HomeMy WebLinkAbout05 FY 19-20 AUDIT REPORTSDocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
5
Agenda Item
' Reviewed:
AGENDA REPORT City Manager
DS
D5W
Finance Director
MEETING DATE: FEBRUARY 16, 2021
TO: MATTHEW S. WEST, CITY MANAGER
FROM: JASON AL -IMAM, FINANCE DIRECTOR/CITY TREASURER
SUBJECT: FISCAL YEAR 2019/20 AUDIT REPORTS
SUMMARY:
The financial statement audit for the 2019/20 fiscal year has been completed by Clifton Larson
Allen (CLA) LLP, which reflects an "unmodified", or clean, opinion that the City's financial
statements for the fiscal year are presented fairly. Nitin Patel, the audit partner from CLA
discussed the results of the audit with the Audit Commission on January 28, 2021.
RECOMMENDATION:
It is recommended that the City Council receive and file the fiscal year 2019/20 audit reports.
FISCAL IMPACT:
The total contractual cost of the annual audit with Clifton Larson Allen LLP was $48,179. Of this
amount, $24,089.50 was charged to the Water Enterprise Fund, and $24,089.50 was charged to the
General Fund. In addition, $3,300 was paid to CaIPERS and charged to the General Fund for
required GASB 68 information related to pension liabilities and expenses.
CORRELATION TO THE STRATEGIC PLAN:
The recommendation correlates to the strategic plan by implementing Goal C, sustain long-term
financial strength with adequate reserves and enhanced capacity to provide a sustainable level of
City services.
DISCUSSION:
The City's financial statements reflect the results of the budgetary process and the strategic
decisions made and implemented during the fiscal year. It is important to note that certain funds
are consolidated in the Comprehensive Annual Financial Report (CAFR). For example, the
General Fund includes amounts associated with the Land Proceeds Fund, Backbone Fee Fund,
CDBG, and other funds that are not permitted to be reported as separate funds for financial
statement reporting purposes.
Total General Fund revenues (including transfers in) amounted to approximately $71 million,
which reflects a decrease of approximately $2 million (3%) compared to prior year revenues. The
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Fiscal Year 2019/20 Audit Reports Page 2 of 3
decrease in General Fund revenues is largely due to economic impacts associated with COVID-
19 and decreases in investment income caused by the declining interest rate environment that
has resulted from the Federal Reserve maintaining rates at or near zero during most of the fiscal
year.
Total General Fund expenditures amounted to approximately $101 million, which included $28
million of capital outlay on projects such as the Veterans Sports Park and the Emergency
Operations Center & Corporate Yard Project. Total General Fund expenditures decreased by
approximately $9 million (8%) compared to the prior year primarily due to a one-time payment of
$15 million that was made in 2018/19 to the Tustin Unified School District (TUSD) towards the
Legacy Magnet Academy School Project in connection with the School Facilities Implementation,
Funding, and Mitigation Agreement.
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the City for its CAFR for the fiscal year ended June 30, 2019.
This was the thirty-third (33) consecutive year that the City received this prestigious award, which
is the highest form of recognition in the area of governmental accounting and financial reporting.
The award is valid for a period of one year only. Staff believes the current CAFR for the fiscal year
ended June 30, 2020 continues to meet the award program's requirements and was submitted
again to the GFOA upon completion of the audit.
The auditors issued a Report on Internal Control Over Financial Reporting, Compliance and Other
Matters ("Report on Internal Control"), which outlines the auditor's consideration of internal control
in connection with planning and performing the audit. The auditor's Report on Internal Control
indicates that no deficiencies in internal control were identified that were considered material
weaknesses or significant deficiencies in internal control.
A separate letter has also been issued by the auditors on matters that are required to be
communicated in connection with the audit, which is referred to as the "Audit Communication
Letter". This letter outlines the scope of the audit, significant estimates and other matters,
including the following corrected and uncorrected misstatements:
• Corrected Misstatement — In accordance with Governmental Accounting Standards Board
Statement No. 75 "Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions", an adjustment of $1.4 million was made to beginning net position
of governmental activities and the Water Enterprise Fund to reallocate the portion of other
postemployment benefits (OPEB) attributable to the Water Enterprise Fund.
• Uncorrected Misstatement - The census data that was provided to the actuary omitted
certain participants, which resulted in a 4% understatement of the City's OPER liability;
however, an adjustment was not warranted based on the magnitude of the item.
Nitin Patel, the audit partner from Clifton Larson Allen LLP (who recently acquired White Nelson
Diehl Evans), discussed the results of the audit with the Audit Commission on January 28, 2021.
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Fiscal Year 2019/20 Audit Reports
94404 O.MMM
Jason AI -Imam
Finance Director/City Treasurer
Attachments:
Page 3 of 3
J ny Leisz
Deputy Director — Financial Services
1. Comprehensive Annual Financial Report
2. Report on Internal Control
3. Report on Appropriations Limit Calculation
4. Report on Compliance Applicable to the Air Quality Improvement Fund
5. Audit Communication Letter
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COMPREHENSIVE ANNUAL
FINANCIAL REPORT
CITY OF TUSTIN, CALIFORNIA
lim
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CITY OF TUSTIN, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
WITH REPORT ON AUDIT
BYINDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2020
Prepared By: Finance Department
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CITY OF TUSTIN
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2020
Table of Contents
Page
Number
INTRODUCTORY SECTION:
Elected and Administrative Officials i
Letter of Transmittal iii
Organization Chart xi
GFOA Certificate of Achievement for Excellence in Financial Reporting xii
FINANCIAL SECTION:
Independent Auditors' Report 1
Management's Discussion and Analysis
(Required Supplementary Information - Unaudited) 5
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Position 21
Statement of Activities 22
Fund Financial Statements:
Governmental Funds:
Balance Sheet 24
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position 25
Statement of Revenues, Expenditures and Changes in Fund Balances 26
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 27
Proprietary Fund:
Statement of Net Position 28
Statement of Revenues, Expenses and Changes in Net Position 29
Statement of Cash Flows 30
Fiduciary Funds:
Statement of Fiduciary Net Position 32
Statement of Changes in Fiduciary Net Position 33
Notes to Basic Financial Statements 35
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CITY OF TUSTIN
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2020
Table of Contents
Page
Number
REQUIRED SUPPLEMENTARY INFORMATION: 91
Safety Plan
Schedule of Proportionate Share of the Net Pension Liability
92
Schedule of Contributions
94
Miscellaneous Plan:
Schedule of Changes in the Net Pension Liability and Related Ratios
96
Schedule of Contributions
98
Other Post -Employment Benefit Plan (OPEB):
Schedule of Changes in the Net OPEB Liability and Related Ratios
100
Schedule of Contributions - OPEB
101
Annual Money -Weighted Rate of Return on Investments
102
Budgetary Comparison Schedules:
117
General Fund
103
Measure M Special Revenue Fund
104
Note to Required Supplementary Information
105
SUPPLEMENTARY INFORMATION: 107
Other Governmental Funds:
108
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
Asset Forfeiture Special Revenue Fund
116
Air Quality Special Revenue Fund
117
Supplemental Law Enforcement Special Revenue Fund
118
Housing Authority Special Revenue Fund
119
Special Tax B Special Revenue Fund
120
Road Maintenance and Rehabilitation Fund
121
Solid Waste Special Revenue Fund
122
Agency Funds: 123
Combining Statement of Assets and Liabilities 124
Combining Statement of Changes in Assets and Liabilities 125
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CITY OF TUSTIN
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2020
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
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CITY OF TUSTIN
Elected and Administrative Officials
Dr. Allan Bernstein
Mayor
Letitia Clark
Mayor Pro Tem
BARRY W. COOPER AUSTIN LUMBARD
Councilmember Councilmember
AUDIT COMMISSION
R. Lawrence Friend, Chair
Craig Shimomura, Chair Pro Tem
Robert Ammann
Colin Deering
Daniel Erickson
CHARLES E. PUCKETT
Councilmember
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CITY MANAGER
Matthew S. West
ASSISTANT CITY MANAGER
Nicole Bernard
David E. Kendig City Attorney
Elizabeth A. Binsack Director, Community Development
Jason Al -Imam Finance Director / City Treasurer
Erica N. Yasuda City Clerk
Stu Greenberg Chief of Police
Christopher Koster Economic Development Director
Derick Yasuda Director of Human Resources
Chad Clanton Director of Parks & Recreation Services
Douglas S. Stack Director, Public Works / City Engineer
In
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City of Tustin, California
Finance Department
December 22, 2020
To the Honorable Mayor, Members of the City Council
and Citizens of the City of Tustin:
TUSTIN
Ili,mu3,
BUILDING OUR FUTURE
HONORING OUR PAST
It is our pleasure to submit the Comprehensive Annual Financial Report (CAFR) of the City of
Tustin for the fiscal year ended June 30, 2020.
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.
This 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. Internal controls reduce the risk of material misstatement to a minimal level, but not all
such risk can be eliminated due to inherent limitations of internal control. Therefore, 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.
We believe 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, 2020, have been audited by
Clifton Larson Allen, LLP, an independent public accounting firm of licensed certified public
accountants. The independent auditor concluded, based upon the audit, that there was a reasonable
300 Centennial Way, Tustin, CA 92780 www.tustinca.org
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basis for rendering an unmodified opinion that the City of Tustin's financial statements for the
fiscal year ended June 30, 2020, 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 of transmittal is designed to complement the MD&A and should be read in
conjunction with it. The City of Tustin's MD&A can be found immediately following the report
of the independent auditors.
PROFILE OF THE CITY OF TUSTIN
The City of Tustin is located in the central part of Orange County, about forty miles southeast of
Los Angeles and eighty miles north of San Diego, at the intersection of the 5 and 55 Freeways. Tustin
covers over eleven square miles adjacent to the cities of Orange, Santa Ana, and Irvine. The State of
California Department of Finance has estimated the City's January 1, 2020 population at 80,382 a
decrease from 2019 of about 1%. Most cities in Orange County showed minor decreases in
population or were relatively flat year -over -year, with the County of Orange experiencing a 0.04%
increase in population. The statewide population growth rate of 0.22% is the slowest in the State's
history. This rate is driven by increases in mortality and declines in birth rates. Adding to the slow
growth in population, affordable housing continues to be challenging for many.
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 directors.
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 and emergency medical 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
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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.tusfnca.org. The City Council conducts various open
budget workshops 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 103 as part of the required supplementary information, and for nonmajor governmental
funds, this comparison is presented on pages 114-122 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 32-33.
ECONOMIC OUTLOOK
On March 19, 2020, California Governor Gavin Newsom issued Executive Order N-33-20 (Stay
at Home Order), which ordered all individuals within the State to stay home or at their place of
residence, except as needed to maintain continuity of operation of federal critical infrastructure
sectors, including essential services of government. Prior to COVID-19, national, state and local
economies were expected to maintain growth and there were no indications of slowing. However,
in just a matter of weeks the unemployment rate in California peaked at 16.4% in April 2020.
Thereafter, California's labor market regained some momentum as business restrictions were
loosened resulting in an unemployment rate of 9.3% as of October 2020; however, the State's
unemployment rate remains elevated relative to the nation as a whole, which had a rate of 6.9% as
of October 2020.
The State -mandated business restrictions and stay-at-home orders have resulted in significant
reductions in City revenue, which has primarily affected sales tax revenues, transient occupancy
tax revenues and departmental revenues related to decreases in Recreation class activity and
building permit revenue.
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The General Fund budget for Fiscal Year 2020-2021 reflects estimated revenues of $65 million,
which includes an estimated loss of $4 million of General Fund revenues due to COVID-19. Sales
tax revenue makes up 36% of General Fund revenues, which is projected to be down $2 million
as decreases in core retail sales are projected as social distancing measures and State -mandated
business restrictions are expected in response to COVID-19. General Fund appropriations are set
at $72 million for 2020-2021, which is consistent with fiscal year 2019-2020 with expenditure
increases largely related to amounts required to be paid annually to Ca1PERS. The operating deficit
can be covered by planned use of reserves and anticipated expenditure savings.
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, an approximately 400,000 -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. FLIGHT
Phase 2 is estimated to encompass an additional 470,000 square feet of creative office.
When all phases are complete, FLIGHT will be comprised of approximately 870,000
square feet and home to an estimated 3,400 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, is comprised of two 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.
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
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Hoag Memorial Hospital Presbyterian completed the 60,000 square foot medical
office building in April 2018.
■ Construction has started on an acute care hospital/rehabilitation facility to
be operated by HealthSouth, with completion planned for 2021.
• 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 have opened, sales are ongoing,
and the first residents began occupying their homes in late 2019. Construction of this new
community is 90% complete with the remaining units expected to be finished in early -
2021. As of December 2020, 78% of the homes have been sold
• Brookfield Homes of Southern California (Neighborhood D South). This community will
feature 400 for -sale units comprised of three design styles: 154 attached stacked flats, 129
row townhomes, as well as 117 luxury single-family homes. The 400 units and amenities
are located on an approximately 25 -acre site within Neighborhood D South. Site
preparation and grading is underway, with the first model homes expected to be completed
in 2022.
Pacific Center East, an area near the intersection of Edinger Avenue and the 55 freeway, also
contains City -owned assets that are either currently under construction or available for future
development. The area currently includes two hotels that generate a significant amount of
Transient Occupancy Tax revenue.
• SchoolsFirst Federal Credit Union: In 2019, the City sold a 1.7 -acre parcel to SchoolsFirst
to expand SchoolsFirst's existing campus and consolidate their facilities into a new
headquarters in Tustin. The site is bounded by Newport Avenue, Del Amo Avenue and
Edinger Avenue. SchoolsFirst is progressing with construction on its new 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. SchoolsFirst expects to occupy the new office building by mid -2021.
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• 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 focus on Old Town Tustin:
• 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 residents and 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 is within walking distance to Old Town businesses. Models are open to the public
and sales are ongoing. Project completion is expected in 2021.
Some of the factors impacting the sustainability of future budgets include the City's pensions and
unfunded liabilities, and funding of construction costs for infrastructure to advance development
within Tustin Legacy. City Staff will continue to work with the Council to prioritize these types
of 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, with the intent of
maximizing the City's long-term revenues.
ACCOMPLISHMENTS AND FUTURE PROJECTS
Major capital improvement projects completed during fiscal year 2020 include the following:
• Tustin Legacy Facilities
• Tustin Legacy Linear Park between Barranca Parkway and Armstrong Avenue
• Parkway Landscaping on Tustin Ranch Road and Valencia Avenue (by TUSD Site)
• Moffett Drive Extension from Park Avenue to east of Peters Canyon Channel
• Public Facilities
• Median Landscape Rehabilitation, Street Light LED Conversion Project & Annual
Major Building Maintenance
• Transportation Facilities
• Annual Pavement Maintenance and Public Infrastructure Maintenance Program
The City's capital projects for fiscal year 2020-2021 are budgeted at $44.7 million. The budget
reflects 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
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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 2020-2021 include:
• Tustin Legacy Facilities
• Veterans Sports Park
• Alley Grove D -South Improvements
• Neighborhood D -South Infrastructure Construction — Phase I
• Tustin Legacy Linear Park Between Armstrong Avenue and Tustin Ranch Road
• Transportation Facilities
• Annual Pavement Maintenance and Public Infrastructure Maintenance Program
• Newport Avenue Rehabilitation between I-5 Freeway and Sycamore Avenue
• Del Amo Avenue and Newport Avenue Improvements
• Public Facilities
• Annual Major Building Maintenance
• Park Facilities
• Peppertree Park Restroom/Playground
• Water Projects
• Simon Ranch Reservoir, Booster Pump Station and Pipeline Replacement
• Conjunctive Use Well at Beneta Well Site
• Flood Control Facilities
• Citywide Storm Drain Catch Basin Improvements
AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded
a Certificate of Achievement for Excellence in Financial Reporting to the City of Tustin for its
Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019. This was the
thirty-third (33) consecutive year that Tustin has achieved this prestigious award. In order to be
awarded a Certificate of Achievement, a municipality 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.
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ACKNOWLEDGMENTS
The preparation of this report would not have been possible without the efficient and dedicated
services of the entire staff of the Finance Department. Special thanks are due to the following
members of the Finance Department who assisted and contributed to its preparation: Jennifer Leisz,
Deputy Director — Financial Services; Sean Tran, Deputy Director — Administrative Services; Glenda
Babbitt, Management Analyst; Andrea Campbell, Senior Accountant; and JP Facundo, Accountant.
Credit also must be given to the City Council for their exceptional support for and commitment to
maintaining the highest standards of professionalism in the management of the City's finances.
Respectfully submitted,
V141
Matthew S. West
City Manager
x
PAN OZ10411�
Jason Al -Imam
Finance Director/City Treasurer
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CITIZENS OF
TUSTIN
MAYOR
CITY COUNCIL
CITY MANAGER
LOCAL GOVERNMENT
FY 2019-2020
SUCCESSOR AGENCY TO THE TUSTIN
REDEVELOPMENT AGENCY
COORDINATION AND
COOPERATION
POLICE DEPUTY CITY PRIVATE
MANAGER UTILITIES
Cable T.V.
Electricity
N atu ral Gas
Telephone
PUBLIC WORKS HUMAN
RESOURCES
CONTRACT
SERVICES
Fire
Refuse
COMMUNITY FINANCE Animal Control
DEVELOPMENT
PARKS &
RECREATION
CITY CLERK
ECONOMIC
DEVELOPMENT
CITY ATTORNEY
xi
SPECIAL
DISTRICTS
Library
Lighting
Sewers
Flood Control
Re -Assessment
District 95-1
C F D's
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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, 2019
Executive Director/CEO
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CLA (CliftonLarsonAllen LLP)
2875 Michelle Drive
Suite 300
Irvine, CA 92606
TJWAW,
714-978-1300 1 fax 714-978-7893
CLAconnect.com
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, 2020, and the related notes to the 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 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 financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the 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.
A member of
Nexia
International
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Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business -type activity, each major fund,
and the aggregate remaining fund information of the City of Tustin, as of June 30, 2020, and the
respective changes in financial position and, where applicable, cash flows thereof for the year then
ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 20 to the financial statements, the City made a restatement to beginning net
positions. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, the safety plan schedule of proportionate share of the net
pension liability and the schedule of contributions, the miscellaneous plan schedule of changes in the
net pension liability and related ratios and the schedule of contributions, the other post -employment
benefit plan schedule of changes in the net OPEB liability and related ratios and the schedule of
contributions — OPEB and 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 our audit of the basic financial statements. We do
not express an opinion or provide any assurance on the RSI because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The introductory section, combining and
individual nonmajor fund financial statements (supplementary information), and statistical section are
presented for purposes of additional analysis and are not a required part of the basic financial
statements.
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Other Matters (Continued)
Other Information (Continued)
The supplementary information, as listed in the table of contents, is the responsibility of management
and was derived from and relates directly to the underlying accounting and other records used to
prepare the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the supplementary information is fairly stated in all material respects in
relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in
the audit of the basic financial statements and, accordingly, we do not express an opinion or provide
any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 22, 2020, on our consideration of the City's internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements
and other matters. The purpose of that report is solely to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the effectiveness of the City's 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.
CliftonLarsonAllen LLP
Irvine, California
December 22, 2020
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
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, 2020. 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, 2020, by $707 million (net position). Net position consists of
$551 million invested in capital assets, $54 million in restricted net position and $102 million in
unrestricted net position.
• The City's total net position decreased by $29.3 million during the fiscal year ended
June 30, 2020. The decrease in net position is largely related to depreciation expense, which
amounted to approximately $14 million during the fiscal year. In addition, deferred resources
related to the City's pension liability and other post -employment benefits resulted in a $4.7
million reduction to net position, which is discussed in further detail within the governmental
activities section of management's discussion and analysis.
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.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
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 cashflows. Thus, revenues
and expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Government -wide financial statements distinguish City governmental activities that are principally
supported by taxes and intergovernmental revenues from other business -type activities that are intended
to recover all or a significant portion of their costs through user fees and charges. Governmental
activities of the City, and the Tustin Public Financing Authority, a blended component unit, include
general government, public safety, community services, and public works. Business -type activity of
the City is the Water Utility.
The government -wide financial statements can be found immediately following this discussion and
analysis.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses
fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of
the funds of the City can be divided into three categories: governmental funds, proprietary funds, and
fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government -wide financial statements. However, unlike the
government -wide financial statements, governmental fund financial statements focus on near-term
inflows and ou�flows ofspendable resources, as well as on balances ofspendable 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.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
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, 2014-1, and 2018-1. The fiduciary funds financial statements can be
found immediately following the proprietary fund financial statements.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
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 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 (79 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.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
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, 2020
(in millions of dollars)
Governmental Business -Type Total
Activities Activities Total % Change
2019 2020 2019 2020 2019 2020 2019-2020
$272.2
$234.2
$36.7
$32.8
$308.9
$267.0
520.4
529.8
48.6
53.8
569.0
583.6
792.6
764.0
85.3
86.6
877.9
850.6 (3.1%)
16.3
14.5
4_0
4_4
20.3
18.9
25.5
22.0
4.8
5.9
30.3
27.9
83.6
84.3
45.7
45.6
129.3
129.9
109.1
106.3
50.5
51.5
159.6
157.8 (1.1%)
1_8
4_0
0_1
0_3
1_9
4_3
520.2 527.0 20.7 24.1 540.9 551.1
67.8 54.1 - - 67.8 54.1
110.0 87.1 18.0 15.1 128.0 102.2
$698.0 5668.2 838.7 839.2 5736.7 $707.4 (4%)
Governmental activities. Net position of the City's governmental activities decreased 4.3% to $668.2
million, of which $527 million is invested in capital assets such as equipment, buildings, and
infrastructure. Of the remaining total, $54.1 million is restricted to specifically stipulated spending
agreements originated by law, contract, or other agreements with external parties. The remaining $87.1
million is subject to designation for specific purposes as approved by the City Council, and may be used
to meet the City's ongoing obligations.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
Government -wide Financial Analysis (Continued)
Pr Expenses and Program Revenues - Governmental Activities
millions Year Ending June 30, 2020
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
I.A Expenses I.A Revenue
Revenues By Source - Governmental Activities
Other general
Investment income revenues6 8%
6.7% Gain on sale of land held for resale
1.5
Sales tax
38.2% or
Othertaxes
2.7%
Transient occupancy
taxes
Business license taxes 2.4%
0.7
10
Property taxes
41.0%
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
Government -wide Financial Analysis (Continued)
City of Tustin
Summary of Changes in Net Position
For the Year Ended June 30, 2020
(in millions of dollars)
Revenues:
Program revenues:
Charges for services
Operating grants & contributions
Capital grants and contributions
General revenues:
Taxes
Intergovernmental revenue
Motor vehicle taxes
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
% Chan2e
2019
2020
2019
2020
2019
2020
2019-2020
$8.9
$8.4
$17.3
$17.3
$26.2
$25.7
5.0
4.9
-
-
5.0
4.9
3.9
4.6
-
-
3.9
4.6
30.4
31.4
-
-
30.4
31.4
26.6
25.5
-
-
26.6
25.5
-
0.1
-
-
-
0.1
7.2
4.4
1.1
0.9
8.3
5.3
6.0
4.3
0.2
-
6.2
4.3
0.4
1.0
-
-
0.4
1.0
88.4
84.6
18.6
18.2
107.0
102.8
(3.9%)
27.1
29.3
-
-
27.1
29.3
36.2
39.1
-
-
36.2
39.1
45.9
40.4
-
-
45.9
40.4
20.3
5.7
-
-
20.3
5.7
-
17.8
17.7
17.8
17.7
129.5
114.5
17.8
17.7
147.3
132.2
(10.3%)
(41.1)
(29.9)
0.8
0.5
(40.3)
(29.4)
737.7
696.6
39.3
40.1
777.0
736.7
-
1_4
=
1.4
-
96.6
$668.1
540.1
539.2
$736.7
$707.3
(4%)
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
Government -wide Financial Analysis (Continued)
Net position at July 1, 2019 has been adjusted as noted in the previous chart to allocate the total OPEB
liability and related deferred outflows and inflows of resources to the Water Enterprise Fund as of the
beginning of the year. The restatement resulted in a $1.4 million decrease to net position for the Water
Enterprise Fund and a corresponding increase to Governmental Activities Funds. There was no change
in the total Government -wide net position as a result of the restatement.
In governmental activities, the decrease in net position of $29.9 million is primarily due to the following:
• Capital asset depreciation expense in the amount of $12.4 million.
• Deferred resources related to the City's pension liability and other post -employment benefits
resulted in a $4.7 million reduction to net position:
o Deferred outflows related to pension plans decreased $2.2 million mostly due to changes
in actuarial assumptions affecting the calculation of the pension liability.
o Deferred inflows of resources increased $2.5 million mostly due to differences between
actual and expected experience and changes in assumptions for Other Post -Employment
Benefits (OPEB).
• Contribution of capital assets to other entities in the amount of $4 million.
• Governmental liabilities increased by $2 million related to claims and judgments and
compensated absences.
In the prior fiscal year, governmental activities decreased by approximately $41.1 million compared to
a decrease of $29.9 million in 2019/20, which reflects an $11.2 million difference year -over -year. The
year -over -year difference is primarily due to a $15 million payment that the City made in the prior year
to Tustin Unified School District (TUSD) for additional funding for the Legacy Magnet Academy 6-12
School Project.
Business -Type activities net position increased slightly reflecting an increase of $0.5 million, which is
comparable with the prior year. Revenues and expenses were also fairly consistent with prior years.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
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 $209.5 million, a decrease of $36.4 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 $42.3 million during fiscal year 2020. Approximately $80.8 million (38.6%)
of the City's governmental fund balance constitutes nonspendable fund balance. Of the nonspendable
amount, $80.3 million is land held for resale. The remainder of the fund balance consists of $53.5 million
in restricted funds, $0.8 million assigned to capital projects, and $74.3 million in unassigned funds.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned
fund balance of the General Fund was $75 million, while total fund balance was $172.3 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 74% of the total General Fund expenditures.
The Measure M Special Revenue Fund is another major governmental fund of the City, with restricted
fund balance of $7 million at the end of the current fiscal year. These funds are restricted by law for
specific purposes such as, road maintenance / safety and traffic improvement projects. During fiscal
year 2020, Measure M fund revenues over expenditures resulted in an increase of fund balance by $1.3
million, compared to a $0.3 million increase in fund balance in the prior year. The year -over -year
increase in fund balance is largely related to capital projects that were budgeted in fiscal year 2020;
however, these projects were not fully expended and have been carried -over into fiscal year 2021.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
Financial Analysis of the Government's Funds (Continued)
City of Tustin
Summary of Changes in Fund Balances - General Fund
For the Year Ended June 30, 2020
(in millions of dollars)
Revenues:
Taxes
Charges for services
Intergovernmental
Fines and forfeitures
Licenses and permits
Investment income
Other
Profit participation
Gain on sale of land held for resale
Total Revenues
Expenditures:
General government
Public safety
Public works
Community services
Capital Outlay
Debt service
Total Expenses
Excess of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses):
Net transfers
Net Change in Fund Balance
14
Total
% Change
2019 2020 2019-2020
$26.3 $27.0
1.8
1.8
28.4
27.6
0.9
0.8
1.2
1.3
5.5
3.4
3.7
3.2
0.2
-
-
1.0
68.0
66.1 (2.8%)
24.4
25.8
33.1
36.2
8.9
7.9
18.7
3.7
25.5
27.8
0.1
0.1
110.7
101.5 (9.2%)
(42.7) (35.4)
5_2 4_7
3( 7.513( 0.71
(18.1%)
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
Financial Analysis of the Government's Funds (Continued)
Material transactions impacting revenues in the General Fund were as follows:
• Taxes increased $0.7 million primarily due to higher property tax revenues. Property tax revenue
totaled about $23 million reflecting an increase of approximately $0.8 million primarily due to
increases in assessed values. The growth in assessed values is largely due to the 2% Proposition
13 inflation adjustment, changes in ownership and development at the former Marine Corp Air
Station, known as Tustin Legacy.
• Intergovernmental revenue, which includes sales taxes, decreased by $0.8 million compared to
the prior fiscal year due to shelter in place restrictions imposed by the State of California in
response to COVID-19.
• Gain on sale of land held for resale totaled $1 million in fiscal year 2020 due to the sale of land
at Pacific Center East to SchoolsFirst Federal Credit Union. There were no land sales affecting
the General Fund in fiscal year 2019.
• Investment income decreased $2.1 million during 2020 largely due to lower cash balances and a
decline in the average weighted yield on investments caused by the declining interest rate
environment during most of fiscal year 2020.
• The City received approximately $682,000 in Coronavirus Relief Funds from the County of
Orange, which was used for public safety expenses related to COVID-19 and to care for the
homeless. In 2019/20, the City also received $1.9 million in Coronavirus Relief Funds from the
County of Orange for economic support to small businesses. However, those funds were not
expended until after July 1, 2020 and therefore those revenues are reflected as unearned revenue.
Changes in General Fund expenditures from previous fiscal year, by function, occurred as follows during
the year ended June 30, 2020:
• Community Services expenditures decreased $15 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.
• General Government expenditures increased $1.4 million from prior year mostly due to higher
pension costs. In addition to Ca1PERS required contributions, the City made 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.
• Public safety expenditures increased $3.1 million over the prior year primarily due to higher
pension costs, increased costs for contract fire services with Orange County Fire Authority and
due to costs associated with a new Computer Aided Dispatch (CAD)/Records Management
System (RMS).
• Public Works expenditures decreased $1.0 million mostly due to costs incurred during the prior
fiscal year for architectural plans for the Tustin Ranch Road pedestrian bridge ($1.2 million).
15
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
Financial Analysis of the Government's Funds (Continued)
Capital Outlay increased $2.3 million primarily due to increases in construction expenditures for
the following projects:
o Tustin Legacy Veterans Sports Park
o City Corporate Yard Facilities
o Tustin Legacy Linear Park Improvements
o Various Park, Road and Median Improvements primarily in the Legacy development
General Fund Budgetary Highlights
Differences between the General Fund actual revenues and amended budgeted revenues were $1 million
lower, mostly due to a decrease in sales tax revenues and other revenues that were affected by the
Statewide shelter in place restrictions related to COVID-19. The amended budgeted expenditures were
$145 million, an increase in appropriations of $24.5 million from the original budgeted expenditures of
$120.5 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 $145 million by
$43.5 million, primarily due to appropriations for capital projects spanning multiple years. The City
shifted its focus from several capital projects due to the impacts associated with COVID-19.
Specifically, the City re-engaged with developers to discuss the viability of various projects due to the
impacts on the development community as a result of the response to the COVID-19 pandemic.
Financial Analysis of the Proprietary Funds
The City has one proprietary fund which is the Water Enterprise Fund. As mentioned previously, net
position at July 1, 2019 has been adjusted to allocate the total OPEB liability and related deferred
outflows and inflows of resources to the Water Enterprise Fund as of the beginning of the year. The
restatement resulted in a $1.4 million decrease to net position for the Water Enterprise Fund. Total
revenues for the Water Fund exceeded total expenses by $0.5 million, resulting in an increase in net
position during fiscal year 2020, from $38.7 million as restated as of June 30, 2019, to $39.2 million as
of June 30, 2020.
Operating revenues showed a modest increase during fiscal year 2020, resulting in $17.3 million for the
year. City Council passed a Water Rate increase January 2020. The increase of about $0.5 million in net
position is consistent with the consultant's estimated revenue increase of $0.4 million that would be
generated from the rate increase.
Related operating costs decreased slightly ($0.3 million) from prior fiscal year, resulting from various
minor declines in expenditures for purchased water and other operations.
16
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
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, 2020 amounts to $583.8 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.
City of Tustin
Summary of Changes in Capital Assets
For the Year Ended June 30, 2020
(in millions of dollars)
Overall, capital asset additions of $33 million in fiscal year 2020 (net of transfers from construction in
progress) were offset by depreciation expense of $14 million and retirements of $4 million for a net
increase in capital assets of approximately $15 million. In fiscal year 2020, the following major
construction projects were completed: Linear Park ($9.6 Million), Moffett Dr., Armstrong Ave., &
Kensington Dr. as part of the Legacy road extensions ($33.1 Million), Median Landscape rehab ($3.0
Million), and El Camino Real road improvements ($1.5 Million). The following major construction
projects were in progress in fiscal year 2020: Veterans Sports Park, Corp Yard Facilities, Linear Park
and various road widening, extension, and traffic signal projects at the Legacy development.
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.
17
Total
Governmental
Business -Type
%
Activities
Activities
Total
Change
2019
2020
2019
2020
2019
2020
2019-
2020
Land
$83.1
$83.1
$1.2
$1.2
$84.3
$84.3
Right of way
43.8
43.8
-
-
43.8
43.8
Construction in progress
78.9
46.6
5.4
12.5
84.3
59.1
Buildings and improvements
74.7
87.3
3.7
3.5
78.4
90.8
Machinery and equipment
5.6
5.3
-
-
5.6
5.3
Infrastructure
234.3
263.8
-
-
234.3
263.8
Property, plant and equipment
-
-
38.3
36.7
38.3
36.7
Total Capital Assets, Net
$520,
$529.9
$48.6
S53.9
S569.0
S583.8
2.6%
Overall, capital asset additions of $33 million in fiscal year 2020 (net of transfers from construction in
progress) were offset by depreciation expense of $14 million and retirements of $4 million for a net
increase in capital assets of approximately $15 million. In fiscal year 2020, the following major
construction projects were completed: Linear Park ($9.6 Million), Moffett Dr., Armstrong Ave., &
Kensington Dr. as part of the Legacy road extensions ($33.1 Million), Median Landscape rehab ($3.0
Million), and El Camino Real road improvements ($1.5 Million). The following major construction
projects were in progress in fiscal year 2020: Veterans Sports Park, Corp Yard Facilities, Linear Park
and various road widening, extension, and traffic signal projects at the Legacy development.
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.
17
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
Long-term Debt
At the end of the current fiscal year, the City had total outstanding long-term liabilities of $129.8 million.
Of this amount, $40.5 million are secured solely by specified revenue sources such as property tax
increment and water service charges.
Bonds payable
Claims and judgments
Postemployment
benefits obligation
Compensated absences
Lease Payable
Pension liabilities
City of Tustin
Summary of Changes in Long -Term Liabilities
For the Year Ended June 30, 2020
(in millions of dollars)
Governmental
Activities
2019 2020
6.4 7.8
Business -Type
Activities
2019 2020
$40.5 $40.5
Total
Total % Change
2019 2020 2019-2020
$40.5 $40.5
6.4 7.8
12.4
10.3
1.4 1.2 13.8
11.5
3.4
4.0
0.3 0.3 3.7
4.3
0.2
0.1
- - 0.2
0.1
61.2
62.1
3_6 3_5 64.8
65.6
Total Outstanding Debt $83.6 $84.3 $45.8 &L5,5 129 4 $129.8 0.3%
Overall, long-term debt increased $0.4 million from the prior year balances mostly due to the increase
in Claims and Judgements of $1.4 million. The increases for the Claims and judgments during fiscal
year 2020 were primarily due to increases in workers compensation claims. The increase in pension
liabilities was comprised of an increase of $1.6 million for the Safety (police) Plans and a decrease of
$0.7 million for Miscellaneous (all other) plans. The above noted increases were offset by decreases in
the other long-term debt categories. The decrease in postemployment benefits obligation of $2.3 million
was due to differences between actual and expected experience and employer contributions. In addition
to normal employer contribution activity, the City made a $0.5 million contribution to Public Agency
Retirement Services (PARS) Trust.
As mentioned previously, an adjustment was made to allocate the total OPEB liability to the Water
Enterprise Funds. This restatement resulted in recording a $1.2 million post -employment benefits
obligation in the Water Enterprise Fund and a corresponding decrease to long-term liabilities in the
Governmental Activities Funds.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2020
Long-term Debt (Continued)
On February 11, 2020, the City issued $14,910,000, Taxable Water Refunding Revenue Bonds, Series
2020, to provide funds to defease the 2013 Water Revenue Bonds and pay the costs of issuing the bonds.
The bonds were refunded to reduce the City's total debt service payments over 23 years by $3,101,131
and to obtain an economic gain (difference between the present values of the old and new debt) of
$2,160,323. 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
On June 18, 2019, the City Council adopted a Biennial Budget that established an operating and capital
spending plan for Fiscal Years 2019-2020 and 2020-2021. On June 16, 2020, the City Council adopted
a revised operating and capital budget for Fiscal Year 2020-2021 in response to COVID-19, which has
resulted in an estimated loss of $4 million of General Fund revenues in 2020-2021. The General Fund
fiscal year 2020-2021 estimated revenues are $65 million and budgeted appropriations are $72 million.
The operating deficit can be covered by planned use reserves and anticipated expenditure savings. The
appropriations are $1.9 million higher than the prior year's appropriation. Overall, the appropriations
are consistent with fiscal year 2020. Expenditure increases are largely related to amounts required to be
paid annually to Ca1PERS. The City has also budgeted additional discretionary payments of $3.3 million
to paydown the City's pension liability with the goal of eliminating all pension debt by 2032. There
were no fee increases as part of the preparation and adoption of the fiscal year 2020-21 budget.
Requests for Information
This financial report is designed to provide a general overview of the City's finances for all those with
an interest in the government's finances. Questions concerning any of the information provided in this
report or requests for additional financial information should be addressed to the Finance Director / City
Treasurer, City of Tustin, 300 Centennial Way, Tustin, California, 92780.
19
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20
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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 OPEB plan
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, 2020
21
Governmental
Business -type
Activities
Activity
Total
S 112,946,827
S 17,932,728
S 130,879,555
9,365,735
2,536,512
11,902,247
369,244
68,818
438,062
898,290
-
898,290
(483,977)
-
(483,977)
499,032
31,145
530,177
80,348,325
3,763,799
84,112,124
24,079,781
8,463,498
32,543,279
6,182,499
-
6,182,499
173,373,711
13,693,852
187,067,563
356,441,349
40,148,594
396,589,943
764,020,816
86,638,946
850,659,762
-
3,693,397
3,693,397
17,867
1,767
19,634
14,461,622
671,192
15,132,814
14,479,489
4,366,356
18,845,845
10,775,814
5,077,580
15,853,394
-
360,549
360,549
9,274,938
502,760
9,777,698
1,973,639
-
1,973,639
11, 544, 541
1,28 5,3 34
12, 829, 875
449,410
39,508,832
39,958,242
10,228,663
1,225,936
11,454, 599
62,055,994
3,525,846
65,581,840
106,302,999
51,486,837
157,789,836
2,090,115
206,715
2,296,830
1,925,314
95,026
2,020,340
4,015,429
301,741
4,317,170
526,953,804
24,145,887
551,099,691
4,573,545
-
4,573,545
3,188,683
3,188,683
40,161,934
40,161,934
6,182,499
-
6,182,499
87,121,412
15,070,837
102,192,249
S 668,181,877
S 39,216,724
S 707,398,601
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
STATEMENT OF ACTIVITIES
For the year ended June 30, 2020
Functions/programs
Expenses
Governmental activities:
for
General government
$ 29,282,004
Public safety
39,064,730
Public works
40,430,009
Community services
5,682,249
Interest on long-term liabilities
6,444
Total governmental activities
114,465,436
Business -type activity:
-
Water
17,767,158
Total
$ 132,232,594
See accompanying notes to basic financial statements.
Program Revenues
Charges
Operating
Capital
for
Grants and
Grants and
Services
Contributions
Contributions
$ 2,157,735
$ 42,428
$ -
1,205,519
1,039,770
-
3,123,961
3,349,911
4,278,831
1,892,126
479,533
286,562
8,379,341
4,911,642
4,565,393
17,364,694
-
-
$ 25,744,035
$ 4,911,642
$ 4,565,393
General revenues:
Taxes:
Property
Franchise
Transient occupancy
Business license
Intergovernmental revenue - sales tax shared state revenues
Motor vehicle taxes shared state revenues
Earnings on investments
Gain on sale of land held for resale
Miscellaneous
Total general revenues
Change in net position
NET POSITION AT BEGINNING OF YEAR, AS RESTATED
NET POSITION AT END OF YEAR
22
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Net (Expense) Revenue and
Changes in Net Position
Governmental Business -type
Activities Activity Total
$ (27,081,841) $ - $ (27,081,841)
(36,819,441) - (36,819,441)
(29,677,306) - (29,677,306)
(3,024,028) - (3,024,028)
(6,444) - (6,444)
(96,609,060) - (96,609,060)
- (402,464) (402,464)
(96,609,060) (402,464) (97,011,524)
27,358,525
-
27,358,525
1,792,263
-
1,792,263
1,593,532
-
1,593,532
438,632
-
438,632
25,487,518
-
25,487,518
64,400
-
64,400
4,445,124
869,426
5,314,550
1,014,511
-
1,014,511
4,556,040
23,193
4,579,233
66,750,545
892,619
67,643,164
(29,858,515)
490,155
(29,368,360)
698,040,392
38,726,569
736,766,961
$ 668,181,877 $ 39,216,724 $ 707,398,601
23
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
BALANCESBEET
GOVERNMENTAL FUNDS
June 30, 2020
See accompanying notes to basic financial statements.
24
Measure M
Other
Total
Special Revenue
Governmental
Governmental
General
Fund
Funds
Funds
ASSETS
Cash and investments
$
85,252,491
$
6,909,441
$ 20,784,895
$ 112,946,827
Restricted cash and investments
11,476,191
-
12,603,590
24,079,781
Restricted cash and investments held by trust
6,182,499
-
-
6,182,499
Receivables:
Accounts
6,450,086
554,080
2,361,569
9,365,735
Interest
243,586
18,027
107,631
369,244
Loans
525,194
-
373,096
898,290
Allowance for uncollectibles
(460,882)
-
(23,095)
(483,977)
Prepaid items and deposits
499,032
-
-
499,032
Land held for resale
80,348,325
-
-
80,348,325
TOTAL ASSETS
$
190,516,522
$
7,481,548
$ 36,207,686
$ 234,205,756
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
LIABILITIES:
Accounts payable and accrued liabilities
$
7,546,885
$
158,015
$ 3,070,914
$ 10,775,814
Deposits payable
8,657,489
-
617,449
9,274,938
Unearned revenue
1,914,618
-
59,021
1,973,639
TOTAL LIABILITIES
18,118,992
158,015
3,747,384
22,024,391
DEFERRED INFLOWS OF RESOURCES:
Unavailable revenue
139,502
351,806
2,230,833
2,722,141
FUND BALANCES:
Nonspendable
80,847,357
-
-
80,847,357
Restricted
16,438,469
6,971,727
30,042,734
53,452,930
Assigned
-
-
815,527
815,527
Unassigned
74,972,202
-
(628,792)
74,343,410
TOTAL FUND BALANCES
172,258,028
6,971,727
30,229,469
209,459,224
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$
190,516,522
$
7,481,548
$ 36,207,686
$ 234,205,756
See accompanying notes to basic financial statements.
24
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
June 30, 2020
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, 2020 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 outflows of resources
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.
25
$ (7,842,971)
(4,026,489)
(124,491)
14,461,622
(1,925,314)
(62,055,994)
17,867
(2,090,115)
(10,228,663)
$ 209,459,224
529,815,060
(11,993,951)
(49,519,686)
(12,300,911)
2,722,141
$ 668,181,877
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the year ended June 30, 2020
OTHER FINANCING SOURCES (USES)
Transfers in
4,745,170
Measure M
Other
Total
Transfers out
-
Special Revenue
Governmental
Governmental
TOTAL OTHER FINANCING
General
Fund
Funds
Funds
REVENUES:
4,745,170
(81,300)
(4,663,870)
-
Taxes
$ 26,977,144
$ -
$ 209,868
$ 27,187,012
Licenses and permits
1,280,180
-
-
1,280,180
Fines and forfeitures
841,747
-
-
841,747
Investment income
3,410,022
217,155
827,883
4,455,060
Intergovernmental revenue
27,564,940
1,697,850
8,893,777
38,156,567
Charges for services
1,765,424
-
923,497
2,688,921
Rental income
1,867,572
-
266,134
2,133,706
Other revenue
1,368,360
-
3,550,066
4,918,426
Gain on sale of land held for resale
1,014,511
-
-
1,014,511
TOTAL REVENUES
66,089,900
11915,005
14,671,225
82,676,130
EXPENDITURES:
Current:
General government
25,834,612
2,785
1,307,729
27,145,126
Public safety
36,177,669
-
249,389
36,427,058
Public works
7,924,563
-
307,226
8,231,789
Community services
3,662,055
-
1,293,916
4,955,971
Capital outlay
27,818,762
500,115
13,958,577
42,277,454
Debt service:
Principal retirement
74,763
-
-
74,763
Interest expenditures
6,444
-
-
6,444
TOTAL EXPENDITURES
101,498,868
502,900
17,116,837
119,118,605
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
(35,408,968)
1,412,105
(2,445,612)
(36,442,475)
OTHER FINANCING SOURCES (USES)
Transfers in
4,745,170
-
-
4,745,170
Transfers out
-
(81,300)
(4,663,870)
(4,745,170)
TOTAL OTHER FINANCING
SOURCES (USES)
4,745,170
(81,300)
(4,663,870)
-
NET CHANGE IN FUND BALANCES
(30,663,798)
1,330,805
(7,109,482)
(36,442,475)
FUND BALANCES - BEGINNING OF YEAR
202,921,826
5,640,922
37,338,951
245,901,699
FUND BALANCES - END OF YEAR
$ 172,258,028 $
6,971,727
$ 30,229,469
$ 209,459,224
See accompanying notes to basic financial statements.
26
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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, 2020
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 $ 26,290,449
Contribution of capital assets to other entities (3,989,785)
Disposition of capital assets (416,018)
Depreciation expense (12,435,140)
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 74,763
Claims and judgments payable (1,397,495)
Compensated absences payable (605,192)
Pension expenditures 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 expenditures 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.
27
$ (36,442,475)
9,449,506
(1,927,924)
(3,279,413)
411,000
1,930,791
$ (29,858,515)
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
STATEMENT OF NET POSITION
PROPRIETARY FUND
June 30, 2020
ASSETS:
CURRENT ASSETS:
Cash and investments
Accounts receivable
Interest receivable
Prepaid items
Land held for resale
Restricted cash and investments
TOTAL CURRENT ASSETS
NONCURRENT ASSETS:
Capital assets:
Not being depreciated
Being depreciated, net
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
Deferred amounts on pension plans
Deferred amounts on OPEB plan
TOTAL DEFERRED OUTFLOWS OF RESOURCES
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
Deposits payable
Compensated absences payable
Interest payable
Bonds payable
TOTAL CURRENT LIABILITIES
Business -type
Activity
Water
Enterprise Fund
$ 17,932,728
2,536,512
68,818
31,145
3,763,799
8,463,498
32,796,500
13,693,852
40,148,594
53,842,446
86,638,946
3,693,397
671,192
1,767
4,366,356
5,077,580
502,760
235,334
360,549
1,050,000
7,226,223
LONG-TERM LIABILITIES:
Compensated absences payable
26,149
Bonds payable
39,482,683
Net pension liability
3,525,846
Total OPEB liability
1,225,936
TOTAL LONG-TERM LIABILITIES
44,260,614
TOTAL LIABILITIES
51,486,837
DEFERRED INFLOWS OF RESOURCES:
Deferred amounts on pension plans
95,026
Deferred amounts on OPEB plan
206,715
TOTAL DEFERRED INFLOWS OF RESOURCES
301,741
NET POSITION:
Net investment in capital assets
24,145,887
Unrestricted
15,070,837
TOTAL NET POSITION
$ 39,216,724
See accompanying notes to basic financial statements.
28
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUND
For the year ended June 30, 2020
NONOPERATING REVENUES (EXPENSES)
Investment income 869,426
Other income 23,193
Interest expense and other fiscal charges (1,802,326)
TOTAL NONOPERATING REVENUES (EXPENSES) (909,707)
CHANGE IN NET POSITION 490,155
NET POSITION AT BEGINNING OF YEAR, AS RESTATED 38,726,569
NET POSITION AT END OF YEAR
;ee accompanying notes to basic financial statements.
29
$ 39,216,724
Business -type
Activity
Water
Enterprise Fund
OPERATING REVENUES:
Charges for services
$ 17,364,694
OPERATING EXPENSES:
Personnel services
3,687,216
Purchased water
6,941,662
Maintenance and operation
3,410,892
Depreciation
1,925,062
TOTAL OPERATING EXPENSES
15,964,832
OPERATING INCOME
1,399,862
NONOPERATING REVENUES (EXPENSES)
Investment income 869,426
Other income 23,193
Interest expense and other fiscal charges (1,802,326)
TOTAL NONOPERATING REVENUES (EXPENSES) (909,707)
CHANGE IN NET POSITION 490,155
NET POSITION AT BEGINNING OF YEAR, AS RESTATED 38,726,569
NET POSITION AT END OF YEAR
;ee accompanying notes to basic financial statements.
29
$ 39,216,724
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
For the year ended June 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Payments to suppliers
Payments to other funds for services
Payments to employees
NET CASH PROVIDED BY
OPERATING ACTIVITIES
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets
Escrow fee refund from acquisition of land held for resale
Principal paid on bonds
Payment to refunding bond escrow agent
Proceeds from issuance of bonds
Bond issuance costs
Interest paid on long-term debt
NET CASH USED BY CAPITAL
AND RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income
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.
30
Business -type
Activity
Water
Enterprise Fund
$ 17,620,009
(7,985,910)
(1,200,000)
(3,456,037)
4,978,062
(7,214,296)
1,548
(860,000)
(14,678,879)
14,910,000
(262,613)
(1,485,838)
(9,590,078)
867,147
867,147
(3,744,869)
30,141,095
$ 26,396,226
$ 17,932,728
8,463,498
$ 26,396,226
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
(CONTINUED)
For the year ended June 30, 2020
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 total OPEB liability
Increase (decrease) in deferred inflows of resources
NET CASH PROVIDED BY OPERATING ACTIVITIES
See accompanying notes to basic financial statements.
31
Business -type
Activity
Water
Enterprise Fund
$ 1,399,862
1,925,062
23,193
233,251
(19,315)
255,921
1,199,840
(1,128)
7,609
(96,658)
(155,157)
205,582
$ 4,978,062
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
STATEMENT OF FIDUCIARY NET POSITION
June 30, 2020
See accompanying notes to basic financial statements.
32
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
$ 3,157,668
$ -
$ 53,649
Cash and investments held by trust
-
2,166,915
-
Restricted cash and investments
835
12,504,166
Receivables:
Taxes
-
-
73,935
Prepaid items and deposits
6,442
-
-
TOTAL ASSETS
3,164,945
2,166,915
$ 12,631,750
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
6,283,986
-
-
LIABILITIES:
Accounts payable
-
-
7,695
Interest payable
659,975
-
-
Due to bondholders
-
-
12,624,055
Long-term liabilities:
Due within one year
1,965,000
-
-
Due in more than one year
53,772,879
-
-
TOTAL LIABILITIES
56,397,854
-
$ 12,631,750
NET POSITION:
Net position restricted for private purpose
(46,948,923)
Net position restricted for OPEB
-
2,166,915
TOTAL NET POSITION
$ (46,948,923)
$ 2,166,915
See accompanying notes to basic financial statements.
32
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
For the year ended June 30, 2020
ADDITIONS:
Tax revenue
Contribution from the City of Tustin
Investment income
Employer contributions
TOTAL ADDITIONS
DEDUCTIONS:
Administrative expenses
Benefits
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.
33
Successor Agency
to the
Tustin Community
Redevelopment Agency
Private Purpose
Trust Fund
Other
Post -Employment
Benefit (OPEB)
Trust Fund
$ 3,968,885 $ -
1,489 97,677
- 1,291,153
3,970,374 1,388,830
-
11,216
-
791,153
28,594
-
2,027,198
-
2,055,792
802,369
1,914,582
586,461
(48,863,505) 1,580,454
$ (46,948,923) $ 2,166,915
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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34
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. The Financial Reporting Entity
The City of Tustin (City) was incorporated in 1927 as a "General Law" City governed by an
elected five -member city council. As required by accounting principles generally accepted in the
United States of America, these financial statements present the City of Tustin (the primary
government) and its component units. The component units discussed below are included in the
City's reporting entity because of the significance of their operational or financial relationship with
the City. These entities are legally separate from each other. However, the City of Tustin's elected
officials have a continuing full or partial accountability for fiscal matters of the other entities. The
financial reporting entity consists of. (1) the City, (2) organizations for which the City is financially
accountable, and (3) organizations for which the nature and significance of their relationship with
the City are such that exclusion would cause the City's financial statements to be misleading or
incomplete.
An organization is fiscally dependent on the primary government if it is unable to adopt its budget,
levy taxes, or set rates or charges, or issue bonded debt without approval by the primary
government. In a blended presentation, a component unit's balances and transactions are reported
in a manner similar to the balances and transactions of the City. Component units are presented on
a blended basis when the component unit's governing body is substantially the same as the City's
or the component unit provides services almost entirely to the City and there is a financial
benefit/burden relationship.
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 consist of debt
service payments that are reported in the Water Enterprise Fund as the Authority has issued debt
for 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
Housing Authority Special Revenue Fund.
All of the City's component units are considered to be blended component units as the City
Council serves as the governing board, management of the City has operational reasonability, and
the City is considered financially accountable for these 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.
35
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING 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.
9M
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING 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 fund balance. 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.
37
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING 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.
9'3
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Fiduciary Funds
Private Purpose Trust Fund is used to account for the activities of the Successor Agency to the
Tustin Community Redevelopment Agency.
Other Post -Employment Benefit Trust Fund is used to account for the activities of the City's trust
for the OPEB plan.
Agency Funds are used to account for assets held by the City in a trustee capacity or as an agent for
individuals, private organizations and other governments. Agency funds are custodial in nature
(assets equal liabilities) and do not involve measurement of results of operations. The agency funds
are used to account for taxes received for special assessments debt for which the City is not
obligated.
d. New Accounting Pronouncements
Current Year Standards
In May 2020, GASB issued Statement No. 95, Postponement of the Effective Dates of Certain
Authority Guidance, which was effective immediately. This Statement provided temporary relief to
governments and other stakeholders in light of the COVID-19 pandemic and postponed the
effective dates of certain provisions in Statements and Implementation Guides that first became
effective or are scheduled to become effective for periods beginning after June 15, 2018, and later.
In June 2020, GASB issued Statement No. 97 — Certain Component Unit Criteria, and Accounting
and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans
an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement
No. 32. Paragraph 4 of this Statement requires that for purposes of determining whether a primary
government is financially accountable for a potential component unit, except for a potential
component unit that is a defined contribution pension plan, a defined contribution OPEB plan, or
an other employee benefit plan (for example, certain Section 457 plans), the absence of a
governing board should be treated the same as the appointment of a voting majority of a governing
board if the primary government performs the duties that a governing board typically would
perform.
Paragraph 5 of this Statement also requires that the financial burden criterion in paragraph 7 of
Statement No. 84, Fiduciary Activities, be applicable to only defined benefit pension plans and
defined benefit OPEB plans that are administered through trusts that meet the criteria in paragraph
3 of Statement No. 67, Financial Reporting for Pension Plans, or paragraph 3 of Statement
No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans,
respectively. The requirements of paragraphs 4 and 5 of Statement No. 97 did not impact the City.
9M
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. New Accounting Pronouncements (Continued)
Pending Accounting Standards
In January 2017, GASB issued Statement No. 84 — Fiduciary Activities. This Statement establishes
criteria for identifying fiduciary activities of all state and local governments. The focus of the
criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity
and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to
identify fiduciary component units and postemployment benefit arrangements that are fiduciary
activities. An activity meeting the criteria should be reported in a fiduciary fund in the basic
financial statements.
This Statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund
when an event has occurred that compels the government to disburse fiduciary resources. Events
that compel a government to disburse fiduciary resources occur when a demand for the resources
has been made or when no further action, approval, or condition is required to be taken or met by
the beneficiary to release the assets. The requirements of this Statement are effective for reporting
periods beginning after December 15, 2019, early application is encouraged.
In June 2017, GASB issued Statement No. 87 — Leases. This statement requires recognition of
certain lease assets and liabilities for leases that previously were classified as operating leases and
recognized as inflows of resources or outflows of resources based on the payment provisions of the
contract. It establishes a single model for lease accounting based on the foundational principle that
leases are financings of the right to use an underlying asset for leases with a term of more than
12 months. Under this Statement, a lessee is required to recognize a lease liability and an
intangible right -to -use lease asset, and a lessor is required to recognize a lease receivable and a
deferred inflow of resources, thereby enhancing the relevance and consistency of information
about governments' leasing activities. For leases with a term of 12 months or less, lessees and
lessors should recognize short-term lease payments as outflows of resources or inflows of
resources, respectively, based on the payment provisions of the lease contract. The requirements of
this Statement are effective for reporting periods beginning after June 15, 2021, early application is
encouraged.
In May 2019, GASB issued Statement No. 91 Conduit Debt Obligations. This Statement clarifies
existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a
liability of the issuer; establishing standards for accounting and financial reporting of additional
commitments and voluntary commitments extended by issuers and arrangements associated with
conduit debt obligations; and improving required note disclosures. The requirements of this
Statement are effective for reporting periods beginning after December 15, 2021, early application
encouraged.
.N
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. New Accounting Pronouncements (Continued)
Pending Accounting Standards (Continued)
In May 2020, GASB issued Statement No. 96 – Subscription -Based Information Technology
Arrangements. This Statement provides guidance on the accounting and financial reporting for
subscription -based information technology arrangements (SBITAs) for government end users
(governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right -
to -use subscription assetan intangible asset—and a corresponding subscription liability; (3)
provides the capitalization criteria for outlays other than subscription payments, including
implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. The
requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all
reporting periods thereafter. Early application is encouraged. Assets and liabilities resulting from
SBITAs should be recognized and measured using the facts and circumstances that existed at the
beginning of the fiscal year in which this Statement is implemented.
In June 2020, GASB issued Statement No. 97 – Certain Component Unit Criteria, and Accounting
and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans
an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No.
32. This Statement requires that a Section 457 plan be classified as either a pension plan or an
other employee benefit plan depending on whether the plan meets the definition of a pension plan
and clarifies that Statement 84, as amended, should be applied to all arrangements organized under
IRC Section 457 to determine whether those arrangements should be reported as fiduciary
activities.
This Statement supersedes the remaining provisions of Statement No. 32, Accounting and
Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, as
amended, regarding investment valuation requirements for Section 457 plans. As a result,
investments of all Section 457 plans should be measured as of the end of the plan's reporting
period in all circumstances.
The requirements of this Statement are effective for fiscal years beginning after June 15, 2021.
Earlier application of those requirements is encouraged and permitted.
41
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity
Cash, Cash Equivalents and Investments
Investments are stated at fair value (the value at which a financial instrument would be exchanged
in a current transaction between willing parties other than a forced or liquidation sale), except for
certain investments which have a remaining life of less than one year when purchased and
investment contracts, which are stated at amortized cost.
The City's proprietary fund participates in the pooling of City-wide cash and investments.
Amounts held in the City pool are available to the fund on demand and are considered to be cash
and cash equivalents for statement of cash flow purposes. Investments not held in the City pool that
are short-term investments with original maturities of three months or less from the date of
acquisition are considered cash and cash equivalents.
Capital Assets
Capital assets (including infrastructure) are recorded at cost where historical records are available
and at an estimated original cost where no historical records exist. Contributed capital assets are
valued at acquisition value at the date of contribution. Capital asset purchases (other than
infrastructure) in excess of $10,000 are capitalized if they have an expected useful life of five years
or more. Infrastructure assets with a cost exceeding $150,000 are capitalized.
Capital assets include additions to public domain (infrastructure), certain improvements including
pavement, curb and gutter, sidewalks, traffic control devices, streetlights, sewers, storm drains,
bridges, and right-of-way corridors within the City.
Capital assets used in operations are depreciated over their estimated useful lives using the
straight-line method in the government -wide financial statements and in the fund financial
statements of the enterprise fund. Depreciation is charged as an expense against operations and
accumulated depreciation is reported on the respective statement of net position. The lives used for
depreciation purposes of each capital asset class are:
Buildings 5 - 40 years
Improvements other than buildings 5 - 40 years
Property and plant 5 - 40 years
Machinery and equipment 4 - 10 years
Infrastructure 25 - 75 years
42
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position and the governmental funds balance sheet will
sometimes report a separate section for deferred outflows of resources. This separate financial
statement element, deferred ouflows 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 the deferred outflows of resources
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, differences between
expected and actual experience, and from changes of assumptions. These amounts are
amortized over a closed period equal to the average of the expected remaining service lives
of all employees that are provided with pensions through the plans.
• Deferred outflow related to OPEB plan resulting from the differences in projected and
actual earnings on investments of the OPEB plan 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.
43
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Deferred Outflows/Inflows of Resources (Continued)
• 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 and OPEB 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 and
OPEB through the respective 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
respective plans.
• Deferred inflow related to pension plan resulting from the difference between projected and
actual earnings on investments of the pension plan fiduciary net positions. These amounts
are amortized over five years.
Land Held for Resale
Land held for resale is carried at the lower of cost or estimated realizable value at June 30, 2020.
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.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Property Tax Calendar
Property taxes are assessed and collected each fiscal year according to the following property tax
calendar:
Lien date
January 1St
Levy period
July 1St to June 30'h
Levy date
On or before 4th Monday in September
Due date
November 1St - 1St installment
February 1St - 2nd installment
Collection date
December 10th - 1St installment
April 10th - 2nd 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 government -wide statement of net position.
Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources
related to pensions, and pension expense, information about the fiduciary net position of the City's
California Public Employees' Retirement System (CalPERS) plans (Plans) and additions
to/deductions from the Plans' fiduciary net position have been determined on the same basis as
they are reported by 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.
45
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
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.
NOTE 2 - CASHAND INVESTMENTS
Cash and Investments
Cash and investments as of June 30, 2020, are classified in the accompanying financial statements as
follows:
19
Fiduciary
Funds
Statement of
Net Position
$ 3,211,317
12,505,001
2,166,915
$ 17,883,233
Total
$134,090,872
45,048,280
8,349,414
$187,488,566
Government -
Wide
Statement of
Net Position
Unrestricted assets:
Cash and investments
$130,879,555
Restricted assets:
Cash and investments
32,543,279
Cash and investments held by trust
6,182,499
Total cash and investments
$169,605,333
19
Fiduciary
Funds
Statement of
Net Position
$ 3,211,317
12,505,001
2,166,915
$ 17,883,233
Total
$134,090,872
45,048,280
8,349,414
$187,488,566
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Cash and Investments (Continued)
Cash and investments as of June 30, 2020, consist of the following:
Cash on hand $ 11,000
Deposits with financial institutions 2,187,698
Investments 185,289,868
Total cash and investments $187,488,566
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
47
Maximum
Percentage
of Portfolio
Maximum
Investment in
One Issuer
30%
5%
25%
5%
None
$75 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%
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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
Bankefs Acceptances
Commercial Paper
Money Market Mutual Funds
Investment Contracts
Certificates of Deposit
Corporate Notes
Repurchase Agreements
N/A - Not Applicable
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of
an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair
value to changes in market interest rates. One of the ways that the City manages its exposure to interest
rate risk is by purchasing a combination of shorter term and longer term investments and by timing
cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity
evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Maximum
Maximum
Maximum
Percentage
Investment in
Maturity
of Portfolio
One Issuer
None
None
None
N/A
None
None
270 days
None
None
180 days
None
None
N/A
None
None
30 years
None
None
None
None
None
None
None
None
None
None
None
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of
an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair
value to changes in market interest rates. One of the ways that the City manages its exposure to interest
rate risk is by purchasing a combination of shorter term and longer term investments and by timing
cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity
evenly over time as necessary to provide the cash flow and liquidity needed for operations.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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:
Remaining Maturity
IYear 1-2 2-3 3-4
Investment Type or Less Years Years Years Total
U.S. Government Sponsored
Agency Securities:
Federal National Mortgage
Association (FNMA)
Federal Home Loan Bank (FHLB)
Federal Home Loan Mortgage
Corporation (FHLMC)
Local Agency Investment Pool (LAIF)
California Asset Management Program(CAMP)
Orange County Investment Pool
Negotiable Certificates of Deposit
Medium-term Notes
Municipal Bonds
Held by Fiscal Agents:
Money Market Mutual Funds
Held by Pension Trust:
Money Market Mutual Funds
Mutual Funds - Equity
Mutual Funds - Fixed Income
Held by OPEB Trust:
Money Market Mutual Funds
Mutual Funds - Equity
Mutual Funds - Fixed Income
Total
$ 1,870,132
$ -
$ -
$ - $ 1,870,132
1,007,336
4,133,117
-
- 5,140,453
-
1,034,724
2,073,640
- 3,108,364
72,699,169
-
-
- 72,699,169
22,994,603
-
-
- 22,994,603
1,147,293
-
-
- 1,147,293
9,814,171
5,323,337
2,858,937
269,563 18,266,008
9,056,923
7,228,220
4,659,586
1,086,945 22,031,674
1,015,430
3,396,409
1,030,043
- 5,441,882
24,240,875 - - - 24,240,875
260,800 - - - 260,800
3,013,127 - - - 3,013,127
2,908,573 - 2,908,573
91,068 91,068
1,056,360 1,056,360
1,019,487 - - - 1,019,487
$ 152,195,347 $ 21,115,807 $ 10,622,206 $ 1,356,508 $ 185,289,868
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the minimum rating required by (where applicable)
the California Government Code, the City's investment policy, or debt agreements, and the Standard &
Poor's actual rating as of year end for each investment type.
N/A - Not Applicable
The ratings for the "Other" category above are as follows:
Medium-term Notes Mtulicipal Bonds CAMP
AA
$ 5,090,224
Minimum
5,706,843
A-
2,005,120
A
1036319
Total as of
Legal
Not
Investment Type
June 30, 2020
Rating
AAA
AA+
AA-
Other
Rated
U.S. Government Sponsored
Agency Securities:
FNMA
$ 1,870,132
N/A
$
$ 1,870,132
$
$
$
FHLB
5,140,453
N/A
5,140,453
FHLMC
3,108,364
N/A
3,108,364
LAIF
72,699,169
N/A
-
-
72,699,169
CAMP
22,994,603
N/A
22,994,603
-
Orange County Investment Pool
1,147,293
N/A
-
1,147,293
Negotiable Certificates of Deposit
18,266,008
N/A
-
-
18,266,008
Medium-term Notes
22,031,674
A
1,004,074
4,092,762
3,096,332
13,838,506
-
MunicipalBonds
5,441,882
A
1,501,271
3,330,018
610,593
Held by Fiscal Agents:
Money Market Mutual Funds
24,240,875
A
24,240,875
-
-
-
Held by Pension Trust:
Money Market Mutual Funds
260,800
N/A
-
260,800
-
Mutual Funds -Equity
3,013,127
N/A
-
3,013,127
MutualFunds- FixedIncome
2,908,573
N/A
-
2,908,573
Held by OPEB Trust:
Money Market Mutual Funds
91,068
N/A
91,068
-
Mutual Funds -Equity
1,056,360
N/A
-
1,056,360
Mutual Funds -Fixed Income
1,019,487
N/A
-
-
-
1,019,487
Total
$ 185,289,868
$ 25,244,949
$15,712,982
$ 6,426,350
$ 37,795,570
$ 100,110,017
N/A - Not Applicable
The ratings for the "Other" category above are as follows:
Medium-term Notes Mtulicipal Bonds CAMP
AA
$ 5,090,224
A+
5,706,843
A-
2,005,120
A
1036319
$ 13,838,506
A $ 610,593
AAAm $ 22,994,603
Held by Pension Trust Held by OPEB Trust
AAAm $ 260,800 AAAm $ 91,068
50
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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. The City did not have investments in
any one issuer that represent 5% or more of total City's investments other than for LAIF, CAMP and
money market mutual funds.
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, 2020, none of the City's deposits with financial institutions in excess of federal
depository insurance limits were held in uncollateralized accounts.
As of June 30, 2020, the City's investments in the following investment types were held by the same
broker-dealer (counterparty) that was used by the City to buy the securities:
Investment Type
U.S. Government Sponsored
Agency Securities
Medium -Term Notes
Municipal Bonds
Negotiable Certificates of Deposit
51
Carrying
Value
$ 10,118,949
22,031,674
5,441,882
18,266,008
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
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.
52
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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
53
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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 3 inputs are significant
unobservable inputs.
The City has the following recurring fair value measurements as of June 30, 2020:
U.S. Government Sponsored
Agency Securities:
FNMA
FHLB
FIILMC
Negotiable Certificates of Deposit
Medium-term Notes
Municipal Bonds
Held by Pension Trust:
Mutual Funds -Equity
Mutual Funds -Fixed 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
$ - $ 1,870,132
$ - $ 1,870,132
- 5,140,453
- 51140,453
- 3,108,364
- 3,108,364
- 18,266,008
- 18,266,008
- 22,031,674
- 22,031,674
- 5,441,882
- 5,441,882
3,013,127
2,908,573
- 31013,127
- 2,908,573
1,056,360 - - 1,056,360
1,019,487 - - 1,019,487
$ 7,997,547 $ 55,858,513 $ - 63,856,060
* Not subject to fair value measurement hierarchy.
54
72,699,169
22,994,603
1,147,293
24,240,875
260,800
91,068
$ 185,289,868
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2020,
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, 2020, was $23,095. An allowance of $23,095 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 1/30a'. 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, 2020, including accrued interest of $16,715, was $460,882. An allowance of $460,882 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, 2020, including accrued interest of $761, was $81,789.
NOTE 4 - INTERFUND TRANSFERS
The composition of interfund transfers for the year ended June 30, 2020, is as follows:
Transfers In
General Fund
Transfers Out
Measure M Special Revenue Fund
Other Governmental Funds
55
Amount
$ 81,300
4,663,870
$ 4,745,170
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 4 - INTERFUND TRANSFERS (CONTINUED)
The transfers during the fiscal year ended June 30, 2020, were for the following purposes:
Measure M Special Revenue Fund transferred $81,300 to the General Fund for eligible Measure M
expenditures.
Other governmental fund (Construction 95-1 Capital Projects Fund) transferred $484,155 to the
General Fund for eligible AD 95-1 construction expenditures.
Other governmental fund (Special Tax B Special Revenue Fund) transferred $4,179,715 to the General
Fund for eligible Special Tax B area expenditures.
NOTE 5 - LAND HELD FOR RESALE
Land held for resale as of June 30, 2020, consisted of the following:
Water Enterprise
General Fund Fund Total
Pacific Center East* $ 28,895,069
Tustin Legacy 51,453,256
2061 Valhalla Drive -
11781 Outlook Lane -
1,957,602
1,806,197
$ 28,895,069
51,453,256
1,957,602
1,806,197
Total Land Held for Resale $ 80,348,325 $ 3,763,799 $ 84,112,124
*Pacific Center East includes several parcels bordered by Del Amo, Valencia, Edinger and Newport Avenue.
In September 2019, the City sold 1.23 acres of land from Pacific Center East to SchoolsFirst Federal
Credit Union for $2,932,000 resulting in a gain on land held for resale of $1,014,511.
56
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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 I 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.
57
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2020, 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.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 7 - CAPITAL ASSETS
A summary of changes in the Governmental Activities capital assets for the year ended June 30, 2020,
is as follows:
Capital assets, not depreciated:
Land
Right of way
Construction in progress
Total capital assets,
not depreciated
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total capital assets,
being depreciated
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total accumulated
depreciation
Total capital assets,
being depreciated, net
Total governmental activities
capital assets, net
Balance at
Deletions/
Contributions to
Balance at
June 30, 2019
Additions
Transfers
Other Entities
June 30, 2020
$ 83,054,787
$ -
$ -
$ -
$ 83,054,787
43,758,156
-
-
-
43,758,156
78,853,406
25,341,085
(53,643,938)
(3,989,785)
46,560,768
205,666,349
25,341,085
(53,643,938)
(3,989,785)
173,373,711
75,082,457
-
-
-
75,082,457
30,584,312
15,262,188
-
-
45,846,500
19,643,699
1,382,310
(226,475)
-
20,799,534
368,675,016
37,948,804
(1,107,511)
-
405,516,309
493,985,484
54,593,302
(1,333,986)
-
547,244,800
(21,357,700)
(1,514,237)
-
-
(22,871,937)
(9,651,197)
(1,055,959)
-
-
(10,707,156)
(14,040,018)
(1,625,504)
198,334
-
(15,467,188)
(134,237,364)
(8,239,440)
719,634
-
(141,757,170)
(179,286,279)
(12,435,140)
917,968
-
(190,803,451)
314,699,205
42,158,162
(416,018)
-
356,441,349
$ 520,365,554 $ 67,499,247 $ (54,059,9561 $ (3,989,785) $ 529,815,060
Depreciation expense was charged to functions/programs of the governmental activities as follows:
General government
Public safety
Public works
Community services
59
$ 243,676
693,920
10,771,266
726,278
$ 12,435,140
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 7 - CAPITAL ASSETS (CONTINUED)
A summary of changes in the Business -type Activity capital assets for the year ended June 30, 2020, is
as follows:
Capital assets, not depreciated:
Land
Construction in progress
Total capital assets,
not depreciated
Capital assets, being depreciated
Balance at
June 30, 2019 Additions
$ 1,177,216 $ -
5,409,137 7,107,499
6,586,353 7,107,499
Deletions/ Balance at
Transfers June 30, 2020
$ - $ 1,177,216
- 12,516,636
- 13,693,852
Buildings and improvements
9,500,377
-
- 9,500,377
Property, plant and equipment
65,826,863
106,797
(8,053) 65,925,607
Total capital assets,
being depreciated
75,327,240
106,797
(8,053) 75,425,984
Less accumulated depreciation for:
Buildings and improvements
(5,826,407)
(209,207)
- (6,035,614)
Property, plant and equipment
(27,533,974)
(1,715,855)
8,053 (29,241,776)
Total accumulated
depreciation
Total capital assets,
being depreciated, net
Total business -type activity
capital assets, net
(33,360,381) (1,925,062) 8,053 (35,277,390)
41,966,859 (1,818,265)
40,148,594
$ 48,553,212 $ 5,289,234 $ - $ 53,842,446
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 8 - LONG-TERM LIABILITIES
A summary of long-term liability activity for the year ended June 30, 2020, is as follows:
61
Balance
Balance
Due Within
July 1, 2019
Additions
Deletions
June 30, 2020
One Year
Governmental Activities:
Claims and judgments (Note 12)
$ 6,445,476
$ 4,047,130
$ (2,649,635)
$
7,842,971
$ 7,842,971
Lease payable
199,254
-
(74,763)
124,491
77,731
Compensated absences
3,421,297
3,098,109
(2,492,917)
4,026,489
3,623,839
Total governmental activities
long-term liabilities
$ 10,066,027
$ 7,145,239
$ (5,217,315)
$
11,993,951
$ 11,544,541
Business -type Activity:
2012 Refunding
Water Revenue Bonds
$ 3,625,000
$ -
$ (860,000)
$
2,765,000
$ 885,000
Bond premium
306,587
-
(81,756)
224,831
-
2013 Water Revenue bonds
13,810,000
-
(13,810,000)
-
-
Bond premium
95,643
-
(95,643)
-
-
2016 W ater
Refunding Revenue Bonds
21,515,000
-
-
21,515,000
-
Bond premium
1,170,456
-
(52,604)
1,117,852
-
2020Taxable Water
Refunding Revenue Bonds
-
14,910,000
-
14,910,000
165,000
Compensated absences
253,874
230,735
(223,126)
261,483
235,334
Total business -type activity
long-term liabilities
$ 40,776,560
$ 15,140,735
$ (15,123,129)
$
40,794,166
$ 1,285,334
61
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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 $6,444 and
principal payments of $74,763. At June 30, 2020, the outstanding principal amount was $124,491.
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, 2020.
Minimum
Year Ending Lease
June 30, Payments
2021 $ 81,207
2022 47,370
Subtotals $ 128,577
Less: amounts representing interest (4,086)
Present value of net minimum lease payments $ 124,491
The assets acquired through the capital lease are as follows:
Equipment
Less: accumulated depreciation
62
$ 368,356
(257,849)
$ 110,507
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2020, is $148,667.
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, 2020, total
interest and principal remaining on the bonds is $2,989,200. During the fiscal year, the total interest
expense incurred was $138,500, principal payments were $860,000, and net revenues were $4,234,897.
The annual debt service requirements to amortize the bonds are as follows:
June 30,
2021
2022
2023
Subtotals
Add: Premium
Totals
Princiaal
$ 885,000
920,000
960,000
$ 2,765,000
224,831
Interest
$ 110,600
75,200
38,400
$ 224,200
Total
$ 995,600
995,200
998,400
$ 2,989,200
224,831
$ 2,989,831 $ 224,200 $ 3,214,031
63
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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 were refunded in advance using the bond
proceeds from the Taxable Water Refunding Revenue Bonds, Series 2020.
2016 Refunding Water 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 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, 2020, 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, 2020, is $2,782,699.
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, 2020, total
interest and principal remaining on the bonds is $30,704,563. During the fiscal year, the total interest
expense incurred was $687,300, no principal payment was due, and net revenues were $4,234,897.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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,
2021
2022
2023
2024
2025
2026-2030
2031 -2035
2036-2040
2041-2044
Subtotals
Add: Premium
Totals
Principal
905,000
925,000
5,040,000
6,025,000
7,080,000
1,540,000
$ 21,515,000
1,117,852
$ 22,632,852
2020 Taxable Water Refunding Revenue Bonds
Interest Total
$ 687,300
687,300
687,300
687,300
669,200
2,911,038
1,936,462
877,463
46,200
$ 9,189,563
$ 9,189,563
$
687,300
$
687,300
687,300
1,592,300
1,594,200
7,951,038
7,961,462
7,957,463
1,586,200
$
30,704,563
1,117,852
$
31,822,415
On February 11, 2020, the City issued $14,910,000, Taxable Water Refunding Revenue Bonds, Series
2020. The Bonds were issued to provide funds to defease the 2013 Water Revenue Bonds and pay the
costs of issuing the bonds. The 2020 Bonds proceeds were invested in an escrow fund with a trustee to
pay interest and principal on the 2013 Bonds until April 1, 2022 and to redeem all 2013 Bonds in full
on April 1, 2022. As of June 30, 2020, the defeased 2013 Bonds have a remaining outstanding balance
of $13,760,000.
The City refunded the 2013 Bonds to reduce its total debt services payments over 23 years by
$3,101,131 and to obtain an economic gain (difference between the present values of the old and new
debt) of $2,160,323.
The Bonds are payable in annual installments ranging from $609,834 to $2,429,165 until maturity on
April 1, 2043. Interest is payable semiannually on April 1 and October 1, with rates ranging from
1.567% to 3.107% per annum.
The defeasance resulted in a difference between the reacquisition price and the net carrying amount of
the old debt of $773,237. The difference reported in the accompanying statements as a deferred
outflow of resources, is being charged to interest expense through 2043. The remaining balance at
June 30, 2020, is $762,031.
65
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 8 - LONG-TERM LIABILITIES (CONTINUED)
Business -type Activity (Continued)
2020 Taxable Water Refunding Revenue Bonds
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, 2020, total
interest and principal remaining on the bonds is $21,785,918. During the fiscal year, no payments were
due, and net revenues were $4,234,897.
The annual debt service requirements to amortize the bonds are as follows:
June 30,
2021
2022
2023
2024
2025
2026-2030
2031 -2035
2036-2040
2041-2044
Totals
NOTE 9 - PENSION PLANS
Principal
$ 165,000
205,000
205,000
440,000
445,000
2,380,000
2,670,000
3,080,000
5,320,000
$ 14,910,000
a. General Information about the Pension Plans
Plan Descriptions
Interest Total
$ 444,834
403,862
400,608
397,240
389,721
1,815,838
1,522,047
1,119,141
382,627
$ 6,875,918
$ 609,834
608,862
605,608
837,240
834,721
4,195,838
4,192,047
4,199,141
5,702,627
$ 21,785,918
All qualified permanent and probationary employees are eligible to participate in the City's
separate Safety (police) and Miscellaneous (all other) Plans. The Miscellaneous Plan is an agent
multiple -employer defined benefit pension plan, and the Safety Plan is a cost-sharing multiple
employer defined benefit pension plan. Both of these Plans are administered by the California
Public Employees' Retirement System (CalPERS), which acts as a common investment and
administrative agent for its participating member employers. Benefit provisions under the Plans are
established by State statute and City resolution. Ca1PERS issues publicly available reports that
include a full description of the pension plans regarding benefit provisions, assumptions and
membership information that can be found on the Ca1PERS website.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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 the measurement date ended June 30, 2019, are
summarized as follows:
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of
eligible compensation
Required employee contribution rates
Required employer contribution rates
Normal cost rate
Payment of unfunded liability
Prior to
January 1, 2012
2%A55
5 years of service
monthly for life
50+
2%
7%
7.791%
$ 3,112,197
67
Miscellaneous
January 1, 2012 to On or After
December 31, 2012 January 1, 2013
2%A60 2%A62
5 years of service 5 years of service
monthly for life monthly for life
50+ 52+
2% 2%
7% 5.75%
7.791% 6.133%
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 9 - PENSION PLANS (CONTINUED)
a. General Information about the Pension Plans (Continued)
Benefits Provided (Continued)
The Plans' provisions and benefits in effect at the measurement date ended June 30, 2019, are
summarized as follows:
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of
eligible compensation
Required employee contribution rates
Required employer contribution rates:
Normal cost rate
Payment of unfunded liability
Employees Covered
Safety
Prior to
January 1, 2012 to
On or After
January 1, 2012
December 31, 2012
January 1, 2013
3%@50
2%@50
2.7%@57
5 years of service
5 years of service
5 years of service
monthly for life
monthly for life
monthly for life
50+
50+
50+
3% 2% 2.7%
90/0 90/0 11.5%
20.556% 15.719% 12.141%
$ 3,517,517 $ 2,651 $ 1,705
At the measurement date ended June 30, 2019, the following employees were covered by the
benefit terms for the Miscellaneous Plan:
Inactive employees or beneficiaries currently receiving benefits 269
Inactive employees entitled to but not yet receiving benefits 305
Active employees 207
Total 781
Contributions
Section 20814(c) of the California Public Employees' Retirement Law requires that the employer
contribution rates for all public employers are determined on an annual basis by the actuary and
shall be effective on the July 1 following notice of a change in the rate. The total plan contributions
are determined through CalPERS' annual actuarial valuation process. The actuarially determined
rate is the estimated amount necessary to finance the costs of benefits earned by employees during
the year, with an additional amount to finance any unfunded accrued liability. The City is required
to contribute the difference between the actuarially determined rate and the contribution rate of
employees. City contribution rates may change if plan contracts are amended. Payments made by
the employer to satisfy contribution requirements that are identified by the pension plan terms as
plan member contributions requirements are classified as plan member contributions. The liability
for governmental activities is primarily liquidated from the general fund and the liability for
business -type activities is liquidated from the water enterprise fund.
Me
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2019, using an annual actuarial valuation as of June 30, 2018 rolled forward to June 30,
2019 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, 2018 actuarial valuations were determined using the
following actuarial assumptions:
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Projected Salary Increase
Mortality Rate Table
Post Retirement Benefit Increase
Miscellaneous
June 30, 2018
June 30, 2019
Entry -Age Normal
Cost Method
7.15%
2.50%
(1)
(2)
(3)
Safety
June 30, 2018
June 30, 2019
Entry -Age Normal
Cost Method
7.15%
2.50%
(1)
(2)
(3)
(1) Varies by entry age and service.
(2) The mortality table used was developed based on C alPERS -specific data. The
probabilities of mortality are based on the 2017 CaIPERS Experience Study for the period
from 1997 to 2015. Pre -retirement and Post-retirement mortality rates includes 15 years
of projected mortality improvement using 90% of Scale MP -2016 published by the
Society of Actuaries. For more details on this table, please refer to the CalPERS
Experience Study and Review of Actuarial Assumptions report from December 2017 that
can be found on the CaIPERS website.
(3) The less of contract COLA or 2.50% until Purchasing Power Protection Allowance Floor
on purchasing power applies, 2.50% thereafter.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, CaIPERS 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 CalPERS 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
70
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%
0.00%
0.92%
Total
100.00%
(a) In the CalPERS 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
70
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2018
(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 miscellaneous expense
Net Changes
Balance at June 30, 2019
(Measurement Date)
Increase (Decrease)
Total Plan Net Pension
Pension Fiduciary Liability
Liability Net Position (Asset)
$119,615,864 $ 91,750,438 $ 27,865,426
2,456,587 - 2,456,587
8,458,273 - 8,458,273
(222,610) - (222,610)
4,373,702 (4,373,702)
1,097,180 (1,097,180)
6,030,153 (6,030,153)
(65,475) 65,475
(4,648,016) (4,648,016) -
213 (213)
6,044,234 6,787,757 (743,523)
$125,660,098 $ 98,538,195 $ 27,121,903
71
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 9 - PENSION PLANS (CONTINUED)
c. Changes in the Net Pension Liability (Continued)
As of June 30, 2020, the City reported $38,459,937 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, 2019, 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, 2018 rolled forward to June 30, 2019 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, 2018 and 2019 was as follows:
Safety
Proportion - June 30, 2018 0.62908%
Proportion - June 30, 2019 0.61609%
Change - Increase (Decrease) -0.01299%
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:
1% Decrease
Net Pension Liability
Current Discount Rate
Net Pension Liability
1% Increase
Net Pension Liability
Pension Plan Fiduciary Net Position
Miscellaneous Safety
6.15% 6.15%
$ 44,310,954 $ 59,357,307
7.15% 7.15%
$ 27,121,903 $ 38,459,937
8.15% 8.15%
$ 12,958,836 $ 21,327,369
Detailed information about each pension plan's fiduciary net position is available in the separately
issued CalPERS financial reports.
72
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 9 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2020, the City recognized pension expense of $6,316,521 and
$7,775,042 for the Miscellaneous and Safety Plans, respectively. At June 30, 2020, the City
reported deferred outflows of resources and deferred inflows of resources related to pensions from
the following sources:
Pension contributions subsequent to measurement date
Differences between actual and expected experience
Change in assumptions
Net differences between projected and actual
earnings on plan investments
Total
Miscellaneous
Deferred
Deferred
Outflows
Inflows
of Resources
of Resources
$ 4,837,028
$ -
325,991
(143,106)
(132,377)
- (455,491)
$ 5,163,019 7 (730,974)
Safety
Deferred Deferred
Outflows Inflows
of Resources of Resources
Pension contributions subsequent to measurement date $ 5,782,787
Differences between actual and expected experience 2,511,087
Change in assumptions 1,576,406
Change in employer's proportion and differences
between the employer's contributions and the
employer's proportionate share of contributions 99,515
Net differences between projected and actual
earnings on plan investments -
Total $ 9,969,795
73
(307,634)
(452,651)
(529,081)
$ (1,289,366)
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 9 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
$4,837,028 and $5,782,787 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, 2021. Other
amounts reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized as pension expense as follows:
Year
Ending
June 30,
Miscellaneous
Safety
2021
$ 462,251
$ 2,593,188
2022
(846,586)
(158,057)
2023
(129,108)
359,567
2024
108,460
102,944
2025
Thereafter
e. Payable to the Pension Plans
At June 30, 2020, the City had no outstanding amount of contributions to the pension plans
required for the year ended June 30, 2020.
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.
74
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2020, measurement date, the benefit terms covered the following employees:
Inactive employees, spouses, or beneficiaries currently receiving benefit payments 122
Active employees 295
Total Plan Participants 417
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, 2020, the
City contributed $500,000 to the PARS OPEB trust, made payments of $521,284 to insurance
providers and retirees, and the estimated implied subsidy was $269,869, resulting in total
contributions of $1,291,153. The liability for governmental activities is primarily liquidated from
the general fund.
75
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 10 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
b. Net OPEB Lability
The City's net OPEB liability was measured as of June 30, 2020 and the total OPEB liability used
to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2019
rolled forward to June 30, 2020 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, 2019 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, 2019
June 30, 2020
Entry -Age Normal Level Percentage of Salary
6.25%
6.25% net of OPEB plan investment expense
2.75%
2.75%.
3.50% for 2020 to 2023; 5.20 percent for 2024 to
2069; and 4.00% for 2070 and later years
Based on the Public Agency Miscellaneous
or Police rates from the 2017 CalPERS Experience
Study.
The actuarial assumptions used in the June 30, 2019 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. The calculated
investment rate of return was set equal to the expected ten-year compound (geometric) real return
plus inflation (rounded to the nearest 25 basis points, where appropriate).
76
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 10 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
b. Net OPEB Lability (Continued)
Actuarial Assumptions (Continued)
The table below provides the long-term expected real rates of return by asset class (based on
published capital market assumptions) as of June 30, 2020:
Assumed Long -Term
Asset Expected Real
Asset Class Allocation Rate of Return
PARS OPEB Trust
Broad U.S. Equity 60.00% 4.40%
U.S. Fixed 40.00% 1.50%
Total 100.00%
Discount Rate
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.
77
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2019
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total OPEB liability
Differences between actual and
expected experience
Changes in assumptions
Contribution - employer
Net investment income
Benefit payments
Administrative expenses
Net Changes
Balance at June 30, 2020
(Measurement Date)
Change of Assumptions
Increase (Decrease)
Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability
$ 15,345,483 $ 1,580,454 $ 13,765,029
437,360 - 437,360
824,887 - 824,887
(1,778,679)
-
(1,778,679)
(416,384)
-
(416,384)
-
1,291,153
(1,291,153)
-
97,677
(97,677)
(791,153)
(791,153)
-
-
(11,216)
11,216
(1,723,969)
586,461
(2,310,430)
$ 13,621,514 $ 2,166,915 $ 11,454,599
From measurement date June 30, 2019 to measurement date June 30, 2020, there were the
following changes of assumptions: (1) the inflation rate increased from 2.50% to 2.75%, (2)
healthcare cost trend changed from 6.50% trending down to 3.84% over 57 years to 3.50% trending
down to 4.00% for 2070 and later 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.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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
1% Decrease
(5.25%)
$ 12,959,760
Discount Rate
(6.25%)
$ 11,454,599
1% Increase
(7.25%)
$ 10,171,810
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
1% Decrease
(2.5% decreasing
to 3.0%)
$ 10,400,386
Current Healthcare
Cost Trend Rates
(3.5% decreasing
to 4.0%)
$ 11,454,599
1% Increase
(4.5% decreasing
to 5.0%)
$ 12,852,892
d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2020, the City recognized OPEB expense of $897,507 At
June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Differences between actual and expected experience
Change in assumptions
Differences between projected and actual earnings
Total
79
Deferred
Outflows
of Resources
Deferred
Inflows
of Resources
$ (1,605,992)
(690,838)
19,634 -
$ 19,634 $ (2,296,830)
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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
2021
$ (250,617)
2022
(250,615)
2023
(249,959)
2024
(249,563)
2025
(255,097)
Thereafter
(1,021,345)
e. Payable to the OPEB Plan
At June 30, 2020, the City had no outstanding amount of contributions to the OPEB plan required
for the year ended June 30, 2020.
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 2020 were $70,628.
.0
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2020. At June 30, 2020, estimated claims payable of $7,842,971, 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, 2020 and 2019, including a
provision for incurred but not reported claims and loss adjustment expenses, were as follows:
Beginning Ending
June 30, Balance Additions Deletions Balance
2019 $ 5,085,858
2020 6,445,476
$ 4,017,447
4,047,130
$ (2,657,829) $ 6,445,476
(2,649,635) 7,842,971
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2020, the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was
$7,445,000.
Amount
Outstanding
District Bonds
of Issue
June 30, 2020
Community
Facilities District 04-1,
2013
$ 9,350,000
$ 7,445,000
Community
Facilities District 06-1,
2015A
49,740,000
45,600,000
Community
Facilities District 06-1,
2015B
2,735,000
2,375,000
Community
Facilities District 07-1,
2015A
13,155,000
13,155,000
Community
Facilities District 07-1,
2015B
1,500,000
300,000
Community
Facilities District 2014-01, 2015A
27,665,000
26,940,000
$ 104,145,000
$ 95,815,000
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, 2020, the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was
$7,445,000.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2020, the outstanding amount of the CFD 2014-01 2015A Special Tax Bonds was
$26,940,000.
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, 2020, 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, 2020, the outstanding amount of the CFD 07-1 Special Tax 2015B
Bonds was $300,000.
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, 2020, the outstanding amount of the CFD 06-01 2015A Refunding Bonds was
$45,600,000
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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, 2020, the outstanding
amount of the CFD 06-1 Special Tax 2015B Bonds was $2,375,000.
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.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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.
Nonspendable:
Prepaid items
Land hell for resale
Restricted for:
Capital projects (1)
Public safety program
Housing projects
Sold waste program
Pension
Assigned to:
Capital projects (2)
Unassigned
Measure M Other Total
General Special Revenue Governmental Governmental
Fund Fund Funds Funds
$ 499,032 $ - $ - $ 499,032
80,348,325 - - 80,348,325
10,255,970 6,971,727 25,384,482 42,612,179
- - 435,269 435,269
- - 4,166,895 4,166,895
56,088 56,088
6,182,499 - - 6,182,499
74,972,202
815,527 815,527
(628,792) 74,343,410
Total fund balances $ 172,258,028 $ 6,971,727 $ 30,229,469 $ 209,459,224
(1) Restricted for capital projects:
• General Fund $10,255,970 - legally restricted for backbone infrastructure at the Tustin Legacy
development.
• Measure M Special Revenue Fund $6,971,727 - state gas taxes restricted for allowable street -
related purposes.
• Other Governmental Funds:
o CFD Construction Capital Projects Fund $11,716,891 - comprised of bond proceeds restricted
for uses specified in the bond indenture.
o Gas Tax Special Revenue Fund $5,291,407 - comprised of state gas taxes restricted for
allowable street -related purposes.
o Park Acquisition and Development Special Revenue Fund $3,247,836 - comprised of developer
fees restricted for improvement of City parks.
o Construction 95-1 Capital Projects Fund $1,142,556 - restricted for uses specified in the bond
indenture.
o Road Maintenance and Rehabilitation Special Revenue Fund $2,601,976 - restricted for
maintenance and rehabilitation of streets.
o Other Capital Projects Fund $115,751 and MCAS 2010 Capital Projects Fund $719,211 -
retention amounts withheld in restricted escrow accounts to be paid to contractors once projects
are completed
o Air Quality Special Revenue Fund $548,854 - restricted for projects to reduce pollution
(2) Assigned to capital projects
• Other Capital Projects Fund $815,527 - for specific projects indicated in the adopted budget.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 15 - OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES
Excess of Expenditures over Appropriations
Other Governmental Funds:
Supplemental Law Enforcement
Special Revenue Fund
Budget
Actual
$ 141,737 $ 145,500
NOTE 16 - JOINT PO WERS A UTHORITY
Orange County Fire Authority
Variance with
Final Budget
$ (3,763)
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. In 2020, City of Placentia left
Authority.
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.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 16 - JOINT PO WERS A UTHORITY (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:
Lone -Term Liabilities
A summary of long-term liabilities activity for the year ended June 30, 2020, is as follows:
Balance
June 30, 2019
Tax allocation bonds $ 52,085,000
Unamortized premium 5,808,955
Additions
Balance
_ Deletions June 30, 2020
$ (1,895,000) $ 50,190,000
- (261,076) 5,547,879
Due Within
One VegT
s 1,`X6-),000
Total long-term liabilities $ 57,893,955 $ - $ (2,156,076) $ 55,737,879 $ 1,965,000
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES (CONTINUED)
Lonst-Term Liabilities (Continued)
Tax Allocation Bonds Payable
2016 Tax Allocation Refunding Bonds
On September 29, 2016, the Successor Agency to the Tustin Community Redevelopment Agency
issued $55,940,000 Refunding Tax Allocation Bonds, Series 2016 (2016 Bonds) for the purpose of
refunding in advance the 2010 Housing Bonds and the MCAS 2010 Redevelopment Bonds and pay for
a surety bond insurance policy and costs of issuance of the bonds. The 2016 Bonds proceeds were
invested in escrow funds (20 10 Housing Escrow Fund and 2010 Redevelopment Escrow Fund) with a
trustee which together will pay interest and principal on the 2010 Housing Bonds up to and including
September 1, 2020 and to redeem the then outstanding 2010 Housing Bonds in full on September 1,
2020; and pay interest and principal on the MCAS 2010 Redevelopment Bonds up to and including
September 1, 2018 and to redeem the then outstanding MCAS 2010 Redevelopment Bonds in full on
September 1, 2018. As of June 30, 2020 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, 2020, is $6,283,986.
At June 30, 2020, the 2016 Tax Allocation Refunding Bonds outstanding balance was $50,190,000.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES (CONTINUED)
Long -Term Liabilities (Continued)
Tax Allocation Bonds Payable (Continued)
2016 Tax Allocation Refunding Bonds (Continued)
The annual debt service requirements to amortize the tax allocation bonds are as follows:
Year Ending
June 30,
2021
2022
2023
2024
2025
2026-2030
2031- 2035
2036- 2040
2041-2044
Principal
$ 1,965,000
2,050,000
2,130,000
2,215,000
2,305,000
11,940,000
11,525,000
13,790,000
2,270,000
Interest
$ 1,940,625
1,860,325
1,776,725
1,689,825
1,599,425
6,229,875
3,684,813
1,413,425
34,050
Total
$ 3,905,625
3,910,325
3,906,725
3,904,825
3,904,425
18,169,875
15,209,813
15,203,425
2,304,050
Totals $ 50,190,000 $ 20,229,088 $ 70,419,088
NOTE 18 - SCHOOL FACILITIES IMPLEMENTATION COMMITMENT
In August 2015, the City entered into a School Facilities Implementation, Funding and Mitigation
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.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2020
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 June 30, 2020, the City's total contributions to TUSD under the I/M agreement was
$60,830,410. The balance remaining under the IM is $24,169,590.
NOTE 19 - COMMITMENTS AND CONTINGENCIES
Legal Claims
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 — RESTATEMENT OF NET POSITIONS
Governmental Business -type
Activities Activities Totals
Net position at July 1, 2019, as originally reported $ 696,626,862 $ 40,140,099 $ 736,766,961
To allocate the total OPEB liability and related
deferred outflows and inflows of resources to the
Water Enterprise Fund as of the beginning of the year 1,413,530 (1,413,530) -
Net position at July 1, 2019, as restated $ 698,040,392 $ 38,726,569 $ 736,766,961
Water
Enterprise
Fund
Net position at July 1, 2019, as originally reported $ 40,140,099
To allocate the total OPEB liabity and related
deferred outflows and inflows of resources to the
Water Enterprise Fund as of the beginning of the year (1,413,530)
Net position at July 1, 2019, as restated $ 38,726,569
•c
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
REQUIRED SUPPLEMENTARY INFORMATION
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SAFETY PLAN
Fiscal year ended
Measurement period
Plan's proportion of the
net pension liability
Plan's proportionate share
of the net pension liability
Plan's covered payroll
Plan's proportionate share
of the net pension liability as a
percentage of covered payroll
Plan's proportionate share of the
fiduciary net position as a
percentage of the Plan's total
pension liability
Plan's proportionate share of
aggregate employer contributions
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Last Ten Fiscal Years*
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
0.61609%
0.62908%
0.60938%
0.60679%
0.58972%
$ 38,459,938
$ 36,911,786
$ 36,411,988
$ 31,427,228
$ 24,298,906
$ 9,896,349
$ 9,967,145
$ 10,443,467
$ 10,013,168
$ 9,495,434
388.63% 370.33% 348.66% 313.86% 255.90%
75.26%
75.26%
73.31%
74.06%
78.40%
$ 5,000,688
$ 4,600,007
$ 3,520,089
$ 3,193,318
$ 3,182,851
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.
From fiscal year June 30, 2019 to June 30, 2020:
There were no changes in assumptions.
* Fiscal year 2015 was the 1 st year of implementation, therefore only six years are shown.
92
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SAFETY PLAN
Fiscal year ended
Measurement period
Plan's proportion of the
net pension liability
Plan's proportionate share
of the net pension liability
Plan's covered payroll
Plan's proportionate share
of the net pension liability as a
percentage of covered payroll
Plan's proportionate share of the
fiduciary net position as a
percentage of the Plan's total
pension liability
Plan's proportionate share of
aggregate employer contributions
Last Ten Fiscal Years*
June 30, 2015
June 30, 2014
0.68843%
$ 25,822,675
$ 9,640,345
267.86%
79.82%
$ 2,544,912
93
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016
Contractually required contribution
(actuarially determined)
$ 4,132,787
$ 3,641,308
$ 3,204,833
$ 3,002,977
$ 2,708,192
Contributions in relation to
Actuarial cost method
Entry age
the actuarially determined
Entry age
Entry age
Entry age
Amortization method
(1)
contributions
(5,782,787)
(5,291,308)
(3,204,833)
(3,002,977)
(2,708,192)
Contribution deficiency (excess)
$ (1,650,000)
_LLL
$ -
$ -
$ -
Covered payroll
$ 10,848,695
$ 9,896,349
$ 9,967,145
$ 10,443,467
$ 10,013,668
Contributions as a percentage
(2)
(2)
(2)
Investment rate of return
7.25%(3)
of covered payroll
53.30%
53.47%
32.15%
28.75%
27.04%
Notes to Schedule
Valuation Date
6/30/2017
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
Entry age
Amortization method
(1)
(1)
(1)
(1)
(1)
Asset valuation method
Market Value
Market Value
Market Value
Market Value
Market Value
Inflation
2.625%
2.75%
2.75%
2.75%
2.75%
Salary increases
(2)
(2)
(2)
(2)
(2)
Investment rate of return
7.25%(3)
7.375%(3)
7.50%(3)
7.50%(3)
7.50%(3)
Retirement age
(4)
(4)
(4)
(4)
(4)
Mortality
(5)
(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 six years are shown.
94
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended June 30, 2015
Contractually required contribution
(actuarially determined) $ 3,045,919
Contributions in relation to
the actuarially determined
contributions (7,049,591)
Contribution deficiency (excess) $ (4,003,672)
Covered payroll $ 9,495,434
Contributions as a percentage
of covered payroll 74.24%
Notes to Schedule:
Valuation Date 6/30/2012
Methods and Assumptions Used to Determine Contribution Rates
Actuarial cost method
Entry age
Amortization method
(1)
Asset valuation method
15 Year
Smoothed
Market Method
Inflation
2.75%
Salary increases
(2)
Investment rate of return
7.50%(3)
Retirement age
(4)
Mortality
(5)
95
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
MISCELLANEOUS PLAN
Fiscal year ended
Measurement period
Total Pension Liability:
Service cost
Interest on total pension liability
Differences between expected and
actual experience
Changes in assumptions
Changes in benefit terms
Benefit payments, including refunds of
employee contributions
Net Change in Total Pension Liability
Total Pension Liability - Beginning of Year
Total Pension Liability - End of Year (a)
Plan Fiduciary Net Position:
Contributions - employer
Contributions - employee
Net investment income
Benefit payments
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
Last Ten Fiscal Years*
June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016
June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
$ 2,456,587 $ 2,402,594 $ 2,211,312 $ 1,840,275 $ 1,779,008
8,458,273 8,052,611 7,614,130 7,306,376 6,982,672
(222,610) (426,547) (737,480) (531,595) 452,122
1,050,413 6,589,964 (1,770,351)
(4,648,016) (4,523,921) (4,300,829) (4,102,189) (3,956,389)
6,044,234 6,555,150 11,377,097 4,512,867 3,487,062
119,615,864 113,060,714 101,683,617 97,170,750 93,683,688
$ 125,660,098 $ 119,615,864 $ 113,060,714 $ 101,683,617 $ 97,170,750
$ 4,373,702 $ 2,249,216 $ 1,881,701 $ 1,850,072 $ 1,503,081
1,097,180 1,043,932 1,037,304 998,937 905,331
6,030,153 7,268,642 8,829,526 372,172 1,753,374
(4,648,016) (4,523,921) (4,300,829) (4,102,189) (3,956,389)
- (213) (114)
213 (254,792) -
(65,475) (134,170) (116,299) (48,573) (89,714)
6,787,757 5,648,694 7,331,403 (929,581) 115,569
91,750,438 86,101,744 78,770,341 79,699,922 79,584,353
$ 98,538,195 $ 91,750,438 $ 86,101,744 $ 78,770,341 $ 79,699,922
_$_27,121,90_3 $ 27,865,426 $ 26,958,970 $ 22,913,276 $ 17,470,828
78.42% 76.70% 76.16% 77.47% 82.02%
$ 16,542,504 $ 15,403,283 $ 14,684,868 $ 13,828,003 $ 12,847,036
163.95% 180.91% 183.58% 165.70% 135.99%
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.
From fiscal year June 30, 2019 to June 30, 2020:
There were no changes in assumptions.
* Fiscal year 2015 was the 1st year of implementation, therefore only six years are shown
96
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CITY OF TUSTIN
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
Fiscal year ended
June 30, 2015
Measurement period
June 30, 2014
Total Pension Liability:
Service cost
$ 1,747,494
Interest on total pension liability
6,613,765
Differences between expected and
actual experience
-
Changes in assumptions
Changes in benefit terms
Benefit payments, including refunds of
employee contributions
(3,974,724)
Net Change in Total Pension Liability
4,386,535
Total Pension Liability - Beginning of Year
89,297,153
Total Pension Liability - End of Year (a)
$ 93,683,688
Plan Fiduciary Net Position:
Contributions - employer
$ 1,379,562
Contributions - employee
962,617
Net investment income
11,900,167
Benefit payments
(3,974,724)
Net plan to plan resource movement
Other miscellaneous expense
Administrative expense
-
Net Change in Plan Fiduciary Net Position
10,267,622
Plan Fiduciary Net Position - Beginning of Year
69,316,731
Plan Fiduciary Net Position - End of Year (b)
$ 79,584,353
Net Pension Liability - Ending (a) -(b)
$ 14,099,335
Plan fiduciary net position as a percentage of the
total pension liability 84.95%
Covered payroll $ 12,270,014
Net pension liability as percentage of
covered payroll 114.91%
97
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CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
Fiscal year ended
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
Contractually required contribution
Actuarial cost method Entry age Entry age
Entry age
Entry age
Entry age
(actuarially determined)
$ 3,187,028
$ 2,723,702
$ 2,249,217
$ 1,881,701
$ 1,850,100
Contributions in relation to
Market Value
Inflation 2.625% 2.75%
2.75%
2.75%
2.75%
the actuarially determined
(2)
(2)
(2)
Investment rate of return 7.25%(3) 7.375%(3)
7.50%(3)
contributions
(4,837,028)
(4,373,702)
(2,249,217)
(1,881,701)
(1,850,100)
Contribution deficiency (excess)
$ (1,650,000)
_LLL
$ -
$ -
$ -
Covered payroll
$ 16,946,205
$ 16,542,504
$ 15,403,283
$ 14,684,868
$ 13,828,003
Contributions as a percentage
(4) 2.5% at 55 and 2% at 60 and 2% at 62
of covered payroll
28.54%
26.44%
14.60%
12.81%
13.38%
Notes to Schedule
Valuation Date 6/30/2017 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
Entry age
Amortization method (1) (1)
(1)
(1)
(1)
Asset valuation method Market Value Market Value
Market Value
Market Value
Market Value
Inflation 2.625% 2.75%
2.75%
2.75%
2.75%
Salary increases (2) (2)
(2)
(2)
(2)
Investment rate of return 7.25%(3) 7.375%(3)
7.50%(3)
7.50%(3)
7.50%(3)
Retirement age (4) (4)
(4)
(4)
(4)
Mortality (5) (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 CalPERS Experience Study
adopted by the CalPERS Board.
* Fiscal year 2015 was the 1 st year of implementation, therefore only six years are shown.
98
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CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
Fiscal year ended June 30, 2015
Contractually required contribution
(actuarially determined) $ 1,503,081
Contributions in relation to
the actuarially determined
contributions (1,503,081)
Contribution deficiency (excess) $ -
Covered payroll $ 12,847,036
Contributions as a percentage
of covered payroll 11.70%
Notes to Schedule:
Valuation Date 6/30/2012
Methods and Assumptions Used to Determine Contribution Rates
Actuarial cost method
Entry age
Amortization method
(1)
Asset valuation method
15 Year
Smoothed
Market Method
Inflation
2.75%
Salary increases
(2)
Investment rate of return
7.50%(3)
Retirement age
(4)
Mortality
(5)
99
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Fiscal year ended
Measurement date
Total OPEB Liability:
Service cost
Interest on total OPEB liability
Differences between expected and actual experience
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
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 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.
Last Ten Fiscal Years*
June 30, 2020 June 30, 2019 June 30, 2018
June 30, 2020 June 30, 2019 June 30, 2018
$ 437,360
824,887
(1,778,679)
(416,384)
(791,153)
(1,723,969)
15,345,483
13,621,514
1,291,153
97,677
(791,153)
(11,216)
586,461
1,580,454
2,166,915
$ 11,454,599
$ 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
$ 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
$ 13,765,029 $ 13,892,607
15.91% 10.30% 6.74%
$ 34,926,881 $ 23,559,635 $ 24,156,049
32.80% 58.43% 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%. The inflation rate decreased from 2.75% to 2.50%. 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.
From fiscal year June 30, 2019 to June 30, 2020:
The inflation rate increased from 2.50% to 2.75%. Healthcare cost trend rates changed to 3.50% trending down to 4.00% for
2070 and later years.
* Fiscal year 2018 was the fust year of implementation; therefore, only three years are shown.
100
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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
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS - OPEB
Last Ten Fiscal Years*
June 30, 2020 June 30, 2019 June 30, 2018
$ 1,318,454 $ 1,780,746 $ 1,729,589
(1,291,153) (1,277,685) (1,686,172)
$ 27,301 $ 503,061 $ 43,417
$ 34,926,881 $ 23,559,635 $ 24,156,049
3.70% 5.42%
Notes to Schedule:
Valuation Date 6/30/2019 6/30/2017
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method
Entry age
Entry age
Amortization method
(1)
(1)
Inflation
2.75%
2.50%
Salary increases
2.75%
2.75%
Healthcare trend rates
(3)
(2)
Rate of return on assets
6.25%
6.25%
Mortality rate
Ca1PERS Rates
Ca1PERS Rates
Retirement rates
Ca1PERS Rates
Ca1PERS Rates
(1) Level percentage of payroll, closed
(2) 7.00%, trending down to 3.84%
(3) 3.50% until 2023, 5.20% for 2024 to 2069 and 4.00% for 2070 and later years
* Fiscal year 2018 was the fust year of implementation; therefore, only three years are shown
101
6.98%
6/30/2017
Entry age
(1)
2.50%
2.75%
(2)
6.25%
Ca1PERS Rates
Ca1PERS Rates
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
OTHER POST -EMPLOYMENT BENEFIT PLAN
ANNUAL MONEY -WEIGHTED RATE OF RETURN ON INVESTMENTS
For the year ended June 30, 2020
Retiree Health Plan
Fiscal Year Ended Annual Money -Weighted Rate of Return, Net of Investment Expense (1)
6/30/2018 N/A*
6/30/2019 6.16%
6/30/2020 5.35%
(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 fust year of implementation; therefore, only three years are presented.
Initial deposit to the OPEB trust was made on June 26, 2018.
102
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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
Gain on land held for resale
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Public safety
Public works
Community services
Capital outlay
Debt service:
Principal retirement
Interest expense
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES:
Transfers in
TOTAL OTHER
FINANCING SOURCES
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2020
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
$ 28,040,647
$ 28,040,647
$ 26,977,144
$ (1,063,503)
883,959
883,959
1,280,180
396,221
916,000
916,000
841,747
(74,253)
1,461,000
1,461,000
3,410,022
1,949,022
27,375,098
28,056,828
27,564,940
(491,888)
2,124,217
2,124,217
1,765,424
(358,793)
1,974,867
1,974,868
1,867,572
(107,296)
3,581,100
3,581,100
1,368,360
(2,212,740)
-
-
1,014,511
1,014,511
66,356,888
67,038,619
66,089,900
(948,719)
24,849,834
26,304,857
25,834,612
470,245
35,861,443
36,276,827
36,177,669
99,158
7,970,942
8,512,521
7,924,563
587,958
4,204,028
4,256,783
3,662,055
594,728
47,508,888
69,598,004
27,818,762
41,779,242
81,200
81,200
74,763
6,437
6,500
6,500
6,444
56
120,482,835
145,036,692
101,498,868
43,537,824
(54,125,947) (77,998,073) (35,408,968) 42,589,105
4,663,500 4,699,500 4,745,170 45,670
4,663,500 4,699,500 4,745,170 45,670
(49,462,447) (73,298,573) (30,663,798) 42,634,775
202,921,826 202,921,826 202,921,826 -
$ 153,459,379 $ 129,623,253 $ 172,258,028 $ 42,634,775
See accompanying note to required supplementary information.
103
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CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
MEASURE M SPECIAL REVENUE FUND
For the year ended June 30, 2020
REVENUES:
Investment income
Intergovernmental 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.
104
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 50,000
$ 50,000
$ 217,155
$ 167,155
1,646,900
1,646,900
1,697,850
50,950
1,696,900
1,696,900
1,915,005
218,105
-
-
2,785
(2,785)
5,060,969
5,917,471
500,115
5,417,356
5,060,969
5,917,471
502,900
5,414,571
(3,364,069)
(4,220,571)
1,412,105
5,632,676
(40,000)
(40,000)
(81,300)
(41,300)
(3,404,069)
(4,260,571)
1,330,805
5,591,376
5,640,922
5,640,922
5,640,922
-
$ 2,236,853
$ 1,380,351
$ 6,971,727
$ 5,591,376
104
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Note to Required Supplementary Information
June 30, 2020
NOTE 1 - 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 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.
105
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SUPPLEMENTARY INFORMATION
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CITY OF TUSTIN
Other Governmental Funds
June 30, 2020
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 (SBI) 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.
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Other Governmental Funds
June 30, 2020
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
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
ASSETS
Cash and investments
Restricted cash and investments
Receivables:
Accounts
Interest
Loans
Allowance for uncollectibles
TOTAL ASSETS
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
LIABILITIES:
Accounts payable and
accrued liabilities
Deposits payable
Unearned revenue
TOTAL LIABILITIES
DEFERRED INFLOWS
OF RESOURCES:
Unavailable revenue
FUND BALANCES:
Restricted
Assigned
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
CITY OF TUSTIN
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2020
Special Revenue Funds
$ 482,018 $ 162,839 $ $
482,018 162,839
$ 5,218 $ 112,264
5,218 112,264
406,650
5,291,407 3,247,836 197,919 548,854 203,210 2,114,636
5,291,407 3,247,836 197,919 548,854 203,210 2,114,636
$ 5,773,425 $ 3,410,675 $ 197,919 $ 548,854 $ 208,428 $ 2,633,550
110
Park
Acquisition
Supplemental
and
Asset
Air
Law
Housing
Gas Tax
Development
Forfeiture
Quality
Enforcement
Authority
$ 5,509,834
$ 3,342,522
$ 197,404
$ 522,026
$ 207,886
$ 2,221,104
-
39,596
-
-
-
-
249,216
19,837
-
25,466
-
-
14,375
8,720
515
1,362
542
62,445
-
-
-
-
-
373,096
-
-
-
-
-
(23,095)
$ 5,773,425
$ 3,410,675
$ 197,919
$ 548,854
$ 208,428
$ 2,633,550
$ 482,018 $ 162,839 $ $
482,018 162,839
$ 5,218 $ 112,264
5,218 112,264
406,650
5,291,407 3,247,836 197,919 548,854 203,210 2,114,636
5,291,407 3,247,836 197,919 548,854 203,210 2,114,636
$ 5,773,425 $ 3,410,675 $ 197,919 $ 548,854 $ 208,428 $ 2,633,550
110
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
$ $ 242,233 $ $ 11,229 $ $ 1,114,943 $ 848,029 $ 92,141 $ 3,070,914
- - 617,449 - - 617,449
59,021 - - 59,021
242,233 70,250 1,732,392 848,029 92,141 3,747,384
1,824,183 2,230,833
34,140 2,601,976 2,052,259 56,088 1,142,556 115,751 719,211 11,716,891 30,042,734
- - - - 815,527 - - 815,527
- - - - - - (628,792) - (628,792)
34,140 2,601,976 2,052,259 56,088 1,142,556 931,278 90,419 11,716,891 30,229,469
$ 34,140 $ 2,844,209 $ 2,052,259 $ 126,338 $ 1,142,556 $ 4,487,853 $ 938,448 $ 11,809,032 $ 36,207,686
111
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
$
$ 2,622,160
$ 2,046,919
$126,009
$ 1,142,556
$ 2,547,799
$ 218,676
$ 80,000
$ 20,784,895
-
-
-
-
115,751
719,211
11,729,032
12,603,590
34,140
215,208
-
-
1,817,702
-
-
2,361,569
-
6,841
5,340
329
6,601
561
107,631
-
-
-
-
-
373,096
-
-
-
-
-
-
-
(23,095)
$ 34,140
$ 2,844,209
$ 2,052,259
$ 126,338
$ 1,142,556
$ 4,487,853
$ 938,448
$ 11,809,032
$ 36,207,686
$ $ 242,233 $ $ 11,229 $ $ 1,114,943 $ 848,029 $ 92,141 $ 3,070,914
- - 617,449 - - 617,449
59,021 - - 59,021
242,233 70,250 1,732,392 848,029 92,141 3,747,384
1,824,183 2,230,833
34,140 2,601,976 2,052,259 56,088 1,142,556 115,751 719,211 11,716,891 30,042,734
- - - - 815,527 - - 815,527
- - - - - - (628,792) - (628,792)
34,140 2,601,976 2,052,259 56,088 1,142,556 931,278 90,419 11,716,891 30,229,469
$ 34,140 $ 2,844,209 $ 2,052,259 $ 126,338 $ 1,142,556 $ 4,487,853 $ 938,448 $ 11,809,032 $ 36,207,686
111
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
For the year ended June 30, 2020
112
Special Revenue Funds
Park
Acquisition
Supplemental
and
Asset
Air
Law
Housing
Gas Tax
Development
Forfeiture
Quality
Enforcement
Authority
REVENUES:
Taxes
$
$
$
$
$
$
Investment income
177,676
128,824
6,671
15,999
6,289
84,504
Intergovernmental revenue
1,890,502
909,741
95,433
103,176
223,182
-
Charges for services
-
7,675
-
-
-
Rental income
266,134
-
-
Other revenue
-
-
4,650
-
31,928
TOTAL REVENUES
2,068,178
1,312,374
106,754
119,175
229,471
116,432
EXPENDITURES:
Current:
General government
1,231,268
75,258
-
203
-
-
Public safety
-
-
109,821
-
139,568
Public works
-
-
-
Community services
-
-
-
1,293,916
Capital outlay
456,484
2,523,273
5,932
-
TOTAL EXPENDITURES
1,687,752
2,598,531
109,821
203
145,500
1,293,916
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
380,426
(1,286,157)
(3,067)
118,972
83,971
(1,177,484)
OTHER FINANCING USES:
Transfers out
-
-
-
TOTAL OTHER
FINANCING USES
-
-
-
-
NET CHANGE IN
FUND BALANCES
380,426
(1,286,157)
(3,067)
118,972
83,971
(1,177,484)
FUND BALANCES -
BEGINNING OF YEAR
4,910,981
4,533,993
200,986
429,882
119,239
3,292,120
FUND BALANCES - END OF YEAR
$ 5,291,407
$ 3,247,836
$ 197,919
$ 548,854
$ 203,210
$ 2,114,636
112
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
1,000 1,307,729
- - - 249,389
183,552 123,674 307,226
- - 1,293,916
428,950 - 7,696,290 1,183,160 1,664,488 13,958,577
428,950 183,552 7,697,290 1,306,834 1,664,488 17,116,837
4,184,442 1,015,996 962,797 43,013 - (4,023,182) (1,292,898) (1,452,441) (2,445,612)
(4,179,715) - - - (484,155) (4,663,870)
(4,179,715) (484,155) (4,663,870)
4,727 1,015,996 962,797 43,013 (484,155) (4,023,182) (1,292,898) (1,452,441) (7,109,482)
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
$ 34,140 $ 2,601,976 $ 2,052,259 $ 56,088 $ 1,142,556 $ 931,278 $ 90,419 $ 11,716,891 $ 30,229,469
113
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
$
$ -
$ -
$ 209,868 $
$ -
$ -
$ -
$ 209,868
35,645
57,825
3,423
86,318
12,662
212,047
827,883
4,184,442
1,409,301
-
-
78,000
-
-
8,893,777
-
-
904,972
10,850
-
923,497
-
-
-
-
266,134
-
-
-
2,424
3,509,790
1,274
-
3,550,066
4,184,442
1,444,946
962,797
226,565
3,674,108
13,936
212,047
14,671,225
1,000 1,307,729
- - - 249,389
183,552 123,674 307,226
- - 1,293,916
428,950 - 7,696,290 1,183,160 1,664,488 13,958,577
428,950 183,552 7,697,290 1,306,834 1,664,488 17,116,837
4,184,442 1,015,996 962,797 43,013 - (4,023,182) (1,292,898) (1,452,441) (2,445,612)
(4,179,715) - - - (484,155) (4,663,870)
(4,179,715) (484,155) (4,663,870)
4,727 1,015,996 962,797 43,013 (484,155) (4,023,182) (1,292,898) (1,452,441) (7,109,482)
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
$ 34,140 $ 2,601,976 $ 2,052,259 $ 56,088 $ 1,142,556 $ 931,278 $ 90,419 $ 11,716,891 $ 30,229,469
113
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
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
GAS TAX SPECIAL REVENUE FUND
For the year ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 65,000 $ 65,000 $ 177,676 $ 112,676
2,166,100 2,166,100 1,890,502 (275,598)
2,231,100 2,231,100 2,068,178 (162,922)
1,262,180
1,547,858
1,231,268
316,590
1,838,400
3,579,981
456,484
3,123,497
3,100,580
5,127,839
1,687,752
3,440,087
(869,480)
(2,896,739)
380,426
3,277,165
4,910,981
4,910,981
4,910,981
-
$ 4,041,501
$ 2,014,242
$ 5,291,407
$ 3,277,165
114
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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, 2020
115
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ 20,000
$ 20,000
$ 128,824
$ 108,824
Intergovernmental revenue
-
-
909,741
909,741
Charges for services
16,500
16,500
7,675
(8,825)
Rental income
207,400
207,400
266,134
58,734
TOTAL REVENUES
243,900
243,900
1,312,374
1,068,474
EXPENDITURES:
Current:
General government
-
40,000
75,258
(35,258)
Capital outlay
2,041,814
2,735,617
2,523,273
212,344
TOTAL EXPENDITURES
2,041,814
2,775,617
2,598,531
177,086
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
(1,797,914)
(2,531,717)
(1,286,157)
1,245,560
FUND BALANCE - BEGINNING OF YEAR
4,533,993
4,533,993
4,533,993
-
FUND BALANCE - END OF YEAR
$ 2,736,079
$ 2,002,276
$ 3,247,836
$ 1,245,560
115
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
ASSET FORFEITURE SPECIAL REVENUE FUND
For the year ended June 30, 2020
116
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
REVENUES:
Investment income
$ - $ -
$ 6,671
$ 6,671
Intergovernmental revenue
- -
95,433
95,433
Other revenue
- -
4,650
4,650
TOTAL REVENUES
- -
106,754
106,754
EXPENDITURES:
Current:
Public safety
- 113,702
109,821
3,881
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
- (113,702)
(3,067)
110,635
FUND BALANCE - BEGINNING OF YEAR
200,986 200,986
200,986
-
FUND BALANCE - END OF YEAR
$ 200,986 $ 87,284
$ 197,919
$ 110,635
116
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
AIR QUALITY SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 1,000 $ 1,000 $ 15,999 $ 14,999
95,900 95,900 103,176 7,276
96,900 96,900 119,175 22,275
-
-
203
(203)
100,000
100,000
-
100,000
100,000
100,000
203
99,797
(3,100)
(3,100)
118,972
122,072
429,882
429,882
429,882
-
$ 426,782 $
426,782 $
548,854
$ 122,072
117
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SUPPLEMENTAL LAW ENFORCEMENT SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
TOTAL REVENUES
EXPENDITURES:
Current:
Public safety
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ 6,289 $ 6,289
176,000 176,000 223,182 47,182
176,000 176,000 229,471 53,471
133,800 141,737 139,568 2,169
- - 5,932 (5,932)
133,800 141,737 145,500 (3,763)
42,200 34,263 83,971 49,708
119,239 119,239 119,239 -
$ 161,439 $ 153,502 $ 203,210 $ 49,708
118
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
HOUSING AUTHORITY SPECIAL REVENUE FUND
REVENUES:
Investment income
Other revenue
TOTAL REVENUES
EXPENDITURES:
Current:
Community services
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ 84,504 $ 84,504
301,120 301,120 31,928 (269,192)
301,120 301,120 116,432 (184,688)
1,422,645 2,117,374 1,293,916 823,458
1,422,645 2,117,374 1,293,916 823,458
(1,121,525) (1,816,254) (1,177,484) 638,770
3,292,120 3,292,120 3,292,120 -
$ 2,170,595 $ 1,475,866 $ 2,114,636 $ 638,770
119
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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, 2020
Budgeted Amounts
Original Final
$ 4,072,500 $ 4,072,500
Actual
$ 4,184,442
Variance with
Final Budget
Positive
(Negative)
$ 111,942
(4,072,500) (4,072,500) (4,179,715) (107,215)
- - 4,727 4,727
29,413 29,413 29,413 -
$ 29,413 $ 29,413 $ 34,140 $ 4,727
120
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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, 2020
121
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ -
$ -
$ 35,645
$ 35,645
Intergovernmental revenue
1,353,300
1,353,300
1,409,301
56,001
TOTAL REVENUES
1,353,300
1,353,300
1,444,946
91,646
EXPENDITURES:
Capital outlay
2,675,000
3,270,500
428,950
2,841,550
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
(1,321,700)
(1,917,200)
1,015,996
2,933,196
FUND BALANCE - BEGINNING OF YEAR
1,585,980
1,585,980
1,585,980
-
FUND BALANCE - END OF YEAR
$ 264,280
$ (331,220)
$ 2,601,976
$ 2,933,196
121
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SOLID WASTE SPECIAL REVENUE FUND
REVENUES:
Taxes
Investment income
Charges for services
Other revenue
TOTAL REVENUES
EXPENDITURES:
Current:
Public works
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
EXPENDITURES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2020
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 210,000 $ 210,000 $ 209,868 $ (132)
- - 3,423 3,423
7,500 7,500 10,850 3,350
- - 2,424 2,424
217,500 217,500 226,565 9,065
213,400 213,400 183,552 29,848
213,400 213,400 183,552 29,848
4,100 4,100 43,013 38,913
13,075 13,075 13,075 -
$ 17,175 $ 17,175 $ 56,088 $ 38,913
122
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Agency Funds
June 30, 2020
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
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
COMBINING STATEMENT OF ASSETS AND LIABILITIES
ALL AGENCY FUNDS
June 30, 2020
124
Community
Community
Community
Community
Community
Community
Facilities
Facilities
Facilities
Facilities
Facilities
Facilities
District
District
District
District
District
District
04-01
06-01
07-01
13-01
2014-1
2018-1
Total
ASSETS
Cash and investments
$ 5,145
$ 34,790
$
$ 1,750
$ 11,089
$ 875
$ 53,649
Restricted cash and investments
1,128,868
6,156,171
1,776,248
-
3,442,879
-
12,504,166
Taxes receivable
15,060
34,837
-
24,038
73,935
TOTAL ASSETS
$ 1,149,073
$ 6,225,798
$ 1,776,248
$ 1,750
$ 3,478,006
$ 875
$12,631,750
LIABILITIES
Accounts payable
$ 5,070
$
$
$ 1,750
$
$ 875
$ 7,695
Due to bondholders
1,144,003
6,225,798
1,776,248
-
3,478,006
-
12,624,055
TOTAL LIABILITIES
$ 1,149,073
$ 6,225,798
$ 1,776,248
$ 1,750
$ 3,478,006
$ 875
$12,631,750
124
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
For the year ended June 30, 2020
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
COMMUNITY FACILITIES DISTRICT 07-01
ASSETS:
Cash and investments
Restricted cash and investments
Prepaid items
TOTAL ASSETS
$ - $ 3,411,534 $ 3,411,534 $ -
6,008,720 3,629,592 3,412,514 6,225,798
$ 6,008,720 $ 7,041,126 $ 6,824,048 $ 6,225,798
$ - $ 938,242 $ 938,242 $ -
1,744,445 927,165 895,362 1,776,248
$ 1,744,445 $ 1,865,407 $ 1,833,604 $ 1,776,248
LIABILITIES:
Balance
Balance
$
- $
July 1, 2019
$
Additions
$
Deletions
June 30, 2020
COMMUNITY FACILITIES DISTRICT 04-01
1,744,445
960,536
928,733
1,776,248
TOTAL LIABILITIES
$
ASSETS:
1,870,999
$
1,839,196
$
1,776,248
COMMUNITY FACILITIES DISTRICT 13-01
Cash and investments
$
-
$
708,270
$
703,125
$
5,145
Restricted cash and investments
1,130,042
692,019
$
693,193
427,670
1,128,868
Taxes receivable
$
6,028
TOTAL ASSETS
15,060
- $
6,028
$
15,060
TOTAL ASSETS
$
1,136,070
$
1,415,349
$
1,402,346
$
1.149,073
LIABILITIES:
Accounts payable
$
- $
4,375
$
2,625
$
1,750
Accounts payable
$
-
$
684,706
$
679,636
$
5,070
Due to bondholders
- $
1,136,070
$
727,457
$
719,524
1,144,003
TOTAL LIABILITIES
$
1,136,070
$
1,412,163
$
1,399,160
$
1,149,073
COMMUNITY FACILITIES DISTRICT 06-01
ASSETS:
Cash and investments
$
4,776
$
3,521,266
$
3,491,252
$
34,790
Restricted cash and investments
5,971,784
3,470,054
3,285,667
6,156,171
Taxes receivable
32,160
34,837
32,160
34,837
TOTAL ASSETS
$
6,008,720
$
7,026,157
$
6,809,079
$
6,225,798
LIABILITIES:
Accounts payable
Due to bondholders
TOTAL LIABILITIES
COMMUNITY FACILITIES DISTRICT 07-01
ASSETS:
Cash and investments
Restricted cash and investments
Prepaid items
TOTAL ASSETS
$ - $ 3,411,534 $ 3,411,534 $ -
6,008,720 3,629,592 3,412,514 6,225,798
$ 6,008,720 $ 7,041,126 $ 6,824,048 $ 6,225,798
$ - $ 938,242 $ 938,242 $ -
1,744,445 927,165 895,362 1,776,248
$ 1,744,445 $ 1,865,407 $ 1,833,604 $ 1,776,248
LIABILITIES:
Accounts payable
$
- $
910,463
$
910,463
$
-
Due to bondholders
1,744,445
960,536
928,733
1,776,248
TOTAL LIABILITIES
$
1,744,445 $
1,870,999
$
1,839,196
$
1,776,248
COMMUNITY FACILITIES DISTRICT 13-01
ASSETS:
Cash and investments
$
- $
427,670
$
425,920
$
1,750
TOTAL ASSETS
$
- $
427,670
$
425,920
$
1,750
LIABILITIES:
Accounts payable
$
- $
4,375
$
2,625
$
1,750
Due to bondholders
-
425,920
425,920
-
TOTAL LIABILITIES
$
- $
430.295
$
428.545
$
1.750
(Continued)
125
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
(CONTINUED)
For the year ended June 30, 2020
126
Balance
Balance
July 1, 2019
Additions
Deletions
June 30, 2020
COMMUNITY FACILITIES DISTRICT 2014-01
ASSETS:
Cash and investments
$
-
$
1,482,534
$
1,471,445
$
11,089
Restricted cash and investments
3,417,565
1,485,488
1,460,174
3,442,879
Taxes receivable
16,878
24,038
16,878
24,038
TOTAL ASSETS
$
3,434,443
$
2,992,060
$
2,948,497
$
3,478,006
LIABILITIES:
Accounts payable
$
-
$
1,452,170
$
1,452,170
$
-
Due to bondholders
3,434,443
1,550,356
1,506,793
3,478,006
TOTAL LIABILITIES
$
3,434,443
$
3,002,526
$
2,958,963
$
3,478,006
COMMUNITY FACILITIES DISTRICT 2018-01
ASSETS:
Cash and investments
$
-
$
276,081
$
275,206
$
875
Restricted cash and investments
-
-
-
-
Taxes receivable
-
-
-
-
TOTAL ASSETS
$
-
$
276,081
$
275,206
$
875
LIABILITIES:
Accounts payable
$
-
$
3,500
$
2,625
$
875
Due to bondholders
-
275,252
275,252
-
TOTAL LIABILITIES
$
-
$
278,752
$
277,877
$
875
TOTAL ALL AGENCY FUNDS
ASSETS:
Cash and investments
$
4,776
$
7,354,063
$
7,305,190
$
53,649
Restricted cash and investments
12,263,836
6,574,726
6,334,396
12,504,166
Taxes receivable
55,066
73,935
55,066
73,935
Prepaid items
-
-
-
-
TOTAL ASSETS
$
12,323,678
$
14,002,724
$
13,694,652
$
12,631,750
LIABILITIES:
Accounts payable
$
-
$
6,466,748
$
6,459,053
$
7,695
Due to bondholders
12,323,678
7,569,113
7,268,736
12,624,055
TOTAL LIABILITIES
$
12,323,678
$
14,035,861
$
13,727,789
$
12,631,750
126
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
STATISTICAL SECTION
127
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
The page left blank intentionally
128
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
Description of Statistical Contents
June 30, 2020
This part of the City of Tustin's Comprehensive Annual Financial Report presents detailed information
as a context for understanding what the information in the financial statements, note disclosures, and
required supplementary information says about the City's overall financial health.
Contents:
Peres
Financial Trends - These schedules contain trend information to help the
reader understand how the City's financial performance and well-being have
changed over time. 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
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
Business -type activities
Net investment in capital assets $ 20,872,492 $ 25,479,160 $ 24,171,745 $ 23,657,878
Restricted - - - -
Unrestricted 5,541,672 2,795,701 7,094,771 8,326,340
Total business -type activities net position $ 26,414,164 $ 28,274,861 $ 31,266,516 31,984,218
Primary government
Net investment in capital assets
$ 399,784,038
Fiscal Year
$ 455,933,033
$ 485,331,201
2011
2012
2013
2014
Governmental activities:
Unrestricted
122,087,023
150,308,950
184,627,659
Net investment in capital assets
$ 378,911,546
$ 412,683,460
$ 431,761,288
$ 461,673,323
Restricted
116,718,495
47,727,966
54,367,385
36,693,458
Unrestricted
116,545,351
147,513,249
177,532,888
93,877,440
Total governmental activities net position
$ 612,175,392
$ 607,924,675
$ 663,661,561
$ 592,244,221
Business -type activities
Net investment in capital assets $ 20,872,492 $ 25,479,160 $ 24,171,745 $ 23,657,878
Restricted - - - -
Unrestricted 5,541,672 2,795,701 7,094,771 8,326,340
Total business -type activities net position $ 26,414,164 $ 28,274,861 $ 31,266,516 31,984,218
Primary government
Net investment in capital assets
$ 399,784,038
$ 438,162,620
$ 455,933,033
$ 485,331,201
Restricted
116,718,495
47,727,966
54,367,385
36,693,458
Unrestricted
122,087,023
150,308,950
184,627,659
102,203,780
Total primary government net position
$ 638,589,556
$ 636,199,536
$ 694,928,077
$ 624,228,439
130
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015 2016 2017 2018 2019 2020
$
456,649,085
$
483,229,135
$
490,574,647
$
499,190,473
$
520,166,300
$
526,953,804
72,929,522
95,241,025
102,027,853
87,395,188
67,892,989
54,106,661
140,727,040
107,224,779
144,442,931
151,119,177
109,981,103
87,121,412
$
670,305,647
$
685,694,939
$
737,045,431
$
737,704,838
$
698,040,392
$
668,181,877
$
24,270,718
$
25,443,651
$
23,252,432
$
22,753,763
$
20,650,435
$
24,145,887
11,845,734
12,227,557
15,129,697
16,505,744
18,076,134
15,070,837
$
36,116,452
$
37,671,208
$
38,382,129
$
39,259,507
$
38,726,569
$
39,216,724
$
480,919,803
$
508,672,786
$
513,827,079
$
521,944,236
$
540,816,735
$
551,099,691
72,929,522
95,241,025
102,027,853
87,395,188
67,892,989
54,106,661
152,572,774
119,452,336
159,572,628
167,624,921
128,057,237
102,192,249
$
706,422,099
$
723,366,147
$
775,427,560
$
776,964,345
$
736,766,961
$
707,398,601
131
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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
7n11 7n17 7n12 7n1A
$ 7,854,361
$ 12,266,470
$ 18,705,913
$ 14,825,780
28,622,807
28,800,773
30,702,298
28,440,799
19,809,907
20,765,854
15,087,234
49,538,371
13,150,089
7,078,104
3,201,865
3,498,460
4,814,598
3,057,645
967,115
-
74,251,762
71,968,846
68,664,425
96,303,410
13,621,100
28,791,083
29,367,544
19,394,706
12,578,667
13,467,541
13,574,149
16,100,137
12,578,667
13,467,541
13,574,149
16,100,137
1,109,150
1,390,073
763,101
249,237
1,196,830
1,133,096
917,947
920,112
3,508,904
800,328
1,248,595
1,710,813
969,006
974,747
926,432
967,134
3,441,281
3,590,210
4,513,158
3,325,304
3,395,929
20,902,629
20,998,311
12,222,106
13,621,100
28,791,083
29,367,544
19,394,706
12,422,746
15,112,161
16,688,773
18,682,821
12,422,746
15,112,161
16,688,773
18,682,821
$ (60,630,662)
$ (43,177,763)
$ (39,296,881)
$ (76,908,704)
(155,921)
1,644,620
3,114,624
2,582,684
$ (60,786,583)
$ (41,533,143)
$ (36,182,257)
$ (74,326,020)
132
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015 2016 2017 2018 2019 2020
$ 17,121,057
$ 20,023,280
$ 24,504,764
$ 23,949,544
$ 27,097,686
$ 29,282,004
29,886,284
27,779,830
34,611,078
33,713,796
36,215,060
39,064,730
34,435,214
47,326,664
24,822,480
37,599,662
45,849,976
40,430,009
3,699,059
7,869,124
19,524,660
10,795,733
20,304,550
5,682,249
-
-
5,802
12,043
9,297
6,444
85,141,614
102,998,898
103,468,784
106,070,778
129,476,569
114,465,436
27,570,891
59,194,506
35,474,682
18,022,346
17,828,387
17,856,376
15,982,078
15,586,463
16,654,429
17,680,886
17,763,633
17,767,158
15,982,078
15, 586,463
16,654,429
17,680,886
17,763,633
17,767,158
252,074
2,072,540
1,979,211
1,630,903
1,920,214
2,157,735
1,071,099
1,195,350
1,255,299
1,283,672
1,285,584
1,205,519
1,564,314
3,538,906
1,861,045
2,167,726
3,300,906
3,123,961
892,102
953,149
1,101,294
1,434,988
2,426,578
1,892,126
3,546,823
2,722,978
2,742,140
3,863,547
4,952,271
4,911,642
20,244,479
48,711,583
26,535,693
7,641,510
3,942,834
4,565,393
27,570,891
59,194,506
35,474,682
18,022,346
17,828,387
17,856,376
19,375,359
in ')mac ')cn
16,511,795
I C CI I 'MC
17,100, 836
1 '7 i nn 0-1c
18,229,013
10 Vin nil)
17,329,090
1 '7 ')'In nnn
17,364,694
i-7 'Icn cnn
$ (57,570,723)
$ (43,804,392)
$ (67,994,102)
$ (88,048,432)
$(111,648,182)
$ (96,609,060)
3,393,281
925,332
446,407
548,127
(434,543)
(402,464)
$ (54,177,442)
$ (42,879,060)
$ (67,547,695)
$ (87,500,305)
$(112,082,725)
$ (97,011,524)
133
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
General revenues and other changes
in net position:
Governmental activities:
Taxes:
Property taxes
Transient occupancy taxes
Business license taxes
Other taxes
Sales tax
Motor vehicle in lieu, unrestricted
Investment income
Other general revenues
Gain on sale of land held for resale
Profit participation
Transfers
Contribution from successor agency
Extraordinary and special items
Total governmental activities
Business -type activities:
Investment income
Miscellaneous
Transfers
Total business -type activities
Total primary government
Changes in net position:
Governmental activities
Business -type activities
Total primary government
CITY OF TUSTIN
CHANGES IN NET POSITION
GENERAL REVENUES
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2011 2012 2013 2014
$ 30,205,879
$ 23,270,718
$ 14,526,101
$ 13,661,771
142,915
137,131
137,064
616,897
358,526
44,800
377,498
393,241
1,648,319
1,621,521
1,655,388
1,663,215
18,597,453
19,931,865
21,575,405
22,288,032
6,189,249
5,833,094
5,951,653
6,150,893
2,358,847
958,169
243,921
628,180
1,700,323
14,444,183
7,231,648
4,040,996
-
-
43,335,089
-
-
(27,314,435)
-
1,412,257
61,201,511
38,927,046
95,033,767
50,855,482
158,242
156,855
39,700
144,381
19,064
59,222
271,858
408,749
177,306
216,077
311,558
553,130
$ 61,378,817 $ 39,143,123 $ 95,345,325 $ 51,408,612
$ 570,849 $ (4,250,717) $ 55,736,886 $ (26,053,222)
21,385 1,860,697 3,426,182 3,135,814
$ 592,234 $ (2,390,020) $ 59,163,068 $ (22,917,408)
134
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015 2016 2017 2018 2019 2020
$
14,552,535
$
16,451,763
$
24,437,717
$
25,636,673
$
26,275,789
$
27,358,525
1,090,675
1,554,754
1,609,318
1,575,830
1,825,957
1,593,532
419,148
406,891
420,684
431,457
466,828
438,632
1,763,878
1,839,963
1,931,185
1,781,175
1,762,642
1,792,263
22,269,896
24,513,610
25,133,146
24,925,934
26,634,458
25,487,518
6,380,698
6,778,329
37,056
43,359
39,526
64,400
1,052,276
2,430,087
611,964
1,109,193
7,167,093
4,445,124
7,829,149
2,671,845
4,594,651
4,838,383
6,002,632
4,556,040
48,136,121
-
24,241,261
33,636,759
395,281
1,014,511
-
-
31,327,612
-
-
-
32,137,773
-
-
-
-
-
-
2,546,442
5,000,000
-
-
-
135,632,149
59,193,684
119,344,594
93,978,763
70,570,206
66,750,545
249,863
480,050
108,669
150,371
1,084,525
869,426
489,090
149,374
155,845
178,880
230,610
23,193
738,953
629,424
264,514
329,251
1,315,135
892,619
$
136,371,102
$
59,823,108
$
119,609,108
$
94,308,014
$
71,885,341
$
67,643,164
$
78,061,426
$
15,389,292
$
51,350,492
$
5,930,331
$
(41,077,976)
$
(29,858,515)
4,132,234
1,554,756
710,921
877,378
880,592
490,155
$
82,193,660
$
16,944,048
$
52,061,413
$
6,807,709
$
(40,197,384)
$
(29,368,360)
135
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
FUND BALANCES OF GOVERNMENTAL FUNDS
Fund Balance subsequent to GASB 54
General fund:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2011 2012 2013 2014
$ 144,186,955 $ 144,604,847 $ 128,988,209 $ 129,049,954
- - 19,615,343 1,352,309
7,443,165 4,077,344 44,368,566 2 18,781,826
Total general fund $ 151,630,120 $ 148,682,191 $ 192,972,118 $ 149,184,089
All other governmental funds
Nonspendable
$ 22,352,713
$ 1,710,292
$ 1,287,607 $ -
Restricted
130,673,281
38,274,666 1
33,885,757 29,820,853
Committed
-
-
- -
Assigned
18,603,317
16,239,322
16,880,590 5,493,536
Unassigned
(10,989,463)
-
- -
Total all other governmental funds
$ 160,639,848
$ 56,224,280
$ 52,053,954 $ 35,314,389
136
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015 2016 2017 2018 2019 2020
$
122,458,642
$
88,579,214 5
$
84,344,748
$
82,868,217
$
82,902,130
$
80,847,357
16,650,332
18,657,461
34,901,943
41,269,878
31,250,893
16,438,469
84,278,138 3
79,667,061
102,517,562
116,332,458
88,768,803
74,972,202
$
223,387,112
$
186,903,736
$
221,764,253
$
240,470,553
$
202,921,826
$
172,258,028
$
-
$
1,922
$
1,922
$
-
$
1,922
$
-
24,048,818
54,438,343
51,069,708
46,322,996
37,215,903
37,014,461
37,350,531 4
26,871,816
20,408,936
17,719,394
5,762,048
815,527
-
-
-
-
-
(628,792)
$
61,399,349
$
81,312,081
$
71,480,566
$
64,042,390
$
42,979,873
$
37,201,196
1 Decrease of $92.4 million due to dissolution of the Tustin Community Redevelopment Agency (TCRA) on February 1,
2012. The assets and liabilities of the TCRA were transferred to the Successor Agency for the TCRA private purpose trust
fund.
2 Increase of $40.3 million due to the gain on sale of land in the former Marine Corp Air Station referred to as the Legacy and
land held for resale along the 55 freeway and Edinger Avenue.
3 Increase of $65.5 million due to the gain on sale of land held for resale of $48.1 million for the development of residential
housing and special item totaling $21.4 million due to reclassification of promissory note to long-term debt.
4 Increase of $31.9 million due to the transfer of bond proceeds from the Successor Agency to the TCRA to the MCAS 2010
Capital Project Fund.
5 Decrease of $33.9 million due to the reclassification of $34 million of land held for resale to land reported as capital assets
which is not reflected in the governmental funds statements.
137
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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
$ 38,726,558
$ 30,975,441
$ 22,703,619
$ 22,808,488
716,144
443,928
577,044
1,284,232
893,642
875,068
678,428
631,340
1,632,215
472,725
173,890
621,786
23,970,358
26,345,002
43,126,447
29,741,754
5,020,485
2,813,752
2,685,080
1,787,268
358,030
480,255
550,003
751,724
1,593,475
-
-
-
-
-
43,340,797
-
2,425,052
14,075,025
9,773,813
6,110,735
75,335,959
76,481,196
123,609,121
63,737,327
7,505,928
11,656,331
17,357,805
14,205,424
27,508,514
28,714,347
27,944,039
28,170,314
9,110,621
6,954,384
5,980,807
5,797,705
12,740,969
6,506,381
2,752,523
3,081,299
9,979,670
25,816,530
28,487,231
74,422,436
10,659,000
2,590,000
-
-
4,131,435
3,264,323
967,115
-
429,731
-
-
-
82,065,868
85,502,296
83,489,520
125,677,178
(6,729,909)
(9,021,100)
40,119,601
(61,939,851)
2,645,014 3,020,291 6,122,454
(2,645,014) (3,020,291) (6,122,454)
43,281,289 - -
18,138 43,745 -
- (98,386,142) -
2,084,612
(2,084,612)
1,412,257
$ 36,569,518 $(107,363,497) $ 40,119,601 $ (60,527,594)
17.69% 20.00% 9.00% 1.73%
138
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015 2016 2017 2018 2019 2020
$ 21,426,308
$ 23,525,899
$ 24,825,401
$ 25,770,970
$ 26,385,383
$ 27,187,012
885,043
1,334,311
853,990
905,086
1,212,696
1,280,180
752,597
982,123
953,665
996,912
909,355
841,747
1,041,661
2,422,072
608,888
1,120,276
7,172,443
4,455,060
37,302,283
42,838,003
35,382,444
42,121,841
39,613,110
38,156,567
1,870,401
2,357,268
1,999,860
2,177,345
2,761,688
2,688,921
1,113,340
1,308,852
1,542,281
1,674,068
2,055,135
2,133,706
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
1,014,511
32,137,773
-
-
-
-
-
6,302,392
4,714,101
5,849,937
8,848,778
7,590,956
4,918,426
167,902,623
105,840,119
136,558,400
125,772,731
88,308,698
82,676,130
17,568,297
20,372,454
24,052,915
21,259,806
25,539,637
27,145,126
33,062,929
27,897,182
30,733,524
32,335,404
33,200,885
36,427,058
6,417,257
7,182,380
7,591,876
7,795,849
9,105,493
8,231,789
3,170,747
7,308,498
18,727,257
9,747,562
19,603,654
4,955,971
23,800,093
22,498,621
26,657,177
40,082,440
59,389,068
42,277,454
5,000,000
4,101,171
4,129,203
3,271,503
71,908
74,763
-
-
5,802
12,043
9,297
6,444
78,883,300 16,479,813 24,660,646 11,268,124 (58,611,244) (36,442,475)
5,266,102 5,453,988 4,242,209 8,908,605 7,281,771 4,745,170
(5,266,102) (5,453,988) (4,242,209) (8,908,605) (7,281,771) (4,745,170)
- - 368,356 - - -
- - 368,356 - - -
- 976,042 - - - -
21,404,683 (34,026,499) - - - -
$ 100,287,983 $ (16,570,644) $ 25,029,002 $ 11,268,124 $ (58,611,244) $ (36,442,475)
8.86% 6.03% 5.28% 3.46% 0.06% 0.09%
139
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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
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
2020
9,494,882
324,715
9,819,597
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
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Redevelopment Agency (A)
141
Total
Direct Tax
Rate (B)
0.310%
0.303%
0.302%
0.116%
0.116%
0.116%
0.116%
0.116%
0.116%
0.116%
Taxable
Assessed
Secured
Unsecured
Value (A)
$ 2,180,029
$ 129,387
$ 2,309,416
2,085,982
133,065
2,219,047
2,107,792
123,929
2,231,721
2,192,026
121,534
2,313,560
2,362,339
139,834
2,502,173
2,643,865
141,934
2,785,799
2,872,602
138,433
3,011,035
3,260,212
143,833
3,404,045
3,498,105
313,242
3,811,347
3,671,553
324,715
3,996,268
141
Total
Direct Tax
Rate (B)
0.310%
0.303%
0.302%
0.116%
0.116%
0.116%
0.116%
0.116%
0.116%
0.116%
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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
2011
2012
2013
2014
$ 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
0.0596
0.0559
0.0672
0.0891
0.0037
0.0037
0.0035
0.0035
0.0314
0.0315
0.0324
0.0333
0.2242
0.2155
0.2155
0.2155
0.0717
0.0715
0.0775
0.0736
0.3906
0.3781
0.3961
0.4150
$ 1.3906
$ 1.3781
$ 1.3961
$ 1.4150
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015
2016
2017
2018
2019
2020
$ 0.1272
$ 0.1272
$ 0.1272
$ 0.1272
$ 0.1272
$ 0.1272
0.4397
0.4397
0.4397
0.4397
0.4397
0.4397
0.0886
0.0886
0.0886
0.0886
0.0886
0.0886
0.0617
0.0617
0.0617
0.0617
0.0617
0.0617
0.0198
0.0198
0.0198
0.0198
0.0198
0.0198
0.0167
0.0167
0.0167
0.0167
0.0167
0.0167
0.0161
0.0161
0.0161
0.0161
0.0161
0.0161
0.2302
0.2302
0.2302
0.2302
0.2302
0.2302
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
0.0696
0.0775
0.0700
0.0687
0.0669
0.0638
0.0035
0.0035
0.0035
0.0035
0.0035
0.0035
0.0508
0.0504
0.0495
0.0509
0.0454
0.0518
-
-
-
-
0.0269
0.0229
0.0960
0.0960
0.1270
0.1270
0.1270
0.1270
0.0687
0.0660
0.0638
0.0633
0.0556
0.0730
-
-
-
0.0271
0.0280
0.0253
0.2886
0.2934
0.3138
0.3405
0.3532
0.3673
$ 1.2886
$ 1.2934
$ 1.3138
$ 1.3405
$ 1.3532
$ 1.3672
143
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Nine Years Ago
Source: Orange County Assesor's Office
144
2020
2011
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
$ 182,150,905
1.33%
$ 154,066,340
1.64%
Raintree Tustin LLC
147,381,658
1.08%
Legacy Villas LLC
129,371,611
0.95%
Irvine Company LLC
128,569,886
0.94%
215,725,010
2.29%
Tustin Market Place
86,528,122
0.63%
Flight Phase I Owner LLC
77,178,891
0.57%
Tustin Parc LP
63,957,712
0.47%
Apple Ten Hospitality Ownership Inc
57,641,874
0.42%
Borchard Redhill SKB-Tustin LLC
57,085,110
0.42%
49,334,093
0.52%
Irvine Apartment Communities LP
55,950,815
0.41%
83,879,946
0.89%
PK II Larwin Square SC LP
-
0.00%
48,435,507
0.51%
Costco Wholesale Corporation
-
0.00%
46,653,846
0.50%
Ricoh Development
-
0.00%
46,703,056
0.50%
Tustin Legacy Community Partners LLC
-
0.00%
60,304,007
0.64%
Avalon II California Value I
-
0.00%
84,390,000
0.90%
American Funding US Investments
-
0.00%
57,006,297
0.61%
$ 985,816,584
7.20%
$ 846,498,102
8.99%
Source: Orange County Assesor's Office
144
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
2011
2012 2013 2014 2015 2016 2017 2018 2019 2020
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
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%
2020
12,732,756
12,500,616 98.18%
182,977
12,683,593
99.61%
Notes:
The amounts presented for fiscal years 2009 through 2012 include City property taxes and former
Redevelopment Agency tax
increment.
Effective February
1, 2012, the former Redevelopment Agency was dissolved.
See Notes 17 for more information.
Source: County of Orange Auditor
Controller's Office
pw-
Millions
Property Tax Levies and Collections
$35.00
$30.00
$25.00
$20.00
$15.00
—
$10.00
—
$5.00 —
—
fft-
2011
2012 2013 2014 2015 2016 2017 2018 2019 2020
Taxes Levied Amount Collected
145
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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
Lease
Governmental
June 30
Bonds (1)
Bonds (2)
Bonds (3)
Payable (4)
Payable (5)
Activities
2011
$ 8,515,000
$ 24,915,000
$ 44,170,000
$ 20,976,317
$ -
$ 98,576,317
2012
-
-
-
21,877282
21,877282
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
199255
199255
2020
124,492
124,492
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 17 for more information.
(2) 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
(3) 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 Note
17 for more information.
(4) 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 ofprobable 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 17 for more information.
(5) In February 2017 the City entered into a lease to finance equipment with a present value of $368,356
146
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
(6) 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.
(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 Refixnding 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 Refimding Water Bonds to defease the outstanding 2011 Water Revenue Bonds.
(11) In February 2020 the City issued $14.91 million of Refixnding Water Bonds to defease the outstanding 2013 Water Revenue Bonds.
147
Business -type Activity
Percentage
Water
Water
Water
Water
Water
Water
Total
Total
of
Debt
Revenue
Revenue
Revenue
Revenue
Revenue
Revenue
Business -type
Primary
Personal
Per
Bonds (6)
Bonds (7)
Bonds (8)
Bonds (9)
Bonds (10)
Bonds (11)
Activity
Government
Income
Capita
$ 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
-
2,989,831
22,632,852
15,672,031
41294,713
41,419,205
1.40%
515
(6) 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.
(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 Refixnding 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 Refimding Water Bonds to defease the outstanding 2011 Water Revenue Bonds.
(11) In February 2020 the City issued $14.91 million of Refixnding Water Bonds to defease the outstanding 2013 Water Revenue Bonds.
147
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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
2011 $ - $ 77,600,000 $ 77,600,000 0.82% $ 1,024
2012 - - - - -
2013 - - - - -
2014 - - - - -
2015 - - - - -
2016 - - - - -
2017 - - - - -
2018 - - - - -
2019 - - - - -
2020 - - - - -
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
Note 17 for more information.
148
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
OVERLAPPING DEBT SCHEDULE
June 30. 2020
2019-20 Assessed Valuation:
$ 13,658,893,858
Redevelopment Incremental Valuation
(3,665,008,824)
Adjusted Assessed Value
$
9,993,885,034
City's
Share of
Total Debt
(1)
Debt at
OVERLAPPING TAX AND ASSESSMENT DEBT:
6/30/20
% Applicable
6/30/20
Metropolitan Water District
$
37,300,000
0.441%
$ 164,493
Rancho Santiago Community College District
220,164,038
0.108
237,777
Rancho Santiago Community College District School Facilities Improvement District No.1
166,020,000
0.178
295,516
Irvine Unwed School District School Facilities Improvement District No. 1
123,400,000
2.903
3,582,302
Orange Unwed School District
180,385,000
0.029
52,312
Santa Ana Unified School District
285,682,392
0.22
628,501
Tustin Unwed School District School Facilities Improvement District No. 2002-1
41,157,228
46.454
19,119,179
Tustin Unwed School District School Facilities Improvement District No. 2008-1
83,175,000
44.841
37,296,502
Tustin Unwed School District School Facilities Improvement District No. 2012-1
39,895,000
45.371
18,100,760
Tustin Unwed School District Community Facilities District No. 88-1
20,930,000
100
20,930,000
Tustin Unwed School District Community Facilities District No. 06-1
14,090,000
100
14,090,000
City of Tustin Community Facilities Districts
95,815,000
100
95,815,000
Irvine Unwed School District Community Facilities District No. 86-1
14,580,000
0.183
26,681
Irvine Ranch Water District Improvement Districts
408,471,130
5.162-87.416
57,541,816
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
267,880,839
OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Orange County General Fund Obligations
$
386,745,000
2.183%
$ 8,442,643
Orange County Pension Obligations
466,863,754
2.183
10,191,636
Orange County Board of Education Certificates of Participation
12,930,000
2.183
282,262
Orange Unwed School District Certificates of Participation
24,951,384
0.029
7,236
Orange Unwed School District Benefit Obligations
63,565,000
0.029
18,434
Santa Ana Unified School District Certificates of Participation
62,467,085
0.22
137,428
City of Tustin
-
100
-
TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT
19,079,639
OVERLAPPING TAX INCREMENT DEBT (Successor Agencies)
$
119,670,000
0.001-100%
50,190,695
TOTAL DIRECT DEBT
TOTAL OVERLAPPING DEBT
COMBINED TOTAL DEBT
$ 337,151,173 (2)
$ 337,151,173
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 2019-20 Assessed Valuations:
Total Overlapping Tax and Assessment Debt 1.96%
Total Direct Debt 0.00%
Combined Total Debt 2.47%
Ratios to Redevelopment Incremental Valuations ($3,665,008,824):
Total Overlapping Tax Increment Debt 1.37%
Source: California Municipal Statistics, Inc.
149
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Fiscal Year
2011 2012 2013
2014
Assessed valuation $ 7,109,878,000 $ 7,159,851,000 $ 7,270,451,000
$ 7,418,821,000
Conversion percentage 25% 25% 25%
25%
Adjusted assessed valuation 1,777,469,500 1,789,962,750 1,817,612,750
1,854,705,250
Debt limit percentage 15% 15% 15%
15%
Debt limit 266,620,425 268,494,413 272,641,913
278,205,788
Total net debt applicable to limitation - - -
-
Legal debt margin $ 266,620,425 $ 268,494,413 $ 272,641,913
$ 278,205,788
Total debt applicable to the limit
as a percentage of debt limit 0.0% 0.0% 0.0%
0.0%
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed
valuation. However, this provision was enacted when assessed valuation was based on 25% of market value.
Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most
recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed
valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in
effect at the time that the legal debt margin was enacted by the State of California for local governments
located within the state.
Sources: County Tax Assessor's Office
City Finance Department
150
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015
2016
2017
2018
2019
2020
$ 7,790,632,000
$ 8,218,228,000
$ 8,566,757,000
$ 8,995,570,000
$ 9,405,874,000
$ 9,819,597,000
25%
25%
25%
25%
25%
25%
1,947,658,000
2,054,557,000
2,141,689,250
2,248,892,500
2,351,468,500
2,454,899,250
15%
15%
15%
15%
15%
15%
292,148,700
308,183,550
321,253,388
337,333,875
352,720,275
368,234,888
$ 292,148,700
$ 308,183,550
$ 321,253,388
$ 337,333,875
$ 352,720,275
$ 368,234,888
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
151
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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
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
19,428,741
12,511,648
6,917,093
770,000
1,973,820
2.52
2016
17,141,219
12,013,376
5,127,843
790,000
1,951,170
1.87
2017
17,365,350
13,032,698
4,332,652
815,000
1,229,673
2.12
2018
18,558,264
14,315,827
4,242,437
845,000
1,535,895
1.78
2019
18,644,225
14,284,470
4,359,755
880,000
1,503,095
1.83
2020
18,257,313
14,022,416
4,234,897
860,000
1,474,120
1.81
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.
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 Note 17 for more information,
152
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Tax Allocation Bonds
Tax Debt Service
Allocation Principal Interest Coverage
$ 17,928,849 $ 2,460,000 $ 2,204,419 4
153
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
Source: HdL Coren & Cone, LLC
Fm
City of Tustin Population
100,000
80,000
60,000
40,000
20,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
r
Per Capita Personal Income
F1O00%County of Orange Unemployment Rate
oo�io
8.00%
6.00%
4.00%
2.00%
0.00%
154
Personal
Per Capita
County of Orange
Calendar
City of Tustin
Income
Personal
Unemployment
Year
Population
(in Thousands)
Income
Rate
2011
75,773
$ 2,363,057
$ 31,186
9.40%
2012
76,597
2,429,318
31,716
8.60%
2013
77,983
2,451,708
31,439
5.60%
2014
78,360
2,375,640
30,317
4.90%
2015
78,347
2,411,442
30,779
5.10%
2016
82,717
2,441,169
29,512
4.20%
2017
82,372
2,506,380
30,427
3.70%
2018
82,344
2,570,460
31,216
3.50%
2019
81,369
2,785,795
34,237
2.80%
2020
80,382
2,963,734
36,870
2.60%
Source: HdL Coren & Cone, LLC
Fm
City of Tustin Population
100,000
80,000
60,000
40,000
20,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
r
Per Capita Personal Income
F1O00%County of Orange Unemployment Rate
oo�io
8.00%
6.00%
4.00%
2.00%
0.00%
154
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
2020 2011
155
Percent of
Percent of
Number of
Total
Number of
Total
Employer
Employees
Employment
Employees
Employment
Tustin Unified School District
2,850
6.85%
Schools First Federal Credit Union
983
2.36%
Youngs Market Company LLC
681
1.64%
2,100
5.42%
Costco Wholesale Corporation
658
1.58%
450
1.16%
New American Funding
645
1.55%
City of Tustin
409
0.98%
300
0.77%
Avid Bioservices, Inc.
230
0.55%
Vita Best Nutrition
215
0.52%
Kaiser Foundation Hospitals
200
0.48%
Logomark Inc
196
0.47%
Ricoh Electronics Inc
-
0.00%
1,384
3.57%
Lamppost Pizza Corp
-
0.00%
1,400
3.61%
Toshiba America Medical Systems
-
0.00%
900
2.32%
Rockwell Collins
-
0.00%
600
1.55%
Cherokee International Corp.
-
0.00%
350
0.90%
RAJ Manufacturing Inc
-
0.00%
260
0.67%
Cash Plus, Inc.
-
0.00%
250
0.64%
Kleen Impressions
-
0.00%
250
0.64%
Ricoh Business Solutions
-
0.00%
250
0.64%
Sources: State of California Employment Development Department
City of Tustin
US Census Bureau
155
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Function
General Government
Community Development
Public Works
Police
Parks and Recreation
RDA/Successor Agency
Water
Total
CITY OF TUSTIN
FULL-TIME CITY EMPLOYEES
BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
25
29
26
35
33
38
35
39
42
42
17
17
15
15
16
19
19
19
20
20
52
51
40
47
48
45
48
47
49
50
140
139
131
140
141
141
137
142
140
143
14
15
13
13
14
14
17
17
17
16
6
5
3
-
-
-
-
-
-
-
23
25
17
17
18
19
18
18
19
17
277 281 245 267 270 276 274 282 287 288
The City contracts with the OC Fire Authority for fire services.
Source: City of Tustin Human Resource Department (Katyn Romos)
156
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Function
CITY OF TUSTIN
CAPITAL ASSET STATISTICS
BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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
129.1
129.1
130.1
130.7
131.3
131.3
132.6
Street Lights
3,544
3,544
3,544
3,640
3,640
3,680
3,700
3,700
3,740
3,797
Traffic Signals
117
118
118
121
121
125
126
128
128
128
Storm Drain (miles)
49.2
49.2
49.2
51.2
51.4
51.8
52.9
53.9
53.9
53.9
Street Trees
15,837
15,786
16,097
16,073
15,815
15,706
15,542
15,574
15,042
14,606
Parks and Recreation
Parks
13
13
13
13
13
14
14
14
14
16
Parks (acres)
98.5
98.5
98.5
98.5
98.5
116.0
116.0
116.0
116.0
173.5
Community Centers
1
1
1
1
1
1
1
1
1
1
Senior Centers
1
1
1
1
1
1
1
1
1
1
Water
Metered Services
14,139
14,139
14,172
14,181
14,148
14,099
14,109
14,104
14,241
14,328
Average daily consumption
12,899
13,491
13,601
13,975
13,975
9,975
10,601
11,770
11,098
11,097
Reservoirs
6
6
6
6
6
6
6
6
6
6
Wells
13
13
13
13
13
13
14
14
14
14
Water Main (miles)
173
173
173
173
173
173
172
172
172
172
Fire Hydrants
2,201
2,201
2,201
1,914
1,945
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
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F021D15934D
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
Fiscal Year
2011 2012 2013 2014
2,592,741
2,733,482
2,815,322
2,905,069
1,133,899
1,172,823
1,158,480
1,163,159
296,001
305,638
308,376
321,125
275
1,242
818
577
134,408
149,957
151,965
167,346
212,561
236,658
268,581
276,292
48,873
53,183
53,461
52,520
11,587
12,204
12,442
7,634
41,291
44,488
44,476
45,920
51,760
58,298
57,462
60,438
8,332
8,514
10,417
12,866
176,248
147,552
82,716
87,785
4,707,976
4,924,039
4,964,516
5,100,731
Measured in hundred cubic feet.
Source: City of Tustin Finance Department (Julie Interante)
Water Consumption By Customer
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
2008 2009 2010 2011 2012
Residential Apartment/Multiple Units Commercial Fire Services
158
2013 20:
Irrigation Governm(
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015 2016 2017 2018 2019
2020
2,603,538
1,934,761
2,119,716
2,398,744
2,199,236
2,264,772
1,139,321
1,003,808
987,688
1,039,878
1,029,284
1,026,696
310,585
259,459
271,649
274,943
267,541
255,245
837
646
504
589
564
475
155,766
96,082
105,750
146,941
131,579
127,429
229,262
134,446
162,843
195,695
177,321
158,344
51,658
45,069
44,947
45,086
45,905
37,786
10,018
11,166
11,276
10,536
13,102
10,158
41,601
22,989
26,751
34,539
32,021
28,491
59,292
40,407
45,071
45,062
44,693
37,520
21,379
23,387
25,185
28,908
32,594
32,754
71,324
68,830
70,721
75,208
76,873
70,777
4,694,581
3,641,050
3,872,101
4,296,129
4,050,713
4,050,447
159
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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.
(2) Per resolution No. 20-04, the City implemented a new water rate with provisions for escalation on February 1, 2020. The
water rate schedule has a fixed component based on the the size of the water meter serving the property and a variable
component based on usage.
Source: City of Tustin Finance Department
160
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
2020
46.85
0.84
1.48
1.94
2.41
3.05
3.53
4.05
2020 (2)
39.76
2.79
2.79
2.79
2.79
2.79
2.79
2.79
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
2020
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.
(2) Per resolution No. 20-04, the City implemented a new water rate with provisions for escalation on February 1, 2020. The
water rate schedule has a fixed component based on the the size of the water meter serving the property and a variable
component based on usage.
Source: City of Tustin Finance Department
160
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
WATER CUSTOMERS
Current Fiscal Year and Nine Years Ago
Water Customer
Tustin Unified School District
City of Tustin
Raintree Tustin LLC
Schroeder Property Management
Tustin Parc
Tustin Acres Community Association
Tustin Village Community Association
Key Inn
Westchester Park LP
Ricoh Electronics, Inc.
Briarwood Investment Co. Ltd.
Vio Tustin Investment LP
CA 4-14 Fund LLC
CMC Association Management
Raintree-Evergreen LLC
Curtis Grieder
Saddleback Mobilodge
New Villa Valencia MHP
Regency West
15701 TV Way Partnership
Arnel Management (Walnut East)
Williamshire HOA
Stonebrook Lmtd.
Waterstone Gardens Investments LP
Sycamore Gardens HOA
CalTrans - District 12
Tustin Plaza Center, LP
Roshan M.D.
Alders Apartment Company
Avalon 2 Calif 1 LP
AT& T Services, Inc.
V KAY - NNC Valencia Gardens
Carmel Partners, MS#3
Cadigan Communites - Monterey Pines
Villa Valencia MHP
Sierra Corporate Management
SKB-Tustin LLC
Archstone Commuites
Great West American
Total Water Sales
Total Water Revenues
Source: City of Tustin Finance Department
2020
0.28%
2011
1.02%
76,797
Percent of
52,264
Percent of
Water
Total Water
Water
Total Water
Charges
Revenues
Charges
Revenues
$ 592,307
3.41%
$466,467
3.75%
204,681
1.18%
148,837
1.20%
170,918
0.98%
0
83,999
0.48%
58,441
0.47%
83,992
0.48%
0
82,100
0.47%
54,514
0.47%
80,388
0.46%
0
74,162
0.43%
0
70,656
0.41%
49,524
0.40%
69,335
0.40%
59,515
0.48%
67,768
0.39%
49,336
0.40%
67,087
0.39%
64,372
0.37%
62,419
0.36%
42,345
0.34%
58,316
0.34%
56,880
0.33%
56,772
0.33%
39,391
0.32%
55,254
0.32%
53,910
0.31%
36,341
0.29%
53,834
0.31%
42,606
0.34%
51,422
0.30%
45,635
0.26%
44,181
0.25%
43,631
0.25%
35,454
0.29%
43,383
0.25%
59,225
0.48%
37,021
0.30%
34,499
0.28%
126,158
1.02%
76,797
0.62%
52,264
0.42%
52,142
0.42%
51,282
0.41%
39,776
0.32%
47,367
0.38%
39,779
0.32%
38,900
0.31%
33,821
0.27%
$ 2,337,402 13.46% $ 1,771,802 14.30%
$ 17,364,694
161
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2011 2012 2013 2014
Public Safety
Moving Citations 6,954 5,161 3,748 3,499
Parking Violations 9,594 8,323 7,754 7,136
Arrests 2,288 2,177 2,420 2,139
Calls for Service 26,819 27,774 27,954 29,527
Public Works
Number of Building Permits Issued 1,230 1,193 1,130 1,517
Number of Building Inspections Completed 10,656 8,019 5,934 5,655
Transportation Permits
Annual 45 50 50 59
Single 62 104 99 89
Encroachment Permits 88 83 123 148
Utility Permits 40 48 55 66
Curb Miles Swept 20,608 20,872 20,003 21,118
Community Services
Rentals 1,055 1,176 1,147 1,138
Classes 1,424 1,555 1,544 1,508
General Government
New Hires 39 37 60 65
Retiree/separations 36 27 82 68
(1) Prior to 2019, Community Services Classes include Classes that were canceled but offered. Fiscal year 2019 on reflects the
classes that were held_
MW Public Safety
70,000
60,000
50,000
40,000
30,000 -
20,000
10,000 ismNINE-
0 - � M M I -E::
Moving Citations X Parking Violations X Arrests a Calls for Service
Public Works - Permits
3,000
2,500
2,000
1,500
1,000
500
X.Number of Building Permits
Issued
Transportation Permits (Annual)
XTransportation Permits (Single)
Encroachment Permits
Utility Permits
162
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Fiscal Year
2015
2016
2017
2018
2019
2020
5,444
6,982
5,590
4,762
4,355
2,811
11,994
13,855
14,514
16,836
17,017
12,609
2,155
2,494
2,343
2,302
2,463
2,448
33,114
36,618
35,172
36,571
38,326
38,288
1,828
2,334
2,430
2,078
2,425
1,915
6,344
11,947
11,768
9,816
11,348
15,884
55
66
56
46
77
74
88
82
208
137
127
104
124
147
107
155
136
161
60
59
62
71
65
57
20,773
22,087
20,589
20,270
22,162
20,766
1,117
1,253
1,494
1,483
1,326
550
1,265
1,389
1,213
1,160
854
805
49
47
67
48
62
46
30
38
47
63
56
37
I
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Community Services
N
MI
IC
h � � � ��, o
.LO
Rentals so Classes
General Government
163
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The page left blank intentionally
164
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CLA (CliftonLarsonAllen LLP)
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TJWAW,
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CLAconnect.com
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, 2020, 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 22, 2020.
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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DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
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.
CliftonLarsonAllen LLP
Irvine, California
December 22, 2020
2
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
APPROPRIATIONS LIMIT WORKSHEET NO. 6
WITH INDEPENDENT ACCOUNTANTS' REPORT
ON AGREED-UPON PROCEDURES
APPLIED TO APPROPRIATIONS LIMIT WORKSHEET NO.6
FOR THE YEAR ENDED JUNE 30, 2020
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CLA (CliftonLarsonAllen LLP)
2875 Michelle Drive
Suite 300
Irvine, CA 92606
TJWAW,
714-978-1300 1 fax 714-978-7893
CLAconnect.com
INDEPENDENT ACCOUNTANTS' REPORT ON
AGREED-UPON PROCEDURES
APPLIED TO APPROPRIATIONS LIMIT WORKSHEET NO. 6
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, 2020. 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. 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, 2020, 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.
3. We compared the prior year appropriations limit presented in the accompanying Appropriations
Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the
pnor year.
No exceptions were noted as a result of our performing this procedure.
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DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
This agreed-upon procedures engagement was conducted in accordance with attestation standards
established by the America Institute of Certified Public Accountants. We were not engaged to, and did
not, conduct an examination or review, the objective of which would be the expression of an opinion or
conclusion, respectively, on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we
do not express such an opinion or conclusion. 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.
CliftonLarsonAllen LLP
Irvine, California
December 22, 2020
2
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
APPROPRIATIONS LIMIT WORKSHEET NO. 6
For the year ended June 30, 2020
Appropriations limit for fiscal year ended June 30, 2019 (see Note 2)
Adjustment factors for the fiscal year ended June 30, 2020 (see Note 2):
Inflation
Population
Factor
Factor Combined
(Note 3)
(Note 4) Factor
1.03 850000
1.00290000 1.04151165
Adjustment for inflation and population
Other adjustments (Note 5)
Total adjustments
Appropriations limit for fiscal year ended June 30, 2020
See accompanying notes to Appropriations Limit Worksheet No. 6.
3
$ 90,391,756
x 0.04151165
3,752,311
3.752.311
94.144.067
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CITY OF TUSTIN
NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO. 6
For the year ended June 30, 2020
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 2019-2020 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 2019-2020 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, 2020.
2
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CLA (CliftonLarsonAllen LLP)
2875 Michelle Drive
Suite 300
Irvine, CA 92606
TJWAW,
714-978-1300 1 fax 714-978-7893
CLAconnect.com
INDEPENDENT AUDITORS' REPORT
The Honorable Mayor and
Members of the City Council
of the City of Tustin
Tustin, California
Compliance
We have audited the City of Tustin's (the City) compliance with the applicable provisions of Assembly
Bill 2766, Chapter 1705 (Health and Safety Code Sections 44220 through 44247) (AB2766) applicable
to the City's Air Quality Improvement Special Revenue Fund (AQMD Fund) for the year ended
June 30, 2020.
Management's Responsibility
Compliance with the requirements referred to above is the responsibility of City's management.
Auditor's Responsibility
Our responsibility is to express an opinion on City's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States; and AB2766. Those
standards and AB2766 require that we plan and perform the audit to obtain reasonable assurance about
whether noncompliance with the compliance requirements referred to above that could have a material
effect on the City's AQMD Fund occurred. An audit includes examining, on a test basis, evidence
about City's compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion. Our audit does not provide a legal determination of City's compliance with those
requirements.
Opinion
In our opinion, City complied, in all material respects, with the compliance requirements referred to
above that are applicable to AQMD Fund for the year ended June 30, 2020.
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Internal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over
compliance with the compliance requirements referred to above. In planning and performing our audit,
we considered City's internal control over compliance to determine the auditing procedures for the
purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on
the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on
the effectiveness of City's internal control over compliance.
A deficiency in internal control over compliance 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, noncompliance on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a compliance
requirement will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance 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 deficiencies, significant deficiencies, or material weaknesses in internal control over compliance.
We did not identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the A132766.
Accordingly, this report is not suitable for any other purpose.
CliftonLarsonAllen LLP
Irvine, California
December 22, 2020
2
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
CLA (CliftonLarsonAllen LLP)
2875 Michelle Drive
Suite 300
Irvine, CA 92606
TJWAW,
714-978-1300 1 fax 714-978-7893
CLAconnect.com
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, 2020. Professional standards require that we provide you with
information about our responsibilities under generally accepted auditing standards and Government
Auditing Standards as well as certain information related to the planned scope and timing of our audit.
We have communicated such information in our engagement letter dated April 14, 2020, and our
planning letter dated May 22, 2020. Professional standards also require that we communicate to you
the following information related to our audit.
Significant Audit Findings
Qualitative Aspects ofAccounting 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, 2020. 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. 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.
b. The annual required contributions, pension expense, net pension liability and
corresponding deferred outflows of resources and deferred inflows of resources for the
City's public defined benefit plans with Ca1PERS are based on actuarial valuations
provided by CalPERS.
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DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Significant Audit Findings (Continued)
Qualitative Aspects ofAccounting Practices (Continued)
Sensitive Estimates (Continued)
c. The actuarially determined contributions, OPEB expense, net OPEB liability and
corresponding deferred outflows of resources and deferred inflows of resources for the
City's OPEB plan are based on certain actuarial assumptions and methods prepared by
an outside actuary.
d. Management's estimate of the claims payable liabilities related to general liability and
worker's compensation claims are based on actuarial assumptions and methods
prepared by an outside actuary.
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 determined that the effects of the following uncorrected adjustment is
immaterial to the financial statements taken as a whole: an entry to increase the Other Post -
Employment Benefits (OPEB) liability by approximately 4%, or $49,500 to the Water Enterprise Fund
and business activities and $500,500 to the governmental activities, due to the omission of certain
participants from the census data used in the actuarial valuation. As a result of our audit related test
work, we proposed an adjustment to allocate a portion of the OPEB liability to the Water Enterprise
Fund, which resulted in a restatement of beginning net positions that, in our judgment, had a
significant effect on the City's financial reporting process.
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.
2
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Significant Audit Findings (Continued)
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated December 22, 2020.
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.
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.
3
DocuSign Envelope ID: C36E5736-5449-4BA5-92D9-F1 F02D15934D
Other Matters (Continued)
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.
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.
CliftonLarsonAllen LLP
Irvine, California
December 22, 2020
S