HomeMy WebLinkAbout10-ATTACHMENT 1COMPREHENSIVE ANNUAL
FINANCIAL REPORT
11
E YEAR ENDED JUNE 30, 2018
TUSTI N, CALIFORNIA
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CITY OF TUSTIN, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
WITH REPORT ON AUDIT
BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2018
Prepared By: Finance Department
CITY OF TUSTIN
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2018
Table of Contents
Page
Number
INTRODUCTORY SECTION:
Elected and Administrative Officials i
Letter of Transmittal iii
Organization Chart xiii
GFOA Certificate of Achievement for Excellence in Financial Reporting xiv
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 23
Statement of Activities 24
Fund Financial Statements:
Governmental Funds:
Balance Sheet 26
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position 27
Statement of Revenues, Expenditures and Changes in Fund Balances 28
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 29
Proprietary Fund:
Statement of Net Position 30
Statement of Revenues, Expenses and Changes in Net Position 31
Statement of Cash Flows 32
Fiduciary Funds:
Statement of Fiduciary Net Position 34
Statement of Changes in Fiduciary Net Position 35
Notes to Basic Financial Statements 37
CITY OF TUSTIN
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2018
Table of Contents
Page
Number
REQUIRED SUPPLEMENTARY INFORMATION: 95
Safety Plan
Schedule of Proportionate Share of the Net Pension Liability
97
Schedule of Contributions
98
Miscellaneous Plan:
Schedule of Changes in the Net Pension Liability and Related Ratios
99
Schedule of Contributions
100
Other Post -Employment Benefit Plan (OPEB):
Schedule of Changes in the Net OPEB Liability and Related Ratios
101
Schedule of Contributions - OPEB
102
Annual Money -Weighted Rate of Return on Investments
103
Budgetary Comparison Schedules:
119
General Fund
104
Measure M Special Revenue Fund
105
Note to Required Supplementary Information
106
SUPPLEMENTARY INFORMATION: 107
Other Governmental Funds:
109
Combining Balance Sheet
112
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
114
Schedules of Revenues, Expenditures and Changes in Fund
Balance - Budget and Actual:
Gas Tax Special Revenue Fund
116
Park Acquisition and Development Special Revenue Fund
117
Asset Forfeiture Special Revenue Fund
118
Air Quality Special Revenue Fund
119
Supplemental Law Enforcement Special Revenue Fund
120
Housing Authority Special Revenue Fund
121
Special Tax B Special Revenue Fund
122
Road Maintenance and Rehabilitation Fund
123
Voluntary Workforce Housing Incentive Special Revenue Fund
124
Agency Funds: 125
Combining Statement of Assets and Liabilities 126
Combining Statement of Changes in Assets and Liabilities 127
CITY OF TUSTIN
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2018
Table of Contents
Page
Number
STATISTICAL SECTION (UNAUDITED): 129
Description of Statistical Section Contents 131
Financial Trends
Net Position by Component - Last Ten Fiscal Years 132
Changes in Net Position - Expenses and Program Revenues - Last Ten Fiscal Years 134
Changes in Net Position - General Revenues - Last Ten Fiscal Years 136
Fund Balances of Governmental Funds - Last Ten Fiscal Years 138
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 140
Revenue Capacity:
Assessed Value and Estimated Actual Values of Taxable Property - Last Ten Fiscal Years 142
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 144
Principal Property Taxpayers - Current Year and Ten Years Ago 146
Property Tax Levies and Collections - Last Ten Fiscal Years 147
Debt Capacity
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 148
Ratio of General Bonded Debt Outstanding - Last Ten Fiscal Years 150
Overlapping Debt Schedule 151
Legal Debt Margin Information - Last Ten Fiscal Years 152
Pledged -Revenue Coverage - Last Ten Fiscal Years 154
Demographic and Economic Information:
Demographic and Economic Statistics - Last Ten Calendar Years 156
Principal Employers - Current Year and Ten Years Ago 157
Operating Information
Full -Time City Employees by Function - Last Ten Fiscal Years 158
Capital Asset Statistics by Function - Last Ten Fiscal Years 159
Water District Schedules for Revenue Capacity:
Water Consumption by Customer Type - Last Ten Fiscal Years 160
Water Rates - Last Ten Fiscal Years 162
Water Customers - Current Year and Ten Years Ago 163
CITY OF TUSTIN
Elected and Administrative Officials
Mayor
Dr. Allan Bernstein
Councilmember
Rebecca "Beckie" Gomez
Mayor Pro Tem
Charles E. Puckett
Councilmember
AUDIT COMMISSION
Robert Ammann, Chair
Colin Deering, Chair Pro Tem
R. Lawrence Friend
Daniel Erickson
Craig Shimomura
Letitia Clark
Councilmember
'TA
CITY MANAGER/CITY TREASURER
Jeffrey C. Parker
ASSISTANT CITY MANAGER
Matthew S. West
David E. Kendig City Attorney
Charles Celano Chief of Police
John A. Buchanan Director, Economic Development/
Director, Finance
Douglas S. Stack Director, Public Works / City Engineer
Elizabeth A. Binsack Director, Community Development
David Wilson Director, Parks & Recreation Services
Derick Yasuda Director, Human Resources
Erica N. Yasuda City Clerk
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Finance Department
December 18, 2018
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
CITIZENS OF THE CITY OF TUSTIN
City of Tustin
Tustin, California 92780
TuSTIN
Hisrou
BUILDING OUR FUTURE
HONORING OUR PAST
The Comprehensive Annual Financial Report (CAFR) of the City of Tustin for the fiscal year
ended June 30, 2018, 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 fiamcwork 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, 2018, 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, 2018, are fairly presented in conforinity with GAAP. The independent
auditor's report is presented as the first component of the financial section of this report.
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300 Centennial Way, Tustin, CA 92780 a 1': (714) 573-3060 & F: (714) 832.0825 + www.tustinca.org
GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statements in the fonn 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.
TUSTIN CITIZEN'S ACRD t -MY - CLASS OF 2018
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 eightymiles 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, 2018 population at 82,344, a
negligible decrease from 2017. There were only two 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.
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Council members serve staggered, four-year terins, 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, economic
development, 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 I 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.or . 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.
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 104 as part
of the required supplementary information, and for nonmajor governmental funds, this comparison
is presented on pages 116-124 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 34-35.
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Tustin Chili Cook -Off 2018
ECONOMIC OUTLOOK
The State of California has maintained a stable economy since the economic downturn. The
statewide unemployment rate has dropped from 4.9% in October 2017 to 4.1 % for October 2418,
which is 0.4% higher than the United States unemployment rate of 3.7% for October 2018. The
Orange County unemployment rate has decreased 0.8% from October 2017 to 2.9% for October
2018. The City's property tax revenue is the largest continuing revenue source for the General
Fund. It is 42% of total General Fund revenues, excluding the significant one-time proceeds
received in fiscal year 2018 related to land sales at Tustin Legacy. Property tax revenue for fiscal
year 2018-19 reflects a 4% increase 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. Property tax will be carefully monitored throughout the year.
Sales tax revenue is the second largest General Fund revenue source (40% of total revenues).
Annual sales tax revenue decreased from fiscal year 2016-2017 to fiscal year 2017-2018 to $24.9
million. The projected sales tax revenue for fiscal year 2018-2019 is expected to increase slightly
over fiscal year 2017-2018 by 1.1%. Staff is comfortable with the projected amounts for fiscal
year 2418-19, but also mindful of the fact that sales tax trends must be carefully monitored
throughout the year.
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Development at Tustin Legacy, the City's newest community, continues to move forward. Staff
is monitoring the costs of providing public services and maintaining facilities including streets,
sidewalks, and parks; these items are largely funded by service taxes tied to Community Facility
Districts (CFDs). A significant amount of development has occurred to date, including major
regional and local infrastructure, residential neighborhoods, shopping centers, parks, and
institutional uses. While there is still a significant amount of infrastructure to install and land to
develop, some major projects are underway or nearing completion, including:
• Phase 1 of FLIGHT at Tustin Legacy, a 480,000 -square -foot creative office campus being
developed by Lincoln Property Company is nearing completion. FLIGHT features 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 all phases are
complete, FLIGHT will be home to approximately 4,500 employees, which will have a
multiplier effect that reaches beyond the boundaries of FLIGHT. Tustin Legacy Park, a
City -owned 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.
The Village at Tustin Legacy, a 22 -acre neighborhood commercial center developed by
Regency Centers that is comprised of two major components:
❑ A retail center anchored by a Blue Ribbon Stater Bros., CVS, Bank of America,
Chipotle, and Dunkin' Donuts. This portion is complete.
o A medical plaza with a medical office building, medical services, and an acute care
hospital/rehabilitation facility. All medical services buildings are complete and
Hoag Memorial Hospital Presbyterian completed the 60,000 square foot medical
office building in April 2018.
o An acute care hospital/rehabilitation facility to be operated by HealthSouth will be
under construction in late 2018.
Levity at Tustin Legacy, a new neighborhood comprised of 218 single family homes on
approximately 14 acres being developed by Lennar Homes of Southern California. The
homes are designed in a contemporary architectural style with flat roofs, upper floor
rooftop decks and balconies that will provide outdoor living opportunities with views of
the local mountains and city lights. The strategic placement of windows is a distinctive
feature of the homes and serves to provide great natural lighting and minimize the use of
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stucco material. Levity features three unique product types: Fleet (townhomes), Velocity
(flats), and Icon (single family detached). Sales ofthese new homes are anticipated to begin
in Summer 2019.
Pacific Center East, an area near the intersection of Edinger Avenue and the 55 freeway, also
contains City -owned assets that are under negotiation for eventual development. The area currently
includes two hotels that generate a significant amount of Transient Occupancy Tax revenue.
In February 2017 the City entered into an Exclusive Negotiation Agreement (ENA) with
SchoolsFirst to negotiate the development of an approximate 180,000 square foot office
building, a 5,000 square foot retail bank branch, and a 900+ space parking structure. The
office building and bank branch, when combined with existing SchoolsFirst buildings, will
be home to over 1,600 employees and serve as SchoolsFirst's corporate headquarters. A
Disposition and Development Agreement (DDA) and Development Agreement (DA) are
anticipated to be executed in early 2019, with construction commencing in mid to late
2019.
The City continues to evaluate future plans for Pacific Center East to complement existing
uses and help diversify City revenue sources.
The City also continues to evaluate Old Town Tustin to ensure it is a successful neighborhood
within the City.
• The City recently adopted the Downtown Commercial Core Specific Plan (DCCSP) to
preserve and enhance the area as a vital, pedestrian -friendly, and attractive commercial
core in Tustin. The DCCSP also introduces the opportunity for mixed use residential
development in select areas to bring more visitors to the area.
Construction of 140 residential units known as Vintage is currently underway. Vintage,
being constructed by Taylor Morrison, offers resort style amenities, including a community
pool and ability to walk to the Old Town Tustin businesses. Models are set to open in late
2018.
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 fiscal year by approximately 3% from fiscal year
2017-18, with nearly half of the increase associated with development plan check and building
permits. Estimated expenditures for fiscal year 2018-19 are about 2.4% higher than the budget in
fiscal year 2017-18. This requires managing expenditures to balance the budget and continue to
provide core City services. This increase in expenditures is due to higher salary and benefit costs,
operational costs, and capital expenditures. A majority of the increase is associated with various
professional and consulting services, including information technology, and personnel changes
reflected in new three-year labor agreements (Memorandum of Understanding or MOU's)
effective July 1, 2018. The City expects a $1.2 million deficit for fiscal year 2018-19 to be funded
with planned use of excess reserves, bringing the projected General Fund reserve percentage to
32%, which is well above the 20% City policy. Budgeted expenditures for fiscal year 2018-19
show an increase of about $1.5 million over the fiscal year 2017-18. City Council will be
reviewing the City's financial condition during the mid -year budget review in February 2019.
Major factors facing the sustainability of future budgets include our efforts to address the City's
pensions and unfunded liabilities, obligations for funding the Tustin Unified School middle/high
school project, funding for construction of temporary and future housing for the homeless, and
continued construction costs for developing Tustin Legacy. City Staff has continued to work with
Council and the City Manager to prioritize these significant projects and to seek new revenue
sources for the fixture. Beginning in calendar year 2019, an increase in the Transient Occupancy
Tax was approved by the voters, which should yield an estimated $0.5 million increase in revenues
for the coming year. In addition, City Staff continues to strive to achieve the best long-term
development strategies, maximizing the City's long-term revenues.
The other major operating fund is the Water Enterprise Fund. Budgeted expenses in the Water
Fund are expected to increase about 8.5% in fiscal year 2018-19, while projected revenues are
about the same as prior year as residents and businesses continue to maintain conservation efforts.
The final year of the water rate increase from the 2410 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
2018-19.
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Tustin's 901h Anniversary Celebration
ACCOMPLISHMENTS AND FUTURE PROJECTS
Major capital improvement projects completed during fiscal year 2018 include the following:
• Annual Major Building Maintenance (Accessibility Improvements, Replace HVAC Units,
Repair Tile Roofs)
• Eastbound EI Camino Real at Jamboree Road Improvement Project
• Transit Circulator Feasibility Study
■ 170' Street Treatment Plant Membrane Replacement
The City's capital projects for fiscal year 2018-2019 are budgeted at $99.4 million. The budget
reflects a substantial increase in capital improvement projects funded by Tustin Legacy Backbone
Infrastructure Funds and proceeds from sale of land at the Tustin Legacy. 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
proceeds, State Road Maintenance and Rehabilitation funds (RMRA), and Community Development
Block Grants. Major capital projects for fiscal year 2018-2019 include:
■ Tustin Legacy Facilities
❑ 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
X
o Peters Canyon Channel Improvements
o Moffett Drive Extension from Park Avenue to east of Peters Canyon Channel
❑ Red Hill Avenue Widening between Barranca. Parkway and Warner Avenue
o Legacy Linear Park between Barranca Parkway and Armstrong Avenue
o Flight Way (formerly Aston) Extension between Barranca Parkway and Legacy
Linear Park
o South Hangar Renovation — Phase I
o Moffett Drive Extension from Future Legacy Road Extension to Park Avenue
o Legacy Road (formerly Kensington Park Drive) Extension from Valencia Avenue to
Future Moffett Drive Extension
o Park Avenue Widening between Tustin Ranch Road and Warner Avenue
o Tustin Ranch Road Pedestrian Bridge
o Neighborhood D South Planning
■ Public Facilities
❑ Median Landscape Rehabilitation
o Street Light LED Conversion Project
o Emergency Operations Center and City Maintenance Yard
o Annual Major Building Maintenance
o Community Center Auditorium Renovation
o Senior Center Alternate Power Source
o Civic Center Alternate Power Source
■ Water Projects
o Simon Ranch Reservoir, Booster Pump Station and Pipeline Replacement
❑ Water Main Replacement — Simon Ranch Road to Racquet Hill via Tustin Hills
Racquet Club Parking Lot
■ Transportation Facilities
o Annual Roadway and Public Infrastructure Maintenance Program (MOE)
o Newport Avenue Rehabilitation. between I-5 Freeway and Holt/Sycamore Avenues
o Citywide Pedestrian Oriented Accessibility Improvement Program
o Westbound El Camino Real at Tustin Ranch Road Improvement
■ Traffic Control Facilities
o Signal Equipment and Synchronization
a Main Street Improvements
■ Park Facilities
❑ Annual Major Park Maintenance
o Citrus Ranch Park Picnic Shelter
o Columbus Tustin Park Field and Picnic Shelter Renovation
■ Flood Control Facilities
X1
o Citywide Installation of Catch Basin Best Management Practices (BMPs)
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, 2417. This was the
thirty-first consecutive year that the government has achieved this prestigious award. In order to
be awarded a Certificate of Achievement, a governinent must publish an easily readable and
efficiently organized comprehensive annual financial report. This report must satisfy both
generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program's
requirements and we are submitting it to GFGA 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; and the finance staff. 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,
A. Buchanan 9ennifer Leisz
Finance Director
xii
Deputy Director — Financial Services
CITIZENS OF
TUSTIN
MAYOR
CITY COUNCIL
CITY ATTORNEY
LOCAL GOVERNMENT
FY 2017-2018
SUCCESSOR AGENCY TO THE TUSTIN
REDEVELOPMENT AGENCY
COORDINATION AND
CITY MANAGER I' COOPERATION
POLICE DEPUTY CITY
MANAGER PRIVATE
UTILITIES
Cable T.V.
Electricity
Natural Gas
PUBLIC WORKS
HUMAN Telephone
RESOURCES
CONTRACT
F SERVICES
F ire
COMMUNITY Refuse
DEVELOPMENT FINANCE Animal Control
SPECIAL
PARKS & ECONOMIC DISTRICTS
Library
RECREATION
DEVELOPMENT Lighting
Sewers
Flood Control
Re -Assessment
District 95-1
CFD
's
CITY CLERK
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Tustin
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2017
Executive Director/CEO
xiv
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, 2018, 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.
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, 2018, and the
respective changes in financial position and, where applicable, cash flows thereof for the year then
ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of a Matter
As discussed in Note I and 21 to the financial statements, the City adopted Governmental Accounting
Standards Board's State No. 75, "Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions", which required retrospective application resulting in a reduction of previously
reported net position. Our opinions are not modified with respect to this matter.
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 changes in the net OPEB liability and related ratios and the schedule of
contributions - OPEB, 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.
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Other Matters (Continued)
Other Information (Continued)
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.
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 18, 2018, 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 18, 2018
3
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
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, 2018. 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, 2018, by $777 million (net position). Net position consists of
$522 million invested in capital assets, $87.4 million in restricted net position and $167.6 million
in unrestricted net position.
The government's total net position increased by $6.8 million during the fiscal year ended
June 30, 2018. The primary reason for the increase is the gain on sale of land held for resale of
$33.6 million, mostly due to $32.7 million from the sale of approximately 14.5 acres (lot 19) to
Lennar Homes for residential housing within the former Marine Corps Air Station known as the
Legacy. The gain was offset by higher expenses for public works projects ($12.8 million) and
less revenue from capital grants and contributions ($19.1 million) due to the receipt in the
previous year of $16.8 million in developer contributions from Project Fair Share Contributions
in conjunction with the sale of land held for resale at the Legacy.
As of June 30, 2018, the City's governmental funds reported combined ending fund balances of
$304.5 million, an increase of $11.3 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 $82.9 million is nonspendable; $87.6 million is restricted; and $17.7 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.
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Government -wide Financial Statements (Continued)
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).
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.
Con
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Fund Financial Statements (Continued)
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 nonmaj or 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.
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 the other post -employment benefit (OPEB) trust fund which is used to
account for the assets in the section 115 trust with the Public Agency Retirement Service (PARS) for
pre -funding the City's OPEB. Council approved the establishment of the trust in April 2017, and the
initial deposit to the trust was made in June 2018.
The third 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.
7
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
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 schedules of funding progress 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 nonmaj or governmental funds are
presented for all nonmaj or Special Revenue Funds, nonmaj or Capital Projects Funds, and all nonmaj or
Debt Service 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 (68 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.
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Government -wide Financial Analysis (Continued)
Liabilities:
Current liabilities
Non -Current liabilities
Total Liabilities
Deferred Inflows of
Resources
Net Position:
Net investment in capital assets
Restricted
Unrestricted
Total Net Position
16.2
City of Tustin
3.5
3.3
19.7
Summary of Net Position
82.4
45.7
45.3
As of June 30, 2018
88.5
99.2
49.2
(in millions of dollars)
137.7
2_3
2_0
Governmental Business -Type
0_1
2_4
Activities Activities
Total
2017 2018 2017 2018
2017
2018
Assets:
Current and other assets
$323.9 $322.0 $34.7 $35.8
$358.6
$357.8
Capital assets
490.6 499.5 48.7 47.9
539.3
547.4
Total Assets
814.5 821.5 83.4 83.7
897.9
905.2
Deferred Outflows of Resources
13.3 17.4 4_3 4_3
17.6
21.7
Liabilities:
Current liabilities
Non -Current liabilities
Total Liabilities
Deferred Inflows of
Resources
Net Position:
Net investment in capital assets
Restricted
Unrestricted
Total Net Position
16.2
16.8
3.5
3.3
19.7
72.3
82.4
45.7
45.3
118.0
88.5
99.2
49.2
48.6
137.7
2_3
2_0
0_1
0_1
2_4
Total
% Chan2e
2017-2018
0.8%
20.1
127.7
147.8 7.3%
2_1
490.6
499.2
23.3 22.8 513.9
522.0
102.0
87.4
- - 102.0
87.4
144.4
151.1
15.1 16.5 159.5
167.6
$737.0$737.7
$38.4 $39.3$775.4$777.0
0.2%
I
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Government -wide Financial Analysis (Continued)
Governmental activities. Net position of the City's governmental activities increased 0.1% to $737.7
million, of which $499.2 million is invested in capital assets such as equipment, buildings, and
infrastructure. Of the remaining total, $87.4 million is restricted to specifically stipulated spending
agreements originated by law, contract, or other agreements with external parties. The remaining $151.1
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.
millions
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
11%
Expenses and Program Revenues - Governmental Activities
Year Ending June 30, 2018
GENERAL PUBLIC SAFETY PUBLIC WORKS COMMUNITY OPERATING CAPITAL GRANTS INTEREST ON
GOVERNMENT SERVICES GRANTS AND AND LONG-TERM
CONTRIBUTIONS CONTRIBUTIONS DEBT
IRExpenses a Revenue
Revenues By Source - Governmental Activities
10
Id Property taxes
■ Transient occupancy
taxes
o Business license taxes
s Other taxes
IN Sales tax
• Motor vehicle in lieu,
-
unrestricted
■ Investment income
■Other genera revenues
■Gain on sale of land
held for resale
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Government -wide Financial Analysis (Continued)
Expenses
General government
City of Tustin
23.9
-
-
Summary of Changes in Net Position
23.9
Public safety
34.6
33.8
For the Year Ended June 30, 2018
-
34.6
33.8
Public works
(in millions of dollars)
37.6
-
-
24.8
Governmental Business -Type
Community services
19.5
Total
-
Activities Activities
Total
10.8
% Change
-
2017 2018 2017 2018
2017
2018
2017-2018
Revenues:
Total Expenses
103.4
106.1
16.7
Program revenues:
120.1
123.8 3.1%
Change in net position
Charges for services
$6.2 $6.5 $17.1 $18.2
$23.3
$24.7
Operating grants & contributions
2.7 3.9 - -
2.7
3.9
0.9
Capital grants and contributions
26.6 7.6 - -
26.6
7.6
General revenues:
Reduction in debt to Successor
Taxes
28.4 29.6 - -
28.4
29.6
Intergovernmental revenue
25.1 24.9 - -
25.1
24.9
_
Motor vehicle taxes
- - - -
-
-
51.3
Earnings on investments
0.6 1.1 0.1 0.2
0.7
1.3
6.8
Miscellaneous
4.6 4.8 0.2 0.2
4.8
5.0
38.4
Gain on sale of assets
24.2 33.6 - -
24.2
33.6
Profit Participation
31.3 - _ -
31.3
-
Adjustment
Total Revenues
149.7 112.0 17.4 18.6
167.1
130.6
(21.8%)
Expenses
General government
24.5
23.9
-
-
24.5
23.9
Public safety
34.6
33.8
-
-
34.6
33.8
Public works
24.8
37.6
-
-
24.8
37.6
Community services
19.5
10.8
-
-
19.5
10.8
Water
-
-
16.7
17.7
16.7
17.7
Total Expenses
103.4
106.1
16.7
17.7
120.1
123.8 3.1%
Change in net position
before special item
46.3
5.9
0.7
0.9
47.0
6.8
Special Item:
Reduction in debt to Successor
Agency
5_0
-
_
-
5_0
-
Change in net position
51.3
5.9
0.7
0.9
52.0
6.8
Net Position - Beginning
685.7
737.0
37.7
38.4
723.4
775.4
Restatement for Prior Period
Adjustment
=
5.2
=
_
=
5.2
Net Position - Ending
$737.0
$737.7
SM -4
$39.3
$775.4
$777.0 0.2%
11
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Government -wide Financial Analysis (Continued)
In governmental activities, the increase in net position of $5.9 million is primarily due to the following
reasons:
• Deferred outflows related to pension plans increased $4.1 million mostly due to changes in
actuarial assumptions effecting the calculation of the pension liability.
• Total governmental assets increased $7 million, mostly due to ongoing construction in progress
for the Sports Park and Linear Park at the Legacy development, Median Landscape
Rehabilitation, Streetlight LED Conversion, and various road widening and extension projects at
the Legacy development.
• Deferred inflows of resources decreased $0.3 million mostly due to changes in actuarial
assumptions, as mentioned previously.
• Governmental liabilities increased $10.7 million mostly due to the long-term liabilities for
pension and OPEB (Other Post Employment Benefits). Pension and OPEB liabilities increased
about $13.7 million due to the interest on the total pension liability. In addition, the
implementation of the new GASB pronouncement no. 75, resulted in changes to the actuarial
calculation required for financial reporting. This change resulted in a $5.2 million increase in
the OPEB liability. The increases in pension and OPEB liabilities was offset by a reduction of
$3.2 million Due to the Successor Agency, due to the final payoff of the note due to the DOF.
Short-term liabilities account for about $0.6 million of the increase due to higher developer
deposits and accounts payable resulting from increased construction costs.
Overall, governmental revenues decreased $37.7 million from prior year. The primary reason for the
decrease was significant revenue ($31.3 million) recognized in fiscal year 2017 for profit participation
from CalAtlantic Homes for residential housing sales in the Greenwood development at Tustin Legacy.
Also contributing to the decrease in revenue was a decrease in Capital grants and contributions of $19
million from fiscal year 2017 primarily due to the receipt in the prior year of $16.8 million in developer
contributions received in conjunction with the sale of land to Regency Center. These decreases were
offset by an increase in the gain on sale of assets of $9.4 million, mostly due to the gain on sale of parcels
at the Legacy development discussed above.
Charges for services for governmental activities increased $0.3 million during fiscal year 2018 with
minor increases in the Public Works and Community Services categories and a small decrease in General
Government. Taxes increased $1.2 million, with continued increases in property and special services
taxes.
12
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Government -wide Financial Analysis (Continued)
Intergovernmental revenue (sales tax revenue) decreased $0.2 million, a slight decrease. Retail and auto
sales continued to lead other market sectors, representing over half of the sales taxes received during the
year. Auto sales are tapering off due to reduced pent up demand which fueled higher auto sales in the
previous year. General consumer goods sales are strong but increasing at a moderate pace. The higher
price of fuel in conjunction with lowered demands are flattening the amount of sales tax from fuel sales.
Earnings on investments increased $0.5 million from fiscal year 2017 due a $2.2 million increase in
interest earnings, which was offset by a $1.7 million decline in market value. The increase in interest
earnings during fiscal year 2018 was caused by higher average cash balances and the increase in the
weighted average maturity. The average cash balance for fiscal year 2017-18 was $218 million with an
average weighted portfolio yield of 1.62% and average weighted days to maturity of 680 days. 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 increase in the weighted average
maturity was primarily caused by a change in the funding strategy for the Tustin Unified School District
(TUSD) building project, which was initially projected to be near term outflows of $40 million. The
present plan is to fund the building over a longer timeframe at designated milestones. This has freed up
some liquidity and enabled investing in longer-term corporate bonds, negotiable certificates of deposit,
and federal agencies with corresponding higher yields. The average weighted portfolio yield increased
0.55% due to the continued rising interest rate environment and the transfer of a majority of the deposits
in the lower earning Orange County Investment Pool (OCIP) and the Local Agency Investment Fund
(LAIF) into the higher earning California Asset Management Program (CAMP).
Overall Governmental expenses increased $2.7 million from the prior year. Public Works expenses
increased $12.8 million from prior year due to construction costs, primarily for OCFCD (Orange County
Flood Control District) channel improvements, wet and dry utilities, and maintenance for parks, streets
and sidewalks.
General Government expenses decreased $0.6 million from fiscal year 2017 mostly due to declines in
professional and consulting expenses related to activity at Tustin Legacy for a new environmental
insurance policy ($1.6 million); commissions paid at settlement for the sale of 39 acres to Flight Venture
LCC ($1.2 million); and required Maintenance of Effort (MOE) per the adopted budget in FY 2017 ($1.4
million). These significant decreases were offset by increases in costs for PARS trust funding for Other
Post Employment Benefits (OPEB) totaling $1 million and higher claims paid for general liability and
worker's compensation claims during fiscal year 2018 ($1.5 million). Reimbursement was received in
the amount of $1.4 million from the California Insurance Pool Authority (CIPA) for one large liability
claim. Also offsetting the decreases from the prior year, were increases in pension expenses totaling
$2.1 million during 2018, and higher salaries for general government compensation ($0.2 million).
Public Safety expenses decreased $0.8 million from prior year mostly due to large declines in liability
claims as compared to the previous fiscal year ($1.9 million). This large decline was offset by increased
costs for higher pension costs of $0.6 million, increased costs for contract fire services with Orange
County Fire Authority ($0.4 million) and other smaller increases related to compensation and overtime.
13
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Government -wide Financial Analysis (Continued)
Community Services expenses decreased $8.7 million from prior year mostly due to a $15 million
advance paid in fiscal year 2017 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 funded an additional $5.4 million during fiscal year
2018, offsetting the decrease. There was also an increase due to a change in the accounting for major
special events (Chili Cook -Off and Tiller Days), resulting in expenses totaling $0.4 million which were
previously offset against related donations on the balance sheet. There were other smaller increases in
compensation offsetting the large decrease from the prior year.
The prior year net position has been restated due to the implementation of GASB 75, resulting in a $5.2
million decrease in net position in fiscal year 2017. Additional information about the restatement can
be found on in Note 21 of the notes to the basic financial statements section of this report.
Business -Type activities net position increased $0.9 million from prior year. Charges for services
increased $1.1 million from fiscal year 2017 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 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 $304.5 million, an increase of $11.3 million in comparison with the prior year. The
increase is primarily due to the gain on sale of land held for resale totaling $33 million from the sale of
land at the Legacy development. In addition, the City received $7.2 million for the final profit
participation payment from Cal Atlantic due to the sale of homes in the Greenwood development at the
Legacy. Approximately $82.9 million (27.2%) of the City's governmental fund balance constitutes
nonspendable fund balance. Of the nonspendable amount, $82.4 million is Land Held for Resale. The
remainder of the fund balance consists of $87.6 million in restricted funds, $17.7 million assigned to
capital projects, and $116.3 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 $116.3 million, while total fund balance was $240.5 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 137% of the total General Fund expenditures.
14
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Financial Analysis of the Government's Funds (Continued)
City of Tustin
Summary of Changes in Fund Balances - General Fund
23.0
For the Year Ended June 30, 2018
Public safety
30.6
(in millions of dollars)
Public works
7.0
7.6
Community services
Total
9.3
Capital Outlay
% Change
2017
2018
2017-2018
Revenues:
Total Expenses
92.2
Taxes $50.0
$25.8
Charges for services 2.0
2.0
30.4
Intergovernmental 1.6
28.5
Fines and forfeitures 1.0
1.0
Licenses and permits 0.9
0.9
Other 3.0
3.9
Developer Contribution 16.8
1.3
Profit participation 23.5
7.2
Gain on sale of land held for resale 23.8
33.0
Total Revenues 122.6
103.6
(15.5%)
Expenditures
General government
23.0
20.3
Public safety
30.6
32.2
Public works
7.0
7.6
Community services
18.4
9.3
Capital Outlay
9.0
12.2
Debt service
4.1
3.3
Total Expenses
92.2
84.9 (7.9%)
Excess of Revenues Over
(Under) Expenditures
30.4
18.7
Other Financing Sources (Uses):
Net transfers 4.1 -
Capital lease issued 0_4
Net Change in Fund Balance 34.9 18.7 (46.4%)
15
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Financial Analysis of the Government's Funds (Continued)
Transactions impacting revenues in the General Fund were as follows:
• Taxes decreased $24.2 million primarily due to the reclassification of sales taxes from the taxes
category to intergovernmental revenue. The reclassification was made because sales taxes are
levied by the State and shared with the City and are properly reported as intergovernmental
revenues. The City received $24.6 million in sales taxes for fiscal year 2018.
• Property tax revenue totaled about $25.6 million reflecting an increase of approximately $1.2
million primarily due to an increase of about $0.5 million in property tax in lieu of VLF. The
City received $7.6 million in property tax in lieu of VLF for fiscal year 2018. 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 $0.7
million is due to the increase in property values.
• Sales tax revenue decreased slightly ($0.2 million), mostly due to decreased sales by new car
dealers when compared to prior year highs. The current economic outlook is conservatively
optimistic and mindful of the impact of recent technological changes and trends in car sales.
• Intergovernmental revenue increased $26.9 million from fiscal year 2017 primarily due to the
reclassification of sales taxes to this category, discussed previously. Other increases include $1.5
million in insurance reimbursements from the California Insurance Pool Authority (CIPA),
reimbursement of $0.2 million in administrative costs from the Department of Finance for
services for the Successor Agency for the former Tustin Redevelopment Agency, and $0.3 in
funding due to an adjustment to recognize deposits for TSIP Area A -B as revenue.
• Other Revenue increased $0.9 million from prior year primarily due to a change in the accounting
for major special events (Chili Cook -Off and Tiller Days), resulting in revenues totaling $0.8
million which were previously recorded as donations on the balance sheet.
• The decrease in Profit Participation of $16.3 million is due to the sale of homes in the Greenwood
development at the Legacy which generated $23.5 million in profit participation in fiscal year
2017. In fiscal year 2018, the City received the final $7.2 million for profit participation from
Cal Atlantic.
• The decrease in Developer Contribution of $15.5 million was due to prior year 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.
• Gain on sale of land held for resale totaled $33 million from the sale of land at the Legacy
development, an increase of $9.2 million compared with previous year's gain on sale of land held
for resale.
16
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Financial Analysis of the Government's Funds (Continued)
Changes in General Fund expenditures from previous fiscal year, by function, occurred as follows during
the year ended June 30, 2018:
• General Government expenditures decreased $2.7 million from prior year mostly due to mostly
due to declines in expenses related to activity at Tustin Legacy for a new environmental insurance
policy ($1.6 million); commissions paid at settlement for the sale of 39 acres to Flight Venture
LCC ($1.2 million); and required Maintenance of Effort (MOE) per the adopted budget in FY
2017 ($1.4 million). These significant decreases were offset by increases in costs for higher
claims paid as discussed previously.
• Public safety expenditures increased $1.6 million from prior year primarily due to increased costs
for higher pension costs of $0.6 million, increased costs for contract fire services with Orange
County Fire Authority ($0.4 million) and other smaller increases related to compensation and
overtime.
• Public Works expenditures increased $0.6 million due to costs incurred for plan check and
building and safety inspection services ($0.4 million) and consulting services for assistance with
new solid waste request for proposal (RFP) and contract execution ($0.2 million).
• Community Services expenditures decreased $9.1 million mostly due to a $15 million advance
paid in fiscal year 2017 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 funded an additional $5.4 million during
fiscal year 2018, offsetting the decrease. There was also an increase due to a change in the
accounting for major special events (Chili Cook -Off and Tiller Days), resulting in expenses
totaling $0.4 million which were previously offset against related donations on the balance sheet.
There were other smaller increases in compensation offsetting the large decrease from the prior
year.
• Capital Outlay increased $3.2 million primarily due to the purchase of street lights from Southern
California Edison (SCE) for about $1.8 million which will result in significant long-term savings
for the City and vehicle purchases totaling about $1.5 million including a 185 foot boom lift for
$0.4 million to facilitate restoration work at the hanger, street sweeper for $0.3 million, and 21
other trucks / police cars.
• Debt service declined $0.8 million due to final payment made in December 2017 of $3.2 million
to the Department of Finance (DOF) per the settlement agreement related to the dissolution of
the Tustin Redevelopment Agency. The payment made in the prior year was $4.1 million.
• Net Transfers decreased $4.1 million from prior year mostly due to the following transfers out in
fiscal year 2018: $1.9 million to cover negative cash in CFD's 06-1, 07-1, and 2014-1
(reimbursement from the trustee was received subsequent to year-end); $1.7 million to the Capital
Fund for LED conversion; $0.8 million to the Capital Fund for Main Street Improvements.
The Measure M Special Revenue Fund's decrease in excess of revenues over expenditures of $0.9
million is primarily due to higher costs in fiscal year 2018 for the Red Hill widening project between
Barranca and Warner Streets, and between Warner and Valencia Streets, and Red Hill Median
Improvements.
17
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
General Fund Budgetary Highlights
Differences between the General Fund actual revenues and amended budgeted revenues were $11.6
million primarily due to unbudgeted profit participation and higher gain on the sale of land at the Legacy
development during fiscal year 2018. The amended budgeted expenditures were $145.9 million, an
increase in appropriations of $13.6 million from the original budgeted expenditures of $132.3 million.
The increase in appropriations was largely due to funding for the following projects: Tustin Library
Restoration Project ($1.1 million), City Net Services ($0.1 million), HVAC Improvements to the Police
Department Property Room ($0.2 million), Legacy Avenue Extension ($0.1 million), Park Avenue
Improvements ($0.1 million), Amalfi Bi -Directional Amplifier ($0.3 million), 115 Trust for Pension /
OPEB liabilities ($6.6 million), and Liability Claim ($1.4 million).
Actual General Fund expenditures were less than the amended budgeted amount of $145.9 million by
$60.9 million due to appropriations for capital projects spanning multiple years, such as Moffett Drive
Extensions (various segments), Red Hill widening, library restoration, 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 $0.9 million, resulting in an increase in net position during fiscal year
2018, from $38.4 million as of June 30, 2017, to $39.3 million as of June 30, 2018.
Operating revenues increased slightly from $17.1 million in fiscal year 2017 to $18.2 million in 2018,
due to increased water consumption resulting from the easing of water conservation efforts. Related
operating costs increased $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.
IV
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
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, 2018 amounts to $547.3 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
Total Capital Assets, Net
City of Tustin
Summary of Changes in Capital Assets
For the Year Ended June 30, 2018
(in millions of dollars)
Governmental
Activities
2017
2018
$86.2
$83.1
43.8
43.8
40.8
56.7
77.0
76.5
6.6
6.7
236.1
232.7
$490.5 $499.5
Business -Type
Activities
2017 2018
$1.2 $1.2
9.7 2.8
4.1 3.9
33.8 40
$48.8 $47.9 $539.3 $547.4 1.48%
Overall, capital asset additions of $49 million in fiscal year 2018 were offset by depreciation expense of
$14 million and retirements of $27 million for a net increase in capital assets of $8 million. In October
2017, the city conveyed approximately 40 acres of land for a proposed school site to the Tustin Unified
School District ($4.2 million). The city's property adjacent to the site at the Legacy was graded in the
same year ($1.1 million). The two events resulted in a net decrease of $3.1 million in land. In fiscal year
2018, construction in progress increased about $32 million due to continued construction of the
following major projects: Sports Park and Linear Park at the Legacy development, Median Landscape
Rehabilitation, Streetlight LED Conversion, and various road widening and extension projects at the
Legacy development. In addition, three major construction projects were completed in fiscal year 2018:
Detention Basin Landscaping Irrigation and Water Quality installed at the corner of Red Hill Ave and
Barranca Parkway (an addition of $2 million for building and improvements), Victory Road Extension
project (an addition of $4.6 million for infrastructure), and Drill and Install the Newport Ave/Edinger
Ave Well (an addition of $7.5 million for property, plant and equipment). Machinery and equipment
additions totaled $1.8 million, which include the purchase of 20 vehicles ($1.1 million) and various
special equipment ($0.7 million).
Additional information on the City's capital assets can be found in Note 7 of the notes to the basic
financial statements section of this report.
19
Total
Total
% Change
2017
2018 2017-2018
$87.4
$84.3
43.8
43.8
50.5
59.5
81.1
80.4
6.6
6.7
236.1
232.7
33.8
40
$48.8 $47.9 $539.3 $547.4 1.48%
Overall, capital asset additions of $49 million in fiscal year 2018 were offset by depreciation expense of
$14 million and retirements of $27 million for a net increase in capital assets of $8 million. In October
2017, the city conveyed approximately 40 acres of land for a proposed school site to the Tustin Unified
School District ($4.2 million). The city's property adjacent to the site at the Legacy was graded in the
same year ($1.1 million). The two events resulted in a net decrease of $3.1 million in land. In fiscal year
2018, construction in progress increased about $32 million due to continued construction of the
following major projects: Sports Park and Linear Park at the Legacy development, Median Landscape
Rehabilitation, Streetlight LED Conversion, and various road widening and extension projects at the
Legacy development. In addition, three major construction projects were completed in fiscal year 2018:
Detention Basin Landscaping Irrigation and Water Quality installed at the corner of Red Hill Ave and
Barranca Parkway (an addition of $2 million for building and improvements), Victory Road Extension
project (an addition of $4.6 million for infrastructure), and Drill and Install the Newport Ave/Edinger
Ave Well (an addition of $7.5 million for property, plant and equipment). Machinery and equipment
additions totaled $1.8 million, which include the purchase of 20 vehicles ($1.1 million) and various
special equipment ($0.7 million).
Additional information on the City's capital assets can be found in Note 7 of the notes to the basic
financial statements section of this report.
19
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Long-term Debt
At the end of the current fiscal year, the City had total outstanding long-term liabilities of $128.7 million.
Of this amount, $41.6 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, 2018
(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
Governmental
Business -Type
Total
Activities
Activities
Total % Chan2e
2017 2018
2017 2018
2017
2018 2017-2018
$- $-
$42.5 $41.6
$42.5
$41.6
3.2 -
- -
3.2
-
5.5 5.1
- -
5.5
5.1
8.7 13.9
- -
8.7
13.9
3.1 3.3
0.2 0.2
3.3
3.5
0.4 0.3
- -
0.4
0.3
51.4 59.8
3_0 3_5
54.4
63.3
Total Outstanding Debt $72.3 $82.4 $45.7 45 3 118 0 $127.7 8.3%
Overall, long-term debt increased $9.7 million from the prior year balances mostly due to the increases
in both post employment benefit obligations of $5.2 million and pension liabilities of $8.9 million. The
City's Net Position as of July 1, 2017, was restated due to implementation of GASB Statement 75 to
record the postemployment benefits obligation. As a result of GASB 75, the postemployment benefits
obligation increased by $5.2 million. The increase in pension liabilities was comprised of increases for
both the Safety (police) Plans and the Miscellaneous (all other) plans of $5.0 million and $4.0 million
respectively. The increases were mostly due to the interest on the total pension liability which accrues
at the rate determined by Ca1PERS of 7.15%. These increases were offset by a decrease of $3.2 million
in Due to Successor Agency to the Tustin Community Redevelopment Agency for the final payment of
$3.2 million made in December 2017. The bonds payable for the Water Enterprise carried underlying
debt ratings of "AA" from Standard & Poor's, with no change from the previous year.
Additional information on the City's long-term debt can be found in Note 8, Note 10 and Note 11 of the
notes to the basic financial statements section of this report starting.
20
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2018
Next Year's Budget and Rates
The City Council adopted the fiscal year 2018-2019 Budget with total appropriations of $218.7 million
which includes $99.4 million of capital outlay. The General Fund fiscal year 2018-2019 estimated
revenues are $63.2 million and budgeted appropriations are $64.3 million resulting in an estimated
operating deficit of $1.1 million. The operating deficit will be covered by planned use of excess General
Fund reserves. The appropriations are $4.3 million higher than the prior year's appropriation due to
increased salary and benefit costs, operational costs, and capital expenditures. An increase of $1.7
million is associated with various professional and consulting services, including information
technology. Overall, the appropriations are consistent with fiscal year 2018. There were no fee increases
as part of the preparation and adoption of the fiscal year 2018-19 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.
21
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22
CITY OF TUSTIN
STATEMENT OF NET POSITION
ASSETS:
Cash and investments
Receivables:
Accounts
Interest
Loans
Allowance for uncollectibles
Internal balances
Prepaid items and deposits
Land held for resale
Restricted assets:
Cash and investments with fiscal agents
Cash and investments held by trust
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
Due in more than one year - OPEB liability
Due in more than one year - pension liability
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES:
Deferred amounts on OPEB plan
Deferred amounts on pension plans
TOTAL DEFERRED INFLOWS OF RESOURCES
NET POSITION:
Net investment in capital assets
Restricted for:
Community services
Public safety
Public works
Pension
Unrestricted
TOTAL NET POSITION
See accompanying notes to basic financial statements.
June 30, 2018
23
Governmental
Business -type
Activities
Activity
Total
$ 161,551,502
$ 19,739,231
$ 181,290,733
9,514,443
2,843,553
12,357,996
513,379
70,140
583,519
863,496
-
863,496
(529,358)
(529,358)
627,404
46,866
674,270
82,357,532
-
82,357,532
61,525,146
13,129,092
74,654,238
5,578,912
-
5,578,912
183,545,413
3,978,963
187,524,376
315,916,222
43,885,311
359,801,533
821,464,091
83,693,156
905,157,247
-
3,301,388
3,301,388
17,425,571
988,889
18, 414, 460
17,425,571
4,290,277
21,715,848
9,515,934
2,506,371
12,022,305
-
375,774
375,774
7,156,079
483,915
7,639,994
116,045
-
116,045
8,143,323
1,089,395
9,232,718
530,982
40,684,257
41,215,239
13,892,607
-
13,892,607
59,866,293
3,504,665
63,370,958
99,221,263
48,644,377
147,865,640
2,626
-
2,626
1,960,935
79,549
2,040,484
1,963,561
79,549
2,043,110
499,190,473
22,753,763
521,944,236
2,877,164
-
2,877,164
719,164
719,164
78,219,948
78,219,948
5,578,912
-
5,578,912
151,119,177
16,505,744
167,624,921
$ 737,704,838
$ 39,259,507
$ 776,964,345
CITY OF TUSTIN
STATEMENT OF ACTIVITIES
For the year ended June 30, 2018
Functions/programs Expenses
Governmental activities:
General government $ 23,949,544
Public safety 33,713,796
Public works 37,599,662
Community services 10,795,733
Interest on long-term liabilities 12,043
Total governmental activities 106,070,778
Business -type activity:
Water 17,680,886
Total $ 123,751,664
See accompanying notes to basic financial statements.
Program Revenues
Charges Operating Capital
for Grants and Grants and
Services Contributions Contributions
$ 1,630,903
1,283,672
2,167,726
1,434,988
$ 27,889
337,692
2,295,368
1,202,598
7,248,026
393,484
6,517,289 3,863,547 7,641,510
18,229,013 - -
$ 24,746,302 $ 3,863,547 $ 7,641,510
General revenues:
Taxes:
Property
Franchise
Transient occupancy
Business license
Intergovernmental revenue - sales tax shared state revenues
Motor vehicle taxes shared state revenues
Earnings on investments
Gain on sale of land held for resale
Miscellaneous
Total general revenues
Change in net position
NET POSITION AT BEGINNING OF YEAR,
AS RESTATED
NET POSITION AT END OF YEAR
24
Net (Expense) Revenue and
Changes in Net Position
Governmental Business -type
Activities Activity Total
$ (22,290,752) $ - $ (22,290,752)
(32,092,432) - (32,092,432)
(25,888,542) - (25,888,542)
(7,764,663) - (7,764,663)
(12,043) - (12,043)
(88,048,432) - (88,048,432)
- 548,127 548,127
(88,048,432) 548,127 (87,500,305)
25,636,673
-
25,636,673
1,781,175
-
1,781,175
1,575,830
-
1,575,830
431,457
-
431,457
24,925,934
-
24,925,934
43,359
-
43,359
1,109,193
150,371
1,259,564
33,636,759
-
33,636,759
4,838,383
178,880
5,017,263
93,978,763
329,251
94,308,014
5,930,331
877,378
6,807,709
731,774,507
38,382,129
770,156,636
$ 737,704,838 $ 39,259,507 $ 776,964,345
25
CITY OF TUSTIN
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2018
See accompanying notes to basic financial statements.
26
Measure M
Other
Total
Special Revenue
Governmental
Governmental
General
Fund
Funds
Funds
ASSETS
Cash and investments
$
121,946,069
$
6,058,789
$ 33,546,644
$ 161,551,502
Restricted cash and investments
36,097,407
195,690
25,232,049
61,525,146
Restricted cash and investments held by trust
5,578,912
-
-
5,578,912
Receivables:
Accounts
5,758,293
670,287
3,085,863
9,514,443
Interest
355,926
13,767
143,686
513,379
Loans
479,700
-
383,796
863,496
Allowance for uncollectibles
(495,562)
-
(33,796)
(529,358)
Prepaid items and deposits
627,404
-
-
627,404
Land held for resale
82,240,813
-
116,719
82,357,532
TOTAL ASSETS
$
252,588,962
$
6,938,533
$ 62,474,961
$ 322,002,456
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
LIABILITIES:
Accounts payable and accrued liabilities
$
5,518,516
$
1,418,098
$ 2,579,320
$ 9,515,934
Deposits payable
6,412,273
-
743,806
7,156,079
Unearned revenue
-
116,045
-
116,045
TOTAL LIABILITIES
11,930,789
1,534,143
3,323,126
16,788,058
DEFERRED INFLOWS OF RESOURCES:
Unavailable revenue
187,620
25,558
488,277
701,455
FUND BALANCES:
Nonspendable
82,868,217
-
-
82,868,217
Restricted
41,269,878
5,378,832
40,944,164
87,592,874
Assigned
-
-
17,719,394
17,719,394
Unassigned
116,332,458
-
-
116,332,458
TOTAL FUND BALANCES
240,470,553
5,378,832
58,663,558
304,512,943
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$
252,588,962
$
6,938,533
$ 62,474,961
$ 322,002,456
See accompanying notes to basic financial statements.
26
CITY OF TUSTIN
RECONCILIATION OF TBE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE S'1'A'1'EMEN'1' Ot' NET POSl'1'ION
June 30, 2018
Fund balances - total governmental funds
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.
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, 2018 are:
Claims and judgments payable
Compensated absences payable
Capital lease payable
Total long-term liabilities
Pension related debt applicable to the City's governmental activities are not due and
payable in the current period and accordingly are not reported as fund liabilities.
Deferred outflows of resources and deferred inflows of resources related to 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
Deferred inflows of resources
Pension liability
OPEB related debt applicable to the City's governmental activities are not due and
payable in the current period and accordingly are not reported as fund liabilities.
Deferred outflows of resources and deferred inflows of resources related to OPEB
are only reported in the Statement of Net Position as the changes in these amounts
effects only the government -wide statements for governmental activities:
Deferred inflows of resources
Post employment benefits liability
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.
Net position of governmental activities
See accompanying notes to basic financial statements.
27
$ (5,085,858)
(3,317,285)
(271,162)
17,425,571
(1,960,935)
(59,866,293)
(2,626)
(13,892,607)
$ 304,512,943
499,461,635
(8,674,305)
(44,401,657)
(13,895,233)
701,455
$ 737,704,838
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the year ended June 30, 2018
OTHER FINANCING SOURCES (USES)
Transfers in
4,468,662
Measure M
Other
Total
Transfers out
(4,439,943)
Special Revenue
Governmental
Governmental
TOTAL OTHER FINANCING
General
Fund
Funds
Funds
REVENUES:
28,719
(293,886)
265,167
-
'faxes
$ 25,770,970
$ -
$ -
$ 25,770,970
Licenses and permits
905,086
5,281,136
-
905,086
Fines and forfeitures
996,912
-
-
996,912
Investment income
583,675
67,431
469,170
1,120,276
Intergovernmental revenue
28,463,529
7,232,280
6,426,032
42,121,841
Charges for services
2,029,405
-
147,940
2,177,345
Rental income
1,479,441
-
194,627
1,674,068
Other revenue
1,820,857
1,200
7,026,721
8,848,778
Developer contribution
1,341,143
-
-
1,341,143
Profit participation
7,179,553
-
-
7,179,553
Gain on sale of land held for resale
33,033,193
-
603,566
33,636,759
TOTAL REVENUES
103,603,764
71300,911
14,868,056
125,772,731
EXPENDITURES:
Current:
General government
20,265,803
5,663
988,340
21,259,806
Public safety
32,222,859
-
112,545
32,335,404
Public works
7,610,935
-
184,914
7,795,849
Community services
9,330,758
-
416,804
9,747,562
Capital outlay
12,212,282
6,903,666
20,966,492
40,082,440
Debt service:
Principal retirement
3,271,503
-
-
3,271,503
Interest expense
12,043
-
-
12,043
TOTAL EXPENDITURES
84,926,183
6,909,329
22,669,095
114,504,607
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
18,677,581
391,582
(7,801,039)
11,268,124
OTHER FINANCING SOURCES (USES)
Transfers in
4,468,662
-
4,439,943
8,908,605
Transfers out
(4,439,943)
(293,886)
(4,174,776)
(8,908,605)
TOTAL OTHER FINANCING
SOURCES (USES)
28,719
(293,886)
265,167
-
NET CHANGE IN FUND BALANCES
18,706,300
97,696
(7,535,872)
11,268,124
FUND BALANCES - BEGINNING OF YEAR
221,764,253
5,281,136
66,199,430
293,244,819
FUND BALANCES - END OF YEAR
$ 240,470,553 $
5,378,832
$ 58,663,558
$ 304,512,943
See accompanying notes to basic financial statements.
28
CITY OF TUSTIN
RECONCILIATION OF THF; STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THF; S'1'A'1'EMEN'1' OF AC'1'1V1'1'Ih;S
For the year ended June 30, 2018
Net change in fund balances - total governmental funds $ 11,268,124
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
$ 21,015,345
Disposition of capital assets
(7,020)
Depreciation expense
(12,121,337) 8,886,988
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
3,271,503
Claims and judgments payable
437,493
Compensated absences payable
(200,460) 3,508,536
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 (4,070,709)
OPEB expense reported in the governmental funds includes the actuarially determined
contributions. In the Statement of Activities, OPEB expense includes the change
in the net OPEB liability, and related change in OPEB amounts for deferred
outflows of resources and deferred inflows of resources 109,014
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 (13,771,622)
Change in net position of governmental activities $ 5,930,331
See accompanying notes to basic financial statements.
29
CITY OF TUSTIN
STATEMENT OF NET POSITION
PROPRIETARY FUND
June 30, 2018
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.
30
Business -type
Activity
Water
Enterprise
Fund
$ 19,739,231
2,843,553
70,140
46,866
13,129,092
35,828,882
3,978,963
43,885,311
47,864,274
83,693,156
3,301,388
988,889
4,290,277
2,506,371
483,915
209,395
375,774
880,000
4,455,455
23,266
40,660,991
3,504,665
44,188,922
48,644,377
79,549
22,753,763
16,505,744
$ 39,259,507
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUND
For the year ended June 30, 2018
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
iee accompanying notes to basic financial statements.
31
Business -type
Activity
Water
Enterprise
Fund
S 18,229,013
3,781,121
7,019,757
3,514,949
1,980,617
16,296,444
1,932,569
150,371
178,880
(1,384,442)
(1,055,191)
877,378
38,382,129
S 39,259,507
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
For the year ended June 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Payments to suppliers
Payments to other funds for services
Payments to employees
NET CASH PROVIDED BY
OPERATING ACTIVITIES
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets
Principal paid on bonds
Interest paid
NET CASH USED BY CAPITAL
AND RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income
NET CASH PROVIDED BY
INVESTING ACTIVITIES
NET INCREASE IN CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS - END OF YEAR
CASH AND CASH EQUIVALENTS:
Cash and investments - current assets
Cash and investments - restricted assets
TOTAL CASH AND CASH EQUIVALENTS
See accompanying notes to basic financial statements.
32
Business -type
Activity
Water
Enterprise
Fund
$ 18,432,117
(9,305,910)
(1,200,000)
(3,439,059)
4,487,148
(733,198)
(845,000)
(1,695,335)
(3,273,533)
125,940
125,940
1,339,555
31,528,768
$ 32,868,323
$ 19,739,231
13,129,092
$ 32,868,323
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
(CONTINUED)
For the year ended June 30, 2018
RECONCILIATION OF OPERATING INCOMETO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation and amortization
Other nonoperating income
Change in assets and liabilities:
(Increase) decrease in accounts receivable
(Increase) decrease in prepaid items
(Increase) decrease in deferred outlows of resources
Increase (decrease) in accounts payable and accrued liabilities
Increase (decrease) in deposits payable
Increase (decrease) in compensated absences
Increase (decrease) in net pension liability
Increase (decrease) in deferred inflows of resources
NET CASH PROVIDED BY OPERATING ACTIVITIES
See accompanying notes to basic financial statements.
33
Business -type
Activity
Water
Enterprise
Fund
$ 1,932,569
1,980,617
178,880
125,092
(4,609)
(162,091)
26,327
(100,867)
8,920
525,940
(23,630)
$ 4,487,148
CITY OF TUSTIN
STATEMENT OF FIDUCIARY NET POSITION
June 30, 2018
See accompanying notes to basic financial statements.
34
Successor Agency
to the
Tustin Community
Other
Redevelopment Agency
Post -Employment
Private Purpose
Benefit (OPEB)
Agency
Trust Fund
Trust Fund
Funds
ASSETS:
Cash and investments
$ 3,074,195
$ -
$
-
Cash and investments held by trust
-
1,000,160
-
Restricted cash and investments
1,156
11,785,523
Receivables:
Taxes
-
-
31,267
Prepaid items and deposits
5,514
-
2,140
TOTAL ASSETS
3,080,865
1,000,160
$
11,818,930
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
6,875,420
-
-
LIABILITIES:
Accounts payable
4,507
-
$
-
Interest payable
703,542
-
-
Due to bondholders
-
-
11,818,930
Long-term liabilities:
Due within one year
1,830,000
-
-
Due in more than one year
58,155,032
-
-
TOTAL LIABILITIES
60,693,081
-
$
11,818,930
NET POSITION:
Held in trust
$ (50,736,796)
$ 1,000,160
See accompanying notes to basic financial statements.
34
CITY OF TUSTIN
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
For the year ended June 30, 2018
ADDITIONS:
Tax revenue
Contribution from the City of Tustin
Investment income
Employer contributions
TOTAL ADDITIONS
DEDUCTIONS:
Community services
Interest
TOTAL DEDUCTIONS
CHANGE IN NET POSITION
NET POSITION - BEGINNING OF YEAR
NET POSITION - END OF YEAR
See accompanying notes to basic financial statements.
35
Successor Agency
to the
Tustin Community
Other
Redevelopment Agency
Post -Employment
Private Purpose
Benefit (OPEB)
Trust Fund
Trust Fund
$ 4,503,505
$ -
83,167
-
1,520
160
-
1,000,000
4,588,192
1,000,160
255,452
-
2,152,015
-
2,407,467
-
2,180,725
1,000,160
(52,917,521)
-
$ (50,736,796)
$ 1,000,160
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36
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMAR Y OF SIGNIFICANTA CCOUNTING 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 Authority's financial transactions are reported in the
Water Enterprise Fund.
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.
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.
37
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
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.
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, other post -employment
benefit trust fund, and agency funds.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
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.
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.
39
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
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 and the other post -employment benefit
(OPEB) trust, which are 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.
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.
Me
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Fiduciary Funds
Private Purpose Trust Fund is used to account for the activities of the Successor Agency to the
Tustin Community Redevelopment Agency.
Other Post -Employment Benefit Trust Fund is used to account for the activities of the City's trust
for the OPEB plan.
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.
d. New Accounting Pronouncements
Current Year Standards
In fiscal year 2017-2018, the City implemented Governmental Accounting Standards Board
Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions. This statement establishes standards for measuring and recognizing liabilities, deferred
outflows of resources, deferred inflows of resources, and expenses for postemployment benefits
other than pension. Accounting changes adopted to conform to the provisions of this statement
should be applied retroactively. The result of the implementation of this statement decreased the
net position at July 1, 2017 of the governmental activities by $5,270,924.
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, and did not impact the
City.
GASB 85 - Omnibus 2017, effective for periods beginning after June 15, 2017, and did not impact
the City
GASB 86 - Certain Debt Extinguishment Issues, effective for periods beginning after
June 15, 2017, and did not impact the City.
41
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
d. New Accounting Pronouncements (Continued)
Pending Accounting Standards
GASB has issued the following statements, which may impact the City's financial reporting
requirements in the future:
• GASB 83 - Certain Asset Retirement Obligations, effective for periods beginning after
June 15, 2018.
• GASB 84 -Fiduciary Activities, effective for periods beginning after December 15, 2018.
• GASB 87 - Leases, effective for periods beginning after December 15, 2019.
• GASB 88 -Certain Disclosures Related to Debt, Including Direct Borrowings and Direct
Placements, effective for periods beginning after June 15, 2018.
• GASB 89 - Accounting for Interest Cost Incurred before the End of a Construction Period,
effective for periods beginning after December 15, 2019.
• GASB 90 - Majority Equity Interests an amendment of GASB Statements No. 14 and No.
61, effective for periods beginning after December 15, 2018.
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.
42
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued):
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
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, the proprietary fund and fiduciary funds
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.
43
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING 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)
• 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.
• Deferred outflow related to pensions resulting from changes of 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.
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 related to 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.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING 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)
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.
Deferred inflow related to OPEB plan resulting from the difference between projected and
actual earnings on investments of the OPEB plan fiduciary net position. These amounts are
amortized over five years.
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 nd installment
Interest and penalties are assessed after the collection date.
'•
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE I - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued):
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.
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.
Post -Employment Benefits Other Than Pensions (OPEB)
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources
related to OPEB, and OPEB expense, information about the fiduciary net position of the City's
OPEB Plan and additions to/deductions from the OPEB Plans' fiduciary net position have been
determined on the same basis as they are reported by the Plan. For this purpose, the City's OPEB
Plan recognizes benefit payments when due and payable in accordance with the benefit terms.
Investments are reported at fair value, except for money market investments that have a maturity at
the time of purchase of one year or less, which are reported at cost.
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.
we
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND INVESTMENTS
Cash and Investments
Cash and investments as of June 30, 2018, are classified in the accompanying financial statements as
follows:
Cash and investments as of June 30, 2018, consist of the following:
Cash on hand
Deposits with financial institutions
Investments
Total cash and investments
47
Total
$184,364,928
86,440,917
6,579,072
$277,384,917
$ 11,000
2,498,572
274,875,345
$277,384,917
Government-
Fiduciary
Wide
Funds
Statement of
Statement of
Net Position
Net Position
Unrestricted assets:
Cash and investments
$181,290,733
$ 3,074,195
Restricted assets:
Cash and investments
74,654,238
11,786,679
Cash and investments held by trust
5,578,912
1,000,160
Total cash and investments
$261,523,883
$ 15,861,034
Cash and investments as of June 30, 2018, consist of the following:
Cash on hand
Deposits with financial institutions
Investments
Total cash and investments
47
Total
$184,364,928
86,440,917
6,579,072
$277,384,917
$ 11,000
2,498,572
274,875,345
$277,384,917
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
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 or the funds within the
Pension Trust and OPEB Trust that are governed by the agreement between the City and the trustee,
rather than the general provisions of the California Government Code or the City's investment policy.
N/A - Not Applicable
*Average weighted maturity shall not exceed ninety (90) days if commercial paper exceeds ten (10)
percent of total portfolio assets.
M.
Maximum
Maximum
Investment Types
Maximum
Percentage
Investment in
Authorized by the City's Policy
Maturity
of Portfolio
One Issuer
Negotiable certificates of deposit
None
30%
None
Prime quality commercial paper
270 days*
15%
None
Government sponsored pools
(LAIF, mutual funds)
N/A
None
None
Commercial bank time drafts
(Bankers acceptances)
180 days
25%
30%
Medium-term notes
5 years
15%
5%
Municipal and state securities
5 years
15%
5%
Federal agency bonds or notes
5 years
75%
None
United States (U.S.) Treasury securities
5 years
None
None
Money market funds
N/A
None
None
Repurchase agreements
1 year
None
None
N/A - Not Applicable
*Average weighted maturity shall not exceed ninety (90) days if commercial paper exceeds ten (10)
percent of total portfolio assets.
M.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND 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.
Investment Types
Authorized by the City's Policy
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
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.
. •
Maximum
Maximum
Maximum
Percentage
Investment in
Maturity
of Portfolio
One Issuer
None
None
None
N/A
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.
. •
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND 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:
50
Remaining Maturity
1Year
1-2
2-3
3-4
4-5
Investment Type
or Less
Years
Years
Years
Years
Total
U.S. Treasury Notes
$ 6,991,220
$ -
$ -
$
$ -
$ 6,991,220
U.S. Government Sponsored
Agency Securities:
Federal National Mortgage
Association (FNMA)
-
6,894,288
3,782,467
1,949,386
12,626,141
Federal Home Loan Bank (FHLB)
1,996,172
-
968,036
8,251,605
1,468,506
12,684,319
Federal Home Loan Mortgage
Corporation (FHLMC)
990,087
-
3,487,858
13,678,462
4,853,141
23,009,548
Federal Farm Credit Bank (FFCB)
-
1,957,926
9,324,015
4,843,345
-
16,125,286
Local Agency Investment Pool (LAIF)
2,585,689
-
-
-
2,585,689
California As s et Management Program (CAMP)
86,043,667
86,043,667
Orange County Investment Pool
1,059,714
-
-
-
1,059,714
Negotiable Certificates ofDeposit
3,704,168
13,950,779
11,174,636
7,391,013
1,930,368
38,150,964
Medium-term Notes
3,980,041
-
8,851,907
7,777,155
3,342,780
23,951,883
Municipal Bonds
-
3,305,789
2,290,610
2,688,903
-
8,285,302
Held by Fiscal Agents:
Money Market Mutual Funds
36,782,540
-
-
-
36,782,540
Held by Pension Trust:
Money Market Mutual Funds
173,139
173,139
Mutual Funds -Equity
2,834,420
2,834,420
Mutual Funds -Fixed Income
2,571,353
2,571,353
Held by OPEB Trust:
Money Market Mutual Funds
31,438
31,438
Mutual Funds -Equity
507,736
-
-
507,736
Mutual Funds -Fixed Income
460,986
460,986
Total
$ 150,712,370
$ 26,108,782
$ 39,879,529
$ 44,630,483
$ 13,544,181
$ 274,875,345
50
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND 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- $ 6,303,044
A+ 1,915,256
A- 4,901,566
$ 13,119,866
U.S. Government Sponsored
Agency Securities
Aaa* $ 1,949,386
Municipal Bonds
AA- $ 5,912,590 AAAm
A 928,734
$ 6,841,324
CAMP
$ 86,043,667
Held by Pension Trust Held by OPEB Trust
AAAm $ 173,139 AAAm $ 31,438
*Moody's rating as the note is not rated by Standard & Poor's
51
Minimum
Exempt
Total as of
Legal
from
Not
Investment Type
June 30, 2018
Rating
Disclosure
AAA
AA+ AA
Other
Rated
U.S. Treasury Notes
$ 6,991,220
N/A
$ 6,991,220
$
$ $
$
$
U.S. Government Sponsored
Agency Securities:
FNMA
12,626,141
N/A
-
10,676,755
1,949,386
FHLB
12,684,319
N/A
12,684,319
-
FHLMC
23,009,548
N/A
23,009,548
FFCB
16,125,286
N/A
16,125,286
LAIF
2,585,689
N/A
-
-
2,585,689
CAMP
86,043,667
N/A
86,043,667
-
Orange County Investment Pool
1,059,714
N/A
-
1,059,714
Negotiable Certificates ofDeposit
38,150,964
N/A
-
-
38,150,964
Medium-term Notes
23,951,883
A
3,974,746
3,907,250 2,950,021
13,119,866
-
MunicipalBonds
8,285,302
A
-
1,443,978 -
6,841,324
Held by Fiscal Agents:
Money Market Mutual Funds
36,782,540
A
36,782,540
-
-
Held by Pension Trust:
Money Market Mutual Funds
173,139
N/A
-
173,139
-
Mutual Funds -Equity
2,834,420
N/A
-
2,834,420
MutualFunds-FixedIncome
2,571,353
2,571,353
Held by OPEB Trust:
Money Market Mutual Funds
31,438
N/A
31,438
-
Mutual Funds - Equity
507,736
N/A
-
-
507,736
Mutual Funds -Fixed Income
460,986
460,986
Total$274,875,345
$ 6,991,220$40,757,286
$67,847,136 $ 2,950,021$108,158,820$48,170,862
N/A - Not Applicable
The ratings for the "Other" category above are as follows:
Medium-term Notes
AA- $ 6,303,044
A+ 1,915,256
A- 4,901,566
$ 13,119,866
U.S. Government Sponsored
Agency Securities
Aaa* $ 1,949,386
Municipal Bonds
AA- $ 5,912,590 AAAm
A 928,734
$ 6,841,324
CAMP
$ 86,043,667
Held by Pension Trust Held by OPEB Trust
AAAm $ 173,139 AAAm $ 31,438
*Moody's rating as the note is not rated by Standard & Poor's
51
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND 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:
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.
As of June 30, 2018, none of the City's deposits with financial institutions in excess of federal
depository insurance limits were held in uncollateralized accounts.
52
Reported
Issuer
Investment Type
Amount
Federal National Mortgage Association
United States Government
Sponsored Agency Securities
$
12,626,141
Federal Home Loan Bank
United States Government
Sponsored Agency Securities
$
12,684,319
Federal Home Loan Mortgage Corporation
United States Government
Sponsored Agency Securities
$
23,009,548
Federal Farm Credit Bank
United States Government
Sponsored Agency Securities
$
16,125,286
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.
As of June 30, 2018, none of the City's deposits with financial institutions in excess of federal
depository insurance limits were held in uncollateralized accounts.
52
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Custodial Credit Risk (Continued)
As of June 30, 2018, 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:
Carrying
Investment Type Value
U.S. Treasury Notes $ 6,991,220
U.S. Government Sponsored
Agency Securities 64,445,294
Medium -Term Notes 23,951,883
Municipal Bonds 8,285,302
Negotiable Certificates of Deposit 38,150,964
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.
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 $1,059,714. 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.
53
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Investments in Pension Trust
The City established a trust account with Public Agency Retirement Services (PARS) to hold assets
that are legally restricted for use in administering the City's pension plans. The Pension Trust's specific
cash and investments are managed by a third -party portfolio manager under guidelines approved by the
City as detailed below.
Investments OPEB Trust
The City established a trust account with Public Agency Retirement Services (PARS) to hold assets
that are legally restricted for use in administering the City's OPEB plan. The OPEB Trust's specific
cash and investments are managed by a third -party portfolio manager under guidelines approved by the
City.
Those guidelines are as follows:
Risk Tolerance Moderate
Risk Management The portfolio is constructed to control risk
through four layers of diversification - asset
classes (cash, fixed income, equity), investment
styles (large cap, small cap, international, value,
growth), managers and securities. Disciplined
mutual fund selection and monitoring process
helps to drive return potential while reducing
portfolio risk.
Investment Objective To provide growth of principal and income. It is
expected that dividend and interest income will
comprise a significant portion of total return,
although growth through capital appreciation is
equally important.
Strategic Ranges 0% - 20% Cash
40% - 60% Fixed Income
40% - 60% Equity
54
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
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 quoted prices of similar assets in active markets, and Level inputs are significant
unobservable inputs.
The City has the following recurring fair value measurements as of June 30, 2018:
* Not subject to fair value measurement hierarchy.
55
Quoted
Observable
Unobservable
Prices
Inputs
Inputs
Level
Level
Level Total
U.S. Treasury Notes
$ -
$ 6,991,220
$ - $ 6,991,220
U.S. Government Sponsored
Agency Securities:
FNMA
-
12,626,141
- 12,626,141
FHLB
-
12,684,319
- 12,684,319
FHLMC
-
23,009,548
- 23,009,548
FFCB
-
16,125,286
- 16,125,286
Negotiable Certificates of Deposit
-
38,150,964
- 38,150,964
MediumtermNotes
-
23,951,883
- 23,951,883
Municipal Bonds
-
8,285,302
- 8,285,302
Held by Pension Trust:
Mutual Funds -Equity
2,834,420
-
- 2,834,420
Mutual Funds - Fixed Income
2,571,353
-
- 2,571,353
Held by OPEB Trust:
Mutual Funds -Equity
507,736
-
- 507,736
Mutual Funds - Fixed Income
460,986
-
- 460,986
Total Leveled Investments
$ 6,374,495
$ 141,824,663
$ - 148,199,158
LAIF*
2,585,689
CAMP*
86,043,667
Orange County Investment Pool*
1,059,714
Held by Fiscal Agents:
Money Market Mutual Funds*
36,782,540
Held by Pension Trust:
Money Market Mutual Funds*
173,139
Held by OPEB Trust:
Money Market Mutual Funds *
31,438
Total Investment Portfolio
$ 274,875,345
* Not subject to fair value measurement hierarchy.
55
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 3 - LOANS 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, 2018,
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, 2018, 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, 2018 including accrued interest of $15,862 was $495,563. An allowance of $459,563 has
been recorded to reflect the amount of the note not expected to be collectible.
NOTE 4 - INTERFUND TRANSFERS
The composition of interfund transfers for the year ended June 30, 2018, is as follows:
Transfers In Transfers Out Amount
General Fund Measure M Special Revenue Fund $ 293,886
Other Governmental Funds 4,174,776
Other Governmental Funds General Fund 4,439,943
$ 8,908,605
The transfers during the fiscal year ended June 30, 2018, were for the following purposes:
A transfer from the Measure M Special Revenue Fund totaling $293,886 to the General Fund to pay
for services provided for Measure M.
A transfer from the other governmental funds totaling $539,264 to the General Fund to pay for services
provided for AD 95-1 Construction.
A transfer from the other governmental funds totaling $61,799 to the General Fund was made to repay
amounts transferred to cover negative cash in prior years.
56
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 4 - INTERFUND TRANSFERS (CONTINUED)
A transfer from other governmental funds totaling $3,573,713 to the General Fund to pay for public
safety services provided for the Special Tax B area.
The General Fund transferred $1,939,493 to the other governmental funds to eliminate negative cash
until reimbursement is received from the fiscal agent.
The General Fund transferred $2,500,000 to the other governmental funds to pay for capital projects
per the adopted budget for fiscal year 2017-18.
NOTE 5 - LAND HELD FOR RESALE
Land held for resale as of June 30, 2018, consisted of the following:
Pacific Park* $ 30,787,557
Tustin Legacy 51,453,256
370 Flyers Lane 116,719
Total Land Held for Resale $ 82,357,532
*Pacific Park includes several parcels bordered by Del Amo, Valencia, Edinger and Newport Avenue.
During fiscal year 2017-18, the City sold land held for resale for the Tustin Legacy (see Note 6) for a
gain of $32,664,261 and donated other land held for resale for a loss of $131,818. In addition,
additional property held for resale by the Housing Authority was sold for a gain of $603,566.
NOTE 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.
57
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED)
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.
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 $6,267,009.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED)
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.
In June 2018, the City sold 14.48 acres of land to a developer for $34,202,712 resulting in a gain on
land held for resale of $32,664,261.
The recorded value of the remaining parcels as of June 30, 2018, was $51,453,256. 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.
NOTE 7 - CAPITAL ASSETS
A summary of changes in the Governmental Activities capital assets for the year ended June 30, 2018,
is as follows:
Capital assets, not depreciated:
Land
Right of way
Construction in progress
Total capital assets,
not depreciated
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total capital assets,
being depreciated
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total accumulated
depreciation
Total capital assets,
being depreciated, net
Total governmental activities
capital assets, net
Balance at
July 1, 2017
Deletions/ Balance at
Additions Transfers June 30, 2018
$ 86,241,894 $ 1,063,639 $ (4,250,746) $ 83,054,787
43,758,156 - - 43,758,156
40,831,005 22,453,395 (6,551,930) 56,732,470
170,831,055 23,517,034 (10,802,676) 183,545,413
74,466,210 -
28,609,604 1,974,708
18,300,168 1,749,057
354,396,049 4,577,222
(589,005)
74,466,210
30,584,312
19,460,220
358,973,271
475,772,031
8,300,987
(589,005) 483,484,013
(18,512,348)
(1,528,458)
- (20,040,806)
(7,542,765)
(1,040,405)
- (8,583,170)
(11,689,636)
(1,605,083)
581,985 (12,712,734)
(118,283,690)
(7,947,391)
- (126,231,081)
(156,028,439) (12,121,337) 581,985 (167,567,791)
319,743,592 (3,820,350) (7,020) 315,916,222
$ 490,574,647 $ 19,696,684 $ (10,809,696) $ 499,461,635
59
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 7 - CAPITAL ASSETS (CONTINUED)
Depreciation expense was charged to functions/programs of the governmental activities as follows:
General government
Public safety
Public works
Community services
$ 287,426
652,324
10,426,474
755,113
$ 12,121,337
A summary of changes in the Business -type Activity capital assets for the year ended June 30, 2018, is
as follows:
Capital assets, being depreciated
Buildings and improvements
Balance at
Deletions/
Balance at
Property, plant and equipment
July 1, 2017
Additions Transfers
June 30, 2018
Capital assets, not depreciated:
Land
$ 1,177,216
$ - $ -
$ 1,177,216
Construction in progress
9,656,077
678,504 (7,532,834)
2,801,747
Total capital assets,
Buildings and improvements
(5,407,991)
(209,209)
not depreciated
10,833,293
678,504 (7,532,834)
3,978,963
Capital assets, being depreciated
Buildings and improvements
9,500,377
-
- 9,500,377
Property, plant and equipment
58,085,554
7,751,917
(10,608) 65,826,863
Total capital assets,
being depreciated
67,585,931
7,751,917
(10,608) 75,327,240
Less accumulated depreciation for:
Buildings and improvements
(5,407,991)
(209,209)
- (5,617,200)
Property, plant and equipment
(24,248,938)
(1,586,399)
10,608 (25,824,729)
Total accumulated
depreciation
Total capital assets,
being depreciated, net
Total business -type activity
capital assets, net
(29,656,929) (1,795,608) 10,608 (31,441,929)
37,929,002 5,956,309
43,885,311
$ 48,762,295 $ 6,634,813 $ (7532,834) $ 47,864,274
During the fiscal year ended June 30, 2018, the City capitalized interest of $164,388.
:1
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 8 - LONG-TERM LIABILITIES
A summary of long-term liability activity for the year ended June 30, 2018, is as follows:
Governmental Activities:
Due to Successor Agency to
the Tustin Community
Redevelopment Agency (Note 9)
Claims and judgments (Note 13)
Lease payable
Compensated absences
Total governmental activities
long-term liabilities
Business -type Activity:
2012 Refunding
Water Revenue Bonds
Bond premium
2013 Water Revenue bonds
Bond premium
2016 Refunding
Water Revenue Bonds
Bond premium
Compensated absences
Total business -type activity
long-term liabilities
Balance
July 1, 2017
Additions
Deletions
Balance Due Within
June 30, 2018 One Year
-
5,523,351 3,934,156 (4,371,649) 5,085,858 5,085,858
340,324 - (69,162) 271,162 71,908
3,116,825 2,873,051 (2,672,591) 3,317,285 2,985,557
$ 12,182,841 $ 6,807,207 $ (10,315,743) $ 8,674,305 $ 8,143,323
$ 5,250,000 $ $ (795,000) $ 4,455,000 $ 830,000
470,101 (81,757) 388,344 -
13,910,000 (50,000) 13,860,000 50,000
103,530 (3,944) 99,586 -
21,515,000 21,515,000
1,275,666 - (52,605) 1,223,061 -
223,741 231,781 (222,861) 232,661 209,395
$ 42,748,038 $ 231,781 $ (106,167) S 41,773,652 $ 1,089,395
321
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 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 $81,207 which included interest payments of $12,045 and
principal payments of $69,162. At June 30, 2018, the outstanding principal amount was $271,162.
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, 2018.
Year Ending
June 3 0,
2019
2020
2021
2022
Subtotals
Less: amounts representing interest
Minimum
Lease
Payments
$ 81,207
81,207
81,207
47,370
$ 290,991
(19,829)
Present value of net minimum lease payments $ 271,162
The assets acquired through the capital lease are as follows:
Equipment
Less: accumulated depreciation
M
$ 368,356
(110,507)
$ 257,849
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 8 - LONG-TERM LIABILITIES (CONTINUED)
Business -type Activity
2012 Refunding Water Revenue Bonds
On March 27, 2012, the City issued $8,910,000, 2012 Refunding Water Revenue Bonds. The Bonds
were issued to provide funds to defease the 2003 Refunding Water Revenue Bonds and prepay certain
outstanding notes payable incurred to finance improvements to the Water Enterprise. The 2003
Refunding Water Revenue Bonds were redeemed in full on April 1, 2013.
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, 2018, is $256,788.
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, 2018, total
interest and principal remaining on the bonds is $4,983,175. During the fiscal year, the total interest
expense incurred was $197,275, principal payments were $795,000, and net revenues were $4,023,354.
The annual debt service requirements to amortize the bonds are as follows:
Year Ending
June 3 0,
2019
2020
2021
2022
2023
Subtotals
Add: Premium
Totals
Principal
$ 830,000
860,000
885,000
920,000
960,000
$ 4,455,000
388,344
$ 4,843,344
M
Interest Total
$ 165,475
138,500
110,600
75,200
38,400
$ 528,175
$ 528,175
$ 995,475
998,500
995,600
995,200
998,400
$ 4,983,175
388,344
$ 5,371,519
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 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, 2018, total
interest and principal remaining on the bonds is $26,285,692. During the fiscal year, the total interest
expense incurred was $651,320, principal payments were $50,000, and net revenues were $4,023,354.
The annual debt service requirements to amortize the bonds are as follows:
Year Ending
June 3 0,
2019
2020
2021
2022
2023
2024-2028
2029-2033
2034-2038
2039-2043
Subtotals
Add: Premium
Principal
$ 50,000
50,000
55,000
55,000
55,000
1,740,000
2,150,000
2,665,000
7,040,000
$ 13,860,000
99,586
Interest Total
$ 700,320
698,320
701,320
698,570
695,820
4,795,640
4,814,157
4,807,700
8,373,845
$ 26,285,692
99,586
$ 650,320
648,320
646,320
643,570
640,820
3,055,640
2,664,157
2,142,700
1,333,845
$ 12,425,692
Totals $ 13,959,586 $ 12,425,692 $ 26,385,278
:E
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 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, 2018, the defeased 2011 Bonds
have a remaining outstanding balance of $20,760,000.
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, 2018, is $3,044,600.
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, 2018, total
interest and principal remaining on the bonds is $32,079,163. During the fiscal year, the total interest
expense incurred was $687,300, no principal payment due, and net revenues were $4,023,354.
;Z
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 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,
Principal
Interest
Total
2019
$ -
$ 687,300
$ 687,300
2020
-
687,300
687,300
2021
-
687,300
687,300
2022
-
687,300
687,300
2023
-
687,300
687,300
2024 -2028
4,770,000
3,193,850
7,963,850
2029 -2033
5,575,000
2,378,126
7,953,126
2034 -2038
6,670,000
1,283,287
7,953,287
2039- 2042
4,500,000
272,400
4,772,400
Subtotals
$ 21,515,000
$ 10,564,163
$ 32,079,163
Add: Premium
1,223,061
-
1,223,061
Totals $ 22,738,061 $ 10,564,163 $ 33,302,224
:.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 9 - DUE TO SUCCESSOR A GENCY TO THE TUSTIN COMMUNITY
REDEVELOPMENTAGENCY
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 note was paid off in December 2017.
NOTE 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.
M
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 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, 2018, are summarized as follows:
is
Miscellaneous
Prior to
January 1, 2012 to
On or After
Hire date
January 1, 2012
December 31, 2012
January 1, 2013
Benefit formula
2%@55
2%@60
2%@62
Benefit vesting schedule
5 years of service
5 years of service
5 years of service
Benefit payments
monthly for life
monthly for life
monthly for life
Retirement age
50+
50+
52+
Monthly benefits, as a % of
eligible compensation
2%
2%
2%
Required employee contribution rates
7%
7%
5.75%
Required employer contribution rates
Normal cost rate
7.327%
7.327%
5.703%
Payment of unfunded liability
$ 1,135,489
$ -
$ -
is
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 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, 2018, 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%(i�50 2%(i�50 2.7%(i�57
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%
90/0 9% 11.5%
19.723% 14.971% 11.990%
$ 1,454,675 $ - $ 709
At June 30, 2018, the following employees were covered by the benefit terms for the
Miscellaneous Plan:
Miscellaneous
Inactive employees or beneficiaries currently receiving benefits 234
Inactive employees entitled to but not yet receiving benefits 294
Active employees 189
Total 717
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. The liability
for governmental activities is primarily liquidated from the general fund and the liability for
business -type activities is liquidated from the water enterprise fund.
Me
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 10 - PENSION PLANS (CONTINUED)
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, 2017, using an annual actuarial valuation as of June 30, 2016 rolled forward to June 30,
2017 using standard update procedures. A summary of principal assumptions and methods used to
determine the net pension liability is shown below.
Actuarial Assumptions
The total pension liabilities in the June 30, 2016 actuarial valuations were determined using the
following actuarial assumptions:
Miscellaneous Safety
Valuation Date June 30, 2016 June 30, 2016
Measurement Date June 30, 2017 June 30, 2017
Actuarial Cost Method Entry -Age Normal Entry -Age Normal
Cost Method Cost Method
Actuarial Assumptions
Discount Rate 7.15% 7.15%
Inflation 2.75% 2.75%
Projected Salary Increase TO (1)
Mortality Rate Table (2) (2)
Post Retirement Benefit Income (3) (3)
(1) Varies by entery age and service.
(2) The probabilities of mortality are derived using CaIPERS' 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, 2016 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 Ca1PERS
website under Forms and Publications.
70
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 10 - PENSION PLANS (CONTINUED)
b. Net Pension Liability (Continued)
Change of Assumptions
In fiscal year 2017-2018, the financial reporting discount rate was reduced from 7.65% to 7.15%.
Deferred outflows of resources and deferred inflows of resources for changes of assumptions
represent the unamortized portion of this assumption change and 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 7.15% for each Plan and reflects
the long-term expected rate of return for the each Plan net of investment expenses and without
reduction for administrative expenses. 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 7.15% discount rate is appropriate and the use of the municipal bond rate calculation is
not deemed necessary. The long term expected discount rate of 7.15% 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.
71
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 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, 2014.
(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
11+ (b)
5.38%
2.27%
1.39%
6.63%
5.21%
5.36%
90.00%
There were no subsequent events that would materially affect the results in this disclosure.
72
New
Real Return
Strategic
Years
Asset Class
Allocation
1-10 (a)
Global Equity
47.00%
4.90%
Global Fixed Income
19.00%
80.00%
Inflation Sensitive
6.00%
60.00%
Private Equity
12.00%
6.60%
Real Estate
11.00%
2.80%
Infrastructure and Forestland
3.00%
3.90%
Liquidity
2.00%
-0.40%
Total
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
11+ (b)
5.38%
2.27%
1.39%
6.63%
5.21%
5.36%
90.00%
There were no subsequent events that would materially affect the results in this disclosure.
72
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 10 - PENSION PLANS (CONTINUED)
c. Changes in the Net Pension Liability
The changes in the net pension liability for the Miscellaneous Plan are as follows:
Balance at June 30, 2016
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total pension liability
Differences between actual and
expected experience
Changes in assumptions
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)
$101,683,617 $ 78,770,341 $ 22,913,276
2,211,312
-
2,211,312
7,614,130
-
7,614,130
(737,480)
-
(737,480)
6,589,964
-
6,589,964
-
1,881,701
(1,881,701)
-
1,037,304
(1,037,304)
-
8,829,526
(8,829,526)
-
(116,299)
116,299
(4,300,829) (4,300,829)
11,377,097 7,331,403
4,045,694
Balance at June 30, 2017
(Measurement Date) $113,060,714 $ 86,101,744 $ 26,958,970
As of June 30, 2018, the City reported net pension liabilities for its proportionate share of the net
pension liability for the Safety Plan as follows:
Safety
Proportionate
Share ofNet
Pension Liability
$ 36,411,988
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, 2017, 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, 2016 rolled forward to June 30, 2017 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.
73
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 10 - PENSION PLANS (CONTINUED)
c. Changes in the Net Pension Liability (Continued)
The City's proportionate share of the net pension liability for each Plan as of measurement dates
ended June 30, 2016 and 2017 was as follows:
Safety
Proportion - June 30, 2016 0.60679%
Proportion - June 30, 2017 0.60938%
Change - Increase (Decrease) 0.00259%
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 of 7.15%, 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:
Miscellaneous
1% Decrease 6.15%
Net Pension Liability $ 43,071,109
Current Discount Rate 7.15%
Net Pension Liability $ 26,958,970
1% Increase 8.15%
Net Pension Liability $ 13,742,995
Pension Plan Fiduciary Net Position
Safety
6.15%
$ 55,778,451
7.15%
$ 36,411,988
8.15%
$ 20,580,872
Detailed information about each pension plan's fiduciary net position is available in the separately
issued Ca1PERS financial reports.
74
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 10 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2018, the City recognized pension expense of $4,866,287 and
$4,998,691 for the Miscellaneous and Safety Plans, respectively. At June 30, 2018, 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
Pension contributions subsequent to measurement date
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
Net differences between projected and actual
earnings on plan investments
Total
75
Miscellaneous
Deferred
Outflows
of Resources
Deferred
Inflows
of Resources
$ 2,249,217 $ -
- (611,915)
4,236,405 -
1,121,218 -
$ 7,606,840 $ (611,915)
Safety
Deferred Deferred
Outflows Inflows
of Resources of Resources
$ 3,204,833
404,223
5,862,255
58,108
(105,392)
(449,768)
(873,409)
1,278,201 -
$ 10,807,620 $ (1,428,569)
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 10 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
$2,249,217 and $3,204,833 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, 2019. 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
2019
$ 1,922,820
2020
2,999,517
2021
477,248
2022
(653, 877)
2023
Thereafter
e. Payable to the Pension Plans
Safety
$ 1,319,339
3,432,913
2,169,886
(747,920)
At June 30, 2018, the City had no outstanding amount of contributions to the pension plans
required for the year ended June 30, 2018.
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS
a. General Information about the OPEB Plan
Plan Description
The City has an agent multiple employer defined benefit post -employment health care plan that
provides for medical insurance benefits to eligible employees at retirement through the California
Public Employees Medical and Hospital Care Act (PEMHCA). In fiscal year 2017-18, the City
established an OPEB trust. The assets shall be held in trust for the exclusive purpose of providing
post -employment health care benefits to the eligible employees of the employer. The City makes
discretionary contributions to the PARS OPEB trust and pays benefits directly to the insurance
provider and retirees. The PARS OPEB trust issues a publicly available financial report for the
fiduciary net position that is available upon request. The PARS OPEB trust is reported as a
fiduciary fund. The plan itself does not issue a separate financial report.
76
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
a. General Information about the OPEB Plan (Continued)
Plan Description (Continued)
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. Dependents are eligible to enroll, and in the event of a retiree's death, benefits may
continue to surviving beneficiaries in certain circumstances.
Employees Covered
Inactive employees, spouses, or beneficiaries currently
receiving benefit payments 105
Inactive employees entitled to but not yet receiving benefits -
Active employees 281
Total Plan Participants 386
Accounting for the Plan
The OPEB trust is prepared using the accrual basis of accounting. Employer contributions to the
plan are recognized when due and the employer has made a formal commitment to provide the
contributions. Benefits are recognized when due and payable in accordance with the terms of each
plan.
Method Used to Value Investments
Investments are reported at fair value, which is determined by the mean of the most recent bid and
asked prices as obtained from dealers that make markets in such securities. Securities for which
market quotations are not readily available are valued at their fair value as determined by the
custodian with the assistance of a valuation service.
Contributions
The contribution requirements of plan members and the City are established and may be amended
by City Council. Currently, contributions are not required from plan members. Administrative
costs of the OPEB plan are financed through investment earnings. The annual contribution is based
on the actuarially determined contributions. For fiscal year ending June 30, 2018, the City
contributed $1,000,000 to the PARS OPEB trust, made payments of $448,853 to insurance
providers and retirees, and the estimated implied subsidy was $237,319, resulting in total
contributions of $1,686,172. The liability for governmental activities is primarily liquidated from
the general fund.
77
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
b. Net OPEB Lability
The City's net OPEB liability was measured as of June 30, 2018 and the total OPEB liability used
to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2017
rolled forward to June 30, 2018 using standard update procedures. A summary of the principal
assumptions and methods used to determine the total OPEB liability is shown below.
Actuarial Assumptions
The total OPEB liability in the June 30, 2017, actuarial valuation was determined using the
following actuarial assumptions, applied to all periods included in the measurement, unless
otherwise specified:
Valuation Date
June 30, 2017
Measurement Date June 30, 2018
Actuarial Cost Method Entry -Age Normal Level Percentage of Salary
Actuarial Assumptions:
Discount Rate 6.0%
Expected long term investment rate of return 6.0%
Inflation 2.75%
Salary Increase 2.875% for base salary. Additional merit -based
increases based on CaIPERS merit salary
Healthcare Cost Trend Rates 7.00% in the first year, trending down to
Mortality
3.84% over 58 years
Derived from CaIPERS pension plan updated
to reflect most recent experience study
The actuarial assumptions used in the June 30, 2017 valuation were based on a standard set of
assumptions the actuary has used for similar valuations, modified as appropriate for the City.
The long-term expected rate of return was determined using a building-block method in which
best -estimate ranges of expected future real rates of return (expected returns, net of OPEB plan
investment expense and inflation) are developed for each major asset class. These ranges are
combined to produce the long-term expected rate of return by weighing the expected future real
rates of return by the target asset allocation percentage and by adding expected inflation.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
b. Net OPEB Lability (Continued)
Actuarial Assumptions (Continued)
Best estimates of arithmetic real rates of return for each major asset class included in the OPEB
plan's target asset allocation as of June 30, 2018 are summarized in the following table:
Asset Class
PARS OPEB Trust
Global Equity
Fixed Income
Cash
Total
Discount Rate
Target Allocation
Long -Term
for PARS
Expected Real
Balanced Fund
Rate of Return
50.00% 8.05%
45.00% 4.42%
5.00% 0.00%
100.00%
The discount rate used to measure the total OPEB liability was 6.00%. The projection of cash flows
used to determine the discount rate assumed that City's contributions will be made at rates equal to
the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's
fiduciary net position was projected to be available to make all projected OPEB payments for
current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of
return on the PARS OPEB trust investments was applied to all periods of projected benefit
payments to determine the total OPEB liability.
Change of Discount Rate
The discount rate utilized in the June 30, 2015 valuation, which was based on the requirements of
GASB 45, was 4.00% as compared to the June 30, 2017 valuation, which was based on the
requirements of GASB 75, discount rate of 6.00%. The discount rate was changed due to expected
levels of investment returns.
79
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
c. Changes in the net OPEB liability
The changes in the net OPEB liability are as follows:
Balance at June 30, 2017
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total OPEB liability
Contribution - employer
Net investment income
Benefit payments
Net Changes
Increase (Decrease)
Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability
$ 14,004,247 $ - $ 14,004,247
714,949
862,866
- 1,686,172
- 3,283
(686,172) (686,172)
891,643 1,003,283
714,949
862,866
(1,686,172)
(3,283)
(111,640)
Balance at June 30, 2018
(Measurement Date) $ 14,895,890 $ 1,003,283 $ 13,892,607
Change of Assumptions
The assumptions used in the June 30, 2015 actuarial valuation was based on requirements of GASB
45 and included a 4.00% investment rate of return, 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. See Note l lb for the assumptions used in the June 30, 2017 actuarial valuations,
which is based on the requirements of GASB 75.
Change of Benefit Terms
There was no change of benefit terms.
Subsequent Events
There were no subsequent events that would materially affect the results presented in this
disclosure.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
c. Changes in the net OPEB liability (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City, as well as what the City's net OPEB
liability would be if it were calculated using a discount rate that is 1 -percentage point lower (5.0%)
or 1 -percentage point higher (7.00%) than the current discount rate:
Net OPEB Liability
1% Decrease
(5.0%)
$ 15,697,546
Discount Rate
(6.0%)
$ 13,892,607
1% Increase
(7.0%)
$ 12,401,645
Sensitivity of the Net OPEB Liability to Changes in the Health -Care Cost Trend Rates
The following presents the net OPEB liability of the City, as well as what the City's net OPEB
liability would be if it were calculated using healthcare cost trend rates that are 1 -percentage point
lower (6.0% decreasing to 2.84%) or 1 -percentage point higher (8.0% decreasing to 4.84%) than
the current healthcare cost trend rates:
Net OPEB Liability
1% Decrease
(6.0% decreasing
to 2.84%)
$ 12,532,372
Current Healthcare
Cost Trend Rates
(7.0% decreasing
to 3.84%)
$ 13,892,607
1% Increase
(8.0% decreasing
to 4.84%)
$ 15,624,010
d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2018, the City recognized OPEB expense of $1,577,158 At
June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between projected and actual earnings $ - $ 2,626
The net difference between projected and actual earnings on plan investments is amortized over a
five-year period.
01
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)
Amounts reported as deferred inflows of resources related to OPEB will be recognized as OPEB
expense as follows:
Year
Ending
June 3 0,
Amount
2019
$ (657)
2020
(657)
2021
(657)
2022
(655)
2023
-
Thereafter
-
e. Payable to the OPEB Plan
At June 30, 2018, the City had no outstanding amount of contributions to the OPEB plan required
for the year ended June 30, 2018.
NOTE 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 2018 were $72,268.
EX
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 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 $3,000,000 per occurrence and $50,000,000 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 $50,000,000 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.
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, 2018. At June 30, 2018, estimated claims payable of $5,085,858, 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, 2018 and 2017, including a
provision for incurred but not reported claims and loss adjustment expenses, were as follows:
Beginning
June 30, Balance Additions
2017 $ 4,785,201 $ 5,013,246
2018 5,523,351 3,934,156
LIM
Ending
Deletions Balance
$ (4,275,096) $ 5,523,351
(4,371,649) 5,085,858
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 14 - SPECIAL ASSESSMENT DISTRICTS' BONDS
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.
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, 2018,
the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was $8,140,000.
Amount
Outstanding
District Bonds
of Issue
June 30, 2018
Community Facilities District 04-1,
2013
$ 9,350,000
$ 8,140,000
Community Facilities District 06-1,
2015A
49,740,000
47,220,000
Community Facilities District 06-1,
2015B
2,735,000
2,575,000
Community Facilities District 07-1,
2015A
13,155,000
13,155,000
Community Facilities District 07-1,
2015B
1,500,000
815,000
Community Facilities District 2014-01, 2015A
27,665,000
27,250,000
$ 104,145,000
$ 99,155,000
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, 2018,
the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was $8,140,000.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 14 - SPECIAL ASSESSMENT DISTRICTS' BONDS (CONTINUED)
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, 2018, the outstanding amount of the CFD 2014-01 2015A Special Tax Bonds was
$27,250,000.
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, 2018, the outstanding amount of the CFD 07-1
2015A Refunding Bonds was $13,155,000.
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, 2018, the outstanding amount of the CFD 07-1 Special Tax 2015B
Bonds was $815,000.
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, 2018, the outstanding amount of the CFD 06-01 2015A Refunding Bonds was
$47,220,000.
M,
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 14 - SPECIAL ASSESSMENT DISTRICTS' BONDS (CONTINUED)
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, 2018, the outstanding
amount of the CFD 06-1 Special Tax 2015B Bonds was $2,575,000.
NOTE 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.
:•
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 15 - GOVERNMENTAL FUND BALANCE CLASSIFICATIONS (CONTINUED)
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.
Nonspendable:
Prepaid items
Land held for resale
Restricted for:
Capital projects (1)
Public safety program
Housing projects
Pension
Assigned to:
Capital projects (2)
Unassigned
Measure M
General Special Revenue
Fund Fund
Other
Total
Governmental
Governmental
Funds
Funds
$ 627,404 $ - $ -
82,240,813 - -
35,690,966 5,378,832 37,150,150
- - 719,164
- - 2,877,164
5,578,912 - -
116,332,458
- 17,917,080
$ 627,404
82,240, 813
78,219,948
719,164
2,877,164
5,578,912
17,917,080
116,332,458
Total fund balances $ 240,470,553 $ 5,378,832 $ 58,663,558 $ 304,512,943
(1) The General Fund balance restricted for capital projects ($35,690,966) is comprised of funds
legally restricted for backbone infrastructure at the Tustin Legacy development. A majority of
the fund balance restricted for capital projects in the Measure M Special Revenue Fund
($5,378,832) and other governmental funds ($12,693,885) includes state gas taxes restricted for
allowable street -related purposes and developer fees to improve City parks. The other
governmental funds (CFD Construction Capital Project) fund balance restricted for capital
projects ($24,456,265) is comprised of bond proceeds restricted for uses specified in the bond
indenture.
(2) The other governmental funds (MCAS 2010 Capital Projects) fund balance assigned to capital
projects ($12,192,022) 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 ($5,725,058) is to be used
for specific projects indicated in the adopted budget.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 16 - OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES
Excess of Expenditures over Appropriations
Variance with
Budget Actual Final Budget
Other Governmental Funds:
Asset Forfeiture Special Revenue Fund $ - $ 57,317 $ (57,317)
Supplemental Law Enforcement
Special Revenue Fund - 127,408 (127,408)
NOTE 17- JOINT PO KERS 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
June 30, 2018
NOTE 18 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES
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 note was paid off in December 2017.
LI -Le
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 18 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES (CONTINUED)
Long -Term Liabilities
A summary of long-term liabilities activity for the year ended June 30, 2018, is as follows:
Tax Allocation Bonds Payable
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 2010 Housing Bonds and the 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, 2018 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, 2018, is $6,875,420.
.o
Balance
Balance
Due Within
July 1, 2017 Additions
Deletions
June 30, 2018
One Year
Taxallocation bonds
$ 55,940,000 $ -
$ (2,025,000)
$ 53,915,000
$ 1,830,000
Unamortized premium
6,331,109 -
(261,077)
6,070,032
-
Note payable to
County Auditor Controller
3,202,341 -
(3,202,341)
-
-
Total long-term liabilities
$ 65,473,450 $ -
$ (5,488,418)
$ 59,985,032
$ 1,830,000
Tax Allocation Bonds Payable
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 2010 Housing Bonds and the 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, 2018 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, 2018, is $6,875,420.
.o
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 18 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES (CONTINUED)
Long -Term Liabilities (Continued)
Tax Allocation Bonds Payable (Continued)
2016 Tax Allocation Refunding Bonds (Continued)
At June 30, 2018, the 2016 Tax Allocation Refunding Bonds outstanding balance was $53,915,000.
The annual debt service requirements to amortize the tax allocation bonds are as follows:
Year Ending
June 3 0,
2019
2020
2021
2022
2023
2024 -2028
2029 -2033
2034 -2038
2039-2041
Principal
$ 1,830,000
1,895,000
1,965,000
2,050,000
2,130,000
12,070,000
11,050,000
12,885,000
8,040,000
Interest
$ 2,083,175
2,017,825
1,940,625
1,860,325
1,776,725
7,395,225
4,596,913
2,314,725
344,550
Totals $ 53,915,000 $ 24,330,088
91
Total
$ 3,913,175
3,912,825
3,905,625
3,910,325
3,906,725
19,465,225
15,646,913
15,199,725
8,384,550
$ 78,245,088
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 18 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES (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 note was paid off in December 2017
NOTE 19 - 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.
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.
92
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2018
NOTE 20 - 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.
NOTE 21- RESTATEMENT OF NET POSITION
Restatement of the government -wide financial statements' net position as of July 1, 2017 are as
follows:
Governmental
Activities
Net Position at July 1, 2017, as originally reported $ 737,045,431
Implementation of GASB Statement 75 to record
the net OPEB liability at the beginning of the year (5,270,924)
Net position at July 1, 2017, as restated 731.774.507
NOTE 22 - SUBSEQUENT EVENTS
In preparing these financial statements, the City has evaluated other events and transactions for
potential recognition or disclosure through December 18, 2018, the date the financial statements were
available to be issued.
93
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REQUIRED SUPPLEMENTARY INFORMATION
.,
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we
CITY OF TUSTIN
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended
Measurement period
Plan's proportion of the net pension liability
Plan's proportionate share of the
net pension liability
Plan's covered payroll
Plan's proportionate share of the net pension liability
as a percentage of covered payroll
Plan's proportionate share of the fiduciary net position
as a percentage of the Plan's total pension liability
Plan's proportionate share of aggregate
employer contributions
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
0.36716%
0.36319%
0.35401%
0.41499%
$ 36,411,988
$ 31,427,228
$ 24,298,906
$ 25,822,675
$ 10,443,467
$ 10,013,168
$ 9,495,434
$ 9,640,345
348.66%
313.86%
255.90%
267.86%
73.31%
74.06%
78.40%
79.82%
$ 3,520,089 $ 3,193,318 $ 3,182,851 $ 2,544,912
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.
From fiscal year June 30, 2017 to June 30, 2018:
The discount rate was reduced from 7.65% to 7.15%.
* - Fiscal year 2015 was the 1st year of implementation, therefore only four years are shown. Additional years' information
will be displayed as it becomes available.
97
Fiscal year ended
Contractually required contribution
(actuarially determined)
Contributions in relation to the actuarially
determined contributions
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered payroll
Notes to Schedule:
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
SAFETY PLAN
Last Ten Fiscal Years*
June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
$ 3,204,833 $ 3,002,977 $ 2,708,192 $ 3,045,919
(3,204,833) (3,002,977) (2,708,192) (7,049,591)
$ - $ - $ - $ (4,003,672)
$ 9,967,145 $ 10,443,467 $ 10,013,668 $ 9,495,434
32.15% 28.75% 27.04% 74.24%
Valuation Date 6/30/2015 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%@50, 2%@50 and 2.7%@57**
Mortality Morality assumptions are based on mortality rates resulting from the most recent Ca1PERS
Experience Study adopted by the Ca1PERS Board.**
* - Fiscal year 2015 was the 1 st year of implementation, therefore only four years are shown. Additional years' information
will be displayed as it becomes available.
** - The valuation for June 30, 2012, 2013, and 2014 (applicable to fiscal years ended June 30, 2015, 2016, and 2017 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, 2014, and 2015
valuations (applicable to fiscal years ended June 30, 2016, 2017, and 2018 respectively).
98
CITY OF TUSTIN
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
MISCELLANEOUS PLAN
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 apercentage of the
total pension liability
Covered payroll
Net pension liability as percentage of
covered payroll
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Last Ten Fiscal Years*
June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
$ 2,211,312 $ 1,840,275
7,614,130 7,306,376
(737,480) (531,595)
6,589,964 -
$ 1,779,008 $ 1,747,494
6,982,672 6,613,765
452,122 -
(1,770,351) -
(4,300,829) (4,102,189) (3,956,389) (3,974,724)
11,377,097 4,512,867 3,487,062 4,386,535
101,683,617 97,170,750 93,683,688 89,297,153
$ 113,060.714 $ 101,683,617 $ 97,170,750 $ 93,683,688
$ 1,881,701
$ 1,850,072
$ 1,503,081
$ 1,379,562
1,037,304
998,937
905,331
962,617
8,829,526
372,172
1,753,374
11,900,167
(4,300,829)
(4,102,189)
(3,956,389)
(3,974,724)
-
-
(114)
-
(116,299)
(48,573)
(89,714)
-
7,331,403
(929,581)
115,569
10,267,622
78,770,341
79,699,922
79,584,353
69,316,731
$ 86,101,744
$ 78,770,341
$ 79,699,922
$ 79,584,353
$ 26,958,970
$ 22,913,276
$ 17,470,828
$ 14,099,335
76.16%
77.47%
82.02%
84.95%
$ 14,684,868 $ 13,828,003 $ 12,847,036 $ 12,270,014
183.58% 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.
From fiscal year June 30, 2017 to June 30, 2018:
The discount rate was reduced from 7.65% to 7.15%.
* - Fiscal year 2015 was the 1 st year of implementation, therefore only four years are shown. Additional years' information
will be displayed as it becomes available.
99
Fiscal year ended
Actuarially determined contribution
Contributions in relation to the actuarially
determined contributions
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered payroll
Notes to Schedule:
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
$ 2,249,217 $ 1,881,701 $ 1,850,100 $ 1,503,081
(2,249,217) (1,881,701) (1,850,100) (1,503,081)
$ 15,403,283 $ 14,684,868 $ 13,828,003 $ 12,847,036
14.60% 12.81% 13.38% 11.70%
Valuation Date 6/30/2016 6/30/2015 6/30/2014 6/30/2013
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**
Morality assumptions are based on mortality rates resulting from the most recent Ca1PERS
Mortality Experience Study adopted by the CalPERS Board.**
* - Fiscal year 2015 was the 1 st year of implementation, therefore only four years are shown. Additional years' information
will be displayed as it becomes available.
** - The valuation for June 30, 2012, 2013, and 2014 (applicable to fiscal years ended June 30, 2015, 2016, and 2017 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, 2014, and 2015
valuations (applicable to fiscal years ended June 30, 2016, 2017, and 2018 respectively).
100
CITY OF TUSTIN
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years*
Fiscal year end
6/30/2018
Measurement date
6/30/2018
Total OPEB Liability:
Service cost
$ 714,949
Interest on total OPEB liability
862,866
Benefit payments
(686,172)
Net Change in Total OPEB Liability
891,643
Total OPEB Liability - Beginning of Year
14,004,247
Total OPEB Liability - End of Year (a)
14,895,890
Plan Fiduciary Net Position:
Contributions - employer
1,686,172
Net investment income
3,283
Benefit payments
(686,172)
Net Change in Plan Fiduciary Net Position
1,003,283
Plan Fiduciary Net Position - Beginning of Year
-
Plan Fiduciary Net Position - End of Year (b)
1,003,283
Net OPEB Liability - Ending (a) -(b)
$ 13,892,607
Plan fiduciary net position as a percentage of the
total OPEB liability 6.74%
Covered - employee payroll $ 24,156,049
Net OPEB liability as percentage of
covered - employee payroll 57.51%
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Changes in Assumptions:
There were no changes in assumptions.
* Fiscal year 2018 was the first year of implementation; therefore, only one year is shown
101
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS - OPEB
Last Ten Fiscal Years*
6/30/2018
Actuarially determined contribution $ 1,729,589
Contributions in relation to the actuarially determined contributions (1,686,172)
Contribution deficiency (excess) $ 43,417
Covered - employee payroll $ 24,156,049
Contributions as a percentage of covered - employee payroll 6.98%
Notes to Schedule
Valuation Date 6/30/2017
Methods and Assumptions Used to Determine Contribution Rates:
Single and agent employers
Entry age normal
Amortization method
Level percent of pay, closed 20 year period
Inflation
2.75%
Assumed payroll growth
2.875%
Healthcare trend rates
7.00%, trending down to 3.84%
Rate of return on assets
6.00%
Mortality rate
Ca1PERS OPEB assumption model, revised December 20, 2017.
Retirement rates
Ca1PERS OPEB assumption model, revised December 20, 2017.
* Fiscal year 2018 was the first year
of implementation; therefore, only one year is shown.
102
CITY OF TUSTIN
OTHER POST -EMPLOYMENT BENEFIT PLAN
ANNUAL MONEY -WEIGHTED RATE OF RETURN ON INVESTMENTS
For the year ended June 30, 2018
Retiree Health Plan
Fiscal Year Ended Annual Money -Weighted Rate of Return, Net of Investment Expense (1)
6/30/2018
N/A*
(1) Ten years of historical information is required by the Governmental Accounting Standards Board Statement No. 74. Fiscal year
ended June 30, 2018 was the first year of implementation; therefore, only one year is presented.
Initial deposit to the OPEB trust was made on June 26, 2018.
103
CITY OF TUS11N
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
TOTAL OTHER
FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2018
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
$ 27,366,359
$ 27,366,359
$ 25,770,970
$ (1,595,389)
737,165
737,165
905,086
167,921
876,000
876,000
996,912
120,912
221,000
221,000
583,675
362,675
28,820,196
28,820,196
28,463,529
(356,667)
2,734,977
2,734,977
2,029,405
(705,572)
1,241,133
1,241,133
1,479,441
238,308
1,535,500
1,535,500
1,820,857
285,357
-
-
1,341,143
1,341,143
-
-
7,179,553
7,179,553
28,499,300
28,499,300
33,033,193
4,533,893
92,031,630
92,031,630
103,603,764
11,572,134
20,182,037
29,538,425
20,265,803
9,272,622
34,130,140
35,358,301
32,222,859
3,135,442
7,804,300
8,523,209
7,610,935
912,274
4,278,293
4,373,887
9,330,758
(4,956,871)
65,863,873
68,073,505
12,212,282
55,861,223
- - 3,271,503 (3,271,503)
- - 12,043 (12,043)
132,258,643 145,867,327 84,926,183 60,941,144
(40,227,013) (53,835,697) 18,677,581 72,513,278
2,092,700 2,092,700 4,468,662 2,375,962
(2,500,000) (2,500,000) (4,439,943) (1,939,943)
(407,300) (407,300) 28,719 436,019
(40,634,313) (54,242,997) 18,706,300 72,949,297
221,764,253 221,764,253 221,764,253
$ 181,129,940 $ 167,521,256 $ 240,470,553 $ 72,949,297
See accompanying note to required supplementary information.
104
CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
MEASURE M SPECIAL REVENUE FUND
For the year ended June 30, 2018
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
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
$ 25,000
$ 25,000
$ 67,431
$ 42,431
4,081,300
4,081,300
7,232,280
3,150,980
-
-
1,200
1,200
4,106,300
4,106,300
7,300,911
3,194,611
-
-
5,663
(5,663)
13,579,294
13,584,906
6,903,666
6,681,240
13,579,294
13,584,906
6,909,329
6,675,577
(9,472,994)
(9,478,606)
391,582
9,870,188
(39,000) (39,000) (293,886) (254,886)
(9,511,994) (9,517,606) 97,696 9,615,302
5,281,136 5,281,136 5,281,136 -
$ (4,230,858) $ (4,236,470) $ 5,378,832 $ 9,615,302
See accompanying note to required supplementary information.
105
CITY OF TUSTIN
Note to Required Supplementary Information
June 30, 2018
NOTE I - BUDGETSAND BUDGETARYACCOUNTING
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.
106
SUPPLEMENTARY INFORMATION
107
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M.
CITY OF TUSTIN
Other Governmental Funds
June 30, 2018
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 AB3229, 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.
Road Maintenance and Rehabilitation - This fund is used to account for revenues and expenditures
apportioned under the Road Repair and Accountability Act of 2017 (SB 1) for road maintenance and
rehabilitation
Voluntary Workforce Housing Incentive - This fund is used to account for in -lieu fees collected and
the associated expenditures that support development of City affordable housing programs and projects
under the City of Tustin Ordinance 1491.
109
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110
CITY OF TUSTIN
Other Governmental Funds
June 30, 2018
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.
MCAS 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.
111
CITY OF TUSTIN
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2018
112
Special Revenue Funds
Park
Acquisition
Supplemental
and
Asset
Air
Law
Housing
Gas Tax
Development
Forfeiture
Quality
Enforcement
Authority
ASSETS
Cash and investments
$ 5,564,687
$ 5,041,917
$ 138,799
$ 283,869
$ 99,742
$ 2,632,372
Restricted cash and investments
-
-
-
-
-
-
Receivables:
Accounts
133,234
-
-
27,119
-
-
Interest
12,645
11,457
315
645
227
78,997
Loans
-
-
-
-
-
383,796
Allowance for uncollectibles
-
-
-
-
-
(33,796)
Advance to other funds
Prepaid items and deposits
-
-
-
-
-
-
Land held for resale
-
-
-
-
-
116,719
TOTAL ASSETS
$ 5,710,566
$ 5,053,374
$ 139,114
$ 311,633
$ 99,969
$ 3,178,088
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
LIABILITIES:
Accounts payable and
accrued liabilities
$ 308,498
$ 69,593
$ 10
$ 19
$ 18,148
$ 19,631
Deposits payable
-
-
-
-
-
-
Unearned revenue
-
-
-
-
-
-
TOTAL LIABILITIES
308,498
69,593
10
19
18,148
19,631
DEFERRED INFLOWS
OF RESOURCES:
Unavailable revenue
-
-
-
-
-
422,695
FUND BALANCES:
Nonspendable
-
-
-
-
-
-
Restricted
5,402,068
4,983,781
139,104
311,614
81,821
2,735,762
Assigned
-
-
-
-
-
-
TOTAL FUND BALANCES
5,402,068
4,983,781
139,104
311,614
81,821
2,735,762
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$ 5,710,566
$ 5,053,374
$ 139,114
$ 311,633
$ 99,969
$ 3,178,088
112
Special Revenue Funds (Continued)
Capital Projects Funds
Road
Voluntary
Total
Maintenance
Workforce
Other
Other
Special
and
Housing
Construction
Capital
MCAS
CFD
Governmental
Tax B
Rehabilitation
Incentive
95-1
Projects
2010
Construction
Funds
$ -
$ 308,077
$ 141,402
$ 1,996,422
$ 4,912,309
$ 12,427,048
$ -
$ 33,546,644
-
-
-
-
34,896
162,790
25,034,363
25,232,049
15,576
174,586
-
-
2,735,348
-
-
3,085,863
-
-
-
-
11,162
28,238
-
143,686
-
-
-
-
-
-
-
383,796
-
-
-
-
-
(33,796)
-
-
-
-
-
-
-
116,719
$ 15,576
$ 482,663
$ 141,402
$ 1,996,422
$ 7,693,715
$ 12,618,076
$ 25,034,363
$ 62,474,961
1,159,269 $ 426,054 $ 578,098 $ 2,579,320
- - - - 743,806 - - 743,806
- - - - 1,903,075 426,054 578,098 3,323,126
- - - - 65,582 - - 488,277
15,576 482,663 141,402 1,996,422 34,896 162,790 24,456,265 40,944,164
- - - 5,690,162 12,029,232 - 17,719,394
15,576 482,663 141,402 1,996,422 5,725,058 12,192,022 24,456,265 58,663,558
$ 15,576 $ 482,663 $ 141,402 $ 1,996,422 $ 7,693,715 $ 12,618,076 $ 25,034,363 $ 62,474,961
113
CITY OF TUSTIN
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
REVENUES:
Investment 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 1N
FUND BALANCES
FUND BALANCES -
BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
For the year ended June 30, 2018
Special Revenue Funds
826,613
Park
- -
-
- - -
112,545 -
-
Acquisition
- 416,804
701,088
Supplemental
127,408 -
1,527,701
and
Asset
Air
Law
Housing
Gas Tax
Development
Forfeiture
Quality
Enforcement
Authority
$ 24,659
$ 58,735
$ 365
$ 476
$ 1,051
$ 8,720
1,737,490
270,347
71,048
105,657
176,242
-
-
6,538
-
-
-
-
-
194,627
-
-
-
-
-
-
-
-
-
28,498
-
-
-
-
-
603,566
1,762,149
530,247
71,413
106,133
177,293
640,784
826,613
43,986 57,317 160
- -
-
- - -
112,545 -
-
- - -
- 416,804
701,088
3,866,979 - -
127,408 -
1,527,701
3,910,965 57,317 160
239,953 416,804
234,448
(3,380,718) 14,096 105,973
(62,660) 223,980
234,448 (3,380,718) 14,096 105,973 (62,660) 223,980
5,167,620 8,364,499 125,008 205,641 144,481 2,511,782
$ 5,402,068 $ 4,983,781 $ 1392104 $ 3112614 $ 812821 $ 2,7352762
114
Special Revenue Funds (Continued)
Capital Projects Funds
Road Voluntary
Total
Maintenance Workforce
Other
Other
Special and Housing Construction
Capital MCAS
CFD Governmental
Tax B Rehabilitation Incentive 95-1
Projects 2010
Construction Funds
$ - $ - $ - $ - $ (5,309) $ 96,066 $ 284,407 $ 469,170
3,582,585 482,663 - - - - - 6,426,032
- - 141,402 - - - - 147,940
- - - - - - - 194,627
- - - 514 6,994,339 1,939 1,431 7,026,721
- - - - - 603,566
3,582,585 482,663 141,402 514 6,989,030 98,005 285,838 14,868,056
- - - - 1,903 - 58,361 988,340
- - - - - - - 112,545
- - - - - 184,914 - 184,914
- - - - - - - 416,804
- - - - 8,116,725 3,775,349 4,378,943 20,966,492
- - - - 8,118,628 3,960,263 4,437,304 22,669,095
3,582,585 482,663 141,402 514 (1,129,598) (3,862,258) (4,151,466) (7,801,039)
- - - - 2,500,000 - 1,939,943 4,439,943
(3,573,713) - - (539,264) - - (61,799) (4,174,776)
(3,573,713) - - (539,264) 2,500,000 - 1,878,144 265,167
8,872 482,663 141,402 (538,750) 1,370,402 (3,862,258) (2,273,322) (7,535,872)
6,704 - 2,535,172 4,354,656 16,054,280 26,729,587 66,199,430
$ 15,576 $ 482,663 $ 141,402 $ 1,996,422 $ 51725,058 $ 12,192,022 $ 24,456,265 $ 58,663,558
115
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
REVENUES:
Investment income
Intergovernmental revenue
Other revenue
I'O'I'AL 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
GAS TAX SPECIAL REVENUE FUND
For the year ended June 30, 2018
1,001,780
1,012,067
826,613
Variance with
2,485,724
2,505,724
701,088
Final Budget
Budgeted Amounts
3,517,791
Positive
Original
Final
Actual
(Negative)
$ 15,000
$ 15,000
$ 24,659
$ 9,659
2,212,800
2,212,800
1,737,490
(475,310)
94,600
94,600
-
(94,600)
2,322,400
2,322,400
1,762,149
(560,251)
1,001,780
1,012,067
826,613
185,454
2,485,724
2,505,724
701,088
1,804,636
3,487,504
3,517,791
1,527,701
1,990,090
(1,165,104)
(1,195,391)
234,448
1,429,839
5,167,620
5,167,620
5,167,620
-
$ 4,002,516
$ 3,972,229
$ 5,402,068
$ 1,429,839
116
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, 2018
117
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ 50,000
$ 50,000
$ 58,735
$ 8,735
Intergovernmental revenue
-
-
270,347
270,347
Charges for services
28,000
28,000
6,538
(21,462)
Rental income
207,400
207,400
194,627
(12,773)
TOTAL REVENUES
285,400
285,400
530,247
244,847
EXPENDITURES:
Current:
General government
3,500
3,500
43,986
(40,486)
Capital outlay
6,203,209
6,455,712
3,866,979
2,588,733
TOTAL EXPENDITURES
6,206,709
6,459,212
3,910,965
2,548,247
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
(5,921,309)
(6,173,812)
(3,380,718)
2,793,094
FUND BALANCE - BEGINNING OF YEAR
8,364,499
8,364,499
8,364,499
-
FUND BALANCE - END OF YEAR
$ 2,443,190
$ 2,190,687
$ 4,983,781
$ 2,793,094
117
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
I'O'I'AL 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, 2018
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 100 $ 100 $ 365 $ 265
100,000 100,000 71,048 (28,952)
100,100 100,100 71,413 (28,687)
- 57,317 (57,317)
100,100 100,100 14,096 (86,004)
125,008 125,008 125,008 -
$ 225,108 $ 225,108 $ 139,104 $ (86,004)
118
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
I'O'I'AL 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, 2018
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 1,000 $ 1,000 $ 476 $ (524)
95,900 95,900 105,657 9,757
96,900 96,900 106,133 9,233
200
200
160
40
100,000
100,000
-
100,000
100,200
100,200
160
100,040
(3,300)
(3,300)
105,973
109,273
205,641
205,641
205,641
-
$ 202,341 $
202,341 $
311,614
$ 109,273
119
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SUPPLEMENTAL LAW ENFORCEMENT SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
I'O'I'AL REVENUES
EXPENDITURES:
Current:
Public safety
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, 2018
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ 1,051 $ 1,051
151,000 151,000 176,242 25,242
151,000 151,000 177,293 26,293
115,100 115,100 112,545 2,555
- - 127,408 (127,408)
115,100 115,100 239,953 (124,853)
35,900 35,900 (62,660) (98,560)
144,481 144,481 144,481 -
$ 180,381 $ 180,381 $ 81,821 $ (98,560)
120
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
fO'1'AL REVENUES
EXPENDITURES:
Current:
Community services
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2018
Budgeted Amounts
Original Final
1,400 1,400
1,400 1,400
454,745 477,645 416,804 60,841
454,745 477,645 416,804 60,841
(453,345) (476,245) 223,980 700,225
2,511,782 2,511,782 2,511,782 -
$ 2,058,437 $ 2,035,537 $ 2,735,762 $ 700,225
121
Variance with
Final Budget
Positive
Actual
(Negative)
$ 8,720
$ 8,720
28,498
27,098
603,566
603,566
640,784
639,384
454,745 477,645 416,804 60,841
454,745 477,645 416,804 60,841
(453,345) (476,245) 223,980 700,225
2,511,782 2,511,782 2,511,782 -
$ 2,058,437 $ 2,035,537 $ 2,735,762 $ 700,225
121
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
FUND BALANCE - END OF YEAR
For the year ended June 30, 2018
Budgeted Amounts
Original Final
$ 3,558,000 $ 3,558,000
Actual
$ 3,582,585
Variance with
Final Budget
Positive
(Negative)
$ 24,585
(3,558,000) (3,558,000) (3,573,713) (15,713)
- - 8,872 8,872
6,704 6,704 6,704 -
$ 6,704 $ 6,704 $ 15,576 $ 8,872
122
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
ROAD MAINTENANCE AND REHABILITATION SPECIAL REVENUE FUND
For the year ended June 30, 2018
REVENUES:
Intergovernmental revenue
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
Budgeted Amounts
Original Final
123
Variance with
Final Budget
Positive
Actual (Negative)
$ 482,663 $ 482,663
$ 482,663 $ 482,663
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
VOLUNTARY WORKFORCE HOUSING INCENTIVE SPECIAL REVENUE FUND
For the year ended June 30, 2018
REVENUES:
Charges for services
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
Budgeted Amounts
Original Final
124
Variance with
Final Budget
Positive
Actual (Negative)
$ 141,402 $ 141,402
$ 141,402 $ 141,402
CITY OF TUSTIN
Agency Funds
June 30, 2018
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.
125
CITY OF TUSTIN
COMBINING STATEMENT OF ASSETS AND LIABILITIES
ALL AGENCY FUNDS
June 30, 2018
126
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
$ 1,080,375
$ 5,746,497
$ 1,666,713
$
$ 3,291,938
$
11,785,523
Taxes receivable
8,097
12,286
-
10,884
31,267
Prepaid items
-
-
2,140
-
2,140
TOTAL ASSETS
$ 1,088,472
$ 5,758,783
$ 1,668,853
$
$ 3,302,822
$
11,818,930
LIABILITIES
Due to bondholders
$ 1,088,472
$ 5,758,783
$ 1,668,853
$
$ 3,302,822
$
11,818,930
TOTAL LIABILITIES
$ 1,088,472
$ 5,758,783
$ 1,668,853
$
$ 3,302,822
$
11,818,930
126
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
For the year ended June 30, 2018
COMMUNITY FACILITIES DISTRICT 04-01
ASSETS:
Cash and investments
Restricted cash and investments
Taxes receivable
TOTAL ASSETS
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
Balance
July 1, 2017
Additions
Deletions
Balance
June 30, 2018
$ - $ 726,906 $ 726,906 $ -
1,066,627 701,226 687,478 1,080,375
10,128 8,097 10,128 8,097
$ 1,076,755 $ 1,436,229 $ 1,424,512 $ 1,088,472
$ - $ 695,256 $ 695,256 $ -
1,076,755 729,101 717,384 1,088,472
$ 1,076,755 $ 1,424,357 $ 1,412,640 $ 1,088,472
$ - $ 3,381,195 $ 3,381,195 $ -
5,563,584 3,350,722 3,167,809 5,746,497
31,966 12,286 31,966 12,286
$ 5,595,550 $ 6,744,203 $ 6,580,970 $ 5,758,783
$ - $ 3,297,226 $ 3,297,226 $ -
5,595,550 3,415,011 3,251,778 5,758,783
$ 5,595,550 $ 6,712,237 $ 6,549,004 $ 5,758,783
COMMUNITY FACILITIES DISTRICT 07-01
ASSETS:
Cash and investments
$
-
$
1,006,616
$
1,006,616
$
-
Restricted cash and investments
1,609,311
940,291
882,889
1,666,713
Prepaid items
-
2,140
-
2,140
TOTAL ASSETS
$
1,609,311
$
1,949,047
$
1,889,505
$
1,668,853
LIABILITIES:
Accounts payable
$
976
$
944,284
$
945,260
$
-
Due to bondholders
1,608,335
989,649
929,131
1,668,853
TOTAL LIABILITIES
$
1,609,311
$
1,933,933
$
1,874,391
$
1,668,853
(Continued)
127
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
(CONTINUED)
For the year ended June 30, 2018
COMMUNITY FACILITIES DISTRICT 13-01
ASSETS:
Cash and investments
TOTAL ASSETS
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
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
Prepaid items
TOTAL ASSETS
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
Balance
July 1, 2017
Additions
Deletions
Balance
June 30, 2018
$ - $ 288,184 $ 288,184 $ -
$ - $ 288,184 $ 288,184 $ -
$ 980 $ 2,625 $ 3,605 $ -
(980) 288,184 287,204 -
$ - $ 290,809 $ 290,809 $ -
$ - $ 1,554,178 $ 1,554,178 $ -
3,182,214 1,526,489 1,416,765 3,291,938
20,407 10,884 20,407 10,884
$ 3,202,621 $ 3,091,551 $ 2,991,350 $ 3,302,822
$ - $ 1,496,324 $ 1,496,324 $ -
3,202,621 1,576,195 1,475,994 3,302,822
$ 3,202,621 $ 3,072,519 $ 2,972,318 $ 3,302,822
$ - $ 6,957,079 $ 6,957,079 $ -
11,421,736 6,518,728 6,154,941 11,785,523
62,501 31,267 62,501 31,267
- 2,140 - 2,140
$ 11,484,237 $ 13,509,214 $ 13,174,521 $ 11,818,930
$ 1,956 $ 6,435,715 $ 6,437,671 $ -
11,482,281 6,998,140 6,661,491 11,818,930
$ 11,484,237 $ 13,433,855 $ 13,099,162 $ 11,818,930
128
STATISTICAL SECTION
129
The page left blank intentionally
130
CITY OF TUSTIN
Description of Statistical Contents
June 30, 2018
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:
Peres
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. 132
Revenue Capacity - These schedules contain information to help the reader
assess the City's most significant local revenue source, the property tax. 142
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. 148
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. 156
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. 158
Sources:
Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports for the relevant year.
131
CITY OF TUSTIN
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
132
Fiscal Year
2009
2010
2011
2012
Governmental activities:
Net investment in capital assets
$ 357,299,104
$ 360,282,692
$ 378,911,546
$ 412,683,460
Restricted
145,602,640
135,670,302
116,718,495
47,727,966
Unrestricted
104,037,153
114,737,049
116,545,351
147,513,249
Total governmental activities net position
$ 606,938,897
$ 610,690,043
$ 612,175,392
$ 607,924,675
Business -type activities:
Net investment in capital assets
$ 24,964,824
$ 24,541,113
$ 20,872,492
$ 25,479,160
Restricted
1,191,694
-
-
-
Unrestricted
1,981,499
1,851,666
5,541,672
2,795,701
Total business -type activities net position
$ 28,138,017
$ 26,392,779
$ 26,414,164
$ 28,274,861
Primary government:
Net investment in capital assets
$ 382,263,928
$ 384,823,805
$ 399,784,038
$ 438,162,620
Restricted
146,794,334
135,670,302
116,718,495
47,727,966
Unrestricted
106,018,652
116,588,715
122,087,023
150,308,950
Total primary government net position
$ 635,076,914
$ 637,082,822
$ 638,589,556
$ 636,199,536
132
Fiscal Year
2013 2014 2015 2016 2017 2018
$ 431,761,288 $ 461,673,323 $ 456,649,085 $ 483,229,135 $ 490,574,647 $ 499,190,473
54,367,385 36,693,458 72,929,522 95,241,025 102,027,853 87,395,188
177,532,888 93,877,440 140,727,040 107,224,779 144,442,931 151,119,177
$ 663,661,561 $ 592,244,221 $ 670,305,647 $ 685,694,939 $ 737,045,431 $ 737,704,838
$ 24,171,745 $ 23,657,878 $ 24,270,718 $ 25,443,651 $ 23,252,432 $ 22,753,763
7,094,771 8,326,340 11,845,734 12,227,557 15,129,697 16,505,744
$ 31,266,516 $ 31,984,218 $ 36,116,452 $ 37,671,208 $ 38,382,129 $ 39,259,507
$ 455,933,033 $ 485,331,201 $ 480,919,803 $ 508,672,786 $ 513,827,079 $ 521,944,236
54,367,385 36,693,458 72,929,522 95,241,025 102,027,853 87,395,188
184,627,659 102,203,780 152,572,774 119,452,336 159,572,628 167,624,921
$ 694,928,077 $ 624,228,439 $ 706,422,099 $ 723,366,147 $ 775,427,560 $ 776,964,345
133
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
')nn4 ')nin ')ni i XW)
$ 8,499,303
$ 7,802,579
$ 7,854,361
$ 12,266,470
29,126,019
27,277,141
28,622,807
28,800,773
22,102,002
20,816,686
19,809,907
20,765,854
5,112,770
12,742,391
13,150,089
7,078,104
3,566,782
4,087,839
4,814,598
3,057,645
68,406,876
72,726,636
74,251,762
71,968,846
Business -type activities:
Water 12,569,331 11,938,146 12,578,667 13,467,541
Tustin Legacy 1,259,093 - - -
Total business -type activities expenses 13,828,424 11,938,146 12,578,667 13,467,541
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)
1,694,464
1,404,925
1,109,150
1,390,073
2,136,772
1,168,348
1,196,830
1,133,096
2,374,308
3,761,321
3,508,904
800,328
897,386
957,545
969,006
974,747
4,253,442
3,403,411
3,441,281
3,590,210
18,865,776
6,287,231
3,395,929
20,902,629
30,222,148
16,982,781
13,621,100
28,791,083
11,281,679 10,594,471 12,422,746 15,112,161
22,587 - - -
11,304,266
10,594,471
12,422,746
15,112,161
$ (38,184,728)
$ (55,743,855)
$ (60,630,662)
$ (43,177,763)
(2,524,158)
(1,343,675)
(155,921)
1,644,620
$ (40,708,886)
$ (57,087,530)
$ (60,786,583)
$ (41,533,143)
134
Fiscal Year
2013 2014 2015 2016 2017 2018
$ 18,705,913
$ 14,825,780
$ 17,121,057
$ 20,023,280
$ 24,504,764
$ 23,949,544
30,702,298
28,440,799
29,886,284
27,779,830
34,611,078
33,713,796
15,087,234
49,538,371
34,435,214
47,326,664
24,822,480
37,599,662
3,201,865
3,498,460
3,699,059
7,869,124
19,524,660
10,795,733
967,115
-
-
-
5,802
12,043
68,664,425
96,303,410
85,141,614
102,998,898
103,468,784
106,070,778
29,367,544
19,394,706
27,570,891
59,194,506
35,474,682
18,022,346
13,574,149
16,100,137
15,982,078
15,586,463
16,654,429
17,680,886
13,574,149
16,100,137
15,982,078
15,586,463
16,654,429
17,680,886
763,101
249,237
252,074
2,072,540
1,979,211
1,630,903
917,947
920,112
1,071,099
1,195,350
1,255,299
1,283,672
1,248,595
1,710,813
1,564,314
3,538,906
1,861,045
2,167,726
926,432
967,134
892,102
953,149
1,101,294
1,434,988
4,513,158
3,325,304
3,546,823
2,722,978
2,742,140
3,863,547
20,998,311
12,222,106
20,244,479
48,711,583
26,535,693
7,641,510
29,367,544
19,394,706
27,570,891
59,194,506
35,474,682
18,022,346
16,688,773
< <oo -7-71
18,682,821
l () L O') O') l
19,375,359
1C)1 -7C ICC)
16,511,795
) c c ) ) -)nc
17,100,836
18,229,013
)o I)I)n nil)
$ (39,296,881)
$ (76,908,704)
$ (57,570,723)
$ (43,804,392)
$ (67,994,102)
$ (88,048,432)
3,114,624
2,582,684
3,393,281
925,332
446,407
548,127
$ (36,182,257)
$ (74,326,020)
$ (54,177,442)
$ (42,879,060)
$ (67,547,695)
$ (87,500,305)
135
General revenues and other changes
in net position:
Governmental activities:
Taxes:
Property taxes
Transient occupancy taxes
Business license taxes
Othertaxes
Sales tax
Motor vehicle in lieu, unrestricted
Investment income
Other general revenues
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:
Investment income
Miscellaneous
Transfers
Total business -type activities
Total primary government
Changes in net position:
Governmental activities
Business -type activities
Total primary government
CITY OF TUSTIN
CHANGES IN NET POSITION
GENERAL REVENUES
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2009 2010 2011 2012
$ 34,022,959
$ 28,347,659
$ 30,205,879
$ 23,270,718
154,379
141,335
142,915
137,131
356,565
337,867
358,526
44,800
1,689,573
1,720,505
1,648,319
1,621,521
19,858,142
15,917,332
18,597,453
19,931,865
252,666
6,122,789
6,189,249
5,833,094
4,863,469
4,086,852
2,358,847
958,169
2,314,540
1,520,662
1,700,323
14,444,183
103,805,196
-
-
-
-
-
-
(27,314,435)
167,317,489
58,195,001
61,201,511
38,927,046
164,764
86,654
158,242
156,855
82,810
25,340
19,064
59,222
(103,805,196)
-
-
-
(103,557,622)
111,994
177,306
216,077
$ 63,759,867 $ 58,306,995 $ 61,378,817 $ 39,143,123
$ 129,132,761 $ 2,451,146 $ 570,849 $ (4,250,717)
(106,081,780) (1,231,681) 21,385 1,860,697
$ 23,050,981 $ 1,219,465 $ 592,234 $ (2,390,020)
136
Fiscal Year
2013 2014 2015 2016 2017 2018
$
14,526,101
$
13,661,771
$
14,552,535
$
16,451,763
$
24,437,717
$
25,636,673
137,064
616,897
1,090,675
1,554,754
1,609,318
1,575,830
377,498
393,241
419,148
406,891
420,684
431,457
1,655,388
1,663,215
1,763,878
1,839,963
1,931,185
1,781,175
21,575,405
22,288,032
22,269,896
24,513,610
25,133,146
24,925,934
5,951,653
6,150,893
6,380,698
6,778,329
37,056
43,359
243,921
628,180
1,052,276
2,430,087
611,964
1,109,193
7,231,648
4,040,996
7,829,149
2,671,845
4,594,651
4,838,383
43,335,089
-
48,136,121
-
24,241,261
33,636,759
-
-
-
-
31,327,612
-
-
-
32,137,773
-
-
-
-
1,412,257
-
2,546,442
5,000,000
-
95,033,767
50,855,482
135,632,149
59,193,684
119,344,594
93,978,763
39,700
144,381
249,863
480,050
108,669
150,371
271,858
408,749
489,090
149,374
155,845
178,880
311,558
553,130
738,953
629,424
264,514
329,251
$
95,345,325
$
51,408,612
$
136,371,102
$
59,823,108
$
119,609,108
$
94,308,014
$
55,736,886
$
(26,053,222)
$
78,061,426
$
15,389,292
$
51,350,492
$
5,930,331
3,426,182
3,135,814
4,132,234
1,554,756
710,921
877,378
$
59,163,068
$
(22,917,408)
$
82,193,660
$
16,944,048
$
52,061,413
$
6,807,709
137
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
$
120,632,293
$
144,139,167
$
-
$
-
1,971,846
5,870,992
-
-
$
122,604,139
$
150,010,159
$
-
$
-
$
49,777,973
$
66,609,267
$
-
$
-
16,437,130
14,277,683
-
-
-
(6,774,245)
-
-
90,474,987
75,663,086
-
-
$
156,690,090
$
149,775,791
$
-
$
-
$
-
$
144,139,167
$
144,186,955
$
144,604,847
-
47,608
-
-
-
5,823,384
-
-
-
-
7,443,165
4,077,344
$
-
$ 150,010,159
$ 151,630,120
$ 148,682,191
$
-
$
34,800,738
$
22,352,713
$
1,710,292
-
111,455,097
130,673,281
38,274,666
-
344,708
-
-
-
11,670,324
18,603,317
16,239,322
-
(8,495,076)
(10,989,463)
-
$
-
$ 149,775,791
$ 160,639,848
$
56,224,280
138
Fiscal Year
$ 52,053,954 $ 35,314,389 $ 61,399,349 $ 81,312,081 $ 71,480,566 $ 64,042,390
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.
139
$ 128,988,209
$ 129,049,954
$ 122,458,642
$
88,579,214 5
$ 84,344,748
$ 82,868,217
19,615,343
1,352,309
16,650,332
18,657,461
34,901,943
41,269,878
44,368,566 2
18,781,826
84,278,138 3
79,667,061
102,517,562
116,332,458
$ 192,972,118
$ 149,184,089
$ 223,387,112
$
186,903,736
$ 221,764,253
$ 240,470,553
$ 1,287,607
$ -
$ -
$
1,922
$ 1,922
$ -
i 33,885,757
29,820,853
24,048,818
54,438,343
51,069,708
46,322,996
16,880,590
5,493,536
37,350,531 4
26,871,816
20,408,936
17,719,394
$ 52,053,954 $ 35,314,389 $ 61,399,349 $ 81,312,081 $ 71,480,566 $ 64,042,390
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.
139
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
142,866,218
Fiscal
Year
3,020,291
Transfers out
2009
2010
2011
2012
Revenues:
-
26,274,205
43,281,289
-
Taxes
$ 36,339,860
$ 36,662,197
$ 38,726,558
$ 30,975,441
Licenses and permits
1,692,955
3,538,198
716,144
443,928
Fines and forfeitures
832,188
890,770
893,642
875,068
Investment income
4,429,915
3,198,484
1,632,215
472,725
Intergovernmental revenues
34,484,805
21,295,762
23,970,358
26,345,002
Charges for services
4,497,309
2,708,705
5,020,485
2,813,752
Rental income
771,807
869,645
358,030
480,255
Developer contributions
-
4,051,180
1,593,475
-
Profit participation
-
-
-
-
Gain on sale of land held for resale
-
-
-
-
Contribution from Successor Agency
-
-
-
-
Other revenues
1,188,200
1,028,432
2,425,052
14,075,025
Total revenues
84,237,039
74,243,373
75,335,959
76,481,196
Expenditures:
Current:
General government
6,728,236
7,197,709
7,505,928
11,656,331
Public safety
27,759,939
26,359,435
27,508,514
28,714,347
Public works
11,311,291
10,133,685
9,110,621
6,954,384
Community services
5,005,986
12,251,479
12,740,969
6,506,381
Capital outlay
24,772,717
13,125,983
9,979,670
25,816,530
Debt service:
Principal retirement
11,143,000
7,913,000
10,659,000
2,590,000
Interest and fiscal charges
3,570,834
4,603,661
4,131,435
3,264,323
Bond issue costs
-
-
429,731
-
Total expenditures
90,292,003
81,584,952
82,065,868
85,502,296
Excess (deficiency) of revenues
over (under) expenditures
(6,054,964)
(7,341,579)
(6,729,909)
(9,021,100)
Other financing sources (uses)
Transfers in
142,866,218
37,207,661
2,645,014
3,020,291
Transfers out
(41,295,836)
(37,207,661)
(2,645,014)
(3,020,291)
Proceeds from debt issuance
-
26,274,205
43,281,289
-
Contribution to developer
-
-
-
-
Sale of property
40,201
7,421
18,138
43,745
Capital lease issued
-
-
-
-
Total other financing sources (uses)
101,610,583
26,281,626
43,299,427
43,745
Extraordinary gain (loss)
-
-
-
(98,386,142)
Special item
-
-
-
-
Net change in fund balances
$ 95,555,619
$ 18,940,047
$ 36,569,518
$ (107,363,497)
Debt service as a percentage of
noncapital expenditures
21.32%
17.69%
20.00%
9.00%
140
Fiscal Year
2013 2014 2015 2016 2017 2018
$ 22,703,619
$ 22,808,488
$ 21,426,308
$ 23,525,899
$ 24,825,401
$ 25,770,970
577,044
1,284,232
885,043
1,334,311
853,990
905,086
678,428
631,340
752,597
982,123
953,665
996,912
173,890
621,786
1,041,661
2,422,072
608,888
1,120,276
43,126,447
29,741,754
37,302,283
42,838,003
35,382,444
42,121,841
2,685,080
1,787,268
1,870,401
2,357,268
1,999,860
2,177,345
550,003
751,724
1,113,340
1,308,852
1,542,281
1,674,068
-
-
16,934,704
26,357,490
16,804,964
1,341,143
-
-
-
-
23,495,709
7,179,553
43,340,797
-
48,136,121
-
24,241,261
33,636,759
-
-
32,137,773
-
-
-
9,773,813
6,110,735
6,302,392
4,714,101
5,849,937
8,848,778
123,609,121
63,737,327
167,902,623
105,840,119
136,558,400
125,772,731
17,357,805
14,205,424
17,568,297
20,372,454
24,052,915
21,259,806
27,944,039
28,170,314
33,062,929
27,897,182
30,733,524
32,335,404
5,980,807
5,797,705
6,417,257
7,182,380
7,591,876
7,795,849
2,752,523
3,081,299
3,170,747
7,308,498
18,727,257
9,747,562
28,487,231
74,422,436
23,800,093
22,498,621
26,657,177
40,082,440
-
-
51000,000
4,101,171
4,129,203
3,271,503
967,115
-
-
-
5,802
12,043
40,119,601 (61,939,851) 78,883,300 16,479,813 24,660,646 11,268,124
6,122,454 2,084,612 5,266,102 5,453,988 4,242,209 8,908,605
(6,122,454) (2,084,612) (5,266,102) (5,453,988) (4,242,209) (8,908,605)
- - - - 368,356 -
- - - - 368,356 -
- 1,412,257 - 976,042 - -
- - 21,404,683 (34,026,499) - -
$ 40,119,601 $ (60,527,594) $ 100,287,983 $ (16,570,644) $ 25,029,002 $ 11,268,124
1.73% 0.00% 6.03% 5.28% 4.48% 3.51%
141
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.
142
City
Fiscal Year
Taxable
Ended
Assessed
June 30
Secured
Unsecured
Value
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
2018
8,684,095
311,475
8,995,570
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.
142
143
Redevelopment Agency (A)
Taxable
Total
Assessed
Direct Tax
Secured
Unsecured
Value (A)
Rate (B)
$ 2,432,407
$ 165,392
$ 2,597,799
0.326%
2,175,049
128,194
2,303,243
0.308%
2,180,029
129,387
2,309,416
0.310%
2,085,982
133,065
2,219,047
0.303%
2,107,792
123,929
2,231,721
0.302%
2,192,026
121,534
2,313,560
0.116%
2,362,339
139,834
2,502,173
0.116%
2,643,865
141,934
2,785,799
0.116%
2,872,602
138,433
3,011,035
0.116%
3,260,212
143,833
3,404,045
0.116%
143
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
144
Fiscal Year
2009
2010
2011
2012
$ 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
0.0310
0.0380
0.0596
0.0559
0.0043
0.0043
0.0037
0.0037
0.0225
0.0274
0.0314
0.0315
0.2143
0.2242
0.2242
0.2155
0.0321
0.0739
0.0717
0.0715
0.3042
0.3678
0.3906
0.3781
$ 1.3042
$ 1.3678
$ 1.3906
$ 1.3781
Fiscal Year
2013
2014
2015
2016
2017
2018
$ 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
0.0672
0.0891
0.0696
0.0775
0.0700
0.0687
0.0035
0.0035
0.0035
0.0035
0.0035
0.0035
0.0324
0.0333
0.0508
0.0504
0.0495
0.0509
0.2155
0.2155
0.0960
0.0960
0.1270
0.1270
0.0775
0.0736
0.0687
0.0660
0.0638
0.0633
0.3961
0.4150
0.2886
0.2934
0.3138
0.3134
$ 1.3961
$ 1.4150
$ 1.2886
$ 1.2934
$ 1.3138
$ 1.3133
145
CITY OF TUSTIN
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Ten Years Ago
2018 2009
The amounts shown above include the Combined Tax Rolls and the SBE Non -Unitary Tax Roll
Sources: Hdl, Coren & Cone
146
Percent of
Percent of
Total City
Total City
Taxable
Taxable
Taxable
Taxable
Assessed
Assessed
Assessed
Assessed
Taxpayer
Value
Value
Value
Value
Irvine Company LLC
$ 246,147,458
1.98%
Vestar Kimco Tustin LP
174,600,631
1.41%
$ 169,487,193
1.71%
Raintree Tustin LLC
164,180,935
1.32%
Legacy Villas LLC
124,408,573
1.00%
Tustin Parc LP
61,606,674
0.50%
PK II Larwin Square SC LP
57,845,032
0.47%
68,155,667
0.69%
Apple Ten Hospitality Ownership Inc
56,364,369
0.45%
Borchard Redhill SKB-Tustin LLC
52,706,141
0.42%
53,542,078
0.54%
Richoh Development
50,190,214
0.40%
Costco Wholesale Corporation
49,793,049
0.40%
45,821,179
0.46%
Tustin Legacy Community Partners LLC
343,117,800
3.45%
Irvine Apartment Communities LP
296,169,557
2.98%
Creekside Meadows Development LLC
127,812,202
1.29%
Tustin Heights SC LP
72,919,613
0.73%
American Fund US Investments
56,753,820
0.57%
CP II Park Place LLC
43,898,760
0.44%
$ 1,037,843,076
8.35%
$ 1,277,677,869
12.86%
The amounts shown above include the Combined Tax Rolls and the SBE Non -Unitary Tax Roll
Sources: Hdl, Coren & Cone
146
Fiscal Taxes Levied
Year Ended for the
June 30 Fiscal Year
2009
$ 38,515,110
2010
31,739,378
2011
30,713,746
2012
30,163,205
2013
9,492,638
2014
9,862,476
2015
9,287,149
2016
10,847,984
2017
11,278,643
2018
11,844,150
CITY OF TUSTIN
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Collected within the
Percent
Fiscal Year of Levy
Collections in
$ 35,440,026
Percent
Subsequent
Amount
of Levy
Years
$ 34,022,959
88.34%
$ 1,417,067
28,347,659
89.31%
917,222
29,541,000
96.18%
610,052
20,433,400
67.74%
147,389
9,257,817
97.53%
121,715
9,655,778
97.90%
121,400
9,007,785
96.99%
163,497
10,541,516
97.17%
233,935
10,996,314
97.50%
207,332
11,615,833
98.07%
174,112
Total Collections to Date
Notes:
The amounts presented for fiscal years 2009 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 for more information
Source: County of Orange Auditor Controller's Office
pff Millions Property Tax Levies and Collections
$45.00
$40.00
$35.00
$ 30.00
$25.00
$ 20.00
$15.00
$10.00 —
$5.00 — —
$-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Taxes Levied Amount Collected
147
Percent
Amount
of Levy
$ 35,440,026
92.02%
29,264,881
92.20%
30,151,052
98.17%
20,580,789
68.23%
9,379,532
98.81%
9,777,178
99.14%
9,171,282
98.75%
10,775,451
99.33%
11,203,646
99.34%
11,789,945
99.54%
Notes:
The amounts presented for fiscal years 2009 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 for more information
Source: County of Orange Auditor Controller's Office
pff Millions Property Tax Levies and Collections
$45.00
$40.00
$35.00
$ 30.00
$25.00
$ 20.00
$15.00
$10.00 —
$5.00 — —
$-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Taxes Levied Amount Collected
147
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
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
2018
-
271,162
271,162
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 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 18 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 for more
information.
148
(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 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.
149
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
$ 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
14,062,474
41,648,043
53,951,555
2.21%
656
-
5,720,101
14,013,530
22,790,666
42,524,297
46,066,962
1.82%
559
4,843,344
13,959,586
22,738,061
41,540,991
41,812,153
1.63%
508
(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 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.
149
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 for more information.
150
Outstanding General Bonded Debt
Fiscal Year
General Tax
Percent of
Ended
Obligation Allocation
Assessed Per
June 30
Bonds Bonds Total
Value * Capita
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
- - -
- -
2018
- - -
- -
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 for more information.
150
CITY OF TUSTIN
OVERLAPPING DEBT SCHEDULE
June 30, 2018
2017-18 Assessed Valuation
$ 12,399,614,364
Redevelopment Incremental Valuation
(3,233,345,633)
Adjusted Assessed Value
$ 9,166,268,731
City's
Share of
Total Debt
(1)
Debt at
OVERLAPPING TAX AND ASSESSMENT DEBT:
6/30/18
%Applicable
6/30/18
Metropolitan Water District
$ 60,600,000
0.452%
$ 273,912
Rancho Santiago Community College District
246,734,249
0.111
273,875
Rancho Santiago Community College District School Facilities Improvement District No.
121,395,000
0.184
223,367
Irvine Unified School District School Facilities Improvement District No. 1
95,000,000
2.98
2,831,000
Santa Ana Unified School District
247,026,073
0.228
563,219
Tustin Unified School District School Facilities Improvement District No. 2002-1
45,094,043
46.614
21,020,137
Tustin Unified School District School Facilities Improvement District No. 2008-1
86,860,000
44.908
39,007,089
Tustin Unified School District School Facilities Improvement District No. 2012-1
45,410,000
46
20,686,526
Tustin Unified School District Community Facilities District No. 88-1
28,315,000
100
28,315,000
Tustin Unified School District Community Facilities District No. 06-1
14,685,000
100
14,685,000
City of Tustin Community Facilities Districts
99,155,000
100
99,155,000
Irvine Unified School District Community Facilities District No. 86-1
41,500,000
0.201
83,415
Irvine Ranch Water District Improvement Districts
491,840,120
4.890-86.540
58,811,634
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
$ 285,929,174
OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Orange County General Fund Obligations
210,347,000
2.224%
4,678,117
Orange County Pension Obligations
383,564,389
2.224
8,530,472
Orange County Board of Education Certificates of Participation
13,990,000
2.224
311,138
Orange Unified School District Certificates of Participation
21,958,225
0.030
6,587
Orange Unified School District Benefit Obligations
78,765,000
0.030
23,630
Santa Ana Unified School District Certificates of Participation
69,817,854
0.228
159,185
TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT
$ 13,709,129
OVERLAPPING TAX INCREMENT DEBT (Successor Agencies)
$ 138,650,000
0.001-100.00%
$ 53,916,035
DIRECT DEBT (CAPITAL LEASE)
271,162
TOTAL DIRECT AND OVERLAPPING DEBT
$ 353,825,500
Overlapping debt excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded
capital lease obligations.
(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.
Effective February 1, 2012, the former Redevelopment Agency was dissolved. See Notes 18 for more information
Ratios to 2017-18 Assessed Valuations:
Total Overlapping Tax and Assessment Debt 2.31%
Total Direct Debt 0.00%
Combined Total Debt 0.00%
Ratios to Redevelopment Incremental Valuations ($3.233.345.633):
Total Overlapping Tax Increment Debt 1.67%
Source: California Municipal Statistics, Inc.
151
Assessed valuation
Conversion percentage
Adjusted assessed valuation
Debt limit percentage
Debt limit
Total net debt applicable to limitation
Legal debt margin
Total debt applicable to the limit
as a percentage of debt limit
CITY OF TUSTIN
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2009
$ 7,360,762,000
25%
1,840,190,500
15%
276,028,575
Fiscal Year
2010
$ 7,197,825,000
25%
1,799,456,250
15%
269,918,438
2011
$ 7,109,878,000
25%
1,777,469,500
15%
266,620,425
2012
$ 7,159,851,000
25%
1,789,962,750
15%
268,494,413
$ 276,028,575 $ 269,918,438 $ 266,620,425 $ 268,494,413
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
152
Fiscal Year
2013
2014
2015
2016
2017
2018
$ 7,270,451,000
$ 7,418,821,000
$ 7,790,632,000
$ 8,218,228,000
$ 8,566,757,000
$ 8,995,570,000
25%
25%
25%
25%
25%
25%
1,817,612,750
1,854,705,250
1,947,658,000
2,054,557,000
2,141,689,250
2,248,892,500
15%
15%
15%
15%
15%
15%
272,641,913
278,205,788
292,148,700
308,183,550
321,253,388
337,333,875
$ 272,641,913
$ 278,205,788
$ 292,148,700
$ 308,183,550
$ 321,253,388
$ 337,333,875
0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
153
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
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
2018
18,299,013
14,315,827
3,983,186
845,000
1,535,895
1.67
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 for more information,
154
Tax Allocation Bonds
Tax
Debt Service
Allocation
Principal
Interest
Coverage
$ 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
155
CITY OF TUSTIN
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
Source: HdL Coren & Cone, LLC
rw City of Tustin Population
84,000
82,000
80,000
78,000
76,000
74,000
72,000
70,000
68,000
$ 34,000
$33,000
$32,000
$ 31,000
$ 30,000
$ 29,000
$ 28,000
$27,000
19
Per Capita Personal Income
V- - -
Personal Income (in Thousands)
$2,600,000
$2,550,000
$2,500,000
$2,450,000
$ 2,400,000
$2,350,000
$2,300,000
$2,250,000
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
156
County of Orange Unemployment Rate
C, ti° tiy �� tib �� tih tib b 'L°tib
Personal
Per Capita
County of Orange
Calendar
City of Tustin
Income
Personal
Unemployment
Year
Population
(in Thousands)
Income
Rate
2009
73,670
$ 2,450,480
$ 33,263
5.20%
2010
74,736
2,407,036
32,207
8.90%
2011
75,773
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%
2018
82,344
2,570,460
31,216
3.50%
Source: HdL Coren & Cone, LLC
rw City of Tustin Population
84,000
82,000
80,000
78,000
76,000
74,000
72,000
70,000
68,000
$ 34,000
$33,000
$32,000
$ 31,000
$ 30,000
$ 29,000
$ 28,000
$27,000
19
Per Capita Personal Income
V- - -
Personal Income (in Thousands)
$2,600,000
$2,550,000
$2,500,000
$2,450,000
$ 2,400,000
$2,350,000
$2,300,000
$2,250,000
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
156
County of Orange Unemployment Rate
C, ti° tiy �� tib �� tih tib b 'L°tib
CITY OF TUSTIN
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
Sources: State of California Employment Development Department
City of Tustin
US Census Bureau
157
2018
2009
Percent of
Percent of
Number of
Total
Number of
Total
Employer
Employees
Employment
Employees
Employment
Tustin Unified School District
2,365
5.53%
Schools First Federal Credit Union
937
2.19%
251
0.65%
Youngs Market Company LLC
578
1.35%
291
0.75%
New American Funding
555
1.30%
City of Tustin
405
0.95%
Costco Wholesale Corporation
350
0.82%
Canon Medical
300
0.70%
Logomark Inc
300
0.70%
Ricoh Electronics Inc
256
0.60%
300
0.78%
Kaiser Foundation Hospitals
250
0.58%
AT&T
1300
3.37%
Rockwell Collins
700
1.81%
Cherokee International Corp
332
0.86%
Balboa Water Group, Inc.
300
0.78%
Microvention, Inc.
300
0.78%
Tustin Hospital Medical Center
300
0.78%
Tustin Ranch Golf Club
200
0.52%
Woodbridge Glass, Inc.
205
0.53%
Sources: State of California Employment Development Department
City of Tustin
US Census Bureau
157
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
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
27
27
25
29
26
35
33
38
35
39
28
24
17
17
15
15
16
19
19
19
50
53
52
51
40
47
48
45
48
47
147
147
140
139
131
140
141
141
137
142
16
15
14
15
13
13
14
14
17
17
6
6
6
5
3
-
-
-
-
-
23
22
23
25
17
17
18
19
18
18
297 294 277 281 245 267 270 276 274 282
The City contracts with the OC Fire Authority for fire services.
Source: City of Tustin Human Resource Department
158
CITY OF TUSTIN
CAPITAL ASSET STATISTICS
BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
Function 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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)
127.2
127.2
127.2
127.2
127.2
129.1
129.1
130.1
130.7
131.3
Street Lights
3,544
3,544
3,544
3,544
3,544
3,640
3,640
3,680
3,700
3,700
Traffic Signals
113
116
117
118
118
121
121
125
126
128
Storm Drain (miles)
49.2
49.2
49.2
49.2
49.2
51.2
51.4
51.8
52.9
53.9
Street Trees
15,853
15,853
15,837
15,786
16,097
16,073
15,815
15,706
15,542
15,574
Parks and Recreation
Parks
12
13
13
13
13
13
13
14
14
14
Parks (acres)
81.5
98.5
98.5
98.5
98.5
98.5
98.5
116.0
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
14,118
14,118
14,139
14,139
14,172
14,181
14,148
14,099
14,109
14,104
Average daily consumption
14,460
14,460
12,899
13,491
13,601
13,975
13,975
9,975
10,601
11,770
Reservoirs
6
6
6
6
6
6
6
6
6
6
Wells
13
13
13
13
13
13
13
13
14
14
Water Main (miles)
173
173
173
173
173
173
173
173
172
172
Fire Hydrants
2,201
2,201
2,201
2,201
2,201
1,914
1,945
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
159
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
6,000,000
5,000,000 -
I r
4,000,000
3,000,000
2,000,000
1,000,000
Last Ten Fiscal Years
Fiscal Year
2009 2010 2011 2012
3,012,575
2,749,415
2,592,741
2,733,482
1,226,181
1,142,749
1,133,899
1,172,823
305,601
287,951
296,001
305,638
184
217
275
1,242
171,382
145,287
134,408
149,957
264,425
238,914
212,561
236,658
54,916
52,761
48,873
53,183
11,222
9,636
11,587
12,204
45,387
43,985
41,291
44,488
67,985
56,360
51,760
58,298
12,890
13,562
8,332
8,514
105,221
171,781
176,248
147,552
5,277,969
4,912,618
4,707,976
4,924,039
Water Consumption By Customer
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
m Residential mApartment/Multiple Units ■ Commercial ■ Fire Services
■ Irrigation Government ■ Restaurants ■ Hospitals
m Non -Profit m Industrial ■ Hotel/Motels ■ All Others
160
2013 2014
Fiscal Year
2015 2016 2017 2018
2,815,322
2,905,069
2,603,538
1,934,761
2,119,716
2,398,744
1,158,480
1,163,159
1,139,321
1,003,808
987,688
1,039,878
308,376
321,125
310,585
259,459
271,649
274,943
818
577
837
646
504
589
151,965
167,346
155,766
96,082
105,750
146,941
268,581
276,292
229,262
134,446
162,843
195,695
53,461
52,520
51,658
45,069
44,947
45,086
12,442
7,634
10,018
11,166
11,276
10,536
44,476
45,920
41,601
22,989
26,751
34,539
57,462
60,438
59,292
40,407
45,071
45,062
10,417
12,866
21,379
23,387
25,185
28,908
82,716
87,785
71,324
68,830
70,721
75,208
4,964,516
5,100,731
4,694,581
3,641,050
3,872,101
4,296,129
161
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
162
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
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
2018
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
2018
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
162
Water Customer
Tustin Unified School District
City of Tustin
Ricoh Electronics, Inc.
Key Inn
Schroeder Property Management
Tustin Plaza Center, LP
Residence Inn Tustin
CalTrans - District 12
Westchester Park LP
Tustin Acres Community Association
AT& T Services, Inc.
CA 4-14 FUND, LLC
Fairfield Inn & Suites Tustin
School's First Credit Union
Sierra Corporate Management
15701 TV Way Partnership
Alta Newport Hospitals Inc
Ems Development Co
Briarwood Investment Co. Ltd.
HSA LP
71286 JMJ LLC
Tustin Village Community Association
CMC Association Management
Saddleback Mobilodge
Alders Apartment Company
Bascom East Tustin Ave Apt LLC
SP/P Creekside Venture, LLC
Lester L Frame
AIMCO-LP, INC.
Greenwood and McKenzie
V KAY - NNC Valencia Gardens
Sycamore Creek Apartments
Carmel Partners, MS43
Villa Valencia MHP
Arnel Management
Regency West
Waterstone Gardens Investments LP
Total Water Sales
Source: City of Tustin Finance Department
CITY OF TUSTIN
WATER CUSTOMERS
Current Year and Ten Years Ago
2018
2009
Percent of
Percent of
Water
Total Water
Water
Total Water
Charges
Revenues
Charges
Revenues
$ 627,777
3.44%
$ 492,401
4.47%
138,874
0.76%
135,365
1.23%
57,528
0.32%
54,087
0.30%
50,506
0.28%
66,053
0.60%
49,011
0.27%
43,635
0.24%
42,176
0.23%
56,521
0.51%
39,759
0.22%
39,431
0.36%
39,403
0.22%
136,062
1.24%
38,634
0.21%
35,865
0.20%
34,884
0.19%
29,414
0.16%
28,882
0.16%
135,135
1.23%
28,276
0.16%
27,923
0.15%
25,986
0.14%
24,403
0.13%
35,290
0.32%
23,755
0.13%
87,814
0.80%
19,548
0.11%
18,856
0.10%
35,008
0.32%
15,770
0.09%
40,556
0.37%
14,752
0.08%
35,961
0.33%
14,299
0.08%
31,658
0.29%
110,099
1.00%
84,222
0.76%
67,568
0.61%
48,928
0.44%
47,606
0.43%
45,527
0.41%
41,731
0.38%
39,418
0.36%
37,028
0.34%
36,802
0.33%
32,805
0.30%
31,021
0.28%
$ 1,524,002
8.36%
$ 1,950,010
17.70%
163
CITY OF TUSTIN
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2009 2010 2011 2012
Public Safety
Moving Citations 7,363 7,439 6,954 5,161
Parking Violations 6,501 9,242 9,594 8,323
Arrests 2,411 2,419 2,288 2,177
Calls for Service 29,387 28,534 26,819 27,774
Public Works
Number of Building Permits Issued 1,380 1,023 1,230 1,193
Number of Building Inspections Completed 26,962 15,999 10,656 8,019
Transportation Permits
Annual 50 61 45 50
Single 131 76 62 104
Encroachment Permits 72 113 88 83
Utility Permits 35 31 40 48
Curb Miles Swept 20,223 20,666 20,608 20,872
Community Services
Rentals 835 929 1,055 1,176
Classes 1,400 1,013 1,424 1,555
General Government
New Hires 35 29 39 37
Retiree/separations 37 39 36 27
Public Safety
60,000
50,000
40,000
30,000
20,000
10,000
0
it Moving Citations 10 Parking Violations K Arrests a Calls for Service
3,000 Public Works - Permits
2,500
2,000
1,500
1,000
500 -
0
19 Number of Building Permits Issued sTransportation Permits (Annual) it Transportation Permits (Single)
it Encroachment Permits it Utility Permits
164
2013
3,748
7,754
2,420
27,954
1,130
5,934
50
99
123
55
20,003
1,147
1,544
60
82
2014
3,499
7,136
2,139
29,527
1,517
5,655
59
89
148
66
21,118
1,138
1,508
65
68
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
90
80
70
60
50
40
30
20
10
0
2015
5,444
11,994
2,155
33,114
1,828
6,344
55
88
124
60
20,773
1,117
1,265
49
30
Fiscal Year
2016
2017
2018
6,982
5,590
4,762
13,855
14,514
16,836
2,494
2,343
2,302
36,618
35,172
36,571
2,334
2,430
2,078
11,947
11,768
9,816
66
56
46
82
208
137
147
107
155
59
62
71
22,087
20,589
20,270
1,253
1,494
1,483
1,389
1,213
1,160
47
67
48
38
47
63
Community Services
N
LO,� ti0,ti0,�
a Rentals a Classes
General Government
00
New Hires Retiree/separations
165
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166