HomeMy WebLinkAbout09 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019AGENDA REPORT
MEETING DATE: JANUARY 21, 2020
TO: MATTHEW S. WEST, CITY MANAGER
Agenda Item
9
Reviewed:
City Manager
Finance Director
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FROM: JOHN A. BUCHANAN, FINANCE DIRECTOR
JENNY LEISZ, DEPUTY DIRECTOR - FINANCIAL SERVICES
SUBJECT: COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED
JUNE 30, 2019
SUMMARY:
The City engages an independent certified public accounting firm to complete an annual audit
of the City's financial records. There are a number of reports such as the Comprehensive
Annual Financial Report (CAFR), produced as a result of the annual audit and there are actions
that are required by the City's governing board (City Council) to meet the requirements of
various auditing standards, such as meeting with the auditing firm that conducted the audit to
discuss the audit and internal control issues.
RECOMMENDATION:
1. Receive and file the CAFR for the year ended June 30, 2019.
2. Discuss the audit and internal controls with the independent certified public accounting
firm, White Nelson Diehl Evans LLP, who conducted the audit.
FISCAL IMPACT:
The independent certified public accounting firm that the City contracted with to complete the
annual audit is White Nelson Diehl Evans LLP. Total cost of the annual audit was $39,000. Of
this amount, $19,500 was charged to the Water Enterprise Fund, and $19,500 was charged to
the General Fund. In addition, $3,300 was paid to CalPERS and charged to the General Fund
for required GASB 68 information related to pension liabilities and expenses.
BACKGROUND:
Each year state and local governments prepare a financial report on assets, liabilities, revenues,
and expenditures in a standardized format that must conform to the Governmental Accounting
Standards Board (GASB) accounting and financial reporting standards. This financial report is
called the CAFR. Most people have heard of the budget, which is the document that plans and
authorizes the spending of money. The CAFR describes what actually was spent and the status
of assets and liabilities at the end of the fiscal year. The CAFR is published annually as best
practice for local governments and serves as evidence of transparency and full disclosure of the
City's financial position to citizens and other stakeholders, including credit rating agencies,
providing SEC required disclosure to investors, and other interested parties.
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019
Page 2
The reports that were produced for the fiscal year ending June 30, 2019 are the CAFR, the City
State Controllers report, and the report of the auditor's consideration of the City's internal control
over financial reporting and on their tests of its compliance with certain provisions of laws,
regulations, contracts, grant agreements, and other matters. The following charts depict revenues
and expenditures presented in the governmental activities statements:
millions
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
Expenses and Program Revenues - Governmental Activities
Year Ending June 30, 2019
GENERAL PUBLIC SAFETY PUBLICWORKS COMMUNITY OPERATING CAPITALGRANTS
GOVERNMENT SERVICES GRANTSAND AND
CONTRIBUTIONS CONTRIBUTIONS
W Expenses a Revenue
REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES
Other general
revenues
Investment income 8.5%
10.2
Gain on sale of land held for resale
0.6
Property taxes
Othertaxes
2.6
Transient occupancy
taxes
2.6%
Business license taxes
0.7
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019
Page 3
The CAFR is a thorough and detailed presentation of the City's financial condition. It reports on
the City's activities and balances for each fiscal year in three major sections:
1. Introductory Section — includes elected and administrative officials, letter of transmittal,
organizational chart, and GFOA Certificate of Achievement for Excellence in Financial
Reporting.
2. Financial Section — includes the independent auditor's report, management's discussion
and analysis (MD & A), notes to the financial statements; required supplementary
information, combining financial statements, and schedules.
a. Government -wide financial statements — long-term view of City finances; includes
all assets such as buildings, streets, and long-term debt
b. Governmental funds financial statements — more of a current activity type view; only
cash and items expected to be liquidated and current liabilities to be paid
3. Statistical Section — includes additional financial, economic, and demographic
information and operating indicators.
For local governments, the annual external financial audit provides assurance that the financial
statements are not materially misstated. Whether you are an investor in bonds, a taxpayer or a
Council member, you need assurance that the City's accounting reports are reliable. The audit
firm is also required to provide an annual Management Letter, which highlights any weaknesses
in the City's practices and procedures which might affect the financial statements, if weaknesses
have come to the firm's attention in the course of the financial audit. The Management Letter also
offers comments and recommendations intended to improve internal control or operating
efficiency.
FINANCIAL HIGHLIGHTS:
General Fund financial highlights for the year ended June 30, 2019 (see page 15 of the
Management's Discussion and Analysis [MD & A] section of the 2019 CAFR) are as follows:
General Fund revenues were $68 million, $35.6 million lower than the prior fiscal year due
to the following:
o Gain on sale of land held for resale totaled $33 million in fiscal year 2018 due to the
sale of land at the Legacy development. There were no land sales affecting the
General Fund in fiscal year 2019.
o The decrease in profit participation of $7 million is due to the receipt in fiscal year
2018 of the final $7.2 million for profit participation from CalAtlantic, related to the
sale of homes in the Greenwood development at the Legacy. The activity for 2019
reflects an additional $0.2 million in profit participation resulting from the Greenwood
profit participation agreement audit.
o Investment income increased $4.9 million largely due to a significant unrealized
gain of $4.3 million for the investment portfolio resulting from the favorable market
value at June 30, 2019 as compared with the value at June 30, 2018. Most of the
remainder of the increase is due to earnings from the PARS Pension Trust ($0.1
million) averaging 6.85% during 2019, plus the higher weighted average portfolio
yield (0.49% increase) caused by the rising interest rate environment during most
of fiscal year 2019. The City opened the PARS investment trust in June 2018, so
this is the first full year of investment earnings for the trust.
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019
Page 4
• The City's General Fund total expenditures were $110.7 million, an increase of $25.8
million from the prior year's expenditures due to the following:
o Capital Outlay increased $13.3 million primarily due to increases in construction
expenditures for the following projects:
■ $4.3 million - Peters Canyon Channel Improvements
■ $5.1 million - Emergency Operations Center and Corporate Yard Project
■ $0.4 million - Moffett Drive and Legacy Road Extension Project
■ $3.2 million - Tustin Legacy Linear Park Improvements
o Community Services expenditures increased $9.4 million mostly due to a $15
million advance paid in fiscal year 2019 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. In the prior year, the City
funded only $5.4 million, contributing significantly to the increase in Community
Services expenses during 2019.
o General Government expenditures increased $4.1 million from prior year mostly
due to a $3.3 million discretionary payment to CalPERS to pay down unfunded
actuarial liabilities for the Miscellaneous and Safety plans. In addition, $0.5 million
was contributed to the Public Agency Retirement Services (PARS) Trust Other
Post -Employment Benefits (OPEB) account. Also contributing to the increase were
higher professional and consulting expenses ($0.6 million), mostly to reimburse
OMBRP LLC for Community Core Development infrastructure design costs for
Neighborhood D North totaling $0.5 million.
• Total expenditures of $110.7 million exceeded total revenues and transfers by $37.5
million. Therefore, the General Fund's fund balance of $240.5 million as of June 30, 2018
decreased to $202.9 million as of June 30, 2019. Of the $202.9 million, $82.9 million are
nonspendable funds primarily due to a total of $82.2 million in Land Held for Resale; $31.3
million are legally restricted funds for backbone infrastructure at the Tustin Legacy
development ($25.6 million) and pension obligations ($5.7 million), and $88.8 million are
unassigned and/or spendable funds not contained in other classifications.
Budgeted General Fund balances used in day-to-day operations which comprise a portion of the
unassigned fund balance discussed above are as follows:
• Of the audited $88.8 million unassigned fund balance, the General Fund (fund 100) ending
cash balance was $23.2 million, compared with the projected ending cash balance of $18.7
million as of the last budget update in June 2019. A large portion of the $4.5 million positive
variance was due to payment to the General Fund for cash shortages at June 30, 2018 caused
by the time lag in funding of construction expenses reimbursed by the Community Facilities
Districts (CFD's). Approximately $2 million was received from the various CFD's in July of
fiscal year 2019. Overall, General Fund expenses were $2.1 million less than budget mostly
to vacant staff positions. City operations diligently monitored their expenditures during the
fiscal year which added to the positive variance. Discussion of other smaller variances
contributing to the overall change in fund balance will be available at the mid -year budget
review planned for February 2020.
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019
Page 5
Other Financial Highlights for the year ended June 30, 2019 are as follows:
The City's assets, which encompass all Governmental and Business -Type Activities (i.e.
General Fund, Special Revenue Funds, Capital Projects Funds, and the Water Enterprise
Fund) and deferred out flows of resources as of June 30, 2019, exceeded its liabilities by
$736.8 million (net position). Net position gives a picture of the City's long-term financial
situation. For example, net position includes receivables that may not be collected for
years and liabilities for employee leave time which may not be used for years. Net position
consists of $540.8 million net investment in capital assets, $67.9 million in restricted net
position and $128.1 million in unrestricted net position.
The City's total net position decreased by $40.3 million primarily due to a $28.9 million
decrease in assets, reflecting the $15 million payment to Tustin Unified School District
(TUSD) for additional funding for the Legacy Magnet Academy 6-12 School project at
Tustin Legacy. Also contributing to the decrease in governmental assets were expenses
for the following significant public works projects that were not capitalized as part of
construction in progress:
o $2.3 million — Temporary Homeless Shelter
o $5.9 million — Peters Canyon Channel Improvements
o $1.8 million — Major Pavement Maintenance
o $1.2 million — Tustin Legacy Pedestrian Bridges Architectural
Also contributing to the decrease in net position were increases in liabilities ($11.3 million)
due to higher accounts payable and accrued liabilities resulting from increased
construction costs.
The City's long-term debt increased $1.7 million mostly due to the pension liabilities of $1.5
million. The increase in pension liabilities was comprised of increases for both the Safety
(police) Plans and the Miscellaneous (all other) plans of $0.6 million and $0.9 million
respectively. The increases were mostly due to the interest on the total pension liability
which accrues at the rate determined by CaIPERS of 7.15%.
A more thorough discussion of the financial activities for the year ended June 30, 2019 is
presented in the MD & A.
The City did not have any audit findings or material misstatements.
C
Jenny Leisz
Deputy Director - Financial Services
Attachments: CAFR for the year ended June 30, 2019
Management Letter
Governmental Auditing Standards Letter
Appropriations Limit Worksheet
Joh A. Buchanan
L-Rrfance Director
CITY OF TUSTIN
TUSTIN, CALIFORNIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2019
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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, 2019
Prepared By: Finance Department
CITY OF TUSTIN
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2019
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, 2019
Table of Contents
Page
Number
REQUIRED SUPPLEMENTARY INFORMATION: 94
Safety Plan:
Schedule of Proportionate Share of the Net Pension Liability
95
Schedule of Contributions
96
Miscellaneous Plan:
Schedule of Changes in the Net Pension Liability and Related Ratios
97
Schedule of Contributions
98
Other Post -Employment Benefit Plan (OPEB):
Schedule of Changes in the Net OPEB Liability and Related Ratios
99
Schedule of Contributions - OPEB
100
Annual Money -Weighted Rate of Return on Investments
101
Budgetary Comparison Schedules:
117
General Fund
102
Measure M Special Revenue Fund
103
Note to Required Supplementary Information
104
SUPPLEMENTARY INFORMATION: 105
Other Governmental Funds:
107
Combining Balance Sheet
110
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
112
Schedules of Revenues, Expenditures and Changes in Fund
Balance - Budget and Actual:
Gas Tax Special Revenue Fund
114
Park Acquisition and Development Special Revenue Fund
115
Air Quality Special Revenue Fund
116
Supplemental Law Enforcement Special Revenue Fund
117
Housing Authority Special Revenue Fund
118
Special Tax B Special Revenue Fund
119
Road Maintenance and Rehabilitation Fund
120
Solid Waste Special Revenue Fund
121
Agency Funds: 123
Combining Statement of Assets and Liabilities 124
Combining Statement of Changes in Assets and Liabilities 125
CITY OF TUSTIN
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2019
Table of Contents
Page
Number
STATISTICAL SECTION (UNAUDITED): 127
Description of Statistical Section Contents 129
Financial Trends:
Net Position by Component - Last Ten Fiscal Years 130
Changes in Net Position - Expenses and Program Revenues - Last Ten Fiscal Years 132
Changes in Net Position - General Revenues - Last Ten Fiscal Years 134
Fund Balances of Governmental Funds - Last Ten Fiscal Years 136
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 138
Revenue Capacity:
Assessed Value and Estimated Actual Values of Taxable Property - Last Ten Fiscal Years 140
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 142
Principal Property Taxpayers - Current Year and Nine Years Ago 144
Property Tax Levies and Collections - Last Ten Fiscal Years 145
Debt Capacity:
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 146
Ratio of General Bonded Debt Outstanding - Last Ten Fiscal Years 148
Overlapping Debt Schedule 149
Legal Debt Margin Information - Last Ten Fiscal Years 150
Pledged -Revenue Coverage - Last Ten Fiscal Years 152
Demographic and Economic Information:
Demographic and Economic Statistics - Last Ten Calendar Years 154
Principal Employers - Current Year and Nine Years Ago 155
Operating Information:
Full -Time City Employees by Function - Last Ten Fiscal Years 156
Capital Asset Statistics by Function - Last Ten Fiscal Years 157
Water District Schedules for Revenue Capacity:
Water Consumption by Customer Type - Last Ten Fiscal Years 158
Water Rates - Last Ten Fiscal Years 160
Water Customers - Current Year and Nine Years Ago 162
CITY OF TUSTIN
Elected and Administrative Officials
Charles E. Puckett
Mayor
LETITIA CLARK
Councilmember
Dr. Allan Bernstein
Mayor Pro Tem
BARRY W. COOPER
Councilmember
AUDIT COMMISSION
Colin Deering, Chair
R. Lawrence Friend, Chair Pro Tem
Robert Ammann
Daniel Erickson
Craig Shimomura
AUSTIN LUMBARD
Councilmember
CITY MANAGER/ACTING CITY TREASURER
Matthew S. West
David E. Kendig City Attorney
Elizabeth A. Binsack Director, Community Development
John A. Buchanan Director, Economic Development /
Finance Director
Erica N. Yasuda City Clerk
Stu Greenberg Chief of Police
Derick Yasuda Director of Human Resources
David Wilson Director of Parks & Recreation Services
Douglas S. Stack Director, Public Works / City Engineer
ii
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Finance Department
December 12, 2019
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
CITIZENS OF THE CITY OF TUSTIN
City of Tustin
Tustin, California 92780
TUSTIN
HISTORY
BUILDING OUR FUTURE
HONORING OUR PAST
The Comprehensive Annual Financial Report (CAFR) of the City of Tustin for the fiscal year ended June
30, 2019, is hereby submitted. These statements have been prepared in conformity with generally accepted
accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by an
independent public accounting firm of licensed certified public accountants.
The report consists of management's representations concerning the finances of the City of Tustin.
Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation,
including all disclosures, rests with management. To provide a reasonable basis for making these
representations, management has established an internal control framework that is designed both to protect
the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the
preparation of the financial statements in conformity with GAAP. Because the cost of internal controls
should not outweigh their benefits, the City's framework of internal controls has been designed to provide
reasonable, rather than absolute assurance that the financial statements will be free from material
misstatement.
As management, we assert that, to the best of our knowledge and belief, the enclosed data is accurate in all
material respects and is reported in a manner designed to fairly present the financial position and results of
operations of the various funds and component units of the City of Tustin. All disclosures necessary to
enable the reader to gain an understanding of the City's financial activities have been included.
The City of Tustin's financial statements for the year ended June 30, 2019, 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, 2019,
are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first
component of the financial section of this report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany
the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter
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300 Centennial Way, Tustin, CA 92780 0 P: (714) 573-3060 • F: (714) 832-0825 0 www.tustinca.org
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.
Bus Tour at Tustin Legacy
PROFILE OF THE CITY OF TUSTIN
The City of Tustin is located in the central part of Orange County, about forty miles southeast of Los Angeles
and eighty miles north of San Diego, at the intersection of the 5 and 55 Freeways. Tustin covers over eleven
square miles and adjoins the cities of Orange, Santa Ana, and Irvine. The State of California Department of
Finance has estimated the City's January 1, 2019 population at 81,369 a decrease from 2018 of about 0.5%.
Most cities in Orange County showed minor decreases in population, with the County of Orange experiencing
a 0.3% increase in population. The statewide population growth rate of 0.47% is the slowest in the State's
history. This rate is driven by a significant decline in births, down by more than 18,000 over the previous year,
as well as data reflecting lower student enrollment. Deaths continued an upward trend seen since 2010 as
California's "Baby Boomers" continue to age. Adding to the slow growth in population, affordable housing
continues to be challenging for many. While Tustin is surrounded by much of the County's main industrial
employment, it is essentially a residential community.
The City was incorporated under the General Laws of the State of California in 1927 as the "City of Tustin".
Government was by a five -member elected City Council. The Council/Administrator form of city government
was adopted in 1965 and was modified to the Council/Manager form in 1981.
Council members serve staggered, four-year terms, with a two consecutive term limit. The Mayor is selected
by the City Council from among its membership and serves a one-year term. The City Manager is appointed
by the City Council to carry out the policies and direction of the City Council, oversee the day-to-day
operations of the City, and appoint department heads.
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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 1 of the Notes to Basic Financial Statements.
The key element of the City's financial management process is the development and approval of the
biannual budget. The two-year budget for the City is part of our strategic plan to enhance financial
sustainability. Council adopted this type of budget to improve our financial projections and to focus on
programs essential to providing quality services to our community. This document is available on our City
website at www.tustinca.org. The City Council conducts various open budget workshops as necessary and
adopts the budget at a noticed public meeting. The budget is prepared pursuant to generally accepted
accounting principles (GAAP) and is balanced by fund. 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 102 as part of the
required supplementary information, and for nonmajor governmental funds, this comparison is presented
on pages 114-121 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.
Mess Hall Opening at Tustin Legacy
L&
ECONOMIC OUTLOOK
The State of California has maintained a stable economy since the economic downturn. The statewide
unemployment rate has dropped from 4.1% in October 2018 to 3.9% for October 2019, which is 0.3%
higher than the United States unemployment rate of 3.6% for October 2019. The Orange County
unemployment rate has decreased 0.7% from October 2018 to 2.8% for October 2019. The City's sales tax
revenue is the largest continuing revenue source for the General Fund. It is 38% of total General Fund
revenues. Annual sales tax revenue increased from fiscal year 2017-2018 to fiscal year 2018-2019 to $26.6
million. The projected sales tax revenue for fiscal year 2019-2020 is expected to decrease slightly from
fiscal year 2018-2019 by 5%. Staff is comfortable with the projected amounts for fiscal year 2019-20, but
also mindful of the fact that sales tax trends must be carefully monitored throughout the year. Property
tax revenue is the second largest General Fund revenue source (37% of total revenues). Property tax
revenue for fiscal year 2019-20 reflects a 5% increase based on information from the City's property tax
consultants and information from the County Assessor. Property tax will be carefully monitored throughout
the year.
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. The core and shell improvements have been completed with tenant
improvements now underway. 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 three major components:
o A retail center anchored by a Blue Ribbon Stater Bros., CVS, Bank of America, Chipotle,
and Dunkin' Donuts. This portion is complete.
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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 Construction has started on an acute care hospital/rehabilitation facility to be operated by
HealthSouth, with completion planned for 2020.
• 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 stucco material. Levity features three unique product
types: Fleet (townhomes), Velocity (flats), and Icon (single family detached). Model homes will
open in late summer 2019, with the first residents occupying their homes in late 2019.
• Brookfield Homes of Southern California (Neighborhood D South). The City executed an Exclusive
Negotiation Agreement (ENA) with Brookfield to negotiate the development of 400 single family
homes, comprised of single family detached, flats, and townhomes. A Disposition and Development
Agreement (DDA) and Development Agreement (DA) are expected in late 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. The City will execute a Disposition
and Development Agreement (DDA) and a Development Agreement (DA) in fall of 2019, with
construction expected to begin shortly thereafter.
• 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.
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• 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 open to the public and sales are
ongoing.
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 decrease
slightly over the next fiscal year by approximately 2% from fiscal year 2018-19, with nearly all of the
decrease associated with declines in sales tax revenues. Projected expenditures for fiscal year 2019-20 are
higher than the previous year, about 14% greater than the fiscal year 2018-19 actuals. The City continues
to manage its expenditures to balance the budget and 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 increases are associated with various professional and consulting services, 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 $1.8 million deficit for fiscal year
2019-20 to be funded with planned use of excess reserves, bringing the projected General Fund reserve
percentage to 24%, which is above the 20% City policy. Budgeted expenditures for fiscal year 2019-20
reflect an increase of about $1.4 million as compared with fiscal year 2018-19 actuals. City Council will
be reviewing the City's financial condition during the mid -year budget review in February 2020.
Major factors facing the sustainability of future budgets include our efforts to address the City's pensions
and unfunded liabilities, obligations for funding the second phase of the Tustin Unified School District's
middle/high school project, funding for the construction of future housing for the homeless, and continued
construction costs for developing Tustin Legacy. City Staff will continue to work with Council and the
City Manager to prioritize these significant projects and to seek new revenue sources for the future. 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
8.5% higher in fiscal year 2019-20 as compared to fiscal year 2018-2019 actuals, 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 2010 five-year program was fiscal year 2014-15. The City
Council set a public hearing for January 21, 2020 to consider a new proposed water rate. The proposed
water rate will be effective for five fiscal years, starting with fiscal year 2019-2020. Notices have been
viii
mailed out to customers and property owners in accordance with Proposition 218. For more infonnation
about Tustin's water service, see the City website at tustinca.org.
Lemonade Day at Tustin Market Place
ACCOMPLISHMENTS AND FUTURE PROJECTS
Major capital improvement projects completed during fiscal year 2019 include the following:
• Tustin Legacy Facilities
• Victory Road Extension: Red Hill Avenue to Armstrong Avenue (formerly Bell Avenue)
• Armstrong Avenue Extension: Warner Avenue to Barranca Parkway
• Red Hill Avenue Widening between Barranca Parkway and Warner Avenue
• Flight Way (formerly Aston) Extension between Barranca Parkway and Tustin Legacy Linear
Park
• Moffett Drive Extension from Future Legacy Road Extension to Park Avenue
• Legacy Road (formerly Kensington Park Drive) Extension from Valencia Avenue to Future
Moffett Drive Extension
• Park Avenue Improvements between Tustin Ranch Road and Warner Avenue
• Red Hill Avenue Median Improvements between Barranca Parkway and Valencia Avenue
• Red Hill Avenue Widening between Warner and Edinger Avenue
ix
• Public Facilities
• Median Landscape Rehabilitation
• Community Center Auditorium Renovation
• Senior Center Alternate Power Source
• Tustin Library Restoration
• Temporary Homeless Shelter
• Annual Major Building Maintenance
■ Accessibility Improvements at Various Facilities
■ Replace HVAC Units at Various Facilities
■ PD Evidence Room HVAC
■ HVAC Controls at Senior Center
■ Digital Public Notice Board at City Hall
• Transportation Facilities
• Annual Pavement Maintenance and Public Infrastructure Maintenance Program
• Eastbound El Camino Real at Jamboree Road Improvement Project
• Transit Circulator Feasibility Study
• Traffic Control Facilities
• Solar Speed Radar Feedback Signs
• Newport Avenue Signal Synchronization
• Park Facilities
• Citrus Ranch Park Picnic Shelter
• Water Production
• Communication Equipment Replacement — SCADA
• 17'h Street Treatment Plant Membrane Replacement
The City's capital projects for fiscal year 2019-2020 are budgeted at $90.3 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 2019-2020 include:
• Tustin Legacy Facilities
• Veterans Sports Park at Tustin Legacy
• Peters Canyon Channel Improvements
• Moffett Drive Extension from Park Avenue to east of Peters Canyon Channel
• Tustin Legacy Linear Park between Barranca Parkway and Armstrong Avenue
• South Hangar Renovation — Phase I
x
• Neighborhood D South Infrastructure Construction — Phase I
• Tustin Legacy Linear Park Between Armstrong Avenue and Tustin Ranch Road
• Parkway Landscaping on Tustin Ranch Road and Valencia Avenue (by TUSD site)
• Transportation Facilities
• Annual Pavement Maintenance and Public Infrastructure Maintenance Program
• Newport Avenue Rehabilitation between I-5 Freeway and Holt Avenue
• Newport Avenue Rehabilitation between I-5 Freeway and Sycamore Avenue
• Del Amo Avenue and Newport Avenue Improvements
• Citywide Pedestrian Oriented Accessibility Improvement Program
• Westbound El Camino Real at Tustin Ranch Road Improvement Project
• Traffic Control Facilities
• Traffic Signal Equipment
• Seventeenth Street Signal Synchronization
• Edinger Avenue/Irvine Center Drive Signal
• Tustin Ranch Road/Von Karman Avenue Signal Synchronization
• Parkcenter Lane/Bryan Avenue Traffic Signal
• Lansdowne Road/Valencia Avenue Traffic Signal
• Newport Avenue/Schools First Signal Project
• Public Facilities
• Annual Major Building Maintenance
• Emergency Operations Center and City Yard
• Civic Center Alternate Power Source
• Street Light LED Conversion Project
• Tustin Legacy Annex Renovations
• Stevens Square Parking Structure Improvements
• Parking Lot Resurfacing 15171 Del Amo
• Park Facilities
• Annual Major Park Maintenance
• Pinetree Park Picnic Shelter Replacement
• Columbus Tustin Park Field and Picnic Shelter Renovation
• Water Projects
• Mardick Road Water Main Replacement between Red Hill Avenue and Beverly Glen Drive
• Water Main Replacement — Simon Ranch Road to Racquet Hill via Tustin Hills Racquet Club
Parking Lot
• Simon Ranch Reservoir, Booster Pump Station and Pipeline Replacement
xi
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, 2018. This was the thirty-second
consecutive year that the government has achieved this prestigious award. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program's
requirements and we are submitting it to GFOA to determine its eligibility for another certificate.
ACKNOWLEDGMENTS
I wish to express my appreciation to the entire Finance Department staff for their contribution to the department
during the year. Their efforts are reflected in this report and in other documents resulting from the annual audit
process. Special thanks are due to Sean Tran, Deputy Director — Administrative Services; Glenda Babbitt,
Management Analyst; Andrea Campbell, Senior Accountant; Sharon Ting, Accountant; 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
Finance Director
9
Jennifer eisz
Deputy Director — Financial Services
X11
MAYOR
CITY COUNCIL
CITIZENS OF
TUSTIN
CITY ATTORNEY
'111111, 11� 11
CITY MANAGER [———————————————— — — — — — —
POLICE ASSISTANT CITY
MANAGER
PUBLIC WORKS HUMAN
RESOURCES
COMMUNITY
DEVELOPMENT FINANCE
PARKS & ECONOMIC
RECREATION DEVELOPMENT
CITY CLERK
SUCCESSOR AGENCY TO THE TUSTIN
REDEVELOPMENT AGENCY
COORDINATION AND
COOPERATION
PRIVATE
UTILITIES
Cable T.V.
Electricity
Natural Gas
Telephone
CONTRACT
SERVICES
Fire
Refuse
Animal Control
SPECIAL
DISTRICTS
Library
Lighting
Sewers
Flood Control
Re -Assessment
District 95-1
CFD's
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Tustin
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2018
Executive Director/CEO
xw
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, 2019, 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 1 Irvine, California 92606 1 WNDECPA.com 1 714.978.1300
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, 2019, and the
respective changes in financial position and, where applicable, cash flows thereof for the year then
ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, the safety plan schedule of proportionate share of the net
pension liability and the schedule of contributions, the miscellaneous plan schedule of changes in the
net pension liability and related ratios and the schedule of contributions, the other post -employment
benefit plan schedule of changes in the net OPEB liability and related ratios and the schedule of
contributions — OPEB and annual money -weighted rate of return on investments, and the budgetary
comparison schedules for the general fund and major special revenue fund, identified as Required
Supplementary Information (RSI) in the accompanying table of contents, be presented to supplement
the basic financial statements. Such information, although not a part of the basic financial statements,
is required by the Governmental Accounting Standards Board, who considers it to be an essential part
of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the RSI in accordance
with auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during the audit of the basic financial statements. We do
not express an opinion or provide any assurance on the RSI because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The introductory section, combining and
individual nonmajor fund financial statements (supplementary information), and statistical section are
presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The supplementary information, as listed in the table of contents, is the responsibility of management
and was derived from and relates directly to the underlying accounting and other records used to
prepare the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the supplementary information is fairly stated in all material respects in
relation to the basic financial statements as a whole.
W
Other Matters (Continued)
Other Information (Continued)
The introductory and statistical sections have not been subjected to the auditing procedures applied in
the audit of the basic financial statements and, accordingly, we do not express an opinion or provide
any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 12, 2019 on our consideration of the City's internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements
and other matters. The purpose of that report is to describe the scope of our testing of internal control
over financial reporting and compliance and the results of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the City's internal
control over financial reporting and compliance.
Irvine, California
December 12, 2019
3
The page left blank intentionally
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
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, 2019. 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, 2019, by $737 million (net position). Net position consists of
$541 million invested in capital assets, $68 million in restricted net position and $128 million in
unrestricted net position.
• The government's total net position decreased by $40.3 million during the fiscal year ended
June 30, 2019. The primary reasons for the decrease were higher expenses ($23.4 million) across
all governmental activities, with significant increases in community services ($9.5 million) and
public works ($8.3 million). Community Services expenses ($20.3 million) were higher due to
a $15 million payment to Tustin Unified School District (TUSD) for additional funding for the
Legacy Magnet Academy 6-12 School project at Tustin Legacy. Public Works expenditures
($45.9 million) increased from the previous year due to continued work on various budgeted
construction projects, including infrastructure at the Legacy development. Overall,
governmental revenues decreased $23.6 million from prior year, contributing to the decline in
net position. The primary reason for the decrease was significant revenue ($33.6 million)
recognized in fiscal year 2018 for the gain on sale of land held for resale, mostly 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. This decrease was offset by higher earnings on
investments ($6.1 million), resulting from a significant market adjustment for unrealized gains
for the investment portfolio at June 30, 2019.
• As of June 30, 2019, the City's governmental funds reported combined ending fund balances of
$245.9 million, a decrease of $58.6 million in comparison with the prior year. The decrease in
ending fund balances is primarily due to the activity discussed above. The decrease is higher for
the governmental funds because the capital assets funded by much of the on-going construction
projects are not presented in the governmental funds statements. Approximately $82.9 million
is nonspendable; $68.5 million is restricted; and $5.8 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.
5
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the
City's finances, in a manner similar to a private -sector business.
The statement of net position presents information on all of the City's assets and liabilities and deferred
inflows/outflows of resources, with the difference reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City is
improving or deteriorating.
The statement of activities presents information showing how the government's net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues
and expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
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 outflows 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.
Con
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Fund Financial Statements (Continued)
Both the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The City maintains various individual governmental funds organized by their type (special revenue, debt
service and capital projects funds). Information is presented separately in the Governmental Funds
Balance Sheet and in the Governmental Funds Statement of Revenues, Expenditures, and Changes in
Fund Balances. The General Fund and Measure M Special Revenue Fund are considered to be major
funds. Data from other governmental funds are combined into a single, aggregated presentation.
Individual fund data for each of these nonmajor governmental funds is provided in the form of combining
statements elsewhere in this report.
The City adopts a bi-annual appropriated budget for its General Fund and the Special Revenue Funds to
demonstrate compliance with the annual budget law. Budgetary comparison schedules have been
provided to demonstrate compliance with this budget requirement elsewhere in this report.
The governmental funds financial statements can be found immediately following the government -wide
financial statements.
Proprietary funds. The City of Tustin maintains one type of proprietary (Enterprise) fund. This
enterprise fund is used to report the same functions presented as business -type activities in the
government -wide financial statements. The City uses an enterprise fund to account for its Water Utility.
The proprietary fund financial statements can be found immediately following the governmental funds
financial statements.
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, 2019
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government -wide and fund financial statements. The notes to
the basic financial statements can be found immediately following the fiduciary funds financial
statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information which includes a Budgetary Comparison Schedule for the General
Fund and Measure M Special Revenue Fund and 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 nonmajor governmental funds are
presented for all nonmajor Special Revenue Funds, nonmajor Capital Projects Funds, and all nonmajor
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 (75 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.
N.
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Government -wide Financial Analysis (Continued)
Assets:
Current and other assets
Capital assets
Total Assets
Deferred Outflows of Resources
Liabilities:
Current liabilities
Non -Current liabilities
Total Liabilities
Deferred Inflows of
Resources
Net Position:
Net investment in capital assets
Restricted
Unrestricted
Total Net Position
City of Tustin
Summary of Net Position
As of June 30, 2019
(in millions of dollars)
Governmental Business -Type
Activities Activities Total
2018 2019 2018 2019 2018 2019
$322.0
$272.2
$35.8
$36.7
$357.8
$308.9
499.5
520.4
47.9
48.6
547.4
569.0
821.5
792.6
83.7
85.3
905.2
877.9
17.4
16.3
4_3
4_0
21.7
20.3
16.8
25.5
3.3
4.8
20.1
30.3
82.4
85.0
45.3
44.3
127.7
129.3
99.2
110.5
48.6
49.1
147.8
159.6
2_0
1.8
0_1
0_1
2_1
1_9
Total
% Change
2018-2019
(3.0%)
8.0%
499.2 520.2 22.8 20.7 522.0 540.9
87.4 67.8 - - 87.4 67.8
151.1 108.6 16.5 19.4 167.6 128.0
$737.7 $696.6 $39.3 $40.1 $777.0 $736.7 (5.2%)
Governmental activities. Net position of the City's governmental activities decreased 5.6% to $696.6
million, of which $520.2 million is invested in capital assets such as equipment, buildings, and
infrastructure. Of the remaining total, $67.8 million is restricted to specifically stipulated spending
agreements originated by law, contract, or other agreements with external parties. The remaining $108.6
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.
I
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Government -wide Financial Analysis (Continued)
millions
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
GENERAL PUBLIC SAFETY PUBLIC WORKS COMMUNITY OPERATING CAPITAL GRANTS
GOVERNMENT SERVICES GRANTS AND AND
CONTRIBUTIONS CONTRIBUTIONS
W Expenses W Revenue
REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES
Other general
revenues
Investment income 8.5% -
10.2
Sales tax
37.7
10
Gain on sale of land held for resale
0.6
Property taxes
Othertaxes
2.6
Transient occupancy
taxes
2.6
Business license taxes
0.7
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Government -wide Financial Analysis (Continued)
City of Tustin
Summary of Changes in Net Position
For the Year Ended June 30, 2019
(in millions of dollars)
Revenues:
Program revenues:
Charges for services
Operating grants & contributions
Capital grants and contributions
General revenues:
Taxes
Intergovernmental revenue
Earnings on investments
Miscellaneous
Gain on sale of assets
Total Revenues
Expenses:
General government
Public safety
Public works
Community services
Water
Total Expenses
Change in net position
Net Position - Beginning
Restatement for Prior Period
Adjustment
Net Position - Ending
Governmental
Business -Type
Total
Activities
Activities
Total
% Change
2018
2019
2018
2019
2018
2019
2018-2019
$6.5
$8.9
$18.2
$17.3
$24.7
$26.2
3.9
5.0
-
-
3.9
5.0
7.6
3.9
-
-
7.6
3.9
29.6
30.4
-
-
29.6
30.4
24.9
26.6
-
-
24.9
26.6
1.1
7.2
0.2
1.1
1.3
8.3
4.8
6.0
0.2
0.2
5.0
6.2
33.6
0.4
-
-
33.6
0.4
112.0
88.4
18.6
18.6
130.6
107.0
(18.1%)
23.9
27.1
-
-
23.9
27.1
33.8
36.2
-
-
33.8
36.2
37.6
45.9
-
-
37.6
45.9
10.8
20.3
-
-
10.8
20.3
_
-
17.7
17.8
17.7
17.8
106.1
129.5
17.7
17.8
123.8
147.3
19.0%
5.9
(41.1)
0.9
0.8
6.8
(40.3)
737.0
737.7
38.4
39.3
775.4
777.0
5.2 - _ = 5.2
$737.7 $696.6 539.3 540.1 $777.0 S736.7 (5.2%)
11
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Government -wide Financial Analysis (Continued)
In governmental activities, the decrease in net position of $41.1 million is primarily due to the following
reasons:
• Deferred outflows related to pension plans decreased $1.1 million mostly due to changes in
actuarial assumptions affecting the calculation of the pension liability.
• Total governmental assets decreased $28.9 million, mostly due to a $15 million payment to
Tustin Unified School District (TUSD) for additional funding for the Legacy Magnet Academy
6-12 School project at Tustin Legacy. Also contributing to the decrease in governmental assets
were expenses for the following significant public works projects that were not capitalized as
part of construction in progress: Temporary Homeless Shelter $2.3 million, Peters Canyon
Channel Improvements $5.9 million, Tustin Legacy Pedestrian Bridges Architectural $1.2
million, and Major Pavement Maintenance $1.8 million.
• Deferred inflows of resources decreased $0.2 million mostly due to changes in the City's
proportion of the pooled safety plan and differences between the City's contributions and the
City's proportionate share of contributions for the pooled safety plan.
• Governmental liabilities increased $11.3 million mostly due to higher accounts payable and
accrued liabilities ($8.1 million) resulting from increased construction costs. Pension liabilities
increased about $1.3 million due to the interest on the total pension liability.
Overall, governmental revenues decreased $23.6 million from prior year. The primary reason for the
decrease was significant revenue ($33.6 million) recognized in fiscal year 2018 for the gain on sale of
land held for resale, mostly 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. This decrease was
offset by increases in earnings on investments ($6.1 million), charges for services ($2.4 million), and
intergovernmental revenue — sales tax shared state revenues ($1.7 million). The increase in earnings on
investments was mostly due to a significant market adjustment for unrealized gains for the investment
portfolio of approximately $6 million at June 30, 2019. Charges for services for governmental activities
increased $2.4 million during fiscal year 2019 mostly due to the increased construction activity reflected
in the public works category. Most of the increase in public works charges is due to higher Park In -Lieu
fees ($0.9 million) which were received from Taylor Morrison in conjunction with the Vintage
development, coupled with increases in building permits and plan check fees ($0.5 million). Community
services charges for services increased about $1 million during the year due to the new Inclusionary
Housing Fee which was implemented in fiscal year 2019. The City received about $0.9 million in
Inclusionary Housing Fees from Taylor Morrison in conjunction with the Vintage development. There
were minor increases in the Public Safety and General Government charges for services categories. The
increase in intergovernmental revenue — sales tax shared state revenues was the result of the continued
favorable economic climate.
12
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Government -wide Financial Analysis (Continued)
Retail and auto sales continued to lead other market sectors, representing over half of the sales taxes
received during the year. Solid returns by new auto dealers and increased leasing activity helped push
autos -transportation higher, while recent additions of specialty retailers lifted general consumers.
Earnings on investments increased $6.1 million from fiscal year 2018 mostly due to a $6 million
unrealized gain in market value plus a $0.8 million increase in investment earnings. The increase in
interest earnings during fiscal year 2019 was primarily due to the higher average weighted portfolio yield
(0.49% increase) caused by the rising interest rate environment during most of fiscal year 2019. This
increase was offset by decreased duration (111 days) and lower average cash balances ($6 million
decrease), resulting from the volatile cash flow needs from the large construction projects taking place
currently. The average cash balance for fiscal year 2018-19 was $212 million with an average weighted
portfolio yield of 2.11% and average weighted days to maturity of 569 days. 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.
Overall Governmental expenses increased $23.4 million from the prior year. Of that amount,
Community Services showed the largest increase in the governmental activities presented, with expenses
increasing $9.4 million from prior year. This was caused by a $15 million payment to TUSD for the
school funding discussed previously. In fiscal year 2018, the City funded approximately $5.4 million
for the school building project, resulting in the increase of $9.4 million in fiscal year 2019.
General Government expenses increased $3.2 million from fiscal year 2018 mostly due to additional
discretionary payments for unfunded actuarial liabilities of $3.3 million for pension liabilities and $0.5
million for Other Post -Employment Benefits (OPEB) liabilities.
Public Safety expenses increased $2.5 million from prior year mostly due to the higher claims paid for
general liability cases and workers compensation claims ($1.5 million). Also contributing to the increase
were higher costs for contact fire services with Orange County Fire Authority ($0.5 million) and other
smaller increases related to compensation and overtime.
Public Works expenses increased $8.3 million due to expenses for the following significant projects that
were not capitalized as part of construction in progress: Temporary Homeless Shelter, Peters Canyon
Channel Improvements, and Tustin Legacy Pedestrian Bridges Architectural plans.
Business -Type activities net position increased $0.8 million from prior year. Charges for services
decreased $0.9 million from fiscal year 2018 due to decreased water consumption caused by less water
usage during the winter and spring rainy season. This decline was offset by higher investment earnings
($0.9 million increase) due to the market value adjustment for unrealized gains discussed previously.
Water operation costs showed a small increase ($0.1 million) primarily due to higher costs from the
Orange County Water District for purchased water.
13
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
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 $245.9 million, a decrease of $58.6 million in comparison with the prior year. The
decrease is primarily due to significant expenditures for capital projects at the Legacy development.
Total capital outlay was $59.4 million during fiscal year 2019. Other major expenses during the year
included a $15 million advance paid 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. Approximately $82.9 million (27.2%) of the City's governmental fund balance constitutes
nonspendable fund balance. Of the nonspendable amount, $82.2 million is land held for resale. The
remainder of the fund balance consists of $68.5 million in restricted funds, $5.8 million assigned to
capital projects, and $88.7 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 $88.8 million, while total fund balance was $202.9 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 80% of the total General Fund expenditures.
14
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Financial Analysis of the Government's Funds (Continued)
City of Tustin
Summary of Changes in Fund Balances - General Fund
20.3
24.4
For the Year Ended June 30, 2019
32.2
33.1
Public works
(in millions of dollars)
8.9
Community services
9.3
18.7
Capital Outlay
Total
25.5
Debt service
3.3
% Change
Total Expenses
2018
2019
2018-2019
Revenues:
(Under) Expenditures
18.7
Taxes
$25.8
$26.3
Charges for services
2.0
1.8
Intergovernmental
28.5
28.4
Fines and forfeitures
1.0
0.9
Licenses and permits
0.9
1.2
Investment income
0.6
5.5
Other
3.3
3.7
Developer Contribution
1.3
-
Profit participation
7.2
0.2
Gain on sale of land held
for resale 33.0
-
Total Revenues 103.6
68.0
(34.4%)
Expenditures:
General government
20.3
24.4
Public safety
32.2
33.1
Public works
7.6
8.9
Community services
9.3
18.7
Capital Outlay
12.2
25.5
Debt service
3.3
0.1
Total Expenses
84.9
110.7 30.4%
Excess of Revenues Over
(Under) Expenditures
18.7
(42.7)
Other Financing Sources (Uses):
Net transfers - 5.2
Net Change in Fund Balance 18.7 37.5 (300.5%)
15
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Financial Analysis of the Government's Funds (Continued)
Transactions impacting revenues in the General Fund were as follows:
• Taxes increased $0.5 million primarily due to higher property tax revenues. Property tax revenue
totaled about $22.3 million reflecting an increase of approximately $0.4 million primarily due to
an increase of about $0.4 million in property tax in lieu of VLF. The City received $7.9 million
in property tax in lieu of VLF for fiscal year 2019. 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 is due to the increase in property values.
• Sales tax revenue increased $1.7 million, mostly due to solid returns by new auto dealers and
increased leasing activity plus the additions of new retailers and growth from restaurants. The
current economic outlook is conservatively optimistic and mindful of the impact of recent
technological changes and trends in car sales.
• Intergovernmental revenue, which includes the sales taxes discussed above, decreased slightly
($0.1 million) from fiscal year 2018. This was primarily due to higher revenues in 2018 resulting
from $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. These
decreases were offset by higher sales taxes in fiscal year 2019 (increase of $1.7 million).
• Other Revenue increased $0.4 million from prior year primarily due to the increase in rental
income of about $0.3 million. This increase is the result of more rental agreements for use of the
historic hanger at Tustin Legacy, as well as other leases for use of City -owned land for parking.
• The decrease in Profit Participation of $7 million is due to the receipt in fiscal year 2018 of the
final $7.2 million for profit participation from CalAtlantic, related to the sale of homes in the
Greenwood development at the Legacy. The activity for 2019 reflects an additional $0.2 million
in profit participation resulting from the Greenwood profit participation agreement audit.
• The decrease in Developer Contribution of $1.3 million was due to prior year Project Fair Share
Contributions in conjunction with the sale of land held for resale at the Legacy of $1.3 million
from Lennar Homes.
• Gain on sale of land held for resale totaled $33 million in fiscal year 2018 due to the sale of land
at the Legacy development. There were no land sales affecting the general fund in fiscal year
2019.
• Investment income increased $4.9 million during 2019 largely due to a significant unrealized
gain of $4.3 million for the investment portfolio resulting from the favorable market value at
June 30, 2019 as compared with the value at June 30, 2018. Most of the remainder of the increase
is due to earnings from the PARS Pension Trust ($0.1 million) averaging 6.85% during 2019,
plus the higher weighted average portfolio yield (0.49%) caused by the rising interest rate
environment during most of fiscal year 2019. The City opened the PARS investment trust in
June 2018, so this is the first full year of investment earnings for the trust.
• Licenses and permits rose $0.3 million during the year because of the rise in building permits,
resulting from increased construction during 2019 at the Legacy development.
16
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Financial Analysis of the Government's Funds (Continued)
• Fines and forfeitures decreased slightly during 2019 because of lower vehicle code fines and
parking citation revenue. This was mostly due to one less Parking Control Officer during most
of the year and more time assigned to specific incidents, which resulted in less time devoted to
patrolling for vehicle code violations.
• Charges for services decreased $0.2 million during fiscal year 2019 due to adjustments in fiscal
year 2018 that increased the revenue for reimbursement of administrative expenses for prior years
for community facilities districts.
Changes in General Fund expenditures from previous fiscal year, by function, occurred as follows during
the year ended June 30, 2019:
• General Government expenditures increased $4.1 million from prior year mostly due to a $3.3
million discretionary payment to Ca1PERS to pay down unfunded actuarial liabilities for the
Miscellaneous and Safety plans. In addition, $0.5 million was contributed to the Public Agency
Retirement Services (PARS) Trust Other Post -Employment Benefits (OPEB) account. Also
contributing to the increase were higher professional and consulting expenses ($0.6 million),
mostly to reimburse OMBRP LLC for Community Core Development infrastructure design costs
for Neighborhood D North totaling $0.5 million.
• Public safety expenditures increased $0.9 million from prior year primarily due to higher pension
costs of $0.5 million and increased costs for contract fire services with Orange County Fire
Authority ($0.5 million).
• Public Works expenditures increased $1.3 million mostly due to costs incurred for architectural
plans for the Tustin Ranch Road pedestrian bridge ($1.2 million).
• Community Services expenditures increased $9.4 million mostly due to a $15 million advance
paid in fiscal year 2019 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. In the prior year, the City funded only $5.4 million, contributing significantly to the
$9.4 million increase in Community Services expenses during 2019.
• Capital Outlay increased $13.3 million primarily due to increases in construction expenditures
for the following projects:
o $4.3 million - Peters Canyon Channel Improvements
o $5.1 million — Emergency Operations Center and Corporate Yard Project
o $0.4 million — Moffett Drive and Legacy Road Extension Project
o $3.2 million — Tustin Legacy Linear Park Improvements
• Debt service declined $3.2 million due to final payment made in the prior year of $3.2 million to
the Department of Finance (DOF) per the settlement agreement related to the dissolution of the
Tustin Redevelopment Agency.
17
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
Financial Analysis of the Government's Funds (Continued)
• Net Transfers increased $5.2 million from prior year mostly due to the following transfers in
during fiscal year 2019: $1.9 million to repay amounts transferred to cover negative cash in prior
years for CFD's 06-1, 07-1, and 2014-1; $3.8 million from the Special Tax B Special Revenue
Fund to pay for public safety services provided for the Special Tax B area. These transfers in
were offset by a transfer out to the Housing Authority Special Revenue Fund to cover the first
year of the Tustin Temporary Homeless Shelter.
General Fund Budgetary Highlights
Differences between the General Fund actual revenues and amended budgeted revenues were $2.8
million, mostly due to increased revenues from investment income and property taxes. Those increases
were offset by lower anticipated revenues from various sources, such as permit fees and OMBRP
development fees. The amended budgeted expenditures were $178.7 million, an increase in
appropriations of $49.8 million from the original budgeted expenditures of $128.9 million. The increase
in appropriations was largely associated with capital expenditures at the Tustin Legacy.
Actual General Fund expenditures were less than the amended budgeted amount of $178.7 million by
$68 million due to appropriations for capital projects spanning multiple years and projects that were
anticipated but indefinitely delayed due to the OMBRP development ending. The budget included nearly
$63.7 million in capital outlay and professional services for the OMBRP development project.
Additionally, a generator replacement project ($1 million) was delayed to a subsequent fiscal year due
to operational requirements in the police department. A majority of the reduced expenditures in Public
Safety was associated with vacancies in the Police Department.
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 $0.8 million, resulting in an increase in net position during fiscal year
2019, from $39.3 million as of June 30, 2018, to $40.1 million as of June 30, 2019.
Operating revenues decreased slightly from $18.2 million in fiscal year 2018 to $17.3 million in 2019,
due to lower water consumption caused by the winter and spring rainy season. Related operating costs
decreased slightly ($0.1 million) from prior fiscal year, due to completion in fiscal year 2018 of the 17th
Street Treatment Plant Membrane repairs.
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
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, 2019 amounts to $569 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, 2019
(in millions of dollars)
Governmental
Activities
2018
2019
$83.1
$83.1
43.8
43.8
56.7
78.9
76.5
74.7
6.7
5.6
232.7 234.3
$499.5 $520.4
Business -Type
Activities
2018 2019
$1.2 $1.2
2.8 5.4
3.9 3.7
40 38.3
$47.9 $48.6 $547.4 $569.0 3.9%
Overall, capital asset additions of $37 million in fiscal year 2019 were offset by depreciation expense of
$14 million and retirements of $1 million for a net increase in capital assets of $22 million. In fiscal
year 2019, construction in progress increased about $25 million due to continued construction of the
following major projects: Sports Park and Linear Park at the Legacy development, Median Landscape
Rehabilitation, Corporate Yard Facilities, Streetlight LED Conversion, and various road widening and
extension projects at the Legacy development. In addition, two major construction projects were
completed in fiscal year 2019: Tustin Library Restoration (an addition of $1.4 million for buildings and
improvements), and Red Hill Avenue Widening and Median Improvements (an addition of $8.5 million
for infrastructure). Declines in other capital asset categories were due to depreciation.
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.
Long-term Debt
At the end of the current fiscal year, the City had total outstanding long-term liabilities of $129.4 million.
Of this amount, $40.5 million are secured solely by specified revenue sources such as property tax
increment and water service charges.
19
Total
Total
% Chan2e
2018
2019 2018-2019
$84.3
$84.3
43.8
43.8
59.5
84.3
80.4
78.4
6.7
5.6
232.7
234.3
40
38.3
$47.9 $48.6 $547.4 $569.0 3.9%
Overall, capital asset additions of $37 million in fiscal year 2019 were offset by depreciation expense of
$14 million and retirements of $1 million for a net increase in capital assets of $22 million. In fiscal
year 2019, construction in progress increased about $25 million due to continued construction of the
following major projects: Sports Park and Linear Park at the Legacy development, Median Landscape
Rehabilitation, Corporate Yard Facilities, Streetlight LED Conversion, and various road widening and
extension projects at the Legacy development. In addition, two major construction projects were
completed in fiscal year 2019: Tustin Library Restoration (an addition of $1.4 million for buildings and
improvements), and Red Hill Avenue Widening and Median Improvements (an addition of $8.5 million
for infrastructure). Declines in other capital asset categories were due to depreciation.
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.
Long-term Debt
At the end of the current fiscal year, the City had total outstanding long-term liabilities of $129.4 million.
Of this amount, $40.5 million are secured solely by specified revenue sources such as property tax
increment and water service charges.
19
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
City of Tustin
Summary of Changes in Long -Term Liabilities
For the Year Ended June 30, 2019
(in millions of dollars)
Total Outstanding Debt $82.4 S85.0 S45.3 S4- SU27.7 SU29.4 1.3%
Overall, long-term debt increased $1.7 million from the prior year balances mostly due to the increase
in pension liabilities of $1.5 million. The increase in pension liabilities was comprised of increases for
both the Safety (police) Plans and the Miscellaneous (all other) plans of $0.6 million and $0.9 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%. Claims and judgments increased $1.3 million during fiscal
year 2019 primarily due to increases in workers compensation claims for Police officers. The above
noted increases were offset by decreases in the other long-term debt categories. 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 9, and Note 10 of the
notes to the basic financial statements section of this report.
Next Year's Budget and Rates
The City Council adopted the fiscal year 2019-2020 Budget with total appropriations of $217.3 million
which includes $90.1 million of capital outlay. The General Fund fiscal year 2019-2020 estimated
revenues are $68.3 million and budgeted appropriations are $70.1 million resulting in an estimated
operating deficit of $1.8 million. The operating deficit will be covered by planned use of excess General
Fund reserves. The appropriations are $0.6 million lower than the prior year's appropriation. Overall,
the appropriations are consistent with fiscal year 2019. There were no fee increases as part of the
preparation and adoption of the fiscal year 2019-20 budget.
20
Governmental
Business -Type
Total
Activities
Activities
Total % Change
2018
2019
2018 2019
2018
2019 2018-2019
Bonds payable
$-
$-
$41.6 $40.5
$41.6
$40.5
Claims and judgments
5.1
6.4
- -
5.1
6.4
Postemployment
benefits obligation
13.9
13.8
- -
13.9
13.8
Compensated absences
3.3
3.4
0.2 0.3
3.5
3.7
Lease Payable
0.3
0.2
- -
0.3
0.2
Pension liabilities
59.8
61.2
3.5 3.6
63.3
64.8
Total Outstanding Debt $82.4 S85.0 S45.3 S4- SU27.7 SU29.4 1.3%
Overall, long-term debt increased $1.7 million from the prior year balances mostly due to the increase
in pension liabilities of $1.5 million. The increase in pension liabilities was comprised of increases for
both the Safety (police) Plans and the Miscellaneous (all other) plans of $0.6 million and $0.9 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%. Claims and judgments increased $1.3 million during fiscal
year 2019 primarily due to increases in workers compensation claims for Police officers. The above
noted increases were offset by decreases in the other long-term debt categories. 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 9, and Note 10 of the
notes to the basic financial statements section of this report.
Next Year's Budget and Rates
The City Council adopted the fiscal year 2019-2020 Budget with total appropriations of $217.3 million
which includes $90.1 million of capital outlay. The General Fund fiscal year 2019-2020 estimated
revenues are $68.3 million and budgeted appropriations are $70.1 million resulting in an estimated
operating deficit of $1.8 million. The operating deficit will be covered by planned use of excess General
Fund reserves. The appropriations are $0.6 million lower than the prior year's appropriation. Overall,
the appropriations are consistent with fiscal year 2019. There were no fee increases as part of the
preparation and adoption of the fiscal year 2019-20 budget.
20
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2019
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
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, 2019
23
Governmental
Business -type
Activities
Activity
Total
$ 130,443,240
$ 20,637,563
$ 151,080,803
8,050,511
2,769,763
10,820,274
429,655
66,538
496,193
931,729
-
931,729
(512,201)
-
(512,201)
663,239
11,830
675,069
82,240,813
3,765,347
86,006,160
44,275,516
9,503,532
53,779,048
5,686,272
-
5,686,272
205,666,349
6,586,353
212,252,702
314,699,205
41,966,859
356,666,064
792,574,328
85,307,785
877,882,113
-
3,116,377
3,116,377
16,327,169
928,880
17,256,049
16,327,169
4,045,257
20,372,426
17,595,778
3,877,739
21,473,517
-
368,530
368,530
7,878,685
503,888
8,382,573
41,262
-
41,262
9,599,406
1,13 8,486
10,737,892
466,621
39,638,074
40,104,695
13,765,029
-
13,765,029
61,154,708
3,622,504
64,777,212
110,501,489
49,149,221
159,650,710
360,412
-
360,412
1,412,734
63,722
1,476,456
1,773,146
63,722
1,836,868
520,166,300
20,650,435
540,816,735
4,381,582
-
4,381,582
1,935,618
1,935,618
55,889,517
55,889,517
5,686,272
-
5,686,272
108,567,573
19,489,664
128,057,237
$ 696,626,862
$ 40,140,099
$ 736,766,961
CITY OF TUSTIN
STATEMENT OF ACTIVITIES
For the year ended June 30, 2019
Functions/programs
Expenses
Governmental activities:
for
General government
$ 27,097,686
Public safety
36,215,060
Public works
45,849,976
Community services
20,304,550
Interest on long-term liabilities
9,297
Total governmental activities
129,476,569
Business -type activity:
-
Water
17,763,633
Total
$ 147,240,202
See accompanying notes to basic financial statements.
Program Revenues
Charges
Operating
Capital
for
Grants and
Grants and
Services
Contributions
Contributions
$ 1,920,214
$ 28,828
$ -
1,285,584
444,112
-
3,300,906
3,201,613
3,689,178
2,426,578
1,277,718
253,656
8,933,282
4,952,271
3,942,834
17,329,090
-
-
$ 26,262,372
$ 4,952,271
$ 3,942,834
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,
NET POSITION AT END OF YEAR
24
Net (Expense) Revenue and
-
Changes in Net Position
1,762,642
Governmental Business -type
1,762,642
Activities Activity
Total
1,825,957
$ (25,148,644) $ -
$ (25,148,644)
(34,485,364) -
(34,485,364)
(35,658,279) -
(35,658,279)
(16,346,598) -
(16,346,598)
(9,297) -
(9,297)
1,084,525
(111,648,182) -
(111,648,182)
-
- (434,543)
(434,543)
230,610
(111,648,182) (434,543)
(112,082,725)
26,275,789
-
26,275,789
1,762,642
-
1,762,642
1,825,957
-
1,825,957
466,828
-
466,828
26,634,458
-
26,634,458
39,526
-
39,526
7,167,093
1,084,525
8,251,618
395,281
-
395,281
6,002,632
230,610
6,233,242
70,570,206
1,315,135
71,885,341
(41,077,976)
880,592
(40,197,384)
737,704,838
39,259,507
776,964,345
$ 696,626,862 $ 40,140,099 $ 736,766,961
25
CITY OF TUSTIN
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2019
See accompanying notes to basic financial statements.
26
Measure M
Other
Total
Special Revenue
Governmental
Governmental
General
Fund
Funds
Funds
ASSETS
Cash and investments
$
96,248,430
$
4,931,912
$ 29,262,898
$ 130,443,240
Restricted cash and investments
29,210,515
-
15,065,001
44,275,516
Restricted cash and investments held by trust
5,686,272
-
-
5,686,272
Receivables:
Accounts
6,433,052
1,040,373
577,086
8,050,511
Interest
290,137
11,662
127,856
429,655
Loans
547,933
-
383,796
931,729
Allowance for uncollectibles
(478,405)
-
(33,796)
(512,201)
Prepaid items and deposits
661,317
-
1,922
663,239
Land held for resale
82,240,813
-
-
82,240,813
TOTAL ASSETS
$
220,840,064
$
5,983,947
$ 45,384,763
$ 272,208,774
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
LIABILITIES:
Accounts payable and accrued liabilities
$
10,570,255
$
167,440
$ 6,858,083
$ 17,595,778
Deposits payable
7,148,757
-
729,928
7,878,685
Unearned revenue
-
41,262
41,262
TOTAL LIABILITIES
17,719,012
167,440
7,629,273
25,515,725
DEFERRED INFLOWS OF RESOURCES:
Unavailable revenue
199,226
175,585
416,539
791,350
FUND BALANCES:
Nonspendable
82,902,130
-
1,922
82,904,052
Restricted
31,250,893
5,640,922
31,574,981
68,466,796
Assigned
-
-
5,762,048
5,762,048
Unassigned
88,768,803
-
-
88,768,803
TOTAL FUND BALANCES
202,921,826
5,640,922
37,338,951
245,901,699
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$
220,840,064
$
5,983,947
$ 45,384,763
$ 272,208,774
See accompanying notes to basic financial statements.
26
CITY OF TUSTIN
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
June 30, 2019
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, 2019 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
$ (6,445,476)
(3,421,297)
(199,254)
16,327,169
(1,412,734)
(61,154,708)
(360,412)
(13,765,029)
$ 245,901,699
520,365,554
(10,066,027)
(46,240,273)
(14,125,441)
791,350
$ 696,626,862
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
REVENUES:
Taxes
Licenses and permits
Fines and forfeitures
Investment income
Intergovernmental revenue
Charges for services
Rental income
Otherrevenue
Profit participation
Gain on sale of land held for resale
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Public safety
Public works
Community services
Capital outlay
Debt service:
Principal retirement
Interest expenditures
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
TOTAL OTHER FINANCING
SOURCES (USES)
For the year ended June 30, 2019
6,254,026 - 1,027,745 7,281,771
(1,027,745) (164,379) (6,089,647) (7,281,771)
5,226,281 (164,379) (5,061,902) -
NET CHANGE IN FUND BALANCES (37,548,727) 262,090 (21,324,607) (58,611,244)
FUND BALANCES - BEGINNING OF YEAR 240,470,553 5,378,832 58,663,558 304,512,943
FUND BALANCES - END OF YEAR $ 202,921,826 $ 5,640,922 $ 37,338,951 $ 245,901,699
See accompanying notes to basic financial statements.
28
Measure M
Other
Total
Special Revenue
Governmental
Governmental
General
Fund
Funds
Funds
$ 26,332,916
$ -
$ 52,467
$ 26,385,383
1,212,696
-
-
1,212,696
909,355
-
-
909,355
5,501,731
190,171
1,480,541
7,172,443
28,441,706
2,522,358
8,649,046
39,613,110
1,806,032
-
955,656
2,761,688
1,822,751
-
232,384
2,055,135
1,684,402
400
5,906,154
7,590,956
212,651
-
-
212,651
-
-
395,281
395,281
67,924,240
2,712,929
17,671,529
88,308,698
24,372,135
2,988
1,164,514
25,539,637
33,080,635
-
120,250
33,200,885
8,936,153
169,340
9,105,493
18,652,582
-
951,072
19,603,654
25,576,538
2,283,472
31,529,058
59,389,068
71,908
-
-
71,908
9,297
-
-
9,297
110,699,248
2,286,460
33,934,234
146,919,942
(42,775,008)
426,469
(16,262,705)
(58,611,244)
6,254,026 - 1,027,745 7,281,771
(1,027,745) (164,379) (6,089,647) (7,281,771)
5,226,281 (164,379) (5,061,902) -
NET CHANGE IN FUND BALANCES (37,548,727) 262,090 (21,324,607) (58,611,244)
FUND BALANCES - BEGINNING OF YEAR 240,470,553 5,378,832 58,663,558 304,512,943
FUND BALANCES - END OF YEAR $ 202,921,826 $ 5,640,922 $ 37,338,951 $ 245,901,699
See accompanying notes to basic financial statements.
28
CITY OF TUSTIN
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the year ended June 30, 2019
Net change in fund balances - total governmental funds
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
Disposition of capital assets
Depreciation expense
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
Claims and judgments payable
Compensated absences payable
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
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
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
Change in net position of governmental activities
See accompanying notes to basic financial statements.
29
$ 34,257,116
(1,063,214)
(12,289,983)
71,908
(1,359,618)
(104,012)
$ (58,611,244)
20,903,919
(1,391,722)
(1,838,616)
(230,208)
89,895
$ (41,077,976)
CITY OF TUSTIN
STATEMENT OF NET POSITION
PROPRIETARY FUND
June 30, 2019
ASSETS:
CURRENT ASSETS:
Cash and investments
Accounts receivable
Interest receivable
Prepaid items
Land held for resale
Restricted cash and investments
TOTAL CURRENT ASSETS
Business -type
Activity
Water
Enterprise
Fund
$ 20,637,563
2,769,763
66,538
11,830
3,765,347
9,503,532
36,754,573
NONCURRENT ASSETS:
Capital assets:
Not being depreciated
6,586,353
Being depreciated, net
41,966,859
TOTAL NONCURRENT ASSETS
48,553,212
TOTAL ASSETS
85,307,785
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
3,116,377
Deferred amounts on pension plans
928,880
TOTAL DEFERRED OUTFLOWS OF RESOURCES
4,045,257
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
3,877,739
Deposits payable
503,888
Compensated absences payable
228,486
Interest payable
368,530
Bonds payable
910,000
TOTAL CURRENT LIABILITIES
5,888,643
LONG-TERM LIABILITIES:
Compensated absences payable
25,388
Bonds payable
39,612,686
Net pension liability
3,622,504
TOTAL LONG-TERM LIABILITIES
43,260,578
TOTAL LIABILITIES
49,149,221
DEFERRED INFLOWS OF RESOURCES:
Deferred amounts on pension plans
63,722
NET POSITION:
Net investment in capital assets
20,650,435
Unrestricted
19,489,664
TOTAL NET POSITION
$ 40,140,099
See accompanying notes to basic financial statements.
30
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUND
For the year ended June 30, 2019
OPERATING REVENUES:
Charges for services
OPERATING EXPENSES:
Personnel services
Purchased water
Maintenance and operation
Depreciation
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
$ 17,329,090
3,708,959
7,257,570
3,317,944
1,918,452
16,202,925
1,126,165
1,084,525
230,610
(1,560,708)
(245,573)
880,592
39,259,507
$ 40,140,099
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
For the year ended June 30, 2019
CASH FLOWS FROM CAPITAL AND
Business -type
RELATED FINANCING ACTIVITIES:
Activity
Acquisition of capital assets
Water
Acquisition of land held for resale
Enterprise
Principal paid on bonds
Fund
CASH FLOWS FROM OPERATING ACTIVITIES:
(1,521,247)
Receipts from customers
$ 17,653,462
Payments to suppliers
(7,985,206)
Payments to other funds for services
(1,200,000)
Payments to employees
(3,509,629)
NET CASH PROVIDED BY
OPERATING ACTIVITIES
4,958,627
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets
(2,607,390)
Acquisition of land held for resale
(3,765,347)
Principal paid on bonds
(880,000)
Interest paid
(1,521,247)
NET CASH USED BY CAPITAL
AND RELATED FINANCING ACTIVITIES
(8,773,984)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income
1,088,129
NET CASH PROVIDED BY
INVESTING ACTIVITIES
NET DECREASE 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
1,088,129
(2,727,228)
32,868,323
$ 30,141,095
$ 20,637,563
9,503,532
$ 30,141,095
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
(CONTINUED)
For the year ended June 30, 2019
RECONCILIATION OF OPERATING INCOME TO
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 outflows 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
S 1,126,165
1,918,452
230,610
73,790
35,036
60,009
1,371,367
19,973
21,213
117,839
(15,827)
$ 4,958,627
CITY OF TUSTIN
STATEMENT OF FIDUCIARY NET POSITION
June 30, 2019
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
$ 3,130,526
$ -
$
4,776
Cash and investments held by trust
-
1,580,454
-
Restricted cash and investments
903
12,263,836
Receivables:
Taxes
-
-
55,066
Prepaid items and deposits
4,560
-
-
TOTAL ASSETS
3,135,989
1,580,454
$
12,323,678
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
6,579,703
-
-
LIABILITIES:
Accounts payable
-
-
$
-
Interest payable
685,242
-
-
Due to bondholders
-
-
12,323,678
Long-term liabilities:
Due within one year
1,895,000
-
-
Due in more than one year
55,998,955
-
-
TOTAL LIABILITIES
58,579,197
-
$
12,323,678
NET POSITION:
Net position restricted for private purpose
(48,863,505)
-
Net position restricted for OPEB
-
1,580,454
TOTAL NET POSITION
$ (48,863,505)
$ 1,580,454
See accompanying notes to basic financial statements.
34
CITY OF TUSTIN
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
For the year ended June 30, 2019
ADDITIONS:
Tax revenue
Contribution from the City of Tustin
Investment income
Employer contributions
TOTAL ADDITIONS
DEDUCTIONS:
Administrative expenses
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
$ 3,979,352
$ -
908
86,370
-
500,000
3,980,260
586,370
-
6,076
7,454
-
2,099,515
-
2,106,969
6,076
1,873,291
580,294
(50,736,796)
1,000,160
$ (48,863,505)
$ 1,580,454
The page left blank intentionally
36
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE - SUMMARY OFSIGNIFICANTACCOUNTINGPOLICIES
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, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING 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, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING 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, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING 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.
.O
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING 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
GASB 83 - Certain Asset Retirement Obligations, effective for periods beginning after June 15,
2018, and did not impact the City.
GASB 88 - Certain Disclosures Related to Debt, Including Direct Borrowings and Direct
Placements, effective for periods beginning after June 15, 2018, and did not significantly impact
the City.
GASB 89 - Accounting for Interest Cost Incurred before the End of a Construction Period,
effective for periods beginning after December 15, 2019 was early implemented by the City in
fiscal year 2018-19. This statement requires that interest cost incurred before the end of a
construction period be recognized as an expense in the period in which the cost is incurred for
financial statements prepared using the economic resources measurement focus. As a result,
interest cost incurred before the end of a construction period will not be included in the historical
cost of a capital asset reported in an enterprise fund. Accounting changes adopted to conform to
this provision for this statement should be applied prospectively. There was no material impact on
the City's financial statements resulting from the implementation of GASB 89.
41
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Pending Accounting Standards
GASB has issued the following statements, which may impact the City's financial reporting
requirements in the future:
• GASB 84 - Fiduciary Activities, effective for periods beginning after December 15, 2018.
• GASB 87 - Leases, 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.
• GASB 91 - Conduit Debt Obligations, effective for periods beginning after December 15,
2020.
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity
Cash, Cash Equivalents and Investments
Investments are stated at fair value (the value at which a financial instrument would be exchanged
in a current transaction between willing parties other than a forced or liquidation sale), except for
certain investments which have a remaining life of less than one year when purchased and
investment contracts, which are stated at amortized cost.
The City's proprietary fund participates in the pooling of City-wide cash and investments.
Amounts held in the City pool are available to the fund on demand and are considered to be cash
and cash equivalents for statement of cash flow purposes. Investments not held in the City pool that
are short-term investments with original maturities of three months or less from the date of
acquisition are considered cash and cash equivalents.
Capital Assets
Capital assets (including infrastructure) are recorded at cost where historical records are available
and at an estimated original cost where no historical records exist. Contributed capital assets are
valued at acquisition value at the date of contribution. Capital asset purchases (other than
infrastructure) in excess of $10,000 are capitalized if they have an expected useful life of five years
or more. Infrastructure assets with a cost exceeding $150,000 are capitalized.
42
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Capital Assets (Continued)
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.
• 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.
43
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING 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 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.
• 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.
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 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 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 and OPEB plan 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 and OPEB 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.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Land Held for Resale
Land held for resale is carried at the lower of cost or estimated realizable value at June 30, 2019.
Estimated realizable value is determined only upon the execution of a disposition and development
agreement. Land held for resale is recorded in the General Fund and the Water Enterprise Fund.
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 1 st
Levy period July 1St to June 30th
Levy date On or before 4t1i Monday in September
Due date November 1st - 1st installment
February 1St - 2" d installment
Collection date December 10th - 1St installment
April Wh - 2°d installment
Interest and penalties are assessed after the collection date.
Compensated Absences
All vested vacation and compensatory leave time is recognized as an expense and as a liability in
the proprietary type fund at the time the liability vests. Governmental fund types recognize the
vested vacation and compensatory time as an expenditure in the current year to the extent it is paid
during the year or is due and payable at year-end. For governmental activities, compensated
absences are primarily liquidated from the general fund. Any additional accrued vacation and
compensatory time relating to governmental funds and amounts relating to the proprietary fund
type are included as long-term liabilities within the statement of net position.
45
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 1- SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources
related to pensions, and pension expense, information about the fiduciary net position of the City's
California Public Employees' Retirement System (Ca1PERS) plans (Plans) and additions
to/deductions from the Plans' fiduciary net position have been determined on the same basis as
they are reported by Ca1PERS. 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. Actual results may differ from those estimates.
we
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 2 - CASHAND INVESTMENTS
Cash and Investments
Cash and investments as of June 30, 2019, are classified in the accompanying financial statements as
follows:
Unrestricted assets:
Cash and investments
Restricted assets:
Cash and investments
Cash and investments held by trust
Total cash and investments
Government -
Wide
Statement of
Net Position
$151,080,803
53,779,048
5,686,272
Fiduciary
Funds
Statement of
Net Position
$ 3,135,302
12,264,739
1,580,454
$210,546,123 $ 16,980,495
Cash and investments as of June 30, 2019, consist of the following:
Cash on hand
Deposits with financial institutions
Investments
Total cash and investments
47
Total
$154,216,105
66,043,787
7,266,726
$227,526,618
$ 11,000
4,216,032
223,299,586
$227,526,618
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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.
Investment Types Maximum
Authorized by the City's Policy Maturity
Negotiable certificates of deposit 5 years
Commercial paper* 270 days
Local Agency Investment Pool (LAIF) N/A
Orange County Investment Pool (OCIP) N/A
Bankers acceptances*
180 days
Medium term notes*
5 years
Municipal and state securities*
5 years
Federal agency bonds or notes
5 years
United States (U.S.) Treasury securities
5 years
Money market mutual funds
N/A
Repurchase agreements*
1 year
Supranationals*
5 years
Shares of beneficial interest by a JPA
5 years
* Combined total limitation of these investment types is
30%
N/A - Not Applicable
Maximum
Percentage
of Portfolio
Maximum
Investment in
One Issuer
30%
5%
25%
5%
None
$65 Million
None
Max permitted
20%
by County
30%
Treasurer
30%
5%
20%
5%
30%
5%
None
50%
None
None
20%
10%
30%
5%
15%
5%
None
50%
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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
Maximm
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, 2019
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
IYear
1-2
2-3
3-4
4-5
Investment Type
or Less
Years
Years
Years
Years
Total
U.S. Government Sponsored
Agency Securities:
Federal National Mortgage
Association (FNMA)
$ 6,985,895
$ 3,850,024
$
$ 2,000,482
$
$ 12,836,401
Federal Horne Loan Bank (FHLB)
-
992,658
7,533,898
2,500,135
11,026,691
Federal Home Loan Mortgage
Corporation (FHLMC)
-
2,549,335
6,009,975
14,012,545
700,678
23,272,533
Federal Farm Credit Bank (FFCB)
1,992,020
9,492,088
5,000,049
-
-
16,484,157
Local Agency Investment Pool (LAIF)
2,653,839
-
-
2,653,839
California Asset Management Program (CAMP)
50,937,339
50,937,339
Orange County Investment Pool
1,115,389
-
-
1,115,389
Negotiable Certificates ofDeposit
14,357,246
10,418,639
7,628,676
2,970,641
993,459
36,368,661
Medium-term Notes
1,997,362
9,013,686
7,053,349
6,483,623
1,046,908
25,594,928
Municipal Bonds
3,347,933
1,012,610
3,359,313
1,015,452
-
8,735,308
Held by Fiscal Agents:
Money Market Mutual Funds
26,746,410
-
-
-
26,746,410
Held by Pension Trust:
Money Market Mutual Funds
202,665
202,665
Mutual Funds - Equity
3,061,105
3,061,105
Mutual Funds - Fixed Income
2,683,707
2,683,707
Held by OPEB Trust:
Money Market Mutual Funds
53,983
53,983
Mutual Funds - Equity
813,193
813,193
Mutual Funds - Fixed Income
713,277
713,277
Total
$ 117,661,363
$ 37,329,040
_$_36,585,260
_$_28,982,878
$ 2,741,045
$ 223,299,586
50
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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
Not
AAA AA+ AA- Other Rated
$ - $10,835,919 $
$ 2,000,482
Minimum
- 11,026,691
Total as of
Legal
Investment Type
June 30, 2019
Rating
U.S. Government Sponsored
-
Agency Securities:
-
2,653,839
FNMA
$ 12,836,401
N/A
FHLB
11,026,691
N/A
FHLMC
23,272,533
N/A
FFCB
16,484,157
N/A
LAIF
2,653,839
N/A
CAMP
50,937,339
N/A
Orange County Investment Pool
1,115,389
N/A
Negotiable Certificates of Deposit
36,368,661
N/A
Medium-term Notes
25,594,928
A
Municipal Bonds
8,735,308
A
Held by Fiscal Agents:
-
813,193
Money Market Mutual Funds
26,746,410
A
Held by Pension Trust:
$ 66,134,652
$47,409,171
Money Market Mutual Funds
202,665
N/A
Mutual Funds -Equity
3,061,105
N/A
Mutual Funds - Fixed Income
2,683,707
N/A
Held by OPEB Trust:
Money Market Mutual Funds
53,983
N/A
Mutual Funds -Equity
813,193
N/A
Mutual Funds - Fixed Income
713,277
N/A
Total
$ 223,299,586
N/A - Not Applicable
Not
AAA AA+ AA- Other Rated
$ - $10,835,919 $
$ 2,000,482
$
- 11,026,691
-
- 23,272,533
- 16,484,157
-
-
-
2,653,839
50,937,339
-
-
1,115,389
-
-
36,368,661
999,602 4,020,846 8,586,383
11,988,097
-
- 1,488,072 6,295,150
952,086
26,746,410 - -
-
-
202,665
-
-
3,061,105
-
2,683,707
53,983
-
-
813,193
713,277
$27,746,012 $67,128,218 $14,881,533
$ 66,134,652
$47,409,171
The ratings for the "Other" category above are as follows:
Mediumz-tenn Notes
AA $ 5,000,802
A+ 3,000,773
A- 3,986,522
$ 11,988,097
Municipal Bonds
A $ 952,086 AAAm
CAMP
$ 50,937,339
U.S. Government Sponsored Held by Pension Trust Held by OPEB Trust
Agency Securities AAAm $ 202,665 AAAm $ 53,983
Aaa* $ 2,000,482
*Moody's rating as the note is not rated by Standard & Poor's
51
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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
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, 2019, 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
$ 12,836,401
Federal Home Loan Mortgage Corporation
United States Government
Sponsored Agency Securities
$ 23,272,533
Federal Farm Credit Bank
United States Government
Sponsored Agency Securities
$ 16,484,157
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, 2019, 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, 2019
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Custodial Credit Risk (Continued)
As of June 30, 2019, 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. Government Sponsored
Agency Securities $ 63,619,782
Medium -Term Notes 25,594,928
Municipal Bonds 8,735,308
Negotiable Certificates of Deposit 36,368,661
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
the California Government Code under the oversight of the Treasurer of the State of California. The
fair value of the City's investment in this pool is reported in the accompanying financial statements at
amounts based upon the City's pro rata share of the fair value provided by LAIF for the entire LAIF
portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is
based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.
The California Local Agency Investment Fund is not insured or collateralized. The Fund is subject to
regulatory oversight by the State of California Treasurer, although it is not registered with the SEC.
Deposits and withdrawals to and from LAIF are made on the basis of $1 and not at fair value.
Accordingly, under the fair value hierarchy, the investment with LAIF is uncategorized.
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 -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.
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, 2019
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Investments in Pension and OPEB Trusts
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 and OPEB plans. The Pension and
OPEB Trusts' 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, 2019
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, 2019:
U.S. Government Sponsored
Agency Securities:
FNMA
FHLB
FHLMC
FFCB
Negotiable Certificates of Deposit
Mediunkenn Notes
Municipal Bonds
Held by Pension Trust:
Mutual Funds - Equity
Mutual Funds - Fined Income
Held by OPEB Trust:
Mutual Funds - Equity
Mutual Funds - Fixed Income
Total Leveled Investments
LAIF*
CAMP*
Orange County Investment Pool*
Money Market Mutual Funds *:
Held by Fiscal Agents
Held by Pension Trust
Held by OPEB Trust
Total Investment Portfolio
Quoted Observable Unobservable
Prices Inputs Inputs
Level Level Level
Total
$ - $ 12,836,401 $ -
$ 12,836,401
- 11,026,691 -
11,026,691
- 23,272,533 -
23,272,533
- 16,484,157 -
16,484,157
- 36,368,661 -
36,368,661
- 25,594,928 -
25,594,928
- 8,735,308 -
8,735,308
3,061,105
2,683,707
3,061,105
2,683,707
813,193 - - 813,193
713,277 - - 713,277
$ 7,271,282 $ 134,318,679 $ - 141,589,961
* Not subject to fair value measurement hierarchy.
55
2,653,839
50,937,339
1,115,389
26,746,410
202,665
53,983
$ 223,299,586
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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, 2019,
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, 2019, was $33,796. An allowance of $33,796 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, 2019, including accrued interest of $16,472, was $478,405. An allowance of $478,405 has
been recorded to reflect the amount of the note not expected to be collectible.
Boys' and Girls' Club Roof Loan: On January 7, 2019, the City executed a promissory note with the
Boys' and Girls' Club of Tustin (the Club) in the amount of $86,000 to assist in roof replacements of
the Club's facility. The loan is payable over 15 years at 2% interest per annum with annual
installments of principal and interest in the amount of $6,693 commencing on January 11, 2020. The
total outstanding balance at June 30, 2019, including accrued interest of $807, was $86,807.
NOTE 4 - INTERFUND TRANSFERS
The composition of interfund transfers for the year ended June 30, 2019, is as follows:
Transfers In Transfers Out Amount
General Fund Measure M Special Revenue Fund $ 164,379
Other Governmental Funds 6,089,647
Other Governmental Funds General Fund 1,027,745
$ 7,281,771
56
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 4 - INTERFUND TRANSFERS (CONTINUED)
The transfers during the fiscal year ended June 30, 2019, were for the following purposes:
Measure M Special Revenue Fund transferred $164,379 to the General Fund to pay for services
provided for Measure M.
The General Fund transferred $41,402 to the other governmental funds to eliminate negative cash until
reimbursement is received from the fiscal agent.
Other governmental funds transferred $369,711 to the General Fund to pay for services provided for
AD 95-1 Construction.
Other governmental funds transferred $1,939,943 to the General Fund to repay amounts transferred to
cover negative cash in prior years.
Other governmental funds transferred $3,779,993 to the General Fund to pay for public safety services
provided for the Special Tax B area.
The General fund transferred $986,343 to other governmental funds to cover the first year of the Tustin
Temporary Homeless Shelter.
NOTE 5 - LAND HELD FOR RESALE
Land held for resale as of June 30, 2019, consisted of the following:
Pacific Center East*
Tustin Legacy
2061 Valhalla Drive
11781 Outlook Lane
Total Land Held for Resale
$ 30,787,557
51,453,256
1,959,150
1,806,197
$ 86,006,160
*Pacific Center East includes several parcels bordered by Del Amo, Valencia, Edinger and Newport Avenue.
During fiscal year 2018-19, the Housing Authority sold land held for resale for a gain of $395,281. In
addition, the City purchased two properties in the water enterprise fund in the amounts of $1,959,150
and $1,806,197 to facilitate and provide cost savings in capital project constructions. These properties
will be sold at fair market value upon project completion.
57
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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.
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.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED)
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.
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, 2019, was $51,453,256. The value of the
parcels was recorded at estimated value at the time of conveyance. The remaining property not sold
will be park space or conveyed to other governmental agencies.
59
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 7 - CAPITAL ASSETS
A summary of changes in the Governmental Activities capital assets for the year ended June 30, 2019,
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:
Balance at
June 30, 2018
Additions
Deletions/
Transfers
Balance at
June 30, 2019
$ 83,054,787 $ - $ - $ 83,054,787
43,758,156 - - 43,758,156
56,732,470 33,773,761 (11,652,825) 78,853,406
183,545,413 1 33,773,761 (11,652,825) 205,666,349
74,466,210
1,754,558 (1,138,311) 75,082,457
30,584,312
- - 30,584,312
19,460,220
483,355 (299,876) 19,643,699
358,973,271
9,898,267 (196,522) 368,675,016
483,484,013 12,136,180 (1,634,709) 493,985,484
Buildings
(20,040,806)
(1,510,325)
193,431 (21,357,700)
Improvements other than buildings
(8,583,170)
(1,068,027)
- (9,651,197)
Machinery and equipment
(12,712,734)
(1,617,235)
289,951 (14,040,018)
Infrastructure
(126,231,081)
(8,094,396)
88,113 (134,237,364)
Total accumulated
depreciation (167,567,791) (12,289,983) 571,495 (179,286,279)
Total capital assets,
being depreciated, net 315,916,222 (153,803) (1,063,214) 314,699,205
Total governmental activities
capital assets, net $ 499,461,635 $ 33,619,958 $ (12,716,039) $ 520,365,554
Depreciation expense was charged to functions/programs of the governmental activities as follows:
General government
Public safety
Public works
Community services
60
$ 266,918
647,604
10,624,237
751,224
$ 12,289,983
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 7 - CAPITAL ASSETS (CONTINUED)
A summary of changes in the Business -type Activity capital assets for the year ended June 30, 2019, is
as follows:
Capital assets, not depreciated:
Land
Construction in progress
Total capital assets,
not depreciated
Capital assets, being depreciated:
Buildings and improvements
Property, plant and equipment
Total capital assets,
being depreciated
Less accumulated depreciation for:
Buildings and improvements
Property, plant and equipment
Total accumulated
depreciation
Total capital assets,
being depreciated, net
Total business -type activity
capital assets, net
Balance at
June 30, 2018 Additions
$ 1,177,216 $ -
2,801,747 2,607,390
3,978,963 2,607,390
9,500,377
65,826,863
75,327,240
(5,617,200) (209,207)
(25,824,729) (1,709,245)
(31,441,929) (1,918,452)
43,885,311 (1,918,452)
Deletions/ Balance at
Transfers June 30, 2019
$ - $ 1,177,216
- 5,409,137
- 6,586,353
- 9,500,377
- 65,826,863
- 75,327,240
- (5,826,407)
(27,533,974)
(33,360,381)
41,966,859
$ 47,864,274 $ 688,938 $ - $ 48,553,212
61
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 8 - LONG-TERM LIABILITIES
A summary of long-term liability activity for the year ended June 30, 2019, is as follows:
62
Balance
Balance
Due Within
July 1, 2018
Additions
Deletions
June 30, 2019
One Year
Governmental Activities:
Claims and judgments (Note 12)
$ 5,085,858
$ 4,017,447
$ (2,657,829)
$
6,445,476
$ 6,445,476
Lease payable
271,162
-
(71,908)
199,254
74,763
Compensated absences
3,317,285
2,955,518
(2,851,506)
3,421,297
3,079,167
Total governmental activities
long-termliabilities
$ 8,674,305
$ 6,972,965
$ (5,581,243)
$
10,066,027
$ 9,599,406
Business -type Activity:
Direct Borrowings:
2012 Refunding
Water Revenue Bonds
$ 4,455,000
$ -
$ (830,000)
$
3,625,000
$ 860,000
Bond premium
388,344
-
(81,757)
306,587
-
2013 Water Revenue bonds
13,860,000
-
(50,000)
13,810,000
50,000
Bond premium
99,586
-
(3,943)
95,643
-
2016 Refunding
Water Revenue Bonds
21,515,000
-
-
21,515,000
-
Bond premium
1,223,061
-
(52,605)
1,170,456
-
Compensated absences
232,661
244,564
(223,351)
253,874
228,486
Total bus ines s -type activity
long-term liabilities
$ 41,773,652
$ 244,564
$ (1,241,656)
$
40,776,560
$ 1,138,486
62
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 8 - LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities
Lease Pqyable
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 $9,299 and
principal payments of $71,908. At June 30, 2019, the outstanding principal amount was $199,254.
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, 2019.
Minimum
Year Ending Lease
June 30, Payments
2020 $ 81,207
2021 81,207
2022 47,370
Subtotals $ 209,784
Less: amounts representing interest (10,530)
Present value of net minin= lease payments $ 199,254
The assets acquired through the capital lease are as follows:
Equipment
Less: accumulated depreciation
63
$ 368,356
(184,178)
$ 184,178
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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, 2019, is $202,727.
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, 2019, total
interest and principal remaining on the bonds is $3,987,700. During the fiscal year, the total interest
expense incurred was $165,475, principal payments were $830,000, and net revenues were $4,359,752.
The annual debt service requirements to amortize the bonds are as follows:
June 30,
2020
2021
2022
2023
Subtotals
Add: Premium
Totals
Principal
$ 860,000
885,000
920,000
960,000
$ 3,625,000
306,587
Interest
$ 138,500
110,600
75,200
38,400
$ 362,700
Total
$ 998,500
995,600
995,200
998,400
$ 3,987,700
306,587
$ 3,931,587 $ 362,700 $ 4,294,287
64
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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, 2019, total
interest and principal remaining on the bonds is $25,585,372. During the fiscal year, the total interest
expense incurred was $650,320, principal payments were $50,000, and net revenues were $4,359,752.
The annual debt service requirements to amortize the bonds are as follows:
June 30,
2020
2021
2022
2023
2024
2025- 2029
2030-2034
2035- 2039
2040-2044
Subtotals
Add: Premium
Principal
$ 50,000
55,000
55,000
55,000
320,000
1,820,000
2,235,000
2,790,000
6,430,000
$ 13,810,000
95,643
Interest Total
$ 698,320
701,320
698,570
695,820
958,070
4,803,845
4,810,907
4,802,775
7,415,745
$ 25,585,372
95,643
$ 648,320
646,320
643,570
640,820
638,070
2,983,845
2,575,907
2,012,775
985,745
$ 11,775,372
Totals $ 13,905,643 $ 11,775,372 $ 25,681,015
65
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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, 2019, 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, 2019, is $2,913,650.
The City has pledged net revenues received from the operation of the 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, 2019, total
interest and principal remaining on the bonds is $31,391,863. During the fiscal year, the total interest
expense incurred was $687,300, no principal payment was due, and net revenues were $4,359,752.
66
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
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:
June 30,
2020
2021
2022
2023
2024
2025- 2029
Principal
905,000
4,900,000
Interest
$ 687,300
687,300
687,300
687,300
687,300
3,057,625
2030-2034 5,790,000 2,168,063
2035- 2039 6,880,000 1,077,275
2039-2043 3,040,000 137,400
Subtotals $ 21,515,000 $ 9,876,863
Add: Premium 1,170,456
Total
$ 687,300
687,300
687,300
687,300
1,592,300
7,957,625
7,958,063
7,957,275
3,177,400
$ 31,391,863
1,170,456
Totals $ 22,685,456 $ 9,876,863 $ 32,562,319
NOTE 9 - 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 (Ca1PERS), 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. CalPERS issues publicly available reports that
include a full description of the pension plans regarding benefit provisions, assumptions and
membership information that can be found on the CalPERS website.
M
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 9 - 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, measurement date 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, 2019
NOTE 9 - 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, measurement date are summarized as
follows:
Monthly benefits, as a % of
eligible compensation 3% 2% 2.7%
Required employee contribution rates 9% 9% 11.5%
Required employer contribution rates:
Normal cost rate 19.723% 14.971% 11.990%
Payment of unfunded liability $ 1,454,675 $ - $ 709
Employees Covered
At June 30, 2018, measurement date, the following employees were covered by the benefit terms
for the Miscellaneous Plan:
Inactive employees or beneficiaries currently receiving benefits 261
Inactive employees entitled to but not yet receiving benefits 301
Active employees 199
Total 761
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 Ca1PERS' 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.
69
Safety
Prior to
January 1, 2012 to
On or After
Hire date
January 1, 2012
December 31, 2012
January 1, 2013
Benefit formula
3%@50
2%@50
2.7%@57
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+
50+
Monthly benefits, as a % of
eligible compensation 3% 2% 2.7%
Required employee contribution rates 9% 9% 11.5%
Required employer contribution rates:
Normal cost rate 19.723% 14.971% 11.990%
Payment of unfunded liability $ 1,454,675 $ - $ 709
Employees Covered
At June 30, 2018, measurement date, the following employees were covered by the benefit terms
for the Miscellaneous Plan:
Inactive employees or beneficiaries currently receiving benefits 261
Inactive employees entitled to but not yet receiving benefits 301
Active employees 199
Total 761
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 Ca1PERS' 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.
69
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 9 - 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, 2018, using an annual actuarial valuation as of June 30, 2017 rolled forward to June 30,
2018 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, 2017 actuarial valuations were determined using the
following actuarial assumptions:
Miscellaneous Safety
Valuation Date June 30, 2017 June 30, 2017
Measurement Date June 30, 2018 June 30, 2018
Actuarial Cost Method Entry -Age Normal Entry -Age Normal
Cost Method Cost Method
Actuarial Assumptions:
Discount Rate 7.15% 7.15%
Inflation 2.50% 2.50%
Projected Salary Increase (1) (1)
Mortality Rate Table (2) (2)
Post Retirement Benefit Income (3) (3)
(1) Varies by entry age and service.
(2) The mortality table used was developed based on CalPERS-specific data. The table
includes 15 years of mortality improvements using the Society of Actuaries Scale 90% of
scale MP 2016. For more details on this table, please refer to the December 2017
experience study report (based on CalPERS demographic data from 1997 to 2015) that
can be found on the CalPERS website.
(3) Contract COLA up to 2.00% until Purchasing Power Protection Allowance Floor on
Purchasing Power applies, 2.50% thereafter.
70
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 9 - PENSION PLANS (CONTINUED)
b. Net Pension Liability (Continued)
Long-term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, Ca1PERS took into account both short-term
and long-term market return expectations as well as the expected pension fund cash flows. Using
historical returns of all the funds' asset classes, expected compound (geometric) returns were
calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block
approach. Using the expected nominal returns for both short-term and long-term, the present value
of benefits was calculated for each fund. The expected rate of return was set by calculating the
rounded single equivalent expected return that arrived at the same present value 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 equal to the single equivalent rate calculated above and adjusted to account for
assumed administrative expenses. The expected real rates of return by asset class are as follows:
(a) In the CaIPERS CAFR, Fixed Income is included in Global Debt Securities; Liquidity is
included in Short-term Investments; Inflation Assets are included in both Global Equity
Securities and Global Debt Securities
(b) An expected inflation of 2.0% used for this period
(c) An expected inflation of 2.92% used for this period
71
Assumed
Real Return
Real Return
Asset
Years
Years
Asset Class (a)
Allocation
1 - 10 (b)
11+ (c)
Global Equity
50.00%
4.80%
5.98%
Fixed Income
28.00%
1.00%
2.62%
Inflation Assets
0.00%
0.77%
1.81%
Private Equity
8.00%
6.30%
7.23%
Real Assets
13.00%
3.75%
4.93%
Liquidity
1.00%
-0.40%
0.92%
Total
100.00%
(a) In the CaIPERS CAFR, Fixed Income is included in Global Debt Securities; Liquidity is
included in Short-term Investments; Inflation Assets are included in both Global Equity
Securities and Global Debt Securities
(b) An expected inflation of 2.0% used for this period
(c) An expected inflation of 2.92% used for this period
71
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 9 - PENSION PLANS (CONTINUED)
b. Net Pension Liability (Continued)
Discount Rate
The discount rate used to measure the total pension liability was 7.15%. The projection of cash
flows used to determine the discount rate assumed that contributions from plan members will be
made at the current member contribution rates and that contributions from employers will be made
at statutorily required rates, actuarially determined. Based on those assumptions, the Plan's
fiduciary net position was projected to be available to make all projected future benefit payments
of current plan members. Therefore, the long-term expected rate of return on plan investments was
applied to all periods of projected benefit payments to determine the total pension liability.
Subsequent Events
There were no subsequent events that would materially affect the results in this disclosure.
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, 2017
(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 plan to plan resource movement
Other miscellaenous expense
Net Changes
Balance at June 30, 2018
(Measurement Date)
Increase (Decrease)
Total
Plan
Net Pension
Pension
Fiduciary
Liability
Liability
Net Position
(Asset)
(7,268,642)
- (134,170)
134,170
$113,060,714
$ 86,101,744
$ 26,958,970
2,402,594 - 2,402,594
8,052,611 - 8,052,611
1,050,413 -
1,050,413
(426,547) -
(426,547)
- 2,249,216
(2,249,216)
- 1,043,932
(1,043,932)
- 7,268,642
(7,268,642)
- (134,170)
134,170
(4,523,921) (4,523,921) -
(213) 213
- (254,792) 254,792
6.555.150 5.648.694 906.456
$119,615,864 $ 91,750,438 $ 27,865,426
72
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 9 - PENSION PLANS (CONTINUED)
c. Changes in the Net Pension Liability (Continued)
As of June 30, 2019, the City reported $36,911,786 of liabilities for its proportionate share of the
net pension liability for the Safety Plan.
The City's net pension liability for the Safety Plan is measured as the proportionate share of the net
pension liability. The net pension liability of the Safety Plan is measured as of June 30, 2018, and
the total pension liability for the Safety Plan used to calculate the net pension liability was
determined by an actuarial valuation as of June 30, 2017 rolled forward to June 30, 2018 using
standard update procedures. The City's proportionate share of the net pension liability was based
on a projection of the City's long-term share of contributions to the pension plans relative to the
projected contributions of all participating employers, actuarially determined.
The City's proportionate share of the net pension liability for the Safety Plan as of measurement
dates ended June 30, 2017 and 2018 was as follows:
Safety
Proportion - June 30, 2017 0.60938%
Proportion - June 30, 2018 0.62908%
Change - Increase (Decrease) 0.01970%
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 $ 44,512,273
Current Discount Rate 7.15%
Net Pension Liability $ 27,865,426
1% Increase 8.15%
Net Pension Liability $ 14,168,383
Pension Plan Fiduciary Net Position
Safety
6.15%
$ 57,032,123
7.15%
$ 36,911,786
8.15%
$ 20,426,774
Detailed information about each pension plan's fiduciary net position is available in the separately
issued Ca1PERS financial reports.
73
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 9 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2019, the City recognized pension expense of $5,620,021 and
$6,045,626 for the Miscellaneous and Safety Plans, respectively. At June 30, 2019, 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
74
Miscellaneous
Deferred
Outflows
of Resources
$ 4,373,702
688,202
1,882,846
Deferred
Inflows
of Resources
(210,708)
(279,462)
200,481 -
$ 7,145,231 $ (490,170)
Safety
Deferred Deferred
Outflows Inflows
of Resources of Resources
$ 5,291,308
793,109
3,621,690
154,801
249,910
$ 10,110,818
(3,009)
(488,631)
(494,646)
$ (986,286)
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 9 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
$4,373,702 and $5,291,308 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, 2020. 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 3 0,
2020
2021
2022
2023
2024
Thereafter
e. Payable to the Pension Plans
Miscellaneous
Safety
2,977,076
$ 3,105,490
433,295
1,897,968
(891,444)
(914,566)
(237,568)
(255,668)
At June 30, 2019, the City had no outstanding amount of contributions to the pension plans
required for the year ended June 30, 2019.
NOTE 10 - 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). The City has an OPEB trust with
PARS where the assets are held 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.
75
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 10 - 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
At June 30, 2019, measurement date, the benefit terms covered the following employees:
Inactive employees, spouses, or beneficiaries currently receiving benefit payments 113
Active employees 284
Total Plan Participants 397
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 measurement period ending June 30, 2019, the
City contributed $500,000 to the PARS OPEB trust, made payments of $480,087 to insurance
providers and retirees, and the estimated implied subsidy was $297,598, resulting in total
contributions of $1,277,685. The liability for governmental activities is primarily liquidated from
the general fund.
76
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 10 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
b. Net OPEB Lability
The City's net OPEB liability was measured as of June 30, 2019 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, 2019 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
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Expected long term
investment rate of return
Inflation
Salary Increase
Healthcare Cost Trend Rates
Mortality
June 30, 2017
June 30, 2019
Entry -Age Normal Level Percentage of Salary
6.25%
6.25%
2.50%
2.75%. Additional merit -based increases based
on CalPERS merit salary increase tables.
6.50% in the first year, trending down to
3.84% over 57 years
Based on CaIPERS tables
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.
77
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 10 - 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, 2019 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% 7.14%
45.00% 4.47%
5.00% 2.10%
100.00%
The discount rate used to measure the total OPEB liability was 6.25%. 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.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 10 - 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, 2018
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total OPEB liability
Changes in assumptions
Contribution - employer
Net investment income
Benefit payments
Net Changes
Balance at June 30, 2019
(Measurement Date)
Change of Assumptions
Increase (Decrease)
Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability
$ 14,895,890
735,504
890,622
(398,848)
(777,685)
449,593
$ 1,003,283 $ 13,892,607
1,277,685
77,171
(777,685)
577,171
735,504
890,622
(398,848)
(1,277,685)
(77,171)
(127,578)
$ 15,345,483 $ 1,580,454 $ 13,765,029
From measurement date June 30, 2018 to measurement date June 30, 2019, there were the
following changes of assumptions: (1) the discount rate increased from 6.00% to 6.25%,
respectively, due to the change in expected levels of investment returns; (2) the inflation rate
decreased from 2.75% to 2.50%, respectively; (3) the salary increase changed from 2.875% to
2.75%, respectively. Measurement date June 30, 2018 also contained healthcare cost trend rates of
7.00% trending down to 3.84% over 58 years while June 30, 2019 contained healthcare cost trend
rates from 6.50% trending down to 3.84% over 57 years.
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.
79
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 10 - 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 or
1 -percentage point higher than the current discount rate:
Net OPEB Liability
I% Decrease
(5.25%)
$ 15,886,883
Discount Rate
(6.25%)
$ 13,765,029
1% Increase
(7.25%)
$ 12,013,478
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 or 1 -percentage point higher than the current healthcare cost trend rates:
Net OPEB Liability
I% Decrease
(5.5% decreasing
to 2.84%)
$ 12,289,352
Current Healthcare
Cost Trend Rates
(6.5% decreasing
to 3.84%)
$ 13,765,029
I% Increase
(7.5% decreasing
to 4.84%)
$ 15,638,908
d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2019, the City recognized OPEB expense of $1,507,893 At
June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Change in assumptions
Differences between projected and actual earnings
Total
01
Deferred
Outflows
of Resources
Deferred
Inflows
of Resources
$ (356,864)
(3,548)
$ (360,412)
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 10 - 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 30,
Amount
2020
$ (43,036)
2021
(43,036)
2022
(43,034)
2023
(42,378)
2024
(41,984)
Thereafter
(146,944)
e. Payable to the OPEB Plan
At June 30, 2019, the City had no outstanding amount of contributions to the OPEB plan required
for the year ended June 30, 2019.
NOTE 11- 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 2019 were $72,830.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 12 - SELF-INSURANCE PROGRAMIRISK 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 $20,000,000 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
$2,000,000. Property, pollution, cyber 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 $20,000,000 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 366 San Miguel Drive, 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, 2019. At June 30, 2019, estimated claims payable of $6,445,476, 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, 2019 and 2018, including a
provision for incurred but not reported claims and loss adjustment expenses, were as follows:
Beginning
June 30, Balance
2018 $ 5,523,351
2019 5,085,858
Additions
$ 3,934,156
4,017,447
Ending
Deletions Balance
$ (4,371,649) $ 5,085,858
(2,657,829) 6,445,476
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 13 - 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 refund in
full and defease the City of Tustin Community Facilities District No. 04-1 Special Tax Bonds,
Series 2004. The 2004 series was 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, 2014 to
September 1, 2032. Term current interest bonds will mature on September 1, 2034, with mandatory
sinking payments from September 1, 2033 through September 1, 2034. Interest maturity rates of the
current interest bonds range from 2.00% at September 1, 2014 to 5.00% at September 1, 2024. At
June 30, 2019, the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was
$7,800,000.
Amount
Outstanding
District Bonds
of Issue
June 30, 2019
Community
Facilities District 04-1, 2013
$ 9,350,000
$ 7,800,000
Community
Facilities District 06-1, 2015A
49,740,000
46,460,000
Community
Facilities District 06-1, 2015B
2,735,000
2,475,000
Community
Facilities District 07-1, 2015A
13,155,000
13,155,000
Community
Facilities District 07-1, 2015B
1,500,000
570,000
Community
Facilities District 2014-01, 2015A
27,665,000
27,110,000
$ 104,145,000
$ 97,570,000
In May 2013, the City issued $9,350,000 of Special Tax Refunding Bonds, Series 2013, to refund in
full and defease the City of Tustin Community Facilities District No. 04-1 Special Tax Bonds,
Series 2004. The 2004 series was 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, 2014 to
September 1, 2032. Term current interest bonds will mature on September 1, 2034, with mandatory
sinking payments from September 1, 2033 through September 1, 2034. Interest maturity rates of the
current interest bonds range from 2.00% at September 1, 2014 to 5.00% at September 1, 2024. At
June 30, 2019, the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was
$7,800,000.
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 13 - 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, 2019, the outstanding amount of the CFD 2014-01 2015A Special Tax Bonds was
$27,110,000.
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, 2019, 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, 2019, the outstanding amount of the CFD 07-1 Special Tax 2015B
Bonds was $570,000.
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, 2019, the outstanding amount of the CFD 06-01 2015A Refunding Bonds was
$46,460,000
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 13 - 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, 2019, the outstanding
amount of the CFD 06-1 Special Tax 2015B Bonds was $2,475,000.
NOTE 14 - 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.
HN
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 14 - 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.
Measure M Other Total
General Special Revenue Governmental Governmental
Fund Fund Funds Funds
Nonspendable:
Prepaid items
$ 661,317
$ - $ 1,922
$ 663,239
Land held for resale
82,240,813
- -
82,240,813
Restricted for:
Capital projects (1)
25,564,621
5,640,922 26,832,608
58,038,151
Public safety program
-
- 349,638
349,638
Housing projects
-
- 4,379,660
4,379,660
Solid waste program
13,075
13,075
Pension
5,686,272
- -
5,686,272
Assigned to:
Capital projects (2)
-
- 5,762,048
5,762,048
Unassigned
88,768,803
- -
88,768,803
Total fund balances
$ 202,921,826
$ 5,640,922 $ 37,338,951
$ 245,901,699
(1) Restricted for capital projects:
• General Fund $25,564,621 - legally restricted for backbone infrastructure at the Tustin Legacy
development.
• Measure M Special Revenue Fund $5,640,922 - state gas taxes restricted for allowable street -
related purposes.
• Other Governmental Funds:
o CFD Construction Capital Projects Fund $13,169,322 - comprised of bond proceeds restricted
for uses specified in the bond indenture.
o Gas Tax Special Revenue Fund $4,910,981 - comprised of state gas taxes restricted for
allowable street -related purposes.
o Park Acquisition and Development Special Revenue Fund $4,533,993 - comprised of developer
fees restricted for improvement of City parks.
o Construction 95-1 Capital Projects Fund $1,626,711 - restricted for uses specified in the bond
indenture.
o Road Maintenance and Rehabilitation Special Revenue Fund $1,585,980 - restricted for
maintenance and rehabilitation of streets.
o Other Capital Projects Fund $35,992 and MCAS 2010 Capital Projects Fund $539,737 -
retention amounts withheld in restricted escrow accounts to be paid to contractors once projects
are completed
o Air Quality Special Revenue Fund $429,882 - restricted for projects to reduce pollution
(2) Assigned to capital projects
• Other Capital Projects Fund $4,918,468 — for specific projects indicated in the adopted budget.
• MCAS 2010 Capital Projects Fund $843,580 — for financing development activities within or for
the benefit of the MCAS -Tustin redevelopment project area as indicated by the 2010 MCAS bond
indenture.
El -rel
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 15 - OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES
Excess of Expenditures over Appropriations
Budget
Other Governmental Funds:
Supplemental Law Enforcement
Special Revenue Fund $ 135,639
NOTE 16 - JOINT PO WERS A UTHORITY
Orange County Fire Authority
Actual
$ 153,060
Variance with
Final Budget
$ (17,421)
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.
Orange County Housing Finance Trust
In May 2019, the City of Tustin entered into a joint powers agreement with Cities throughout the
county and the County of Orange (County) to create the Orange County Housing Finance Trust
(OCHFT). The purpose of the OCHFT is to fund the planning and construction of housing of all types
and tenures for the homeless population and persons and families of extremely low, very low, and low
income as defined in the Section 50093 of the Health and Safety Code, including but not limited to,
permanent supportive housing, and to receive public and private financing and funds.
HM
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 16 - JOINT POWERS AUTHORITY (CONTINUED)
Orange County Housing Finance Trust (Continued)
The OCHFT's governing board consists of nine members: two members of the Board of Supervisors of
the County, two countywide elected officials, one city council member for each city member with the
greatest population in the North, Central, and South Region Service Planning Area, as depicted in the
agreement, and two city council members selected from member cities that are not already represented.
The County is responsible for OCHFT's administrative costs for one year following the creation of
OCHFT. After the initial year, the member cities will make annual contributions towards the budgeted
administrative costs in accordance with a cost allocation formula approved by the governing board.
The particular programs and program budget, funded, sponsored or operated by OCHFT, as well as the
level of and mechanisms for, the involvement of OCHFT and each member city, in such programs and
program budget, will be determined and approved by the governing board. A member city's individual
contribution, involvement and role in any particular program or budgeted program costs will be
mutually agreed to between the member city and OCHFT.
The financial statements of the Orange County Housing Finance Trust are available at 333 W. Santa
Ana Blvd, Santa Ana, California.
NOTE 17 - 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:
Long -Term Liabilities
A summary of long-term liabilities activity for the year ended June 30, 2019, is as follows:
Balance
June 30, 2018
Tax allocation bonds $ 53,915,000
Unamortized premium 6,070,032
$
Additions
Balance
Deletions June 30, 2019
$ (1,830,000) $ 52,085,000
(261,077) 5,808,955
Due Within
One Venr
s 1,895,000
Total long-term liabilities $ 59,985,032 $ - $ (2,091,077) $ 57,893,955 $ 1,895,000
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
A GENCY DISCL OS URES (CONTINUED)
Lone -Term Liabilities (Continued)
Tax Allocation Bonds Payable
2016 Tax Allocation RefundingBonds
onds
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 (2010 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, 2019 the amount of defeased 2010 Housing Bonds outstanding was
$17,760,000. The defeased MCAS 2010 Redevelopment Bonds were paid in full on September 1, 2018.
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 2.0% to 5.0% 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, 2019, is $6,579,703.
At June 30, 2019, the 2016 Tax Allocation Refunding Bonds outstanding balance was $52,085,000.
'
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
A GENCY DISCL OS URES (CONTINUED)
Lone -Term Liabilities (Continued)
Tax Allocation Bonds Payable (Continued)
2016 Tax Allocation Refunding Bonds (Continued)
The annual debt service requirements to amortize the tax allocation bonds are as follows:
Year Ending
June 30,
2020
2021
2022
2023
2024
2025- 2029
2030-2034
2035- 2039
2040-2041
Principal
$ 1,895,000
1,965,000
2,050,000
2,130,000
2,215,000
12,215,000
11,070,000
13,350,000
5,195,000
Totals $ 52,085,000
Interest
$ 2,017,825
1,940,625
1,860,325
1,776,725
1,689,825
6,822,225
4,134,638
1,858,700
146,025
$ 22,246,913
Total
$ 3,912,825
3,905,625
3,910,325
3,906,725
3,904,825
19,037,225
15,204,638
15,208,700
5,341,025
$ 74,331,913
NOTE 18 - SCHOOL FACILITIES IMPLEMENTATION COMMITMENT
In August 2015, the City entered into a School Facilities Implementation, Funding and Migration
Agreement (I/M Agreement) as amended 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.
O1
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2019
NOTE 18 - SCHOOL FACILITIES IMPLEMENTATION COMMITMENT
The total obligation under the I/M Agreement with TUSD is the lesser of the actual cost to construct
TUSD facilities or $85,000,000. In January 2019, the City advanced $14,958,598 to TUSD to provide
the remaining funds necessary to fund both: (a) the Legacy Magnet Academy classroom building for
grades 6-9 along with associated parking and athletic fields, and (b) the Administration Building
portion of the Legacy Magnet Academy 6-12 School Project. These expenses are expected to be offset
by a credit the City will receive from TUSD in the amount of $11,849,685 which credit will be
redeemable by the City against any future prepayment by the City of the special tax obligations within
CFD 15-2. As of January 2019, the City's total contributions to TUSD under the I/M agreement
including the funds advanced in January 2019 was $60,414,097. The balance remaining under the IM
is $24,585,903.
NOTE 19 - 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 20 - SUBSEQUENT EVENTS
In July 2019, the City executed a Disposition and Development Agreement with SchoolsFirst Federal
Credit Union for the conveyance of approximately 1.8 acres of City -owned property at Pacific Park for
development in the amount of $2,932,000. The property was conveyed to SchoolsFirst in September
2019.
In preparing these financial statements, the City has evaluated other events and transactions for
potential recognition or disclosure through December 12, 2019, the date the financial statements were
available to be issued.
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REQUIRED SUPPLEMENTARY INFORMATION
W,
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CITY OF TUSTIN
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
Measurement period
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
Plan's proportion of the
net pension liability
0.38305%
0.36716%
0.36319%
0.35401%
0.41499%
Plan's proportionate share
of the net pension liability
$ 36,911,786
$ 36,411,988
$ 31,427,228
$ 24,298,906
$ 25,822,675
Plan's covered payroll
$ 9,967,145
$ 10,443,467
$ 10,013,168
$ 9,495,434
$ 9,640,345
Plan's proportionate share
of the net pension liability as a
percentage of covered payroll
370.33%
348.66%
313.86%
255.90%
267.86%
Plan's proportionate share of the
fiduciary net position as a
percentage of the Plan's total
pension liability
75.26%
73.31%
74.06%
78.40%
79.82%
Plan's proportionate share of
aggregate employer contributions
$ 4,600,007
$ 3,520,089
$ 3,193,318
$ 3,182,851
$ 2,544,912
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Changes in Assumptions:
From fiscal year June 30, 2015 to June 30, 2016:
GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment
expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014
measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date
is without reduction of pension plan administrative expense.
From fiscal year June 30, 2016 to June 30, 2017:
There were no changes in assumptions.
From fiscal year June 30, 2017 to June 30, 2018:
The discount rate was reduced from 7.65% to 7.15%
From fiscal year June 30, 2018 to June 30, 2019:
There were no changes in assumptions.
* Fiscal year 2015 was the 1 st year of implementation, therefore only five years are shown.
95
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, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
$ 3,641,308 $ 3,204,833 $ 3,002,977 $ 2,708,192 $ 3,045,919
(5,291,308) (3,204,833) (3,002,977) (2,708,192) (7,049,591)
$ (1,650,000) $ - $ - $ - $ (4,003,672)
$ 9,896,349 $ 9,967,145 $ 10,443,467 $ 10,013,668 $ 9,495,434
53.47% 32.15% 28.75% 27.04% 74.24%
Valuation Date
6/30/2016
6/30/2015
6/30/2014
6/30/2013
Methods and Assumptions Used to Determine Contribution Rates
Actuarial cost method
Entry age
Entry age
Entry age
Entry age
Amortization method
(1)
(1)
(1)
(1)
Asset valuation method
Market Value
Market Value
Market Value
Market Value
Inflation
2.75%
2.75%0
2.75%
2.75%
Salary increases
(2)
(2)
(2)
(2)
Investment rate of return
7.375%(3)
7.50%(3)
7.50%(3)
7.50%(3)
Retirement age
(4)
(4)
(4)
(4)
Mortality
(5)
(5)
(5)
(5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) 3% at 50 and 2% at 50 and 2.7% at 57
(5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study
adopted by the CalPERS Board.
* Fiscal year 2015 was the 1 st year of implementation, therefore only five years are shown.
96
6/30/2012
Entry age
(1)
15 Year
Smoothed
Market Method
2.75%
(2)
7.50%(3)
(4)
(5)
[yMMY�J�IILliylYhl
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
Net plan to plan resource movement
Other miscellaneous expense
Administrative expense
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning of Year
Plan Fiduciary Net Position - End of Year (b)
Net Pension Liability - Ending (a) -(b)
Plan fiduciary net position as a percentage of the
total pension liability
Covered 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, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
$ 2,402,594 $ 2,211,312 $ 1,840,275 $ 1,779,008 $ 1,747,494
8,052,611 7,614,130 7,306,376 6,982,672 6,613,765
(426,547) (737,480) (531,595) 452,122
1,050,413 6,589,964 (1,770,351) -
(4,523,921) (4,300,829) (4,102,189) (3,956,389) (3,974,724)
6,555,150 11,377,097 4,512,867 3,487,062 4,386,535
113,060,714 101,683,617 97,170,750 93,683,688 89,297,153
$ 119,615,864 $ 113,060,714 $ 101,683,617 $ 97,170,750 $ 93,683,688
$ 2,249,216 $ 1,881,701 $ 1,850,072 $ 1,503,081 $ 1,379,562
1,043,932 1,037,304 998,937 905,331 962,617
7,268,642 8,829,526 372,172 1,753,374 11,900,167
(4,523,921) (4,300,829) (4,102,189) (3,956,389) (3,974,724)
(213) - (114) -
(254,792) - - - -
(134,170) (116,299) (48,573) (89,714) -
5,648,694 7,331,403 (929,581) 115,569 10,267,622
86,101,744 78,770,341 79,699,922 79,584,353 69,316,731
$ 91,750,438 $ 86,101,744 $ 78,770,341 $ 79,699,922 $ 79,584,353
$ 27,865,426 $ 26,958,970 $ 22,913,276 $ 17,470,828 $ 14,099,335
76.70% 76.16% 77.47% 82.02% 84.95%
$ 15,403,283 $ 14,684,868 $ 13,828,003 $ 12,847,036 $ 12,270,014
180.91% 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 -tern 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%.
From fiscal year June 30, 2018 to June 30, 2019:
There were no changes in assumptions.
* Fiscal year 2015 was the 1 st year of implementation, therefore only five years are shown.
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:
Valuation Date
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
$ 2,723,702 $ 2,249,217 $ 1,881,701 $ 1,850,100 $ 1,503,081
(4,373,702) (2,249,217) (1,881,701) (1,850,100) (1,503,081)
$ (1,650,000) $ - $ - $ - $ -
$ 16,542,504 $ 15,403,283 $ 14,684,868 $ 13,828,003 $ 12,847,036
26.44% 14.60%
6/30/2016 6/30/2015
12.81% 13.38%
6/30/2014 6/30/2013
Methods and Assumptions Used to Determine Contribution Rates
Actuarial cost method Entry age Entry age
Entry age
Entry age
Amortization method (1) (1)
(1)
(1)
Asset valuation method Market Value Market Value
Market Value
Market Value
Inflation 2.75% 2.75%
2.75%
2.75%
Salary increases (2) (2)
(2)
(2)
Investment rate of return 7.375%(3) 7.50%(3)
7.50%(3)
7.50%(3)
Retirement age (4) (4)
(4)
(4)
Mortality (5) (5)
(5)
(5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) 2.5% at 55 and 2% at 60 and 2% at 62
(5) Mortality assumptions are based on mortality rates resulting from the most recent CaIPERS Experience Study
adopted by the CalPERS Board.
* Fiscal year 2015 was the 1 st year of implementation, therefore only five
years are shown.
98
11.70%
6/30/2012
Entry age
(1)
15 Year
Smoothed
Market Method
2.75%
(2)
7.50%(3)
(4)
(5)
CITY OF TUSTIN
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years*
Fiscal year ended
Measurement date
Total OPEB Liability:
Service cost
Interest on total OPEB liability
Changes of assumptions
Benefit payments
Net Change in Total OPEB Liability
Total OPEB Liability - Beginning of Year
Total OPEB Liability - End of Year (a)
Plan Fiduciary Net Position:
Contributions - employer
Net investment income
Benefit payments
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning of Year
Plan Fiduciary Net Position - End of Year (b)
Net OPEB Liability - Ending (a) -(b)
Plan fiduciary net position as a percentage of the
total OPEB liability
Covered - employee payroll
Net OPEB liability as percentage of
covered - employee payroll
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
June 30, 2019 June 30, 2018
June 30, 2019 June 30, 2018
$ 735,504
890,622
(398,848)
(777,685)
449,593
14,895,890
15,345,483
1,277,685
77,171
(777,685
577,171
1,003,283
1,580,454
$ 13,765,029
10.30%
$ 23,559,635
58.43%
$ 714,949
862,866
686,172
891,643
14,004,247
14,895,890
1,686,172
3,283
686,172
1,003,283
1,003,283
$ 13,892,607
6.74%
$ 24,156,049
57.51%
Changes in Assumptions:
From fiscal year June 30, 2018 to June 30, 2019:
The discount rate increased from 6.00% to 6.25°/x. The inflation rate decreased from 2.75% to 2.50°/x. Salary increase changed
from 2.875% to 2.75%. June 30, 2018 contained healthcare cost trend rates of 7.00% trending down to 3.84% over 58 years
while June 30, 2019 contained healthcare cost trend rates from 6.50% trending down to 3.84% over 57 years.
* Fiscal year 2018 was the first year of implementation; therefore, only two years are shown.
99
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS - OPEB
Last Ten Fiscal Years*
Fiscal year ended
Actuarially determined contribution
Contributions in relation to the actuarially determined contributions
Contribution deficiency (excess)
Covered - employee payroll
Contributions as a percentage of covered - employee payroll
Notes to Schedule:
Valuation Date
June 30, 2019 June 30, 2018
$ 1,780,746 $ 1,729,589
(1,277,685) (1,686,172)
$ 503,061 $ 43,417
$ 23,559,635 $ 24,156,049
5.42%
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 years period
Inflation
2.50%
Assumed payroll growth
2.75%
Healthcare trend rates
7.00%, trending down to 3.84%
Rate of return on assets
6.25%
Mortality rate
CAPERS Rates
Retirement rates
CAPERS Rates
* Fiscal year 2018 was the first year of implementation; therefore, only two years are shown.
100
6.98%
6/30/2017
Retiree Health Plan
Fiscal Year Ended
6/30/2018
6/30/2019
CITY OF TUSTIN
OTHER POST -EMPLOYMENT BENEFIT PLAN
ANNUAL MONEY -WEIGHTED RATE OF RETURN ON INVESTMENTS
For the year ended June 30, 2019
Annual Money -Weighted Rate of Return, Net of Investment Expense (1)
N/A*
6.16%
(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 two years are presented.
* Initial deposit to the OPEB trust was made on June 26, 2018.
101
CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
REVENUES:
Taxes
Licenses and permits
Fines and forfeitures
Investment income
Intergovernmental
Charges for services
Rental income
Other revenue
Profit participation
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, 2019
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
$ 25,649,100
$ 25,649,100
$ 26,332,916
$ 683,816
1,152,674
1,152,674
1,212,696
60,022
976,000
976,000
909,355
(66,645)
731,000
731,000
5,501,731
4,770,731
27,901,339
27,901,339
28,441,706
540,367
2,628,238
2,628,238
1,806,032
(822,206)
1,658,313
1,658,313
1,822,751
164,438
4,381,600
4,381,600
1,684,402
(2,697,198)
-
-
212,651
212,651
65,078,264
65,078,264
67,924,240
2,845,976
27,461,907
35,106,107
24,372,135
10,733,972
34,299,285
35,064,573
33,080,635
1,983,938
7,500,795
8,434,292
8,936,153
(501,861)
4,112,954
19,211,952
18,652,582
559,370
55,528,118
80,878,676
25,576,538
55,302,138
-
-
71,908
(71,908)
-
-
9,297
(9,297)
128,903,059
178,695,600
110,699,248
67,996,352
(63,824,795)
(113,617,336)
(42,775,008)
70,842,328
5,614,785 5,614,785 6,254,026 639,241
- (986,343) (1,027,745) (41,402)
5,614,785 4,628,442 5,226,281 597,839
(58,210,010) (108,988,894) (37,548,727) 71,440,167
240,470,553 240,470,553 240,470,553 -
$ 182,260,543 $ 131,481,659 $ 202,921,826 $ 71,440,167
See accompanying note to required supplementary information.
102
CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
MEASURE M SPECIAL REVENUE FUND
For the year ended June 30, 2019
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
See accompanying note to required supplementary information.
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
$ 25,000
$ 25,000
$ 190,171
$ 165,171
1,835,900
1,835,900
2,522,358
686,458
-
-
400
400
1,860,900
1,860,900
2,712,929
852,029
-
-
2,988
(2,988)
5,891,631
7,515,702
2,283,472
5,232,230
5,891,631
7,515,702
2,286,460
5,229,242
(4,030,731)
(5,654,802)
426,469
6,081,271
(39,000) (39,000) (164,379) (125,379)
(4,069,731) (5,693,802) 262,090 5,955,892
5,378,832 5,378,832 5,378,832 -
$ 1,309,101 $ (314,970) $ 5,640,922 $ 5,955,892
103
CITY OF TUSTIN
Note to Required Supplementary Information
June 30, 2019
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, except for Asset
Forfeiture Special Revenue Fund and Voluntary Workforce Housing Incentive Special Revenue
Fund, 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.
104
SUPPLEMENTARY INFORMATION
105
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106
CITY OF TUSTIN
Other Governmental Funds
June 30, 2019
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 (SB1) 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.
Solid Waste - This fund is used to account for the solid waste program revenues and expenditures.
107
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CITY OF TUSTIN
Other Governmental Funds
June 30, 2019
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.
109
CITY OF TUSTIN
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2019
110
Special Revenue Funds
Park
Acquisition
Supplemental
and
Asset
Air
Law
Housing
Gas Tax
Development
Forfeiture
Quality
Enforcement
Authority
ASSETS
Cash and investments
$
5,149,644
$ 5,353,674
$
201,297
$
401,265
$ 126,916
$
3,468,102
Restricted cash and investments
-
4,169
-
-
-
-
Receivables:
Accounts
128,310
-
-
27,689
-
-
Interest
12,177
12,659
476
949
300
74,739
Loans
-
-
-
-
-
383,796
Allowance for uncollectibles
-
-
-
-
(33,796)
Prepaid items and deposits
-
-
-
-
-
1,922
TOTAL ASSETS
$
5,290,131
$ 5,370,502
$
201,773
$
429,903
$ 127,216
$
3,894,763
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
LIABILITIES:
Accounts payable and
accrued liabilities
$
379,150
$ 836,509
$
787
$
21
$ 7,977
$
186,104
Deposits payable
-
-
-
-
-
-
Unearned revenue
-
-
-
-
-
-
TOTAL LIABILITIES
379,150
836,509
787
21
7,977
186,104
DEFERRED INFLOWS
OF RESOURCES:
Unavailable revenue
-
-
-
-
-
416,539
FUND BALANCES:
Nonspendable
-
-
-
-
-
1,922
Restricted
4,910,981
4,533,993
200,986
429,882
119,239
3,290,198
Assigned
-
-
-
-
-
-
TOTAL FUND BALANCES
4,910,981
4,533,993
200,986
429,882
119,239
3,292,120
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$
5,290,131
$ 5,370,502
$
201,773
$
429,903
$ 127,216
$
3,894,763
110
$ - $ 306,917 $ - $ 13,086 $ - $ 585,611 $ 3,145,083 $ 1,396,838 $ 6,858,083
- - - - 729.928 - - 729,928
- 306,917 - 54,348 - 1,315,539 3,145,083 1,396,838 7,629,273
- - - - - - - - 416,539
- - - - - - - - 1,922
29.413 1.585,980 1.089.462 13,075 1.626.711 35,992 539,737 13,169,332 31,574.981
29,413 1,585,980 1,089,462 13,075 1,626,711 4,954,460 1,383,317 13,169,332 37,338,951
29,413 $ 1,892,897 $ 1,089,462 $ 67,423 $ 1,626,711 $ 6,269,999 $ 4,528,400 $ 14,566,170 $ 45,384,763
U
Special Revenue Funds (Continued)
Capital Projects Funds
Road
Voluntary
Total
Maintenance
Workforce
Other
Other
Special
and
Housing
Solid
Construction
Capital
MCAS
CFD
Governmental
Tax B
Rehabilitation
Incentive
Waste
95-1
Projects
2010
Construction
Funds
$ -
$ 1,623,399
$ 1,086,892
$ 67,264
$ 1,626,711
$ 6,097,413
$ 3,979,254
$ 81,067
$ 29,262,898
-
-
-
-
-
35,992
539,737
14,485,103
15,065,001
29,413
269,498
-
-
-
122,176
-
-
577,086
-
-
2,570
159
-
14,418
9,409
-
127,856
-
-
-
-
-
-
-
-
383,796
-
-
-
-
-
-
-
(33,796)
-
-
-
-
-
-
-
-
1,922
$ 29,413
$ 1,892,897
$ 1,089,462
$ 67,423
$ 1,626,711
$ 6,269,999
$ 4,528,400
$ 14,566,170
$ 45,384,763
$ - $ 306,917 $ - $ 13,086 $ - $ 585,611 $ 3,145,083 $ 1,396,838 $ 6,858,083
- - - - 729.928 - - 729,928
- 306,917 - 54,348 - 1,315,539 3,145,083 1,396,838 7,629,273
- - - - - - - - 416,539
- - - - - - - - 1,922
29.413 1.585,980 1.089.462 13,075 1.626.711 35,992 539,737 13,169,332 31,574.981
29,413 1,585,980 1,089,462 13,075 1,626,711 4,954,460 1,383,317 13,169,332 37,338,951
29,413 $ 1,892,897 $ 1,089,462 $ 67,423 $ 1,626,711 $ 6,269,999 $ 4,528,400 $ 14,566,170 $ 45,384,763
U
CITY OF TUSTIN
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
REVENUES:
Taxes
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 IN
FUND BALANCES
FUND BALANCES -
BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
For the year ended June 30, 2019
Special Revenue Funds
978,956 48,054 -
- - 134,166
1,399,725 2,018,185 -
2,378,681 2,066,239 134,166
208 - -
- 120,250 -
- - 951,072
- 32,810 -
208 153,060 951,072
(491,087) (449,788) 61,882 118,268 37,418 (429,985)
(491,087) (449,788) 61,882 118,268
- 986,343
- 986,343
37,418 556,358
5,402,068 4,983,781 139,104 311,614 81,821 2,735,762
$ 4,910,981 $ 4,533,993 $ 200,986 $ 429,882 $ 119,239 $ 3,292,120
112
Park
Acquisition
Supplemental
and
Asset
Air
Law
Housing
Gas Tax
Development
Forfeiture
Quality
Enforcement
Authority
196,645
188,987
6,189
11,671
3,894
109,150
1,690,949
1,170,979
189,859
106,805
186,584
-
-
19,101
-
-
-
-
-
232,384
-
-
-
-
-
5,000
-
-
-
16,656
-
-
-
-
-
395,281
1,887,594
1,616,451
196,048
118,476
190,478
521,087
978,956 48,054 -
- - 134,166
1,399,725 2,018,185 -
2,378,681 2,066,239 134,166
208 - -
- 120,250 -
- - 951,072
- 32,810 -
208 153,060 951,072
(491,087) (449,788) 61,882 118,268 37,418 (429,985)
(491,087) (449,788) 61,882 118,268
- 986,343
- 986,343
37,418 556,358
5,402,068 4,983,781 139,104 311,614 81,821 2,735,762
$ 4,910,981 $ 4,533,993 $ 200,986 $ 429,882 $ 119,239 $ 3,292,120
112
- - - 2,279 851 1,030,348
- - - - - 254,416
- - - 43,391 - - 125,949 - 169,340
- - - - - - - - 951,072
- 406,723 - - - 6,789,267 11,106,065 9,776,283 31,529,058
- 406,723 - 43,391 - 6,791,546 11,232,014 9,777,134 33,934,234
3,793,830 1,103,317 948,060 13,075 - (770,598) (10,808,705) (9,388,392) (16,262,705)
- - - - - - - 41,402 1,027,745
(3,779,993) - - (369,711) - - (1,939,943) (6,089,647)
(3,779,993)
Special Revenue Funds (Continued)
- (1,898,541)
Capital Projects Funds
13,837 1,103,317
948,060 13,075 (369,711)
Road
Voluntary
15,576 482,663
141,402 - 1,996,422
5,725,058 12,192,022 24,456,265
58,663,558
Total
Maintenance
Workforce
Other
Other
Special
and
Housing
Solid
Construction Capital
MCAS
CFD
Governmental
Tax B
Rehabilitation
Incentive
Waste
95-1 Projects
2010
Construction
Funds
$ -
$ -
$ -
$ 52,467
$ - $ -
$ -
$ -
$ 52,467
-
-
14,805
699
- 171,450
388,309
388,742
1,480,541
3,793,830
1,510,040
-
-
- -
-
-
8,649,046
-
-
933,255
3,300
- -
-
-
955,656
-
-
-
-
- -
-
-
232,384
-
-
-
- 5,849,498
35,000
-
5,906,154
-
-
-
-
- -
-
-
395,281
3,793,830
1,510,040
948,060
56,466
- 6,020,948
423,309
388,742
17,671,529
- - - 2,279 851 1,030,348
- - - - - 254,416
- - - 43,391 - - 125,949 - 169,340
- - - - - - - - 951,072
- 406,723 - - - 6,789,267 11,106,065 9,776,283 31,529,058
- 406,723 - 43,391 - 6,791,546 11,232,014 9,777,134 33,934,234
3,793,830 1,103,317 948,060 13,075 - (770,598) (10,808,705) (9,388,392) (16,262,705)
- - - - - - - 41,402 1,027,745
(3,779,993) - - (369,711) - - (1,939,943) (6,089,647)
(3,779,993)
- - (369,711)
- (1,898,541)
(5,061,902)
13,837 1,103,317
948,060 13,075 (369,711)
(770,598) (10,808,705) (11,286,933)
(21,324,607)
15,576 482,663
141,402 - 1,996,422
5,725,058 12,192,022 24,456,265
58,663,558
$ 29,413 $_1,585,980 $ 1,089,462 $ 13,075 $ 1,626,711 $ 4,954,460 $ 1,383,317 $ 13,169,332 $ 37,338,951
113
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
REVENUES:
Investment income
Intergovernmental revenue
Other revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
GAS TAX SPECIAL REVENUE FUND
For the year ended June 30, 2019
1,086,380
1,110,315
978,956
Variance with
2,169,879
3,189,423
1,399,725
Final Budget
Budgeted Amounts
4,299,738
Positive
Original
Final
Actual
(Negative)
$ 15,000
$ 15,000
$ 196,645
$ 181,645
2,007,200
2,007,200
1,690,949
(316,251)
93,600
93,600
-
(93,600)
2,115,800
2,115,800
1,887,594
(228,206)
1,086,380
1,110,315
978,956
131,359
2,169,879
3,189,423
1,399,725
1,789,698
3,256,259
4,299,738
2,378,681
1,921,057
(1,140,459)
(2,183,938)
(491,087)
1,692,851
5,402,068
5,402,068
5,402,068
-
$ 4,261,609
$ 3,218,130
$ 4,910,981
$ 1,692,851
114
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, 2019
EXPENDITURES:
Current:
General government - - 48,054 (48,054)
Capital outlay 3,399,833 5,651,175 2,018,185 3,632,990
TOTAL EXPENDITURES 3,399,833 5,651,175 2,066,239 3,584,936
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (3,126,433) (5,377,775) (449,788) 4,927,987
FUND BALANCE - BEGINNING OF YEAR 4,983,781 4,983,781 4,983,781 -
FUND BALANCE - END OF YEAR $ 1,857,348 $ (393,994) $ 4,533,993 $ 4,927,987
115
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ 50,000
$ 50,000
$ 188,987
$ 138,987
Intergovernmental revenue
-
-
1,170,979
1,170,979
Charges for services
16,000
16,000
19,101
3,101
Rental income
207,400
207,400
232,384
24,984
Other revenue
-
-
5,000
5,000
TOTAL REVENUES
273,400
273,400
1,616,451
1,343,051
EXPENDITURES:
Current:
General government - - 48,054 (48,054)
Capital outlay 3,399,833 5,651,175 2,018,185 3,632,990
TOTAL EXPENDITURES 3,399,833 5,651,175 2,066,239 3,584,936
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (3,126,433) (5,377,775) (449,788) 4,927,987
FUND BALANCE - BEGINNING OF YEAR 4,983,781 4,983,781 4,983,781 -
FUND BALANCE - END OF YEAR $ 1,857,348 $ (393,994) $ 4,533,993 $ 4,927,987
115
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
AIR QUALITY SPECIAL REVENUE FUND
For the year ended June 30, 2019
REVENUES:
Investment income
Intergovernmental revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
Budgeted Amounts
Original Final
$ 1,000 $ 1,000
$ 11,671
106,805
Variance with
Final Budget
Positive
(Negative)
$ 10,671
-
-
208
(208)
100,000
100,000
-
100,000
100,000
100,000
208
99,792
(3,100)
(3,100)
118,268
121,368
311,614
311,614
311,614
-
$ 308,514 $
308,514 $
429,882
$ 121,368
116
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SUPPLEMENTAL LAW ENFORCEMENT SPECIAL REVENUE FUND
For the year ended June 30, 2019
REVENUES:
Investment income
Intergovernmental revenue
TOTAL 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
Budgeted Amounts
Original Final
176,000 176,000
Variance with
Final Budget
Positive
Actual (Negative)
3,894 $ 3,894
190,478 14,478
112,100
118,500
120,250
(1,750)
-
17,139
32,810
(15,671)
112,100
135,639
153,060
(17,421)
63,900
40,361
37,418
(2,943)
81,821
81,821
81,821
-
$ 145,721
$ 122,182 $
119,239
$ (2,943)
117
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
HOUSING AUTHORITY SPECIAL REVENUE FUND
For the year ended June 30, 2019
EXPENDITURES:
Current:
Community services 525,695 1,779,038 951,072 827,966
TOTAL EXPENDITURES 525,695 1,779,038 951,072 827,966
EXCESS OF REVENUES OVER
Variance with
(UNDER) EXPENDITURES
(524,295)
(1,777,638)
Final Budget
OTHER FINANCING USES:
Budgeted Amounts
Positive
Transfers in
Original Final
Actual
(Negative)
REVENUES:
(524,295)
(791,295)
556,358 1,347,653
Investment income
$ - $ -
$ 109,150
$ 109,150
Other revenue
1,400 1,400
16,656
15,256
Gain on sale of land held for resale
- -
395,281
395,281
TOTAL REVENUES
1,400 1,400
521,087
519,687
EXPENDITURES:
Current:
Community services 525,695 1,779,038 951,072 827,966
TOTAL EXPENDITURES 525,695 1,779,038 951,072 827,966
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
(524,295)
(1,777,638)
(429,985) 1,347,653
OTHER FINANCING USES:
Transfers in
-
986,343
986,343 -
NET CHANGE IN FUND BALANCE
(524,295)
(791,295)
556,358 1,347,653
FUND BALANCE - BEGINNING OF YEAR
2,735,762
2,735,762
2,735,762 -
FUND BALANCE - END OF YEAR
$ 2,211,467
$ 1,944,467
$ 3,292,120 $ 1,347,653
118
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, 2019
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 3,630,000 $ 3,630,000 $ 3,793,830 $ 163,830
(3,630,000) (3,630,000) (3,779,993) (149,993)
- - 13,837 13,837
15,576 15,576 15,576 -
$ 15,576 $ 15,576 $ 29,413 $ 13,837
119
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, 2019
120
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Intergovernmental revenue
$ 1,367,900
$ 1,367,900
$ 1,510,040
$ 142,140
EXPENDITURES:
Capital outlay
920,000
920,000
406,723
513,277
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
447,900
447,900
1,103,317
655,417
FUND BALANCE - BEGINNING OF YEAR
482,663
482,663
482,663
-
FUND BALANCE - END OF YEAR
$ 930,563
$ 930,563
$ 1,585,980
$ 655,417
120
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
REVENUES:
Taxes
Investment income
Charges for services
TOTAL REVENUES
EXPENDITURES:
Current:
Public works
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
SOLID WASTE SPECIAL REVENUE FUND
For the year ended June 30, 2019
61,800 64,930 43,391 21,539
61,800 64,930 43,391 21,539
248,200 245,070 13,075 (231,995)
FUND BALANCE - BEGINNING OF YEAR - - - -
FUND BALANCE - END OF YEAR $ 248,200 $ 245,070 $ 13,075 $ (231,995)
121
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
$ 300,000 $ 300,000
$ 52,467
$ (247,533)
- -
699
699
10,000 10,000
3,300
(6,700)
310,000 310,000
56,466
(253,534)
61,800 64,930 43,391 21,539
61,800 64,930 43,391 21,539
248,200 245,070 13,075 (231,995)
FUND BALANCE - BEGINNING OF YEAR - - - -
FUND BALANCE - END OF YEAR $ 248,200 $ 245,070 $ 13,075 $ (231,995)
121
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122
CITY OF TUSTIN
Agency Funds
June 30, 2019
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 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.
123
CITY OF TUSTIN
COMBINING STATEMENT OF ASSETS AND LIABILITIES
ALL AGENCY FUNDS
June 30, 2019
124
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
Cash and investments
$ -
$ 4,776
$ -
$ -
$
$
4,776
Restricted cash and investments
1,130,042
5,971,784
1,744,445
-
3,417,565
12,263,836
Taxes receivable
6,028
32,160
-
-
16,878
55,066
TOTAL ASSETS
$ 1,136,070
$ 6,008,720
$ 1,744,445
$
S 3,434,443
$
12,323,678
LIABILITIES
Due to bondholders
$ 1,136,070
$ 6,008,720
$ 1,744,445
$
S 3,434,443
$
12,323,678
TOTAL LIABILITIES
$ 1,136,070
$ 6,008,720
$ 1,744,445
$
S 3,434,443
$
12,323,678
124
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
For the year ended June 30, 2019
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, 2018
Additions
Deletions
Balance
June 30, 2019
$ - $ 722,955 $ 722,955 $ -
1,080,375 732,947 683,280 1,130,042
8,097 6,028 8,097 6,028
$ 1,088,472 $ 1,461,930 $ 1,414,332 $ 1,136,070
$ - $ 721,580 $ 721,580 $ -
1,088,472 733,030 685,432 1,136,070
$ 1,088,472 $ 1,454,610 $ 1,407,012 $ 1,136,070
$ - $ 3,356,951 $ 3,352,175 $ 4,776
5,746,497 3,436,277 3,210,990 5,971,784
12,286 32,160 12,286 32,160
$ 5,758,783 $ 6,825,388 $ 6,575,451 $ 6,008,720
$ - $ 3,352,175 $ 3,352,175 $ -
5,758,783 3,477,048 3,227,111 6,008,720
$ 5,758,783 $ 6,829,223 $ 6,579,286 $ 6,008,720
COMMUNITY FACILITIES DISTRICT 07-01
ASSETS:
Cash and investments
$
-
$
931,008
$
931,008
$
-
Restricted cash and investments
1,666,713
953,167
875,435
1,744,445
Prepaid items
2,140
-
2,140
-
TOTAL ASSETS
$
1,668,853
$
1,884,175
$
1,808,583
$
1,744,445
LIABILITIES:
Accounts payable
$
-
$
931,008
$
931,008
$
-
Due to bondholders
1,668,853
959,290
883,698
1,744,445
TOTAL LIABILITIES
$
1,668,853
$
1,890,298
$
1,814,706
$
1,744,445
(Continued)
125
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
(CONTINUED)
For the year ended June 30, 2019
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, 2018
Additions
Deletions
Balance
June 30, 2019
$ - $ 417,935 $ 417,935 $ -
$ - $ 417,935 $ 417,935 $ -
$ - $ 3,500 $ 3,500 $ -
- 417,935 417,935 -
$ - $ 421,435 $ 421,435 $ -
$ - $ 1,511,413 $ 1,511,413 $ -
3,291,938 1,565,103 1,439,476 3,417,565
10,884 16,878 10,884 16,878
$ 3,302,822 $ 3,093,394 $ 2,961,773 $ 3,434,443
$ - $ 1,511,413 $ 1,511,413 $ -
3,302,822 1,577,971 1,446,350 3,434,443
$ 3,302,822 $ 3,089,384 $ 2,957,763 $ 3,434,443
$ - $ 6,940,262 $ 6,935,486 $ 4,776
11,785,523 6,687,494 6,209,181 12,263,836
31,267 55,066 31,267 55,066
2,140 - 2,140 -
$ 11,818,930 $ 13,682,822 $ 13,178,074 $ 12,323,678
$ - $ 6,519,676 $ 6,519,676 $ -
11,818,930 7,165,274 6,660,526 12,323,678
$ 11,818,930 $ 13,684,950 $ 13,180,202 $ 12,323,678
126
STATISTICAL SECTION
127
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128
CITY OF TUSTIN
Description of Statistical Contents
June 30, 2019
This part of the City of Tustin's Comprehensive Annual Financial Report presents detailed information
as a context for understanding what the information in the financial statements, note disclosures, and
required supplementary information says about the City's overall financial health.
Contents:
Pages
Financial Trends - These schedules contain trend information to help the
reader understand how the City's financial performance and well-being have
changed over time. 130
Revenue Capacity - These schedules contain information to help the reader
assess the City's most significant local revenue source, the property tax. 140
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. 146
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. 154
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. 156
Sources:
Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports for the relevant year.
129
CITY OF TUSTIN
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
Business -type activities:
Net investment in capital assets $ 24,541,113 $ 20,872,492 $ 25,479,160 $ 24,171,745
Restricted - - - -
Unrestricted 1,851,666 5,541,672 2,795,701 7,094,771
Total business -type activities net position $ 26,392,779 $ 26,414,164 $ 28,274,861 $ 31,266,516
Primary government:
Net investment in capital assets
$ 384,823,805
Fiscal Year
$ 438,162,620
$ 455,933,033
2010
2011
2012
2013
Governmental activities:
Unrestricted
116,588,715
122,087,023
150,308,950
Net investment in capital assets
$ 360,282,692
$ 378,911,546
$ 412,683,460
$ 431,761,288
Restricted
135,670,302
116,718,495
47,727,966
54,367,385
Unrestricted
114,737,049
116,545,351
147,513,249
177,532,888
Total governmental activities net position
$ 610,690,043
$ 612,175,392
$ 607,924,675
$ 663,661,561
Business -type activities:
Net investment in capital assets $ 24,541,113 $ 20,872,492 $ 25,479,160 $ 24,171,745
Restricted - - - -
Unrestricted 1,851,666 5,541,672 2,795,701 7,094,771
Total business -type activities net position $ 26,392,779 $ 26,414,164 $ 28,274,861 $ 31,266,516
Primary government:
Net investment in capital assets
$ 384,823,805
$ 399,784,038
$ 438,162,620
$ 455,933,033
Restricted
135,670,302
116,718,495
47,727,966
54,367,385
Unrestricted
116,588,715
122,087,023
150,308,950
184,627,659
Total primary government net position
$ 637,082,822
$ 638,589,556
$ 636,199,536
$ 694,928,077
130
Fiscal Year
2014 2015 2016 2017 2018 2019
$ 461,673,323 $ 456,649,085 $ 483,229,135 $ 490,574,647 $ 499,190,473 $ 520,166,300
36,693,458 72,929,522 95,241,025 102,027,853 87,395,188 67,892,989
93,877,440 140,727,040 107,224,779 144,442,931 151,119,177 108,567,573
$ 592,244,221 $ 670,305,647 $ 685,694,939 $ 737,045,431 $ 737,704,838 $ 696,626,862
$ 23,657,878 $ 24,270,718 $ 25,443,651 $ 23,252,432 $ 22,753,763 $ 20,650,435
8,326,340 11,845,734 12,227,557 15,129,697 16,505,744 19,489,664
$ 31,984,218 $ 36,116,452 S 37,671,208 $ 38,382,129 $ 39,259,507 $ 40,140,099
$ 485,331,201 $ 480,919,803 $ 508,672,786 $ 513,827,079 $ 521,944,236 $ 540,816,735
36,693,458 72,929,522 95,241,025 102,027,853 87,395,188 67,892,989
102,203,780 152,572,774 119,452,336 159,572,628 167,624,921 128,057,237
$ 624,228,439 $ 706,422,099 $ 723,366,147 $ 775,427,560 $ 776,964,345 $ 736,766,961
131
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
Business -type activities:
Water
Tustin Legacy
Total business -type activities expenses
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)
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
In in 7n11 Im 111 W)12
$ 7,802,579
$ 7,854,361
$ 12,266,470
$ 18,705,913
27,277,141
28,622,807
28,800,773
30,702,298
20,816,686
19,809,907
20,765,854
15,087,234
12,742,391
13,150,089
7,078,104
3,201,865
4,087,839
4,814,598
3,057,645
967,115
72,726,636
74,251,762
71,968,846
68,664,425
16,982,781
13,621,100
28,791,083
29,367,544
11,938,146
12,578,667
13,467,541
13,574,149
11,938,146
12,578,667
13,467,541
13,574,149
1,404,925
1,109,150
1,390,073
763,101
1,168,348
1,196,830
1,133,096
917,947
3,761,321
3,508,904
800,328
1,248,595
957,545
969,006
974,747
926,432
3,403,411
3,441,281
3,590,210
4,513,158
6,287,231
3,395,929
20,902,629
20,998,311
16,982,781
13,621,100
28,791,083
29,367,544
10,594,471
12,422,746
15,112,161
16,688,773
10,594,471
12,422,746
15,112,161
16,688,773
$ (55,743,855)
$ (60,630,662)
$ (43,177,763)
$ (39,296,881)
(1,343,675)
(155,921)
1,644,620
3,114,624
$ (57,087,530)
$ (60,786,583)
$ (41,533,143)
$ (36,182,257)
132
Fiscal Year
'VTIn IAIG 1)(11 1- ')nl'7 ImIQ ')n1n
$ 14,825,780
$ 17,121,057
$ 20,023,280
$ 24,504,764
$ 23,949,544
$ 27,097,686
28,440,799
29,886,284
27,779,830
34,611,078
33,713,796
36,215,060
49,538,371
34,435,214
47,326,664
24,822,480
37,599,662
45,849,976
3,498,460
3,699,059
7,869,124
19,524,660
10,795,733
20,304,550
-
-
-
5,802
12,043
9,297
96,303,410
85,141,614
102,998,898
103,468,784
106,070,778
129,476,569
19,394,706
27,570,891
59,194,506
35,474,682
18,022,346
17,828,387
16,100,137
15,982,078
15,586,463
16,654,429
17,680,886
17,763,633
16,100,137
15,982,078
15,586,463
16,654,429
17,680,886
17,763,633
249,237
252,074
2,072,540
1,979,211
1,630,903
1,920,214
920,112
1,071,099
1,195,350
1,255,299
1,283,672
1,285,584
1,710,813
1,564,314
3,538,906
1,861,045
2,167,726
3,300,906
967,134
892,102
953,149
1,101,294
1,434,988
2,426,578
3,325,304
3,546,823
2,722,978
2,742,140
3,863,547
4,952,271
12,222,106
20,244,479
48,711,583
26,535,693
7,641,510
3,942,834
19,394,706
27,570,891
59,194,506
35,474,682
18,022,346
17,828,387
18,682,821
19,375,359
16,511,795
17,100,836
18,229,013
17,329,090
18,682,821
19,375,359
16,511,795
17,100,836
18,229,013
17,329,090
$ (76,908,704)
$ (57,570,723)
$ (43,804,392)
$ (67,994,102)
$ (88,048,432)
$(111,648,182)
2,582,684
3,393,281
925,332
446,407
548,127
(434,543)
$ (74,326,020)
$ (54,177,442)
$ (42,879,060)
$ (67,547,695)
$ (87,500,305)
$(112,082,725)
133
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 govermnental 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
2010 2011 2012 2013
$ 28,347,659
$ 30,205,879
$ 23,270,718
$ 14,526,101
141,335
142,915
137,131
137,064
337,867
358,526
44,800
377,498
1,720,505
1,648,319
1,621,521
1,655,388
15,917,332
18,597,453
19,931,865
21,575,405
6,122,789
6,189,249
5,833,094
5,951,653
4,086,852
2,358,847
958,169
243,921
1,520,662
1,700,323
14,444,183
7,231,648
-
-
-
43,335,089
-
-
(27,314,435)
-
58,195,001
61,201,511
38,927,046
95,033,767
86,654
158,242
156,855
39,700
25,340
19,064
59,222
271,858
111,994
177,306
216,077
311,558
$ 58,306,995 $ 61,378,817 $ 39,143,123 $ 95,345,325
$ 2,451,146 $ 570,849 $ (4,250,717) $ 55,736,886
(1,231,681) 21,385 1,860,697 3,426,182
$ 1,219,465 $ 592,234 $ (2,390,020) $ 59,163,068
134
Fiscal Year
2014 2015 2016 2017 2018 2019
$ 13,661,771
$
14,552,535
$
16,451,763
$
24,437,717
$
25,636,673
$
26,275,789
616,897
1,090,675
1,554,754
1,609,318
1,575,830
1,825,957
393,241
419,148
406,891
420,684
431,457
466,828
1,663,215
1,763,878
1,839,963
1,931,185
1,781,175
1,762,642
22,288,032
22,269,896
24,513,610
25,133,146
24,925,934
26,634,458
6,150,893
6,380,698
6,778,329
37,056
43,359
39,526
628,180
1,052,276
2,430,087
611,964
1,109,193
7,167,093
4,040,996
7,829,149
2,671,845
4,594,651
4,838,383
6,002,632
-
48,136,121
-
24,241,261
33,636,759
395,281
-
-
-
31,327,612
-
-
-
32,137,773
-
-
-
1,412,257
-
2,546,442
5,000,000
50,855,482
135,632,149
59,193,684
119,344,594
93,978,763
70,570,206
144,381
249,863
480,050
108,669
150,371
1,084,525
408,749
489,090
149,374
155,845
178,880
230,610
553,130
738,953
629,424
264,514
329,251
1,315,135
$ 51,408,612
$
136,371,102
$
59,823,108
$
119,609,108
$
94,308,014
$
71,885,341
$ (26,053,222)
$
78,061,426
$
15,389,292
$
51,350,492
$
5,930,331
$
(41,077,976)
3,135,814
4,132,234
1,554,756
710,921
877,378
880,592
$ (22,917,408)
$
82,193,660
$
16,944,048
$
52,061,413
$
6,807,709
$
(40,197,384)
135
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
2010 2011 2012 2013
$ 144,139,167 $ - $ - $ -
5,870,992 - - -
$ 150,010,159 $ - $ - $ -
$ 66,609,267 $ - $ - $ -
14,277,683 - - -
(6,774,245) - - -
75,663,086 - - -
$ 149,775,791 $ - $ - $ -
$ 144,139,167 $ 144,186,955 $ 144,604,847 $ 128,988,209
- - - 19,615,343
47,608 - - -
5,823,384 - - -
- 7,443,165 4,077,344 44,368,566
$ 150,010,159 $ 151,630,120 $ 148,682,191 $ 192,972,118
$ 34,800,738 $ 22,352,713 $ 1,710,292 $ 1,287,607
111,455,097 130,673,281 38,274,666 33,885,757
344,708 - - -
11,670,324 18,603,317 16,239,322 16,880,590
(8,495,076) (10,989,463) - -
$ 149,775,791 $ 160,639,848 $ 56,224,280 $ 52,053,954
136
Fiscal Year
2014 2015 2016 2017 2018 2019
$ 35,314,389 $ 61,399,349 $ 81,312,081 $ 71,480,566 $ 64,042,390 $ 42,979,873
i 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.
137
$
129,049,954
$ 122,458,642
$
88,579,214 5
$
84,344,748
$
82,868,217
$
82,902,130
1,352,309
16,650,332
18,657,461
34,901,943
41,269,878
31,250,893
2
18,781,826
84,278,138 3
79,667,061
102,517,562
116,332,458
88,768,803
$
149,184,089
$ 223,387,112
$ 186,903,736
$ 221,764,253
$ 240,470,553
$ 202,921,826
$
-
$ -
$
1,922
$
1,922
$
-
$
1,922
29,820,853
24,048,818
54,438,343
51,069,708
46,322,996
37,215,903
5,493,536
37,350,531 4
26,871,816
20,408,936
17,719,394
5,762,048
$ 35,314,389 $ 61,399,349 $ 81,312,081 $ 71,480,566 $ 64,042,390 $ 42,979,873
i 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.
137
CITY OF TUSTIN
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Revenues:
Taxes
Licenses and permits
Fines and forfeitures
Investment income
Intergovernmental revenues
Charges for services
Rental income
Developer contributions
Profit participation
Gain on sale of land held for resale
Contribution from Successor Agency
Other revenues
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community services
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Bond issue costs
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses):
Transfers in
Transfers out
Proceeds from debt issuance
Contribution to developer
Sale of property
Capital lease issued
Total other financing sources (uses)
Extraordinary gain (loss)
Special item
Net change in fund balances
Debt service as a percentage of
noncapital expenditures
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
$ 36,662,197
$ 38,726,558
$ 30,975,441
$ 22,703,619
3,538,198
716,144
443,928
577,044
890,770
893,642
875,068
678,428
3,198,484
1,632,215
472,725
173,890
21,295,762
23,970,358
26,345,002
43,126,447
2,708,705
5,020,485
2,813,752
2,685,080
869,645
358,030
480,255
550,003
4,051,180
1,593,475
-
-
-
-
-
43,340,797
1,028,432
2,425,052
14,075,025
9,773,813
74,243,373
75,335,959
76,481,196
123,609,121
7,197,709
7,505,928
11,656,331
17,357,805
26,359,435
27,508,514
28,714,347
27,944,039
10,133,685
9,110,621
6,954,384
5,980,807
12,251,479
12,740,969
6,506,381
2,752,523
13,125,983
9,979,670
25,816,530
28,487,231
7,913,000
10,659,000
2,590,000
-
4,603,661
4,131,435
3,264,323
967,115
-
429,731
-
-
81,584,952
82,065,868
85,502,296
83,489,520
(7,341,579) (6,729,909) (9,021,100) 40,119,601
37,207,661
2,645,014
(37,207,661)
(2,645,014)
26,274,205
43,281,289
7,421
18,138
3,020,291 6,122,454
(3,020,291) (6,122,454)
43,745 -
(98,386,142) -
$ 18,940,047 $ 36,569,518 $(107,363,497) $ 40,119,601
17.69% 20.00% 9.00% 1.73%
138
Fiscal Year
2014 2015 2016 2017 2018 2019
$ 22,808,488
$ 21,426,308
$ 23,525,899
$ 24,825,401
$ 25,770,970
$ 26,385,383
1,284,232
885,043
1,334,311
853,990
905,086
1,212,696
631,340
752,597
982,123
953,665
996,912
909,355
621,786
1,041,661
2,422,072
608,888
1,120,276
7,172,443
29,741,754
37,302,283
42,838,003
35,382,444
42,121,841
39,613,110
1,787,268
1,870,401
2,357,268
1,999,860
2,177,345
2,761,688
751,724
1,113,340
1,308,852
1,542,281
1,674,068
2,055,135
-
16,934,704
26,357,490
16,804,964
1,341,143
-
-
-
-
23,495,709
7,179,553
212,651
-
48,136,121
-
24,241,261
33,636,759
395,281
-
32,137,773
-
-
-
-
6,110,735
6,302,392
4,714,101
5,849,937
8,848,778
7,590,956
63,737,327
167,902,623
105,840,119
136,558,400
125,772,731
88,308,698
14,205,424
17,568,297
20,372,454
24,052,915
21,259,806
25,539,637
28,170,314
33,062,929
27,897,182
30,733,524
32,335,404
33,200,885
5,797,705
6,417,257
7,182,380
7,591,876
7,795,849
9,105,493
3,081,299
3,170,747
7,308,498
18,727,257
9,747,562
19,603,654
74,422,436
23,800,093
22,498,621
26,657,177
40,082,440
59,389,068
-
5,000,000
4,101,171
4,129,203
3,271,503
71,908
-
-
-
5,802
12,043
9,297
125,677,178
89,019,323
89,360,306
111,897,754
114,504,607
146,919,942
(61,939,851)
78,883,300
16,479,813
24,660,646
11,268,124
(58,611,244)
2,084,612 5,266,102 5,453,988 4,242,209 8,908,605 7,281,771
(2,084,612) (5,266,102) (5,453,988) (4,242,209) (8,908,605) (7,281,771)
368,356 - -
- - - 368,356 - -
1,412,257 - 976,042 - - -
- 21,404,683 (34,026,499) - - -
$ (60,527,594) $ 100,287,983 $ (16,570,644) $ 25,029,002 $ 11,268,124 $ (58,611,244)
0.00% 6.03% 5.28% 4.48% 3.51% 0.07%
139
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.
140
City
Fiscal Year
Taxable
Ended
Assessed
June 30
Secured
Unsecured
Value
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
2019
9,092,631
313,242
9,405,874
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.
140
141
Redevelopment Agency (A)
Taxable
Total
Assessed
Direct Tax
Secured
Unsecured
Value (A)
Rate (B)
$ 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%
3,498,105
313,242
3,811,347
0.116%
141
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
Orange Unified School District Bonds
Irvine Ranch Water District Bonds
Santa Ana Unified School District Bonds
Irvine Unified School District Bonds
Total Overlapping Rates
Total Direct and Overlapping Rates
Source: Hdl, Coren & Cone
142
Fiscal Year
2010
2011
2012
2013
$ 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
0.0380
0.0596
0.0559
0.0672
0.0043
0.0037
0.0037
0.0035
0.0274
0.0314
0.0315
0.0324
0.2242
0.2242
0.2155
0.2155
0.0739
0.0717
0.0715
0.0775
0.3678
0.3906
0.3781
0.3961
$ 1.3678
$ 1.3906
$ 1.3781
$ 1.3961
Fiscal Year
2014
2015
2016
2017
2018
2019
$ 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
09161
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
0.0891
0.0696
0.0775
0.0700
0.0687
0.0669
0.0035
0.0035
0.0035
0.0035
0.0035
0.0035
0.0333
0.0508
0.0504
0.0495
0.0509
0.0454
-
-
-
-
-
0.0269
0.2155
0.0960
0.0960
0.1270
0.1270
0.1270
0.0736
0.0687
0.0660
0.0638
0.0633
0.0556
-
-
-
0.0271
0.0280
0.4150
0.2886
0.2934
0.3138
0.3405
0.3532
$ 1.4150
$ 1.2886
$ 1.2934
$ 1.3138
$ 1.3405
$ 1.3532
143
CITY OF TUSTIN
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Nine Years Ago
144
2019
2010
Percent of
Percent of
Total City
Total City
Taxable
Taxable
Taxable
Taxable
Assessed
Assessed
Assessed
Assessed
Taxpayer
Value
Value
Value
Value
Vestar Kimco Tustin LP
$ 178,522,619
1.37%
$ 150,656,486
1.59%
Raintree Tustin LLC
144,576,002
1.11%
-
0.00%
Legacy Villas LLC
126,809,875
0.97%
-
0.00%
Irvine Company LLC
126,224,453
0.97%
217,805,520
2.29%
Tustin Market Place
84,423,861
0.65%
-
0.00%
Tustin Parc LP
62,683,272
0.48%
-
0.00%
Apple Ten Hospitality Ownership Inc
56,735,392
0.44%
-
0.00%
Borchard Redhill SKB-Tustin LLC
53,913,261
0.41%
55,368,358
0.58%
PK 11 Larwin Square SC LP
53,406,781
0.41%
50,121,773
0.53%
Costco Wholesale Corporation
51,707,187
0.40%
46,636,264
0.49%
Richoh Development
-
0.00%
-
0.00%
Tustin Legacy Community Partners LLC
-
0.00%
86,699,995
0.91%
Irvine Apartment Communities LP
-
0.00%
84,078,200
0.89%
Creekside Meadows Development LLC
-
0.00%
130,368,443
1.37%
Tustin Heights SC LP
-
0.00%
47,130,120
0.50%
American Fund US Investments
-
0.00%
57,888,895
0.61%
$ 939,002,703
7.20%
$ 926,754,054
9.76%
144
CITY OF TUSTIN
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Notes:
The amounts presented for fiscal years 2010 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
Millions
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Taxes Levied Amount Collected
145
Collected within the
Fiscal
Taxes Levied
Fiscal Year of Levy
Collections in
Total Collections to Date
Year Ended
for the
Percent
Subsequent
Percent
June 30
Fiscal Year
Amount
of Levy
Years
Amount
of Levy
2010
31,739,378
28,347,659
89.31%
917,222
29,264,881
92.20%
2011
30,713,746
29,541,000
96.18%
610,052
30,151,052
98.17%
2012
30,163,205
20,433,400
67.74%
147,389
20,580,789
68.23%
2013
9,492,638
9,257,817
97.53%
121,715
9,379,532
98.81%
2014
9,862,476
9,655,778
97.90%
121,400
9,777,178
99.14%
2015
9,287,149
9,007,785
96.99%
163,497
9,171,282
98.75%
2016
10,847,984
10,541,516
97.17%
233,935
10,775,451
99.33%
2017
11,278,643
10,996,314
97.50%
207,332
11,203,646
99.34%
2018
11,844,150
11,615,833
98.07%
174,112
11,789,945
99.54%
2019
12,335,873
12,072,342
97.86%
183,788
12,256,130
99.35%
Notes:
The amounts presented for fiscal years 2010 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
Millions
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Taxes Levied Amount Collected
145
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
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
2019
199,255
199,255
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 cant'
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.
146
(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.
147
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
$ 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
-
-
3,931,858
13,905,642
22,685,456
40,522,956
40,722,211
1.46%
500
(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.
147
CITY OF TUSTIN
RATIO OF GENERAL BONDED DEBT OUTSTANDING
Last Ten Fiscal Years
Outstanding General Bonded Debt
Fiscal Year General Tax Percent of
Ended Obligation Allocation Assessed Per
June 30 Bonds Bonds Total Value * Capita
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 - - - - -
2019 - - - - -
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.
148
CITY OF TUSTIN
OVERLAPPING DEBT SCHEDULE
June 30, 2019
2018-19 Assessed Valuation:
$ 13,043,122,290
Redevelopment Incremental Valuation
(3,464,367,696)
Adjusted Assessed Value
$ 9,578,754,594
City's
Share of
Total Debt
(1)
Debt at
OVERLAPPING TAX AND ASSESSMENT DEBT:
6/30/19
% Applicable
6/30/19
Metropolitan Water District
$ 48,050,000
0.447%
$ 214,784
Rancho Santiago Community College District
234,052,001
0.147
344,056
Rancho Santiago Community College District School Facilities Improvement District No.1
115,390,000
0.251
289,629
Irvine Unified School District School Facilities Improvement District No. 1
128,825,000
2.937
3,783,590
Orange Unified School District
188,000,000
0.03
56,400
Santa Ana Unified School District
293,004,757
0.31
908,315
Tustin Unified School District School Facilities Improvement District No. 2002-1
43,163,363
46.729
20,169,808
Tustin Unified School District School Facilities Improvement District No. 2008-1
85,140,000
45.067
38,370,044
Tustin Unified School District School Facilities Improvement District No. 2012-1
42,890,000
45.506
19,517,523
Tustin Unified School District Community Facilities District No. 88-1
24,770,000
100
24,770,000
Tustin Unified School District Community Facilities District No. 06-1
14,400,000
100
14,400,000
City of Tustin Community Facilities Districts
97,570,000
100
97,570,000
Irvine Unified School District Community Facilities District No. 86-1
28,395,000
0.191
54,234
Irvine Ranch Water District Improvement Districts
480,271,130
5.320-87.124
59,711,232
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
280,159,615
OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Orange County General Fund Obligations
$ 388,720,000
2.203%
8,563,502
Orange County Pension Obligations
407,629,239
2.203
8,980,072
Orange County Board of Education Certificates of Participation
13,490,000
2.203
297,185
Orange Unified School District Certificates of Participation
28,483,215
0.030
8,545
Orange Unified School District Benefit Obligations
76,765,000
0.030
23,030
Santa Ana Unified School District Certificates of Participation
66„ 113,991
0.31
204,953
City of Tustin
-
100
199,255
TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT
18.276,542
OVERLAPPING TAX INCREMENT DEBT (Successor Agencies
)
TOTAL DIRECT DEBT
TOTAL OVERLAPPING DEBT
COMBINED TOTAL DEBT
$ 124,395,000 0.001-100.% 52,085,723
199,255
$350,322,625
$350,521,880
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 Note 18 for more information
Ratios to 2018-19 Assessed Valuations:
Total Overlapping Tax and Assessment Debt 2.15%
Total Direct Debt 0.00%
Combined Total Debt 2.69%
Ratios to Redevelopment Incremental Valuations ($3,464,367,696):
Total Overlapping Tax Increment Debt 1.50%
Source: California Municipal Statistics, Inc.
149
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
Fiscal Year
2010
2011
2012
2013
$ 7,197,825,000
$ 7,109,878,000
$ 7,159,851,000
$ 7,270,451,000
25%
25%
25%
25%
1,799,456,250
1,777,469,500
1,789,962,750
1,817,612,750
15%
15%
15%
15%
269,918,438
266,620,425
268,494,413
272,641,913
$ 269,918,438
$ 266,620,425
$ 268,494,413
$ 272,641,913
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
150
Fiscal Year
2014
2015
2016
2017
2018
2019
$ 7,418,821,000
$ 7,790,632,000
$ 8,218,228,000
$ 8,566,757,000
$ 8,995,570,000
$ 9,405,874,000
25%
25%
25%
25%
25%
25%
1,854,705,250
1,947,658,000
2,054,557,000
2,141,689,250
2,248,892,500
2,351,468,500
15%
15%
15%
15%
15%
15%
278,205,788
292,148,700
308,183,550
321,253,388
337,333,875
352,720,275
$ 278,205,788
$ 292,148,700
$ 308,183,550
$ 321,253,388
$ 337,333,875
$ 352,720,275
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
151
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
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
2019 17,329,090
14,284,470
3,044,620
880,000
1,503,095
1.28
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,
152
Tax
Allocation
$ 3,831,975
17,928,849
Tax Allocation Bonds
Debt Service
Principal
$ 1,150,000
2,460,000
Interest
497,180
2,204,419
153
Coverage
2.33
3.84
Calendar
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
CITY OF TUSTIN
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
Personal
City of Tustin Income
Population (in Thousands)
74,736 $ 2,407,036
75,773
76,597
77,983
78,360
78,347
82,717
82,372
82,344
81,369
Source: HdL Coren & Cone, LLC
84,000
82,000
80,000
78,000
76,000
74,000
72,000
70,000
$35,000
$34,000
$33,000
$32,000
$31,000
$30,000
$29,000
$28,000
$27,000
City of Tustin Population
,10,O ,10,y .10,E ,10,E ,10,E .10,h 'LOti� ,10,E E 'LOti1)
Per Capita Personal Income
lip 110 ,10,E rLOti� 10,E 10,h 110,0 LOti^ LOti� 10,E
2,363,057
2,429,318
2,451,708
2,375,640
2,411,442
2,441,169
2,506,380
2,570,460
2,785,795
Per Capita
County of Orange
Personal
Unemployment
Income
Rate
$ 32,207
8.90%
31,186
9.40%
31,716
8.60%
31,439
5.60%
30,317
4.90%
30,779
5.10%
29,512
4.20%
30,427
3.70%
31,216
3.50%
34,237
2.80%
Personal Income (in Thousands)
$2,900,000
$2,800,000
$2,700,000
$2,600,000 -
$2,500,000 - - -
$2,400,000 - -
$2,300,000
$2,200,000 - - - - - - - - - - -
$2,100,000
1.0 '§� I -P 11P 11 y 10 'o '�'o tiny"
County of Orange Unemployment Rate
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
OSA O,0
ti ti ti ti ti ti ti ti ti ti
154
CITY OF TUSTIN
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
155
2019
2010
Percent of
Percent of
Number of
Total
Number of
Total
Employer
Employees
Employment
Employees
Employment
Tustin Unified School District
2,884
6.75%
1,004
2.73%
Schools First Federal Credit Union
937
2.19%
-
0.00%
Youngs Market Company LLC
681
1.59%
-
0.00%
New American Funding
559
1.31%
-
0.00%
City of Tustin
411
0.96%
307
0.83%
Costco Wholesale Corporation
658
1.54%
250
0.68%
Canon Medical
300
0.70%
-
0.00%
Logomark Inc
265
0.62%
-
0.00%
Ricoh Electronics Inc
256
0.60%
500
1.36%
Kaiser Foundation Hospitals
250
0.59%
-
0.00%
ABM Industries
-
0.00%
1,300
3.53%
Rockwell Collins
-
0.00%
600
1.63%
Big Lots
-
0.00%
500
1.36%
Cherokee International Corp.
-
0.00%
350
0.95%
Microvention, Inc.
-
0.00%
300
0.82%
Toshiba America Medical Systems
-
0.00%
300
0.82%
Sources: State of California Employment Development Department
City of Tustin
US Census Bureau
155
CITY OF TUSTIN
FULL-TIME CITY EMPLOYEES
BY FUNCTION
Last Ten Fiscal Years
The City contracts with the OC Fire Authority for fire services
Source: City of Tustin Human Resource Department
156
Fiscal Year
Function
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
General Government
27
25
29
26
35
33
38
35
39
42
Community Development
24
17
17
15
15
16
19
19
19
20
Public Works
53
52
51
40
47
48
45
48
47
49
Police
147
140
139
131
140
141
141
137
142
140
Parks and Recreation
15
14
15
13
13
14
14
17
17
17
RDA/Successor Agency
6
6
5
3
-
-
-
-
-
-
Water
22
23
25
17
17
18
19
18
18
19
Total
294
277
281
245
267
270
276
274
282
287
The City contracts with the OC Fire Authority for fire services
Source: City of Tustin Human Resource Department
156
Function
CITY OF TUSTIN
CAPITAL ASSET STATISTICS
BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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
129.1
129.1
130.1
130.7
131.3
131.3
Street Lights
3,544
3,544
3,544
3,544
3,640
3,640
3,680
3,700
3,700
3,740
Traffic Signals
116
117
118
118
121
121
125
126
128
128
Storm Drain (miles)
49.2
49.2
49.2
49.2
51.2
51.4
51.8
52.9
53.9
53.9
Street Trees
15,853
15,837
15,786
16,097
16,073
15,815
15,706
15,542
15,574
15,042
Parks and Recreation
Parks
13
13
13
13
13
13
14
14
14
14
Parks (acres)
98.5
98.5
98.5
98.5
98.5
98.5
116.0
116.0
116.0
116.0
Community Centers
1
1
1
I
1
I
1
1
1
1
Senior Centers
1
I
1
1
1
1
1
1
1
1
Water
Metered Services
14,118
14,139
14,139
14,172
14,181
14,148
14,099
14,109
14,104
14,241
Average daily consumption
14,460
12,899
13,491
13,601
13,975
13,975
9,975
10,601
11,770
11,098
Reservoirs
6
6
6
6
6
6
6
6
6
6
Wells
13
13
13
13
13
13
13
14
14
14
Water Main (miles)
173
173
173
173
173
173
173
172
172
172
Fire Hydrants
2,201
2,201
2,201
2,201
1,914
1,945
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
157
CITY OF TUSTIN
WATER CONSUMPTION BY CUSTOMER TYPE
Last Ten Fiscal Years
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
4,000,000
3,000,000
2,000,000
1,000,000
Fiscal Year
2011
2012
2013
2,749,415
2,592,741
2,733,482
2,815,322
1,142,749
1,133,899
1,172,823
1,158,480
287,951
296,001
305,638
308,376
217
275
1,242
818
145,287
134,408
149,957
151,965
238,914
212,561
236,658
268,581
52761
48,873
53,183
53,461
9:636 6
11,587
12,204
12,442
43,985
41,291
44,488
44,476
56,360
51,760
58,298
57,462
13,562
8,332
8,514
10,417
171,781
176,248
147,552
82,716
4,912,618
4,707,976
4,924,039
4,964,516
Water Consumption By Customer
IL _d
2010 2011 2012 2013 2014 2015 2016 2017 2018
■ Residential Apartment/Multiple Units Commercial ■ Fire Services
■ Irrigation Government ■ Restaurants ■ Hospitals
■ Non -Profit r Industrial m Hotel/Motels ■ All Others
158
Fiscal Year
2014 2015 2016 2017 2018 2019
2,905,069
2,603,538
1,934,761
2,119,716
2,398,744
2,199,236
1,163,159
1,139,321
1,003,808
987,688
1,039,878
1,029,284
321,125
310,585
259,459
271,649
274,943
267,541
577
837
646
504
589
564
167,346
155,766
96,082
105,750
146,941
131,579
276,292
229,262
134,446
162,843
195,695
177,321
52,520
51,658
45,069
44,947
45,086
45,905
7,634
10,018
11,166
11,276
10,536
13,102
45,920
41,601
22,989
26,751
34,539
32,021
60,438
59,292
40,407
45,071
45,062
44,693
12,866
21,379
23,387
25,185
28,908
32,594
87,785
71,324
68,830
70,721
75,208
76,873
5,100,731
4,694,581
3,641,050
3,872,101
4,296,129
4,050,713
159
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
160
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
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
2019
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
2019
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
160
CITY OF TUSTIN
WATER CUSTOMERS
Current Fiscal Year and Ten Years Ago
2019
2010
Source: City of Tustin Finance Department
161
Percent of
Percent of
Water
Total Water
Water
Total Water
Water Customer
Charges
Revenues
Charges
Revenues
Tustin Unified School District
$ 739,443
4.06%
$ 380,442
3.59%
City of Tustin
204,847
1.12%
129,090
1.22%
Raintree Tustin LLC
183,511
1.01%
-
0.00%
Schroeder Property Management
104,359
0.57%
45,009
0.42%
Ricoh Electronics, Inc.
84,359
0.46%
43,618
0.41%
Tustin Parc
84,223
0.46%
-
0.00%
Tustin Acres Community Association
82,808
0.45%
54,958
0.52%
Tustin Village Community Association
79,258
0.43%
31,846
0.30%
CalTrans - District 12
76,146
0.42%
46,017
0.43%
Westchester Park LP
74,558
0.41%
37,053
0.35%
Tustin Plaza Center, LP
72,300
0.40%
-
0.00%
Key Inn
72,294
0.40%
-
0.00%
Briarwood Investment Co. Ltd.
70,534
0.39%
43,209
0.41%
Vio Tustin Investment LP
63,761
0.35%
-
0.00%
CMC Association Management
63,077
0.35%
38,374
0.36%
Curtis Grieder
61,943
0.34%
-
0.00%
New Villa Valencia MHP
56,416
0.31%
-
0.00%
Regency West
53,964
0.30%
33,348
0.31%
Saddleback Mobilodge
53,225
0.29%
34,440
0.33%
15701 TV Way Partnership
50,310
0.28%
32,822
0.31%
Sycamore Gardens HOA
49,366
0.27%
-
0.00%
Roshan M.D.
48,513
0.27%
-
0.00%
Alders Apartment Company
46,159
0.25%
29,967
0.28%
Stonebrook Lmtd.
43,182
0.24%
-
0.00%
Waterstone Gardens Investments LP
42,824
0.23%
30,371
0.29%
SP/P Creekside Venture, LLC
-
0.00%
109,015
1.03%
AT& T Services, Inc.
-
0.00%
51,711
0.49%
V KAY - NNC Valencia Gardens
-
0.00%
46,116
0.44%
Carmel Partners, MS#3
-
0.00%
39,870
0.38%
Villa Valencia MHP
-
0.00%
35,943
0.34%
Sierra Corporate Management
-
0.00%
35,219
0.33%
Total Water Sales
$ 2,561,380
14.05%
$ 1,328,437
12.54%
Total Water Revenues
$ 17,329,090
Source: City of Tustin Finance Department
161
CITY OF TUSTIN
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2010 2011 2012 2013
Public Safety
Moving Citations 7,439 6,954 5,161 3,748
Parking Violations 9,242 9,594 8,323 7,754
Arrests 2,419 2,288 2,177 2,420
Calls for Service 28,534 26,819 27,774 27,954
Public Works
Number of Building Permits Issued 1,023 1,230 1,193 1,130
Number of Building Inspections Completed 15,999 10,656 8,019 5,934
Transportation Permits
Annual 61 45 50 50
Single 76 62 104 99
Encroachment Permits 113 88 83 123
Utility Permits 31 40 48 55
Curb Miles Swept 20,666 20,608 20,872 20,003
Community Services
Rentals 929 1,055 1,176 1,147
Classes 1,013 1,424 1,555 1,544
General Government
New Hires 29 39 37 60
Retiree/separations 32 36 27 82
01
Public Safety
60,000
50,000
40,000
30,000 -
20,000
10,000 -�
0
�
tiQ)
Moving Citations m Parking Violations Arrests ■ Calls for Service
3,000
2,500
2,000
1,500
1,000
500
0
Number of Building Permits Issued Transportation Permits (Annual) 0 Transportation Permits (Single)
Encroachment Permits Utility Permits
162
90 General Government
80
70
60
50
40
30
20
10
0
ti°y° ti°may ti°yam ti°y� ti°y� ti°yh ti°�� ti°y� ti°y� ti°�°
New Hires Retiree/separations
163
Fiscal Year
2014
2015
2016
2017
2018
2019
3,499
5,444
6,982
5,590
4,762
4,355
7,136
11,994
13,855
14,514
16,836
17,017
2,139
2,155
2,494
2,343
2,302
2,463
29,527
33,114
36,618
35,172
36,571
38,326
1,517
1,828
2,334
2,430
2,078
2,425
5,655
6,344
11,947
11,768
9,816
11,348
59
55
66
56
46
77
89
88
82
208
137
127
148
124
147
107
155
136
66
60
59
62
71
65
21,118
20,773
22,087
20,589
20,270
22,162
1,138
1,117
1,253
1,494
1,483
1,326
1,508
1,265
1,389
1,213
1,160
1,173
65
49
47
67
59
62
68
30
38
48
63
56
Community
Services
1,800
1,600
1,400
1,200
-
1,000
-
- -
-
- -
- -
800 -
-
- -
-
- -
- - -
600 -
- -
-
- -
- - -
400 -
-
-
200 -
0
00
Rentals
Rentals
■ Classes
90 General Government
80
70
60
50
40
30
20
10
0
ti°y° ti°may ti°yam ti°y� ti°y� ti°yh ti°�� ti°y� ti°y� ti°�°
New Hires Retiree/separations
163
The page left blank intentionally
164
Honorable Mayor and
Members of the City Council
of the City of Tustin
Tustin, California
We have audited the financial statements of the governmental activities, business -type activity, each
major fund, and aggregate remaining fund information of the City of Tustin, California (the City), as of
and for the year ended June 30, 2019. Professional standards require that we provide you with
information about our responsibilities under generally accepted auditing standards and Government
Auditing Standards as well as certain information related to the planned scope and timing of our audit.
We have communicated such information in our engagement letter dated May 15, 2019 and our
planning letter dated June 12, 2019. Professional standards also require that we communicate to you
the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 to the financial statements. No new
accounting policies were adopted and the application of other existing policies was not changed during
the year ended June 30, 2019. We noted no transactions entered into by the City during the year for
which there is a lack of authoritative guidance or consensus. All significant transactions have been
recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from those expected.
The most sensitive estimates affecting the City's financial statements are as follows:
a. Management's estimate of the fair value of investments is based on market values
provided by outside sources.
b. Management's estimate of the value of capital assets (infrastructure assets) is based on
industry standards.
1
2875 Michelle Drive, Suite 300 1 Irvine, California 92606 1 WNDECPA.com 1 714.978.1300
Significant Audit Findings (Continued)
Qualitative Aspects of Accounting Practices (Continued)
Sensitive Estimates (Continued)
c. The estimated useful lives of capital assets for depreciation purposes are based on
industry standards.
d. The estimated value for the land held for resale related to Tustin Legacy was based on
fair value when donated by the United States Government.
e. The annual required contributions, pension expense, net pension liability and
corresponding deferred outflows of resources and deferred inflows of resources for the
City's public defined benefit plans with Ca1PERS are based on actuarial valuations
provided by Ca1PERS.
£ The actuarially determined contributions, OPEB expense, net OPEB liability and
corresponding deferred inflows of resources for the City's OPEB plan are based on
certain actuarial assumptions and methods prepared by an outside actuary.
g. Management's estimate of the claims payable liabilities related to general liability and
worker's compensation claims are based on estimates by the claims administrators.
We evaluated the key factors and assumptions used to develop these estimates in determining that they
were reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosures affecting the financial statements were
reported in Notes 5 and 6 regarding the land held for resale, Note 9 regarding the Ca1PERS defined
benefit plans, Note 10 regarding the City's other post -employment benefit plan, and Note 12 regarding
the claims payable.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management were material,
either individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
2
Significant Audit Findings (Continued)
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditors' report. We are pleased to report that no such disagreements arose during the
course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated December 12, 2019.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the City's financial statements or a determination of
the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the City's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our retention.
Other Matters
We applied certain limited procedures to management's discussion and analysis, the safety plan
schedule of proportionate share of the net pension liability and schedule of contributions, the
miscellaneous plan schedule of changes in net pension liability and related ratios and schedule of
contributions, the other post -employment benefit plan schedule of changes in the net OPEB liability
and related ratios, schedule of contributions and annual money -weighted rate of return on investments,
and the budgetary comparison schedule for the general fund and the major special revenue fund, which
are required supplementary information (RSI) that supplements the financial statements. Our
procedures consisted of inquiries of management regarding the methods of preparing the information
and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We did not audit the RSI and do not express an opinion or provide any assurance on the
RSI.
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Other Matters (Continued)
We were engaged to report on the combining and individual nonmajor fund financial statements and
schedules (supplementary information), which accompany the financial statements but are not RSI.
With respect to this supplementary information, we made certain inquiries of management and
evaluated the form, content, and methods of preparing the information to determine that the
information complies with accounting principles generally accepted in the United States of America,
the method of preparing it has not changed from the prior period, and the information is appropriate
and complete in relation to our audit of the financial statements. We compared and reconciled the
supplementary information to the underlying accounting records used to prepare the basic financial
statements or to the basic financial statements themselves.
We were not engaged to report on the introductory section and statistical section, which accompany the
financial statements but are not RSI. We did not audit or perform other procedures on this other
information and we do not express an opinion or provide any assurance on them.
Upcoming Changes in Accounting Standards
The Governmental Accounting Standards Board (GASB) issued Statement No. 84, Fiduciary Activities
(Statement), which is effective for the City's fiscal year ended June 30, 2020. Due to the significant
nature of this Statement, GASB has also issued Implementation Guide No. 2019-2, Fiduciary
Activities, to clarify, explain, and elaborate the requirements of this Statement. The objective of the
Statement is to improve guidance regarding the identification of fiduciary activities for accounting and
financial reporting purposes and how those activities should be reported. Implementation of this
Statement could require significant time from staff to identify the City's fiduciary activities, to analyze
current activity in the City's agency funds and recharacterize those activities into a custodial fund or
another City fund depending upon whether the activity is custodial in nature or related to a City's own -
source revenue activity, and, to potentially modify the chart of accounts structure in the City's general
ledger for fiduciary activities to accommodate the newly -required statement of changes in fiduciary net
position for all fiduciary activities.
Restriction on Use
This information is intended solely for the use of the City Council and management of the City of
Tustin and is not intended to be, and should not be, used by anyone other than these specified parties.
Irvine, California
December 12, 2019
!!
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GO VERNMENTA UDITING STANDARDS
Honorable Mayor and
Members of the City Council
of the City of Tustin
Tustin, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business -type activity, each major fund, and the aggregate remaining fund information of
the City of Tustin, California (the City), as of and for the year ended June 30, 2019, and the related
notes to the financial statements, which collectively comprise the City's basic financial statements and
have issued our report thereon dated December 12, 2019.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate
in the circumstances for the purpose of expressing our opinions on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly,
we do not express an opinion on the effectiveness of the City's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the City's financial statements will not be prevented, or detected and corrected on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal
control that is less severe than a material weakness, yet important enough to merit attention by those
charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify
any deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
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2875 Michelle Drive, Suite 300 1 Irvine, California 92606 1 WNDECPA.com 1 714.978.1300
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Irvine, California
December 12, 2019
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CITY OF TUSTIN
APPROPRIATIONS LIMIT WORKSHEET NO. 6
WITH INDEPENDENT ACCOUNTANTS' REPORT
ON AGREED-UPON PROCEDURES
APPLIED TO APPROPRIATIONS LIMIT WORKSHEET
FOR THE YEAR ENDED JUNE 30, 2019
INDEPENDENT ACCOUNTANTS' REPORT ON
AGREED-UPON PROCEDURES
APPLIED TO APPROPRIATIONS LIMIT WORKSHEET
Honorable Mayor and
Members of the City Council
of the City of Tustin
Tustin, California
We have performed the procedures enumerated below to the accompanying Appropriations Limit
Worksheet No. 6 of the City of Tustin, California for the year ended June 30, 2019. These procedures,
which were agreed to by the City of Tustin, California and the League of California Cities (as
presented in the League publication entitled "Article XIII -B Appropriations Limit Uniform
Guidelines") were performed solely to assist the City of Tustin, California in meeting the requirements
of Section 1.5 of Article XIIIB of the California Constitution. The City of Tustin's management is
responsible for the Appropriations Limit Worksheet No. 6.
This agreed-upon procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. The sufficiency of the
procedures is solely the responsibility of those parties specified in this report. Consequently, we make
no representation regarding the sufficiency of the procedures described below either for the purpose for
which this report has been requested or for any other purpose.
The procedures performed and our findings were as follows:
1. We obtained the completed Worksheet No. 6 for the year ended June 30, 2019, and compared the
limit and annual adjustment factors included in that worksheet to the limit and annual adjustment
factors that were adopted by resolution of the City Council. We also compared the population and
inflation options included in the aforementioned worksheet to those that were selected by a
recorded vote of the City Council.
No exceptions were noted as a result of our performing this procedure.
2. For the accompanying Appropriations Limit Worksheet No. 6, we added last year's limit to the
total adjustments, and compared the resulting amount to this year's limit.
No exceptions were noted as a result of our performing this procedure.
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2875 Michelle Drive, Suite 300 1 Irvine, California 92606 1 WNDECPA.com 1 714.978.1300
2. We compared the prior year appropriations limit presented in the accompanying Appropriations
Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the
prior year.
When selecting the population factor, the City has the option to utilize the larger of the annual
percentage change of the City or the County in which the City is located. In the prior year, the
$86,379,313 appropriation limit adopted by the City Council was calculated using the City's
population factor, which was lower than the population factor for the County of Orange. The
$86,594,316 appropriations limit for the prior year presented in the accompanying Appropriations
Limit Worksheet No. 6 is the appropriation limit had the City used the population factor for the
County of Orange.
We were not engaged to, and did not, perform an audit, the objective of which would be the expression
of an opinion on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we do not
express such an opinion. Had we performed additional procedures, other matters might have come to
our attention that would have been reported to you. No procedures have been performed with respect
to the determination of the appropriation limit for the base year, as defined by the League publication
entitled "Article XIIIB Appropriations Limitation Uniform Guidelines".
This report is intended solely for the use of the City Council and management of the City of Tustin,
California and is not intended to be, and should not be, used by anyone other than these specified
parties.
Irvine, California
December 12, 2019
2
CITY OF TUSTIN
APPROPRIATIONS LIMIT WORKSHEET NO. 6
For the year ended June 30, 2019
Appropriations limit for fiscal year ended June 30, 2018 (see Note 2)
Adjustment factors for the fiscal year ended June 30, 2019 (see Note 2):
$ 86,594,316
Inflation
Population
Factor
Factor Combined
(Note 3)
Note 4) Factor
1.03670000
1.00690000 1.04385323 x 0.04385323
Adjustment for inflation and population
Other adjustments (Note 5)
Total adjustments
Appropriations limit for fiscal year ended June 30, 2019
See accompanying notes to Appropriations Limit Worksheet No. 6.
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3,797,440
3,797,440
90,391,756
CITY OF TUSTIN
NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO. 6
For the year ended June 30, 2019
1. PURPOSE OF LIMITED PROCEDURES REVIEW:
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative),
California governmental agencies are restricted as to the amount of annual appropriations from
proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of
Article XIIIB, the annual calculation of the appropriations limit is subject to a limited procedures
review in connection with the annual audit.
2. METHOD OF CALCULATION:
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the
appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87,
adjusted for the inflation and population factors discussed at Notes 3 and 4 below.
3. INFLATION FACTORS:
A California governmental agency may adjust its appropriations limit by either the annual
percentage change in the 4th quarter per capita personal income (which percentages are supplied by
the State Department of Finance), or the percentage change in the local assessment roll from the
preceding year due to the change of local nonresidential construction. The factor adopted by the
City of Tustin for the fiscal year 2018-2019 represents the annual percentage change in the
4th quarter per capita personal income.
4. POPULATION FACTORS:
A California governmental agency may adjust its appropriations limit by either the annual
percentage change of the jurisdiction's own population, or the annual percentage change in
population in the County where the jurisdiction is located. The factor adopted by the City of Tustin
for fiscal year 2018-2019 represents the annual percentage change in the population for the
County.
5. OTHER ADJUSTMENTS:
A California governmental agency may be required to adjust its appropriations limit when certain
events occur, such as the transfer of responsibility for municipal services to, or from, another
governmental agency or private entity. The City of Tustin had no such adjustments for the year
ended June 30, 2019.
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