19,524,660
3,057,645
967,115
-
-
-
5,802
71,968,846
68,664,425
96,303,410
85,141,614
102,998,898
103,468,784
28,791,083
29,367,544
19,394,706
27,570,891
59,194,506
35,474,682
13,467,541
13,574,149
16,100,137
15,982,078
15,586,463
16,654,429
13,467,541
13,574,149
16,100,137
15,982,078
15,586,463
16,654,429
1,390,073
763,101
249,237
252,074
2,072,540
1,979,211
1,133,096
917,947
920,112
1,071,099
1,195,350
1,255,299
800,328
1,248,595
1,710,813
1,564,314
3,538,906
1,861,045
974,747
926,432
967,134
892,102
953,149
1,101,294
3,590,210
4,513,158
3,325,304
3,546,823
2,722,978
2,742,140
20,902,629
20,998,311
12,222,106
20,244,479
48,711,583
26,535,693
28,791,083
29,367,544
19,394,706
27,570,891
59,194,506
35,474,682
15,112,161
lG ll') lLl
16,688,773
l L LOO -7-71
18,682,821
l O L O') O') l
19,375,3 59
1C)1 -7C ICC)
16,511,795
)L c) ) -)nc
17,100,836
$ (43,177,763)
$ (39,296,881)
$ (76,908,704)
$ (57,570,723)
$ (43,804,392)
$ (67,994,102)
1,644,620
3,114,624
2,582,684
3,393,281
925,332
446,407
$ (41,533,143)
$ (36,182,257)
$ (74,326,020)
$ (54,177,442)
$ (42,879,060)
$ (67,547,695)
-127-
General revenues and other changes
in net position:
Governmental activities:
Taxes:
Property taxes
Transient occupancy taxes
Business license taxes
Other taxes
Sales tax
Motor vehicle in lieu, unrestricted
Investment income
Other general revenues
Gain (loss) on disposal of capital assets
Gain on sale of land held for resale
Profit participation
Transfers
Contribution from successor agency
Extraordinary and special items
Total governmental activities
Business -type activities
CITY OF TUSTIN
CHANGES IN NET POSITION
GENERAL REVENUES
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2008 2009 2010 2011
$ 31,070,501
$ 34,022,959
$ 28,347,659
$ 30,205,879
163,831
154,379
141,335
142,915
N/A
356,565
337,867
358,526
1,665,601
1,689,573
1,720,505
1,648,319
20,428,465
19,858,142
15,917,332
18,597,453
321,918
252,666
6,122,789
6,189,249
7,417,199
4,863,469
4,086,852
2,358,847
1,523,530
2,314,540
1,520,662
1,700,323
(1,366,208)
-
-
-
53,668,609 103,805,196
Investment income
815,560
164,764
86,654
158,242
Gain (loss) on disposal of capital assets
(681)
-
-
-
Miscellaneous
23,337
82,810
25,340
19,064
Transfers
(53,668,609)
(103,805,196)
-
-
Total business -type activities
(52,830,393)
(103,557,622)
111,994
177,306
Total primary government
$ 62,063,053
$ 63,759,867
$ 58,306,995
$ 61,378,817
Changes in net position:
Governmental activities
$ 130,502,500
$ 129,132,761
$ 2,451,146
$ 570,849
Business -type activities
(26,724,434)
(106,081,780)
(1,231,681)
21,385
Total primary government
$ 103,778,066
$ 23,050,981
$ 1,219,465
$ 592,234
-128-
Fiscal Year
2012 2013 2014 2015 2016 2017
$ 23,270,718
$ 14,526,101
$ 13,661,771
$ 14,552,535
$ 16,451,763
$ 24,437,717
137,131
137,064
616,897
1,090,675
1,554,754
1,609,318
44,800
377,498
393,241
419,148
406,891
420,684
1,621,521
1,655,388
1,663,215
1,763,878
1,839,963
1,931,185
19,931,865
21,575,405
22,288,032
22,269,896
24,513,610
25,133,146
5,833,094
5,951,653
6,150,893
6,380,698
6,778,329
37,056
958,169
243,921
628,180
1,052,276
2,430,087
611,964
14,444,183
7,231,648
4,040,996
7,829,149
2,671,845
4,594,651
- 43,335,089 - 48,136,121 - 24,241,261
- - - - - 31,327,612
-
-
-
32,137,773
-
-
(27,314,435)
-
1,412,257
-
2,546,442
5,000,000
38,927,046
95,033,767
50,855,482
135,632,149
59,193,684
119,344,594
156,855
39,700
144,381
249,863
480,050
108,669
59,222
271,858
408,749
489,090
149,374
155,845
216,077
311,558
553,130
738,953
629,424
264,514
$ 39,143,123
$ 95,345,325
$ 51,408,612
$ 136,371,102
$ 59,823,108
$ 119,609,108
$ (4,250,717)
$ 55,736,886
$ (26,053,222)
$ 78,061,426
$ 15,389,292
$ 51,350,492
1,860,697
3,426,182
3,135,814
4,132,234
1,554,756
710,921
$ (2,390,020)
$ 59,163,068
$ (22,917,408)
$ 82,193,660
$ 16,944,048
$ 52,061,413
-129-
CITY OF TUSTIN
FUND BALANCES OF GOVERNMENTAL FUNDS
Fund Balance prior to GASB 54
General fund:
Reserved
Unreserved
Total general fund
All other governmental funds:
Reserved
Unreserved, reported in:
Special revenue funds
Debt service funds
Capital projects funds
Total all other governmental funds
Fund Balance subsequent to GASB 54
General fund:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total general fund
All other governmental funds:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total all other governmental funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
$ 116,342 $ 120,632,293 $ 144,139,167 $ -
24,471,029 1,971,846 5,870,992 -
$ 24,587,371 $ 122,604,139 $ 150,010,159 $ -
$ 76,696,588 $ 49,777,973 $ 66,609,267 $ -
64,896,223 16,437,130 14,277,683 -
- - (6,774,245) -
17,558,428 90,474,987 75,663,086 -
$ 159,151,239 $ 156,690,090 $ 149,775,791 $ -
$ 144,139,167 $ 144,186,955
- - 47,608 -
- - 5,823,384 -
- - - 7,443,165
$ 150,010,159 $ 151,630,120
$ 34,800,738 $ 22,352,713
- - 111,455,097 130,673,281
- - 344,708 -
- - 11,670,324 18,603,317
- - (8,495,076) (10,989,463)
$ 149,775,791 $ 160,639,848
-130-
Fiscal Year
$ 56,224,280 $ 52,053,954 $ 35,314,389 $ 61,399,349 $ 81,312,081 $ 71,480,566
1 Decrease of $92.4 million due to dissolution of the Tustin Community Redevelopment Agency (TCRA) on February 1, 2012.
The assets and liabilities of the TCRA were transferred to the Successor Agency for the TCRA private purpose trust fund.
2 Increase of $40.3 million due to the gain on sale of land in the former Marine Corp Air Station referred to as the Legacy and
land held for resale along the 55 freeway and Edinger Avenue.
3 Increase of $65.5 million due to the gain on sale of land held for resale of $48.1 million for the development of residential
housing and special item totaling $21.4 million due to reclassification of promissory note to long-term debt.
4 Increase of $31.9 million due to the transfer of bond proceeds from the Successor Agency to the TCRA to the MCAS 2010
Capital Project Fund.
5 Decrease of $33.9 million due to the reclassification of $34 million of land held for resale to land reported as capital assets
which is not reflected in the governmental funds statements.
-131-
$ 144,604,847
$ 128,988,209
$
129,049,954
$ 122,458,642
$
88,579,214 5
$ 84,344,748
-
19,615,343
1,352,309
16,650,332
18,657,461
34,901,943
4,077,344
44,368,566 2
18,781,826
84,278,138 s
79,667,061
102,517,562
$ 148,682,191
$ 192,972,118
$
149,184,089
$ 223,387,112
$
186,903,736
$ 221,764,253
$ 1,710,292
$ 1,287,607
$
-
$ -
$
1,922
$ 1,922
38,274,666 i
33,885,757
29,820,853
24,048,818
54,438,343
51,069,708
16,239,322
16,880,590
5,493,536
37,350,531 4
26,871,816
20,408,936
$ 56,224,280 $ 52,053,954 $ 35,314,389 $ 61,399,349 $ 81,312,081 $ 71,480,566
1 Decrease of $92.4 million due to dissolution of the Tustin Community Redevelopment Agency (TCRA) on February 1, 2012.
The assets and liabilities of the TCRA were transferred to the Successor Agency for the TCRA private purpose trust fund.
2 Increase of $40.3 million due to the gain on sale of land in the former Marine Corp Air Station referred to as the Legacy and
land held for resale along the 55 freeway and Edinger Avenue.
3 Increase of $65.5 million due to the gain on sale of land held for resale of $48.1 million for the development of residential
housing and special item totaling $21.4 million due to reclassification of promissory note to long-term debt.
4 Increase of $31.9 million due to the transfer of bond proceeds from the Successor Agency to the TCRA to the MCAS 2010
Capital Project Fund.
5 Decrease of $33.9 million due to the reclassification of $34 million of land held for resale to land reported as capital assets
which is not reflected in the governmental funds statements.
-131-
CITY OF TUSTIN
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
Other financing sources (uses)
Transfers in
7,803,274
Fiscal Year
37,207,661
2,645,014
Transfers out
2008
2009
2010
2011
Revenues:
-
-
26,274,205
43,281,289
Taxes
$ 51,775,505
$ 56,198,002 $
52,579,529
$ 57,324,011
Licenses and permits
2,710,309
1,692,955
3,538,198
716,144
Fines and forfeitures
818,868
832,188
890,770
893,642
Investment income
7,529,488
4,429,915
3,198,484
1,632,215
Intergovernmental revenues
27,394,402
14,626,663
5,378,430
5,372,905
Charges for services
1,583,324
4,497,309
2,708,705
5,020,485
Rental income
786,438
771,807
869,645
358,030
Developer contributions
-
-
4,051,180
1,593,475
Profit participation
-
-
-
-
Gain on sale of land held for resale
-
-
-
-
Contribution from Successor Agency
-
-
-
-
Other revenues
59,309,772
1,188,200
1,028,432
2,425,052
Total revenues
151,908,106
84,237,039
74,243,373
75,335,959
Expenditures:
Current:
General government
8,295,887
6,728,236
7,197,709
7,505,928
Public safety
26,561,960
27,759,939
26,359,435
27,508,514
Public works
10,136,680
11,311,291
10,133,685
9,110,621
Community services
2,886,132
5,005,986
12,251,479
12,740,969
Capital outlay
15,080,865
24,772,717
13,125,983
9,979,670
Debt service:
Principal retirement
1,055,000
11,143,000
7,913,000
10,659,000
Interest and fiscal charges
4,718,806
3,570,834
4,603,661
4,131,435
Bond issue costs
-
-
-
429,731
Total expenditures
68,735,330
90,292,003
81,584,952
82,065,868
Excess (deficiency) of revenues
over (under) expenditures
83,172,776
(6,054,964)
(7,341,579)
(6,729,909)
Other financing sources (uses)
Transfers in
7,803,274
142,866,218
37,207,661
2,645,014
Transfers out
(7,803,274)
(41,295,836)
(37,207,661)
(2,645,014)
Proceeds from debt issuance
-
-
26,274,205
43,281,289
Contribution to developer
(11,934,400)
-
-
-
Sale of property
44,658
40,201
7,421
18,138
Capital lease issued
-
-
-
-
Total other financing sources (uses)
(11,889,742)
101,610,583
26,281,626
43,299,427
Extraordinary gain (loss) - - - -
Special item - - - -
Net change in fund balances $ 71,283,034 $ 95,555,619 $ 18,940,047 $ 36,569,518
Debt service as a percentage of
noncapital expenditures 10.35% 21.32% 17.69% 20.00%
-132-
Fiscal Year
2012 2013 2014 2015 2016 2017
$ 50,907,306
$ 44,279,024
$ 45,096,520
$ 43,696,204
$ 48,039,509
$ 49,958,547
443,928
577,044
1,284,232
885,043
1,334,311
853,990
875,068
678,428
631,340
752,597
982,123
953,665
472,725
173,890
621,786
1,041,661
2,422,072
608,888
6,413,137
21,551,042
7,453,722
15,032,387
18,324,393
10,249,298
2,813,752
2,685,080
1,787,268
1,870,401
2,357,268
1,999,860
480,255
550,003
751,724
1,113,340
1,308,852
1,542,281
-
-
-
16,934,704
26,357,490
16,804,964
-
-
-
-
-
23,495,709
-
43,340,797
-
48,136,121
-
24,241,261
-
-
-
32,137,773
-
-
14,075,025
9,773,813
6,110,735
6,302,392
4,714,101
5,849,937
76,481,196
123,609,121
63,737,327
167,902,623
105,840,119
136,558,400
11,656,331
17,357,805
14,205,424
17,568,297
20,372,454
24,052,915
28,714,347
27,944,039
28,170,314
33,062,929
27,897,182
30,733,524
6,954,384
5,980,807
5,797,705
6,417,257
7,182,380
7,591,876
6,506,381
2,752,523
3,081,299
3,170,747
7,308,498
18,727,257
25,816,530
28,487,231
74,422,436
23,800,093
22,498,621
26,657,177
2,590,000
-
-
5,000,000
4,101,171
4,129,203
3,264,323
967,115
-
-
-
5,802
(9,021,100)
40,119,601
(61,939,851)
78,883,300
16,479,813
24,660,646
3,020,291
6,122,454
2,084,612
5,266,102
5,453,988
4,242,209
(3,020,291)
(6,122,454)
(2,084,612)
(5,266,102)
(5,453,988)
(4,242,209)
43,745
-
-
-
-
-
-
-
-
-
-
368,356
43,745
-
-
-
-
368,356
(98,386,142)
-
1,412,257
-
976,042
-
-
-
-
21,404,683
(34,026,499)
-
$(107,363,497)
$ 40,119,601
$ (60,527,594)
$ 100,287,983
$ (16,570,644)
$ 25,029,002
9.00%
1.73%
0.00%
6.03%
5.28%
4.48%
- 133 -
CITY OF TUSTIN
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
(IN THOUSANDS)
Last Ten Fiscal Years
Notes:
Exemptions are netted directly against individual categories
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 reassessed at the time
that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold.
The assessed valuation data shown above represents the only data currently available with respect to the actual market
value of taxable property and is subject to the limitations described above.
(A) Effective February 1, 2012, the Redevelopment Agency was dissolved. See Notes 18 and 19 for more information.
(B) This rate represents the weighted average of all individual direct rates applied by the City of Tustin.
-134-
City
Fiscal Year
Taxable
Ended
Assessed
June 30
Secured
Unsecured
Value
2008
$ 7,708,506
$ 435,160
$ 8,143,666
2009
7,019,706
341,056
7,360,762
2010
6,874,131
323,694
7,197,825
2011
6,791,003
318,875
7,109,878
2012
6,865,333
294,518
7,159,851
2013
6,975,148
295,303
7,270,451
2014
7,151,192
267,629
7,418,821
2015
7,503,074
287,558
7,790,632
2016
7,924,736
293,492
8,218,228
2017
8,254,232
312,525
8,566,757
Notes:
Exemptions are netted directly against individual categories
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 reassessed at the time
that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold.
The assessed valuation data shown above represents the only data currently available with respect to the actual market
value of taxable property and is subject to the limitations described above.
(A) Effective February 1, 2012, the Redevelopment Agency was dissolved. See Notes 18 and 19 for more information.
(B) This rate represents the weighted average of all individual direct rates applied by the City of Tustin.
-134-
Redevelopment Agency (A)
- 135 -
Total
Direct Tax
Rate (B)
0.279%
0.326%
0.308%
0.310%
0.303%
0.302%
0.116%
0.116%
0.116%
0.116%
Taxable
Assessed
Secured
Unsecured
Value (A)
$ 1,826,514
$ 89,863
$ 1,916,377
2,432,407
165,392
2,597,799
2,175,049
128,194
2,303,243
2,180,029
129,387
2,309,416
2,085,982
133,065
2,219,047
2,107,792
123,929
2,231,721
2,192,026
121,534
2,313,560
2,362,339
139,834
2,502,173
2,643,865
141,934
2,785,799
2,872,602
138,433
3,011,035
- 135 -
Total
Direct Tax
Rate (B)
0.279%
0.326%
0.308%
0.310%
0.303%
0.302%
0.116%
0.116%
0.116%
0.116%
CITY OF TUSTIN
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
(rate per $100 of taxable value)
Direct Rate:
City of Tustin
Tustin Unified School District
South Orange County Community College District
County of Orange
Orange County Flood Control District
Orange County Library District
Orange County Department of Education
Various Special Districts
Total Direct Rate
Overlapping Rates:
Tustin Unified School District Bonds
Metropolitan Water District Bonds
Rancho Santiago Community College District Bonds
Irvine Ranch Water District Bonds
Santa Ana Unified School District Bonds
Total Overlapping Rates
Total Direct and Overlapping Rates
Source: Hdl, Coren & Cone
-136-
Fiscal Year
2008
2009
2010
2011
$ 0.1272
$ 0.1272
$ 0.1272
$ 0.1272
0.4397
0.4397
0.4397
0.4397
0.0886
0.0886
0.0886
0.0886
0.0617
0.0617
0.0617
0.0617
0.0198
0.0198
0.0198
0.0198
0.0167
0.0167
0.0167
0.0167
0.0161
0.0161
0.0161
0.0161
0.2302
0.2302
0.2302
0.2302
1.0000
1.0000
1.0000
1.0000
0.0317
0.0310
0.0380
0.0596
0.0045
0.0043
0.0043
0.0037
0.0237
0.0225
0.0274
0.0314
0.2143
0.2143
0.2242
0.2242
0.0359
0.0321
0.0739
0.0717
0.3101
0.3042
0.3678
0.3906
$ 1.3101
$ 1.3042
$ 1.3678
$ 1.3906
-137-
Fiscal Year
2012
2013
2014
2015
2016
2017
$ 0.1272
$ 0.1272
$ 0.1272
$ 0.1272
$ 0.1272
$ 0.1272
0.4397
0.4397
0.4397
0.4397
0.4397
0.4397
0.0886
0.0886
0.0886
0.0886
0.0886
0.0886
0.0617
0.0617
0.0617
0.0617
0.0617
0.0617
0.0198
0.0198
0.0198
0.0198
0.0198
0.0198
0.0167
0.0167
0.0167
0.0167
0.0167
0.0167
0.0161
0.0161
0.0161
0.0161
0.0161
0.0161
0.2302
0.2302
0.2302
0.2302
0.2302
0.2302
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
0.0559
0.0672
0.0891
0.0696
0.0775
0.0700
0.0037
0.0035
0.0035
0.0035
0.0035
0.0035
0.0315
0.0324
0.0333
0.0508
0.0504
0.0495
0.2155
0.2155
0.2155
0.0960
0.0960
0.1270
0.0715
0.0775
0.0736
0.0687
0.0660
0.0638
0.3781
0.3961
0.4150
0.2886
0.2934
0.3138
$ 1.3781
$ 1.3961
$ 1.4150
$ 1.2886
$ 1.2934
$ 1.3138
-137-
CITY OF TUSTIN
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Ten Years Ago
2017 2007
The amounts shown above include the Combined Tax Rolls and the SBE Non -Unitary Tax Roll
Sources: Hdl, Coren & Cone
-138-
Percent of
Percent of
Total City
Total City
Taxable
Taxable
Taxable
Taxable
Assessed
Assessed
Assessed
Assessed
Taxpayer
Value
Value
Value
Value
Irvine Company LLC
$ 240,622,443
2.08%
$ 66,612,138
0.74%
Vestar Kimco Tustin LP
171,082,080
1.48%
90,813,428
1.00%
Legacy Villas LLC
122,209,720
1.06%
Raintree Tustin LLC
105,422,597
0.91%
Tustin Parc LP
60,290,000
0.52%
Irvine Apartment Communities LP
52,768,742
0.46%
224,978,873
2.48%
Apple Ten Hospitality Ownership Inc
52,483,043
0.45%
Borchard Redhill SKB-Tustin LLC
51,672,689
0.45%
55,468,620
0.61%
Cadigan Communities LP
51,087,754
0.44%
PK II Larwin Square SC LP
50,263,983
0.43%
Creekside Meadows Development LLC
125,306,082
1.38%
William Lyon Homes Inc
68,633,798
0.76%
Ora Residential Investment LLC
55,935,225
0.62%
Oppenheim Immobilen-Kapi Talanlagegesel
55,641,000
0.61%
LennarHomes
45,707,185
0.50%
MW Housing Partners III LP
42,711,152
0.47%
$ 957,903,051
0.0828
$ 831,807,501
0.0917
The amounts shown above include the Combined Tax Rolls and the SBE Non -Unitary Tax Roll
Sources: Hdl, Coren & Cone
-138-
CITY OF TUSTIN
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Notes:
The amounts presented for fiscal years 2008 through 2012 include City property taxes and former Redevelopment Agency tax
increment.
Effective February 1, 2012, the former Redevelopment Agency was dissolved. See Notes 18 and 19 for more information.
Source: County of Orange Auditor Controller's Office
-139-
Collected within the
Fiscal
Taxes Levied
Fiscal Year of Levy
Collections in
Total Collections to Date
Year Ended
for the
Percent
Subsequent
Percent
June 30
Fiscal Year
Amount
of Levy
Years
Amount
of Levy
2008
$ 33,554,781
$ 31,070,501
92.60%
$ 695,793
$ 31,766,294
94.67%
2009
38,515,110
34,022,959
88.34%
1,417,067
35,440,026
92.02%
2010
31,739,378
28,347,659
89.31%
917,222
29,264,881
92.20%
2011
30,713,746
29,541,000
96.18%
610,052
30,151,052
98.17%
2012
30,163,205
20,433,400
67.74%
147,389
20,580,789
68.23%
2013
9,492,638
9,257,817
97.53%
121,715
9,379,532
98.81%
2014
9,862,476
9,655,778
97.90%
121,400
9,777,178
99.14%
2015
9,287,149
9,007,785
96.99%
163,497
9,171,282
98.75%
2016
10,847,984
10,541,516
97.17%
233,935
10,775,451
99.33%
2017
11,278,643
10,996,314
97.50%
207,332
11,203,646
99.34%
Notes:
The amounts presented for fiscal years 2008 through 2012 include City property taxes and former Redevelopment Agency tax
increment.
Effective February 1, 2012, the former Redevelopment Agency was dissolved. See Notes 18 and 19 for more information.
Source: County of Orange Auditor Controller's Office
-139-
CITY OF TUSTIN
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Fiscal
Governmental Activities
Year
Tax
Tax
Tax
Total
Ended
Allocation
Allocation
Allocation
Notes
Notes
Lease Governmental
June 30
Bonds (1)
Bonds (5)
Bonds (6)
Payable (2)
Payable (3)
Payable (11) Activities
2008
$ 11,975,000
$
$
$ 25,000,000 $
-
$ - $ 36,975,000
2009
10,870,000
14,962,000
19,284,170
45,116,170
2010
9,720,000
26,170,000
8,199,000
20,112,456
64,201,456
2011
8,515,000
24,915,000
44,170,000
-
20,976,317
98,576,317
2012
-
-
-
21,877,282
21,877,282
2013
22,816,940
22,816,940
2014
21,404,683
21,404,683
2015
16,404,683
16,404,683
2016
12,303, 512
12,303, 512
2017
3,202,341
340,324 3,542,665
Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
(1) On July 1, 1998 The City issued $20.8 million of Tax Allocation Refunding Bonds to retire Series 1987 Refunding Bonds. On
February 1, 2012, the remaining liability of $7,260,000 was transferred to the Successor Agency to the Tustin Community
Redevelopment Agency. See Notes 18, and 19 for more information.
(2) In April of 2007 the Tustin Redevelopment Agency executed a note payable in the amount of $25 million to acquire property to carry
out the program objectives of the Agency.
(3) In December of 2008 the City executed a note payable to the Tustin Redevelopment Agency in the amount of $18,881,750 to increase
its deposit of probable compensation per court order pending litigation. As of February 1, 2012, this note became payable to the
Successor Agency to the Tustin Community Redevelopment Agency. See Note 19 for more information.
(4) In September of 2003 the City issued $14.355 million of Refunding Water Revenue Bonds to defease the outstanding Certificates of
Participation and the Orange County Water District Notes. These bonds were defeased in March 2012.
(5) In March 2010 the Tustin Redevelopment Agency issued $26,170,000 Tax Allocation Housing Bonds, Series 2010 to refinance low and
moderate income housing activities throughout the geographic boundaries in the City. On February 1, 2012, the remaining liability of
$24,220,000 was transferred to the Successor Agency to the Tustin Community Redevelopment Agency. See Notes 18, and 19 for more
information.
-140-
21,013,711 6,571,858
- 5,720,101
14,062,474
14,013,530 22,790,666
41,648,043 53,951,555
42,524,297 46,066,962
2.21% 656
1.82% 559
(6) In November 2010 the Tustin Redevelopment Agency issued $44,170,000 MCAS Tax Allocation Bonds, Series 2010 to finance
capital improvements in the MCAS project area. On February 1, 2012, the remaining liability of $43,530,000 was transferred to
the Successor Agency to the Tustin Community Redevelopment Agency. See Notes 18, and 19 for more information.
(7) In May 2011 the City issued $20,760,000 Water Revenue Bonds, 2011 Series A to finance water capital improvement projects.
(8) In March 2012 the City issued $8.91 million of Refunding Water Bonds to defease the outstanding 2003 Water Revenue Bonds.
(9) In October 2013 the City issued $14,045,000 Water Revenue Bonds to finance water capital improvement projects.
(10) In September 2016 the City issued $21.515 million of Refunding Water Bonds to defease the outstanding 2011 Water Revenue
Bonds.
(11) In February 2017 the City entered into a lease to finance equipment with a present value of $368,356.
-141 -
Business -type Activity
Percentage
Water
Water
Water
Water Water
Total
Total
of
Debt
Revenue
Revenue
Revenue
Revenue Revenue
Business -type
Primary
Personal
Per
Bonds (4)
Bonds (7)
Bonds (8)
Bonds (9) Bonds (10)
Activity
Government
Income
Capita
$ 13,080,000
$
$
$ $
$ 13,080,000
$ 50,055,000
2.11%
$ 696
12,560,000
12,560,000
57,676,170
2.35%
783
11,875,000
11,875,000
76,076,456
3.16%
1,018
11,165,000
20,760,000
31,925,000
130,501,317
5.52%
1,722
-
20,760,000
8,910,000
29,670,000
51,547,282
2.12%
673
21,044,310
8,997,129
30,041,439
52,858,379
2.16%
678
21,034,111
8,205,372
14,160,362
43,399,845
64,804,528
2.73%
827
21,023,911
7,398,615
14,111,418
42,533,944
58,938,627
2.44%
752
21,013,711 6,571,858
- 5,720,101
14,062,474
14,013,530 22,790,666
41,648,043 53,951,555
42,524,297 46,066,962
2.21% 656
1.82% 559
(6) In November 2010 the Tustin Redevelopment Agency issued $44,170,000 MCAS Tax Allocation Bonds, Series 2010 to finance
capital improvements in the MCAS project area. On February 1, 2012, the remaining liability of $43,530,000 was transferred to
the Successor Agency to the Tustin Community Redevelopment Agency. See Notes 18, and 19 for more information.
(7) In May 2011 the City issued $20,760,000 Water Revenue Bonds, 2011 Series A to finance water capital improvement projects.
(8) In March 2012 the City issued $8.91 million of Refunding Water Bonds to defease the outstanding 2003 Water Revenue Bonds.
(9) In October 2013 the City issued $14,045,000 Water Revenue Bonds to finance water capital improvement projects.
(10) In September 2016 the City issued $21.515 million of Refunding Water Bonds to defease the outstanding 2011 Water Revenue
Bonds.
(11) In February 2017 the City entered into a lease to finance equipment with a present value of $368,356.
-141 -
CITY OF TUSTIN
RATIO OF GENERAL BONDED DEBT OUTSTANDING
Last Ten Fiscal Years
General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in
enterprise funds. The City currently does not have general bonded debt in either fund.
* - Assessed value has been used because the actual value of taxable property is not readily available in the State
of California.
Effective February 1, 2012, the redevelopment agency was dissolved. The outstanding balance of tax allocation
bonds were transferred to the Successor Agency to the Tustin Community Redevelopment Agency. See
Notes 18 and 19 for more information.
-142-
Outstanding General Bonded Debt
Fiscal Year
General Tax
Percent of
Ended
Obligation Allocation
Assessed
Per
June 30
Bonds Bonds Total
Value *
Capita
2008
$ - $ 11,975,000 $ 11,975,000
0.12%
$ 166
2009
- 10,870,000 10,870,000
0.11%
148
2010
- 35,890,000 35,890,000
0.38%
480
2011
- 77,600,000 77,600,000
0.82%
1,024
2012
- - -
-
-
2013
- - -
-
-
2014
- - -
-
-
2015
- - -
-
-
2016
- - -
-
-
2017
- - -
-
-
General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in
enterprise funds. The City currently does not have general bonded debt in either fund.
* - Assessed value has been used because the actual value of taxable property is not readily available in the State
of California.
Effective February 1, 2012, the redevelopment agency was dissolved. The outstanding balance of tax allocation
bonds were transferred to the Successor Agency to the Tustin Community Redevelopment Agency. See
Notes 18 and 19 for more information.
-142-
CITY OF TUSTIN
OVERLAPPING DEBT SCHEDULE
June 30, 2017
2016-17 Assessed Valuation
$11,577,792,122
Redevelopment Incremental Valuation
(2,841,809,468)
Adjusted Assessed Value
$ 8,735,982,654
City's
Share of
Total Debt
(1)
Debt at
OVERLAPPING TAX AND ASSESSMENT DEBT:
6/30/17
%Applicable
6/30/17
Metropolitan Water District
$ 74,905,000
0.448%
335,574
Rancho Santiago Community College District
258,096,533
0.114
294,230
Rancho Santiago Community College District School Facilities Improvement Dst No. 1
57,025,000
0.191
108,918
Santa Ana Unified School District
265,510,216
0.236
626,604
Tustin Unified School District School Facilities Improvement District No. 2002-1
46,550,254
45.684
21,266,018
Tustin Unified School District School Facilities Improvement District No. 2008-1
88,340,000
43.879
38,762,709
Tustin Unified School District School Facilities Improvement District No. 2012-1
27,720,000
44.842
12,430,202
Tustin Unified School District Community Facilities District No. 88-1
31,610,000
100
31,610,000
Tustin Unified School District Community Facilities District No. 06-1
15,060,000
100
15,060,000
City of Tustin Community Facilities Districts
100,600,000
100
100,600,000
Irvine Unified School District Community Facilities District No. 86-1
53,980,000
0.195
105,261
Irvine Ranch Water District Improvement Districts
503,159,370
5.107-84.927
60,731,810
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
S 281,931,326
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations
227,516,000
2.205%
5,016,728
Orange County Pension Obligations
386,762,539
2.205
8,528,114
Orange County Board of Education Certificates of Participation
14,440,000
2.205
318,402
Orange Unified School District Certificates of Participation
24,848,145
0.031
7,703
Orange Unified School District Benefit Obligations
80,865,000
0.031
25,068
Santa Ana Unified School District Certificates of Participation
60,937,067
0.236
143,811
City of Tustin
-
100.000
-
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT
14,039,826
OVERLAPPING TAX INCREMENT DEBT (Successor Agencies)
$ 148,430,000
0.001-100.00%
$ 59,666,108
TOTAL DIRECT DEBT
$ -
TOTAL OVERLAPPING DEBT
355,637,260
COMBINED TOTAL DEBT $ 355,637,260 (2)
(1) 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.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded capital lease
obligations.
Effective February 1, 2012, the former Redevelopment Agency was dissolved. See Notes 18 and 19 for more information
Ratios to 2016-17 Assessed Valuations:
Total Overlapping Tax and Assessment Debt 2.44%
Total Direct Debt 0.00%
Combined Total Debt 3.07%
Ratios to Redevelopment Incremental Valuations ($2.841.809.468):
Total Overlapping Tax Increment Debt 2.10%
Source: California Municipal Statistics, Inc.
- 143 -
CITY OF TUSTIN
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Fiscal Year
2008 2009 2010
2011
Assessed valuation $ 8,143,666,000 $ 7,360,762,000 $ 7,197,825,000
$ 7,109,878,000
Conversion percentage 25% 25% 25%
25%
Adjusted assessed valuation 2,035,916,500 1,840,190,500 1,799,456,250
1,777,469,500
Debt limit percentage 15% 15% 15%
15%
Debt limit 305,387,475 276,028,575 269,918,438
266,620,425
Total net debt applicable to limitation - - -
-
Legal debt margin $ 305,387,475 $ 276,028,575 $ 269,918,438
$ 266,620,425
Total debt applicable to the limit
as a percentage of debt limit 0.0% 0.0% 0.0%
0.0%
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed
valuation. However, this provision was enacted when assessed valuation was based on 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.
Sources: County Tax Assessor's Office
City Finance Department
-144-
Fiscal Year
2012
2013
2014
2015
2016
2017
$ 7,159,851,000
$ 7,270,451,000
$ 7,418,821,000
$ 7,790,632,000
$ 8,218,228,000
$ 8,566,757,000
25%
25%
25%
25%
25%
25%
1,789,962,750
1,817,612,750
1,854,705,250
1,947,658,000
2,054,557,000
2,141,689,250
15%
15%
15%
15%
15%
15%
268,494,413
272,641,913
278,205,788
292,148,700
308,183,550
321,253,388
$ 268,494,413
$ 272,641,913
$ 278,205,788
$ 292,148,700
$ 308,183,550
$ 321,253,388
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
-145-
CITY OF TUSTIN
PLEDGED -REVENUE COVERAGE
Last Ten Fiscal Years
Fiscal Year
Less
Net
Water Revenue Bonds
Ended
Water
Operating
Available
Debt Service
June 30
Revenue
Expenses
Revenue
Principal
Interest
Coverage
2008
$ 11,240,752
$ 10,053,706
$ 1,187,046
$ 335,000
$ 563,450
1.32
2009
11,510,315
10,573,932
936,383
520,000
550,385
0.87
2010
12,829,902
9,928,608
2,901,294
685,000
530,105
2.39
2011
12,422,746
10,566,435
1,856,311
710,000
502,705
1.53
2012
15,112,161
10,683,621
4,428,540
740,000
1,432,659
2.04
2013
16,688,773
11,462,258
5,226,515
710,000
957,111
3.14
2014
18,955,616
13,198,598
5,757,018
710,000
1,622,859
2.47
2015
19,375,359
12,511,648
6,863,711
770,000
1,973,820
2.50
2016
16,511,795
12,013,376
4,498,419
790,000
1,951,170
1.64
2017
17,100,836
13,032,698
4,068,138
815,000
1,753,485
1.58
Notes:
Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.
Operating expenses do not include interest or depreciation and amortization expenses.
Water revenues in 2010 include proceeds from an advance from the City's general fund.
On February 1, 2012, the remaining balance of the Tax Allocation Bonds was transferred to the Successor Agency to
the Tustin Community Redevelopment Agency. See Notes 18 and 19 for more information,
-146-
Tax Allocation Bonds
Tax
Debt Service
Allocation
Principal
Interest
Coverage
$ 3,381,188
$ 1,055,000 $
594,358
2.05
4,460,947
1,105,000
547,365
2.70
3,831,975
1,150,000
497,180
2.33
17,928,849
2,460,000
2,204,419
3.84
-147-
CITY OF TUSTIN
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
Source: HdL Coren & Cone, LLC
-148-
Personal
Per Capita
County of Orange
Calendar
City of Tustin
Income
Personal
Unemployment
Year
Population
(In Thousands)
Income
Rate
2008
71,931
$ 2,368,395
$ 32,926
3.80%
2009
73,670
2,450,480
33,263
5.20%
2010
74,736
2,407,036
32,207
8.90%
2011
75,733
2,363,057
31,186
9.40%
2012
76,597
2,429,318
31,716
8.60%
2013
77,983
2,451,708
31,439
5.60%
2014
78,360
2,375,640
30,317
4.90%
2015
78,347
2,411,442
30,779
5.10%
2016
82,717
2,441,169
29,512
4.20%
2017
82,372
2,506,380
30,427
3.70%
Source: HdL Coren & Cone, LLC
-148-
CITY OF TUSTIN
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
Sources: Orange County Workforce Investment Board
City of Tustin
US Census Bureau
-149-
2017
2007
Percent of
Percent of
Number of
Total
Number of
Total
Employer
Employees
Employment
Employees
Employment
Tustin Unified School District
2,248
5.30%
Schools First Federal Credit Union
850
2.00%
New American Funding
594
1.40%
Kaiser Foundation Hospitals
593
1.40%
Youngs Market Company LLC
548
1.29%
City of Tustin
398
0.94%
Costco Wholesale Corporation
350
0.83%
Logomark Inc
315
0.74%
Toshiba America Medical Systs
300
0.71%
300
0.76%
Ricoh Electronics Inc
256
0.60%
1038
2.64%
Tustin Hospital Medical Center
200
0.51%
KTBN Channel 40 Trinity Broadcasting
180
0.46%
Texas Instruments
560
1.42%
MacPherson Enterprises
540
1.37%
GE Power Electronics (formerly Cherokee
330
o
0.84/0
International)
Revere Transducers
200
0.51%
Fireman's Fund Insurance
190
0.48%
Safeguard Business Systems
175
0.45%
Sources: Orange County Workforce Investment Board
City of Tustin
US Census Bureau
-149-
Function
General Government
Community Development
Public Works
Police
Parks and Recreation
RDA/Successor Agency
Water
Total
CITY OF TUSTIN
FULL-TIME CITY EMPLOYEES
BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
31
27
27
25
29
26
35
33
38
35
29
28
24
17
17
15
15
16
19
19
51
50
53
52
51
40
47
48
45
48
144
147
147
140
139
131
140
141
141
137
15
16
15
14
15
13
13
14
14
17
5
6
6
6
5
3
-
-
-
-
20
23
22
23
25
17
17
18
19
18
295 297 294 277 281 245 267 270 276 274
The City contracts with the OC Fire Authority for fire services.
Source: City of Tustin Human Resource Department
-150-
CITY OF TUSTIN
CAPITAL ASSET STATISTICS
BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
Function 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Public Safety
Police Stations
1
1
1
1
1
1
1
1
1
1
Fire Stations (1)
2
2
2
2
2
2
2
2
2
2
Public Works
Street (miles)
106.3
127.2
127.2
127.2
127.2
127.2
129.1
129.1
130.1
130.7
Street Lights
3,285
3,544
3,544
3,544
3,544
3,544
3,640
3,640
3,680
3,700
Traffic Signals
113
113
116
117
118
118
121
121
125
126
Storm Drain (miles)
49.1
49.2
49.2
49.2
49.2
49.2
51.2
51.4
51.8
52.9
Street Trees
15,821
15,853
15,853
15,837
15,786
16,097
16,073
15,815
15,706
15,542
Parks and Recreation
Parks
12
12
13
13
13
13
13
13
14
14
Parks (acres)
81.5
81.5
98.5
98.5
98.5
98.5
98.5
98.5
116.0
116.0
Community Centers
1
1
1
1
1
1
1
1
1
1
Senior Centers
1
1
1
1
1
1
1
1
1
1
Water
Metered Services
14,117
14,118
14,118
14,139
14,139
14,172
14,181
14,148
14,099
14,109
Average daily consumption
14,970
14,460
14,460
12,899
13,491
13,601
13,975
13,975
9,975
10,601
Reservoirs
6
6
6
6
6
6
6
6
6
6
Wells
12
13
13
13
13
13
13
13
13
14
Water Main (miles)
173
173
173
173
173
173
173
173
173
172
Fire Hydrants
2,200
2,201
2,201
2,201
2,201
2,201
1,914
1,945
1,945
1,945
(1) The City contracts with the OC Fire Authority for fire services, and they have full use of City owned stations.
Source: City of Tustin Finance Department
- 151 -
CITY OF TUSTIN
WATER CONSUMPTION BY CUSTOMER TYPE
Type of Customer
Residential
Apartment/Multiple Units
Commercial
Fire Services
Irrigation
Government
Restaurants
Hospitals
Non -Profit
Industrial
Hotel/Motels
All Others
Measured in hundred cubic feet.
Source: City of Tustin Finance Department
Last Ten Fiscal Years
Fiscal Year
2008 2009 2010
2011
3,202,982
3,012,575
2,749,415
2,592,741
1,264,584
1,226,181
1,142,749
1,133,899
326,987
305,601
287,951
296,001
478
184
217
275
174,858
171,382
145,287
134,408
260,688
264,425
238,914
212,561
61,029
54,916
52,761
48,873
14,376
11,222
9,636
11,587
48,922
45,387
43,985
41,291
69,920
67,985
56,360
51,760
12,803
12,890
13,562
8,332
115,246
105,221
171,781
176,248
5,552,873
5,277,969
4,912,618
4,707,976
-152-
2012 2013
Fiscal Year
2014 2015 2016 2017
2,733,482
2,815,322
2,905,069
2,603,538
1,934,761
2,119,716
1,172,823
1,158,480
1,163,159
1,139,321
1,003,808
987,688
305,638
308,376
321,125
310,585
259,459
271,649
1,242
818
577
837
646
504
149,957
151,965
167,346
155,766
96,082
105,750
236,658
268,581
276,292
229,262
134,446
162,843
53,183
53,461
52,520
51,658
45,069
44,947
12,204
12,442
7,634
10,018
11,166
11,276
44,488
44,476
45,920
41,601
22,989
26,751
58,298
57,462
60,438
59,292
40,407
45,071
8,514
10,417
12,866
21,379
23,387
25,185
147,552
82,716
87,785
71,324
68,830
70,721
4,924,039
4,964,516
5,100,731
4,694,581
3,641,050
3,872,101
- 153 -
CITY OF TUSTIN
WATER RATES
Last Ten Fiscal Years
Notes:
HCF = Hundred Cubic Feet (1 HCF = 748 gallons)
(1) A revised seven (7) tiered rate structure was approved on August 5, 2014 to address a stage 2 emergency drought
water demand reduction mandate.
A seven (7) tiered rate structure was implemented on July 1, 2010. Additionally, a new fixed charge (Capital Fee)
was implemented with the new rate structure, which has been included in the Bi -Monthly Fixed Charge. The
rate shown is for a standard residential customer.
The bi-monthly fixed rate shown is based on the standard residential customer meter (5/8"). The City uses the
American Water Works Association equivalent meter capacity ratios from the AWWA Manual M6 to calculate
fixed charges for meters ranging from 1 to 6 inches.
Source: City of Tustin Finance Department
-154-
Consumption Charges
Bi -Monthly
Up to
From
From
All
Fiscal
Fixed
12
13 to 40
41 to 60
Over 60
Year
Charge
HCF
HCF
HCF
HCF
2008
$ 22.26
$ 0.49
$ 1.56
$ 1.67
$ 1.84
2009
22.26
0.49
1.56
1.67
1.84
2010
22.26
0.49
1.56
1.67
1.84
Consumption Charges
Bi -Monthly
Up to
From
From
From
From
From
All
Fiscal
Fixed
10
11 to 20
21 to 30
31 to 40
41 to 50
51 to 60
Over 61
Year
Charge
HCF
HCF
HCF
HCF
HCF
HCF
HCF
2011
$ 34.49
$ 0.58
$ 1.02
$ 1.33
$ 1.65
$ 1.97
$ 2.29
$ 2.62
2012
36.94
0.70
1.22
1.60
1.99
2.37
2.76
3.17
2013
40.63
0.73
1.29
1.69
2.10
2.56
2.97
3.40
2014
43.59
0.79
1.38
1.81
2.25
2.79
3.24
3.70
2015(l)
46.85
0.84
1.48
1.94
2.41
3.05
3.53
4.05
2016
46.85
0.84
1.48
1.94
2.41
3.05
3.53
4.05
2017
46.85
0.84
1.48
1.94
2.41
3.05
3.53
4.05
Emergency Drought Stage 2 - Consumption Charges
Bi -Monthly
Up to
From
From
From
From
From
All
Fiscal
Fixed
8
9 to 16
17 to 24
25 to 32
33 to 40
41 to 48
Over 49
Year
Charge
HCF
HCF
HCF
HCF
HCF
HCF
HCF
2015(l)
$ 46.85
$ 0.84
$ 1.48
$ 1.94
$ 2.41
$ 3.05
$ 3.53
$ 4.05
2016
46.85
0.84
1.48
1.94
2.41
3.05
3.53
4.05
2017
46.85
0.84
1.48
1.94
2.41
3.05
3.53
4.05
Notes:
HCF = Hundred Cubic Feet (1 HCF = 748 gallons)
(1) A revised seven (7) tiered rate structure was approved on August 5, 2014 to address a stage 2 emergency drought
water demand reduction mandate.
A seven (7) tiered rate structure was implemented on July 1, 2010. Additionally, a new fixed charge (Capital Fee)
was implemented with the new rate structure, which has been included in the Bi -Monthly Fixed Charge. The
rate shown is for a standard residential customer.
The bi-monthly fixed rate shown is based on the standard residential customer meter (5/8"). The City uses the
American Water Works Association equivalent meter capacity ratios from the AWWA Manual M6 to calculate
fixed charges for meters ranging from 1 to 6 inches.
Source: City of Tustin Finance Department
-154-
Water Customer
Tustin Unified School District
City of Tustin
Tustin Plaza Center, LP
Ricoh Electronics, Inc.
Schroeder Property Management
Tustin Gateway LP
Fairfield Inn & Suites Tustin
CalTrans - District 12
Residence Inn Tustin
Key Inn
Tustin Acres Community Association
Alta Newport Hospitals Inc
15701 TV Way Partnership
71286 JMJ LLC
School's First Credit Union
Ems Development Co
Briarwood Investment Co. Ltd.
CA 4-14 FUND, LLC
HSA LP
Sierra Corporate Management
Westchester Park LP
AT& T Services, Inc.
Tustin Village Community Association
SP/P Creekside Venture, LLC
Saddleback Mobilodge
V KAY - NNC Valencia Gardens
Greenwood and McKenzie
CMC Association Management
Alders Apartment Company
Pacific Point Apartments
Arnel Management
Regency West
Sycamore Creek Apartments
Total Water Sales
Source: City of Tustin Finance Department
CITY OF TUSTIN
WATER CUSTOMERS
Current Year and Ten Years Ago
2017
2007
Percent of
Percent of
Water
Total Water
Water
Total Water
Charges
Revenues
Charges
Revenues
$ 536,061
3.13%
$ 283,081
2.75%
106,428
0.62%
99,990
0.97%
65,705
0.38%
55,484
0.32%
51,692
0.30%
32,726
0.32%
49,591
0.29%
45,487
0.27%
42,014
0.25%
32,140
0.31%
41,039
0.24%
39,812
0.23%
38,433
0.22%
43,641
0.42%
34,245
0.20%
34,236
0.20%
32,310
0.31%
31,886
0.19%
31,285
0.18%
31,136
0.18%
30,847
0.18%
25,378
0.25%
30,223
0.18%
30,174
0.18%
63,242
0.61%
29,109
0.17%
28,160
0.16%
29,407
0.29%
26,513
0.16%
52,837
0.51%
23,002
0.13%
26,689
0.26%
73,526
0.71%
26,157
0.25%
21,069
0.20%
36,361
0.35%
29,531
0.29%
25,538
0.25%
20,122
0.20%
29,362
0.29%
24,881
0.24%
22,368
0.22%
$ 1,432,559
8.38%
$ 1,030,356
10.00%
-155-
The page left blank intentionally
-156-
Honorable Mayor and
Members of the City Council
of the City of Tustin
Tustin, California
We have audited the financial statements of the governmental activities, business -type activity, each
major fund, and aggregate remaining fund information of the City of Tustin, California (the City), as of
and for the year ended June 30, 2017. Professional standards require that we provide you with
information about our responsibilities under generally accepted auditing standards and Government
Auditing Standards as well as certain information related to the planned scope and timing of our audit.
We have communicated such information in our engagement letter dated April 11, 2017 and our
planning letter dated May 1, 2017. Professional standards also require that we communicate to you the
following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 to the financial statements. No new
accounting policies were adopted and the application of other existing policies was not changed during
the year ended June 30, 2017. We noted no transactions entered into by the City during the year for
which there is a lack of authoritative guidance or consensus. All significant transactions have been
recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from those expected.
The most sensitive estimates affecting the City's financial statements are as follows:
a. Management's estimate of the fair value of investments is based on market values
provided by outside sources.
b. Management's estimate of the value of capital assets (infrastructure assets) is based on
industry standards.
c. The estimated useful lives of capital assets for depreciation purposes are based on
industry standards.
-1-
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
Significant Audit Findings (Continued)
Qualitative Aspects of Accounting Practices (Continued)
Sensitive Estimates (Continued)
d. The estimated value for the land held for resale related to Tustin Legacy was based on
fair value when donated by the United States Government.
e. The annual required contributions, pension expense, net pension liability and
corresponding deferred outflows of resources and deferred inflows of resources for the
City's public defined benefit plans with Ca1PERS are based on actuarial valuations
provided by CalPERS.
f. The annual required contribution and actuarial accrued liability for the City's Other
Post -Employment Benefit Plan are based on certain actuarial assumptions and methods
prepared by an outside consultant.
g. Management's estimate of the claims payable liabilities related to general liability and
worker's compensation claims are based on estimates by the claims administrators.
We evaluated the key factors and assumptions used to develop these estimates in determining that they
were reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosures affecting the financial statements were
reported in Notes 5 and 6 regarding the land held for resale, Note 10 regarding the Ca1PERS defined
benefit plans, Note 11 regarding the City's other post -employment benefit plan, Note 13 regarding the
claims payable, Note 18 regarding the recent changes in legislation affecting California
Redevelopment Agencies and Note 19 regarding Successor Agency disclosures.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management were material,
either individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
-2-
Significant Audit Findings (Continued)
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditors' report. We are pleased to report that no such disagreements arose during the
course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated December 12, 2017.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the City's financial statements or a determination of
the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the City's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our retention.
Other Matters
We applied certain limited procedures to management's discussion and analysis, the safety plan
schedule of proportionate share of the net pension liability and schedule of contributions, the
miscellaneous plan schedule of changes in net pension liability and related ratios and schedule of
contributions, the other post -employment benefit plan schedule of funding progress, and the budgetary
comparison schedule for the general fund and the major special revenue fund, which are required
supplementary information (RSI) that supplements the financial statements. Our procedures consisted
of inquiries of management regarding 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
did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual nonmajor fund financial statements and
schedules (supplementary information), which accompany the financial statements but are not RSI.
With respect to this supplementary information, we made certain inquiries of management and
evaluated the form, content, and methods of preparing the information to determine that the
information complies with accounting principles generally accepted in the United States of America,
the method of preparing it has not changed from the prior period, and the information is appropriate
and complete in relation to our audit of the financial statements.
-3-
Other Matters (Continued)
We compared and reconciled the supplementary information to the underlying accounting records used
to prepare the basic financial statements or to the basic financial statements themselves.
We were not engaged to report on the introductory section and statistical section, which accompany the
financial statements but are not RSI. We did not audit or perform other procedures on this other
information and we do not express an opinion or provide any assurance on them.
Upcoming Changes in Accounting Standards and Regulatory Updates
Procurement Rules under Uniform Guidance
The Uniform Guidance has different procurement rules than those previously required by the
Circular A-133. Due to the work required by nonfederal entities to implement these new rules, a
two-year grace period was given. In May 2017, an additional one-year grace period was given.
Beginning July 1, 2018, nonfederal entities will be required to comply with all of the Uniform
Guidance procurement rules. Included in these new rules is the requirement for written policies and
procedures.
Commencing with the fiscal year 2018-2019 audits, auditors will request the written policies of the
nonfederal entity for all single audits and review the procurement policies and procedures for
compliance with the Uniform Guidance procurement rules.
Other Postemployment Benefit Standards
In June 2015, the Governmental Accounting Standards Board (GASB) issued Statement No. 75,
Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (Statement).
The scope of this Statement addresses accounting and financial reporting for postemployment benefits
other than pension (other postemployment benefits or OPEB) that is provided to the employees of state
and local governmental employers. This Statement establishes standards for recognizing and measuring
liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures for
defined benefit and defined contribution plans. This Statement requires governments to report a net
OPEB liability or asset on the face of the financial statements. The City is required to implement this
Statement in fiscal year ending June 30, 2018.
Restriction on Use
This information is intended solely for the use of the City Council and management of the City of
Tustin and is not intended to be, and should not be, used by anyone other than these specified parties.
J 41&-" e't_v� ��
Irvine, California
December 12, 2017
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS
Honorable Mayor and
Members of the City Council
of the City of Tustin
Tustin, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business -type activity, each major fund, and the aggregate remaining fund information of
the City of Tustin, California (the City), as of and for the year ended June 30, 2017, and the related
notes to the financial statements, which collectively comprise the City's basic financial statements and
have issued our report thereon dated December 12, 2017.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate
in the circumstances for the purpose of expressing our opinion on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly,
we do not express an opinion on the effectiveness of the City's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the City's financial statements will not be prevented, or detected and corrected on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal
control that is less severe than a material weakness, yet important enough to merit attention by those
charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify
any deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
-1-
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Irvine, California
December 12, 2017
-2-
CITY OF TUSTIN
APPROPRIATIONS LIMIT WORKSHEET NO. 6
WITH INDEPENDENT ACCOUNTANTS' REPORT
ON AGREED-UPON PROCEDURES
APPLIED TO APPROPRIATIONS LIMIT WORKSHEET
FOR THE YEAR ENDED JUNE 30, 2017
INDEPENDENT ACCOUNTANTS' REPORT ON
AGREED-UPON PROCEDURES
APPLIED TO APPROPRIATIONS LIMIT WORKSHEET
Honorable Mayor and
Members of the City Council
of the City of Tustin
Tustin, California
We have performed the procedures enumerated below to the accompanying Appropriations Limit
Worksheet No. 6 of the City of Tustin, California for the year ended June 30, 2017. These procedures,
which were agreed to by the City of Tustin, California and the League of California Cities (as
presented in the League publication entitled "Article XIII -B Appropriations Limit Uniform
Guidelines") were performed solely to assist the City of Tustin, California in meeting the requirements
of Section 1.5 of Article XIIIB of the California Constitution. The City of Tustin's management is
responsible for the Appropriations Limit Worksheet No. 6.
This agreed-upon procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. The sufficiency of the
procedures is solely the responsibility of those parties specified in this report. Consequently, we make
no representation regarding the sufficiency of the procedures described below either for the purpose for
which this report has been requested or for any other purpose.
The procedures performed and our findings were as follows:
1. We obtained the completed Worksheet No. 6 for the year ended June 30, 2017, and compared the
limit and annual adjustment factors included in that worksheet to the limit and annual adjustment
factors that were adopted by resolution of the City Council. We also compared the population and
inflation options included in the aforementioned worksheet to those that were selected by a
recorded vote of the City Council.
No exceptions were noted as a result of our performing this procedure.
2. For the accompanying Appropriations Limit Worksheet No. 6, we added last year's limit to the
total adjustments, and compared the resulting amount to this year's limit.
No exceptions were noted as a result of our performing this procedure.
-1-
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
3. We compared the prior year appropriations limit presented in the accompanying Appropriations
Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the
prior year.
No exceptions were noted as a result of our performing this procedure.
We were not engaged to, and did not, perform an audit, the objective of which would be the expression
of an opinion on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we do not
express such an opinion. Had we performed additional procedures, other matters might have come to
our attention that would have been reported to you. No procedures have been performed with respect
to the determination of the appropriation limit for the base year, as defined by the League publication
entitled "Article XIIIB Appropriations Limitation Uniform Guidelines".
This report is intended solely for the use of the City Council and management of the City of Tustin,
California and is not intended to be, and should not be, used by anyone other than these specified
parties.
��t�•� 41&-" daw&J GAP
Irvine, California
December 12, 2017
-2-
CITY OF TUSTIN
APPROPRIATIONS LIMIT WORKSHEET NO. 6
For the year ended June 30, 2017
Appropriations limit for fiscal year ended June 30, 2016 (see Note 2)
Adjustment factors for the fiscal year ended June 30, 2017 (see Note 2):
Inflation
Population
Factor
Factor Combined
(Note 3)
(Note 4) Factor
1.05370000
1.02160000 1.07645992
Adjustment for inflation and population
Other adjustments (Note 5)
Total adjustments
Appropriations limit for fiscal year ended June 30, 2017
See accompanying notes to Appropriations Limit Worksheet No. 6.
-3-
$ 77,049,230
x 0.07645992
5,891,178
5.891.178
82.940.408
CITY OF TUSTIN
NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO. 6
For the year ended June 30, 2017
1. PURPOSE OF LIMITED PROCEDURES REVIEW:
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative),
California governmental agencies are restricted as to the amount of annual appropriations from
proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of
Article XIIIB, the annual calculation of the appropriations limit is subject to a limited procedures
review in connection with the annual audit.
2. METHOD OF CALCULATION:
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the
appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87,
adjusted for the inflation and population factors discussed at Notes 3 and 4 below.
3. INFLATION FACTORS:
A California governmental agency may adjust its appropriations limit by either the annual
percentage change in the 4th quarter per capita personal income (which percentages are supplied by
the State Department of Finance), or the percentage change in the local assessment roll from the
preceding year due to the change of local nonresidential construction. The factor adopted by the
City of Tustin for the fiscal year 2016-2017 represents the annual percentage change in the
4th quarter per capita personal income.
4. POPULATION FACTORS:
A California governmental agency may adjust its appropriations limit by either the annual
percentage change of the jurisdiction's own population, or the annual percentage change in
population in the County where the jurisdiction is located. The factor adopted by the City of Tustin
for fiscal year 2016-2017 represents the annual percentage change in the population for the City of
Tustin.
5. OTHER ADJUSTMENTS:
A California governmental agency may be required to adjust its appropriations limit when certain
events occur, such as the transfer of responsibility for municipal services to, or from, another
governmental agency or private entity. The City of Tustin had no such adjustments for the year
ended June 30, 2017.