HomeMy WebLinkAbout06 FISCAL YEAR 2020-2021 AUDIT REPORTSDocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
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AGENDA REPORT
MEETING DATE:
TO:
FROM:
SUBJECT:
SUMMARY:
FEBRUARY 15, 2022
MATTHEW S. WEST, CITY MANAGER
Agenda Item 6
Reviewed: F-5w
City Manager Ds
Finance Director �a
JASON AL -IMAM, FINANCE DIRECTOR/CITY TREASURER
FISCAL YEAR 2020-2021 AUDIT REPORTS
The financial statement audit for the 2020-2021 fiscal year has been completed by Davis Farr
LLP, which reflects an "unmodified", or clean opinion that the City's financial statements for the
fiscal year are presented fairly. Jennifer Farr, the audit partner from Davis Farr LLP discussed
the results of the audit with the Audit Commission on February 3, 2022.
RECOMMENDATION:
It is recommended that the City Council receive and file the fiscal year 2020-2021 audit reports.
FISCAL IMPACT:
The total contractual cost of the annual audit with Davis Farr LLP is $43,500. Of this amount, $8,700
is charged to the Water Enterprise Fund, and $34,800 is charged to the General Fund. In addition,
$3,300 was paid to CalPERS and charged to the General Fund for required GASB 68 information
related to pension liabilities and expenses.
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 strategic decisions
made and implemented during the fiscal year. It is important to note that certain funds are
consolidated in the Annual Comprehensive Financial Report (ACFR). 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.
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Fiscal Year 2020-2021 Audit Reports Page 2 of 3
Total General Fund revenues excluding transfers in amounted to approximately $78 million, which
reflects an increase of approximately $12 million (18.5%) compared to prior year revenues. The
increases in General Fund revenues were attributed to the following factors:
• Sales and use tax revenue increased by $5.3 million, or 21 %, which was primarily due to
strong sales from autos and transportation, business and industry, and from the state and
county pools;
• The City received $3 million in federal CARES Act funding, which was primarily used for
economic assistance and meal gap assistance;
• $5 million in profit participation revenue was received in connection with a housing
development at the Tustin Legacy; and
• Investment income was $1.8 million lower due to the declining interest rate environment
during FY 2020-2021.
Total General Fund expenditures amounted to approximately $82 million, a decrease of $19.5
million (19%) compared to prior year. This decrease was primarily attributed to capital outlay
spending ($8.8 million in FY 2020-2021 vs. $27.8 million in FY 2019-2020). Major projects such
as the Tustin Legacy Veterans Sports Park, Emergency Operations Center and Corporate Yard
Facility incurred significant expenditures in prior year and were completed during the early part of
FY 2020-2021.
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the City for its ACFR for the fiscal year ended June 30, 2020.
This was the thirty -forth (34) 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 ACFR for the fiscal year
ended June 30, 2021 continues to meet the award program's requirements and was submitted
again to GFOA upon completion of the audit.
In addition to the Independent Auditor's Report, the auditors issued a Report on Internal Control
Over Financial Reporting and 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 internal control deficiencies
were identified and considered to be material weaknesses. However, the auditors identified one
matter related to prior period restatements. During FY 2020-2021, City staff conducted a
comprehensive review of land held for resale and determined that land had been legally
transferred to the City in 2010 and 2012; however, these land transfers had not been recorded in
the City's accounting records in prior years. Therefore, an adjustment was initiated by staff to
correct the City's accounting records, which resulted in an increase in the value of land held by
the City and was properly recorded as a prior period restatement.
Additionally, during the audit, it was discovered that affordable housing loans to home buyers had
been legally transferred in prior years to the Housing Authority. However, the housing loans
receivable were not recorded in the Housing Authority's accounting records in prior years.
Therefore, an adjustment was made to properly record the housing loans, which resulted in a
prior period restatement. The auditors agree with the prior period restatements initiated by City
staff, and recommended that the City ensure that the internal controls that resulted in the City's
detection of prior period misstatements are maintained in order to ensure that material
transactions are accounted for in the appropriate fiscal period.
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Fiscal Year 2020-2021 Audit Reports
Page 3 of 3
A separate letter has also been issued by the auditors on matters that are required to be
communicated in connection with the audit. This letter, referred to as the "Required Audit
Communications", outlines the scope of the audit, significant estimates and other matters,
including a corrected misstatement of receivables and cash in a CFD Construction Fund.
Jennifer Farr, the audit partner from Davis Farr LLP discussed the results of the audit with the
Audit Commission on February 3, 2022.
F
DocuSign/e{d�byn:
Jason AI-Ima 1D15CC3AFOCB4AE_.
Finance Director/City Treasurer
Attachments:
DocuSigned by:
Jennifer King 14A1CDD9FF1D5480..
Deputy Director — Financial Services
1. Annual Comprehensive Financial Report (ACFR)
2. Report on Internal Control
3. Report on Appropriations Limit Calculation
4. Report on Compliance Applicable to the Air Quality Improvement Fund
5. Required Audit Communications
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lqqqqq
Annual
Comprehensive
Financial
Report
Fiscal Year Ended
June 30, 2021
City of Tustin,
California
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CITY OF TUSTIN, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2021
Prepared By: Finance Department
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CITY OF TUSTIN
Annual Comprehensive Financial Report
For the Year Ended June 30, 2021
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
Annual Comprehensive Financial Report
For the Year Ended June 30, 2021
Table of Contents
Page
Number
REQUIRED SUPPLEMENTARY INFORMATION: 95
Safety Plan:
112
Schedule of Proportionate Share of the Net Pension Liability
96
Schedule of Contributions
98
Miscellaneous Plan:
116
Schedule of Changes in the Net Pension Liability and Related Ratios
100
Schedule of Contributions
102
Other Post -Employment Benefit Plan (OPEB):
118
Schedule of Changes in the Net OPEB Liability and Related Ratios
104
Schedule of Contributions - OPEB
105
Annual Money -Weighted Rate of Return on Investments
106
Budgetary Comparison Schedules:
122
General Fund
107
Housing Authority Fund
108
Note to Required Supplementary Information
109
SUPPLEMENTARY INFORMATION: III
Other Governmental Funds:
112
Combining Balance Sheet
114
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
116
Schedules of Revenues, Expenditures and Changes in Fund
Balance - Budget and Actual:
Gas Tax Special Revenue Fund
118
Park Acquisition and Development Special Revenue Fund
119
Asset Forfeiture Special Revenue Fund
120
Air Quality Special Revenue Fund
121
Supplemental Law Enforcement Special Revenue Fund
122
Special Tax B Special Revenue Fund
123
Road Maintenance and Rehabilitation Fund
124
Solid Waste Special Revenue Fund
125
Measure M Special Revenue Fund
126
Custodial Funds:
Combining Statement of Fiduciary Net Position — Custodial Funds 127
Combining Statement of Changes in Fiduciary Net Position — Custodial Funds 128
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CITY OF TUSTIN
Annual Comprehensive Financial Report
For the Year Ended June 30, 2021
Table of Contents
Page
Number
STATISTICAL SECTION (UNAUDITED): 131
Description of Statistical Section Contents 133
Financial Trends:
Net Position by Component - Last Ten Fiscal Years 134
Changes in Net Position - Expenses and Program Revenues - Last Ten Fiscal Years 136
Changes in Net Position - General Revenues - Last Ten Fiscal Years 138
Fund Balances of Governmental Funds - Last Ten Fiscal Years 140
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 142
Revenue Capacity:
Assessed Value and Estimated Actual Values of Taxable Property - Last Ten Fiscal Years 144
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 146
Principal Property Taxpayers - Current Year and Nine Years Ago 148
Property Tax Levies and Collections - Last Ten Fiscal Years 149
Debt Capacity:
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 150
Overlapping Debt Schedule 152
Legal Debt Margin Information - Last Ten Fiscal Years 154
Pledged -Revenue Coverage - Last Ten Fiscal Years 156
Demographic and Economic Information:
Demographic and Economic Statistics - Last Ten Calendar Years 157
Principal Employers - Current Year and Nine Years Ago 158
Operating Information:
Full -Time City Employees by Function - Last Ten Fiscal Years 159
Capital Asset Statistics by Function - Last Ten Fiscal Years 160
Water District Schedules for Revenue Capacity:
Water Consumption by Customer Type - Last Ten Fiscal Years 162
Water Rates - Last Ten Fiscal Years 164
Water Customers - Current Year and Nine Years Ago 165
Operating Indicators by Function — last Ten Fiscal Years 166
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CITY OF TUSTIN
Elected and Administrative Officials
LETITIA CLARK
Mayor
BARRY W. COOPER
Councilmember
AUSTIN LUMBARD
Mayor Pro Tem
RYAN GALLAGHER
Councilmember
[:11113-1-1[Offla ►1iR.Y[W
Craig Shimomura, Chair
Daniel Erickson, Chair Pro Tem
Robert Ammann
Jered Elmore
John Wende
REBECCA "BECKIE"
GOMEZ
Councilmember
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CITY MANAGER
Matthew S. West
ASSISTANT CITY MANAGER
Nicole Bernard
David E. Kendig City Attorney
Justina Willkom 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
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Introductory
Section
ANNUAL COMPREHENSIVE FINANCIAL REPORT
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City of Tustin, California
Finance Department
December 15, 2021
To the Honorable Mayor, Members of the City Council
and Citizens of the City of Tustin:
TUSTIN
N 1 %YoRY
BUILDING OUR FUTURE
HONORING OUR PAST
It is our pleasure to submit the Annual Comprehensive Financial Report (ACFR) of the City of
Tustin for the fiscal year ended June 30, 2021.
These statements have been prepared in conformity with generally accepted accounting principles
(GAAP) as promulgated by the Government Accounting Standards Board (GASB). This report
consists of management's representations concerning the finances of the City of Tustin.
Responsibility for the accuracy and completeness of the data presented including all disclosures,
rests with management. To provide a reasonable basis for making these representations and
assurance that the financial statements will be free from material misstatements, management has
established a comprehensive 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. As the cost of internal
control should not outweigh their benefits, the City's comprehensive framework of internal
controls has been designed to provide reasonable, rather than absolute assurance that the financial
statements will be free from material misstatement.
The City of Tustin's financial statements for the year ended June 30, 2021, have been audited by
Davis Farr LLP, an independent public accounting firm of licensed certified public accountants.
The goal of the audit was to provide reasonable assurance that the financial statements of the City
of Tustin for the fiscal year ended June 30, 2021 are free of material misstatements. The
independent audit involved examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements; assessing the accounting principles used and significant
estimates made by management; and evaluating the overall financial statement presentation. The
independent auditor concluded, based upon the audit, that there was a reasonable basis for
rendering an unmodified opinion that the City of Tustin's financial statements for the fiscal year
300 Centennial Way, Tustin, CA 92780 iii www.tustinca.org
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ended June 30, 2021, 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 in the financial section of the ACFR.
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, 2021 population at 80,009, a
decrease from 2020 of about 0.6%. Most cities in Orange County showed minor decreases in
population, with the County of Orange total population experiencing a 0.8% decrease. For the first
time, the California statewide population also decreased by 0.5% as the state continues to experience
increases in mortality and declines in birth rates as well as deaths related to the COVID-19 pandemic.
Also contributing to the decline in population, affordable housing continues to be challenging for
many Californians.
The City was incorporated under the General Laws of the State of California in 1927 and is governed
by a five -member elected City Council. The Council/Administrator form of city government was
adopted in 1965 and modified to the Council/City 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.
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BUDGET DEVELOPMENT AND MONITORING
The key element of the City's financial management process is the development and approval of
the biennial budget. The two-year budget serves as the foundation for the City's financial planning
and control, which allows the Council to prioritize expenditures and to focus on programs essential
to our community. Additionally, the Council adopts a second -year update to the biennial budget.
As part of the budget development, the City Council conducts various public workshops on the
proposed budget and adopts the budget at a public meeting. Budget documents are available on
the City website at www.tustinca.org.
Budgetary control is at the fund level. The City Manager is authorized to transfer appropriations
within the fund between various programs and/or departments as long as the transfers do not result
in an increase to the fund's approved appropriations.
ECONOMIC OUTLOOK
The impacts of COVID-19 continue to affect local and national economic conditions. Over the
past year, COVID vaccines became more accessible and state -mandated stay-at-home restrictions
were loosened. In 2020, the City of Tustin developed a "Tustin CARES" program in response to
the pandemic. In Fiscal Year 2020-2021, the City allocated over $3 million of federal funds to
provide aid and reinvestment into the Tustin community in the form of grants to small businesses
and non -profits, meal gap assistance for seniors and families in need, and to provide emergency
rent and utility assistance. As a continuation of the Tustin CARES program from last year, $7.4
million from the American Rescue Plan Act of 2021 (ARPA) are expected to be utilized to provide
additional rounds of aid and reinvestment into the Tustin community to respond to the public health
emergency and to address related negative economic impacts. All these factors have helped the
local economy to recover from the devastating impacts of state -mandated business restrictions and
stay-at-home orders. According to U.S. Bureau of Labor Statistics' data, the unemployment rate
for the Santa Ana -Anaheim -Irvine area dropped to 4.7 percent in October 2021 compared to the
all-time high of 14.9 percent in May 2020. However, this recovery is still hampered by supply
chain limitations created by COVID.
The City's adopted biennial budget for fiscal years 2021-2023 reflects an increase in General Fund
revenues of approximately $8 million over the next two years. Increases to the top three revenue
sources are briefly described below:
• Sales tax revenue is the General Fund's largest revenue source. As the economy continues
to reopen and consumer demand remains strong, sales tax revenue is projected to increase
three to four percent each year.
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• Property tax revenue is the General Fund's second largest revenue source. This revenue is
projected to increase two to three percent per year due to projected increases in assessed
property valuations.
• Departmental revenues primarily consist of revenues generated by the Parks and
Recreation and Community Development Departments. Recreation program revenues are
projected to increase due to relaxed COVID restrictions. Building and permit fees are
projected to increase based on anticipated development activity.
The General Fund expenditures are projected to increase by $5.3 million during the same two-year
period. Major factors contributing to this increase are higher landscape maintenance costs for new
parks and medians; addition of four Police Officers to restore staffing level; and additional
contributions to pay down the City's pension liability.
MAJOR ECONOMIC DEVELOPMENTS
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 substantial amount of infrastructure to install and remaining
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 developed by Lincoln Property Company, has been completed. FLIGHT
features several amenities, including a very popular 12,000 -square -foot 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. Current tenants occupy over 50% of Phase 1 and include
Happy Money, OTTNO Inc, Virgin Galactic, InXile Entertainment, and Branded Online.
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 positive
economic multiplier effect that reaches beyond the boundaries of FLIGHT. FLIGHT will
benefit 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:
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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
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 early 2022.
• Levity at Tustin Legacy, a new neighborhood comprised of 218 single family homes on
approximately 14 acres developed by Lennar Homes of Southern California is complete
and all homes are sold and closed. The homes were designed in a contemporary
architectural style with flat roofs, upper floor rooftop decks and balconies that 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).
• The Landing at Tustin Legacy is a 25 -acre community that will feature 400 for -sale units
comprised of three design styles: 154 attached stacked flats (Terra), 129 row townhomes
(Luna), as well as 117 luxury single-family homes (Circ). The City closed on the land sale
of the property with Brookfield Homes in the Fall of 2021. Grading and phased
infrastructure commenced soon thereafter. Model homes are expected to be open in Spring
2022.
Pacific Center East, an area near the intersection of Edinger Avenue and the 55 freeway, also
contains City -owned parcels, portions of which have been conveyed for development, leased, or
are available for future development. The area currently includes two hotels that generate a
significant amount of Transient Occupancy Tax revenue for the City.
• 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 completed construction of its new 180,000 square foot office
building, 5,000 square foot retail bank branch, and 900+ space parking structure in 2021.
The office building and bank branch, when combined with existing SchoolsFirst buildings,
is home to over 1,600 employees and serves as SchoolsFirst's California corporate
headquarters.
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• The City will evaluate future development opportunities 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 Downtown Commercial Core Specific Plan (DCCSP) provides the framework 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 was completed in 2021. The
Vintage by Taylor Morrison offers resort style amenities, including a community pool, and
is within walking distance to Old Town businesses.
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 2021 include the following:
• Tustin Legacy Veterans Sports Park
• Public Facilities
• City Corporate Yard Data Center, Peppertree Park Improvements, and Annual Major
Building Maintenance
• Transportation Facilities
• Del Amo and Newport Avenue Improvements and Annual Pavement Maintenance
The City's capital projects for fiscal year 2021-2022 are budgeted at $34.1 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
Water Revenue Bond proceeds, water revenues, gas tax, Park Development Funds, Measure M2,
Community Facility District bond proceeds, State Road Maintenance and Rehabilitation funds
(RMRA), and Community Development Block Grants. Major capital projects for fiscal year 2021 -
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2022 include:
• Tustin Legacy Facilities
• Alley Grove Neighborhood D -South Improvements
• Neighborhood D -South Infrastructure Construction — Phase I
• South Hangar Renovation — Phase I
• Transportation Facilities
• Annual Pavement Maintenance and Public Infrastructure Maintenance Program
• Public Facilities
• Civic Center Alternate Power Source
• Park Facilities
• Pine Tree Park Irrigation and Turf Improvements, Picnic Shelter Replacement, and
Volleyball Court Reconfiguration
• Water Projects
• Simon Ranch Reservoir, Booster Pump Station and Pipeline Replacement
• Conjunctive Use Well at Beneta Well Site
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
Annual Comprehensive Financial Report for the fiscal year ended June 30, 2020. This was the
thirty-fourth (34) 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 annual comprehensive financial report. This report must satisfy both
generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
annual comprehensive financial report continues to meet the Certificate of Achievement Program's
requirements and we are submitting it to GFOA to determine its eligibility for another certificate.
ACKNOWLEDGMENTS
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 King,
Deputy Director — Financial Services; Sean Tran, Deputy Director — Administrative Services; David
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Faraone, Jr., Senior Budget Analyst; Glenda Babbitt, Management Analyst; Andrea Campbell, Senior
Accountant; and JP Facundo, Accountant.
Credit must also be given to the City Council for their exceptional support and commitment to
maintaining the highest standards of professionalism in the management of the City's finances; and
finally to the City's auditing firm of Davis Farr LLP for their professional assistance.
Respectfully submitted,
e4elm :�z N/wf
Matthew S. West
City Manager
X
Jason Al -Imam
Finance Director/City Treasurer
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CITIZENS OF
TUSTIN
MAYOR
CITY COUNCIL
CITY MANAGER
LOCAL GOVERNMENT
FY 2020-2021
SUCCESSOR AGENCY TO THE TUSTIN
REDEVELOPMENT AGENCY
COORDINATION AND
COOPERATION
ASSISTANT
POLICE CITY PRIVATE
MANAGER UTILITIES
Cable T.V.
Electricity
Natural 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 FD'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, 2020
Executive Director/CEO
xii
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Independent
Auditor's Report
ANNUAL COMPREHENSIVE FINANCIAL REPORT
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DavisFar r
CERTIFIED PUBLIC ACCOUNTANTS
City Council
City of Tustin
Tustin, California
Davis Farr LLP
18201 Von Korman Avenue I Suite 1100 1 Irvine, CA 92612
Main: 949.474.2020 1 Fax: 949.263.5520
Independent Auditor's Report
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Tustin, California, as of and for the year ended June 30, 2021, 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.
Auditor's 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 auditor's
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 auditor
considers internal control relevant to the entity'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 entity'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.
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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 activities, each
major fund, and the aggregate remaining fund information of the City of Tustin, California, as of
June 30, 2021, 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
The financial statements for the year ended June 30, 2021 reflect certain prior period
adjustments as described further in note 20 to the financial statements. Our opinion is not
modified with respect to this matter.
As described further in note 1 to the financial statements, during the year ended June 30, 2021,
the City implemented Governmental Accounting Standards Board (GASB) Statement No. 84. Our
opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that
management's discussion and analysis and budgetary comparison information for the General
Fund and each major special revenue fund and Schedule of Proportionate Share of the Net
Pension Liability - Safety Plan, Schedule of Contributions - Safety Plan, Schedule of Changes in
the Net Pension Liability and Related Ratios - Miscellaneous Plan, Schedule of Contributions -
Miscellaneous Plan, Schedule of Changes in the Net OPEB Liability and Related Ratios, Schedule of
Contributions - OPEB, and the Annual Money -Weighted Rate of Return on Investments 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 required supplementary information 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 information 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 of Tustin's basic financial statements. The combining and individual
nonmajor fund financial statements and schedules, the introductory section and the statistical
section are presented for purposes of additional analysis and are not a required part of the basic
financial statements.
The combining and individual nonmajor fund financial statements and schedules are the
responsibility of management and were derived
from and
relate 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
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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 combining and individual nonmajor fund financial statements and
schedules are fairly stated, in all material respects, in relation to the basic financial statements as
a whole.
The introductory section and the statistical section 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 15, 2021 on our consideration of the City of Tustin'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 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 City of Tustin's internal control over financial reporting and
compliance.
Irvine, California
December 15, 2021
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Management's Discussion
and Analysis
ANNUAL COMPREHENSIVE FINAKIAL REPORT
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
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, 2021. 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, 2021, by $750.5 million (net position). Net position consists of
$591.4 million invested in capital assets, $39.4 million in restricted net position, and $119.7
million in unrestricted net position.
The City's total net position decreased by $11.7 million during the fiscal year ended June 30,
2021. The decrease in net position is largely related to depreciation expense, which amounted to
approximately $16.8 million during the fiscal year. In addition, deferred resources and liabilities
related to the City's pension and other post -employment benefits (OPEB) liability resulted in a
$3.7 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.
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
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
to recover all or a significant portion of their costs through user fees and charges. Governmental
activities of the City, and the Tustin Public Financing Authority, a blended component unit, include
general government, public safety, community services, and public works. Business -type activity of
the City is the Water Utility.
The government -wide financial statements can be found immediately following this discussion and
analysis.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses
fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of
the funds of the City can be divided into three categories: governmental funds, proprietary funds, and
fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government -wide financial statements. However, unlike the
government -wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating a government's near-term
financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government -wide financial statements. By
doing so, readers may better understand the long-term impact of the government's near-term financing
decisions.
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, Housing Authority Special Revenue Fund and American Rescue Plan
Act (ARPA) 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.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Fund Financial Statements (Continued)
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 a custodial 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.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government -wide and fund financial statements. The notes to
the basic financial statements can be found immediately following the fiduciary funds financial
statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information which includes a Budgetary Comparison Schedule for the General
Fund and schedules of funding progress for the City's defined benefit pension plan and other post -
employment healthcare benefits (OPEB) 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 norlmajor Special Revenue Funds, nonmajor Capital Projects Funds, and all nonmajor
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
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 (78.8 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.
The City's total assets decreased slightly by $2 million or 0.2% compare to the prior fiscal year while its
total liabilities increased by $8.9 million or 5.6%. The primary reason for the increase in liabilities relates
to American Rescue Plan Act (ARPA) funds, which are required to be classified as unearned revenue
until expended. The City received its first tranche of ARPA funds ($9.7 million) in May 2021. However,
no amounts were expended in the current year. Therefore, $9.7 million was classified as unearned
revenue as of June 30, 2021. The City's total net position decreased by $11.7 million or 1.5%. Major
factors contributed to the net position decrease are discussed in the following pages.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Government -wide Financial Analysis (Continued)
City of Tustin
Summary of Net Position
As of June 30, 2021
(in millions of dollars)
Deferred Inflows of
Resources
Net Position:
Net investment in capital assets
Restricted
Unrestricted
4.0 3.6 0.3 0.2 4.3 3.8
549.5 565.4 24.1 26.0 573.6 591.4
59.3 39.4 - - 59.3 39.4
Total Net Position 5723.0 J111.fi L39.2 LL7S 62.2 750.5 -1.5%
* Fiscal year 2020 net position was restated. See further information at footnote 20.
Governmental activities. Net position of the City's governmental activities decreased by $11.4 million
or 1.6% to $711.6 million after factoring in prior period restatement totaling $54.8 million, which is
discussed in further detail later in the Summary of Net Position section. Of the $711.6 million in net
position, $565.4 million is invested in capital assets such as land, buildings, equipment, and
infrastructure; $39.4 million is restricted to specifically stipulated spending agreements originated by
law, contracts, or other agreements with external parties. The remaining $106.8 million is unrestricted
and available to be designated for specific purposes by the City Council to meet the City's ongoing
obligations.
9
Governmental
Business -Type
Total
Activities
Activities
Total
Change
2020*
2021
2020
2021
2020
2021
2020-2021
Assets:
Current and other assets
$ 266.5
$ 267.7
$ 32.8
$ 24.5
$ 299.3
$ 292.2
Capital assets
552.3
550.5
53.8
60.7
606.1
611.2
Total Assets
818.8
818.2
86.6
85.2
905.4
903.4
-0.2%
Deferred Outflows of Resource
14.5
13.5
4.4
4.1
18.9
17.6
Liabilities:
Current liabilities
22.0
27.3
5.9
5.6
27.9
32.9
Non -Current liabilities
84.3
89.2
45.6
44.6
129.9
133.8
Total Liabilities
106.3
116.5
51.5
50.2
157.8
166.7
5.6%
Deferred Inflows of
Resources
Net Position:
Net investment in capital assets
Restricted
Unrestricted
4.0 3.6 0.3 0.2 4.3 3.8
549.5 565.4 24.1 26.0 573.6 591.4
59.3 39.4 - - 59.3 39.4
Total Net Position 5723.0 J111.fi L39.2 LL7S 62.2 750.5 -1.5%
* Fiscal year 2020 net position was restated. See further information at footnote 20.
Governmental activities. Net position of the City's governmental activities decreased by $11.4 million
or 1.6% to $711.6 million after factoring in prior period restatement totaling $54.8 million, which is
discussed in further detail later in the Summary of Net Position section. Of the $711.6 million in net
position, $565.4 million is invested in capital assets such as land, buildings, equipment, and
infrastructure; $39.4 million is restricted to specifically stipulated spending agreements originated by
law, contracts, or other agreements with external parties. The remaining $106.8 million is unrestricted
and available to be designated for specific purposes by the City Council to meet the City's ongoing
obligations.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Government -wide Financial Analysis (Continued)
millions
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
Expenses and Program Revenues - Governmental Activities
Year Ending June 30, 2021
GENERAL PUBLIC SAFETY PUBLIC WORKS COMMUNITY OPERATING CAPITAL GRANTS
GOVERNMENT SERVICES GRANTS AND AND
CONTRIBUTIONS CONTRIBUTIONS
Io Expenses Ia Revenue
Motor vehicle
taxes shared
state revenues
0.1
Gain on sale of
land held for
resale
0.1%
Business license taxes
0.6
Transient occupancy
taxes
1.7
Revenues By Source - Governmental Activities
Sales tax
43.0
Other general
revenues
1.8
Investment income
2.3
10
Profit participation
7.0%
Othertaxes
2.6%
Property taxes
40.7
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Government -wide Financial Analysis (Continued)
City of Tustin
Summary of Changes in Net Position
For the Year Ended June 30, 2021
(in millions of dollars)
Revenues:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Taxes
Motor vehicle taxes
Earnings on investments
Miscellaneous
Profit participation
Gain on sale of assets
Total Revenues
Expenses:
General government
Public safety
Public works
Community services
Water
Total Expenses
Governmental Business -Type Total
Activities Activities Total Change
2020* 2021 2020 2021 2020 2021 2020-2021
$ 8.4 $ 7.1 $ 17.3 $ 18.9 $ 25.7 $ 26.0
4.9
8.6
- - 4.9
8.6
4.6
4.4
- - 4.6
4.4
57.0
63.4
- - 57.0
63.4
0.1
0.1
- - 0.1
0.1
4.4
1.7
0.9 - 5.3
1.7
4.3
1.3
- 0.1 4.3
1.4
-
5.0
- - -
5.0
1.0
0.1
- - 1.0
0.1
84.7
91.7
18.2 19.0 102.9
110.7 7.6%
29.3
27.2 - -
39.1
42.3 - -
40.4
25.7 - -
5.7
7.9 - -
-
- 17.7 19.3
114.5
103.1 17.7 19.3
29.3 27.2
39.1 42.3
40.4 25.7
5.7 7.9
132.2 122.4 -7.4%
Change in net position (29.8) (11.4) 0.5 (0.3) (29.3) (11.7)
Net Position - Beginning as 752.8 723.0 38.7 39.2 791.5 762.2
Restated
Net Position -Ending7S 23.07S 11.6 S39.2 S 38.9 7S 62.2 7S 50.5 -1.5%
* Fiscal year 2020 net position was restated. See further information at footnote 20
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Government -wide Financial Analysis (Continued)
Net position at July 1, 2020 has been adjusted, as noted in the previous table, to correct the value of land
held for resale in the amount of $49.6 million, record notes receivable in the amount of $4.6 million, and
to correct deposits payable liability of $0.6 million. The three restatements resulted in a $54.8 million
increase to net position for governmental activities.
In governmental activities, the decrease in net position of $11.4 million is primarily due to the following:
• Capital asset depreciation expense in the amount of $14.8 million; offset with $13.9 million
increase in capital assets.
• Net deferred resources related to the City's pension and OPEB liability resulted in a $0.6 million
reduction to net position:
o Net deferred resources related to pension plans decreased $1.1 million mostly due to
changes in actuarial assumptions affecting the calculation of the pension liability.
o Net deferred resources related to OPEB increased $0.5 million mostly due to differences
between actual and expected experience and changes in OPEB assumptions.
• Net pension liability increased by $2.5 million and net OPEB liability increased by $0.6 million,
for a combined increase in liability of $3.1 million.
• Governmental liabilities increased by $1.9 million related to claims and judgments and
compensated absences.
In the prior fiscal year, governmental activities decreased by approximately $29.8 million compared to
a decrease of $11.4 million in 2020-21, which reflects a $18.4 million difference year -over -year. The
year -over -year difference is primarily attributed to a $5.3 million or 21% increase in sales tax revenue
and one-time profit participation revenue of $5 million in 2021 as well as a decrease in non -capital
project -related expenditures in 2021 when compared to 2020.
Business -Type activities net position decreased slightly by $0.3 million. Revenues increased by $0.8
million, while expenses increased by $1.6 million when compared to the prior year.
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 $234.7 million, a decrease of $2.6 million from the prior year's fund balance, as
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
restated. The decrease is primarily due to significant expenditures for capital projects. Total capital
outlay was $20.2 million during fiscal year 2021. Approximately $108.2 million, or 46.1 %, of the City's
governmental fund balance constitutes nonspendable fund balance. Of the nonspendable amount, $107.3
million is land held for resale. The remainder of the fund balance consists of $42.7 million in restricted
funds, $4.9 million assigned to capital projects, and $78.8 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 $78.8 million, while total fund balance was $202.7 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 93.5% of the total General Fund expenditures,
including transfers out.
Two other Special Revenue Funds are determined to be major governmental funds of the City. The first
major governmental fund is the American Rescue Plan Act (ARPA) Special Revenue Fund, which has
$9.7 million in cash and investments with an offsetting unearned revenue of $9.7 million. These funds
are restricted for specific purposes relating to COVID-19 mitigation efforts. The Housing Authority
Special Revenue Fund is the other major governmental fund with $0.9 million in restricted fund balance
at the end of the current fiscal year. These funds are restricted for increasing or improving low and
moderate income housing. The Housing Authority Fund holds $5 million in affordable housing loans.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Financial Analysis of the Government's Funds (Continued)
City of Tustin
Summary of Changes in land Balances - General Fund
For the Year Ended June 30, 2021
(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
Total
% Change
2020 2021 2020-2021
$ 52.5 $ 58.5
1.8
2.0
2.1
5.0
0.8
1.0
1.3
1.2
3.4
1.6
3.2
3.9
-
5.0
1.0
0.1
66.1
78.3 18.5%
25.8
23.8
36.2
37.5
7.9
8.5
3.7
3.3
27.8
8.8
0.1
0.1
101.5
82.0 -19.2%
(35.4) (3.7)
4.7 7.1
Net Change in Fund Balance S 3.4 -111.1%
14
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Financial Analysis of the Government's Funds (Continued)
General Fund total revenues increased by $12.2 million or 18.5% as noted in the previous table. Material
transactions impacting revenues in the General Fund were as follows:
• Taxes increased $6.0 million primarily due to higher sales tax revenues. As discussed previously,
sales tax revenue totaled approximately $30.8 million, reflecting an increase of approximately
$5.3 million or 21% due to an increase in consumer spending.
• Intergovernmental revenue increased by $2.9 million compared to the prior fiscal year. The
increase is due to CARES Act federal funding in response to COVID-19. The City of Tustin
received $3.0 million in CARES Act funding in 2021, which was primarily used for economic
assistance and meal gap assistance. The City also received $9.7 million in ARPA funds. These
funds were not expended in 2021, therefore are reflected as unearned revenue.
• Investment income decreased $1.8 million during 2021, largely due to a reduction in the average
weighted yield on investments caused by the declining interest rate environment.
General Fund total expenditures decreased by $19.5 million or 19.2%, which is primarily related to
capital outlay. $8.8 million was spent on capital outlay during the current fiscal year compared to $27.8
million in the prior year, which is a decrease of $19 million. The decrease in capital outlay primarily
relates to capital expenditures on projects such as the Tustin Legacy Veterans Sports Park and Corporate
Yard Facility Project, which had significant capital outlay in the prior year and were completed during
the first part of the current year.
General Fund Budgetary Highlights
The General Fund actual revenues were $9.7 million higher than the amended budgeted revenues, mostly
due to an increase in sales tax revenues and one-time profit participation revenue. The amended budgeted
expenditures were $109.9 million, an increase in appropriations of $4.5 million from the original
budgeted expenditures of $105.4 million. The increase in appropriations was largely associated with
capital expenditures.
Actual General Fund expenditures were less than the amended budgeted amount of $109.9 million by
$28.0 million, primarily due to appropriations for capital projects spanning multiple years.
Financial Analysis of the Proprietary Funds
The City has one proprietary fund which is the Water Enterprise Fund. Total expenses for the Water
Fund exceeded total revenues by $0.3 million, resulting in a decrease in net position during fiscal year
2021, from $39.2 million as of June 30, 2020, to $38.9 million as of June 30, 2021.
Operating revenues increased by $1.5 million or 9%, which is largely attributable to a 13% increase in
water consumption.
Related operating costs increased by $1.6 million from prior fiscal year, due to an increase in purchased
water.
15
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
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, 2021 amounts to $611.2 million, net of accumulated depreciation. This investment in capital
assets includes land, buildings and system improvements, machinery and equipment, park facilities,
roads, and bridges.
City of Tustin
Summary of Changes in Capital Assets
For the Year Ended June 30, 2021
(in millions of dollars)
*Beginning balance at June 30, 2020 for land was restated.
Overall, capital asset additions of $22.8 million in fiscal year 2021 (net of transfers from construction in
progress) were offset by depreciation expense of $16.8 million and net retirements of $0.9 million for a
net increase in capital assets of approximately $5.1 million. In fiscal year 2021, the following major
construction projects were completed:
• Tustin Legacy Veterans Sports Park
• Peppertree Park Improvements
• Corporate Yard Facility Project
• Del Amo and Newport Avenue Improvements
The following major construction projects were in progress in fiscal year 2021: South Hangar Rehab,
Neighborhood D -South Infrastructure Project, Simon Ranch Reservoir project, and various road
widening, extension, and traffic signal projects.
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.
16
Governmental
Business -Type
Total
Activities
Activities
Total
% Change
2020
2021
2020 2021
2020
2021
2020-2021
Land*
$ 105.6
$ 105.6
$ 1.2 $ 1.2
$ 106.8
$ 106.8
Right of way
43.8
43.8
- -
43.8
43.8
Construction in progress
46.6
13.3
12.5 13.9
59.1
27.2
Buildings and improvements
87.3
120.7
3.5 10.2
90.8
130.9
Machinery and equipment
5.3
5.1
- -
5.3
5.1
Infrastructure
263.7
262.0
- -
263.7
262.0
Property, plant and equipment
-
-
36.6 35.4
36.6
35.4
Total Capital Assets, Net
S-152 3
S 550.5
S-53.8 S-0.7
S 606.1
S 611.2
0.8%
*Beginning balance at June 30, 2020 for land was restated.
Overall, capital asset additions of $22.8 million in fiscal year 2021 (net of transfers from construction in
progress) were offset by depreciation expense of $16.8 million and net retirements of $0.9 million for a
net increase in capital assets of approximately $5.1 million. In fiscal year 2021, the following major
construction projects were completed:
• Tustin Legacy Veterans Sports Park
• Peppertree Park Improvements
• Corporate Yard Facility Project
• Del Amo and Newport Avenue Improvements
The following major construction projects were in progress in fiscal year 2021: South Hangar Rehab,
Neighborhood D -South Infrastructure Project, Simon Ranch Reservoir project, and various road
widening, extension, and traffic signal projects.
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.
16
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Long-term Debt
At the end of the current fiscal year, the City had total outstanding long-term liabilities of $133.7 million.
Of this amount, $39.3 million are secured solely by specified revenue sources such as water service
charges.
City of Tustin
Summary of Changes in Long -Term Liabilities
For the Year Ended June 30, 2021
(in millions of dollars)
Governmental Business -Type
Activities Activities Total
2020 2021 2020 2021 2020 2021
Bonds payable
$ -
Claims and judgments
7.8
P ostemployment
9.3
benefits obligation
10.2
Compensated absences
4.0
Lease Payable
0.1
Pension liabilities
62.2
$ -
$ 40.5
$ 39.3
$ 40.5
$ 39.3
9.3
-
-
7.8
9.3
10.9
1.2
1.3
11.4
12.2
4.5
0.3
0.3
4.3
4.8
-
-
-
0.1
-
64.5
3.6
3.6
65.8
68.1
Total Outstanding Debt 5 84.3 $ 89.2 $ 45.6 S 44.5 $_129.9 S 133.7
Total
% Change
2020-2021
2.9%
Overall, long-term debt increased $3.8 million from the prior year balances mostly due to the increases
in Net Pension Liability of $2.3 million and Claims and Judgements of $1.5 million. The increase in the
net pension liabilities is largely related to the return on investments held by CalPERS, which amounted
to 4.7% for the 2019-2020 measurement period compared to an expected return of 7%. The increases
for the Claims and judgments during fiscal year 2021 were primarily due to increases in workers
compensation claims. Additionally, there were noted increases in postemployment benefits obligation
(OPEB) of $0.8 million and compensated absences of $0.5 million, which was offset with a decrease in
bonds payable of $1.2 million.
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.
17
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2021
Next Year's Budget and Rates
On June 15, 2021, the City Council adopted a Biennial Budget that established an operating and capital
spending plan for Fiscal Years 2021-2022 and 2022-2023. The 2021-22 Budget was adopted with total
appropriations of $168.7 million. The General fund fiscal year 2021-22 estimated revenues are $72.3
million and budgeted appropriations are $76.5 million. The operating deficit can be covered by planned
use reserves and anticipated expenditure savings. The appropriations are $4.4 million higher than the
prior year's adopted appropriation as the City anticipates higher landscape maintenance costs for new
parks and landscape areas, adding new Police Officers and additional contributions toward pension
liability.
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.
In
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Government -Wide
Financial Statements
ANNUAL COMPREHENSIVE FINANCIAL REPORT
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
STATEMENT OF NET POSITION
June 30, 2021
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
Unrestricted
TOTAL NET POSITION
See accompanying notes to the basic financial statements 21
Governmental Business -type
Activities Activity Total
$ 118,766,937 $ 14,417,388 $ 133,184,325
13,161,221
3,528,251
16,689,472
280,108
32,945
313,053
5,455,695
-
5,455,695
(492,779)
-
(492,779)
883,441
125,203
1,008,644
107,321,821
3,763,799
111,085,620
14,939,278
2,597,597
17,536,875
7,376,718
-
7,376,718
162,629, 731
15,098,941
177,728, 672
387,872,786
45,624,196
433,496,982
818,194,957 85,188,320 903,383,277
-
3,474,766
3,474,766
512,053
50,642
562,695
12,962,488
573,780
13,536,268
13,474,541
4,099,188
17,573,729
8,128,227
4,355,474
12,483,701
-
291,590
291,590
9,179,825
1,000,726
10,180,551
9,993,425
-
9,993,425
7,029,538
1,475,767
8,505,305
6,794,957
38,205,484
45,000,441
10,861,109
1,329,888
12,190,997
64,544,121
3,542,057
68,086,178
116,531,202 50,200,986 166,732,188
2,069,374 183,756 2,253,130
1,492,530 43,182 1,535,712
3,561,904 226,938 3,788,842
565,395,034 25,941,133 591,336,167
2,061,993
- 2,061,993
571,410
- 571,410
36,774,126
- 36,774,126
106,773, 829
12, 918,451 119,692,280
$ 711,576,392 $ 38,859,584 $ 750,435,976
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
STATEMENT OF ACTIVITIES
For the year ended June 30, 2021
Functions/programs Expenses
Governmental activities:
General government $ 27,175,873
Public safety 42,307,312
Public works 25,720,382
Community services 7,898,475
Total governmental activities 103,102,042
Business -type activity:
Water
Total
19,283,136
Program Revenues
Charges Operating Capital
for Grants and Grants and
Services Contributions Contributions
$ 2,011,470 $ 3,541,991 $ -
1,298,587 259,020 -
2,586,033 3,390,923 2,352,293
1,232,539 1,426,697 2,070,598
7,128,629 8,618,631 4,422,891
18,891,433
$ 122,385,178 $ 26,020,062 $ 8,618,631 $ 4,422,891
General revenues:
Taxes:
Property
Franchise
Transient occupancy
Business license
Sales tax
Motor vehicle taxes shared state revenues
Earnings on investments
Gain on sale of land held for resale
Profit participation
Miscellaneous
Total general revenues
Change in net position
NET POSITION AT BEGINNING OF YEAR, AS RESTATED
NET POSITION AT END OF YEAR
See accompanying notes to the basic financial statements 22
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
Net (Expense) Revenue and
Changes in Net Position
Governmental Business -type
Activities Activity Total
0 (21,622,412) Q 0 21 622 412
(40,749,705)
(17,391,133)
(3,168,641)
(82,931,891)
(40,749,705)
(17,391,133)
(3,168,641)
(82,931,891)
(391,703) (391,703)
(82,931,891) (391,703) (83,323,594)
29,142,850
-
29,142,850
1,862,200
-
1,862,200
1,218,924
-
1,218,924
416,266
-
416,266
30,753,042
-
30,753,042
58,955
-
58,955
1,676,386
5,629
1,682,015
85,240
-
85,240
5,012,767
-
5,012,767
1,308,076
28,934
1,337,010
71,534,706
34,563
71,569,269
(11,397,185)
(357,140)
(11,754,325)
722,973,577
39,216,724
762,190,301
$ 711,576,392 $
38,859,584
$ 750,435,976
See accompanying notes to the basic financial statements 23
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
Fund Financial
Statements
ANNUAL COMPREHENSIVE FINANCIAL REPORT
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
ASSETS
Cash and investments
Restricted cash and investments
Restricted cash and investments held by trust
Receivables:
Accounts
Interest
Loans
Allowance for uncollectibles
Prepaid items and deposits
Due from other funds
Land held for resale
TOTAL ASSETS
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
LIABILITIES
Accounts payable and
accrued liabilities
Deposits payable
Due to other funds
Unearned revenue
TOTAL LIABILITIES
DEFERRED INFLOW OF RESOURCES
Unavailable revenue
FUND BALANCES
Nonspendable
Restricted
Assigned
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
CITY OF TUSTIN
BALANCESHEET
$ 115,253
$ 2,317,237
$ 8,128,227
GOVERNMENTALFUNDS
-
-
9,179,825
-
June 30, 2021
737,411
737,411
303,033
9,690,392 -
American
9,993,425
Other
Total
3,054,648
Rescue Plan Act
Housing
Governmental
Governmental
General
(ARPA) Fund
Authority Fund
Funds
Funds
$ 83,012,087
$ 9,690,392
$ 900,251
$ 25,164,207 $
118,766,937
8,307,446
-
-
6,631,832
14,939,278
7,376,718
-
-
-
7,376,718
10,106,203
-
385,545
2,669,473
13,161,221
203,175
234,679,296
30,813
46,120
280,108
502,355
9,690,392 $ 6,248,893
4,953,340
-
5,455,695
(469,683)
(23,096)
-
(492,779)
880,136
2,040
1,265
883,441
737,411
-
-
737,411
107,321,821
-
-
-
107,321,821
$ 217,977,669
$ 9,690,392
$ 6,248,893
$ 34,512,897 $
268,429,851
$ 5,695,737 $
$ 115,253
$ 2,317,237
$ 8,128,227
9,179,825
-
-
9,179,825
-
737,411
737,411
303,033
9,690,392 -
-
9,993,425
15,178,595
9,690,392 115,253
3,054,648
28,038,888
101,319
- 5,252,182
358,166
5,711,667
108,201,957
2,040
1,265
108,205,262
15,684,164
879,418
26,180,657
42,744,239
-
-
4,918,161
4,918,161
78,811,634
-
-
78,811,634
202,697,755
- 881,458
31,100,083
234,679,296
$ 217,977,669 $
9,690,392 $ 6,248,893
$ 34,512,897
$ 268,429,851
See accompanying notes to the basic financial statements 24
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
June 30, 2021
Fund balances of governmental funds $ 234,679,296
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. 550,502,517
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:
Balance at June 30, 2021 are:
Claims and judgments payable $ (9,303,222)
Compensated absences payable (4,474,512)
Capital lease payable (46,761)
Total long-term liabilities (13,824,495)
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
12,962,488
Deferred inflows of resources
(1,492,530)
Pension liability
(64,544,121)
(53,074,163)
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
512,053
Deferred inflows of resources
(2,069,374)
Post employment benefit liability
(10,861,109)
(12,418,430)
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.
5,711,667
Net position of governmental activities
$ 711,576,392
See accompanying notes to the basic financial statements 25
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the year ended June 30, 2021
See accompanying notes to the basic financial statements 26
American
Other
Total
Rescue Plan Act
Housing Authority
Governmental
Governmental
General (ARPA) Fund
Fund
Funds
Funds
REVENUES
Taxes
$ 58,534,615 $
$
$ 209,868 $
58,744,483
Licenses and permits
1,227,707
-
1,227,707
Fines and forfeitures
929,637
-
929,637
Investment income (loss)
1,577,658
(4,772)
103,500
1,676,386
Intergovernmental revenue
5,047,719
11,827,382
16,875,101
Charges for services
1,992,336
24,764
2,017,100
Rental income
1,599,274
-
306,279
1,905,553
Other revenue
7,253,848
46,201
3,390,775
10,690,824
Gain on sale of land held for resale
85,240
-
-
85,240
Total revenues
78,248,034
41,429
15,862,568
94,152,031
EXPENDITURES
Current:
General government
23,807,225
1,529,584
25,336,809
Public safety
37,456,271
136,588
37,592,859
Public works
8,494,468
-
289,841
8,784,309
Community services
3,344,152
1,367,283
-
4,711,435
Capital outlay
8,772,139
-
11,437,489
20,209,628
Debt service:
Principal retirement
77,730
-
77,730
Interest expenditures
3,476
-
-
3,476
TOTAL EXPENDITURES
81,955,461
1,367,283
13,393,502
96,716,246
EXCESS OF REVENUES
(UNDER) EXPENDITURES
(3,707,427)
(1,325,854)
2,469,066
(2,564,215)
OTHER FINANCING SOURCES (USES)
Transfer in
9,443,742
2,370,752
11,814,494
Transfer out
(2,370,752)
(9,443,742)
(11,814,494)
TOTAL OTHER FINANCING
7,072,990
(7,072,990)
SOURCES (USES)
NET CHANGES IN FUND BALANCES
3,365,563
(1,325,854)
(4,603,924)
(2,564,215)
FUND BALANCES - BEGINNING OF YEAR,
AS RESTATED
199,332,192
2,207,312
35,704,007
237,243,511
FUND BALANCES - END OF YEAR
$ 202,697,755 $
$ 881,458
$ 31,100,083 $
234,679,296
See accompanying notes to the basic financial statements 26
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES TO THE GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the year ended June 30, 2021
Net changes in fund balances - total governmental funds $ (2,564,215)
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
$ 13,881,083
Disposition of capital assets
(949,133)
Depreciation expense
(14,764,340)
(1,832,390)
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 theses differences in the treatment of long-term liabilities:
Principal payments - lease
77,730
Claims and judgments payable
(1,460,251)
Compensated absences payable
(448,023)
(1,830,544)
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.
(3,554,476)
OPEB expenditures reported in the governmental funds includes the actuarially determined
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. (117,519)
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
(1,498,041)
Change in net position of governmental activities $ (11,397,185)
See accompanying notes to the basic financial statements 27
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
STATEMENT OF NET POSITION
PROPRIETARY FUND
June 30, 2021
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
LONG-TERM LIABILITIES:
Compensated absences payable
Bonds payable
Net pension liability
Total OPEB liability
TOTAL LONG-TERM LIABILITIES
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES:
Deferred amounts on pension plans
Deferred amounts on OPEB plan
TOTAL DEFERRED INFLOWS OF RESOURCES
NET POSITION:
Net investment in capital assets
Unrestricted
TOTAL NET POSITION
See accompanying notes to the basic financial statements 28
Business -type
Activity
Water
Enterprise Fund
$ 14,417,388
3,528,251
32,945
125,203
3,763,799
2,597,597
24,465,183
15,098,941
45,624,196
60.723.137
85,188,320
3,474,766
573,780
50,642
4.099.1 RR
4,355,474
1,000,726
216,405
291,590
1.259.362
/,125,» /
116,525
38,088,959
3,542,057
1,329,888
43.077.429
50,200,986
43,182
183,756
226,938
25,941,133
12,918,451
$ 38,859,584
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Cyll11'Z�]�IIIL�l.I I
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUND
For the year ended June 30, 2021
OPERATING REVENUES:
Charges for services
OPERATING EXPENSES:
Personnel services
Purchased water
Maintenance and operation
Depreciation
TOTAL OPERATING EXPENSES
OPERATING INCOME
NONOPERATING REVENUES (EXPENSES):
Investment income
Other income
Interest expense and other fiscal charges
TOTAL NONOPERATING REVENUES (EXPENSES)
CHANGE IN NET POSITION
NET POSITION AT BEGINNING OF YEAR
NET POSITION AT END OF YEAR
See accompanying notes to the basic financial statements 29
Business -type
Activity
Water
Enterprise Fund
$ 18,891,433
3,717,246
8,544,074
3,689,547
2,065,329
18,016,196
875,237
5,629
28,934
(1,266,940)
(1,232,377)
(357,140)
39,216,724
$ 38,859,584
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
For the year ended June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Payments to suppliers
Payments to employees
NET CASH PROVIDED BY
OPERATING ACTIVITIES
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets
Principal paid on bonds
Interest paid 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 the basic financial statements 30
Business -type
Activity
Water
Enterprise Fund
$ 17,708,488
(12,551,819)
(3,551,902)
1,604,767
(8,946,020)
(1,050,000)
(1,251,630)
(11,247,650)
261,642
261,642
(9,381,241)
26,396,226
$ 17,014,985
$ 14,417,388
2,597,597
$ 17,014,985
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
(CONTINUED)
For the year ended June 30, 2021
SCHEDULE OF NON-CASH INVESTING ACTIVITIES
Unrealized loss on investments $ (220,140)
See accompanying notes to the basic financial statements 31
Business -type
Activity
Water
Enterprise Fund
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income
$ 875,237
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation and amortization
2,065,329
Other nonoperating income (expense)
(191,206)
Change in assets and liabilities:
(Increase) decrease in accounts receivable
(991,739)
(Increase) decrease in prepaid items
(94,058)
(Increase) decrease in deferred outflows of resources
48,537
Increase (decrease) in accounts payable and accrued liabilities
(722,106)
Increase (decrease) in deposits payable
497,966
Increase (decrease) in compensated absences
71,447
Increase (decrease) in net pension liability
16,211
Increase (decrease) in total OPEB liability
103,952
Increase (decrease) in deferred inflows of resources
(74,803)
NET CASH PROVIDED BY OPERATING ACTIVITIES
$ 1,604,767
SCHEDULE OF NON-CASH INVESTING ACTIVITIES
Unrealized loss on investments $ (220,140)
See accompanying notes to the basic financial statements 31
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
STATEMENT OF FIDUCIARY NET POSITION
June 30, 2021
See accompanying notes to the basic financial statements 32
Successor
Agency to the
Tustin Community
Redevelopment
Other Post -
Agency Private
Employment
Purpose Trust
Benefit (OPEB)
Custodial
Fund
Trust Fund
Funds
ASSETS:
Cash and investments
$ 3,224,912
$ -
$ 106,233
Investments:
Money markets
-
34,226
-
Mutual funds - equity
-
1,372,596
-
Mutual funds - fixed income
-
1,178,714
-
Restricted cash and investments
-
-
12,611,632
Receivables:
Taxes
-
-
69,790
Interest
6,244
-
-
Prepaid items and deposits
4,015
-
-
TOTAL ASSETS
3,235,171
2,585,536
12,787,655
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
5,988,269
-
-
LIABILITIES:
Accounts payable
-
-
106,233
Interest payable
633,775
-
-
Long-term liabilities:
Due within one year
2,050,000
-
-
Due in more than one year
51,461,802
-
-
TOTAL LIABILITIES
54,145,577
-
106,233
NET POSITION:
Restricted for:
Postemployment benefits other than pensions
-
2,585,536
-
Individuals, organizations and other governments
(44,922,137)
-
12,681,422
TOTAL NET POSITION
$ (44,922,137)
$ 2,585,536
$ 12,681,422
See accompanying notes to the basic financial statements 32
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
ADDITIONS:
Tax revenue
Investment income
TOTAL ADDITIONS
Deductions:
Administrative expenses
Community services
Principal
Interest
TOTAL DEDUCTIONS
CHANGE IN NET POSITION
For the year ended June 30, 2021
Successor
Agency to the
Tustin Community
Redevelopment
Agency Private
Purpose Trust
Fund
Other
Post -Employment
Benefit (OPEB) Custodial
Trust Fund Funds
$ 3,975,885 $ - $ 6,845,647
30,904 431,637 4,529
4,006,789 431,637 6,850,176
- 13,016 320,628
30,938 - -
- - 1,970,000
1,949,065 - 4,502,181
1,980,003 13,016 6,792,809
2,026,786
418,621 57,367
NET POSITION - BEGINNING OF YEAR, AS RESTATED
(46,948,923)
2,166,915
12,624,055
NET POSITION - END OF YEAR $
(44,922,137) $
2,585,536 $
12,681,422
See accompanying notes to the basic financial statements 33
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
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34
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
Notes to the
Financial Statements
ANNUAL COMPREHENSIVE FINANCIAL REPORT
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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
benefitiburden 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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
b. Government -wide and Fund Financial Statements
The government -wide financial statements (i.e., the statement of net position and the statement of
activities) report information about the reporting government as a whole, except for its fiduciary
activities. All fiduciary activities are reported only in the fund financial statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business -type activities, which rely to a significant extent on fees and charges for
support. Likewise, the primary government (including its blended component units) is reported
separately from discretely presented component units for which the primary government is
financially accountable. The City has no discretely presented component units.
Certain eliminations have been made as prescribed by Governmental Accounting Standards Board
(GASB) Statement No. 34 in regards to interfund activities, payables and receivables. All internal
balances in the statement of net position have been eliminated except those representing balances
between the governmental activities and the business -type activity, which are presented as internal
balances and eliminated in the total primary government column. In the statement of activities,
inter -fund services have been eliminated; however, those transactions between governmental and
business -type activity have not been eliminated.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to customers
or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by
a given function or segment and 2) grants and contributions that are restricted to meeting the
operational or capital requirements of a particular function or segment. Taxes and other items not
properly included among program revenues are reported instead as general revenues.
The underlying accounting system of the City is organized and operated on the basis of separate
funds, each of which is considered to be a separate accounting entity. The operations of each fund
are accounted for with a separate set of self -balancing accounts that comprise its assets, deferred
outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and
expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted
for in individual funds based upon the purposes for which they are to be spent and the means by
which spending activities are controlled.
Separate financial statements for the City's governmental, proprietary, and fiduciary funds are
presented after the government -wide financial statements. These statements display information
about major funds individually and other governmental funds in the aggregate for governmental
funds. Fiduciary fund statements, even though excluded from the government -wide financial
statements, include financial information for private purpose trust funds, other post -employment
benefit trust fund, and custodial funds.
36
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government -wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the proprietary fund and fiduciary private purpose
trust fund (fiduciary custodial 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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Property taxes, franchise taxes, licenses, intergovernmental revenue and interest associated with the
current fiscal period are all considered to be susceptible to accrual and so have been recognized as
revenues of the current fiscal period. All other revenue items are considered to be measurable and
available only when cash is received by the government.
The City's fiduciary funds consist of a private purpose trust and the other post -employment benefit
(OPEB) trust, which are reported using the economic resources measurement focus, and the
custodial 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 American Rescue Plan Act (ARPA.) Fund is used to account for monies received from the U.S
Treasury for COVID-19 related expenses.
The Housing Authority Fund is used to account for revenues and associated expenditures to be
used for increasing or improving low and moderate income housing.
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.
0
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Capital Projects Funds are used to account for financial resources to be used for the acquisition or
construction of major capital facilities.
Fiduciary Funds
Private Purpose Trust Fund is used to account for the activities of the Successor Agency to the
Tustin Community Redevelopment Agency.
Other Post -Employment Benefit Trust Fund is used to account for the activities of the City's trust
for the OPEB plan.
Custodial 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. The custodial 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 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.
In October 2021, GASB issued Statement No. 98 — The Annual Comprehensive Financial Report.
This Statement establishes the term annual comprehensive financial report and its acronym ACFR.
That new term and acronym replace instances of comprehensive annual financial report and its
acronym in generally accepted accounting principles for state and local governments.
This statement was developed in response to concerns raised by stakeholders that the common
pronunciation of the acronym for comprehensive annual financial report sounds like an
objectionable racial slur. This Statement's introduction of the new term is founded on a
commitment to promoting inclusiveness.
39
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
d. New Accounting Pronouncements (Continued)
Pending Accounting Standards
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
is encouraged.
M
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (CONTINUED)
d. New Accounting Pronouncements (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 asset—an 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 2021, 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 No. 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, 2022.
Earlier application of those requirements is encouraged and permitted.
41
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING 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 generally 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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (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 outflows 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 and rental. These amounts are
deferred and recognized as an inflow of resources in the period that the amounts become
available.
43
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (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 fiscal year end.
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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (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 30th
Levy date On or before 4th Monday in September
Due date November 1St - 1St installment
February 1St - 2°d installment
Collection date December 10th - 1St installment
April 10th - 2"d installment
Interest and penalties are assessed after the collection date.
Compensated Absences
All vested vacation and compensatory leave time is recognized as an expense and as a liability in
the proprietary type fund at the time the liability vests. Governmental fund types recognize the
vested vacation and compensatory time as an expenditure in the current year to the extent it is paid
during the year or is due and payable at year-end. For governmental activities, compensated
absences are primarily liquidated from the general fund. Any additional accrued vacation and
compensatory time relating to governmental funds and amounts relating to the proprietary fund
type are included as long-term liabilities within the 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 (Ca1PERS) plans (Plans) and additions
to/deductions from the Plans' fiduciary net position have been determined on the same basis as
they are reported by Ca1PERS. For this purpose, benefit payments (including refunds of employee
contributions) are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
LE
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 1- SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (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, 2021, are classified in the accompanying financial statements as
follows:
Unrestricted assets:
Cash and investments
Restricted assets:
Cash and investments
Cash and investments held by trust
Total cash and investments
Government -
Wide
Statement of
Net Position
$133,184,325
17,536,875
7,376,718
$158,097,918
W.
Fiduciary
Funds
Statement of
Net Position
$ 3,331,145
12,611,632
2,585,536
$ 18,528,313
Total
$136,515,470
30,148,507
9,962,254
$176,626,231
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Cash and Investments (Continued)
Cash and investments as of June 30, 2021, consist of the following:
Cash on hand $ 7,900
Deposits with financial institutions 13,393,413
Investments 163,224,918
Total cash and investments $176,626,231
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.
* Combined total limitation of these investment types is 30%
N/A - Not Applicable
47
Maximum
Maximum
Investment Types
Maximum
Percentage
Investment in
Authorized by the City's Policy
Maturity
of Portfolio
One Issuer
Negotiable certificates of deposit
5 years
30%
5%
Commercial paper*
270 days
25%
5%
Max permitted
Local Agency Investment Pool (LAIF)
N/A
None
by State
Treasurer
Orange County Investment Pool (OCIP)
N/A
None
Max permitted
by County
Treasurer
Bankers acceptances*
180 days
30%
5%
Medium-term notes*
5 years
20%
5%
Municipal and state securities*
5 years
30%
5%
Federal agency bonds or notes
5 years
None
50%
United States (U.S.) Treasury securities
5 years
None
None
Money market mutual funds
N/A
20%
10%
Repurchase agreements*
1 year
30%
5%
Supranationals*
5 years
15%
5%
Shares of beneficial interest by a JPA
5 years
None
50%
* Combined total limitation of these investment types is 30%
N/A - Not Applicable
47
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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 Maximum
Authorized by Debt Agreements Maturity
U.S Treasury Obligations None
U.S Government Sponsored
Agency Securities
Banker's Acceptances
Commercial Paper
Money Market Mutual Funds
Investment Contracts
Certificates of Deposit
Corporate Notes
Repurchase Agreements
N/A - Not Applicable
Disclosures Relating to Interest Rate Risk
N/A
270 days
180 days
N/A
30 years
None
None
None
Maximum
Percentage
of Portfolio
None
None
None
None
None
None
None
None
None
Maximum
Investment in
One Issuer
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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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:
Investment Type
U.S. Treasury Notes
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
12 Months or
12 to 24
25-60
less
Months
Months
Total
$ -
$ -
$ 3,950,940
$ 3,950,940
1,987,480
-
-
1,987,480
4,064,719
-
-
4,064,719
1,017,439
2,040,220
-
3,057,659
83,495,260
-
-
83,495,260
721,638
-
-
721,638
1,957
-
-
1,957
4,746,001
3,071,074
7,817,075
7,093,510
4,641,520
3,025,380
14,760,410
3,359,411
1,025,750
-
4,385,161
29,020,365
-
-
29,020,365
97,404
-
-
97,404
3,916,164
-
-
3,916,164
3,363,150
-
-
3,363,150
34,226 - - 34,226
1,372,596 - - 1,372,596
1,178,714 - - 1,178,714
$ 145,470,034 $ 10,778,564 $ 6,976,320 $ 163,224,918
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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.
Minimum
Total as of Required
Investment Type June 30, 2021 Rating _
U.S. Treasury Notes $ 3,950,940 N/A $
U.S. Government Sponsored
Agency Securities:
FNMA 1,987,480 N/A
FHLB 4,064,719 N/A
FHLMC 3,057,659 N/A
LAIF 83,495,260 N/A
CAMP 721,638 N/A
Orange County Investment Pool 1,957 N/A
Negotiable Certificates of Deposit 7,817,075 N/A
MediunrtermNotes 14,760,410 A
Municipal Bonds 4,385,161 N/A
Held by Fiscal Agents:
Money Market Mutual Funds 29,020,365 AAA
Held by Pension Trust:
Money Market Mutual Funds 97,404 N/A
Mutual Funds - Equity 3,916,164 N/A
Mutual Funds - Fixed Income 3,363,150 N/A
Held by OPEB Trust:
Money Market Mutual Funds 34,226 N/A
Mutual Funds - Equity 1,372,596 N/A
Mutual Funds - Fixed Income 1,178,714 N/A
Total $163,224,918
N/A - Not Applicable
29,020,365 - - -
97,404 - - -
- - - 3,916,164
- 3,363,150
34,226 - - -
- - - 1,372,596
- - - 1,178,714
$ 29,151,995 $ 17,587,150 $ 13,608,329 $102,877,444
50
Not
AAA AA
A Rated
- $ 3,950,940
$ - $ -
- 1,987,480
- -
- 4,064,719
- -
- 3,057,659
- -
- -
- 83,495,260
- -
- 721,638
- -
- 1,957
- -
- 7,817,075
- 3,033,180
11,727,230 -
- 1,493,172
1,881,099 1,010,890
29,020,365 - - -
97,404 - - -
- - - 3,916,164
- 3,363,150
34,226 - - -
- - - 1,372,596
- - - 1,178,714
$ 29,151,995 $ 17,587,150 $ 13,608,329 $102,877,444
50
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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 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 parry. 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, 2021, 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, 2021, 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
9,109,858
14,760,410
4,385,161
7,817,075
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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 -parry 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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by generally
accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair
value of the assets. Level 1 inputs are quoted prices in active markets for identical assets, Level 2
inputs are quoted prices of similar assets in active markets, and Level inputs are significant
unobservable inputs.
The City has the following recurring fair value measurements as of June 30, 2021:
* Not subject to fair value measurement hierarchy.
54
Quoted
Observable
Unobservable
Prices
Inputs
Inputs
Level
Level
Level Total
U.S. Treasury Notes
$ -
$ 3,950,940
$ - $ 3,950,940
U.S. Government Sponsored
Agency Securities:
FNMA
-
1,987,480
- 19987,480
FHLB
-
4,064,719
- 4,064,719
FHLMC
-
3,057,659
- 3,057,659
Negotiable Certificates of Deposit
-
7,817,075
- 7,817,075
Medium-term Notes
-
14,760,410
- 14,760,410
Municipal Bonds
-
4,385,161
- 4,385,161
Held by Pension Trust:
Mutual Funds - Equity
3,916,164
-
- 3,916,164
Mutual Funds - Fixed Income
3,363,150
-
- 3,363,150
Held by OPEB Trust:
Mutual Funds - Equity
1,372,596
-
- 1,372,596
Mutual Funds - Fixed Income
1,178,714
-
- 1,178,714
Total Leveled Investments
$ 9,830,624
$40,023,444
$ - 49,854,068
LAIF*
839495,260
CAMP*
721,638
Orange County Investment Pool*
1,957
Money Market Mutual Funds*:
Held by Fiscal Agents
29,020,365
Held by Pension Trust
97,404
Held by OPEB Trust
34,226
Total Investment Portfolio
$163,224,918
* Not subject to fair value measurement hierarchy.
54
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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, 2021,
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, 2021, 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 1/30th. Should the OCRM successfully
utilize the properties for homeless veterans housing for all 30 years in which the note is in effect, as
stipulated in the deed of trust, it will owe no money to the City. The total outstanding balance at
June 30, 2021, including accrued interest of $43,282, was $469,683. An allowance of $469,683 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, 2021. The
total outstanding balance at June 30, 2021, including accrued interest of $2,328, was $78,283.
Affordable Housing Loans: The City executed promissory notes with approximately 279 affordable
home buyers to facilitate the preservation of the City's affordable housing supply. The entire unpaid
principal amount and accrued interest is due 45 years from the date of the initial sale of the unit to a
member of the home -buying public. No prepayment of the note in whole, or in part, is allowed any
time prior to the maturity date. Additionally, 95% of the loan is forgivable, should the owner comply
with the Affordable Housing Covenant as of the maturity date. As of June 30, 2021 the total
outstanding principal balance was $91,604,880. An allowance of $87,024,636 has been recorded to
reflect the amount of the note not expected to be collectible.
55
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 4 - INTERFUND TRANSFERS
The composition of interfund transfers for the year ended June 30, 2021, is as follows:
Transfers In
Transfers Out
General Fund Other Governmental Funds
Other Governmental Funds General Fund
Amount
$ 9,443,742
2,370,752
$ 11,814,494
The transfers during the fiscal year ended June 30, 2021, were for the following purposes:
General Fund transferred to other governmental fund (Capital Projects Fund) $2,370,752 for capital
and maintenance expenditures.
Other governmental fund (Measure M Special Revenue Fund) transferred $158,658 to the General
Fund for eligible Measure M expenditures.
Other governmental fund (Construction 95-1 Capital Projects Fund) transferred $809,947 to the
General Fund for eligible AD 95-1 construction expenditures.
Other governmental fund (Special Tax B Special Revenue Fund) transferred $4,433,734 to the General
Fund for eligible Special Tax B area expenditures.
Other governmental fund (Community Facilities District Construction Fund) transferred $4,041,403 to
the General Fund for eligible construction expenditures.
NOTE 5 - LAND HELD FOR RESALE
Land held for resale as of June 30, 2021, consisted of the following:
Pacific Center East*
Tustin Legacy
2061 Valhalla Drive
11781 Outlook Lane
Water Enterprise
General Fund Fund Total
$ 30,380,901
76,940,920
Total Land Held for Resale $ 107,321,821
1,957,602
1,806,197
$ 3,763,799
$ 30,380,901
76,940,920
1,957,602
1,806,197
$ 111,085,620
*Pacific Center East includes several parcels bordered by Del Amo, Valencia, Edinger and Newport Avenue.
In Fiscal Year 2021, the City restated the Land Held for Resale in the Pacific Center East and Tustin
Legacy for land that was not recorded in a prior year when transferred to the City. Additionally, the
City corrected the fair value of the transferred property that was valued incorrectly in a prior year.
Total restatement to land held for resale was $27,074,164.
56
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT
On May 13, 2002, the City entered into an agreement with the United States of America (the
Government) wherein the Government agreed to convey to the City a portion of the former Marine
Corps Air Station Tustin (MCAS Tustin). The transfer is pursuant to the authority provided by
Section 2905(b)4 of the Defense Base Closure and Realignment Act of 1990, as amended, and the
implementing regulations of the Department of Defense to convey surplus property at a closing
installation to the local redevelopment authority at no cost for economic development purposes.
The real properties, consisting of approximately 1,153 acres of land located within the bounds of the
former MCAS Tustin, were conveyed to the City in multiple parcels, by separate conveyances. Parcel
Group I, (consisting of approximately 977 acres), was conveyed to the City on May 14, 2002. A
portion of Parcel Group I (consisting of approximately 23 acres) was conveyed to the City during fiscal
year 2003 and the remainder was conveyed to the City in fiscal year 2004. Conveyance of Parcel
Group II (consisting of a total of 49 acres) was conveyed in September 2006 and May and July 2003.
Conveyance of Parcel Group III (consisting of approximately 18 acres) and Parcel Group IV
(consisting of approximately 119 acres) were conveyed in September 2006 and April 2008,
respectively. As part of the agreement, the City also received certain personal property and utilities on
the base. The land parcels were recorded at their estimated fair values at the dates of conveyance.
Subsequent to the conveyance of properties from the Government, the Agreement required the City to
convey approximately 22 acres to Santa Ana Unified School District (SAUSD), 15 acres to Rancho
Santiago Community College District (RSCCD) and 65 acres to South Orange County Community
College District (SOCCCD) subject to certain conditions as detailed in the agreement with the
Government and the terms and conditions of the settlement and release agreements between the City
and SAUSD and the City and the RSCCD.
The SAUSD declined the conveyance of the land from the City and instead of receiving the land, the
SAUSD was paid $60,000,000 under an agreement dated December 20, 2002. The City conveyed the
RSCCD parcel during fiscal year 2003. Conveyance of the SOCCCD parcel happened in fiscal
year 2004.
On May 21, 2013, the City Council approved a General Plan Amendment, MCAS Tustin Specific Plan
Amendment, Development Agreement, and Agreement for Exchange of Real Property with the
SOCCCD. The Exchange Agreement delineates the terms and processes associated with the exchange
of the ultimate ownership of approximately 89 acres of land within Planning Area 1 of Tustin Legacy.
The City of Irvine has identified concerns about that project's traffic impacts in Irvine, and about the
traffic analysis of projects in the MCAS Tustin Specific Plan area generally. In July 2013, the City
entered into a settlement agreement with the City of Irvine which allowed the City to proceed with the
Exchange Agreement. The transfer of the parcels occurred August 2014 and was considered an even
exchange.
57
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED)
The City also entered into a separate agreement with the SOCCCD in July 2014 to acquire the
Valencia Parcels, approximately 5 acres of land, for $1,083,220 less a demolition credit of $500,000.
In August 2014, the City sold 74 acres of the land to a developer for $56,000,000 resulting in a gain on
land held for resale of $40,143,447.
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 279 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. As a result, land held for resale was reduced by $64,002,073 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 $3,808,739.
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 $14,533,528.
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 $31,100,613.
The recorded value of the remaining conveyed parcels as of June 30, 2021, was $76,940,920. 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.
M
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 7 - CAPITAL ASSETS
A summary of changes in the Governmental Activities capital assets for the year ended June 30, 2021,
is as follows:
Capital assets, not depreciated:
Land*
Right of way
Construction in progress
Total capital assets,
not depreciated
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total capital assets,
being depreciated
Less accumulated depreciation for:
Balance at Balance at
June 30, 2020 Additions Deletions June 30, 2021
$105,574,634 $ - $ - $105,574,634
43,758,156 - - 43,758,156
46,560,768 12,802,002 (46,065,829) 13,296,941
195,893,558 12,802,002 (46,065,829) 162,629,731
75,082,457
11,768,723 -
86,851,180
45,846,500
25,857,198 -
71,703,698
20,799,534
1,554,905 (536,745)
21,817,694
405,516,309
7,964,084 (1,363,447)
412,116,946
547,244,800 47,144,910 (1,900,192) 592,489,518
Buildings
(22,871,937)
(1,626,786)
- (24,498,723)
Improvements other than buildings
(10,707,156)
(2,607,715)
- (13,314,871)
Machinery and equipment
(15,467,188)
(1,712,328)
497,275 (16,682,241)
Infrastructure
(141,757,170)
(8,817,511)
453,784 (150,120,897)
Total accumulated
depreciation
Total capital assets,
being depreciated, net
Total governmental activities
capital assets, net
(190,803,451) (14,764,340)
356,441,349 32,380,570
951,059 (204,616,732)
949,133) 387,872,786
$ 552,334,907 $45,182,572 $ (47,014,962) $ 550,502,517
*Beginning Balance at June 30, 2020 for land was restated. See further information at footnote 20.
Depreciation expense was charged to functions/programs of the governmental activities as follows:
General Government
Public Safety
Public Works
Cornmunity Services
Total
59
$ 324,467
693,015
11,635,325
2,111,533
$ 14,764,340
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 7 - CAPITAL ASSETS (CONTINUED)
A summary of changes in the Business -type Activity capital assets for the year ended June 30, 2021, is
as follows:
Capital assets, not depreciated:
Land
Construction in progress
Total capital assets,
not depreciated
Capital assets, being depreciated:
Buildings and improvements
Property, plant and equipment
Total capital assets,
being depreciated
Less accumulated depreciation for:
Buildings and improvements
Property, plant and equipment
Total accumulated
depreciation
Total capital assets,
being depreciated, net
Total business -type activity
capital assets, net
Balance at Balance at
June 30, 2020 Additions Deletions June 30, 2021
$ 1,177,216 $ - $ - $ 1,177,216
12,516,636 8,921,985 (7,516,896) 13,921,725
13,693,852 8,921,985 (7,516,896) 15,098,941
9,500,377
6,998,333 -
65,925,607
542,598 -
75,425,984
7,540,931 -
(6,035,614)
(279,188) -
(29,241,776)
(1,786,141) -
(35,277,390)
(2,065,329) -
40,148,594
5,475,602 -
16,498,710
66,468,205
82,966,915
(6,314,802)
(31,027,917)
(37,342,719)
45,624,196
$ 53,842,446 $14,397,587 $ (7,516,896) $ 60,723,137
.81
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 8 - LONG-TERM LIABILITIES
A summary of long-term liability activity for the year ended June 30, 2021, is as follows:
Balance Balance Due Within
July 1, 2020 Additions Deletions June 30, 2021 One Year
Governmental Activities:
Claims and judgments
$ 7,842,971
$ 3,070,339 $ (1,610,088)
$ 9,303,222
$ 4,489,860
Lease payable
124,491
- (77,730)
46,761
46,761
Compensated absences
4,026,489
3,086,465 (2,638,442)
4,474,512
2,492,917
Total governmental activities
long-term liabilities
$11,993,951
$ 6,156,804 $ (4,326,260)
$13,824,495 =
$ 7,029,538
Business -type Activities:
2012 Refunding
Water Revenue Bonds
Bond premium
2016 Water
Refunding Revenue Bonds
Bond premium
2020 Taxable Water
Refunding Revenue Bonds
Compensated absences
Total business -type activity
long-term liabilities
$ 2,765,000 $ - $ (885,000) $ 1,880,000 $ 920,000
224,831 - (81,757) 143,074 81,757
21,515,000 - - 21,515,000 -
1,117,852 - (52,605) 1,065,247 52,605
14,910,000 - (165,000) 14,745,000 205,000
261,483 246,092 (174,645) 332,930 216,405
$40,794,166 $ 246,092 $(1,359,007) $39,681,251 $ 1,475,767
61
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 8 - LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities
Lease Payable
The City entered into a lease to finance equipment with a present value of $368,356, using an interest
rate of 3.9%. The lease term is for a period of 60 months with monthly payments of $6,767. At June
30, 2021, the outstanding principal amount was $46,761.
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, 2021.
Minimum
Year Ending Lease
June 30, Payments
2022 $ 47,371
Subtotals 47,371
Less: amounts representing interest (610)
Present value of net minimum lease payments $ 46,761
The assets acquired through the capital lease are as follows:
Equipment
Less: accumulated depreciation
62
$ 368,356
(331,610)
$ 36,746
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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, 2021, is $94,606.
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, 2021, total
interest and principal remaining on the bonds is $2,136,674. During the fiscal year, the total interest
expense incurred was $110,600, principal payments were $885,000, and net revenues were $3,194,300.
The annual debt service requirements to amortize the bonds are as follows:
June 30,
2022
2023
Subtotals
Add: Premium
Totals
Principal
$ 920,000
960,000
1,880,000
143,074
$ 2,023,074
63
Interest
$ 75,200
38,400
113,600
$ 113,600
Total
$ 995,200
998,400
1,993,600
143,074
$ 2,136,674
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 8 - LONG-TERM LIABILITIES (CONTINUED)
Business -type Activity (Continued)
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.
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, 2021, is $2,651,749.
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, 2021, total
interest and principal remaining on the bonds is $31,082,510. During the fiscal year, the total interest
expense incurred was $687,300, no principal payment was due, and net revenues were $3,194,300.
M.
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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,
2022
2023
2024
2025
2026
2027-2031
2032-2036
2037-2041
Subtotals
Add: Premium
Totals
Principal
905,000
925,000
950,000
5,205,000
6,245,000
7,285,000
21,515,000
1,065,247
$ 22,580,247
2020 Taxable Water Refunding Revenue Bonds
Interest
$ 687,300
687,300
687,300
669,200
645,450
2,745,600
1,711,713
668,400
8,502,263
$ 8,502,263
Total
$ 687,300
687,300
1,592,300
1,594,200
1,595,450
7,950,600
7,956,713
7,953,400
30,017,263
1,065,247
$ 31,082,510
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, 2021, 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, 2021, is $728,411.
W,
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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, 2021, total
interest and principal remaining on the bonds is $21,176,086. During the fiscal year, no payments were
due, and net revenues were $3,194,300.
The annual debt service requirements to amortize the bonds are as follows:
June 30,
2022
2023
2024
2025
2026
2027-2031
2032-2036
2037-2041
2042-2043
Totals
NOTE 9 - PENSION PLANS
Principal
$ 205,000
205,000
440,000
445,000
450,000
2,435,000
2,745,000
3,180,000
4,640,000
$ 14,745,000
a. General Information about the Pension Plans
Plan Descriptions
Interest Total
$ 403,862
400,608
397,240
389,721
381,760
1,766,062
1,451,052
1,023,446
217,335
$ 6,431,086
$ 608,862
605,608
837,240
834,721
831,760
4,201,062
4,196,052
4,203,446
4,857,335
$ 21,176,086
All qualified permanent and probationary employees are eligible to participate in the City's
separate Safety (police) and Miscellaneous (all other) Plans. The Miscellaneous Plan is an agent
multiple -employer defined benefit pension plan, and the Safety Plan is a cost-sharing multiple
employer defined benefit pension plan. Both of these Plans are administered by the California
Public Employees' Retirement System (Ca1PERS), which acts as a common investment and
administrative agent for its participating member employers. Benefit provisions under the Plans are
established by State statute and City resolution. 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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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 information below includes the aggregate total pension plan related items:
Net pension liability
Deferred outflows of
resources - pension
Deferred inflows of
resources - pension
Pension expense
Miscellaneous Safety
$ (27,246,594) $ (40,839,584)
4,413,695
(332,168)
4,056,381
67
9,122,573
(1,203,544)
7,815,182
Total
$ (68,086,178)
13,536,268
(1,535,712)
11,871,563
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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, 2020, 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%@55
5 years of service
monthly for life
50+
Miscellaneous
January 1, 2012 to
December 31, 2012
2%@60
5 years of service
monthly for life
50+
2%
10%
8.674%
$ 3,366,814 $
On or After
January 1, 2013
2%@62
5 years of service
monthly for life
52+
2%
2%
10%
6.25%
8.674%
6.397%
The Plans' provisions and benefits in effect at the measurement date ended June 30, 2020, 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 unlf ended liability
Safe
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%
12% 12% 12%
21.927% 16.636% 13.034%
$ 3,852,570 $ 3,689 $ 3,135
.:
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 9 - PENSION PLANS (CONTINUED)
a. General Information about the Pension Plans (Continued)
Employees Covered
At the measurement date ended June 30, 2020, the following employees were covered by the
benefit terms for the Miscellaneous Plan:
Inactive employees or beneficiaries currently receiving benefits
Inactive employees entitled to but not yet receiving benefits
Active employees
Total
Contributions
269
305
207
781
Section 20814(c) of the California Public Employees' Retirement Law requires that the employer
contribution rates for all public employers are determined on an annual basis by the actuary and
shall be effective on the July 1 following notice of a change in the rate. The total plan contributions
are determined through Ca1PERS' annual actuarial valuation process. The actuarially determined
rate is the estimated amount necessary to finance the costs of benefits earned by employees during
the year, with an additional amount to finance any unfunded accrued liability. The City is required
to contribute the difference between the actuarially determined rate and the contribution rate of
employees. City contribution rates may change if plan contracts are amended. Payments made by
the employer to satisfy contribution requirements that are identified by the pension plan terms as
plan member contributions requirements are classified as plan member contributions. The liability
for governmental activities is primarily liquidated from the general fund and the liability for
business -type activities is liquidated from the water enterprise fund.
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, 2020, using an annual actuarial valuation as of June 30, 2019 rolled forward to June 30,
2020 using standard update procedures. A summary of principal assumptions and methods used to
determine the net pension liability is shown below.
.•
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 9 - PENSION PLANS (CONTINUED)
b. Net Pension Liability (Continued)
Actuarial Assumptions
The total pension liabilities in the June 30, 2019 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, 2019
June 30, 2020
Safety
June 30, 2019
June 30, 2020
Entry -Age Normal Entry -Age Normal
Cost Method 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 Ca1PERS-specific data. The
probabilities of mortality are based on the 2017 Ca1PERS 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 Ca1PERS
Experience Study and Review of Actuarial Assumptions report from December 2017
that can be found on the Ca1PERS website.
(3) The less of contract COLA or 2.50% until Purchasing Power Protection Allowance
Floor on purchasing power applies, 2.50% thereafter.
70
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 9 - PENSION PLANS (CONTINUED)
b. Net Pension Liability (Continued)
Long-term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, Ca1PERS took into account both short-term
and long-term market return expectations as well as the expected pension fund cash flows. Using
historical returns of all the funds' asset classes, expected compound (geometric) returns were
calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block
approach. Using the expected nominal returns for both short-term and long-term, the present value
of benefits was calculated for each fund. The expected rate of return was set by calculating the
rounded single equivalent expected return that arrived at the same present value of benefits for cash
flows as the one calculated using both short-term and long-term returns. The expected rate of return
was then set equal to the single equivalent rate calculated above and adjusted to account for
assumed administrative expenses. The expected real rates of return by asset class are as follows:
(a) In the Ca1PERS CAFR, Fixed Income is included in Global Debt Securities; Liquidity
is included in Short-term Investments; Inflation Assets are included in both Global
Equity Securities and Global Debt Securities
(b) An expected inflation of 2.0% used for this period
(c) An expected inflation of 2.92% used for this period
71
Assumed
Real Return
Real Return
Asset
Years
Years
Asset Class (a)
Allocation
1 - 10 (b)
11+ (c)
Global Equity
50.00%
4.80%
5.98%
Fixed Income
28.00%
1.00%
2.62%
Inflation Assets
0.00%
0.77%
1.81%
Private Equity
8.00%
6.30%
7.23%
Real Assets
13.00%
3.75%
4.93%
Liquidity
1.00%
0.00%
0.92%
Total
100.00%
(a) In the Ca1PERS CAFR, Fixed Income is included in Global Debt Securities; Liquidity
is included in Short-term Investments; Inflation Assets are included in both Global
Equity Securities and Global Debt Securities
(b) An expected inflation of 2.0% used for this period
(c) An expected inflation of 2.92% used for this period
71
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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, 2019
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total pension liability
Differences between actual and
expected experience
Changes in assumptions
Changes in benefit terms
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, 2020
(Measurement Date)
Increase (Decrease
Total
Plan
Net Pension
Pension
Fiduciary
Liability
Liability
Net Position
(Asset)
$125,660,098
$ 98,538,195
$ 27,121,903
2,581,396 - 2,581,396
8,860,960 - 8,860,960
(417,769) - (417,769)
- 4,837,028
(4,837,028)
- 1,190,426
(1,190,426)
- 5,011,357
(5,011,357)
- (138,915)
138,915
(5,207,052) (5,207,052)
5,817,535 5,692,844 124,691
$131,477,633 $104,231,039 $ 27,246,594
72
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 9 - PENSION PLANS (CONTINUED)
c. Changes in the Net Pension Liability (Continued)
As of June 30, 2021, the City reported $40,839,584 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, 2020, 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, 2019 rolled forward to June 30, 2020 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, 2019 and 2020 was as follows:
Safety
Proportion - June 30, 2019 0.61609%
Proportion - June 30, 2020 0.61299%
Change - Increase (Decrease) -0.00310%
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%
$ 45,012,631
7.15%
$ 27,246,594
8.15%
$ 12,592,579
$ 62,629,867
7.15%
$ 40,839,584
8.15%
$ 22,958,595
Detailed information about each pension plan's fiduciary net position is available in the separately
issued Ca1PERS financial reports.
73
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 9 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2021, the City recognized pension expense of $4,056,381 and
$7,815,182 for the Miscellaneous and Safety Plans, respectively. At June 30, 2021, 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 - (332,168)
Total $ 4,413,695 $ (332,168)
Miscellaneous
Deferred
Outflows
of Resources
$ 3,581,172
832,523
Deferred
Inflows
of Resources
Pension contributions subsequent to measurement date
Differences between actual and expected experience
Change in assumptions
Change in employer's proportion and differences
between the employer's contributions and the
employer's proportionate share of contributions
Net differences between employer's contributions and
proportionate share of contributions
Net differences between projected and actual
earnings on plan investments 887,616 -
Total $ 9,122,573 $ (1,203,544)
Safety
Deferred Deferred
Outflows Inflows
of Resources of Resources
$ 4,592,442 $ -
3,166,903 -
- (136,037)
337,950 (472,731)
137,662 (594,776)
74
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 9 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
$3,581,172 and $4,592,442 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,
2022
2023
2024
2025
2026
Thereafter
Miscellaneous
$ (586,750)
160,568
517,499
409,038
NOTE 10 - POST -EMPLOYMENT HEALTH CARE BENEFITS
a. General Information about the OPEB Plan
Plan Description
Safety
$ 731,976
1,246,871
902,995
444,745
The City administers a single -employer defined benefit other post -employment benefit (OPEB)
plan that provides eligible retirees with a subsidy towards retiree medical insurance premiums. An
employee hired by the City prior to July 1, 2011 is eligible for this benefit if they retire from the
City on or after age 50 (unless disabled), with five years of service and are eligible for a Ca1PERS
pension and enroll in a Ca1PERS medical insurance plan immediately after retirement. An
employee hired by the City on or after July 1, 2011 is eligible for this benefit if they retire from the
City on or after age 50 (unless disabled), with ten years of service and are eligible for a Ca1PERS
pension and enroll in a Ca1PERS medical insurance plan immediately after retirement. Eligible
employees who suffer a disability may satisfy the continuous service requirement using a
combination of service with the City and service with any public agency with a reciprocal
retirement system. Benefits vary by hire date, employment status and employment classification. In
the event of a retiree's death, benefits may continue to surviving beneficiaries in certain
circumstances.
A portion of the City's OPEB liability is in the form of an implied rate subsidy. Retirees and active
employees are insured together as a group, thus creating a lower rate for retirees than if they were
insured separately. Although the retirees are solely responsible for the cost of their health insurance
benefits through this plan, the retirees receive the benefit of a lower rate. The difference between
these amounts is the implied rate subsidy, which is considered an OPEB liability.
75
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 10 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
a. General Information about the OPEB Plan (Continued)
Plan Description (Continued)
In 2018, the City established a trust with Public Agency Retirement Services (PARS) to hold assets
that are legally restricted for the City's OPEB plan under Section 115 of the Internal Revenue
Code. The City makes discretionary contributions to the OPEB Trust. Contributions to the OPEB
Trust and earnings on those contributions are irrevocable. The City also determines the timing of
the distribution of trust assets and whether those assets will be paid directly to the insurance
provider or to reimburse the City for plan benefits and expenses paid by the City. The OPEB Trust
is reported as a fiduciary fund since it would be misleading to exclude the OPEB Trust Fund from
the City's financial statements. PARS issues a publicly available financial report for the fiduciary
net position of the OPEB Trust, which is available upon request. The plan itself does not issue a
separate financial report.
Employees Covered
At June 30, 2019, valuation date, the benefit terms covered the following employees:
Inactive employees or beneficiaries currently receiving benefits 112
Active employees 282
Total 394
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.
76
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 10 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
a. General Information about the OPEB Plan (Continued)
Contributions (Continued)
For measurement period ending June 30, 2021, the City contributed $0 to the PARS OPEB trust,
made payments of $559,829 to insurance providers and retirees, and the estimated implied subsidy
was $289,823, resulting in total contributions of $849,652. 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.
b. Net OPEB Liability
The City's net OPEB liability was measured as of June 30, 2021 and the total OPEB liability used
to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2019
rolled forward to June 30, 2021 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, 2021
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 Ca1PERS
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.
77
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 10 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
b. Net OPEB Lability (Continued)
Actuarial Assumptions (Continued)
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).
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, 2021:
Assumed
Long -Term
Asset
Expected Real
Asset Class Allocation
Rate of Return
PARS OPEB Trust
Broad U.S Equity
U.S Fixed
Total
Discount Rate
60.00% 4.40%
40.00% 1.50%
100.00%
The discount rate used to measure the total OPEB liability was 6.25%. The projection of cash flows
used to determine the discount rate assumed that City's contributions will be made at rates equal to
the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's
fiduciary net position was projected to be available to make all projected OPEB payments for
current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of
return on the PARS OPEB trust investments was applied to all periods of projected benefit
payments to determine the total OPEB liability.
0
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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, 2020
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total OPEB liability
Differences between actual and
expected experience
Changes in assumptions
Changes in benefit terms
Contribution - employer
Net investment income
Benefit payments
Administrative expenses
Net Changes
Balance at June 30, 2021
(Measurement Date)
Change of Assumptions
Increase (Decrease)
Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability
$ 13,621,514 $ 2,166,915 $ 11,454,599
482,722 - 482,722
894,576 - 894,576
627,373 - 627,373
- 849,652
(849,652)
- 431,637
(431,637)
(849,652) (849,652)
-
- (13,016)
13,016
1,155,019 418,621
736,398
$ 14,776,533 $ 2,585,536 $ 12,190,997
From measurement date June 30, 2019 to measurement date June 30, 2021, there were the
following changes of assumptions: (1) the inflation rate increased from 2.50% to 2.75°/x, (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.
79
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 10 - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
c. Changes in the net OPEB liability (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City, as well as what the City's net OPEB
liability would be if it were calculated using a discount rate that is 1 -percentage point lower or
1 -percentage point higher than the current discount rate:
Net OPEB Liability
I% Decrease
(5.25%)
$ 13,809,643
Discount Rate
(6.25%)
$ 129190,997
1% Increase
(7.25%)
$ 10,809,299
Sensitivity of the Net OPEB Liability to Changes in the Health -Care Cost Trend Rates
The following presents the net OPEB liability of the City, as well as what the City's net OPEB
liability would be if it were calculated using healthcare cost trend rates that are 1 -percentage point
lower or 1 -percentage point higher than the current healthcare cost trend rates:
Net OPEB Liability
I% Decrease
(2.5% decreasing
to 3.0%)
$ 10,966,143
Current Healthcare
Cost Trend Rates
(3.5% decreasing
to 4.0%)
$ 12,190,997
1% Increase
(4.5% decreasing
to 5.0%)
$ 13,824,695
d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2021, the City recognized OPEB expense of $999,289. At
June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between actual and expected experience $ 562,695
Change in assumptions
Differences between projected and actual earnings
$(1,433,305)
(608,428)
on investments - (211,397)
Total $ 562,695 $ (2,253,130)
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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,
2022
2023
2024
2025
2026
Thereafter
Amount
(242,575)
(241,919)
(241,525)
(247,054)
(190,419)
(526,943)
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 2021 were $74,440.
EW
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 12 - SELF-INSURANCE PROGRAM/RISK POOL
The City uses a combination of insured and self-insured programs to finance its property and casualty
risk. The City is self-insured for worker's compensation, automotive, and general liability risks. Excess
liability coverage for the City's self-insurance retention of $350,000 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, 2021. At June 30, 2021, estimated claims payable of $9,303,222, 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, 2021 and 2020, including a
provision for incurred but not reported claims and loss adjustment expenses, were as follows:
June 30,
2020
2021
Beginning Ending
Balance Additions Deletions Balance
$ 6,445,476 $ 4,047,130
7,842,971 3,070,339
$ (2,649,635) $ 7,842,971
(1,610,088) 9,303,222
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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.
District Bonds
Community Facilities District 04-1, 2013
Community Facilities District 06-1, 2015A
Community Facilities District 06-1, 2015B
Community Facilities District 07-1, 2015A
Community Facilities District 2014-01, 2015A
Amount
of Issue
$ 9,350,000
49,740,000
2,735,000
13,155,000
27,665,000
$ 102,645,000
Outstanding
June 30, 2021
$ 7,085,000
44,600,000
2,275,000
13,155,000
26,730,000
$ 93,845,000
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, 2021, the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was
$7,085,000.
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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, 2021, the outstanding amount of the CFD 2014-01 2015A Special Tax Bonds was
$26,730,000.
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, 2021, the outstanding amount of the CFD 07-1
2015A Refunding Bonds was $13,155,000.
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, 2021, the outstanding amount of the CFD 06-01 2015A Refunding Bonds was
$44,600,000.
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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, 2021, the outstanding
amount of the CFD 06-1 Special Tax 2015B Bonds was $2,275,000.
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.
Assi _ned - 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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
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 held for resale
Restricted for:
Capital projects (1)
Public safety program
Housing projects
Solid waste program
Pension
Assigned to:
Capital projects (2)
Unassigned
American Other Total
General Rescue Plan Act Housing Governmental Governmental
Fund (ARPA) Fund Authority Funds Funds
$ 880,136 $
107,321,821
8,307,446
7,376,718
78,811,634
$ 2,040 $
879,418
1,265 $ 883,441
- 107,321,821
22,638,658 30,946,104
571,410 571,410
2,061,993 2,941,411
908,596 908,596
- 7,376,718
4,918,161
4,918,161
78,811,634
Total fund balances $ 202,697,755 $ - $ 881,458 $ 31,100,083 $ 234,679,296
(1) Restricted for capital projects:
• General Fund $8,307,446 - legally restricted for backbone infrastructure at the Tustin Legacy
development.
• Other Governmental Funds:
o Measure M Special Revenue Fund $6,054,876 - state gas taxes restricted for allowable street -
related purposes.
o CFD Construction Capital Projects Fund $4,744,354 - comprised of bond proceeds restricted
for uses specified in the bond indenture.
o Gas Tax Special Revenue Fund $4,889,701 - comprised of state gas taxes restricted for
allowable street -related purposes.
o Park Acquisition and Development Special Revenue Fund $2,337,335 - comprised of developer
fees restricted for improvement of City parks.
o Construction 95-1 Capital Projects Fund $332,609 - restricted for uses specified in the bond
indenture.
o Road Maintenance and Rehabilitation Special Revenue Fund $4,131,135 - restricted for
maintenance and rehabilitation of streets.
o Other Capital Projects Fund $8,647 - retention amounts withheld in restricted escrow accounts
to be paid to contractors once projects are completed.
o Air Quality Special Revenue Fund $139,287 - restricted for projects to reduce pollution.
o MAC 2010 Capital Projects Fund $714 — restricted for projects at the Marine Corp. Air Station.
(2) Assigned to capital projects:
• Other Capital Projects Fund $4,918,161 — for specific projects indicated in the adopted budget.
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CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 15 - OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES
Excess of Expenditures over Appropriations
NOTE 16 - JOINT POWERS AUTHORITY
Orange County Fire Authority
In January 1995, the City of Tustin entered into a joint powers agreement with the Cities of Buena
Park, Cypress, Dana Point, Irvine, Laguna Hills, Laguna Niguel, Lake Forest, La Palma, Los Alamitos,
Mission Viejo, Placentia, San Clemente, San Juan Capistrano, Seal Beach, Stanton, Villa Park, and
Yorba Linda and the County of Orange (County) to create the Orange County Fire Authority
(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 2021,
City of Placentia left the 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.
Variance with
Budget
Actual
Final Budget
Other Governmental Funds:
Asset Forfeiture
$ -
$ 100 $
100
Air Quality
500,000
516,660
16,660
Solid Waste
218,500
257,970
39,470
Measure M
2,641,777
2,826,515
184,738
NOTE 16 - JOINT POWERS AUTHORITY
Orange County Fire Authority
In January 1995, the City of Tustin entered into a joint powers agreement with the Cities of Buena
Park, Cypress, Dana Point, Irvine, Laguna Hills, Laguna Niguel, Lake Forest, La Palma, Los Alamitos,
Mission Viejo, Placentia, San Clemente, San Juan Capistrano, Seal Beach, Stanton, Villa Park, and
Yorba Linda and the County of Orange (County) to create the Orange County Fire Authority
(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 2021,
City of Placentia left the 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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 16 - JOINT POWERS AUTHORITY (CONTINUED)
Orange County Housing Finance Trust (Continued)
The OCHFT's governing board consists of nine members: two members of the Board of Supervisors of
the County, two countywide elected officials, one city council member for each city member with the
greatest population in the North, Central, and South Region Service Planning Area, as depicted in the
agreement, and two city council members selected from member cities that are not already represented.
The County is responsible for OCHFT's administrative costs for one year following the creation of
OCHFT. After the initial year, the member cities will make annual contributions towards the budgeted
administrative costs in accordance with a cost allocation formula approved by the governing board.
The particular programs and program budget, funded, sponsored or operated by OCHFT, as well as the
level of and mechanisms for, the involvement of OCHFT and each member city, in such programs and
program budget, will be determined and approved by the governing board. A member city's individual
contribution, involvement and role in any particular program or budgeted program costs will be
mutually agreed to between the member city and OCHFT.
The financial statements of the Orange County Housing Finance Trust are available at 333 W. Santa
Ana Blvd, Santa Ana, California.
NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES
The assets and liabilities of the former redevelopment agency were transferred to the Successor
Agency to the Tustin Community Redevelopment Agency on February 1, 2012 as a result of the
dissolution of the former redevelopment agency. The City is acting in a fiduciary capacity for the
assets and liabilities. Disclosures related to these transactions are as follows:
Lone -Term Liabilities
A summary of long-term liabilities activity for the year ended June 30, 2021, is as follows:
Balance
June 30, 2020
Tax allocation bonds $ 50,190,000
Unamortized premium 5,547,879
Additions Deletions
$ - $ (1,965,000)
(261,077)
Balance Due Within
June 30, 2021 One Year
$48,225,000 $2,050,000
5,286,802 -
Total long-term liabilities $ 55,737,879 $ - $ (2,226,077) $ 53,511,802 $ 2,050,000
::
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CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
A GENCY DISCL OS URES (CONTINUED)
Long -Term Liabilities (Continued)
Tax Allocation Bonds Payable
2016 Tax Allocation Refundin 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 (2010 Housing Escrow Fund and 2010 Redevelopment Escrow Fund) with a
trustee which together will pay interest and principal on the 2010 Housing Bonds up to and including
September 1, 2021 and to redeem the then outstanding 2010 Housing Bonds in full on September 1,
2021; 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, 2021 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, 2021, is $5,988,269.
At June 30, 2021, the 2016 Tax Allocation Refunding Bonds outstanding balance was $48,225,000.
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 17 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
A GENCY DISCL OS URES (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,
Principal
Interest
Total
2022
$ 2,050,000
$ 1,860,325
$ 3,910,325
2023
2,130,000
1,776,725
3,906,725
2024
2,215,000
1,689,825
3,904,825
2025
2,305,000
1,599,425
3,904,425
2026
2,395,000
1,493,450
3,888,450
2027-2031
11,675,000
5,639,500
17,314,500
2032-2036
11,970,000
3,237,788
15,207,788
2037-2041
13,485,000
991,425
14,476,425
Totals
$ 48,225,000
$ 18,288,463
$ 66,513,463
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.
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: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 18 - SCHOOL FACILITIES IMPLEMENTATION COMMITMENT (CONTINUED)
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, 2021, the City's total contributions to TUSD under the I/M agreement was
$60,831,410. The balance remaining under the IM is $24,168,590.
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.
Construction
Various construction projects were in progress at June 30, 2021 with an estimated cost to complete of
approximately $13,985,754 across all fund types.
NOTE 20 — RESTATEMENT OF NET POSITIONS
Net position at July 1, 2020,
as originally reported
To correct the value of land held for resale
To record notes receivable
To correct deposits payable and
record revenue
Net position at July 1, 2020, as restated
Governmental General
Activities Fund
$ 668,181,877 $ 172,258,028
49,594,011 27,074,164
4,580,242 -
Other Governmental Funds
Housing Other Capital
Authority Projects Total
$ 2,114,636 $ 931,278 $ 35,086,560
92,676
617,447 - - 617,447 617,447
$ 722,973,577 $ 199,332,192 $ 2,207,312 $ 1,548,725 $ 35,704,007
Custodial Funds
CFD 04-01 CFD 06-01 CFD 07-01 CFD 2014-1 Total
Net position at July 1, 2020,
as originally reported $ - $ - $ --
Implementation of GASB 84 1,144,003 6,225,798 1,776,248 3,478,006 12,624,055
Net position at July 1, 2020, as restated $ 1,144,003 $ 6,225,798 $1,776,248 $3,478,006 $12,624,055
91
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CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2021
NOTE 21— SUBSEQUENT EVENT
In September 2021, the City sold approximately 25 acres of land held for resale located at the Tustin
Legacy to a developer, which will be used for the development of 400 homes. The property was sold
for an initial disposition price of approximately $69.5 million. This price includes the base purchase
price for the land of $61.5 million and a project fair share contribution of $8 million for backbone
infrastructure improvements at Tustin Legacy.
92
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Required Supplemental
Information
ANNUAL COMPREHENSIVE FINANCIAL REPORT
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REQUIRED SUPPLEMENTARY INFORMATION
W
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CITY OF TUSTIN
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
Measurement period
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
Plan's proportion of the
net pension liability
0.64745%
0.61609%
0.62908%
0.60938%
0.60679%
Plan's proportionate share
of the net pension liability
$ 40,839,584
$ 38,459,938
$ 36,911,786
$ 36,411,988
$ 31,427,228
Plan's covered payroll
$ 10,848,695
$ 9,896,349
$ 9,967,145
$ 10,443,467
$ 10,013,168
Plan's proportionate share
of the net pension liability as a
percentage of covered payroll
376.45%
388.63%
370.33%
348.66%
313.86%
Plan's proportionate share of the
fiduciary net position as a
percentage of the Plan's total
pension liability
74.55%
75.26%
75.26%
73.31%
74.06%
Plan's proportionate share of
aggregate employer contributions
$ 6,072,529
$ 5,000,688
$ 4,600,007
$ 3,520,089
$ 3,193,318
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.
From fiscal year June 30, 2020 to June 30, 2021:
There were no changes in assumptions.
* Fiscal year 2015 was the lst year of implementation, therefore only seven years are shown.
M
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended
Measurement period
Plan's proportion of the
net pension liability
Plan's proportionate share
of the net pension liability
Plan's covered payroll
Plan's proportionate share
of the net pension liability as a
percentage of covered payroll
Plan's proportionate share of the
fiduciary net position as a
percentage of the Plan's total
pension liability
Plan's proportionate share of
aggregate employer contributions
June 30, 2016 June 30, 2015
June 30, 2015 June 30, 2014
0.58972% 0.68843%
$ 24,298,906 $ 25,822,675
$ 9,495,434 $ 9,640,345
255.90% 267.86%
78.40% 79.82%
$ 3,182,851 $ 2,544,912
97
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Fiscal year ended
Contractually required contribution
(actuarially determined)
Contributions in relation to
the actuarially determined
contributions
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage
of covered payroll
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
SAFETY PLAN
Last Ten Fiscal Years*
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017
$ 4,592,442 $ 4,132,787 $ 3,641,308 $ 3,204,833 $ 3,002,977
(4,592,442) (5,782,787) (5,291,308) (3,204,833) (3,002,977)
$ - $ (1,650,000) $ (1,650,000) $ - $ -
$ 11,498,163 $ 10,848,695 $ 9,896,349 $ 9,967,145 $ 10,443,467
39.94% 53.30% 53.47% 32.15% 28.75%
Notes to Schedule:
2.500%
2.625%
2.75%
Valuation Date
6/30/2018
6/30/2017
6/30/2016
Methods and Assumptions Used to Determine Contribution Rates:
(2)
Actuarial cost method
Entry age
Entry age
Entry age
Amortization method
(1)
(1)
(1)
Asset valuation method
Market Value
Market Value
Market Value
6/30/2015 6/30/2014
Entry age Entry age
(1) (1)
Market Value Market Value
Inflation
2.500%
2.625%
2.75%
2.75%
2.75%
Salary increases
(2)
(2)
(2)
(2)
(2)
Investment rate of return
7.25%(3)
7.25%(3)
7.375%(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 Ca1PERS Experience Study
adopted by the Ca1PERS Board.
* Fiscal year 2015 was the lst year of implementation, therefore only seven years are shown.
M
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Fiscal year ended
Contractually required contribution
(actuarially determined)
Contributions in relation to
the actuarially determined
contributions
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage
of covered payroll
Notes to Schedule:
Valuation Date
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
SAFETY PLAN
Last Ten Fiscal Years*
June 30, 2016 June 30, 2015
$ 2,708,192 $ 3,045,919
(2,708,192) (7,049,591)
$ - $ (4,003,672)
$ 10,013,668 $ 9,495,434
27.04% 74.24%
6/30/2013 6/30/2012
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method
Entry age
Entry age
Amortization method
(1)
(1)
Asset valuation method
Market Value
15 Year
Smoothed
Market Method
Inflation
2.75%
2.75%
Salary increases
(2)
(2)
Investment rate of return
7.50%(3)
7.50%(3)
Retirement age
(4)
(4)
Mortality
(5)
(5)
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
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
Benefit payments, including refunds of
employee contributions
Net Change in Total Pension Liability
Total Pension Liability - Beginning of Year
Total Pension Liability - End of Year (a)
Plan Fiduciary Net Position:
Contributions - employer
Contributions - employee
Net investment income
Benefit payments
Net plan to plan resource movement
Other miscellaneous expense
Administrative expense
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning of Year
Plan Fiduciary Net Position - End of Year (b)
Net Pension Liability - Ending (a) -(b)
Plan fiduciary net position as a percentage of the
total pension liability
Covered payroll
Net pension liability as percentage of
covered payroll
Notes to Schedule:
Last Ten Fiscal Years*
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017
June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016
$ 2,581,396 $ 2,456,587 $ 2,402,594 $ 2,211,312 $ 1,840,275
8,860,960 8,458,273 8,052,611 7,614,130 7,306,376
(417,769) (222,610) (426,547) (737,480) (531,595)
- 1,050,413 6,589,964
(5,207,052) (4,648,016) (4,523,921) (4,300,829) (4,102,189)
5,817,535 6,044,234 6,555,150 11,377,097 4,512,867
125,660,098 119,615,864 113,060,714 101,683,617 97,170,750
$131,477,633 $125,660,098 $119,615,864 $113,060,714 $101,683,617
$ 4,837,028 $ 4,373,702 $ 2,249,216 $ 1,881,701 $ 1,850,072
1,190,426 1,097,180 1,043,932 1,037,304 998,937
5,011,357 6,030,153 7,268,642 8,829,526 372,172
(5,207,052) (4,648,016) (4,523,921) (4,300,829) (4,102,189)
- (213) -
213 (254,792)
(138,915) (65,475) (134,170) (116,299) (48,573)
5,692,844 6,787,757 5,648,694 7,331,403 (929,581)
98,538,195 91,750,438 86,101,744 78,770,341 79,699,922
$104,231,039 $ 98,538,195 $ 91,750,438 $ 86,101,744 $ 78,770,341
$ 27,246,594 $ 27,121,903 $ 27,865,426 $ 26,958,970 $ 22,913,276
79.28% 78.42% 76.70% 76.16% 77.47%
$ 16,946,205 $ 16,542,504 $ 15,403,283 $ 14,684,868 $ 13,828,003
160.78% 163.95% 180.91% 183.58% 165.70%
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.
From fiscal year June 30, 20 to June 30, 2021:
There were no changes in assumptions.
* Fiscal year 2015 was the 1 st year of implementation, therefore only seven years are shown.
100
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
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, 2016
June 30, 2015
Measurement period
June 30, 2015
June 30, 2014
Total Pension Liability:
Service cost
$ 1,779,008
$ 1,747,494
Interest on total pension liability
6,982,672
6,613,765
Differences between expected and
actual experience
452,122
-
Changes in assumptions
(1,770,351)
Benefit payments, including refunds of
employee contributions
(3,956,389)
(3,974,724)
Net Change in Total Pension Liability
3,487,062
4,386,535
Total Pension Liability - Beginning of Year
93,683,688
89,297,153
Total Pension Liability - End of Year (a)
$ 97,170,750
$ 93,683,688
Plan Fiduciary Net Position:
Contributions - employer
$ 1,503,081
$ 1,379,562
Contributions - employee
905,331
962,617
Net investment income
1,753,374
11,900,167
Benefit payments
(3,956,389)
(3,974,724)
Net plan to plan resource movement
(114)
-
Other miscellaneous expense
-
Administrative expense
(89,714)
-
Net Change in Plan Fiduciary Net Position
115,569
10,267,622
Plan Fiduciary Net Position - Beginning of Year
79,584,353
69,316,731
Plan Fiduciary Net Position - End of Year (b)
$ 79,699,922
$ 79,584,353
Net Pension Liability - Ending (a) -(b)
$ 17,470,828
$ 14,099,335
Plan fiduciary net position as a percentage of the
total pension liability 82.02% 84.95%
Covered payroll $ 12,847,036 $ 12,270,014
Net pension liability as percentage of
covered payroll 135.99% 114.91%
101
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Fiscal year ended
Contractually required contribution
(actuarially determined)
Contributions in relation to
the actuarially determined
contributions
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage
of covered payroll
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017
$ 3,581,172 $ 3,187,028 $ 2,723,702 $ 2,249,217 $ 1,881,701
(3,581,172) (4,837,028) (4,373,702) (2,249,217) (1,881,701)
$ - $ (1,650,000) $ (1,650,000) $ - $ -
$ 17,513,680 $ 16,946,205 $ 16,542,504 $ 15,403,283 $ 14,684,868
20.45% 28.54% 26.44% 14.60% 12.81%
Notes to Schedule:
2.75%
2.75%
Salary increases (2) (2)
Valuation Date
6/30/2018
6/30/2017
6/30/2016
Methods and Assumptions Used
to Determine Contribution Rates:
(4)
Actuarial cost method
Entry age
Entry age
Entry age
Amortization method
(1)
(1)
(1)
Asset valuation method
Market Value
Market Value
Market Value
6/30/2015 6/30/2014
Entry age
(1)
Market Value
Inflation 2.500% 2.625%
2.75%
2.75%
Salary increases (2) (2)
(2)
(2)
Investment rate of return 7.00%(3) 7.25%(3)
7.375%(3)
7.50%(3)
Retirement age (4) (4)
(4)
(4)
Mortality (5) (5)
(5)
(5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) 2.5% at 55 and 2% at 60 and 2% at 62
(5) Mortality assumptions are based on mortality rates resulting from the most
recent Ca1PERS Experience Study
adopted by the Ca1PERS Board.
* Fiscal year 2015 was the 1st year of implementation, therefore only seven
years are shown.
102
Entry age
(1)
Market Value
2.75%
(2)
7.50%(3)
(4)
(5)
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Fiscal year ended
Contractually required contribution
(actuarially determined)
Contributions in relation to
the actuarially determined
contributions
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage
of covered payroll
Notes to Schedule:
Valuation Date
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
June 30, 2016 June 30, 2015
$ 1,850,100 $ 1,503,081
(1,850,100) (1,503,081)
$ 13,828,003 $ 12,847,036
13.38% 11.70%
6/30/2013 6/30/2012
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method
Entry age
Entry age
Amortization method
(1)
(1)
Asset valuation method
Market Value
15 Year
Smoothed
Market Method
Inflation
2.75%
2.75%
Salary increases
(2)
(2)
Investment rate of return
7.50%(3)
7.50%(3)
Retirement age
(4)
(4)
Mortality
(5)
(5)
103
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
LailMMIIlllIR 1101
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years*
Fiscal year ended
Measurement date
Total OPEB Liability:
Service cost
Interest on total OPEB liability
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.
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
$ 482,722
$ 437,360
$ 735,504
$ 714,949
894,576
824,887
890,622
862,866
627,373
(1,778,679)
-
-
-
(416,384)
(398,848)
-
(849,652)
(791,153)
(777,685)
(686,172)
1,155,019
(1,723,969)
449,593
891,643
13,621, 514
15,345,483
14, 895, 890
14,004,247
14,776,533
13,621,514
15,345,483
14,895,890
849,652
1,291,153
1,277,685
1,686,172
431,637
97,677
77,171
3,283
(849,652)
(791,153)
(777,685)
(686,172)
(13,016)
(11,216)
-
-
418,621
586,461
577,171
1,003,283
2,166,915
1,580,454
1,003,283
-
2,585,536
2,166,915
1,580,454
1,003,283
$ 12,190,997 $ 11,454,599 $ 13,765,029 $ 13,892,607
17.50% 15.91% 10.30% 6.74%
$ 31,930,486 $ 34,926,881 $ 23,559,635 $ 24,156,049
38.18% 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
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%
From fiscal year June 30, 2020 to June 30, 2021:
There were no changes in assumptions.
* Fiscal year 2018 was the first year of implementation; therefore, only four years are shown.
104
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS - OPEB
Fiscal year ended
Actuarially determined contribution
Contributions in relation to the
actuarially determined contributions
Contribution deficiency (excess)
Covered - employee payroll
Contributions as a percentage of
covered -employee payroll
Notes to Schedule:
Valuation Date
Last Ten Fiscal Years*
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018
$ 1,354,712 $ 1,318,454 $ 1,780,746 $ 1,729,589
(849,652)
(1,291,153)
(1,277,685)
(1,686,172)
$ 505,060
$ 27,301
$ 503,061
$ 43,417
$ 31,930,486
$ 34,926,881
$ 23,559,635
$ 24,156,049
2.66%
6/30/2019
Methods and Assumptions Used to Determine Contribution Rates:
3.70%
6/30/2019
5.42%
6/30/2017
6.98%
6/30/2017
Actuarial cost method
Entry age
Entry age
Entry age
Entry age
Amortization method
(1)
(1)
(1)
(1)
Inflation
2.75%
2.75%
2.50%
2.50%
Salary increases
2.75%
2.75%
2.75%
2.75%
Healthcare trend rates
(3)
(3)
(2)
(2)
Rate of return on assets
6.25%
6.25%
6.25%
6.25%
Mortality rate
Ca1PERS Rates
Ca1PERS Rates
CAPERS Rates
Ca1PERS Rates
Retirement rates
CAPERS Rates
CAPERS Rates
Ca1PERS Rates
CAPERS 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 first year of implementation; therefore, only four years are shown.
105
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Retiree Health Plan
Fiscal Year Ended
6/30/2018
6/30/2019
6/30/2020
6/30/2021
CITY OF TUSTIN
OTHER POST -EMPLOYMENT BENEFIT PLAN
ANNUAL MONEY -WEIGHTED RATE OF RETURN ON INVESTMENTS
Last Ten Fiscal Years*
Annual Money -Weighted Rate of Return, Net of Investment Expense (1)
N/A*
6.16%
5.35%
19.62%
(1) Ten years of historical information is required by the Governmental Accounting Standards Board Statement No. 74. Fiscal year
ended June 30, 2018 was the first year of implementation; therefore, only three years are presented.
* Initial deposit to the OPEB trust was made on June 26, 2018.
106
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
REVENUES:
Taxes
Licenses and permits
Fines and forfeitures
Investment income
Intergovernmental revenue
Charges for services
Rental income
Other revenue
Gain on sale of land held for resale
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Public safety
Public works
Community services
Capital outlay
Debt services:
Principal retirement
Interest expense
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES:
Transfer in
Transfer out
TOTAL OTHER
FINANCING SOURCES
For the year ended June 30, 2021
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
$ 51,231,287
$ 53,501,293
$ 58,534,615
$ 5,033,322
437,960
560,460
1,227,707
667,247
916,000
591,000
929,637
338,637
494,000
494,000
1,577,658
1,083,658
5,508,178
8,421,124
5,047,719
(3,373,405)
2,745,376
2,366,537
1,992,336
(374,201)
1,766,001
1,481,405
1,599,274
117,869
1,214,600
1,134,562
7,253,848
6,119,286
-
-
85,240
85,240
64,313,402
68,550,381
78,248,034
9,697,653
27,006,831
31,525,372
23,807,225
7,718,147
39,268,943
39,377,121
37,456,271
1,920,850
10,769,104
10,792,258
8,494,468
2,297,790
4,754,828
4,088,836
3,344,152
744,684
23,477,858
24,040,588
8,772,139
15,268,449
81,200
81,200
77,730
3,470
3,500
3,500
3,476
24
105,362,264
109,908,875
81,955,461
27,953,414
(41,048,862)
(41,358,494)
(3,707,427)
(18,255,761)
11,308,100
11,838,206
9,443,742
(2,394,464)
(6,463,100)
(6,463,100)
(2,370,752)
4,092,348
4,845,000
5,375,106
7,072,990
1,697,884
NET CHANGE IN FUND BALANCE (36,203,862) (35,983,388) 3,365,563
FUND BALANCE - BEGINNING OF YEAR,
AS RESTATED 199,332,192 199,332,192 199,332,192
(16,557,877)
FUND BALANCE - END OF YEAR $ 163,128,330 $ 163,348,804 $ 202,697,755 $ (16,557,877)
See accompanying notes to the required supplementary information
107
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
HOUSING AUTHORITY SPECIAL REVENUE FUND
REVENUES:
Investment income (loss)
Otherrevenue
TOTAL REVENUES
EXPENDITURES:
Current:
Community services
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfer out
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING
OF YEAR, AS RESTATED
FUND BALANCE - END OF YEAR
For the year ended June 30, 2021
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ (4,772) $ (4,772)
301,120 301,120 46,201 (254,919)
301,120 301,120 41,429 (259,691)
1,420,245
2,163,947
1,367,283
796,664
1,420,245
2,163,947
1,367,283
796,664
(1,119,125)
(1,862,827)
(1,325,854)
536,973
(100,000)
(100,000)
-
(100,000)
(1,219,125)
(1,962,827)
(1,325,854)
436,973
2,207,312
2,207,312
2,207,312
-
$ 988,187 $
244,485 $
881,458 $
436,973
See accompanying notes to the required supplementary information
108
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CITY OF TUSTIN
Notes to Required Supplementary Information
June 30, 2021
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 two Special Revenue Funds noted below and 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. Unspent capital projects appropriations are
an automatic supplemental appropriation for the next year. All other operating appropriations
lapse unless they are re -appropriated through the formal budget process.
(4) Annual budgets are adopted for the General and Special Revenue Funds, except for Voluntary
Workforce Housing Incentive Special Revenue Fund and the American Rescue Plan Act
(ABPA) 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.
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Supplementary
Schedules
ANNUAL COMPREHENSIVE FINANCIAL REPORT
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
SUPPLEMENTARY INFORMATION
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CITY OF TUSTIN
Other Governmental Funds
June 30, 2021
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 the 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 Statues 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.
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 unauthorized services and administrative expenses.
Road Maintenance and Rehabilitation — This fund is used to account for revenues and expenditures
apportioned under the Road Repair and Accountability Act of 2017 (SB 1) for read 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 solid waste program revenues and expenditures.
Measure M — This fund is used to account for monies received from the County for street and
maintenance projects.
112
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
Other Governmental Funds
June 30, 2021
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.
113
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2021
114
Special Revenue Funds
Park
Acquisition
Supplemental
and
Asset
Air
Law
Special
Gas Tax
Development
Forfeiture
Quality
Enforcement
Tax B
ASSETS
Cash and investments
$ 4,908,147
$ 2,332,579
$
243,783
$
505,532
$ 263,852
$
34,140
Restricted cash and investments
-
-
-
-
-
-
Receivables:
Accounts
207,985
8,968
-
26,689
-
34,780
Interest
9,503
4,265
472
979
511
-
Loans
-
-
-
-
-
-
Allowance for uncollectibles
-
Prepaid items and deposits
1,265
-
-
-
-
TOTAL ASSETS
$ 5,126,900
_$_2,345,812
$
244,255
$
533,200
$__264 363
$
68,920
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
LIABILITIES:
Accounts payable and
accrued liabilities
$ 235,934
$ 8,477
$
$
393,913
$ 6,128
$
Due to other funds
-
-
-
-
TOTAL LIABILITIES
235,934
8,477
393,913
6,128
DEFERRED INFLOWS
OF RESOURCES:
Unavailable revenue
-
FUND BALANCES:
Nonspendable
1,265
-
-
-
-
Restricted
4,889,701
2,337,335
244,255
139,287
258,235
68,920
Assigned
-
-
-
-
-
-
TOTAL FUND BALANCES
4,890,966
2,337,335
244,255
139,287
258,235
68,920
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$ 5,126,900
$ 2,345,812
$
244,255
$
533,200
$ 264,363
$
68,920
114
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Special Revenue Funds (Continued)
Capital Projects Funds
Road
Voluntary
Total
Maintenance
Workforce
Other
Other
and
Housing
Solid
Construction
Capital MCAS
CFD
Governmental
Rehabilitation
Incentive
Waste
Measure M
95-1
Projects 2010
Construction
Funds
$ 3,853,376
$2,058,008
$ 941,469
$ 5,887,961
$ 332,609
$3,802,118 $ 633
$ -
$ 25,164,207
-
-
-
-
-
8,647 -
6,623,185
6,631,832
271,551
-
17,589
283,267
-
1,818,563 81
-
2,669,473
7,461
3,985
178
11,400
-
7,366 -
-
46,120
-
-
-
-
- -
-
1,265
$ 4,132,388
$2,061,993
$ 959,236
$6,182,628
$ 332,609
$5,636,694 $ 714
$ 6,623,185
$ 34,512,897
$ 1,253 $
1,253
$ 10,453 $ 127,752 $
10,453 127,752
40,187 -
$ 391,907 $
391,907
317,979
$ 1,141,420 $ 2,317,237
737,411 737,411
1,878,831 3,054,648
- - 358,166
- - - - - - - - 1,265
4,131,135 2,061,993 908,596 6,054,876 332,609 8,647 714 4,744,354 26,180,657
- - - - 4,918,161 - - 4,918,161
4,131,135 2,061,993 908,596 6,054,876 332,609 4,926,808 714 4,744,354 31,100,083
$ 4,132,388 $2,061,993 $ 959,236 $ 6,182,628 $ 332,609 $5,636,694 $ 714 $ 6,623,185 $ 34,512,897
115
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
REVENUES:
Taxes
Investment income (loss)
Intergovernmental revenue
Charges for services
Rental income
Other revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Public safety
Public works
Community services
Capital outlay
TOTAL EXPENDITURES
For the year ended June 30, 2021
Special Revenue Funds
1,461,699
Park
768,491
1,629,769
2,230,190
1,681,599
Acquisition
Supplemental
and
Asset
Air
Law
Special
Gas Tax
Development
Forfeiture
Quality
Enforcement
Tax B
18,667
1,359
1,303
2,132
1,661
-
1,811,082
138,746
45,133
104,961
189,852
4,468,514
-
12,714
-
-
-
-
-
306,279
-
-
-
-
-
312,000
-
-
-
-
1,829,749
771,098
46,436
107,093
191,513
4,468,514
1,461,699
51,830
768,491
1,629,769
2,230,190
1,681,599
- 239 -
100 - 136,488
516,421 -
100 516,660 136,488
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (400,441) (910,501) 46,336 (409,567) 55,025 4,468,514
OTHER FINANCING USES:
Transfers in - - - - - -
Transfers out - - - - - (4,433,734)
TOTAL OTHER
FINANCING USES - - - - (4,433,734)
NET CHANGE IN
FUND BALANCES (400,441) (910,501) 46,336 (409,567) 55,025 34,780
FUND BALANCES - BEGINNING
OF YEAR, AS RESTATED 5,291,407 3,247,836 197,919 548,854 203,210 34,140
FUND BALANCES - END OF YEAR $ 4,890,966 $ 2,337,335 $ 244,255 $ 1392287 $ 2582235 $ 682920
116
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Special Revenue Funds (Continued) Capital Projects Funds
Road Voluntary Total
Maintenance Workforce Other Other
and Housing Solid Construction Capital MCAS CFD Governmental
Rehabilitation Incentive Waste Measure M 95-1 Projects 2010 Construction Funds
$ - $
- $ 209,868 $ - $
- $ - $ - $
- $ 209,868
25,124
9,734 222 28,231
- 13,438 (2,361)
3,990 103,500
1,490,165
- 38,838 2,040,091
- 1,500,000 -
- 11,827,382
-
- 12,050 -
- - -
- 24,764
-
- - -
- - -
- 306,279
57,863
- 849,500 -
- 2,171,412 -
- 3,390,775
1,573,152
9,734 1,110,478 2,068,322
- 3,684,850 (2,361)
3,990 15,862,568
3,353
21,954 - 257,970 -
22,039 - 2,823,162
43,993 - 257,970 2,826,515
12,463 - - 1,529,584
- - - - 136,588
9,917 - 289,841
2,665,056 77,427 2,935,124 11,437,489
2,677,519 87,344 2,935,124 13,393,502
1,529,159 9,734 852,508 (758,193) - 1,007,331 (89,705) (2,931,134) 2,469,066
- - - - - 2,370,752 - - 2,370,752
- - - (158,658) (809,947) - - (4,041,403) (9,443,742)
1,529,159
- (158,658) (809,947) 2,370,752 - (4,041,403) (7,072,990)
9,734 852,508 (916,851) (809,947) 3,378,083 (89,705) (6,972,537) (4,603,924)
2,601,976 2,052,259 56,088 6,971,727 1,142,556 1,548,725 90,419 11,716,891 35,704,007
$ 4,131,135 $2,061,993 $_908,596_ $ 6,054,876 $ 332,609 $4,926,808 $ 714 $ 4,744,354 $ 31,100,083
117
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GAS TAX SPECIAL REVENUE FUND
For the year ended June 30, 2021
118
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ 25,000 $
25,000
$ 18,667
$ (6,333)
Intergovernmental revenue
1,926,900
1,926,900
1,811,082
(115,818)
TOTAL REVENUES
1,951,900
1,951,900
1,829,749
(122,151)
EXPENDITURES:
Current:
General government
1,202,680
1,213,282
1,461,699
(248,417)
Capital outlay
3,338,140
3,376,908
768,491
2,608,417
TOTAL EXPENDITURES
4,540,820
4,590,190
2,230,190
2,360,000
EXCESS OF REVENUES OVER
EXPENDITURES
(2,588,920)
(2,638,290)
(400,441)
2,237,849
NET CHANGE IN FUND BALANCE
(2,588,920)
(2,638,290)
(400,441)
2,237,849
FUND BALANCE - BEGINNING OF YEAR
5,291,407
5,291,407
5,291,407
-
FUND BALANCE - END OF YEAR
$ 2,702,487 $
2,653,117
$ 4,890,966
$ 2,237,849
118
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
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, 2021
119
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ 20,000 $
20,000
$ 1,359
$ (18,641)
Intergovernmental revenue
-
-
138,746
138,746
Charges for services
17,500
17,500
12,714
(4,786)
Rental income
207,400
207,400
306,279
98,879
Other revenue
-
-
312,000
312,000
TOTAL REVENUES
244,900
244,900
771,098
526,198
EXPENDITURES:
Current:
General government
-
-
51,830
(51,830)
Capital outlay
2,528,814
2,528,814
1,629,769
899,045
TOTAL EXPENDITURES
2,528,814
2,528,814
1,681,599
847,215
EXCESS OF REVENUES OVER
EXPENDITURES
(2,283,914)
(2,283,914)
(910,501)
1,373,413
NET CHANGE IN FUND BALANCE
(2,283,914)
(2,283,914)
(910,501)
1,373,413
FUND BALANCE - BEGINNING OF YEAR
3,247,836
3,247,836
3,247,836
-
FUND BALANCE - END OF YEAR
$ 963,922 $
963,922
$ 2,337,335
$ 1,373,413
119
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
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, 2021
120
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
REVENUES:
Investment income
$ - $ -
$ 1,303
$ 1,303
Intergovernmental revenue
- -
45,133
45,133
TOTAL REVENUES
- -
46,436
46,436
EXPENDITURES:
Current:
Public safety
- -
100
(100)
TOTAL EXPENDITURES
- -
100
(100)
EXCESS OF REVENUES OVER
EXPENDITURES
- -
46,336
46,336
NET CHANGE IN FUND BALANCE
- -
46,336
46,336
FUND BALANCE - BEGINNING OF YEAR
197,919 197,919
197,919
-
FUND BALANCE - END OF YEAR
$ 197,919 $ 197,919
$ 244,255
$ 46,336
120
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
AIR QUALITY SPECIAL REVENUE FUND
For the year ended June 30, 2021
121
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ 500 $
500
$ 2,132
$ 1,632
Intergovernmental revenue
95,900
95,900
104,961
9,061
TOTAL REVENUES
96,400
96,400
107,093
10,693
EXPENDITURES:
Current:
General government
-
-
239
(239)
Capital outlay
500,000
500,000
516,421
(16,421)
TOTAL EXPENDITURES
500,000
500,000
516,660
(16,660)
EXCESS OF REVENUES OVER
EXPENDITURES
(403,600)
(403,600)
(409,567)
(5,967)
NET CHANGE IN FUND BALANCE
(403,600)
(403,600)
(409,567)
(5,967)
FUND BALANCE - BEGINNING OF YEAR
548,854
548,854
548,854
-
FUND BALANCE - END OF YEAR
$ 145,254 $
145,254
$ 139,287
$ (5,967)
121
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SUPPLEMENTAL LAW ENFORCEMENT SPECIAL REVENUE FUND
For the year ended June 30, 2021
122
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
REVENUES:
Investment income
$ - $
-
$ 1,661
$ 1,661
Intergovernmental revenue
176,000
176,000
189,852
13,852
TOTAL REVENUES
176,000
176,000
191,513
15,513
EXPENDITURES:
Current:
Public safety
136,900
136,900
136,488
412
TOTAL EXPENDITURES
136,900
136,900
136,488
412
EXCESS OF REVENUES OVER
EXPENDITURES
39,100
39,100
55,025
15,925
NET CHANGE IN FUND BALANCE
39,100
39,100
55,025
15,925
FUND BALANCE - BEGINNING OF YEAR
203,210
203,210
203,210
-
FUND BALANCE - END OF YEAR
$ 242,310 $
242,310
$ 258,235
$ 15,925
122
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
l�■�i061MIL 11101
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
REVENUES:
Intergovernmental revenue
TOTAL REVENUES
EXCESS OF REVENUES OVER
EXPENDITURES
SPECIAL TAX B SPECIAL REVENUE FUND
For the year ended June 30, 2021
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 4,154,000 $ 4,154,000 $ 4,468,514 $ 314,514
4,154,000 4,154,000 4,468,514 314,514
4,154,000 4,154,000 4,468,514 314,514
OTHER FINANCING SOURCES (USES):
Transfer out (4,154,000) (3,794,700) (4,433,734) 639,034
NET CHANGE IN FUND BALANCE - 359,300 34,780 953,548
FUND BALANCE - BEGINNING OF YEAR 34,140 34,140 34,140 -
FUND BALANCE - END OF YEAR $ 34,140 $ 393,440 $ 68,920 $ 953,548
123
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
ROAD MAINTENANCE AND REHABILITATION SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
Other revenue
TOTAL REVENUES
EXPENDITURES:
Current:
Public works
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
EXPENDITURES
NET CHANGE IN FUND BALANCE
For the year ended June 30, 2021
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ 25,124 $ 25,124
1,398,500 1,398,500 1,490,165 91,665
- - 57,863 57,863
1,398,500 1,398,500 1,573,152 174,652
- - 21,954 (21,954)
804,083 1,963,708 22,039 1,941,669
804,083 1,963,708 43,993 1,919,715
594,417 (565,208) 1,529,159 2,094,367
594,417 (565,208) 1,529,159 2,094,367
FUND BALANCE - BEGINNING OF YEAR
2,601,976
2,601,976
2,601,976 -
FUND BALANCE - END OF YEAR $
3,196,393 $
2,036,768
$ 4,131,135 $ 2,094,367
124
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SOLID WASTE SPECIAL REVENUE FUND
For the year ended June 30, 2021
125
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
REVENUES:
Taxes
$ 210,000 $
210,000
$ 209,868
$ (132)
Investment income
-
-
222
222
Intergovernmental revenue
-
-
38,838
38,838
Charges for services
7,500
7,500
12,050
4,550
Other revenue
-
-
849,500
849,500
TOTAL REVENUES
217,500
217,500
1,110,478
892,978
EXPENDITURES:
Current:
Public works
218,500
218,500
257,970
(39,470)
TOTAL EXPENDITURES
218,500
218,500
257,970
(39,470)
EXCESS OF REVENUES OVER
EXPENDITURES
(1,000)
(1,000)
852,508
853,508
NET CHANGE IN FUND BALANCE
(1,000)
(1,000)
852,508
853,508
FUND BALANCE - BEGINNING OF YEAR
56,088
56,088
56,088
-
FUND BALANCE - END OF YEAR
$ 55,088 $
55,088
$ 908,596
$ 853,508
125
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
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
EXPENDITURES
MEASURE M SPECIAL REVENUE FUND
For the year ended June 30, 2021
- - 3,353 (3,353)
1,958,197 2,641,777 2,823,162 (181,385)
1,958,197 2,641,777 2,826,515 (184,738)
(261,297) (944,877) (758,193) 186,684
OTHER FINANCING SOURCES (USES):
Variance with
Transfer out
Final Budget
Budgeted Amounts
(158,658) 118,658
Positive
Original Final
Actual
(Negative)
$ 50,000 $ 50,000
$ 28,231
$ (21,769)
1,646,900 1,646,900
2,040,091
393,191
1,696,900 1,696,900
2,068,322
371,422
- - 3,353 (3,353)
1,958,197 2,641,777 2,823,162 (181,385)
1,958,197 2,641,777 2,826,515 (184,738)
(261,297) (944,877) (758,193) 186,684
OTHER FINANCING SOURCES (USES):
Transfer out
(40,000)
(40,000)
(158,658) 118,658
NET CHANGE IN FUND BALANCE
(301,297)
(984,877)
(916,851) 305,342
FUND BALANCE - BEGINNING OF YEAR
6,971,727
6,971,727
6,971,727 -
FUND BALANCE - END OF YEAR $
6,670,430 $
5,986,850 $
6,054,876 $ 305,342
126
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
ASSETS
Cash and investments
Restricted cash and investments
Taxes receivable
TOTAL ASSETS
LIABILITIES
CITY OF TUSTIN
COMBINING STATEMENT OF FIDUCIARY NET POSITION
CUSTODIAL FUNDS
June 30, 2021
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
$ 6,681 $ 69,073 $ - $
1,126,640 6,239,776 1,765,897
11,933 39,707 -
$ 1,145,254 $ 6,348,556 $ 1,765,897 $
Total
875 $ 28,729 $ 875 $ 106,233
- 3,479,319 - 12,611,632
14,310 3,840 69,790
875 $ 3,522,358 $ 4,715 $ 12,787,655
Accounts payable 6,681 69,073 875 28,729 875 106,233
TOTAL LIABILITIES 6,681 69,073 - 875 28,729 875 106,233
NET POSITION
RESTRICTED FOR:
Bondholders $ 1,138,573 $ 6,279,483 $ 1,765,897 $ - $ 3,493,629 $ 3,840 $ 12,681,422
127
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
CUSTODIAL FUNDS
For the year ended June 30, 2021
128
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
ADDITIONS
Tax revenue
$ 723,980
$ 3,583,976
$ 966,502
$ 3,500
$ 1,560,349
$ 7,340
$ 6,845,647
Investment Income
51
2,775
844
-
859
4,529
TOTAL ADDITIONS
724,031
3,586,751
967,346
3,500
1,561,208
7,340
6,850,176
DEDUCTIONS
Administrative expenses
53,855
145,485
64,278
3,500
50,010
3,500
320,628
Principal
360,000
1,100,000
300,000
-
210,000
-
1,970,000
Interest
315,606
2,287,581
613,419
1,285,575
4,502,181
TOTAL DEDUCTIONS
729,461
3,533,066
977,697
3,500
1,545,585
3,500
6,792,809
NET INCREASE (DECREASE)
IN FIDUCIARY NET POSITION
(5,430)
53,685
(10,351)
-
15,623
3,840
57,367
NET POSITION AT BEGINNING
OF YEAR, AS RESTATED
1,144,003
6,225,798
1,776,248
3,478,006
12,624,055
NET POSITION AT END OF YEAR
$ 1,138,573
$ 6,279,483
$ 1,765,897
$
$ 3,493,629
$ 3,840
$ 12,681,422
128
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Statistical
Section
ANNUAL COMPREHENSIVE FINANCIAL REPORT
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STATISTICAL SECTION
131
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CITY OF TUSTIN
Description of Statistical Contents
June 30, 2021
This part of the City of Tustin's Annual Comprehensive Financial Report presents detail information as
a context for understanding what the information in the financial statements, note disclosures, and
required supplementary information says about the City's overall financial health.
Contents:
Pages
Financial Trends — These schedules contain trend information to help the
reader understand how the City's financial performance and well-being have
changed over time. 134
Revenue Capacity — These schedules contain information to help the reader
assess the City's most significant local revenue source, the property tax. 144
Debt Capacity — These schedules present information to help the read assess
the affordability of the City's current levels of outstanding debt and the City's
ability to issue additional debt in the future. 150
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. 157
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. 159
Sources:
Unless otherwise noted, the information in these schedules is derived from the
Annual Comprehensive Financial Reports for the relevant year.
133
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
Primary government:
Net investment in capital assets
$ 438,162,620
$ 455,933,033
$ 485,331,201
Fiscal Year
Restricted
47,727,966
54,367,385
36,693,458
2012
Unrestricted
2013
184,627,659
2014
152,572,774
2015
Governmental activities:
$ 694,928,077
$ 624,228,439
$ 706,422,099
Net investment in capital assets
$
412,683,460
$
431,761,288
$
461,673,323
$
456,649,085
Restricted
47,727,966
54,367,385
36,693,458
72,929,522
Unrestricted
147,513,249
177,532,888
93,877,440
140,727,040
Total governmental activities net position
$
607,924,675
$
663,661,561
$
592,244,221
$
670,305,647
Business -type activities:
Net investment in capital assets
$
25,479,160
$
24,171,745
$
23,657,878
$
24,270,718
Unrestricted
2,795,701
7,094,771
8,326,340
11,845,734
Total business -type activities net position
$
28,274,861
$
31,266,516
$
31,984,218
$
36,116,452
Primary government:
Net investment in capital assets
$ 438,162,620
$ 455,933,033
$ 485,331,201
$ 480,919,803
Restricted
47,727,966
54,367,385
36,693,458
72,929,522
Unrestricted
150,308,950
184,627,659
102,203,780
152,572,774
Total primary government net position
$ 636,199,536
$ 694,928,077
$ 624,228,439
$ 706,422,099
* Fiscal year 2020 net position was restated.
134
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Fiscal Year
2016 2017 2018 2019 2020* 2021
$ 483,229,135 $ 490,574,647 $ 499,190,473 $ 520,166,300 $ 549,473,651 $ 565,395,034
95,241,025 102,027,853 87,395,188 67,892,989 59,304,350 39,407,529
107,224,779 144,442,931 151,119,177 108,567,573 114,195,576 106,773,829
$ 685,694,939 $ 737,045,431 $ 737,704,838 $ 696,626,862 $ 722,973,577 $ 711,576,392
$ 25,443,651 $ 23,252,432 $ 22,753,763 $ 20,650,435 $ 24,145,887 $ 25,941,133
12,227,557 15,129,697 16,505,744 19,489,664 15,070,837 12,918,451
$ 37,671,208 $ 38,382,129 $ 39,259,507 $ 40,140,099 $ 39,216,724 $ 38,859,584
$ 508,672,786 $ 513,827,079 $ 521,944,236 $ 540,816,735 $ 573,619,538 $ 591,336,167
95,241,025 102,027,853 87,395,188 67,892,989 59,304,350 39,407,529
119,452,336 159,572,628 167,624,921 128,057,237 129,266,413 119,692,280
$ 723,366,147 $ 775,427,560 $ 776,964,345 $ 736,766,961 $ 762,190,301 $ 750,435,976
135
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CITY OF TUSTIN
CHANGES IN NET POSITION
EXPENSES AND PROGRAM REVENUES
Expenses:
Governmental activities:
General government
Public safety
Public works
Community services
Interest on long-term debt
Total governmental activities expenses
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2012 2013 2014
$ 12,266,470
$ 18,705,913
$ 14,825,780
28,800,773
30,702,298
28,440,799
20,765,854
15,087,234
49,538,371
7,078,104
3,201,865
3,498,460
3,057,645
967,115
-
71,968,846
68,664,425
96,303,410
2015
$ 17,121,057
29,886,284
34,435,214
3,699,059
85,141,614
Business -type activities:
Water 13,467,541 13,574,149 16,100,137 15,982,078
Total business -type activities expenses 13,467,541 13,574,149 16,100,137 15,982,078
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
Total business -type activities
program revenues
Net revenues (expenses):
Governmental activities
Business -type activities
Total net revenues (expenses)
1,390,073
763,101
249,237
252,074
1,133,096
917,947
920,112
1,071,099
800,328
1,248,595
1,710,813
1,564,314
974,747
926,432
967,134
892,102
3,590,210
4,513,158
3,325,304
3,546,823
20,902,629
20,998,311
12,222,106
20,244,479
28,791,083
29,367,544
19,394,706
27,570,891
15,112,161
16,688,773
18,682,821
19,375,359
15,112,161
16,688,773
18,682,821
19,375,359
$ (43,177,763) $ (39,296,881) $ (76,908,704) $ (57,570,723)
1,644,620 3,114,624 2,582,684 3,393,281
$ (41,533,143) $ (36,182,257) $ (74,326,020) $ (54,177,442)
136
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Fiscal Year
2016 2017 2018 2019 2020 2021
$ 20,023,280
$ 24,504,764
$ 23,949,544
$ 27,097,686
$ 29,282,004
$ 27,172,397
27,779,830
34,611,078
33,713,796
36,215,060
39,064,730
42,307,312
47,326,664
24,822,480
37,599,662
45,849,976
40,430,009
25,720,382
7,869,124
19,524,660
10,795,733
20,304,550
5,682,249
7,898,475
-
5,802
12,043
9,297
6,444
3,476
102,998,898
103,468,784
106,070,778
129,476,569
114,465,436
103,102,042
15,586,463
16,654,429
17,680,886
17,763,633
17,767,158
19,283,136
15,586,463
16,654,429
17,680,886
17,763,633
17,767,158
19,283,136
2,072,540
1,979,211
1,630,903
1,920,214
2,157,735
2,011,470
1,195,350
1,255,299
1,283,672
1,285,584
1,205,519
1,298,587
3,538,906
1,861,045
2,167,726
3,300,906
3,123,961
2,586,033
953,149
1,101,294
1,434,988
2,426,578
1,892,126
1,232,539
2,722,978
2,742,140
3,863,547
4,952,271
4,911,642
8,618,631
48,711,583
26,535,693
7,641,510
3,942,834
4,565,393
4,422,891
59,194,506
35,474,682
18,022,346
17,828,387
17,856,376
20,170,151
16,511,795
17,100,836
18,229,013
17,329,090
17,364,694
18,891,433
16,511,795
17,100,836
18,229,013
17,329,090
17,364,694
18,891,433
$ (43,804,392) $ (67,994,102) $ (88,048,432) $ (111,648,182) $ (96,609,060) $ (82,931,891)
925,332 446,407 548,127 (434,543) (402,464) (391,703)
$ (42,879,060) $ (67,547,695) $ (87,500,305) $ (112,082,725) $ (97,011,524) $ (83,323,594)
137
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CITY OF TUSTIN
CHANGES IN NET POSITION
GENERAL REVENUES
Last Ten Fiscal Years
(accrual basis of accounting)
138
Fiscal Year
2012
2013
2014
2015
General revenues and other changes
in net position:
Governmental activities:
Taxes:
Property taxes
$
23,270,718
$
14,526,101
$
13,661,771
$
14,552,535
Transient occupancy taxes
137,131
137,064
616,897
1,090,675
Business license taxes
44,800
377,498
393,241
419,148
Other taxes
1,621,521
1,655,388
1,663,215
1,763,878
Sales tax
19,931,865
21,575,405
22,288,032
22,269,896
Motor vehicle in lieu, unrestricted
5,833,094
5,951,653
6,150,893
6,380,698
Investment income
958,169
243,921
628,180
1,052,276
Other general revenues
14,444,183
7,231,648
4,040,996
7,829,149
Gain on sale of land held for resale
-
43,335,089
-
48,136,121
Profit participation
-
-
-
-
Contribution from successor agency
-
-
-
32,137,773
Extraordinary and special items
(27,314,435)
-
1,412,257
-
Total governmental activities
38,927,046
95,033,767
50,855,482
135,632,149
Business -type activities:
Investment income
156,855
39,700
144,381
249,863
Miscellaneous
59,222
271,858
408,749
489,090
Total business -type activities
216,077
311,558
553,130
738,953
Total primary government
$
39,143,123
$
95,345,325
$
51,408,612
$
136,371,102
Changes in net position:
Governmental activities
$
(4,250,717)
$
55,736,886
$
(26,053,222)
$
78,061,426
Business -type activities
1,860,697
3,426,182
3,135,814
4,132,234
Total primary government
$
(2,390,020)
$
59,163,068
$
(22,917,408)
$
82,193,660
138
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Fiscal Year
2016 2017 2018 2019 2020 2021
$
16,451,763
$
24,437,717
$
25,636,673
$
26,275,789
$
27,358,525
$
29,142,850
1,554,754
1,609,318
1,575,830
1,825,957
1,593,532
1,218,924
406,891
420,684
431,457
466,828
438,632
416,266
1,839,963
1,931,185
1,781,175
1,762,642
1,792,263
1,862,200
24,513,610
25,133,146
24,925,934
26,634,458
25,487,518
30,753,042
6,778,329
37,056
43,359
39,526
64,400
58,955
2,430,087
611,964
1,109,193
7,167,093
4,445,124
1,676,386
2,671,845
4,594,651
4,838,383
6,002,632
4,556,040
1,308,076
-
24,241,261
33,636,759
395,281
1,014,511
85,240
-
31,327,612
-
-
-
5,012,767
2,546,442
5,000,000
-
-
-
-
59,193,684
119,344,594
93,978,763
70,570,206
66,750,545
71,534,706
480,050
108,669
150,371
1,084,525
869,426
5,629
149,374
155,845
178,880
230,610
23,193
28,934
629,424
264,514
329,251
1,315,135
892,619
34,563
$
59,823,108
$
119,609,108
$
94,308,014
$
71,885,341
$
67,643,164
$
71,569,269
$
15,389,292
$
51,350,492
$
5,930,331
$
(41,077,976)
$
(29,858,515)
$
(11,397,185)
1,554,756
710,921
877,378
880,592
490,155
(357,140)
$
16,944,048
$
52,061,413
$
6,807,709
$
(40,197,384)
$
(29,368,360)
$
(11,754,325)
139
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CITY OF TUSTIN
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
General fund:
Nonspendable
$ 144,604,847
$ 128,988,209
$ 129,049,954
$ 122,458,642
Restricted
-
19,615,343
1,352,309
16,650,332
Unassigned
4,077,344
44,368,566 2
18,781,826
84,278,138 3
Total general fund
$ 148,682,191
$ 192,972,118
$ 149,184,089
$ 223,387,112
All other governmental funds:
Nonspendable
$ 1,710,292
$ 1,287,607
$ -
$ -
Restricted
38,274,666 1
33,885,757
29,820,853
24,048,818
Assigned
16,239,322
16,880,590
5,493,536
37,350,531 4
Unassigned
Total all other governmental funds $ 56,224,280 $ 52,053,954 $ 35,314,389 $ 61,399,349
140
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Fiscal Year
2016
2017
2018
2019
2020*
2021
$ 88,579,214 5
$ 84,344,748
$ 82,868,217
$ 82,902,130
$ 107,921,521
$ 108,201,957
18,657,461
34,901,943
41,269,878
31,250,893
16,438,469
15,684,164
79,667,061
102,517,562
116,332,458
88,768,803
74,972,202
78,811,634
$ 186,903,736
$ 221,764,253
$ 240,470,553
$ 202,921,826
$ 199,332,192
$ 202,697,755
$ 1,922
$ 1,922
$ -
$ 1,922
$ -
$ 3,305
54,438,343
51,069,708
46,322,996
37,215,903
37,107,137
27,060,075
26,871,816
20,408,936
17,719,394
5,762,048
1,432,974
4,918,161
-
-
-
-
(628,792)
-
$ 81,312,081
$ 71,480,566
$ 64,042,390
$ 42,979,873
$ 37,911,319
$ 31,981,541
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.
* Fiscal year 2020 fund balance was restated.
141
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CITY OF TUSTIN
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
(1) Sales tax revenues were classified as intergovernmental revenues prior to June 30, 2021.
Effective June 30, 2021, sales tax revenues have been classified as taxes in the financial statements.
142
Fiscal
Year
2012
2013
2014
2015
Revenues:
Taxes
$ 30,975,441
$ 22,703,619
$ 22,808,488
$ 21,426,308
Licenses and permits
443,928
577,044
1,284,232
885,043
Fines and forfeitures
875,068
678,428
631,340
752,597
Investment income
472,725
173,890
621,786
1,041,661
Intergovernmental revenues
26,345,002
43,126,447
29,741,754
37,302,283
Charges for services
2,813,752
2,685,080
1,787,268
1,870,401
Rental income
480,255
550,003
751,724
1,113,340
Developer contributions
-
-
-
16,934,704
Profit participation
-
-
-
-
Gain on sale of land held for resale
-
43,340,797
-
48,136,121
Contribution from Successor Agency
-
-
-
32,137,773
Otherrevenues
14,075,025
9,773,813
6,110,735
6,302,392
Total revenues
76,481,196
123,609,121
63,737,327
167,902,623
Expenditures:
Current:
General government
11,656,331
17,357,805
14,205,424
17,568,297
Public safety
28,714,347
27,944,039
28,170,314
33,062,929
Public works
6,954,384
5,980,807
5,797,705
6,417,257
Community services
6,506,381
2,752,523
3,081,299
3,170,747
Capital outlay
25,816,530
28,487,231
74,422,436
23,800,093
Debt service:
Principal retirement
2,590,000
-
-
5,000,000
Interest and fiscal charges
3,264,323
967,115
-
-
Total expenditures
85,502,296
83,489,520
125,677,178
89,019,323
Excess (deficiency) of revenues
over (under) expenditures
(9,021,100)
40,119,601
(61,939,851)
78,883,300
Other financing sources (uses):
Transfers in
3,020,291
6,122,454
2,084,612
5,266,102
Transfers out
(3,020,291)
(6,122,454)
(2,084,612)
(5,266,102)
Sale of property
43,745
-
-
-
Capital lease issued
-
-
-
-
Total other financing sources (uses)
43,745
-
-
-
Extraordinary gain (loss)
(98,386,142)
-
1,412,257
-
Special item
-
-
-
21,404,683
Net change in fund balances
$ (107,363,497)
$ 40,119,601
$ (60,527,594)
$ 100,287,983
Debt service as a percentage of
noncapital expenditures
20.00%
9.00%
1.73%
8.86%
(1) Sales tax revenues were classified as intergovernmental revenues prior to June 30, 2021.
Effective June 30, 2021, sales tax revenues have been classified as taxes in the financial statements.
142
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Fiscal Year
$ 23,525,899
$ 24,825,401
$ 25,770,970
$ 26,385,383
$ 27,187,012
$ 58,744,483 (1)
1,334,311
853,990
905,086
1,212,696
1,280,180
1,227,707
982,123
953,665
996,912
909,355
841,747
929,637
2,422,072
608,888
1,120,276
7,172,443
4,455,060
1,676,386
42,838,003
35,382,444
42,121,841
39,613,110
38,156,567
16,875,101 (1)
2,357,268
1,999,860
2,177,345
2,761,688
2,688,921
2,017,100
1,308,852
1,542,281
1,674,068
2,055,135
2,133,706
1,905,553
26,357,490
16,804,964
1,341,143
-
-
-
-
23,495,709
7,179,553
212,651
-
5,012,767
-
24,241,261
33,636,759
395,281
1,014,511
85,240
4,714,101
5,849,937
8,848,778
7,590,956
4,918,426
5,678,057
105,840,119
136,558,400
125,772,731
88,308,698
82,676,130
94,152,031
20,372,454
24,052,915
21,259,806
25,539,637
27,145,126
25,336,809
27,897,182
30,733,524
32,335,404
33,200,885
36,427,058
37,592,859
7,182,380
7,591,876
7,795,849
9,105,493
8,231,789
8,784,309
7,308,498
18,727,257
9,747,562
19,603,654
4,955,971
4,711,435
22,498,621
26,657,177
40,082,440
59,389,068
42,277,454
20,209,628
4,101,171
4,129,203
3,271,503
71,908
74,763
77,730
-
5,802
12,043
9,297
6,444
3,476
89,360,306
111,897,754
114,504,607
146,919,942
119,118,605
96,716,246
16,479,813 24,660,646 11,268,124 (58,611,244) (36,442,475) (2,564,215)
5,453,988 4,242,209 8,908,605 7,281,771 4,745,170 11,814,494
(5,453,988) (4,242,209) (8,908,605) (7,281,771) (4,745,170) (11,814,494)
368,356 - - - -
368,356 - - - -
976,042 - - - - -
(34,026,499) - - - - -
$ (16,570,644) $ 25,029,002 $ 11,268,124 $ (58,611,244) $ (36,442,475) $ (2,564,215)
6.03% 5.28% 3.46% 0.06%
143
0.09% 0.10%
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Fiscal Year
Ended
June 30
CITY OF TUSTIN
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
(IN THOUSANDS)
Last Ten Fiscal Years
Secured
Unsecured
Taxable
Assessed
Value
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
2021
9,958,441
326,678
10,285,119
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
I% 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.
(1) Effective February 1, 2012, the Redevelopment Agency was dissolved. The Successor Agency took over the assets
liabilities of the former Redevelopment Agency. See Note 17 for more information.
(2) This rate represents the weighted average of all individual direct rates applied by the City of Tustin.
144
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
145
Successor Agency (1)
Taxable
Total
Assessed
Direct Tax
Secured
Unsecured
Value
Rate (2)
$ 2,085,982
$ 133,065
$ 2,219,047
0.303%
2,107,792
123,929
2,231,721
0.302%
2,192,026
121,534
2,313,560
0.116%
2,362,339
139,834
2,502,173
0.116%
2,643,865
141,934
2,785,799
0.116%
2,872,602
138,433
3,011,035
0.116%
3,260,212
143,833
3,404,045
0.116%
3,498,105
138,599
3,811,347
0.116%
3,671,553
167,199
3,996,268
0.116%
3,900,575
186,969
4,087,544
0.116%
145
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
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
146
Fiscal Year
2012 2013 2014 2015
$ 0.1272 $ 0.1272
0.4397
0.4397
0.0886
0.0886
0.0617
0.0617
0.0198
0.0198
0.0167
0.0167
0.0161
0.0161
0.2302
0.2302
1.0000 1.0000
$ 0.1272 $ 0.1272
0.4397
0.4397
0.0886
0.0886
0.0617
0.0617
0.0198
0.0198
0.0167
0.0167
0.0161
0.0161
0.2302
0.2302
I�IZIZIII��IIIZIZI;
0.0559
0.0672
0.0891
0.0696
0.0037
0.0035
0.0035
0.0035
0.0315
0.0324
0.0333
0.0508
0.2155
0.2155
0.2155
0.0960
0.0715
0.0775
0.0736
0.0687
0.3781
0.3961
0.4150
0.2886
$ 1.3781
$ 1.3961
$ 1.4150
$ 1.2886
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
Fiscal Year
2016
2017
2018
2019
2020
2021
$ 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
0.0775
0.0700
0.0687
0.0669
0.0638
0.0710
0.0035
0.0035
0.0035
0.0035
0.0035
0.0035
0.0504
0.0495
0.0509
0.0454
0.0518
0.0452
-
-
-
0.0269
0.0229
0.0166
0.0960
0.1270
0.1270
0.1270
0.1270
0.1270
0.0660
0.0638
0.0633
0.0556
0.0730
0.0813
-
-
0.0271
0.0280
0.0253
0.0280
0.2934
0.3138
0.3405
0.3532
0.3673
0.3727
$ 1.2934
$ 1.3138
$ 1.3405
$ 1.3532
$ 1.3672
$ 1.3727
147
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Nine Years Ago
Source: HdL, Coren & Cone
2021
2012
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
$ 185,837,479
1.29%
$ 155,332,597
1.66%
Raintree Tustin LLC
150,903,500
1.05%
Legacy Villas LLC
132,342,076
0.92%
Flight Phase I Owner LLC
113,623,471
0.79%
Irvine Company LLC
95,027,728
0.66%
218,130,508
2.33%
Tustin Market Place
88,084,248
0.61%
Lennar Homes of California
69,100,131
0.48%
Tustin Parc LP
65,246,777
0.45%
Apple Ten Hospitality Ownership Inc
58,442,221
0.41%
Borchard Redhill
58,226,812
0.40%
49,705,576
0.53%
Avalon II California
97,409,550
1.04%
Irvine Apartment Communities LP
86,147,485
0.92%
Ricoh Development
50,094,745
0.53%
PK II Larwin Square SC LP
48,800,223
0.52%
Costco Wholesale Corporation
42,000,279
0.45%
CP II Park Place LLC
33,923,534
0.36%
Tustin Heights SC LP
33,047,879
0.35%
$ 1,016,834,443
7.06%
$ 814,592,376
8.69%
Source: HdL, Coren & Cone
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Millions
$35.00
$30.00
$25.00
$ 20.00
$15.00
$10.00
$5.00
Property Tax Levies and Collections
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Taxes Levied Amount Collected
149
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
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%
2021
13,346,141
13,122,458
98.32%
180,669
13,303,126
99.68%
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
Millions
$35.00
$30.00
$25.00
$ 20.00
$15.00
$10.00
$5.00
Property Tax Levies and Collections
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Taxes Levied Amount Collected
149
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Fiscal Governmental Activities
Year Total
Ended Notes Lease Governmental
June 30 Payable (1) Payable (2) Activities
2012 $ 21,877,282 $ $ 21,877,282
2013 22,816,940 22,816,940
2014 21,404,683 21,404,683
2015 16,404,683 16,404,683
2016 12,303,512 12,303,512
2017 3,202,341 340,324 3,542,665
2018 - 271,162 271,162
2019 199,255 199,255
2020 124,492 124,492
2021 46,761 46,761
Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
(1) In December of 2008 the City executed a note payable to the Tustin Redevelopment Agency in the
amount of $18,881,750 to increase its deposit of probable compensation per court order pending
litigation. As of February 1, 2012, this note became payable to the Successor Agency to the Tustin
Community Redevelopment Agency. See Note 17 for more information.
(2) In February 2017 the City entered into a lease to finance equipment with a present value of $368,356.
Source: LT Debt -City & Water
Revenue Bonds + Bond Premium
150
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Percentage
of Debt
Personal Per
Income Capita
2.12% 673
2.16% 678
2.73% 827
2.44% 752
2.21% 656
1.82% 559
1.63% 508
1.46% 500
1.37% 506
1.27% 492
(3) In May 2011 the City issued $20,760,000 Water Revenue Bonds, 2011 Series A to finance water capital improvement projects.
(4) In March 2012 the City issued $8.91 million of Refunding Water Bonds to defease the outstanding 2003 Water Revenue Bonds.
(5) In October 2013 the City issued $14,045,000 Water Revenue Bonds to finance water capital improvement projects.
(6) In September 2016 the City issued $21.515 million of Refunding Water Bonds to defease the outstanding 2011 Water Revenue
Bonds.
(7) In February 2020 the City issued $14.91 million of Refunding Water Bonds to defease the outstanding 2013 Water Revenue Bonds.
151
Business -type Activity
Water
Water
Water
Water
Water
Total
Total
Revenue
Revenue
Revenue
Revenue
Revenue
Business -type
Primary
Bonds (3)
Bonds (4)
Bonds (5)
Bonds (6)
Bonds (7)
Activity
Government
$ 20,760,000
$ 8,910,000
$ -
$ -
$ -
$ 29,670,000
$ 51,547,282
21,044,310
8,997,129
-
30,041,439
52,858,379
21,034,111
8,205,372
14,160,362
43,399,845
64,804,528
21,023,911
7,398,615
14,111,418
42,533,944
58,938,627
21,013,711
6,571,858
14,062,474
-
41,648,043
53,951,555
-
5,720,101
14,013,530
22,790,666
42,524,297
46,066,962
4,843,344
13,959,586
22,738,061
41,540,991
41,812,153
-
3,931,858
13,905,642
22,685,456
40,522,956
40,722,211
-
2,989,831
-
22,632,852
14,910,000
40,532,683
40,657,175
-
2,023,074
-
22,580,247
14,745,000
39,348,321
39,395,082
Percentage
of Debt
Personal Per
Income Capita
2.12% 673
2.16% 678
2.73% 827
2.44% 752
2.21% 656
1.82% 559
1.63% 508
1.46% 500
1.37% 506
1.27% 492
(3) In May 2011 the City issued $20,760,000 Water Revenue Bonds, 2011 Series A to finance water capital improvement projects.
(4) In March 2012 the City issued $8.91 million of Refunding Water Bonds to defease the outstanding 2003 Water Revenue Bonds.
(5) In October 2013 the City issued $14,045,000 Water Revenue Bonds to finance water capital improvement projects.
(6) In September 2016 the City issued $21.515 million of Refunding Water Bonds to defease the outstanding 2011 Water Revenue
Bonds.
(7) In February 2020 the City issued $14.91 million of Refunding Water Bonds to defease the outstanding 2013 Water Revenue Bonds.
151
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
C�1 Y II•Z�] X11 ILIIJh Y I►1
OVERLAPPING DEBT SCHEDULE
June 30, 2021
2020-21 Assessed Valuation:
Redevelopment Incremental Valuation
Adjusted Assessed Value
OVERLAPPING TAX AND ASSESSMENT DEBT:
$ 14,373,207,288
(3,911,025,948)
$ 10,462,181,340
Total Debt
6/30/21
(1)
% Applicable
City's
Share of
Debt at
6/30/21
Metropolitan Water District
$ 26,830,000
0.440%
$ 118,052
Rancho Santiago Community College District
215,876,119
0.147
317,338
Rancho Santiago Community College District School Facilities Improvement District No.1
159,970,000
0.251
401,525
Irvine Unified School District School Facilities Improvement District No. 1
163,295,000
2.867
4,681,668
Orange Unified School District
177,865,000
0.029
51,581
Santa Ana Unified School District
351,580,064
0.31
1,089,898
Tustin Unified School District School Facilities Improvement District No. 2002-1
40,654,092
46.764
19,011,480
Tustin Unified School District School Facilities Improvement District No. 2008-1
82,195,000
45.203
37,154,606
Tustin Unified School District School Facilities Improvement District No. 2012-1
38,950,000
45.627
17,771,717
Tustin Unified School District Community Facilities District No. 88-1
16,780,000
100
16,780,000
Tustin Unified School District Community Facilities District No. 06-1
13,755,000
100
13,755,000
City of Tustin Community Facilities Districts
93,845,000
100
93,845,000
Irvine Ranch Water District Improvement Districts
456,589,860
5.075 - 88.055
55,875,862
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
260,853,727
OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Orange County General Fund Obligations
$ 381,885,000
2.193%
$ 8,374,738
Orange County Pension Obligations Bonds
485,318,204
2.193
10,643,028
Orange County Board of Education General Fund Obligations
12,310,000
2.193
269,958
Orange Unified School District Certificates of Participation
21,191,594
0.029
6,146
Orange Unified School District Benefit Obligations
63,055,000
0.029
18,286
Santa Ana Unified School District General Fund Obligations
58,729,304
0.31
182,061
TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT
19,494,217
OVERLAPPING TAX INCREMENT DEBT (Successor Agencies)
$ 117,365,000
0.001-100.%
48,225,691 (2)
TOTAL OVERLAPPING DEBT
328,573,635 (3)
TOTAL DIRECT DEBT
46,761
COMBINED TOTAL DEBT $ 328,620,396
(1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by
determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.
(2) Effective February 1, 2012, the former Redevelopment Agency was dissolved. The Successor Agency took over assets and liability of the former
Redevelopment agency. See Note 17 for more information
(3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded capital lease
Ratios to 2020-21 Assessed Valuations:
Total Overlapping Tax and Assessment Debt 1.81%
Total Direct Debt 0.00%
Combined Total Debt 2.29%
Ratios to Redevelopment Incremental Valuations ($3,911,025,948):
Total Overlapping Tax Increment Debt 1.23%
Source: California Municipal Statistics, Inc.
152
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153
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Assessed valuation
Conversion percentage
Adjusted assessed valuation
Debt limit percentage
Debt limit
Total net debt applicable to limitation
Legal debt margin
Total debt applicable to the limit
as a percentage of debt limit
CITY OF TUSTIN
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Fiscal Year
2012
2013
2014
2015
$ 7,159,851,000
$ 7,270,451,000
$ 7,418,821,000
$ 7,790,632,000
25%
25%
25%
25%
1,789,962,750
1,817,612,750
1,854,705,250
1,947,65 8,000
15%
15%
15%
15%
268,494,413
272,641,913
278,205,788
292,148,700
$ 268,494,413
$ 272,641,913
$ 278,205,788
$ 292,148,700
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
154
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
Fiscal Year
2016
2017
2018
2019
2020
2021
$ 8,218,228,000
$ 8,566,757,000
$ 8,995,570,000
$ 9,405,874,000
$ 9,819,597,000
$ 10,285,119,000
25%
25%
25%
25%
25%
25%
2,054,557,000
2,141,689,250
2,248,892,500
2,351,468,500
2,454,899,250
2,571,279,750
15%
15%
15%
15%
15%
15%
308,183,550
321,253,388
337,333,875
352,720,275
368,234,888
385,691,962.50
$ 308,183,550
$ 321,253,388
$ 337,333,875
$ 352,720,275
$ 368,234,888
$ 385,691,963
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
155
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
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
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
14,284,473
4,359,752
880,000
1,503,095
1.83
2020
18,257,313
14,022,416
4,234,897
860,000
1,474,120
1.81
2021
19,083,377
15,889,077
3,194,300
1,050,000
1,251,630
1.39
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.
Source: Proprietary Fund (ACFR) & Debt Service Schedules
156
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
Source: HdL Coren & Cone, LLC
City of Tustin Population
100,000
80,000
60,000
40,000 I
20,000
Per Capita Personal Income
$50,000
$40,000
$30,000 -
$20,000
$10,000
$-
Personal Income (in Thousands)
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
T<sem ti°�" T'S' T(y' '°' '°' '°' '°' ti°�° ti°may
County of Orange Unemployment Rate
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
y1\ yw y°' ti0 1y
,ti0 ,LO ,y0 ,10 ,10 ,10 ,ti0 .10 .LO ,LO
157
Personal
Per Capita
County of Orange
Calendar
City of Tustin
Income
Personal
Unemployment
Year
Population
(in Thousands)
Income
Rate
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%
2021
80,009
3,112,332
38,899
8.30%
Source: HdL Coren & Cone, LLC
City of Tustin Population
100,000
80,000
60,000
40,000 I
20,000
Per Capita Personal Income
$50,000
$40,000
$30,000 -
$20,000
$10,000
$-
Personal Income (in Thousands)
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
T<sem ti°�" T'S' T(y' '°' '°' '°' '°' ti°�° ti°may
County of Orange Unemployment Rate
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
y1\ yw y°' ti0 1y
,ti0 ,LO ,y0 ,10 ,10 ,10 ,ti0 .10 .LO ,LO
157
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
2021 2012
158
Percent of
Percent of
Number of
Total
Number of
Total
Employer
Employees
Employment
Employees
Employment
Tustin Unified School District
2,933
7.05%
1,600
3.92%
Schools First Federal Credit Union
1,082
2.60%
Costco Wholesale Corporation
658
1.58%
450
1.10%
New American Funding
578
1.39%
Foothill Regional Medical Center
575
1.38%
City of Tustin
406
0.98%
300
0.73%
Youngs Market Company LLC
350
0.84%
2,100
5.14%
Avid Bioservices, Inc.
282
0.68%
Kaiser Foundation Hospitals
200
0.48%
Logomark Inc
196
0.47%
Ricoh Electronics Inc
0.00%
1,384
3.39%
Lamppost Pizza Corp
0.00%
1,400
3.43%
Toshiba America Medical Systems
0.00%
900
2.20%
Rockwell Collins
0.00%
600
1.47%
Safmarine
0.00%
400
0.98%
Cash Plus, Inc.
0.00%
250
0.61%
Sources: State of California Employment Development Department
City of Tustin
US Census Bureau
158
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
FULL-TIME CITY EMPLOYEES
BY FUNCTION
Last Ten Fiscal Years
The City contracts with the OC Fire Authority for fire services.
Source: City of Tustin Human Resource Department
159
Fiscal Year
Function
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
General Government
29
26
35
33
38
35
39
42
42
45
Community Development
17
15
15
16
19
19
19
20
20
23
Public Works
51
40
47
48
45
48
47
49
50
53
Police
139
131
140
141
141
137
142
140
143
150
Parks and Recreation
15
13
13
14
14
17
17
17
16
17
RDA/Successor Agency
5
3
-
-
-
-
-
-
-
-
Water
25
17
17
18
19
18
18
19
17
21
Total
281
245
267
270
276
274
282
287
288
309
The City contracts with the OC Fire Authority for fire services.
Source: City of Tustin Human Resource Department
159
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Function
CITY OF TUSTIN
CAPITAL ASSET STATISTICS
BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
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
129.1
129.1
130.1
130.7
131.3
131.3
132.6
132.6
Street Lights
3,544
3,544
3,640
3,640
3,680
3,700
3,700
3,740
3,797
3,789
Traffic Signals
118
118
121
121
125
126
128
128
128
131
Storm Drain (miles)
49.2
49.2
51.2
51.4
51.8
52.9
53.9
53.9
53.9
54.8
Street Trees
15,786
16,097
16,073
15,815
15,706
15,542
15,574
15,042
14,606
14,546
Parks and Recreation
Parks
13
13
13
13
14
14
14
14
16
16
Parks (acres)
98.5
98.5
98.5
98.5
116.0
116.0
116.0
116.0
173.5
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
14,172
14,181
14,148
14,099
14,109
14,104
14,241
14,328
14,325
Average daily consumption
13,491
13,601
13,975
13,975
9,975
10,601
11,770
11,098
11,098
12,494
Reservoirs
6
6
6
6
6
6
6
6
6
6
Wells
13
13
13
13
13
14
14
14
14
14
Water Main (miles)
178
178
178
178
178
178
178
178
178
178
Fire Hydrants
2,201
2,201
1,911
1,911
1,911
1,911
1,911
1,911
1,911
1,911
(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
160
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
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161
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
WATER CONSUMPTION BY CUSTOMER TYPE
Last Ten Fiscal Years
Fiscal Year
Type of Customer 2012 2013 2014 2015
Residential
Apartment/Multiple Units
Commercial
Fire Services
Irrigation
Government
Restaurants
Hospitals
Non -Profit
Industrial
Hotel/Motels
All Others
2,733,482
2,815,322
2,905,069
2,603,538
1,172,823
1,158,480
1,163,159
1,139,321
305,638
308,376
321,125
310,585
1,242
818
577
837
149,957
151,965
167,346
155,766
236,658
268,581
276,292
229,262
53,183
53,461
52,520
51,658
12,204
12,442
7,634
10,018
44,488
44,476
45,920
41,601
58,298
57,462
60,438
59,292
8,514
10,417
12,866
21,379
147,552
82,716
87,785
71,324
4,924,039
4,964,516
5,100,731
4,694,581
Measured in hundred cubic feet.
Source: City of Tustin Finance Department (Julie Interante)
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
Water Consumption By Customer
2012 2013 2014
■ Residential m Apartment/Multiple Units
162
2015 2016
Commercial ■ Fire Services Irrigation Governmf
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
Fiscal Year
2016 2017 2018 2019 2020 2021
1,934,761
2,119,716
2,398,744
2,199,236
2,264,772
2,499,132
1,003,808
987,688
1,039,878
1,029,284
1,026,696
1,199,638
259,459
271,649
274,943
267,541
255,245
308,452
646
504
589
564
475
595
96,082
105,750
146,941
131,579
127,429
156,414
134,446
162,843
195,695
177,321
158,344
239,870
45,069
44,947
45,086
45,905
37,786
30,574
11,166
11,276
10,536
13,102
10,158
10,256
22,989
26,751
34,539
32,021
28,491
28,792
40,407
45,071
45,062
44,693
37,520
43,009
23,387
25,185
28,908
32,594
32,754
33,598
68,830
70,721
75,208
76,873
70,777
9,947
3,641,050
3,872,101
4,296,129
4,050,713
4,050,447
4,560,277
2017 2018 2019 2020 2021
ent r Restaurants ■ Hospitals in Non -Profit r Industrial r Hotel/Motels ■ All Others
163
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
CITY OF TUSTIN
WATER RATES
Last Ten Fiscal Years
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) The City Council adopted Resolution No. 20-04 to replace the tiered rate structure with a rate structure that consists a
fixed component based on the size of water meter and a variable component based on usage. The new rate structure went
into effect on February 1, 2020.
(3) No longer in effect.
Source: City of Tustin Finance Department
164
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
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
2021
41.75
2.93
2.93
2.93
2.93
2.93
2.93
2.93
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
2021 (3)
-
-
-
-
-
-
-
-
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) The City Council adopted Resolution No. 20-04 to replace the tiered rate structure with a rate structure that consists a
fixed component based on the size of water meter and a variable component based on usage. The new rate structure went
into effect on February 1, 2020.
(3) No longer in effect.
Source: City of Tustin Finance Department
164
DocuSign Envelope ID: 062B9853-6381-4FOF-80B6-83CA408FF28B
Water Customer
Tustin Unified School District
Tustin Village Community Association
Tustin Acres Community Association
Raintree Tustin LLC
City of Tustin
Tustin Parc
CMC Association Management
Vio Tustin Investment LP
Schroeder Property Management
Westchester Park LP
Briarwood Investment Co. Ltd.
Saddleback Mobilodge
Curtis Grieder
Sycamore Gardens HOA
Cadigan Communites - Monterey Pines
Key Inn
Ricoh Electronics, Inc.
New Villa Valencia MHP
Waterstone Gardens Investments LP
Regency West
Arnel Management (Walnut East)
15701 TV Way Partnership
Stonebrook Lmtd.
Tustin Village Com.Assn
Contesta Immobilien Gmbh & Co
AT& T Services, Inc.
HSA LP
CalTrans - District 12
Tustin Plaza Center, LP
SKB-Tustin LLC
Red Hill Association
Sierra Corporate Management
Trinity United Presbyterian
Avalon 2 Calif 1 LP
Tustin Hospital Medical Center
Tustin Place HOA
Valencia Gardens Owner LLC
Total Water Sales
Total Water Revenues
Source: City of Tustin Finance Department
CITY OF TUSTIN
WATER CUSTOMERS
Current Fiscal Year and Nine Years Ago
2021
2012
Percent of
Percent of
Water
Total Water
Water
Total Water
Charges
Revenues
Charges
Revenues
700,872
3.71%
$471,855
3.80%
251,296
1.33%
237,374
1.26%
46,659
0.38%
183,209
0.97%
181,249
0.96%
128,889
1.04%
85,794
0.45%
74,873
0.40%
38,992
0.31%
72,165
0.38%
70,207
0.37%
38,895
0.31%
67,603
0.36%
66,978
0.35%
27,404
0.22%
62,575
0.33%
58,482
0.31%
56,715
0.30%
29,388
0.24%
55,465
0.29%
37,171
0.30%
55,041
0.29%
24,659
0.20%
54,734
0.29%
68,087
0,55%
54,208
0.29%
24,033
0.19%
52,468
0.28%
51,994
0.28%
51,812
0.27%
51,225
0.27%
30,955
0.25%
47,723
0.25%
46,700
0.25%
24,610
0.20%
43,666
0.23%
74,379
0.60%
59,167
0.48%
56,450
0.45%
37,930
0.31%
36,655
0.30%
33,974
0.27%
30,075
0.24%
28,703
0.23%
28,453
0.23%
25,101
0.20%
24,208
0.19%
23,274
0.19%
$ 2,734,427
14.47% $
1,449,966
11.67%
$ 18,891,433
165
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
CITY OF TUSTIN
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
Public Safety
Moving Citations
Parking Violations
Arrests
Calls for Service
Public Works
Number of Building Permits Issued
Number of Building Inspections Completed
Transportation Permits
Annual
Single
Encroachment Permits
Utility Permits
Curb Miles Swept
Community Services
Rentals
Classes
General Government
New Hires
Retiree/separations
Fiscal Year
2012
2013
2014
2015
5,161
3,748
3,499
5,444
8,323
7,754
7,136
11,994
2,177
2,420
2,139
2,155
27,774
27,954
29,527
33,114
1,193
1,130
1,517
1,828
8,019
5,934
5,655
6,344
50
50
59
55
104
99
89
88
83
123
148
124
48
55
66
60
20,872
20,003
21,118
20,773
1,176
1,147
1,138
1,117
1,555
1,544
1,508
1,265
37
60
65
49
27
82
68
30
(1) Prior to 2019, Community Services Classes include Classes that were canceled but offered.
Fiscal year 2019 on reflects the classes that were held.
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
4,000
3,000
2,000
1,000
0
Public Safety
ti�y� ti�y� ti�y� `ti�y� ti�y� tidy^ ti�y� ti�y� ti��o ti��y
■ Moving Citations ■ Parking Violations ■ Arrests ■ Calls for Service
Public Works - Permits
tk
■ Number of Building Permits Issued Transportation Permits (Annual) ■ Transportation Permits (Single)
■ Encroachment Permits Utility Permits
166
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
Fiscal Year
2016
2017
2018
2019
2020
2021
6,982
5,590
4,762
4,355
2,811
3,079
13,855
14,514
16,836
17,017
12,609
16,256
2,494
2,343
2,302
2,463
2,448
2,774
36,618
35,172
36,571
38,326
38,288
37,616
2,334
2,430
2,078
2,425
1,915
1,560
11,947
11,768
9,816
11,348
15,884
9,907
66
56
46
77
74
73
82
208
137
127
104
64
147
107
155
136
161
117
59
62
71
65
57
65
22,087
20,589
20,270
22,162
20,766
20,766
1,253
1,494
1,483
1,326
550
187
1,389
1,213
1,160
854
805
362
47
67
48
62
46
24
38
47
63
56
37
24
2,000
1,500
1,000
500
0
a Rentals ■ Classes
General Government
Community Services
ti°tip ��y\ ti°�° ti°may
ti
100
80
60
40
20
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
-New Hires -Retiree/separations
167
DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
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DocuSign Envelope ID: 062B9853-6381-4FOF-8OB6-83CA408FF28B
DavisFarr
CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Korman Avenue I Suite 1100 1 Irvine, CA 92612
Main: 949.474.2020 1 Fax: 949.263.5520
Report on Internal Control Over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards
City Council
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 activities, 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, 2021, 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 15, 2021.
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
City's internal control. Accordingly, we do not express an opinion on the effectiveness of 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 entity'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. We
consider the following deficiency in internal control to be a significant deficiency.
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(1) Prior Period Restatements
Auditing standards suggest that the presence of a material prior period adjustment to
correct the prior year financial statements is an indication of an internal control
weakness that existed in prior periods. During the fiscal year ended June 30, 2021,
City staff identified this risk of potential prior period misstatement and conducted a
comprehensive review of land held for resale and determined that land had been
legally transferred to the City in 2010 and 2012. However, these land transfers had
not been recorded in the City's accounting records in prior years. Therefore, an
adjustment was initiated by staff to correct the City's accounting records, which
resulted in an increase in the value of land held by the City and was properly recorded
as a prior period restatement.
Additionally, during the audit, it was discovered that affordable housing loans to home
buyers had been legally transferred in prior years to the Housing Authority, which
serves as the Housing Successor Agency to the former Tustin Community
Redevelopment Agency. However, the housing loans receivable were not recorded in
the Housing Authority's accounting records in prior years. Therefore, an adjustment
was made to properly record the housing loans, which resulted in a prior period
restatement.
Recommendation
The City should ensure that the internal controls that resulted in the City's detection
of prior period misstatements are maintained in order to ensure that material
transactions are accounted for in the appropriate fiscal period and to provide a
reasonable opportunity to detect and correct prior period accounting when warranted.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether 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 entity'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 entity's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Irvine, California
December 15, 2021
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1 DavisFarr
CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Karman Avenue 1 Suite 1100 1 Irvine, CA 92612
Main: 949.474.2020 1 Fax: 949.263.5520
INDEPENDENT ACCOUNTANT'S REPORT
The Honorable Mayor and City Council
City of Tustin, California
We have performed the procedures enumerated below on the City of Tustin, California
(City) appropriations limit worksheets for compliance with the requirements of Section 1.5
of Article XIIIB of the California Constitution for the year ended June 30, 2021. The City is
responsible for compliance with Section 1.5 of Article XIIIB of the California Constitution.
The City has agreed to and acknowledged that these procedures are appropriate to meet
the intended purpose of evaluating compliance with the requirements of Section 1.5 of
Article XIIIB of the California Constitution and the League of California Cities publication
entitled Article XIIIB Appropriations Limitation Uniform Guidelines for the year ended June
30, 2021. This report may not be suitable for any other purpose. The procedures
performed may not address all the items of interest to a user of this report and may not
meet the needs of all users of this report and, as such, users are responsible for
determining whether the procedures performed are appropriate for their purposes.
The procedures and the associated findings are as follows:
1. We obtained the worksheets referred to above and compared the limit and
annual adjustment factors included in those worksheets 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
worksheets to those that were selected by a recorded vote.
Results: No exceptions were noted as a result of our procedures.
2. We recalculated the mathematical computations reflected in the City's
worksheets.
Results: No exceptions were noted as a result of our procedures.
3. We compared the current year information used to determine the current year
limit and agreed it to worksheets prepared by the City and to information
provided by the State Department of Finance.
Results: No exceptions were noted as a result of our procedures.
4. We compared the amount of the prior year appropriations limit presented in the
worksheets to the amount adopted by the City Council for the prior year.
Results: No exceptions were noted as a result of our procedures.
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The Honorable Mayor and City Council
City of Tustin, California
Page Two
We were engaged by the City to perform this agreed-upon procedures engagement and
conducted our engagement in accordance with standards established by the American
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 worksheets referred to above. 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.
We are required to be independent of the City and to meet our other ethical responsibilities,
in accordance with the relevant ethical requirements related to our agreed-upon procedures
engagement.
This report is intended solely for the information and use of the Management of the City of
Tustin, California and is not intended to be, and should not be, used by anyone other than
the specified party.
c.LP
Irvine, California
December 15, 2021
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0 1 DavisFar r
CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Korman Avenue I Suite 1100 1 Irvine, CA 92612
Main: 949.474.2020 1 Fax: 949.263.5520
Independent Auditor's Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of the Air Ouality
Improvement Special Revenue Fund Performed
in Accordance with Government Auditing Standards
City Council
City of Tustin
Tustin, California
Report on the Financial Statements
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 City of Tustin, California (the City) including the Air Quality Improvement
Special Revenue Fund (the Fund) of the City, as of and for the year ended June 30, 2021, 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 15, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the Fund's 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 entity'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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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's Fund 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.
Such provisions include those provisions of laws and regulations identified in Assembly Bill
2766 Chapter 1705 [Health and Safety Code Sections 44220 through 44247] (the Guide).
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 and the Guide in considering
the City's internal control and compliance. Accordingly, this communication is not suitable for
any other purpose.
Irvine, California
December 15, 2021
2
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DavisFarr
CERTIFIED PUBLIC ACCOUNTANTS
City Council
City of Tustin
Tustin, California
Davis Farr LLP
18201 Von Karman Avenue I Suite 1100 1 Irvine, CA 92612
Main: 949.474.2020 1 Fax: 949.263.5520
REQUIRED AUDIT COMMUNICATIONS
We have audited the financial statements of the governmental activities, the business -type
activities, each major fund, and the aggregate remaining fund information of the City of Tustin
("City") for the year ended June 30, 2021. Professional standards require that we provide
you with information about our responsibilities under generally accepted auditing standards,
Government Auditing Standards and the Uniform Guidance, as well as certain information
related to the planned scope and timing of our audit. We have communicated such information
in our letter to you dated July 13, 2021. Professional standards also require that we
communicate to you the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by City are described in Note 1 to the financial statements.
The City implemented Governmental Accounting Standards Board ("GASB") Statement No.
84 related to the Fiduciary Funds. The cumulative effect of the implementation of GASB
Statement No. 84 as of the beginning of the year is described further in Note 20 to the financial
statements. The City also implemented GASB Statement No. 98 to replace the term and
acronym for Comprehensive Annual Financial Report with Annual Comprehensive Financial
Report (ACFR). We noted no transactions entered into by 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 were:
• Judgments involving the calculation of the pension liability.
• Judgments involving the calculation of the other post employment benefit (OPEB)
liability.
• Judgments involving estimates of the claims payable liabilities related to general
liability and workers' compensation claims.
Management's estimate of the pension liability, OPEB liability and claims payable liability
are based on an actuarial valuation reports. We evaluated the key factors and assumptions
used to develop the pension liability, OPEB liability and claims payable liability in determining
that it is reasonable in relation to the financial statements taken as a whole.
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Certain financial statement disclosures are particularly sensitive because of their significance
to financial statement users. The most sensitive disclosures affecting the financial statements
were:
• Disclosures of the net pension liability and related amounts
• Disclosures of the net OPEB liability and related amounts
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and
completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are clearly trivial, and communicate them to the
appropriate level of management. Management has corrected all such misstatements. None
of the misstatements detected as a result of audit procedures and corrected by management
were material with the exception of a correction of receivables and cash in the CFD
Construction Fund.
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 auditor's report. We are pleased to report that
no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the
management representation letter dated December 15, 2021.
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.
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Other Matters
We applied certain limited procedures to Schedule of Proportionate Share of the Net Pension
Liability - Safety Plan, Schedule of Contributions - Safety Plan, Schedule of Changes in the
Net Pension Liability and Related Ratios - Miscellaneous Plan, Schedule of Contributions -
Miscellaneous Plan, Schedule of Changes in the Net OPEB Liability and Related Ratios - OPEB,
Schedule of Contributions - OPEB, Annual Money -Weighted Rate of Return on Investments -
OPEB, and the Budgetary Comparison Schedules for the General Fund and the Housing
Authority Fund, which are required supplementary information (RSI) that supplements the
basic 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, 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 financial statements or to the financial statements themselves.
We were not engaged to report on the introductory section and statistical section, which
accompany the financial statements but are not RSI. Such information has 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 it.
Restriction on Use
This information is intended solely for the information and use of City Council and
management of the City and is not intended to be, and should not be, used by anyone other
than these specified parties.
Irvine, California
December 15, 2021
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