HomeMy WebLinkAbout04 FISCAL YEAR 2022-2023 AUDIT REPORTSDocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9 4
Agenda Item
Reviewed: Ds
'} AGENDA REPORT City Manager
Finance Director
MEETING DATE:
TO:
FROM:
SUBJECT:
SUMMARY:
FEBRUARY 20, 2024
NICOLE BERNARD, ACTING CITY MANAGER
JENNIFER KING, FINANCE DIRECTOR/CITY TREASURER
FISCAL YEAR 2022-2023 AUDIT REPORTS
The financial statement audit for the 2022-2023 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 January 25, 2024.
RECOMMENDATION:
It is recommended that the City Council receive and file the fiscal year 2022-2023 audit reports.
FISCAL IMPACT:
The total contractual cost of the annual audit with Davis Farr LLP is $44,400.Of this amount, $8,880
is charged to the Water Enterprise Fund, and $35,520 is charged to the General Fund. In addition,
$3,300 was paid to CalPERS and charged to the General Fund for the 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, and other
funds that are not permitted to be reported as separate funds for financial statement reporting
purposes.
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Fiscal Year 2022-2023 Audit Reports
February 20, 2024 Page 2 of 3
Total General Fund revenues excluding transfers -in amounted to approximately $98.7 million,
which reflects a decrease of $42 million (29.9%) compared to prior year revenues. The decreases
in General Fund revenues were attributed to the following factors:
• One-time gain of $56 million from sale of land during last fiscal year 2021-2022.
• Taxes increased $3.7 million primarily due to higher sales tax and property tax revenues.
Sales tax revenue totaled approximately $35.9 million, an increase of $1.5 million or
4.4% from higher consumer spending. Property tax revenue totaled $27.3 million, an
increase of $1.8 million or 6.9%.
• Program and fee revenues such as licenses and permits, charges for services and
rental income experienced a total increase of $1.7 million as service demands grew
during the year.
• Net increase of $1.7 million from a combination of developer contribution and profit
participating revenues.
• Intergovernmental revenue decreased by $1.5 million mainly due to the reclassification
of CDBG fund from the General Fund to a special revenue fund starting this fiscal year.
• Investment earnings increased $8.3 million during 2023, largely due to improved market
conditions.
Total General Fund expenditure amounted to approximately $90.7 million, an increase of $4
million (4.6%) compared to prior year. This increase was primarily related to labor obligations,
increased public service demands, and inflation adjustments.
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, 2022.
This was the thirty-sixth (36) 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, 2023 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 separate letter 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 corrected and uncorrected material misstatements. We are happy to report that
no material misstatements have been identified by the auditors.
Jennifer Farr, the audit partner from Davis Farr LLP discussed the results of the audit with the
Audit Commission on January 25, 2024.
Jennifer King
Finance Director/City Treasurer
Elsa Chow
Deputy Director - Financial Services
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Fiscal Year 2022-2023 Audit Reports
February 20, 2024
Attachments:
1. Annual Comprehensive Financial Report (ACFR)
2. Report on Appropriations Limit Calculation
3. Report on Compliance Applicable to the Air Quality Improvement Fund
4. Required Audit Communications
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At&_a4..� --it 1
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CITY OF TUSTIN, CALIFORNIA
FISCAL YEAR ENDED JUNE 307 2023
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CITY OF TUSTIN, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED DUNE 30, 2023
Prepared By: Finance Department
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CITY OF TUSTIN
Annual Comprehensive Financial Report
For the Year Ended June 30, 2023
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 xiii
FINANCIAL SECTION:
Independent Auditor's Report 1
Management's Discussion and Analysis
(Required Supplementary Information - Unaudited) 4
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Position 19
Statement of Activities 20
Fund Financial Statements:
Governmental Funds:
Balance Sheet
22
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position
23
Statement of Revenues, Expenditures and Changes in Fund Balances
24
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities
25
Proprietary Fund:
Statement of Net Position 26
Statement of Revenues, Expenses and Changes in Net Position 27
Statement of Cash Flows 28
Fiduciary Funds:
Statement of Fiduciary Net Position 30
Statement of Changes in Fiduciary Net Position 31
Notes to Basic Financial Statements 32
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CITY OF TUSTIN
Annual Comprehensive Financial Report
For the Year Ended June 30, 2023
Table of Contents
Page
Number
REQUIRED SUPPLEMENTARY INFORMATION: 91
Safety Plan:
Schedule of Proportionate Share of the Net Pension Liability
92
Schedule of Contributions
94
Miscellaneous Plan:
Schedule of Changes in the Net Pension Liability and Related Ratios
96
Schedule of Contributions
98
Other Post -Employment Benefit Plan (OPEB):
Schedule of Changes in the Net OPEB Liability and Related Ratios
100
Schedule of Contributions - OPEB
101
Annual Money -Weighted Rate of Return on Investments
102
Budgetary Comparison Schedules:
General Fund
103
Housing Authority Special Revenue Fund
104
American Rescue Plan Act (ARPA) Special Revenue Fund
105
Park Acquisition and Development Special Revenue Fund
106
Note to Required Supplementary Information 107
SUPPLEMENTARY INFORMATION: 108
Other Governmental Funds:
Combining Balance Sheet
III
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
113
Schedules of Revenues, Expenditures and Changes in Fund
Balance - Budget and Actual:
Gas Tax Special Revenue Fund
115
Community Development Block Grant (CDBG) Fund
116
Asset Forfeiture Special Revenue Fund
117
Air Quality Special Revenue Fund
118
Supplemental Law Enforcement Special Revenue Fund
119
Special Tax B Special Revenue Fund
120
Road Maintenance and Rehabilitation Fund
121
Solid Waste Special Revenue Fund
122
Measure M Special Revenue Fund
123
Custodial Funds:
Combining Statement of Fiduciary Net Position — Custodial Funds 124
Combining Statement of Changes in Fiduciary Net Position — Custodial Funds 125
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CITY OF TUSTIN
Annual Comprehensive Financial Report
For the Year Ended June 30, 2023
Table of Contents
Page
Number
STATISTICAL SECTION (UNAUDITED): 126
Description of Statistical Section Contents 127
Financial Trends:
Net Position by Component - Last Ten Fiscal Years 128
Changes in Net Position - Expenses and Program Revenues - Last Ten Fiscal Years 130
Changes in Net Position - General Revenues - Last Ten Fiscal Years 132
Fund Balances of Governmental Funds - Last Ten Fiscal Years 134
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 136
Revenue Capacity:
Assessed Value and Estimated Actual Values of Taxable Property - Last Ten Fiscal Years 138
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 140
Principal Property Taxpayers - Current Year and Nine Years Ago 142
Property Tax Levies and Collections - Last Ten Fiscal Years 143
Debt Capacity:
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 144
Overlapping Debt Schedule 146
Legal Debt Margin Information - Last Ten Fiscal Years 147
Pledged -Revenue Coverage - Last Ten Fiscal Years 149
Demographic and Economic Information:
Demographic and Economic Statistics - Last Ten Calendar Years 150
Principal Employers - Current Year and Nine Years Ago 151
Operating Information:
Full -Time City Employees by Function - Last Ten Fiscal Years 152
Capital Asset Statistics by Function - Last Ten Fiscal Years 153
Water District Schedules for Revenue Capacity:
Water Consumption by Customer Type - Last Ten Fiscal Years 154
Water Rates - Last Ten Fiscal Years 156
Water Customers - Current Year and Nine Years Ago 157
Operating Indicators by Function — last Ten Fiscal Years 158
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:IIIIIIIMIICI'/.`17M111
0
ANNUAL COMPREHENSIVE
FINAN(IAL REPORT
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CITY OF TUSTIN
Elected and Administrative Officials
As of June 30, 2023
AUSTIN LUMBARD
Mayor
RYAN GALLAGHER
Councilmember
LETITIA CLARK
Mayor Pro Tem
REBECCA "BECKIE"
GOMEZ
Councilmember
AUDIT COMMISSION
Jered Elmore, Chair
John Wende, Chair Pro Tern
Daniel Erickson
Adrian Henson
Kristin Manna
RAY SCHNELL
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
Jennifer King Finance Director / City Treasurer
Erica N. Yasuda City Clerk
Stu Greenberg Chief of Police
Christopher Koster Director, Economic Development
Derick Yasuda Director, Human Resources
Chad Clanton Director, Parks & Recreation Services
Douglas S. Stack Director, Public Works / City Engineer
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FINANCE DEPARTMENT
Remembering what connects us.
December 21, 2023
To the Honorable Mayor, Members of the City Council
and Citizens of the City of Tustin:
It is our pleasure to submit the Annual Comprehensive Financial Report (ACFR) of the
City of Tustin for the fiscal year ended June 30, 2023.
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 an absolute
assurance that the financial statements will be free from material misstatements.
The City of Tustin's financial statements for the year ended June 30, 2023, 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, 2023, were
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
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fiscal year ended June 30, 2023, 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 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
population at 79,558 as of January 1, 2023, a decrease of about 0.2% from 2022. Most
cities in Orange County showed minor decreases in population, with the County of
Orange's total population decreasing by 0.5%. The California statewide population also
decreased by 0.4% as the state continues to experience declining birth rates and aging
baby boomer generation. Also contributing to the decline in population is the fact that
affordable housing remains 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 CounciVAdministrator form of
city government was adopted in 1965 and modified to the CounciVCity Manager form in
1981. Council members serve staggered, four-year terms, with a two -consecutive -term
Limit. The Mayor was selected by the City Council from among its members 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. In 2021, the City code was amended to implement
by -district elections for four council members and established the Office of the Mayor to
be elected at -large starting in year 2022. In November 2022, a Council member for
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Council District 3 and Mayor were elected in the general municipal election. The Council
Members for Council Districts 1, 2, and 4 will be elected in the general municipal election
in November 2024.
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.
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 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 in the fund's approved appropriations.
ECONOMIC OUTLOOK
As the nation emerged from the pandemic, household spending, particularly a shift back
to experience and services, continues to grow, although at a slower pace than the
double-digit increases seen during the initial pandemic recovery. In Fiscal Year 2022-
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2023, many economic challenges such as inflation, labor shortage, and the more
expensive mortgage rates remain prevalent. Low employment rate and inflation have
been key driving forces behind the Federal Open Market Committee (FOMC)'s decision
to increase the federal funds rate 500% dated back to the summer of 2022. However,
inflation continues to be a concern. Looking ahead, tightening household budget, higher
housing costs, increasing labor costs, and continuing inventory issues are all contributing
to a slower economic outlook for the foreseeable future.
The City's year one of the biennial budget reflects an increase of $1.9 million in General
Fund revenues in Fiscal Year 2023-2024 as compared to the amendment budget from
Fiscal Year 2022-2023. The budgeted revenues reflect a slower or flat growth trend in
sales tax receipts as well as a steady increase in property tax revenue. Despite its slower
growth, local sales tax revenue has seen a significant increase over the pre -pandemic
periods. Activities for the City's top three revenue sources are briefly described below:
• Sales tax revenue is the General Fund's largest revenue source. As consumer
demands remain stable, sales tax revenue is projected to increase by one to three
percent each year.
• Property tax revenue is the General Fund's second largest revenue source. This
revenue is estimated to increase by three to four percent per year due to projected
increases in assessed property valuations and on -going development.
• Departmental revenues primarily consist of revenues generated by the Parks and
Recreation and Community Development Departments. Building and permit fees
are projected to return to the normal pace as certain major development activities
were completed over the past year.
The General Fund expenditures are projected to increase by $1.7 million over the Fiscal
Year 2022-2023 amended budget. Major factors contributing to this increase are
contractually obligated salary increases; higher annual required contributions toward
the City's pension obligations; and an across-the-board increase in most contracts for
services, including fire, animal services, and other professional services.
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MAJOR ECONOMIC DEVELOPMENTS
Tustin Legacy
Development at Tustin Legacy, the City's newest community, continues to move
forward. Staff are 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 the 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:
• Senior Living — The City entered into an Exclusive Negotiating Agreement (ENA)
with Confluent Senior Living and Morningstar Senior Living for the development
of MorningStar at Tustin Legacy, an approximately 283,000-square-foot, large-
scale senior living community. The project will feature 145 independent living
units, 60 assisted living units, a secure memory care wing with 28 supportive
units, as well as 29 adjacent single -story cottages. MorningStar at Tustin Legacy
is anticipated to set the new gold standard for Class A, luxury senior living in
Orange County, California as a community that integrates with the character of
the surrounding 1,600-acre Tustin Legacy community, while delivering innovative
and progressive design, and technology for the seniors of today and the future.
• Residential Development —The Landing at Tustin Legacy, an award -winning 400
for sale home community by Brookfield, is almost "sold out". It offers three stylish
home collections including contemporary elevator -served flats, stylish
townhomes, and sophisticated single-family homes, all with flex spaces, offices,
decks, smart home technology, and curated designer finishes. The final build -out
will be completed approximately two years earlier than projected.
• South Orange County Community College District's (SOCCCD) Advanced
Technology and Education Park (ATEP) campus — The City is coordinating
development with SOCCCD of the Saddleback@ATEP project, the second
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education project on the campus. Groundbreaking was held in March 2023 and
the new complex with two buildings will house Saddleback College's Advanced
Transportation department and Culinary Arts department. Estimated opening is
in year 2025. The City is also coordinating development with SOCCCD of the
first non-SOCCCD project — the Goddard School, a 14,400-square-foot
educational preschool. The presence of the Goddard School adjacent to the
community college campus will provide opportunities for learning and
development for both the children in attendance and the community college
students. Estimated opening is early 2024. Finally, the City is working with
SOCCCD to finalize design and entitlements for the Advantech North America
Headquarters Campus at ATEP, which will feature an approximately 109,000-
square-foot headquarter building and an approximately 79,000-square-foot
research and development building.
Central Tustin
• The Jessup —In January 2023, the City Council approved a request from Intracorp
Homes to develop The Jessup residential community. The Jessup community
includes a request to demolish two existing 2-story office buildings and construct
a new, multifamily residential development at 17802 and 17842 Irvine
Boulevard. The project includes 40, three story residential units (including two
very -low-income affordable units) consisting of eighteen duplexes (36 units) and
four single-family residences. Each unit includes a fully enclosed, two -car garage
(80 total parking stalls), and the site includes ten uncovered guest parking spaces.
The Jessup is currently under construction.
Transitional Housing
• House of Ruth — Family Promise of Orange County's House of Ruth, with seven
apartment -style units ranging in size from one to three bedrooms, completed
construction and opened in November 2023 to serve homeless families. With a
shared commitment to ending family homelessness in our community, the City
conveyed the property to Family Promise of Orange County in May 2022. The
units will provide emergency short-term housing for homeless families while they
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receive housing navigation services to help secure long-term, permanent housing.
House of Ruth's Community Resource Center will offer vital support programs
that promote stability, health, healing, and self-sufficiency.
Some of the factors impacting the sustainability of future budgets include the City's
increasing pension costs and related unfunded liabilities, and funding of construction
costs for infrastructure to advance development in Tustin Legacy. City Staff will
continue to work with the City Council to prioritize these types of significant projects and
to seek new revenue sources for the future. In addition, the City Council continues to
advance 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 2023 include the
following:
Park Facilities
o Pine Tree and Pioneer Park Renovations
• Transportation Facilities
o Neighborhood D South Phase 1 Infrastructure
o Annual Roadway and Pavement Maintenance Program
o Newport Avenue Rehabilitation
The City's capital projects for fiscal year 2023-2024 are budgeted at $57.3 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 the General Fund, water revenues, Gas Tax, State
grant for parks, Measure M2, and State Road Maintenance and Rehabilitation funds
(RMRA). Major capital projects for fiscal year 2023-2024 include:
• Public Facilities
o Civic Center Alternate Power Source Improvements
o Legacy Annex Improvements — Police Substation
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• Park Facilities
o Alley Grove
o Tustin Legacy Linear Park
o Tustin Legacy Dog Park
o Heideman School Park
o Centennial Park Improvements
• Traffic Facilities
o Main Street Improvements
o Neighborhood D-South Infrastructure Construction — Phase 2
o Neighborhood G Phase 1
o Neighborhood D-North Phase 1
o Armstrong Pedestrian Bridge
• Transportation Facilities
o Annual Roadway Maintenance and Public Infrastructure Maintenance
Program
o Red Hill Rehabilitation — San Juan Street to First Street
o Red Hill Rehabilitation — Walnut to 1-5
• Water Projects
o Conjunctive Use Well at Beneta Well Site
_�_GR.
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 (ACFR) for the fiscal year ended
June 30, 2022. This was the thirty-sixth (36) consecutive year that Tustin has achieved
this prestigious award. 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
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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: Elsa Chow, Deputy Director — Financial Services; Sean Tran, Deputy
Director — Administrative Services; David Faraone, Jr., Senior Budget Analyst; Glenda
Babbitt, Management Analyst; Andrea Campbell, Senior Accountant; and 1P 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,
V\...,r U141 T(D4
Nicole M. Bernard
Acting City Manager
Jennifer King
Finance Director/City Treasurer
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LOCAL GOVERNMENT
FY 2022-23
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Tustin
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
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INDEPENDENT AUDITOR'S REPORT
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DavisFa r r
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
Independent Auditor's Report
Report on the Audit of the Financial Statements
Opinions
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,
California, as of and for the year June 30, 2023, and the related notes to the financial statements,
which collectively comprise the City of Tustin's basic financial statements as listed in the table of
contents.
In our opinion, the accompanying financial statements 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, 2023, 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.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS) and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for
the Audit of the Financial Statements section of our report. We are required to be independent of
the City of Tustin, California, and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements relating to our audit. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As described further in Note 1 to the financial statements, during the year ended June 30, 2023,
the City of Tustin implemented Governmental Accounting Standards Board (GASB) Statement No.
96. As a result, the financial statements for the fiscal year ended June 30, 2023 reflect a certain
prior period adjustment as described further in note 21 to the financial statements. Our opinion is
not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
The City of Tustin's management is responsible for the preparation and fair presentation of the
financial statements in accordance with accounting principles generally accepted in the United
States of America, and for 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.
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In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the City of
Tustin's ability to continue as a going concern for one year after the date that the financial
statements are issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but
is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance
with GAAS will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control. Misstatements are considered material if there is a substantial likelihood that,
individually or in the aggregate, they would influence the judgment made by a reasonable user
based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of The City of Tustin's internal control.
Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the City of Tustin's ability to continue as a
going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control -related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, budgetary comparison information for the General Fund
and each major special revenue fund, 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 is the responsibility of management
and, 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
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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.
Supplementary 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 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
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.
Other Information
Management is responsible for the other information included in the Annual Comprehensive
Financial Report. The other information comprises the introductory section and statistical section
but does not include the financial statements and our auditor's report thereon. Our opinions on
the financial statements do not cover the other information, and we do not express an opinion or
any form of assurance thereon. In connection with our audit of the financial statements, our
responsibility is to read the other information and consider whether a material inconsistency
exists between the other information and the financial statements, or the other information
otherwise appears to be materially misstated. If, based on the work performed, we conclude that
an uncorrected material misstatement of the other information exists, we are required to describe
it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report December
21, 2023 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 the effectiveness of internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City of Tustin's internal control over financial reporting and
compliance.
Irvine, California
December 21, 2023
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MANAGEMENT'S DISCUSSION
AND ANALYSIS
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
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, 2023. 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, 2023, by $816 million (net position). The net position consists
of $568 million invested in capital assets, $54 million in restricted net position, and $194
million in unrestricted net position.
• The City's total net position increased by $10.5 million during the fiscal year ended June 30,
2023. The increase in net positionis largely related to a one-time profit participation revenue
of $11.6 million received during the fiscal year.
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 the 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 finance, in a manner similar to a private -sector business.
The statement of net position presents information on all of the City's assets and liabilities and deferred
inflows/outflows of resources, with the difference reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City is
improving or deteriorating.
The statement of activities presents information showing how the government's net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues
and expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Government -wide financial statements distinguish City governmental activities that are principally
supported by taxes and intergovernmental revenues from other business -type activities that are
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Government -wide Financial Statements (Continued)
intended to recover all or a significant portion of their costs through user fees and charges.
Governmental activities of the City, the Tustin Housing Authority, and Tustin Public Financing
Authority, both of which are blended component units, cover general government, public safety,
community services, and public works functions. Business -type activity of the City is the water utility
services.
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
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, the 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 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, American Rescue Plan Act (ARPA) Special Revenue Fund, Housing Authority
Special Revenue Fund, and Park Acquisition and Development 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
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Fund Financial Statements (Continued)
form of combining statements elsewhere in this report.
The City adopts a biennial budget for its General Fund and the Special Revenue Funds. Budgetary
comparison schedules have been provided to demonstrate compliance with this budget requirement
elsewhere in this report.
The governmental funds financial statements can be found immediately following the government -
wide financial statements.
Proprietary funds. The City of Tustin maintains one type of proprietary (Enterprise) fund. This
enterprise fund is used to report the same functions presented as business -type activities in the
government -wide financial statements. The City uses an enterprise fund to account for its water utility
services.
The proprietary fund financial statements can be found immediatelyfollowing the governmental funds
financial statements.
Fiduciaryfunds. 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 statements
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 a Section 115 trust with the Public Agency Retirement Services (PARS) for
pre -funding the City's OPEB obligations. The City Council approved the establishment of the trust in
April 2017, and the City has made several deposits to the trust since its inception.
The third fiduciary fund is a custodial fund that is used to account for the assets of Community Facility
Districts 04-1, 06-1, 07-1, and 2014-1. The fiduciary funds financial statements can be found
immediately following the proprietary fund financial statements.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government -wide and fund financial statements. The notes
to the basic financial statements can be found immediately following the fiduciary funds financial
statements.
rel
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information, which includes the Budgetary Comparison Schedules for the
General Fund and three other major funds, as well as schedules of funding progress for the City's
defined benefit pension plans and other post -employment healthcare benefits (OPEB) plan. The
required supplementary information can be found immediately following the notes to the basic
financial statements.
The combining statements referred to earlier in connection with nonmajor governmental funds are
presented for all nonmajor Special Revenue Funds and nonmajor Capital Projects Funds. These
combining and individual fund statements and schedules can be found immediately following the
required supplementary information.
Government -wide Financial Analysis
The government -wide financial statements provide long-term and short-term information about the
City's overallfinancial condition. This analysis addresses the financial statements of the City as a whole.
The largest portion of the City's net position (70%) 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 debtthatwas 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 increased by $7.2 million or 0.7% compared to the prior fiscal year while its total
deferred outflows of resources increased by $19.6 million or 88.3%. Total assets increased mainly
due to an increase in cash from receiving a profit participation revenue of $11.6 million, offset by a
$3.8 million reduction from land held for resale due to two property disposals that took place in the
Water Enterprise Fund. The major factor to the increase in deferred outflows of resources was due to
changes in actuarial assumptions affecting the calculation of pension liability and additional pension
contribution made by the City, which will be applied as a reduction to the net pension liabilities for the
next fiscal year.
The City's total liabilities increased by $39.3 million or 28% while its total deferred inflows of resources
decreased by $23.1 million. The primary reason for the increased liabilities and decreased deferred
inflows of resources can be attributed to CaIPERS incurring an investment loss of 6.1% during fiscal
year 2021-2022 compared to a 21% investment gain in fiscal year 2020-2021. As a result, the City's
pension liabilities increased by $45.2 million.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Government -wide Financial Analysis (Continued)
Atthe same time, this investment loss of 6.1% narrowed the gap between the pension plan's projected
and actual investment earnings by $23 million, which was reported as a decrease in deferred inflows
of resources.
The other component that offset the total liability increase was a decrease in unspent American
Rescue Plan Act (ARPA) funds. The City received two tranches of ARPA funds ($9.7 million in May
2021 and $9.7 million in June 2022). ARPA funds are required to be classified as unearned revenue
until expended. The City expended $5.2 million in ARPA funds in the current year and the remaining
$7.9 million was classified as unearned revenue at June 30, 2023.
The City's total net position increased by $10.6 million or 1.3% (excluding restatement from GASB 96
implementation as shown in Note 21). Major factors that contributed to the net position increase are
discussed in the following pages.
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Government -wide Financial Analysis (Continued)
Assets:
Current and other assets
Capital assets
Total Assets
Deferred outflows of resources
Liabilities:
Current liabilities
Non -current liabilities
Total Liabilities*
Deferred inflows of
resources
City of Tustin
Summary of Net Position
As of June 30, 2023
(in millions of dollars)
Governmental
Business -Type
Total
Activities
Activities
Total
% Chancre
2022
2023
2022 2023
2022
2023
2022-2023
$ 334.8
$ 347.7
$ 19.0 $ 15.0
$ 353.8
$ 362.7
542.4
538.0
64.6 67.3
607.0
605.3
877.2
885.7
83.6 82.3
960.8
968.0
0.7%
18.1
36.8
4.1 5.0
22.2
41.8
88.3%
31.1
27.2
5.5
3.8
36.6
31.0
62.1
105.4
41.5
43.1
103.6
148.5
93.2
132.6
47.0
46.9
140.2
179.5 28.0%
35.7 14.2 1.7 0.1 37.4 14.3 -61.8%
Net Position:
Net investment in capital assets* 540.2 533.7 29.2 34.5 569.4 568.2 69.6%
Restricted 48.3 54.0 - - 48.3 54.0
Unrestricted 177.9 188.0 9.8 5.8 187.7 193.8
Total Net Position*
766.4 775.7 39.0 40.3 805.4 816.0 1.3%
* 2022 numbers are not restated to reflect GASB 96 implementation.
Governmental Activities. The net position of the City's governmental activities increased by $9.3
million or 1.2% to $775.7 million (excluding restatement from GASB 96 as shown in Note 21) . Of the
$775.7 million in net position, $533.7 million is invested in capital assets such as land, buildings,
equipment, and infrastructure; $54 million is restricted to specifically stipulated spending agreements
originated by law, contracts, or other agreements with external parties. The remaining $188 million is
unrestricted and available to be designated for specific purposes by the City Council to meet the City's
ongoing obligations.
E
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Government -wide Financial Analysis (Continued)
millions
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
r
k
Expenses and Program Revenues - Governmental Activities
Year Ending June 30, 2023
GENERAL PUBLIC SAFETY PUBLIC WORKS COMMUNITY OPERATING CAPITAL GRANTS
GOVERNMENT SERVICES GRANTS AND AND
CONTRIBUTIONS CONTRIBUTIONS
14 Expenses u Revenue
Revenues By Source - Governmental Activities
Sales tax
40.0%
Investment income
6.8%
Unrestricted
motor vehicle
in -lieu fees
0.1%
J
Transi
Profit participation
13.0% Business license
taxes
0.5%
Other general
revenues
1.3%
Property taxes
33.8%
e
nt occupancy taxes
2.4%
Othertaxes
2.2%
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Government -wide Financial Analysis (Continued)
City of Tustin
Summary of Changes in Net Position
For the Year Ended June 30, 2023
(in millions of dollars)
Revenues:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Taxes
Earnings(loss) on investments
Motor vehicle in -lieu fees
Miscellaneous
Profit participation
Gain on sale of assets
Transfer
Total Revenues
Expenses:
General government
Public safety
Public works
Community services
Water
Total Expenses
Change in net position
Governmental
Business -Type
Total
Activities
Activities
Total
% Change
2022
2023
2022
2023
2022
2023
2022-2023
$ 12.7
$ 15.6
$ 19.6
$ 19.5
$ 32.3 $
35.1
12.3
12.8
0.1
-
12.4
12.8
12.9
3.1
1.6
4.1
14.5
7.2
66.9
70.7
-
-
66.9
70.7
(3.5)
6.1
(0.2)
0.3
(3.7)
6.4
0.1
0.1
-
-
0.1
0.1
0.2
1.1
0.4
-
0.6
1.1
0.3
11.6
-
-
0.3
11.6
56.0
-
-
-
56.0
-
0.1
-
(0.1)
-
-
-
158.0
121.1
21.4
23.9
179.4
145.0
-19.2%
19.4
23.3
-
-
19.4
23.3
37.3
43.4
-
-
37.3
43.4
34.8
34.3
-
-
34.8
34.3
11.7
11.0
-
-
11.7
11.0
-
-
21.3
22.6
21.3
22.6
103.2
112.0
21.3
22.6
124.5
134.6
8.1%
54.8
9.1
0.1
1.3
54.9
10.4
Net Position - Beginning Restated
711.6
766.6
38.9
39.0
750.5
805.6
Net Position - Ending
766.4
775.7
39.0
40.3
805.4
816.0 1.3%
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Government -wide Financial Analysis (Continued)
In governmental activities, the increase in net position of $9.1 million (after restatement from GASB 96 as
shown in Note 21) is primarily due to the following:
• The City received a one-time $11.6 million profit participation revenue pursuant to a Profit
Participation Agreement between the City and the developer.
• As discussed previously, net pension liability changed due to CaIPERS investment loss of 6.1%
from fiscal year 2021-2022 and resulted in a decrease of $42.4 million to net position.
• The same investment loss also resulted in an increase to the net deferred resources on pension
plans and a $41.8 million addition to net position.
• Capital asset depreciation expense in the amount of $20 million; offset by a $13 million
increase in capital assets.
• Governmental liabilities decreased by $5.7 million mainly due to changes in ARPA funding
unearned revenue, claims and judgments, and compensated absences.
• Subscription -based IT assets increased by $2.2 million with offset by subscription liability of
$2.1 million due to implementation of GASB 96.
In the prior fiscal year, the net position of governmental activities increased by approximately $54.8
million compared to an increase of $9.1 million in 2022-23, which reflects a $45.7 million decrease
year -over -year. In 2021-22, a significant amount of increase was due to a one-time sale of 25.44
acres of land for $56 million. Other than the gain from the sale of land, the year -over -year difference
can also be attributed to the following:
• The City received a one-time developer contribution of $10.4 million during fiscal year 2021-
22.
• Sales tax revenue, property tax, and investment earnings increased by a total of $13 million
mainly due to improved market conditions in fiscal year 2023 and economic recovery from the
pandemic.
• Charges for services increased by $2.8 million due to major development activities in fiscal
year 2023.
• Other revenue increased by $12.2 million mainly due to the profit participation revenue as
discussed above.
• Expenditure increased by $8.8 million mainly due to increases in contractually obligated labor
costs, public safety expenditures, and inflation adjustments.
Business -Type activities net position increased slightly by $1.3 million. Revenues increased by $2.4
million, while expenses increased by $1.2 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.
12
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Financial Analysis of the Government's Funds (Continued)
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 $306.7 million, an increase of $15.5 million from the prior year's fund balance. The
following factors impacted the net change to fund balance:
• A combined increase of $3.8 million from sales tax, property tax, and transient occupancy tax
as a result of economic recovery from the pandemic.
• A combined increase of $1.7 million in charges for services, licenses and permits revenue, and
rental income as service demands increased.
• A net increase of $2.7 million in profit participation and developer contributions.
• An increase of $9.6 million in investment earnings due to improved market conditions.
• Intergovernmental revenue increased by $1.4 million due to increases in CDBG and Special
Tax revenues.
• The revenue increases were offset by a corresponding increase in service costs. Total non -
capital expenditure increased by $5.4 million while capital outlays reduced by $1.4 million.
Approximately $107.5 million or 35.1% of the City's governmental fund balance constitutes
nonspendable fund balance. Of the nonspendable amount, $102.5 million is land held for resale. The
remaining fund balance consists of $47.2 million in restricted funds, $12.3 million assigned to capital
projects, and $139.7 million in unassigned funds.
The General FundisthechiefoperatingfundoftheCity. Attheendofthe currentfiscalyear, the unassigned
fund balance of the General Fund was $139.8 million, while total fund balance was $274.7 million. As
a measure of the General Fund's liquidity, it may be useful to compare unassigned fund balance to total
fund expenditures. The unassigned fund balance covers 143.9% of the total General Fund expenditures,
including transfers out.
Three 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
$7.8 million in cash and investments with an offsetting unearned revenue of $7.8 million. This fund is
restricted for specific purposes relating to COVID-19 mitigation efforts and governmental services. The
Housing Authority Special Revenue Fund is the second major governmental fund with $0.4 million in
restricted fund balance at the end of the current fiscal year. This fund is restricted for increasing or
improving low -and -moderate income housing. The Housing Authority Fund holds $4.9 million in
affordable housing loans. The third major governmental fund is the Park Acquisition and Development
Special Revenue Fund, which holds fees collected to develop the City's park system.
13
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Financial Analysis of the Government's Funds (Continued)
City of Tustin
Summary of Changes in Fund Balances - General Fund
For the Year Ended June 30, 2023
(in millions of dollars)
Total
% Chancre
2022
2023
2022-2023
Revenues:
Taxes
$ 63.9 $
67.6
Charges for services
4.2
5.0
Intergovernmental
2.1
0.6
Fines and forfeitures
1.0
1.2
Licenses and permits
2.2
3.0
Investment income (loss)
(3.3)
5.0
Other
14.3
4.7
Profit participation
0.3
11.6
Gain on sale of land held for resale
56.0
-
Total Revenues
140.7
98.7
-29.9%
Expenditures:
General government
18.5
19.8
Public safety
41.4
44.3
Public works
15.6
16.8
Community services
6.3
5.4
Capital Outlay
4.8
3.8
Debt service
0.1
0.6
Total Expenses
86.7
90.7 4.6%
Excess of Revenues Over
(Under) Expenditures 54.0 8.0
Other Financing Sources (Uses):
Net transfers 7.6 2.2
Net Change in Fund Balance $ 61.6 $ 10.2 -83.4%
14
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Financial Analysis of the Government's Funds (Continued)
General Fund total revenues decreased by $42 million or 29.9% as noted in the previous table. Material
transactions impacting revenues in the General Fund were as follows:
• Taxes increased $3.7 million primarily due to higher sales tax and property tax revenues. Sales
tax revenue totaled approximately $35.9 million, an increase of $1.5 million or 4.4% due to
an increase in consumer spending. Property tax revenue totaled $27.3 million, an increase of
$1.8 million or 6.9%.
• Program and fee revenues such as licenses and permits, charges for services and rental income
experienced a total increase of $1.7 million as service demands grew during the year.
• One-time gain of $56 million from sale of land during last fiscal year 2021-2022.
• Net increase of $1.7 million from a combination of developer contribution and profit
participating revenues.
• Intergovernmental revenue decreased by $1.5 million mainly due to the reclassification of
CDBG fund from the General Fund to a special revenue fund starting this fiscal year.
• Investment earnings increased $8.3 million during 2023, largely due to improved market
conditions.
General Fund total expenditures increased by $4 million or 4.6%, which is primarily related to labor
obligations, increased public service demands, and inflation adjustments.
General Fund Budgetary Highlights
The General Fund actual revenues were $17.1 million higher than the amended budgeted revenues,
mostly due to the one-time profit participation revenue. The amended budgeted expenditures were
$142.6 million, an increase in appropriations of $42.5 million from the original budgeted expenditures
of $100 million. The increase in appropriations was largely associated with additional capital outlay
for improvements in public right of way and special equipment.
Actual General Fund expenditures were less than the amended budgeted amount of $142.6 million by
$51.9 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 revenues for the Water
Fund exceeded total expenses by $1.4 million, resulting in an increase in net position during fiscal year
2023, from $38.9 million as of June 30, 2022, to $40.3 million as of June 30, 2023.
Operating revenues decreased by $0.1 million or 0.8%. Related operating costs increased by $0.6
million from the prior fiscal year, due to increases in labor and on -going maintenance costs.
15
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
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,
2023 amounts to $605.3 million, net of accumulated depreciation. The 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, 2023
(in millions of dollars)
Governmental
Business -Type
Total
Activities
Activities
Total
% Change
2022
2023
2022
2023
2022
2023
2022-2023
Land
$ 105.3
$ 105.3
$ 1.2
$ 1.2
$ 106.5
$ 106.5
Right of way
45.9
45.9
-
-
45.9
45.9
Construction in progress
12.7
6.6
2.5
7.6
15.2
14.2
Buildings and improvements
116.6
114.8
9.8
9.5
126.4
124.3
Machinery and equipment
5.4
5.6
-
-
5.4
5.6
Infrastructure
256.0
257.1
-
-
256.0
257.1
Lease assets
0.5
0.4
-
-
0.5
0.4
Subsciption based assets
-
2.2
-
-
-
2.2
Property, plant and equipment
-
-
51.1
49.1
51.1
49.1
Total Capital Assets, Net
542.4
L537.9
64.6
67.4
607.0
605.3
-0.3%
The net reduction of $1.7 million in capital assets consists of additions totaling $17.9 million (net of
transfers from construction in progress and asset disposals); depreciation expense of $22.4 million;
and a prior period adjustment of $2.8 million of subscription -based assets due to the implementation
of GASB 96. In fiscal year 2023, the following major construction projects were completed:
• Neighborhood D South Phase 1 Improvements
• Various Roadway and Public Infrastructure Maintenance
• Pine Tree and Pioneer Park Renovations
• Newport Avenue Rehabilitation
The following major construction projects were in progress in fiscal year 2023: Neighborhood D-South
Infrastructure Phase 2, Alley Grove, Tustin Legacy Dog Park, Beneta Wells, and various road widening,
extension, and traffic signal projects.
16
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Capital Asset and Debt Ad ministration (Continued)
Additional information on the City's capital assets can be found in Note 8 of the notes to the basic
financial statements section of this report.
Long-term Debt
Atthe end of the current fiscal year, the City had total outstanding Long-term liabilities of $148.4 million.
Of this amount, $36.8 million is 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, 2023
(in millions of dollars)
Governmental Business -Type Total
Activities Activities Total % Chancge
2022 2023 2022 2023 2022 2023 2022-2023
Bonds payable
$ -
$ -
$ 38.1
$ 36.8
$ 38.1
$ 36.8
Claims and judgments
10.4
9.3
-
-
10.4
9.3
Postemployment
benefits obligation
11.9
11.8
1.4
1.5
13.3
13.3
Compensated absences
5.0
5.0
0.4
0.4
5.4
5.4
Lease payable
0.6
0.5
-
-
0.6
0.5
Subscription based payable
2.6
2.1
-
-
2.6
2.1
Pension liabilities
34.2
76.6
1.6
4.4
35.8
81.0
Total Outstanding Debt
64.7
105.3
41.5
LA3.1
L106.2
L148.4 39.7%
Overall, long-term debt increased by $40.1 million or 39.7% from the prior year balances mostly due to
an increase in the City's net pension liability as a result of CaLPER's investment loss for the 2021-2022
measurement period. As discussed previously, the increase in pension liabilities was offset by a decrease
in deferred inflows of resources related to the pension plans. Additionally, bond payable decreased by
$1.3 million along with the decrease of $1.1 million in claims and judgments.
Additional information on the City's long-term debt can be found in Notes 9, 10, and 11 of the notes
to the basic financial statements section of this report.
17
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CITY OF TUSTIN
Management's Discussion and Analysis (Unaudited)
June 30, 2023
Next Year's Budget
On June 20, 2023, the City Council adopted year one of the Fiscal Years 2023-2025 Biennial Budget.
The budget for Fiscal Year 2023-2024 allocates resources that reflect the City Council's priorities set
forth in the City's five-year strategic plan. The 2023-2024 Budget was adopted with a total
appropriation of $217 million. The General fund's estimated revenues are $86 million and budgeted
appropriations are $90 million. The operating deficit can be covered by planned use of reserves. The
appropriations are $1.7 million higher than the prior year's amended appropriation, excluding the $3.8
million General Fund loan to the Water Fund that the City Council approved in May 2023. Major
increases impacting the General Fund's expenditures are compensation -related costs from labor
agreements as well as service contracts due to inflationary adjustments.
Requests for Information
This financial report is designed to provide a general overview of the City's finances for all those with
an interest in the government's finances. Questions concerning any of the information provided in this
report or requests for additional financial information should be addressed to the Finance Director, City
of Tustin, 300 Centennial Way, Tustin, California, 92780.
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e...% GOVERNMENT -WIDE
FINANCIAL STATEMENTS
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CITY OF TUSTIN
STATEMENT OF NET POSITION
June 30, 2023
ASSETS:
Cash and investments
Receivables:
Accounts
Interest
Leases
Loans
Allowance for uncollectibles
Internal balances
Prepaid items and deposits
Land held for resale
Restricted assets:
Cash and investments with fiscal agents
Cash and investments held by trust
Capital assets:
Not being depreciated
Being depreciated, net
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
Deferred amounts on 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 leases
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
Governmental Business -type
Activities Activity Total
$ 188,853,562 $ 14,625,281 $ 203,478,843
9,063,748
2,967,975
12,031,723
687,031
39,877
726,908
9,161,417
-
9,161,417
6,443,142
-
6,443,142
(1,593,956)
-
(1,593,956)
3,830,700
(3,830,700)
-
1,162,036
137,650
1,299,686
102,457,773
-
102,457,773
16,680,630
1,020,787
17,701,417
10,951,986
-
10,951,986
157,810,973
8,789,491
166,600,464
380,144,951
58,552,291
438,697,242
885,653,993
82,302,652
967,956,645
-
3,051,022
3,051,022
1,060,434
85,509
1,145,943
35,739,325
1,892,772
37,632,097
36,799,759
5,029,303
41,829,062
7,604,851
2,822,174
10,427,025
-
282,308
282,308
10,039,855
727,778
10,767,633
9,570,802
-
9,570,802
5,858,429
1,660,729
7,519,158
11,015,522
35,500,143
46,515,665
11, 836,203
1,510,251
13,346,454
76,619,674
4,370,615
80,990,289
132,545,336
46,873,998
179,419,334
8,778,411
-
8,778,411
1,401,576
138,618
1,540,194
4,038,631
-
4,038,631
14,218,618
138,618
14,357,236
533,745,376 34,501,119 568,246,495
7,882,740 - 7,882,740
1,216,599 - 1,216,599
44,636,034 - 44,636,034
188,209,049 5,818,220 194,027,269
$ 775,689,798 $ 40,319,339 $ 816,009,137
19
See accompanying notes to the basic financial statements
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
STATEMENT OF ACTIVITIES
For the year ended June 30, 2023
Functions/programs Expenses
Governmental activities:
General government $ 23,229,440
Public safety 43,411,070
Public works 34,453,960
Community services 11,011,517
Interest on long-term liabilities 25,402
Total governmental activities 112,131,389
Business -type activity:
Water 22,544,478
Total $ 134,675,867
Program Revenues
Charges Operating Capital
for Grants and Grants and
Services Contributions Contributions
$ 3,344,041 $ - $ -
1,400,441 3,952,872 -
7,436,265 4,661,485 3,015,212
3,445,025 4,166,775 118,634
15,625,772 12,781,132 3,133,846
19,466,690 - 4,090,446
$ 35,092,462 $ 12,781,132 $ 7,224,292
General revenues:
Taxes:
Property
Franchise
Transient occupancy
Business license
Sales tax
Unrestricted intergovernmental revenue
Earnings on investments
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
20
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Net (Expense) Revenue and
Changes in Net Position
Governmental Business -type
Activities Activity Total
$ (19,885,399)
(38,057,757)
(19,340,998)
(3,281,083)
(25,402)
(80,590,639)
$ (19,885,399)
(38,057,757)
(19,340,998)
(3,281,083)
(25,402)
(80,590,639)
1,012,658 1,012,658
(80,590,639) 1,012,658 (79,577,981)
30,283,746
-
30,283,746
2,011,849
-
2,011,849
2,151,007
-
2,151,007
470,064
-
470,064
35,889,406
-
35,889,406
82,411
-
82,411
6,081,889
326,716
6,408,605
11,622,220
-
11,622,220
1,126,304
19,918
1,146,222
89,718,896
346,634
90,065,530
9,128,257
1,359,292
10,487,549
766,561,541
38,960,047
805,521,588
$ 775,689,798
$ 40,319,339
$ 816,009,137
21
See accompanying notes to the basic financial statements
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FUND FINANCIAL STATEMENTS
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DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2023
Park
American
Acquisition
Other
Total
Rescue Plan Act
Housing
and
Governmental
Governmental
General
(ARPA) Fund
Authority Fund
Development
Funds
Funds
ASSETS
Cash and investments
$ 148,910,870
$ 7,795,805
$ 401,251
$ 1,903,899 $
29,841,737
$ 188,853,562
Restricted cash and investments
16,188,107
-
-
-
492,523
16,680,630
Restricted cash and investments held by trust
10,951,986
-
-
10,951,986
Receivables:
Accounts
7,992,087
-
-
50
1,071,611
9,063,748
Interest
481,722
70,455
48,039
13,040
73,775
687,031
Leases
4,216,100
-
-
4,945,317
-
9,161,417
Loans
456,370
5,986,772
-
6,443,142
Allowance for uncollectibles
(544,048)
(1,049,908)
-
(1,593,956)
Prepaid items and deposits
1,154,735
-
7,301
1,162,036
Advances to other funds
3,830,700
-
3,830,700
Land held for resale
102,457,773
-
-
102,457,773
TOTAL ASSETS
$ 296,096,402
$ 7,866,260
$ 5,386,154
$ 6,862,306 $
31,486,947
$ 347,698,069
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
LIABILITIES
Accounts payable and
accrued liabilities
$ 5,518,885 $
$ 141,542
$ 389,798 $
1,554,626 $
7,604,851
Deposits payable
10,039,855
-
-
-
10,039,855
Unearned revenue
1,656,230 7,866,260
-
-
48,312
9,570,802
TOTAL LIABILITIES
17,214,970 7,866,260
141,542
389,798
1,602,938
27,215,508
DEFERRED INFLOW OF RESOURCES
Unavailable revenue
28,765 -
4,891,280
-
95,022
5,015,067
Lease related
4,104,096
4,674,315
-
8,778,411
TOTAL DEFERRED INFLOW
OF RESOURCES
4,132,861
4,891,280
4,674,315
95,022
13,793,478
FUND BALANCES
Nonspendable
107,508,711
-
-
7,301
107,516,012
Restricted
27,466,991
353,332
-
19,399,599
47,219,922
Assigned
-
-
1,798,193
10,479,549
12,277,742
Unassigned
139,772,869
-
-
(97,462)
139,675,407
TOTAL FUND BALANCES
274,748,571 -
353,332
1,798,193
29,788,987
306,689,083
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$ 296,096,402 $ 7,866,260
$ 5,386,154
$ 6,862,306 $
31,486,947 $
347,698,069
22
See accompanying notes to the basic financial statements
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
June 30, 2023
Fund balances of governmental funds $ 306,689,083
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. 537,955,924
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, 2023 are:
Claims and judgments payable $ (9,329,099)
Compensated absences payable (4,955,652)
Subscription -based information technology arrangements (2,121,251)
Lease payable (467,949)
Total long-term liabilities (16,873,951)
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
35,739,325
Deferred inflows of resources
(4,038,631)
Pension liability
(76,619,674)
(44,918,980)
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
1,060,434
Deferred inflows of resources
(1,401,576)
Post employment benefit liability
(11,836,203)
(12,177,345)
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.
5,015,067
Net position of governmental activities
$ 775,689,798
23
See accompanying notes to the basic financial statements
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CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
REVENUES
Taxes
Licenses and permits
Fines and forfeitures
Investment income
Intergovernmental revenue
Charges for services
Rental income
Other revenue
TOTALREVENUES
EXPENDITURES
Current:
General government
Public safety
Public works
Community services
Capital outlay
Debt service:
Principal retirement
Interest expenditures
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfer in
Transfer out
TOTAL OTHER FINANCING
SOURCES (USES)
NET CHANGES IN FUND BALANCES
For the year ended June 30, 2023
American
Rescue Plan Act
General (ARPA) Fund
Park
Acquisition
Housing Authority and
Fund Development
Other Total
Governmental Governmental
Funds Funds
$ 67,627,570 $
$
$
$ 209,868
$ 67,837,438
3,007,410
-
3,007,410
1,160,608
-
1,160,608
4,988,709
236,463
8,322
153,305
695,090
6,081,889
556,238
5,178,924
599,257
228,279
15,046,529
21,609,227
5,018,259
-
1,000
18,895
63,146
5,101,300
2,925,421
-
398,224
-
3,323,645
13,411,404
26,840
381,481
13,819,725
98,695,619
5,415,387
635,419
798,703
16,396,114
121,941,242
19,831,017
-
-
-
7,000
19,838,017
44,298,391
53,357
44,351,748
16,765,571
-
-
-
2,418,195
19,183,766
5,357,382
1,575,600
1,492,620
54,732
301,483
8,781,817
3,757,886
-
-
940,063
8,888,446
13,586,395
638,528
-
-
638,528
25,402
-
25,402
90,674,177
1,575,600
1,492,620
994,795
11,668,481
106,405,673
8,021,442
3,839,787
(857,201)
(196,092)
4,727,633
15,535,569
8,638,611
-
439,787
6,450,000
15,528,398
(6,450,000)
(3,839,787)
-
(5,238,611)
(15,528,398)
2,188,611
(3,839,787)
439,787
1,211,389
-
10,210,053
(417,414)
(196,092)
5,939,022
15,535,569
FUND BALANCES - BEGINNING OF YEAR 264,538,518 770,746 1,994,285 23,849,965 291,153,514
FUND BALANCES - END OF YEAR $ 274,748,571 $ $ 353,332 $ 1,798,193 $ 29,788,987 $ 306,689,083
24
See accompanying notes to the basic financial statements
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2023
Net changes in fund balances - total governmental funds $ 15,535,569
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
$ 12,986,269
Disposition of capital assets
(336,970)
Depreciation expense
(19,909,357)
(7,260,058)
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
113,146
Principal payments - subscription -based information technology arrangements
525,382
Claims and judgments payable
1,099,471
Compensated absences payable
1,554
1,739,553
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.
(636,092)
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. 93,911
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
(344,626)
Change in net position of governmental activities $ 9,128,257
25
See accompanying notes to the basic financial statements
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
STATEMENT OF NET POSITION
PROPRIETARY FUND
June 30, 2023
Business -type
Activity
Water
ASSETS:
Enterprise Fund
CURRENT ASSETS:
Cash and investments
$ 14,625,281
Accounts receivable
2,967,975
Interest receivable
39,877
Prepaid items
137,650
Restricted cash and investments
1,020,787
TOTAL CURRENT ASSETS
18,791,570
NONCURRENT ASSETS:
Capital assets:
Not being depreciated
8,789,491
Being depreciated, net
58,552,291
TOTAL NONCURRENT ASSETS
67,341,782
TOTAL ASSETS
86,133,352
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
3,051,022
Deferred amounts on pension plans
1,892,772
Deferred amounts on OPEB plan
85,509
TOTAL DEFERRED OUTFLOWS OF RESOURCES
5.029.303
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
2,822,174
Deposits payable
727,778
Interest payable
282,308
Advances from other funds
3,830,700
Compensated absences payable
263,125
Bonds payable
1,397,604
TOTAL CURRENT LIABILITIES
9.323.689
LONG-TERM LIABILITIES:
Compensated absences payable
87,708
Bonds payable
35,412,435
Net pension liability
4,370,615
Net OPEB liability
1,510,251
TOTAL LONG-TERM LIABILITIES
41,381,009
TOTAL LIABILITIES
50,704,698
DEFERRED INFLOWS OF RESOURCES:
Deferred amounts on OPEB plan
138,618
TOTAL DEFERRED INFLOWS OF RESOURCES
138,618
NET POSITION:
Net investment in capital assets
34,501,119
Unrestricted
5,818,220
TOTAL NET POSITION
$ 40,319,339
See accompanying notes to the basic financial statements 26
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUND
For the year ended June 30, 2023
Business -type
Activity
Water
Enterprise Fund
OPERATING REVENUES:
Charges for services $ 19,466,690
TOTAL OPERATING REVENUES 19,466,690
OPERATING EXPENSES:
Personnel services
4,147,146
Purchased water
9,674,776
Maintenance and operation
4,309,711
Depreciation
2,530,814
TOTAL OPERATING EXPENSES
20,662,447
OPERATING INCOME (LOSS) (1,195,757)
NONOPERATING REVENUES (EXPENSES):
Investment income 326,716
Loss on sale of land held for resale (663,799)
Other income 19,918
Interest expense and other fiscal charges (1,218,232)
TOTAL NONOPERATING REVENUES (EXPENSES) (1,535,397)
CAPITAL CONTRIBUTIONS:
Capital contributions 4,090,446
CAPITAL CONTRIBUTIONS 4,090,446
CHANGE IN NET POSITION 1,359,292
NET POSITION AT BEGINNING OF YEAR 38,960,047
NET POSITION AT END OF YEAR
$ 40,319,339
See accompanying notes to the basic financial statements 27
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
For the year ended June 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Payments to suppliers
Payments to employees
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Cash received from other funds
NET CASH FLOWS PROVIDED BY NONCAPITAL
FINANCING ACTIVITIES:
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets
Proceeds from the sale of land held for resale
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 INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS - END OF YEAR
CASH AND CASH EQUIVALENTS:
Cash and investments - current assets
Cash and investments - restricted assets
TOTAL CASH AND CASH EQUIVALENTS
Business -type
Activity
Water
Enterprise Fund
$ 21,174,883
(15,753,822)
(4,057,573)
1,363,488
3,830,700
(1,201,478)
3,100,000
(1,165,000)
(1,126,307)
(392,785)
314,529
314,529
5,115,932
10,530,136
$ 15,646,068
$ 14,625,281
1,020,787
$ 15,646,068
See accompanying notes to the basic financial statements 28
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
(CONTINUED)
For the year ended June 30, 2023
Business -type
Activity
Water
Enterprise Fund
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income (loss)
$ (1,195,757)
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation and amortization
2,530,814
Other nonoperating income (expense)
19,918
Change in assets, liabilities and deferrals:
(Increase) decrease in accounts receivable
1,688,275
(Increase) decrease in prepaid items
(47,785)
(Increase) decrease in deferred outflows of resources
(1,116,320)
Increase (decrease) in accounts payable and accrued liabilities
(1,806,551)
Increase (decrease) in deposits payable
85,001
Increase (decrease) in compensated absences
(21,896)
Increase (decrease) in net pension liability
2,739,221
Increase (decrease) in total OPEB liability
64,158
Increase (decrease) in deferred inflows of resources
(1,575,590)
NET CASH PROVIDED BY OPERATING ACTIVITIES
$ 1,363,488
SCHEDULE OF NON -CASH CAPITAL AND INVESTING ACTIVITIES
Unrealized gain on investments $ 39,160
Donated capital assests 4,090,446
See accompanying notes to the basic financial statements 29
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
STATEMENT OF FIDUCIARY NET POSITION
June 30, 2023
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
$ 3,308,822
$ -
$ 216,212
Investments:
Money markets
-
163,004
-
Mutual funds - equity
-
1,670,332
-
Mutual funds - fixed income
-
1,600,781
-
Restricted cash and investments
1,208
-
13,152,135
Receivables:
Accounts
-
-
101,216
TOTAL ASSETS
3,310,030
3,434,117
13,469,563
DEFERRED OUTFLOWS OF RESOURCES:
Deferred charge on refunding
5,396,835
-
-
LIABILITIES:
Interest payable
578,042
-
-
Long-term liabilities:
Due within one year
2,476,076
-
-
Due in more than one year
46,333,573
-
-
TOTAL LIABILITIES
49,387,691
-
-
NET POSITION:
Restricted for:
Postemployment benefits other than pensions
-
314349117
-
Individuals, organizations and other governments
(40,680,826)
-
13,469,563
TOTAL NET POSITION
$ (4096809826)
$ 394349117
$ 13,469,563
30
See accompanying notes to the basic financial statements
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
ADDITIONS:
Tax revenue
Investment income
Employer contributions
TOTAL ADDITIONS
DEDUCTIONS:
Administrative expenses
Community services
Principal
Interest
TOTAL DEDUCTIONS
CHANGE IN NET POSITION
For the year ended June 30, 2023
Successor
Agency to the
Tustin Community
Redevelopment
Agency Private
Purpose Trust
Fund
Other
Post -Employment
Benefit (OPEB)
Trust Fund
Custodial
Funds
$ 3,974,928 $ - $ 7,112,218
5,633 212,945 342,064
- 500,000 -
3,980,561 712,945 7,454,282
- 14,960 173,863
25,173 - -
- - 2,435,000
1,782,965 - 4,319,516
1,808,138 14,960 6,928,379
2,172,423
697,985 525,903
NET POSITION - BEGINNING OF YEAR
(42,853,249)
2,736,132
12,943,660
NET POSITION - END OF YEAR $
(40,680,826) $
3,434,117
$ 13,469,563
31
See accompanying notes to the basic financial statements
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
NOTES TO THE FINANCIAL
STATEMENTSC=
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DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES
a. The Financial Reporting Entity
The City of Tustin (City) was incorporated in 1927 as a "General Law" City governed by an
elected five -member city council. As required by accounting principles generally accepted in the
United States of America, these financial statements present the City of Tustin (the primary
government) and its component units. The component units discussed below are included in the
City's reporting entity because of the significance of their operational or financial relationship with
the City. These entities are legally separate from each other. However, the City of Tustin's elected
officials have a continuing full or partial accountability for fiscal matters of the other entities. The
financial reporting entity consists o£ (1) the City, (2) organizations for which the City is financially
accountable, and (3) organizations for which the nature and significance of their relationship with
the City are such that exclusion would cause the City's financial statements to be misleading or
incomplete.
An organization is fiscally dependent on the primary government if it is unable to adopt its budget,
levy taxes, or set rates or charges, or issue bonded debt without approval by the primary
government. In a blended presentation, a component unit's balances and transactions are reported
in a manner similar to the balances and transactions of the City. Component units are presented on
a blended basis when the component unit's governing body is substantially the same as the City's
or the component unit provides services almost entirely to the City and there is a financial
benefit/burden relationship.
Blended Component Units
The Tustin Public Financing Authority (the Authority) is a joint powers authority organized
pursuant to the State of California Government Code, Section 6500. The Authority exists under a
Joint Exercise of Power Agreement dated May 1, 1995. The members of the City Council
constitute the members of the Board of Directors of the Authority. The Authority is authorized to
borrow money for the purpose of financing the acquisition of bonds, notes, and other obligations
of, or for the purpose of making loans to the City and/or to refinance outstanding obligations of the
City or Assessment Districts of the City. The Authority's financial transactions consist of debt
service payments that are reported in the Water Enterprise Fund as the Authority has issued debt
for the Water Enterprise Fund.
The City of Tustin Housing Authority (the Housing Authority) was established by the City Council
in 2011 and is responsible for the administration of providing affordable housing in the City. The
Housing Authority is governed by a five -member Board of Directors which consists of members of
the City Council, which designates management and has full accountability for the Housing
Authority's financial affairs. The Housing Authority's financial transactions are reported in the
Housing Authority Special Revenue Fund.
All of the City's component units are considered to be blended component units as the City
Council serves as the governing board, management of the City has operational reasonability, and
the City is considered financially accountable for these component units. Blended component units,
although legally separate entities, are in substance, part of the City's operations and so data from
these units are reported within the funds of the primary government. These component units do not
issue separate component unit financial statements.
32
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
b. Government -wide and Fund Financial Statements
The government -wide financial statements (i.e., the statement of net position and the statement of
activities) report information about the reporting government as a whole, except for its fiduciary
activities. All fiduciary activities are reported only in the fund financial statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business -type activities, which rely to a significant extent on fees and charges for
support. Likewise, the primary government (including its blended component units) is reported
separately from discretely presented component units for which the primary government is
financially accountable. The City has no discretely presented component units.
Certain eliminations have been made as prescribed by Governmental Accounting Standards Board
(GASB) Statement No. 34 in regard 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
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.
33
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government -wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the proprietary fund and fiduciary private purpose
trust fund (fiduciary custodial funds use the economic resource 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.
34
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Property taxes, franchise taxes, licenses, intergovernmental revenue and interest associated with the
current fiscal period are all considered to be susceptible to accrual and so have been recognized as
revenues of the current fiscal period. All other revenue items are considered to be measurable and
available only when cash is received by the government.
The City's fiduciary funds consist of a private purpose trust, other post -employment benefit
(OPEB) trust, and custodial funds which are reported using the economic resources measurement
focus.
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 Park Acquisition and Development Fund is used to account for fees received from developers
and park activities to develop the City's park system.
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:
35
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Governmental Funds
Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
restricted by law or administrative action for a specified purpose.
Capital Projects Funds are used to account for financial resources to be used for the acquisition or
construction of major capital facilities.
Fiduciary Funds
Private Purpose Trust Fund is used to account for the activities of the Successor Agency to the
Tustin Community Redevelopment Agency.
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 assessment district debt for which the City is not obligated.
d. New Accounting Pronouncements
Current Year Standards
In May 2020, GASB issued Statement No. 96 — Subscription -Based Information Technology
Arrangements. This Statement provides guidance on the accounting and financial reporting for
subscription -based information technology arrangements (SBITAs) for government end users
(governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right -
to -use subscription assetan intangible asset —and a corresponding subscription liability; (3)
provides the capitalization criteria for outlays other than subscription payments, including
implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. The
requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all
reporting periods thereafter. Early application is encouraged. Assets and liabilities resulting from
SBITAs should be recognized and measured using the facts and circumstances that existed at the
beginning of the fiscal year in which this Statement is implemented.
In April 2022, GASB issued Statement No. 99 — Omnibus 2022. The objectives of this Statement
are to enhance comparability in accounting and financial reporting and to improve the consistency
of authoritative literature by addressing (1) practice issues that have been identified during
implementation and application of certain GASB Statements and (2) accounting and financial
reporting for financial guarantees. The effective date for this GASB is for the year ending June 15,
2023.
36
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
d. New Accounting Pronouncements (Continued)
Pending Accounting Standards
In June 2022, GASB issued Statement No. 100 - Accounting Changes and Error Corrections — an
amendment of GASB Statement No. 62. This statement clarifies the existing definition of
accounting changes and requires enhancements accounting and financial reporting for accounting
changes and error corrections to provide more understandable, reliable, relevant, consistent and
comparable information.
In June 2022, GASB issued Statement No. 101 — Compensated Absences. This statement clarifies
the existing recognition and measurement guidance for compensated absences. This Statement
requires that liabilities for compensated absences be recognized for (1) leave that has not been used
and (2) leave that has been used but not yet paid in cash or settled through noncash means. A
liability should be recognized for leave that has not been used if (a) the leave is attributable to
services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be
used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable
to services already rendered when an employee has performed the services required to earn the
leave. Leave that accumulates is carried forward from the reporting period in which it is earned to
a future reporting period during which it may be used for time off or otherwise paid or settled.
In estimating the leave that is more likely than not to be used or otherwise paid or settled, a
government should consider relevant factors such as employment policies related to compensated
absences and historical information about the use or payment of compensated absences. However,
leave that is more likely than not to be settled through conversion to defined benefit
postemployment benefits should not be included in a liability for compensated absences.
This Statement requires that a liability for certain types of compensated absences —including
parental leave, military leave, and jury duty leave —not be recognized until the leave commences.
This Statement also requires that a liability for specific types of compensated absences not be
recognized until the leave is used.
This Statement also establishes guidance for measuring a liability for leave that has not been used,
generally using an employee's pay rate as of the date of the financial statements. A liability for
leave that has been used but not yet paid or settled should be measured at the amount of the cash
payment or noncash settlement to be made. Certain salary -related payments that are directly and
incrementally associated with payments for leave also should be included in the measurement of
the liabilities.
37
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING 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.
Prepaids
The City uses the consumption method to record prepaid items.
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
Subscription -based IT assets 1 — 7 years
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANT ACCO UNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Capital Assets (Continued)
Lease assets are defined as assets with an initial, individual cost of more than $10,000 and an
estimated useful life of at least one year. Such assets are recorded at the present value of the lease
liability. Lease assets are amortized using the straight-line method of each leases' term.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position and the governmental funds balance sheet will
sometimes report a separate section for deferred outflows of resources. This separate financial
statement element, deferred ou flows of resources, represents a consumption of net assets 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 resulting from employer contributions made after the
measurement date of the net pension liability. These amounts are recognized in the
subsequent fiscal year. 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. Deferred outflow related to changes in assumptions, and
differences between expected and actual experience. These amounts are amortized over a
closed period equal to the average of the expected remaining service lives of all employees
provided with OPEB.
39
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Deferred Outflows/Inflows of Resources (Continued)
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 assets 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.
• 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 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.
• 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 future lease revenue which is recorded at present value at the
point of inception and is recognized over the life of each lease term.
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.
.O
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Property Taxes
Under California law, property taxes are assessed and collected by the counties up to 1 % of
assessed value, plus other increases approved by the voters. The property taxes go into a pool and
are then allocated to the cities based on complex formulas. The City accrues as revenues only those
taxes which are received within 60 days after year end in the fund financial statements.
Property Tax Calendar
Property taxes are assessed and collected each fiscal year according to the following property tax
calendar:
Lien date
January 1st
Levy period
July I" to June 30th
Levy date
On or before 4th Monday in September
Due date
November 1st - I st installment
February 1st - 2nd installment
Collection date
December loth - I st installment
April IOth - 2nd installment
Interest and penalties are assessed after the collection date.
Compensated Absences
All vested vacation and compensatory leave time is recognized as an expense and as a liability in
the proprietary type fund at the time the liability vests. Governmental fund types recognize the
vested vacation and compensatory time as an expenditure in the current year to the extent it is paid
during the year or is due and payable at year-end. For governmental activities, compensated
absences are primarily liquidated from the general fund. Any additional accrued vacation and
compensatory time relating to governmental funds and amounts relating to the proprietary fund
type are included as long-term liabilities within the government -wide statement of net position.
Leases
At the commencement of the lease, the City initially measures the payable at the present value of
payments expected to be paid during the lease term. Subsequently, the payable is reduced by the
principal portion of payments made. The lease assets are initially measured by the present value of
payments expected to be paid during the lease term. Subsequently, the lease assets are amortized
over the life of the lease term.
41
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
e. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net
Position or Equity (Continued)
Subscription -Based Information Technology (IT) Arrangements
The City is a participant in subscription -based IT arrangements as detailed in Footnote 9. The City
recognizes a subscription -based IT payable and right to use IT assets in the financial statements.
At the commencement of the arrangement, the City initially measures the payable at the present
value of payments expected to be paid during the arrangement term. Subsequently, the payable is
reduced by the principal portion of payments made. The right to use assets are initially measured at
the initial amount of the subscription -based IT payable. Subsequently, the right to use assets are
amortized over the life of the arrangement term.
Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources
related to pensions, and pension expense, information about the fiduciary net position of the City's
California Public Employees' Retirement System (Ca1PERS) plans (Plans) and additions
to/deductions from the Plans' fiduciary net position have been determined on the same basis as
they are reported by Ca1PERS. For this purpose, benefit payments (including refunds of employee
contributions) are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
Post -Employment Benefits Other Than Pensions (OPEB)
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources
related to OPEB, and OPEB expense, information about the fiduciary net position of the City's
OPEB Plan and additions to/deductions from the OPEB Plans' fiduciary net position have been
determined on the same basis as they are reported by the Plan. For this purpose, the City's OPEB
Plan recognizes benefit payments when due and payable in accordance with the benefit terms.
Investments are reported at fair value, except for money market investments that have a maturity at
the time of purchase of one year or less, which are reported at cost.
42
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE I - SUMMARY OF SIGNIFICANTA CCOUNTING POLICIES (CONTINUED)
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, 2023, 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
Fiduciary
Funds
Statement of
Net Position
Total
$ 203,478,843 $ 3,525,034 $ 207,003,877
17,701,417 13,153,343 30,854,760
10,951,986 3,434,117 14,386,103
$ 232,132,246 $ 20,112,494 $ 252,244,740
Cash and investments as of June 30, 2023, consist of the following:
Cash on hand
Deposits with financial institutions
Investments
Total cash and investments
$ 9,950
8,494,833
243,739,957
$ 252,244,740
43
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Cash and Investments (Continued)
Investments Authorized by the California Government Code and the City's Investment Policy
The table below identifies the investment types that are authorized for the City. The table also
identifies certain provisions of the City's investment policy that address interest rate risk and
concentration of credit risk. This table does not address investments of debt proceeds held by fiscal
agents that are governed by the provisions of debt agreements of the City or the funds within the
Pension Trust and OPEB Trust that are governed by the agreement between the City and the trustee,
rather than the general provisions of the California Government Code or the City's investment policy.
Investment Types Maximum
Authorized by the City's Policy Maturity
Negotiable certificates of deposit 5 years
Commercial paper 270 days
Local Agency Investment Pool (LAIF)
Orange County Investment Pool (OCIP)
Bankers acceptances
Medium -term notes
Municipal and state securities
Federal agency bonds or notes
United States (U.S.) Treasury securities
Money market mutual funds
Agency mortgage pass -through securities
Repurchase agreements
Supranationals
Shares of beneficial interest by a JPA
N/A - Not Applicable
N/A
N/A
180 days
5 years
5 years
5 years
5 years
N/A
5 years
1 year
5 years
5 years
Maximum
Percentage
of Portfolio
30%
30%
None
None
30%
30%
30%
None
None
20%
20%
30%
5%
None
Maximum
Investment in
One Issuer
5%
5%
Max permitted
by State
Treasurer
Max permitted
by County
Treasurer
5%
5%
5%
50%
None
10%
10%
5%
5%
50%
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
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 the concentration of credit risk.
Investment Types
Authorized by Debt Agreements
U.S Treasury Obligations
U.S Government Sponsored
Agency Securities
Banker's Acceptances
Commercial Paper
Money Market Mutual Funds
Investment Contracts
Certificates of Deposit
Corporate Notes
Repurchase Agreements
N/A - Not Applicable
Disclosures Relating to Interest Rate Risk
Maximum
Maturity
None
Maximum
Maximum
Percentage
Investment in
of Portfolio
One Issuer
None None
N/A
None
None
270 days
None
None
180 days
None
None
N/A
None
None
30 years
None
None
None
None
None
None
None
None
None
None
None
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of
an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair
value to changes in market interest rates. One of the ways that the City manages its exposure to interest
rate risk is by purchasing a combination of shorter term and longer -term investments and by timing
cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity
evenly over time as necessary to provide the cash flow and liquidity needed for operations.
45
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
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)
Federal Farm Credit Bank (FHLB)
Local Agency Investment Pool (LAIF)
California Asset Management Program (CAMP)
Negotiable Certificates of Deposit
Commercial Paper
Medium -term Notes
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
19,671,046 $ 6,000,220 $ 6,790,145 $ 32,461,411
-
1,836,166 -
1,836,166
14,210,622
2,869,995 -
17,080,617
-
977,954 712,494
1,690,448
-
977,853 -
977,853
18,035,024
- -
18,035,024
108,021,595
- -
108,021,595
241,771
- 1,136,749
1,378,520
2,949,938
- -
2,949,938
994,870
15,068,061 15,378,819
31,441,750
13,480,532 - - 13,480,532
520,795 -
- 520,795
5,327,090 -
- 5,327,090
5,104,101 -
- 5,104,101
163,004 - - 163,004
1,670,332 - - 1,670,332
1,600,781 - - 1,600,781
$ 191,991,501 $ 27,730,249 $ 24,018,207 $ 243,739,957
.e
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
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
Not
Investment Type
June 30, 2023
Rating
AAA
AA
A A-1
Rated
U.S. Treasury Notes
$ 32,461,411
N/A
$
$ 28,500,152
$ $ 3,961,259
$
U.S. Government Sponsored
Agency Securities:
FNMA
1,836,166
N/A
1,836,166
-
FHLB
17,080,617
N/A
6,326,252
10,754,365
-
FHLMC
1,690,448
N/A
-
-
1,690,448
FFCB
977,853
N/A
977,853
-
LAIF
18,035,024
N/A
-
18,035,024
CAMP
108,021,595
N/A
108,021,595
-
Negotiable Certificates of Deposit
1,378,520
N/A
-
1,378,520
Commercial Paper
2,949,938
A-1
-
2,949,938
-
Medium -term Notes
31,441,750
A
-
5,548,733
19,340,206 6,552,811
Held by Fiscal Agents:
Money Market Mutual Funds
13,480,532
AAA
13,480,532
-
- -
Held by Pension Trust:
Money Market Mutual Funds
520,795
N/A
520,795
-
Mutual Funds - Equity
5,327,090
N/A
-
5,327,090
Mutual Funds - Fixed Income
5,104,101
N/A
-
5,104,101
Held by OPEB Trust:
Money Market Mutual Funds
163,004
N/A
163,004
-
Mutual Funds - Equity
1,670,332
N/A
-
1,670,332
Mutual Funds - Fixed Income
1,600,781
N/A
-
-
- -
1,600,781
Total
$ 243,739,957
$ 122,185,926
$ 43,189,156
$ 19,340,206 $ 24,218,373
$ 34,806,296
47
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
Concentration of Credit Risk
Investments in any one issuer that represent five percent or more of total City's investments are as
follows:
Reported Percentage
Issuer Investment Type Amount of Portfolio
Federal Home Loan Bank United States Government $ 17,080,617 7.00%
(FHLB) Sponsored Agency Securities
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 parry. The custodial credit risk for investments is the
risk that, in the event of the failure of the counterparty (e.g., broker -dealer) to a transaction, an investor
will not be able to recover the value of its investment or collateral securities that are in the possession
of another party. The California Government Code and the City's investment policy do not contain
legal or policy requirements that would limit the exposure to custodial credit risk for deposits or
investments, other than the following provision for deposits:
The California Government Code requires that a financial institution secures deposits made by state or
local governmental units by pledging securities in an undivided collateral pool held by a depository
regulated under state law (unless so waived by the governmental unit). The fair 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, 2023, none of the City's deposits with financial institutions in excess of federal
depository insurance limits were held in uncollateralized accounts.
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.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 2 - CASHAND INVESTMENTS (CONTINUED)
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.
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
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
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, 2023:
U.S. Treasury Notes
U.S. Government Sponsored
Agency Securities:
FNMA
FHLB
FHLMC
FFCB
Negotiable Certificates of Deposit
Commercial Paper
Medium -term Notes
Held by Pension Trust:
Mutual Funds - Equity
Mutual Funds - Fixed Income
Held by OPEB Trust:
Mutual Funds - Equity
Mutual Funds - Fixed Income
Total Leveled Investments
LAIF*
CAMP*
Money Market Mutual Funds*:
Held by Fiscal Agents
Held by Pension Trust
Held by OPEB Trust
Total Investment Portfolio
Quoted
Observable
Unobservable
Prices
Inputs
Inputs
Level
Level
Level Total
$ -
$ 32,461,411
$ - $ 32,461,411
-
1,836,166
- 1,836,166
-
17,080,617
- 17,080,617
-
1,690,448
- 1,690,448
-
977,853
- 977,853
-
1,378,519
- 1,378,519
-
2,949,938
- 2,949,938
-
31,441,751
- 31,441,751
5,327,090
-
- 5,327,090
5,104,101
-
- 5,104,101
1,670,332 -
1,600,781 -
$ 13,702,304 $ 89,816,703
* Not subject to fair value measurement hierarchy.
1,670,332
- 1,600,781
103,519,007
18,035,024
108,021,595
13,480,532
520,795
163,004
$ 243,739,957
50
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
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, 2023,
including accrued interest of $10,024 was $360,024.
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, 2023, was $12,840. An allowance of $12,840 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 1/301h. 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, 2023, including accrued interest of $51,402, was $442,268. An allowance of $442,268 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, 2023, including accrued interest of $610, was $66,113.
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, 2023, the total
outstanding principal balance was $92,478,647. An allowance of $87,854,715 has been recorded to
reflect the amount of the note not expected to be collectible.
51
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 3 - LOANS RECEIVABLE (CONTINUED)
Family Promise Loan: On February 18, 2020, the Housing Authority entered into an agreement with
Family Promise of Orange County, whereby the City agreed to convey real property for the
development of transitional housing units for homeless families. In exchange, Family Promise
executed a promissory note to the City in the amount of $1,000,000 on May 12, 2022. The note is
payable after 30 years with 3% interest. For each year that Family Promise complies with all
applicable terms, conditions, and covenants of the agreement, 1/30 of both principal and interest shall
be forgiven. The total outstanding balance at June 30, 2023, including accrued interest of $37,068, was
$1,037,068. An allowance of $1,037,068 has been recorded to reflect the amount of the note not
expected to be collectible.
NOTE 4 - INTERFUND TRANSFERS AND ADVANCES
The composition of interfund transfers for the year ended June 30, 2023, is as follows:
Transfers In
General Fund
General Fund
Housing Authority Fund
Other Governmental Funds
Transfers Out
ARPA Fund
Other Governmental Funds
ARPA Fund
General Fund
Amount
$ 3,400,000
5,238,611
439,787
6,450,000
$ 15,528,398
The transfers during the fiscal year ended June 30, 2023, were for the following purposes:
ARPA Fund transferred to the General Fund $3,400,000 for revenue replacement intended to cover
public safety salaries.
Other governmental fund (Special Tax B Special Revenue Fund) transferred $5,059,557 to the General
Fund for eligible Special Tax B area expenditures.
Other governmental fund (Measure M Special Revenue Fund) transferred $179,054 to the General
Fund for eligible Measure M expenditures.
ARPA Fund transferred to the Housing Authority Fund $439,787 for homeless shelter expenditure.
General Fund transferred to other governmental fund (Other Capital Projects Fund) $6,450,000 for
capital and maintenance expenditures.
52
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 4 - INTERFUND TRANSFERS AND ADVANCES (CONTINUED)
The composition of interfund advances for the year ended June 30, 2023, is as follows:
Advance From Advance To Amount
General Fund Water Enterprise Fund $ 3,830,700
The General Fund advanced a total of $3,830,700 to the Water Enterprise Fund to replenish cash to
meet bond covenant requirements. The advance accrues interest at a 3.5% annual interest rate and has a
maturity date no later than July 1, 2030.
NOTE S - LAND HELD FOR RESALE
Land held for resale as of June 30, 2023, consisted of the following:
General Fund
Pacific Center East* $ 30,380,902
Tustin Legacy 72,076,871
Total Land Held for Resale $ 102,457,773
*Pacific Center East includes several parcels bordered by Del Amo, Valencia, Edinger and Newport Avenue.
In November 2022, the City sold the property at 2061 Valhalla Drive for $1,750,000 resulting in a loss
on land held for resale of $207,603.
In January 2023, the City sold the property at 11781 Outlook Lane for $1,350,000 resulting in a loss on
land held for resale of $456,197.
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,
53
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED)
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 in August 2014 and was considered an even
exchange.
The City also entered into a separate agreement with the SOCCCD in July 2014 to acquire the
Valencia Parcels, approximately five 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 five 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.
54
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 6 - LAND TRANSFER FROM THE UNITED STATES GOVERNMENT (CONTINUED)
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.
In September 2021, the City sold 25.44 acres of land to a developer for $61,500,000 resulting in a gain
on land held for resale of $56,048,775.
Additionally, in September of 2021 the City of Tustin took title to approximately 7.93 acres of
property at the Tustin Legacy, which was former Lease in Furtherance of Conveyance (LIFOC)
property. The property consists of Carveout 2 (6.23 acres) and Carveout 9 (1.7 acres). In May 2022,
4.74 acres associated with Carveout 2 was sold to a land developer for $1,784,115. An additional 1.49
acres of Carveout 2 and 0.14 acres of Carveout 9 were reclassified by the City out of land held for
resale to appropriately record the assets as rights -of -way. The remaining 1.56 acres from Carveout 9
remains in land held for resale at a value of $587,177.
The recorded value of the remaining conveyed parcels as of June 30, 2023, was $72,076,871. 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.
NOTE 7 —LEASE RECIEVABLES
The City is a lessor in 18 noncancellable leases for use of City land and buildings. The lessees are
required to make fixed monthly payments ranging from $500 to $43,680 per month. The City
recognized $1,784,662 in lease revenue and $123,260 in interest revenue during the current fiscal year
related to these agreements. As of June 30, 2023, the lease receivable is $9,161,417 and deferred
inflows of resources is $8,778,411. A schedule of future payments is included below:
June 30,
Principal
2024
$ 1,443,466
2025
1,680,076
2026
1,710,411
2027
471,800
2028
390,153
2029 - 2033
2,009,563
2034 - 2038
1,106,736
Interest Total
$ 187,090 $ 1,630,556
153,531 1,833,607
111,434
82,854
75,503
260,805
96,422
2039 - 2041 349,212 9,543
Totals $ 9,161,417 $ 977,182
1,821,845
554,654
465,656
2,270,368
1,203,158
358,755
$ 10,138,599
55
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - CAPITAL ASSETS
A summary of changes in the Governmental Activities capital assets for the year ended June 30, 2023,
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
Lease assets
Subscription -based IT assets*
Total capital assets,
being depreciated
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Lease assets
Subscription -based IT assets*
Total accumulated
depreciation
Total capital assets,
being depreciated, net
Total governmental activities
capital assets, net
Balance at
June 30, 2022*
AAAitinnc
Deletions
Balance at
June 30, 2023
$ 105,254,634
$ -
$ -
$ 105,254,634
45,926,681
-
-
45,926,681
12,727,986
11,555,638
(17,653,966)
6,629,658
163,909,301
11,555,638
(17,653,966)
157,810,973
86,713,891
-
(5,580)
86,708,311
72,887,063
2,713,140
(53,674)
75,546,529
18,667,270
1,733,994
(212,799)
20,188,465
413,634,366
14,637,463
(2,737,965)
425,533,864
649,132
16,566
-
665,698
2,797,692
-
-
2,797,692
595,349,414
19,101,163
(3,010,018)
611,440,559
(26,106,524)
(1,695,371)
5,580
(27,796,315)
(16,869,816)
(2,831,607)
32,771
(19,668,652)
(13,292,502)
(1,448,250)
212,615
(14,528,137)
(157,661,254)
(13,217,650)
2,422,082
(168,456,822)
(129,203)
(154,379)
-
(283,582)
-
(562,100)
-
(562,100)
(214,059,299)
(19,909,357)
2,673,048
(231,295,608)
381,290,115
(808,194)
(336,970)
380,144,951
$ 545,199,416 $ 10,747,444 $ (17,990,936) $ 537,955,924
* - Balance at June 30, 2022 has been restated to implement GASB Statement No. 96.
56
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 8 - CAPITAL ASSETS (CONTINUED)
Depreciation expense was charged to functions/programs of the governmental activities as follows:
General Government $ 2,980,435
Public Safety 435,414
Public Works 14,331,452
Community Services 2,162,056
Total $ 19,909,357
A summary of changes in the Business -type Activity capital assets for the year ended June 30, 2023, 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, 2022
Additions Deletions
June 30, 2023
$ 1,177,216
$ - $ -
$ 1,177,216
2,519,231
5,093,044 -
7,612,275
3,696,447
5,093,044 -
8,789,491
16,498,710
- -
16,498,710
83,464,800
198,880 -
83,663,680
99,963,510
198,880 -
100,162,390
(6,660,148)
(349,169) -
(7,009,317)
(32,419,137)
(2,181,645) -
(34,600,782)
(39,079,285)
(2,530,814) -
(41,610,099)
60,884,225
(2,331,934) -
58,552,291
$ 64,580,672
$ 2,761,110 $ -
$ 67,341,782
57
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 9 - LONG-TERM LIABILITIES
A summary of long-term liability activity for the year ended June 30, 2023, is as follows:
Balance
July 1, 2022*
Governmental Activities:
Additions
Deletions
Balance Due Within
June 30, 2023 One Year
Claims and judgments
$ 10,428,570
$ 744,173
$ (1,843,644)
$ 9,329,099
$
1,303,009
Subscription -based IT payable
2,646,633
-
(525,382)
2,121,251
640,128
Lease payable
564,529
16,566
(113,146)
467,949
198,553
Compensated absences
4,957,206
3,770,145
(3,771,699)
4,955,652
3,716,739
Total governmental activities
long-term liabilities
$ 18,596,938
$ 4,530,884
$ (6,253,871)
$ 16,873,951
$
5,858,429
Business -type Activities:
2012 Refunding
Water Revenue Bonds
$ 960,000
$ -
$ (960,000)
$ -
$
-
Bond premium
61,317
-
(61,317)
-
-
2016 Water Refunding
Revenue Bonds
21,515,000
-
-
21,515,000
905,000
Bond premium
1,012,643
-
(52,604)
960,039
52,604
2020 Taxable Water
Refunding Revenue Bonds
14,540,000
-
(205,000)
14,335,000
440,000
Compensated absences
372,729
319,189
(341,085)
350,833
263,125
Total business -type activity
long-term liabilities
$ 38,461,689
$ 319,189
$ (1,620,006)
$ 37,160,872
$
1,660,729
* - Balance at June 30, 2022 has been restated to implement GASB Statement No. 96.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 9 - LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities
Subscription -Based Information Technology (IT) Arrangements Pgyable
The City has entered into 18 subscription -based IT arrangements for various software applications and
is required to make annual principal and interest payments ranging from $1,815 to $172,746 over the
arrangement terms. The payable at June 30, 2023, was $2,121,251. The future principal and interest
lease payments as of June 30, 2023, were as follows:
June 30,
2024
2025
2026
2027
2028
2029 - 2030
Totals
Lease Pqyable
Principal
$ 640,128
626,668
303,439
208,879
137,631
204,506
$ 2,121,251
Interest
Total
$ 56,474 $
696,602
37,879
664,547
21,032
324,471
13,283
222,162
7,725
145,356
5,694
210,200
$ 142,087 $
2,263,338
The City has entered into ten leases as a lessee for facilities, vehicles and equipment and is required to
make principal and interest payments ranging from $485 to $3,844 over the lease terms. The lease
liability at June 30, 2023, was $467,949. The future principal and interest lease payments as of June
30, 2023, were as follows:
June 30,
Principal
2024
$ 198,553
2025
122,906
2026
111,012
2027
35.478
Interest
$ 18,723 $
8,656
4,602
939
Totals $ 467,949 $
32,920 $
Total
217,276
131,562
115,614
36,417
500,869
59
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 9 - LONG-TERM LIABILITIES (CONTINUED)
Business -type Activity
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, 2023, is $2,389,848.
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, 2023, total
interest and principal remaining on the bonds is $28,642,662. During the fiscal year, the total interest
expense incurred was $687,300, no principal payment was due, and net revenues were $4,308,093.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 9 - 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,
2024
2025
2026
2027
2028
2029 - 2033
2034 - 2038
2039 - 2041
Subtotals
Principal
$ 905,000
925,000
950,000
975,000
1,015,000
5,575,000
6,670,000
4,500,000
21,515,000
Interest
$ 687,300
669,200
645,450
615,450
576,450
2,378,125
1,283,287
272,400
7,127,662
Total
$ 1,592,300
1,594,200
1,595,450
1,590,450
1,591,450
7,953,125
7,953,287
4,772,400
28,642,662
Add: Premium 960,039 - 960,039
Totals $ 22,475,039 $ 7,127,662 $ 29,602,701
2020 Taxable Water Refunding Revenue Bonds
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.
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, 2023, is $661,174.
61
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 9 - 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, 2023, total
interest and principal remaining on the bonds is $19,961,616. During the fiscal year, the total interest
expense incurred was $400,608, principal payments were $205,000, and net revenues were $4,308,093.
The annual debt service requirements to amortize the bonds are as follows:
June 30,
2024
2025
2026
2027
2028
2029-2033
2034-2038
2039-2043
Totals
NOTE 10 - PENSION PLANS
Principal
$ 440,000
445,000
450,000
465,000
475,000
2,545,000
2,910,000
6,605,000
$ 14,335,000
a. General Information about the Pension Plans
Plan Descriptions
Interest
$ 397,240
389,721
381,760
373,169
363,827
1,652,483
1,294,928
773,488
$ 5,626,616
Total
$ 837,240
834,721
831,760
838,169
838,827
4,197,483
4,204,928
7,378,488
$ 19,961,616
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.
62
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - PENSION PLANS (CONTINUED)
a. General Information about the Pension Plans (Continued)
Benefits Provided
Ca1PERS provides service retirement and disability retirement benefits, annual cost of living
adjustments and death benefits to plan members, who must be public employees or their
beneficiaries. Benefits are based on three factors: service credit (up to one year of service per fiscal
year), benefit factor (based on plan and age at retirement), and final compensation (highest
pensionable compensation for a consecutive 12- or 36-month period, depending on plan).
Members with five years of total service are eligible to retire at age 50 to 62 with statutorily
reduced benefits. Members of all but one plan available to employees are eligible to retire upon
reaching age 50 and attaining five 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 five years of service. All members are eligible for non -duty disability retirement benefits
after five 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
$ (33,620,118) $ (47,370,171)
13,663,684
5,683,328
23,968,413
(4,038,631)
6,074,294
Total
$ (80,990,289)
37,632,097
(4,038,631)
11,757,622
63
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - 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, 2022, 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 unfimded 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+
2.00% 2.00%
10.00% 10.00%
9.06%
$2,740,081
On or After
January 1, 2013
2%@62
5 years of service
monthly for life
52+
2.00%
6.25%
The Plans' provisions and benefits in effect at the measurement date ended June 30, 2022, 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
3%@50
5 years of service
monthly for life
50+
3.00%
12.00%
23.75%
$ 3,508,683
S
January 1, 2012 to
December 31, 2012
2%@50
5 years of service
monthly for life
50+
2.00%
12.00%
18.17%
$ 12,801
Vn or Auer
January 1, 2013
2.7%@57
5 years of service
monthly for life
50+
2.70%
13.00%
12.78%
$ 27,231
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - PENSION PLANS (CONTINUED)
a. General Information about the Pension Plans (Continued)
Employees Covered
At the measurement date ended June 30, 2022, the following employees were covered by the
benefit terms for the Miscellaneous Plan:
Miscellaneous
Inactive employees or beneficiaries currently receiving benefits 309
Inactive employees entitled to but not yet receiving benefits 296
Active employees 214
Total 819
Contributions
Section 20814(c) of the California Public Employees' Retirement Law requires that the employer
contribution rates for all public employers are determined on an annual basis by the actuary and
shall be effective on the July 1 following notice of a change in the rate. The total plan contributions
are determined through Ca1PERS' annual actuarial valuation process. The actuarially determined
rate is the estimated amount necessary to finance the costs of benefits earned by employees during
the year, with an additional amount to finance any unfunded accrued liability. The City is required
to contribute the difference between the actuarially determined rate and the contribution rate of
employees. City contribution rates may change if plan contracts are amended. Payments made by
the employer to satisfy contribution requirements that are identified by the pension plan terms as
plan member contributions requirements are classified as plan member contributions. The liability
for governmental activities is primarily liquidated from the General Fund and the liability for
business -type activities is liquidated from the Water Enterprise Fund.
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, 2022, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30,
2022 using standard update procedures. A summary of principal assumptions and methods used to
determine the net pension liability is shown on the next page.
65
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - PENSION PLANS (CONTINUED)
b. Net Pension Liability (Continued)
Actuarial Assumptions
The total pension liabilities in the June 30, 2022 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 Safety
June 30, 2021 June 30, 2021
June 30, 2022 June 30, 2022
Entry -Age Actuarial Entry -Age Actuarial
Cost Method Cost Method
6.90%
6.90%
2.30%
2.30%
(1)
(1)
(2)
(2)
(3)
(3)
(1) Varies by entry age and service.
(2) The mortality table used was developed based on CAPERS -specific data. The probabilities
of mortality are based on the 2021 Ca1PERS Experience Study for the period from 2001 to
2019. Pre -retirement and Post -retirement mortality rates include generational mortality
improvement using 80% of Scale MP-2020 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 November 2021 that can be found on the Ca1PERS website.
(3) The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance Floor
on purchasing power applies, 2.30% thereafter.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - 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. Using historical returns of all of the funds' asset classes,
expected compound (geometric) returns were calculated over the next 20 years using a building-
block approach. The expected rate of return was then adjusted to account for assumed
administrative expenses of 10 Basis points. The expected real rates of return by asset class are as
follows:
Asset Class'
Global Equity - Cap -weighted
Global Equity - Non -Cap -weighted
Private Equity
Treasury
Mortgage -backed Securities
Investment Grade Corporates
High Yield
Emerging Market Debt
Private Debt
Real Assets
Leverage
Assumed
Asset
Real
Allocation
Return"'
30.00%
4.54%
12.00%
3.84%
13.00%
7.28%
5.00%
0.27%
5.00%
0.50%
10.00%
1.56%
5.00%
2.27%
5.00%
2.48%
5.00%
3.57%
15.00%
3.21 %
-5.00%
-0.59%
- An expected inflation of 2.30% used for this period.
- Figures are based on the 2021 Asset Liability Management study.
67
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - PENSION PLANS (CONTINUED)
b. Net Pension Liability (Continued)
Discount Rate
The discount rate used to measure the total pension liability was 6.90%. 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.
On July 12, 2021, Ca1PERS reported a preliminary 21.3% net return on investments for fiscal year
2020-21. Based on the thresholds specified in Ca1PERS Funding Risk Mitigation policy, the excess
return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in
the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since Ca1PERS was
in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to
defer any changes to the asset allocation until the ALM process concluded, and the board could
make its final decision on the asset allocation in November 2021.
On November 17, 2021, the board adopted a new strategic asset allocation. The new asset
allocation along with the new capital market assumptions, economic assumptions and
administrative expense assumption support a discount rate of 6.90% (net of investment expense but
without a reduction for administrative expense) for financial reporting purposes. This includes a
reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November
2021 Ca1PERS Experience Study and Review of Actuarial Assumptions. This study also
recommended modifications to retirement rates, termination rates, mortality rates and rates of
salary increases that were adopted by the board. These new assumptions are reflected in the GASB
68 accounting valuation reports for the June 30, 2022, measurement date.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - PENSION PLANS (CONTINUED)
c. Changes in the Net Pension Liability
The changes in the net pension liability for the Miscellaneous Plan are as follows:
Balance at June 30, 2021
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total pension liability
Differences between actual and
expected experience
Changes in assumptions
Contribution - employer
Contribution - employee
Net investment income
Administrative expenses
Benefit payments, including refunds
of employee contributions
Net Changes
Balance at June 30, 2022
(Measurement Date)
Increase (Decrease)
Total
Plan
Net Pension
Pension
Fiduciary
Liability
Liability
Net Position
(Asset)
$138,684,172
$126,134,984
$ 12,549,188
3,049,919
-
3,049,919
9,777,454
-
9,777,454
134,069
-
134,069
4,647,187
-
4,647,187
-
4,877,030
(4,877,030)
-
1,239,440
(1,239,440)
-
(9,500,196)
9,500,196
-
(78,575)
78,575
(6,576,321)
(6,576,321)
-
11,032,308
(10,038,622)
21,070,930
$149,716,480 $116,096,362 $ 33,620,118
As of June 30, 2023, the City reported $47,370,171 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, 2022, 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, 2021 rolled forward to June 30, 2022 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.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - PENSION PLANS (CONTINUED)
c. Changes in the Net Pension Liability (Continued)
The City's proportionate share of the net pension liability for the Safety Plan as of measurement
dates ended June 30, 2021 and 2022 was as follows:
Proportion - June 30, 2021
Proportion - June 30, 2022
Change - Increase (Decrease)
Safety
0.66329%
0.68936%
0.02607%
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 6.90%, 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
5.90% 5.90%
$ 54,248,228
6.90%
$ 33,620,118
7.90%
$ 16,691,413
$ 72,476,220
6.90%
$ 47,370,171
7.90%
$ 26,851,648
Detailed information about each pension plan's fiduciary net position is available in the separately
issued Ca1PERS financial reports.
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2023, the City recognized pension expense of $5,683,328 and
$6,074,294 for the Miscellaneous and Safety Plans, respectively. At June 30, 2023, the City
reported deferred outflows of resources and deferred inflows of resources related to pensions from
the following sources:
Iff
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Pension contributions subsequent to measurement date
Differences between actual and expected experience
Change in assumptions
Net differences between projected and actual
earnings on plan investments
Total
Pension contributions subsequent to measurement date
Differences between actual and expected experience
Change in assumptions
Change in employer's proportion and differences
between the employer's contributions and the
employer's proportionate share of contributions
Net differences between employer's contributions and
proportionate share of contributions
Net differences between projected and actual
earnings on plan investments
Total
Miscellaneous
Deferred
Deferred
Outflows
Inflows
of Resources
of Resources
$ 4,333,352
$ -
537,516
-
3,098,125
-
5,694,691
-
$ 13,663,684
$ -
Safety
Deferred
Deferred
Outflows
Inflows
of Resources
of Resources
$ 6,729,176
$ -
1,960,479
(514,403)
4,776,347
-
3,021,999 (43,253)
- (3,480,975)
7,480,412 -
$ 23,968,413 $ (4,038,631)
Deferred outflows of resources $4,333,352 and $6,729,176 reported in the Miscellaneous and
Safety Plans, respectively, are related to contributions subsequent to the measurement date and will
be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2024.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related
to pensions will be recognized as pension expense as follows:
71
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 10 - PENSION PLANS (CONTINUED)
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Fiscal Year
Ending
June 30,
Miscellaneous
Safety
2024
$ 2,937,070
$ 3,793,791
2025
2,380,472
3,102,628
2026
377,681
1,741,042
2027
3,635,109
4,563,145
2028
-
-
Thereafter
-
-
NOTE 11 - POST -EMPLOYMENT HEALTH CARE BENEFITS
a. General Information about the OPEB Plan
Plan Description
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 CalPERS
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.
72
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE H - 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, 2021, valuation date, the benefit terms covered the following employees:
Inactive employees or beneficiaries currently receiving benefits 139
Active employees 294
Total 433
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.
73
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE H - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
a. General Information about the OPEB Plan (Continued)
Method Used to Value Investments
Investments are reported at fair value, which is determined by the mean of the most recent bid and
asked prices as obtained from dealers that make markets in such securities. Securities for which
market quotations are not readily available are valued at their fair value as determined by the
custodian with the assistance of a valuation service.
Contributions
The contribution requirements of plan members and the City are established and may be amended
by City Council. Currently, contributions are not required from plan members. Administrative
costs of the OPEB plan are financed through investment earnings. The annual contribution is based
on the actuarially determined contributions.
For measurement period ending June 30, 2023, the City contributed $500,000 to the PARS OPEB
trust, made payments of $572,305 to insurance providers and retirees, and the estimated implied
subsidy was $273,505, resulting in total contributions of $1,345,810. The liability for governmental
activities is primarily liquidated from the General Fund and the liability for the business -type
activity is liquidated from the Water Enterprise Fund.
b. Net OPEB Liability
The City's net OPEB liability was measured as of June 30, 2023 and the total OPEB liability used
to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2021
rolled forward to June 30, 2023 using standard update procedures. A summary of the principal
assumptions and methods used to determine the total OPEB liability is shown on the next page.
Z1
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE H - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
b. Net OPEB Lability (Continued)
Actuarial Assumptions
The net OPEB liability in the June 30, 2021 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 tern investment rate of return
Inflation
Salary Increase
Healthcare Cost Trend Rates
Pre -Retirement Mortality:
Miscellaneous
Safety
Post -Retirement Mortality:
Miscellaneous
Safety
June 30, 2021
June 30, 2023
Entry -Age Normal Level Percentage of Salary
6.25%
6.25% net of OPEB plan investment expense
2.75%
2.75%.
4.00% for 2023; 5.20 percent for 2024 to 2069; and
4.00% for 2070 and later years; Medicare ages: 3.50%
for all years
Preretirement Mortality Rates for Public Agency
Miscellaneous from 2021 Ca1PERS Experience Study.
Preretirement Mortality Rates for Public Agency Police
from 2021 CaIPERS Experience Study.
Postretirement Mortality Rates for Public Agency
Miscellaneous from 2021 Ca1PERS Experience Study.
Postretirement Mortality Rates for Public Agency Police
from 2021 Ca1PERS Experience Study.
Actuarial assumptions used in the June 30, 2021 valuation were based on a review of plan
experience during the period June 30, 2019 to June 30, 2021.
75
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE H - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
b. Net OPEB Lability (Continued)
Actuarial Assumptions (Continued)
The long-term expected rate of return on OPEB plan investments was determined using a building-
block method in which expected future real rates of return (expected returns, net of 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).
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% 1.80%
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.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE H - 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, 2022
(Measurement Date)
Changes in the Year:
Service cost
Interest on the total OPEB liability
Contribution - employer
Net investment income
Benefit payments
Administrative expenses
Net Changes
Balance at June 30, 2023
(Measurement Date)
Change of Assumptions
Increase (Decrease)
Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability
$ 16,067,699 $ 2,736,132 $ 13,331,567
546,336
-
1,012,346
-
-
1,345,810
-
212,945
(845,810)
(845,810)
-
(14,960)
712,872
697,985
546,336
1,012,346
(1,345,810)
(212,945)
14,960
14,887
$ 16,780,571 $ 3,434,117 $ 13,346,454
From measurement date June 30, 2022 to measurement date June 30, 2023, there were no changes
in assumptions.
77
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE H - POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
c. Changes in the net OPEB liability (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City, as well as what the City's net OPEB
liability would be if it were calculated using a discount rate that is 1-percentage point lower or
1-percentage point higher than the current discount rate:
Net OPEB Liability
1 % Decrease
(5.25%)
$ 15,233,238
Discount Rate
(6.25%)
$ 13,346,454
1% Increase
(7.25%)
$ 11,749,698
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:
Current Healthcare
1% Decrease Cost Trend Rates 1% Increase
Net OPEB Liability $ 11,789,645 $ 13,346,454 $ 15,390,506
d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2023, the City recognized OPEB expense of $1,304,364. At June 30,
2023, the City reported deferred outflows of resources and deferred inflows of resources related to
OPEB from the following sources:
Differences between actual and expected experience
Change in assumptions
Differences between projected and actual earnings
on investments
Total
Deferred
Deferred
Outflows
Inflows
of Resources
of Resources
$ 433,339
516,764
195,840
$ 1,145,943
$ (1,096,586)
(443,608)
$ (1,540,194)
78
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 11- POST -EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)
d. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)
Amounts reported as deferred inflows of resources related to OPEB will be recognized as OPEB
expense as follows:
Fiscal Year
Ending
June 30,
Amount
2024
$ (78,346)
2025
(83,879)
2026
(27,244)
2027
(134,411)
2028
(108,938)
Thereafter
38,567
NOTE 12 - IRS SECTION 457 DEFERRED COMPENSATION PLAN
In accordance with federal law, all part-time employees must be enrolled in Social Security or another
"qualified" retirement plan. Since the City does not participate in Social Security, part-time employees
are enrolled in the City's IRS Section 457 deferred compensation plan. Nationwide Retirement
Solutions, Inc. acts as the third -party administrative services provider for the defined contribution plan.
Employees are required to contribute 5.5% of their salary to the deferred compensation plan every pay
period. The City contributes an additional 2% of salary, for a total contribution of 7.5%. The City
Council established the plan by resolution in fiscal year 2011-2012 and has the authority to amend
contribution requirements. Contributions to the participant's 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 2023 were $107,647.
NOTE 13 - SELF-INSURANCE PROGRAMIRISKPOOL
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.
191
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 13 - SELF-INSURANCE PROGRAMIRISKPOOL (CONTINUED)
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, 2023. At June 30, 2023, estimated claims payable of $9,329,099, 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, 2023 and 2022, including a
provision for incurred but not reported claims and loss adjustment expenses, were as follows:
Beginning Ending
June 30, Balance Additions Deletions Balance
2022 $ 9,303,222 $ 2,132,017 $ (1,006,669) $ 10,428,570
2023 10,428,570 744,173 (1,843,644) 9,329,099
NOTE 14 - SPECIAL ASSESSMENT DISTRICTS' BONDS
Special assessment districts exist in various parts of the City to provide improvements to properties
located in those districts. Properties are assessed for the cost of improvements; these assessments are
payable over the term of the debt issued to finance the improvements and must be sufficient to repay
this debt. The bonds listed below were issued pursuant to the Refunding Act of 1984 for the
1915 Improvement Act Bonds and the Improvement Bond Act of 1915. They are the liabilities of the
property owners and 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.
:1
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 14 - SPECIAL ASSESSMENT DISTRICTS' BONDS (CONTINUED)
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
Conunanity Facilities District 06-1, 2015B
Coma u *y Facilities District 07-1, 2015A
Coma u *y Facilities District 2014-01, 2015A
Amount
of Issue
$ 9,350,000
49,740,000
2,735,000
13,155,000
Outstanding
June 30, 2023
$ 6,315,000
42,270,000
2,065,000
12,410,000
27,665,000 26,200,000
$ 102,645,000 $ 89,260,000
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, 2023, the outstanding amount of the Special Tax Refunding Bonds, Series 2013 was $6,315,000.
In November 2015, the City issued $27,665,000 Community Facilities District No. 2014-01 Special
Tax Bonds, Series 2015A (CFD 2014-01 2015A Special Tax Bonds). The CFD 2014-01 2015A
Special Tax Bonds were issued to finance certain infrastructure improvements and school facilities,
fund a reserve account, and pay for costs of issuance and administrative costs. Serial current interest
bonds will mature from September 1, 2016 to September 1, 2035 with interest rates ranging from 2.0%
to 5.0%. Term current interest bonds will mature on September 1, 2040 and September 1, 2045, with
mandatory sinking payments from September 1, 2036 through September 1, 2045 with interest rates of
5.0%. At June 30, 2023, the outstanding amount of the CFD 2014-01 2015A Special Tax Bonds was
$26,200,000.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 14 - SPECIAL ASSESSMENT DISTRICTS' BONDS (CONTINUED)
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, 2023, the outstanding amount of the CFD 07-1 2015A
Refunding Bonds was $12,410,000.
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, 2023, the outstanding amount of the CFD 06-01 2015A Refunding Bonds was
$42,270,000.
In November 2015, the City issued $2,735,000 Community Facilities District No. 06-1 Special Tax
Bonds, Series 2015B (CFD 06-1 Special Tax 2015B Bonds). The CFD 06-1 Special Tax 2015B Bonds
were issued to finance public improvements, fund a reserve account, and pay for costs of issuance.
Serial current bonds will mature from September 1, 2016 to September 1, 2033 with interest rates
ranging from 2.0% to 3.75%. Term current interest bonds will mature on September 1, 2035 with an
interest rate of 3.75%, and September 1, 2037 with an interest rate of 3.75% with mandatory sinking
fund payments due September 1, 2035 through September 1, 2037. At June 30, 2023, the outstanding
amount of the CFD 06-1 Special Tax 2015B Bonds was $2,065,000.
NOTE 15 - GOVERNMENTAL FUND BALANCE CLASSIFICATIONS
The fund balances reported on the fund statements consist of the following categories:
Nonspendable - This classification includes amounts that cannot be spent because they are either
(a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted - This classification includes amounts that can be spent only for specific purposes stipulated
by constitution, external resource providers or through enabling legislation.
FIX
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 15 - GOVERNMENTAL FUND BALANCE CLASSIFICATIONS (CONTINUED)
Committed - This classification includes amounts that can be used only for the specific purposes
determined by a formal action of the City's highest level of decision -making authority. The City
Council is the highest level of decision -making authority for the City that can, by adoption of an
ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation
imposed by the ordinance remains in place until a similar action is taken (the adoption of another
ordinance) to remove or revise the limitation.
Assigned - This classification includes amounts that are intended to be used for specific purposes as
indicated by City Council or by persons to whom City Council has delegated the authority to assign
amounts for specific purposes. The City Council has not delegated such authority.
Unassigned - This classification includes the residual balance for the City's general fund including all
spendable amounts not contained in other classifications. Negative fund balance in governmental
funds, after determining the fund balance classifications described above, is also reported as
unassigned fund balance. The General Fund is the only fund that reports a positive unassigned fund
balance amount.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund balances
are available, the City's policy is to apply restricted fund balance first.
When an expenditure is incurred for purposes for which committed, assigned or unassigned fund
balances are available, the City's policy is to apply committed fund balance first, then assigned fund
balance, and finally unassigned fund balance.
FIN
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 15 - GOVERNMENTAL FUND BALANCE CLASSIFICATIONS (CONTINUED)
Parks
Development
Other
Total
General
Housing
& Acquisition
Governmental
Governmental
Fund
Authority
Fund
Funds
Funds
Nonspendable:
Prepaid items
$ 1,154,735
$ -
$ -
$ 7,301
$ 1,162,036
Land held for resale
102,457,773
-
-
-
102,457,773
Loan receivable
65,503
-
-
-
65,503
Advances to other funds
3,830,700
-
-
-
3,830,700
Restricted for:
Capital projects (1)
15,760,068
-
-
14,681,392
30,441,460
Public safety program
301,415
-
-
915,184
1,216,599
Community services
453,522
-
-
-
453,522
Housing projects
-
353,332
-
2,089,584
2,442,916
Solid waste program
-
-
-
1,713,439
1,713,439
Pension
10,951,986
-
-
-
10,951,986
Assigned to:
Capital projects (2)
-
-
1,798,193
10,479,549
12,277,742
Unassigned
139,772,869
-
-
(97,462)
139,675,407
Total fund balances
$ 274,748,571
$ 353,332
$ 1,798,193
$ 29,788,987
$ 306,689,083
(1) Restricted for capital projects:
• General Fund $15,564,382 - legally restricted for backbone infrastructure at the Tustin Legacy
development.
• General Fund $195,686 — retention withheld in restricted escrow account to be paid to contractors
once projects are completed.
• Other Governmental Funds:
o Gas Tax Special Revenue Fund $5,035,908 - comprised of state gas taxes restricted for
allowable street -related purposes.
o Air Quality Special Revenue Fund $253,413 - restricted for projects to reduce pollution.
o Road Maintenance and Rehabilitation Special Revenue Fund $5,830,407 - restricted for
maintenance and rehabilitation of streets.
o Measure M Special Revenue Fund $3,151,223 - state gas taxes restricted for allowable street -
related purposes.
o Construction 95-1 Capital Projects Fund $332,609 - restricted for uses specified in the bond
indenture.
o Other Capital Projects Fund $11,410 - retention amounts withheld in restricted escrow accounts
to be paid to contractors once projects are completed.
o CFD Construction Capital Projects Fund $66,422 - comprised of bond proceeds restricted for
uses specified in the bond indenture.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 15 - GOVERNMENTAL FUND BALANCE CLASSIFICATIONS (CONTINUED)
(2) Assigned to capital projects:
• Other Capital Projects Fund $10,479,549 — for specific projects indicated in the adopted budget.
• Park Acquisition and Development Special Revenue Fund $1,798,193 — comprised of park fees for
improvement of City parks.
NOTE 16 - OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES
Excess of Expenditures over Appropriations
Final Variance with
Budget Actual Final Budget
Other Governmental Funds:
Special Tax B Fund $ - $ 7,000 $ 7,000
NOTE 17 - JOINT PO WERS A UTHORITY
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 (Fire
Authority). The purpose of the Fire 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,
the City of Placentia left the Fire Authority.
The effective date of formation was March 1, 1995. The Fire Authority's governing board consists of
one representative from each City and two from the County. The operations of the Fire 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
Fire 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 Fire
Authority's annual budget.
The financial statements of the Orange County Fire Authority are available at 1 Fire Authority Road,
Irvine, California.
FM
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 17 - JOINT POWERS A UTHORITY (CONTINUED)
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.
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.
:.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 18 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES
The assets and liabilities of the former redevelopment agency were transferred to the Successor
Agency to the Tustin Community Redevelopment Agency on February 1, 2012 as a result of the
dissolution of the former redevelopment agency. The City is acting in a fiduciary capacity for the
assets and liabilities. Disclosures related to these transactions are as follows:
Long -Term Liabilities
A summary of long-term liabilities activity for the year ended June 30, 2023, is as follows:
Balance
June 30, 2022
Tax allocation bonds $ 46,175,000
Unamortized premium 5,025,725
Additions Deletions
$ - $ (2,130,000)
(261,076)
Balance
Due Within
June 30, 2023
One Year
$ 44,045,000
$ 2,215,000
4,764,649
261,076
Total long-term liabilities $ 51,200,725 $ - $ (2,391,076) $ 48,809,649 $ 2,476,076
2016 Tax Allocation Refunding
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 WAS 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 WAS 2010 Redevelopment Bonds up to and including
September 1, 2018 and to redeem the then outstanding WAS 2010 Redevelopment Bonds in full on
September 1, 2018. As of June 30, 2023 the amount of defeased 2010 Housing Bonds outstanding was
$5,396,835. The defeased WAS 2010 Redevelopment Bonds were paid in full on September 1, 2018.
FM
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 18 - SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT
AGENCYDISCLOSURES (CONTINUED)
Long -Term Liabilities (Continued)
2016 Tax Allocation Refunding Bonds (Continued)
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, 2023, is $5,396,835.
At June 30, 2023, the 2016 Tax Allocation Refunding Bonds outstanding balance was $44,045,000.
The annual debt service requirements to amortize the tax allocation bonds are as follows:
Year Ending
June 30,
Principal
Interest
Total
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
2,515,000
1,370,700
3,885,700
2028
2,640,000
1,241,825
3,881,825
2029 - 2033
11,050,000
4,596,913
15,646,913
2034 - 2038
12,885,000
2,314,725
15,199,725
2039 - 2041
8.040.000
344.550
8.384.550
Totals $ 44,045,000 $ 14,651,413 $ 58,696,413
N.N.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 19 - SCHOOL FACILITIES IMPLEMENTATION COMMITMENT
In August 2015, the City entered into a School Facilities Implementation, Funding and Mitigation
Agreement (UM 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.
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, 2023, the City's total contributions to TUSD under the I/M agreement was
$65,042,546. The balance remaining under the IM is $19,957,454.
NOTE 20 - 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.
Capital Projects
Various capital projects were in progress at June 30, 2023 with an estimated cost to complete of
approximately $14,317,199 across all fund types.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
Notes to Basic Financial Statements
June 30, 2023
NOTE 21— PRIOR PERIOD ADJUSTMENT
With the implementation of GASB 96 - Subscription Based Information Technology Arrangements,
the beginning balance of capital assets and long-term liabilities were restated as follows:
Governmental
Activities
Net position, beginning of year, as previously reported $ 766,410,482
Subscription -based IT assets 2,797,692
Subscription -based IT payable (2,646,633)
Net position, beginning of year, as restated $ 766,561,541
NOTE 22 — SUBSEQUENT EVENT
On November 7, 2023, a fire erupted at the decommissioned Tustin Air Base in the North Hangar, a
17-story, 323,000-square-feet wooden structure designated as a historical landmark. The fire
eventually destroyed the North Hangar. The U.S. Navy (Navy), who owns the North Hangar and its
85-acres site, entered into a cooperative agreement with the City that allows the City to take
all appropriate emergency measures necessary to address public health and environmental concerns
related to this fire incident. The Navy has represented that it's committed to funding the costs of the
emergency response, and, to date, has already entered into contractual commitments to reimburse the
City up to $11 million toward those costs. Discussions regarding reimbursements for the
remaining costs are actively continuing at this time.
r'1
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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iEUUIHEU s
NmRMATIC
III
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
REQUIRED SUPPLEMENTARY INFORMATION
1
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SAFETY PLAN
Last Ten Fiscal Years*
Fiscal year ended
Measurement period
Plan's proportion of the
net pension liability
Plan's proportionate share
of the net pension liability
Plan's covered payroll
Plan's proportionate share
of the net pension liability as a
percentage of covered payroll
Plan's proportionate share of the
fiduciary net position as a
percentage of the Plan's total
pension liability
Plan's proportionate share of
aggregate employer contributions
Notes to Schedule:
Benefit Changes
June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019
June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018
0.68936% 0.66329% 0.64745% 0.61609% 0.62908%
$ 47,370,171 $ 23,278,195 $ 40,839,584 $ 38,459,938 $ 36,911,786
$ 12,664,376 $ 11,498,163 $ 10,848,695 S 9,896,349 $ 9,967,145
374.04% 202.45% 376.45% 388.63% 370.33%
75.53% 86.61% 73.12% 73.37% 75.26%
$ 8,968,451 $ 7,653,147 $ 6,191,362 $ 5,000,688 $ 4,600,007
There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in
the Plan may have provided a benefit improvement to their employees such as Golden Handshakes, service purchases, and other
prior service costs. Employers that have done so may need to report this information as a separate liability in their financial
statement as a Ca1PERS considers such amounts to be separately financed employer -specific liabilities. These employers should
consult with their auditors. Additionally, the figures above do not include any liabiltiy impact that occurred after the June 30, 2021
valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.
Changes in Assumptions:
From fiscal year June 30, 2022 to June 30, 2023:
Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15%
to 6.90%. In determining the long-term expected rate of return, Ca1PERS took into account long-term market return expectations
as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk
estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities
was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption
were changed in accordance with the 2021 Ca1PERS Experience Study and Review of Actuarial 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, 2022:
There were no changes in assumptions.
* Fiscal year 2015 was the 1 st year of implementation, therefore only nine years are shown.
92
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2018 June 30, 2017 June 30, 2016 June 30, 2015
June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
0.60938% 0.60679% 0.58972% 0.68843%
$ 36,411,988 $ 31,427,228 $ 24,298,906 $ 25,822,675
$ 10,443,467 $ 10,013,168 $ 9,495,434 $ 9,640,345
348.66% 313.86% 255.90% 267.86%
73.31% 74.06% 78.40% 79.82%
$ 3,520,089 $ 3,193,318 $ 3,182,851 $ 2,544,912
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2023 Junc 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019
5,729,176 5,243,210 $ 4,592,442 $ 4,132,787 $ 3,641,308
(6,729,176) (6,243,210) (4,592,442) (5,782,787) (5,291,308)
$ (1,000,000) $ (1,000,000) $ - $ (1,650,000) $ (1,650,000)
$ 13,375,405 $ 12,664,376 $ 11,498,163 $ 10,848,695 $ 9,896,349
50.31% 49.30% 39.94% 53.30% 53.47%
Notes to Schedule:
Valuation Date
6/30/2020
6/30/2019
6/30/2018
6/30/2017
6/30/2016
Methods and Assumptions Used
to Determine Contribution Rates:
Actuarial cost method
Entry age
Entry age
Entry age
Entry age
Entry age
Amortization method
(1)
(1)
(1)
(1)
(1)
Asset valuation method
Fair Value
Fair Value
Fair Value
Fair Value
Fair Value
Inflation
2.300%
2.500%
2.500%
2.625%
2.75%
Salary increases
(2)
(2)
(2)
(2)
(2)
Investment rate of return
7.00% (3)
7.00% (3)
7.00% (3)
7.25% (3)
7.375% (3)
Retirement age
(4)
(4)
(4)
(4)
(4)
Mortality
(5)
(5)
(5)
(5)
(5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) 3% at 50 and 2% at 50 and 2.7% at 57
(5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study
adopted by the Ca1PERS Board.
* Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.
A
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2018 June 30, 2017 June 30, 2016 June 30, 2015
$ 3,204,833 $ 3,002,977 $ 2,708,192 $ 3,045,919
(3,204,833) (3,002,977) (2,708,192) (7,049,591)
$ - $ - $ - $ (4,003,672)
$ 9,967,145 $ 10,443,467 $ 10,013,668 $ 9,495,434
32.15% 28.75% 27.04% 74.24%
Notes to Schedule:
Valuation Date
6/30/2015
6/30/2014
Methods and Assumptions Used
to Determine Contribution
Rates:
Actuarial cost method
Entry age
Entry age
Amortization method
(1)
(1)
Asset valuation method
Fair Value
Fair Value
6/30/2013 6/30/2012
Entry age
(1)
Fair Value
Inflation
2.75%
2.75%
2.75%
Salary increases
(2)
(2)
(2)
Investment rate of return
7.50% (3)
7.50% (3)
7.50% (3)
Retirement age
(4)
(4)
(4)
Mortality
(5)
(5)
(5)
Entry age
(1)
15 Year
Smoothed
Fair Value
2.75%
(2)
7.50% (3)
(4)
(5)
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2023
June 30, 2022
June 30, 2021
June 30, 2020
June 30, 2019
Measurement period
June 30, 2022
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
Total Pension Liability:
Service cost
$ 3,049,919
$ 2,693,820
$ 2,581,396
$ 2,456,587
$ 2,402,594
Interest on total pension liability
9,777,454
9,379,056
8,860,960
8,458,273
8,052,611
Differences between expected and
actual experience
134,069
1,568,479
(417,769)
(222,610)
(426,547)
Changes in assumptions
4,647,187
-
1,050,413
Benefit payments, including refunds of
employee contributions
(6,576,321)
(6,434,816)
(5,207,052)
(4,648,016)
(4,523,921)
Net Change in Total Pension Liability
11,032,308
7,206,539
5,817,535
6,044,234
6,555,150
Total Pension Liability - Beginning of Year
138,684,172
131,477,633
125,660,098
119,615,864
113,060,714
Total Pension Liability - End of Year (a)
$ 149,716,480
$ 138,684,172
$ 131,477,633
$ 125,660,098
$ 119,615,864
Plan Fiduciary Net Position:
Contributions - employer
$ 4,877,030
$ 3,581,172
$ 4,837,028
$ 4,373,702
$ 2,249,216
Contributions - employee
1,239,440
1,196,644
1,190,426
1,097,180
1,043,932
Net investment income
(9,500,196)
23,665,065
5,011,357
6,030,153
7,268,642
Benefit payments
(6,576,321)
(6,434,816)
(5,207,052)
(4,648,016)
(4,523,921)
Net plan to plan resource movement
-
(213)
Other miscellaneous expense
213
(254,792)
Administrative expense
(78,575)
(104,120)
(138,915)
(65,475)
(134,170)
Net Change in Plan Fiduciary Net Position
(10,038,622)
21,903,945
5,692,844
6,787,757
5,648,694
Plan Fiduciary Net Position- Beginning of Year
126,134,984
104,231,039
98,538,195
91,750,438
86,101,744
Plan Fiduciary Net Position - End of Year (b)
$ 116,096,362
$ 126,134,984
$ 104,231,039
$ 98,538,195
$ 91,750,438
Net Pension Liability - Ending (a)-(b)
$ 33,620, 118
$ 12,549,188
$ 27,246,594
$ 27,121,903
$ 27,8 55,426
Plan fiduciary net position as a percentage of the
total pension liability 77.54% 90.95% 79.28% 78.42% 76.70%
Covered payroll $ 18,260,967 $ 17,513,680 $ 16,946,205 $ 16,542,504 $ 15,403,283
Net pension liability as percentage of
covered payroll 184.11% 71.65% 160.78% 163.95% 180.91%
Benefit Changes:
There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have
provided a benefit improvement to their employees such as Golden Handshakes, service purchases, and other prior service costs. Employers that
have done so may need to report this information as a separate liability in their financial statement as a Ca1PERS considers such amounts to be
separately financed employer -specific liabilities. These employers should consult with their auditors. Additionally, the figures above do not include
any liabiltiy impact that occurred after the June 30, 2021 valuation date, unless the liability impact is deemed to be material to the Public Agency
Pool.
Changes in Assumptions:
From fiscal year June 30, 2022 to June 30, 2023
Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In
determining the long-term expected rate of return, Ca1PERS took into account long-term market return expectations as well as the expected
pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound
(geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In
addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and
Review of Actuarial 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, 2022:
There were no changes in assumptions.
* Fiscal year 2015 was the 1 st year of implementation, therefore only nine years are shown.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2018
June 30, 2017
June 30, 2016
June 30, 2015
Measurement period
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
Total Pension Liability:
Service cost
$ 2,211,312
$ 1,840,275
$ 1,779,008
$ 1,747,494
Interest on total pension liability
7,614,130
7,306,376
6,982,672
6,613,765
Differences between expected and
actual experience
(737,480)
(531,595)
452,122
-
Changes in assumptions
6,589,964
-
(1,770,351)
Benefit payments, including refunds of
employee contributions
(4,300,829)
(4,102,189)
(3,956,389)
(3,974,724)
Net Change in Total Pension Liability
11,377,097
4,512,867
3,487,062
4,386,535
Total Pension Liability - Beginning of Year
101,683,617
97,170,750
93,683,688
89,297,153
Total Pension Liability - End of Year (a)
$ 113,060,714
$ 101,683,617
$ 97,170,750
$ 93,683,688
Plan Fiduciary Net Position:
Contributions - employer
$ 1,881,701
$ 1,850,072
$ 1,503,081
$ 1,379,562
Contributions - employee
1,037,304
998,937
905,331
962,617
Net investment income
8,829,526
372,172
1,753,374
11,900,167
Benefit payments
(4,300,829)
(4,102,189)
(3,956,389)
(3,974,724)
Net plan to plan resource movement
(114)
Other miscellaneous expense
-
Administrative expense
(116,299)
(48,573)
(89,714)
Net Change in Plan Fiduciary Net Position
7,331,403
(929,581)
115,569
10,267,622
Plan Fiduciary Net Position - Beginning of Year
78,770,341
79,699,922
79,584,353
69,316,731
Plan Fiduciary Net Position - End of Year (b)
$ 86,101,744
$ 78,770,341
$ 79,699,922
$ 79,584,353
Net Pension Liability - Ending (a)-(b)
$ 26,958,970
$ 22,913, 776
$ 17,470,828
$ 14,099,335
Plan fiduciary net position as a percentage of the
total pension liability
76.16%
77.47%
82.02%
84.95 %
Covered payroll
$ 14,684,868
$ 13,828,003
$ 12,847,036
$ 12,270,014
Net pension liability as percentage of
covered payroll
183.58%
165.70%
135.99%
114.91%
M
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
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:
SCHEDULE OF CONTRIBUTIONS
MISCELLANEOUS PLAN
Last Ten Fiscal Years*
June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019
$ 4,333,352 $ 3,877,030 $ 3,581,172 $ 3,187,028 $ 2,723,702
(4,333,352) (4,877,030) (3,581,172) (4,837,028) (4,373,702)
$ - $ (1,000,000) $ $ (1,650,000) (1,650,000)
$ 18,865,908 $ 18,260,967 $ 17,513,680 $ 16,946,205 $ 16,542,504
22.97% 21.22% 20.45% 28.54% 26.44%
Valuation Date
6/30/2020
6/30/2019
Methods and Assumptions Used
to Determine Contribution
Rates:
Actuarial cost method
Entry age
Entry age
Amortization method
(1)
(1)
Asset valuation method
Fair Value
Fair Value
6/30/2018 6/30/2017
Entry age Entry age
(1) (1)
Fair Value Fair Value
Inflation 2.300% 2.500%
2.500%
2.625%
Salary increases (2) (2)
(2)
(2)
Investment rate of return 7.00% (3) 7.00% (3)
7.00% (3)
7.25% (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 CalPERS Experience Study
adopted by the Ca1PERS Board.
* Fiscal year 2015 was the 1 st year of implementation, therefore only nine
years are shown.
6/30/2016
Entry age
(1)
Fair Value
2.75%
(2)
7.375% (3)
(4)
(5)
1:
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2018 June 30, 2017 June 30, 2016 June 30, 2015
$ 2,249,217 $ 1,881,701 $ 1,850,100 $ 1,503,081
(2,249,217) (1,881,701) (1,850,100) (1,503,081)
$ 15,403,283 $ 14,684,868 $ 13,828,003 $ 12,847,036
14.60% 12.81% 13.38% 11.70%
Notes to Schedule:
Valuation Date
6/30/2015
6/30/2014
Methods and Assumptions Used
to Determine Contribution
Rates:
Actuarial cost method
Entry age
Entry age
Amortization method
(1)
(1)
Asset valuation method
Fair Value
Fair Value
6/30/2013 6/30/2012
Entry age
(1)
Fair Value
Inflation
2.75%
2.75%
2.75%
Salary increases
(2)
(2)
(2)
Investment rate of return
7.50% (3)
7.50% (3)
7.50% (3)
Retirement age
(4)
(4)
(4)
Mortality
(5)
(5)
(5)
Entry age
(1)
15 Year
Smoothed
Fair Value
2.75%
(2)
7.50% (3)
(4)
(5)
ZZ
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
ln�rc�J�ruL��ia
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Fiscal year ended
Measurement date
Total OPEB Liability:
Service cost
Interest on total OPEB liability
Differences between expected and actual experience
Changes of assumptions
Benefit payments
Net Change in Total OPEB Liability
Total OPEB Liability - Beginning of Year
Total OPEB Liability - End of Year (a)
Plan Fiduciary Net Position:
Contributions - employer
Net investment income
Benefit payments
Administrative expense
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning of Year
Plan Fiduciary Net Position - End of Year (b)
Net OPEB Liability - Ending (a)-(b)
Plan fiduciary net position as a percentage of the
total OPEB liability
Covered - employee payroll
Net OPEB liability as percentage of
covered - employee payroll
Notes to Schedule:
Benefit Changes:
There were no changes in benefits.
Last Ten Fiscal Years*
June 30, 2023
June 30, 2022
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2023
June 30, 2022
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
$ 546,336
$ 531,714
$ 482,722
$ 437,360
$ 735,504
$ 714,949
1,012,346
970,235
894,576
824,887
890,622
862,866
-
(10,715)
627,373
(1,778,679)
-
-
639,802
-
(416,384)
(398,848)
(845,810)
(839,870)
(849,652)
(791,153)
(777,685)
(686,172)
712,872
1,291,166
1,155,019
(1,723,969)
449,593
891,643
16,067,699
14,776,533
13,621,514
15,345,483
14,895,890
14,004,247
16,780,571
16,067,699
14,776,533
13,621,514
15,345,483
14,895,890
1,345,810
1,339,870
849,652
1,291,153
1,277,685
1,686,172
212,945
(335,000)
431,637
97,677
77,171
3,283
(845,810)
(839,870)
(849,652)
(791,153)
(777,685)
(686,172)
(14,960)
(14,404)
(13,016)
(11,216)
697,985
150,596
418,621
586,461
577,171
1,003,283
2,736,132
2,585,536
2,166,915
1,580,454
1,003,283
-
3,434,117
2,736,132
2,585,536
2,166,915
1,580,454
1,003,283
$ 13,346,454
$ 13,331,567
$ 12,190,997
$ 11,454,599
$ 13,765,029
$ 13,892,607
20.46%
17.03%
17.50%
15.91%
10.30%
6.74%
$ 44,626,782
$ 39,276,574
$ 31,930,486
$ 34,926,881
$ 23,559,635
$ 24,156,049
29.91%
33.94%
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 years.
From fiscal year June 30, 2019 to June 30, 2020:
The inflation rate increased from 2.50% to 2.75%. Healthcare cost trend rates changed to 3.50% trending down to 4.00% for 2070 and later years.
From fiscal year June 30, 2020 to June 30, 2021:
There were no changes in assumptions.
From fiscal year June 30, 2021 to June 30, 2022:
Healthcare cost trend rates changed to 4.00% for 2023, 5.20% for 2024-2069 and 4.00% for 2070 and later years.
* Fiscal year 2018 was the first year of implementation; therefore, only six years are shown.
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Fiscal year ended
Actuarially determined contribution
Contributions in relation to the
actuarially determined contributions
Contribution deficiency (excess)
Covered - employee payroll
Contributions as apercentage of
covered -employee payroll
CITY OF TUSTIN
SCHEDULE OF CONTRIBUTIONS - OPEB
Last Ten Fiscal Years*
June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018
$ 1,641,241 $ 1,597,315 $ 1,354,712 $ 1,318,454 $ 1,780,746 $ 1,729,589
(1,345,810) (1,339,870) (849,652) (1,291,153) (1,277,685) (1,686,172)
$ 295,431 $ 257,445 $ 505,060 $ 27,301 $ 503,061 $ 43,417
$ 44,626,782 $ 39,276,574 $ 31,930,486 $ 34,926,881 $ 23,559,635 $ 24,156,049
3.02% 3.41% 2.16% 4.04% 5.42% 6.98%
Notes to Schedule:
Valuation Date 6/30/2021 6/30/2021
6/30/2019
6/30/2019
6/30/2017
6/30/2017
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method Entry age Entry age
Entry age
Entry age
Entry age
Entry age
Amortization method (1) (1)
(1)
(1)
(1)
(1)
Inflation 2.75% 2.75%
2.75%
2.50%
2.50%
2.50%
Salary increases 2.75% 2.75%
2.75%
2.75%
2.75%
2.75%
Healthcare trend rates (4) (3)
(3)
(2)
(2)
(2)
Rate of return on assets 6.25% 6.25%
6.25%
6.25%
6.25%
6.25%
Mortality rate Ca1PERS Rates Ca1PERS Rates
Ca1PERS Rates
Ca1PERS Rates
Ca1PERS Rates
Ca1PERS Rates
Retirement rates Ca1PERS Rates Ca1PERS Rates
Ca1PERS Rates
Ca1PERS Rates
Ca1PERS Rates
Ca1PERS Rates
(1) Level percentage ofpayroll, 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
(4) 4.00% 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 six years are shown.
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CITY OF TUSTIN
Retiree Health Plan
Fiscal Year Ended
6/30/2018
6/30/2019
6/30/2020
6/30/2021
6/30/2022
6/30/2023
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%
-11.23%
6.99%
(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 six years are presented.
* Initial deposit to the OPEB trust was made on June 26, 2018.
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CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
For the year ended June 30, 2023
REVENUES:
Taxes
Licenses and permits
Fines and forfeitures
Investment income
Intergovernmental revenue
Charges for services
Rental income
Other revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Public safety
Public works
Community services
Capital outlay
Debt service:
Principal retirement
Interest expense
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfer in
Transfer out
TOTAL OTHER
FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCE
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
$ 58,751,483
$ 65,096,447
$ 67,627,570
$ 2,531,123
1,438,837
2,247,914
3,007,410
759,496
916,000
1,030,000
1,160,608
130,608
843,000
1,390,000
4,988,709
3,598,709
295,300
326,500
556,238
229,738
7,888,610
8,481,505
5,018,259
(3,463,246)
1,958,073
2,491,477
2,925,421
433,944
848,300
514,300
13,411,404
12,897,104
72,939,603
81,578,143
98,695,619
17,117,476
25,760,991
27,518,120
19,831,017
7,687,103
42,471,405
46,407,478
44,298,391
2,109,087
18,148,923
16,478,752
16,765,571
(286,819)
4,855,559
5,342,165
5,357,382
(15,217)
8,733,972
46,732,640
3,757,886
42,974,754
81,200
81,200
638,528
(557,328)
3,500
6,637
25,402
(18,765)
100,055,550
142,566,992
90,674,177
51,892,815
(27,115,947)
(60,988,849)
8,021,442
69,010,291
10,431,248
8,893,332
8,638,611
(254,721)
(5,876,674)
(6,694,832)
(6,450,000)
244,832
4,554,574
2,198,500
2,188,611
(9,889)
(22,561,373)
(58,790,349)
10,210,053
69,000,402
FUND BALANCE - BEGINNING OF YEAR 264,538,518 264,538,518 264,538,518 -
FUND BALANCE - END OF YEAR $ 241,977,145 $ 205,748,169 $ 274,748,571 $ 69,000,402
See accompanying notes to the required supplementary information
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CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
HOUSING AUTHORITY SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
Charges for services
Otherrevenue
TOTAL REVENUES
EXPENDITURES:
Current:
Community services
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfer in
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2023
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ 8,322 $ 8,322
385,000
1,400
386,400
599,257 599,257 -
1,120 1,000 (120)
- 26,840 25,720
600,377 635,419 33,922
868,440
1,756,285
1,492,620
263,665
868,440
1,756,285
1,492,620
263,665
(482,040)
(1,155,908)
(857,201)
297,587
-
460,000
439,787
20,213
(482,040)
(695,908)
(417,414)
317,800
770,746
770,746
770,746
-
$ 288,706 $
74,838 $
353,332 $
317,800
See accompanying notes to the required supplementary information
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REVENUES:
Investment income
Intergovernmental revenue
TOTAL REVENUES
EXPENDITURES:
Current:
Community Services
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfer out
TOTAL OTHER
FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
CITY OF TUSTIN
BUDGETARY COMPARISON SCHEDULE
ARPA SPECIAL REVENUE FUND
For the year ended June 30, 2023
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ 236,463 $ 236,463
- 5,178,924 5,178,924
- 5,415,387 5,415,387
3,900,000 1,575,600 2,324,400
3,900,000 1,575,600 2,324,400
(3,900,000) 3,839,787 7,739,787
(3,860,000) (3,839,787) 20,213
(3,860,000) (3,839,787) 20,213
(7,760,000) - 7,760,000
$ - $ (7,760,000) $ - $ 7,760,000
See accompanying notes to the required supplementary information
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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, 2023
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income
$ 20,000 $
20,000
$ 153,305
$ 133,305
Intergovernmental revenue
-
-
228,279
228,279
Charges for services
15,000
32,500
18,895
(13,605)
Rental income
340,000
207,400
398,224
190,824
TOTAL REVENUES
375,000
259,900
798,703
538,803
EXPENDITURES:
Current:
Community services
-
-
54,732
(54,732)
Capital outlay
1,035,000
6,721,481
940,063
5,781,418
TOTAL EXPENDITURES
1,035,000
6,721,481
994,795
5,726,686
EXCESS OF REVENUES OVER
EXPENDITURES
(660,000)
(6,461,581)
(196,092)
6,265,489
NET CHANGE IN FUND BALANCE
(660,000)
(6,461,581)
(196,092)
6,265,489
FUND BALANCE - BEGINNING OF YEAR
1,994,285
1,994,285
1,994,285
-
FUND BALANCE - END OF YEAR
$ 1,334,285 $
(4,467,296)
$ 1,798,193
$ 6,265,489
See accompanying notes to the required supplementary information
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CITY OF TUSTIN
Notes to Required Supplementary Information
June 30, 2023
NOTE I - BUDGETSAND BUDGETARYACCOUNTING
The City follows these procedures in establishing the budgets.
(1) The annual budget is adopted by the City Council after the holding of a hearing and provides
for the general operation of the City. The operating budget includes proposed expenditures and
the means of financing them.
(2) The City Council approves total budgeted appropriations and any amendments to
appropriations throughout the year. This "appropriated budget" covers City expenditures in all
governmental funds, except for one 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 the
Voluntary Workforce Housing Incentive Special Revenue Fund, on a basis substantially
consistent with accounting principles generally accepted in the United States of America.
Accordingly, actual revenues and expenditures can be compared with related budgeted amounts
without any significant reconciling items. No budgetary comparisons are presented for the
City's Proprietary Funds as the City is not legally required to adopt budgets for these fund
types. Budgetary comparisons of Capital Projects Funds are primarily "long-term" budgets,
which emphasize capital outlay plans extending over one year. Because of the long-term nature
of these budgets, "annual" budget comparisons are not considered meaningful and accordingly,
no budgetary information is provided.
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SUPPLEMENTARY SCHEDULES
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SUPPLEMENTARY INFORMATION
1:
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CITY OF TUSTIN
Other Governmental Funds
June 30, 2023
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.
Community Development Block Grant Fund — This fund is used to account for funds received from
U.S. Department of Housing and Urban Development to meet low income housing and community
development needs.
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 public 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.
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CITY OF TUSTIN
Other Governmental Funds
June 30, 2023
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.
CFD Construction — This fund is used to account for construction and improvements to the Tustin
Legacy area.
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CITY OF TUSTIN
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2023
Special Revenue Funds
Supplemental
Asset
Air
Law
Special
Gas Tax
CDBG
Forfeiture
Quality
Enforcement
Tax B
ASSETS
Cash and investments
$ 5,091,990
$
60,768
$ 410,201
$
226,320
$ 442,566
$
1,750
Restricted cash and investments
-
-
-
-
-
-
Receivables:
Accounts
178,713
95,022
-
26,526
-
63,557
Interest
13,001
-
1,036
567
1,127
-
Prepaid items
2,835
TOTAL ASSETS
$ 5,286,539
$
155,790
$ 411,237
$
253,413
$ 443,693
$
65,307
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
LIABILITIES:
Accounts payable and
accrued liabilities
$ 247,796
$
158,230
$
$
$ 3,303
$
1,750
Unearned revenue
-
TOTAL LIABILITIES
247,796
158,230
3,303
1,750
DEFERRED INFLOWS
OF RESOURCES:
Unavailable revenue
-
95,022
FUND BALANCES:
Nonspendable
2,835
-
-
-
Restricted
5,035,908
411,237
253,413
440,390
63,557
Assigned
-
-
-
-
-
Unassigned
-
(97,462)
TOTAL FUND BALANCES
5,038,743
(97,462)
411,237
253,413
440,390
63,557
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES
AND FUND BALANCES
$ 5,286,539
$
155,790
$ 411,237
$
253,413
$ 443,693
$
65,307
III
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Special Revenue Funds (Continued)
Capital Projects Funds
Road
Voluntary
Total
Maintenance
Workforce
Other
Other
and
Housing
Solid
Construction
Capital
CFD
Governmental
Rehabilitation
Incentive
Waste
Measure M
95-1
Projects Construction
Funds
$ 5,509,178
$ 2,084,290
$ 1,773,216
$ 3,368,633
$ 332,609
$ 10,529,439 $
10,777
$ 29,841,737
-
-
-
77,686
-
11,410
403,427
492,523
314,416
-
25,289
368,088
-
-
1,071,611
14,010
5,294
3,589
8,609
26,542
73,775
4,466
7,301
$ 5,837,604
$ 2,089,584
$ I802,094
$ 3,823,016
$ 332,609
$ 10,571,857 $
414,204
$ 31,486,947
$ 7,197 $
7,197
$ 40,343 $ 671,793 $
48,312
88,655 671,793
$ 76,432 $ 347,782 $ 1,554,626
- - 48,312
76,432 347,782 1,602,938
- 95,022
- - - - - 4,466 - 7,301
5,830,407 2,089,584 1,713,439 3,151,223 332,609 11,410 66,422 19,399,599
- - - - - 10,479,549 - 10,479,549
- - - - - - - (97,462)
5,830,407 2,089,584 1,713,439 3,151,223 332,609 10,495,425 66,422 29,788,987
$ 5,837,604 $ 2,089,584 $ 1,802,094 $ 3,823,016 $ 332,609 $ 10,571,857 $ 414,204 $ 31,486,947
112
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CITY OF TUSTIN
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
For the year ended June 30, 2023
Special Revenue Funds
Supplemental
Asset
Air
Law
Special
Gas Tax
CDBG
Forfeiture
Quality
Enforcement
Tax B
REVENUES:
Taxes $
-
$
$
$ -
$ -
$
Investment income
136,116
9,416
5,040
11,400
Intergovernmental revenue
2,036,471
2,188,802
198,929
131,305
203,493
5,082,454
Charges for services
-
-
-
-
-
-
Other revenue
-
-
-
-
-
-
TOTALREVENUES
2,172,587
2,188,802
208,345
136,345
214,893
5,082,454
EXPENDITURES:
Current:
General government
-
-
-
-
-
7,000
Public safety
-
53,357
-
Public works
1,821,799
-
-
Community services
-
301,483
-
Capital outlay
295,367
1,809,929
46,893
-
-
TOTAL EXPENDITURES
2,117,166
2,111,412
46,893
-
53,357
7,000
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
55,421
77,390
161,452
136,345
161,536
5,075,454
OTHER FINANCING SOURCES (USES):
Transfers in
-
-
-
-
-
-
Transfers out
(5,059,557)
TOTAL OTHER
FINANCING (USES)
(5,059,557)
NET CHANGE IN
FUND BALANCES
55,421
77,390
161,452
136,345
161,536
15,897
FUND BALANCES - BEGINNING
OF YEAR
4,983,322
(174,852)
249,785
117,068
278,854
47,660
FUND BALANCES - END OF YEAR $
5,038,743
$ (97,462)
$ 411,237
$ 253,413
$ 440,390
$ 63,557
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Special Revenue Funds (Continued)
Capital Projects Funds
Road
Voluntary
Total
Maintenance
Workforce
Other
Other
and
Housing
Solid
Construction Capital
CFD
Governmental
Rehabilitation
Incentive
Waste
Measure M
95-1 Projects
Construction
Funds
$ -
$ -
$ 209,868
$ -
$ $ -
$ -
$ 209,868
134,560
54,707
38,153
90,815
185,411
29,472
695,090
1,794,306
-
85,574
2,245,938
1,079,257
-
15,046,529
-
63,146
-
-
63,146
-
-
381,029
452
-
-
381,481
1,928,866
54,707
777,770
2,337,205
1,264,668
29,472
16,396,114
7,000
- - - 53,357
23,911 380,965 191,520 2,418,195
- - - - - 301,483
1,723,140 - 1,997,764 2,038,558 976,795 8,888,446
1,747,051 380,965 1,997,764 2,038,558 1,168,315 11,668,481
181,815 54,707 396,805 339,441
(773,890) (1,138,843)
4,727,633
- - - -
6,450,000
6,450,000
(179,054)
-
(5,238,611)
- - - (179,054)
6,450,000
1,211,389
181,815 54,707 396,805 160,387
5,676,110 (1,138,843)
5,939,022
5,648,592 2,034,877 1,316,634 2,990,836 332,609 4,819,315 1,205,265 23,849,965
$ 5,830,407 $ 21089,584 $ 11713,439 $ 31151,223 $ 332,609 $ 10,495,425 $ 66,422 $ 29,788,987
114
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2023
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Investment income $
-
$ -
$ 136,116
$ 136,116
Intergovernmental revenue
2,032,800
2,333,800
2,036,471
(297,329)
TOTAL REVENUES
2,032,800
2,333,800
2,172,587
(161,213)
EXPENDITURES:
Current:
Public works
1,432,802
1,827,513
1,821,799
5,714
Capital outlay
200,000
763,100
295,367
467,733
TOTAL EXPENDITURES
1,632,802
2,590,613
2,117,166
473,447
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES
399,998
(256,813)
55,421
312,234
NET CHANGE IN FUND BALANCE
399,998
(256,813)
55,421
312,234
FUND BALANCE - BEGINNING OF YEAR
4,983,322
4,983,322
4,983,322
-
FUND BALANCE - END OF YEAR $
5,383,320
$ 4,726,509
$ 5,038,743
$ 312,234
115
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUND
For the year ended June 30, 2023
REVENUES:
Intergovernmental revenue
TOTAL REVENUES
EXPENDITURES:
Current:
Community services
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES
NET CHANGE IN FUND BALANCE
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 313,345 $ 2,859,588 $ 2,188,802 $ (670,786)
313,345 2,859,588 2,188,802 (670,786)
313,345 1,982,154 301,483 1,680,671
- 1,809,929 1,809,929 -
313,345 3,792,083 2,111,412 1,680,671
(932,495) 77,390 1,009,885
(932,495) 77,390 1,009,885
FUND BALANCE - BEGINNING OF YEAR
(174,852)
(174,852)
(174,852) -
-FUND BALANCE - END OF YEAR
$ (174,852) $
(1,107,347) $
(97,462) $ 1,009,885
116
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2023
Budgeted Amounts
Original
REVENUES:
Investment income
Intergovernmental revenue
Final
Variance with
Final Budget
_ Positive
Actual (Negative)
- $ 9,416 $ 9,416
- 198,929 198,929
TOTAL REVENUES
- -
208,345
208,345
EXPENDITURES:
Current:
Capital outlay
- 46,900
46,893
7
TOTAL EXPENDITURES
- 46,900
46,893
7
EXCESS OF REVENUES OVER
EXPENDITURES
- (46,900)
161,452
208,352
NET CHANGE IN FUND BALANCE
- (46,900)
161,452
208,352
FUND BALANCE - BEGINNING OF YEAR
249,785 249,785
249,785
-
FUND BALANCE - END OF YEAR $
249,785 $ 202,885
$ 411,237
$ 208,352
117
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
AIR QUALITY SPECIAL REVENUE FUND
REVENUES:
Investment income
Intergovernmental revenue
TOTAL REVENUES
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
For the year ended June 30, 2023
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
$ 500 $ 500 $ 5,040 $ 4,540
95,900 95,900 131,305 35,405
96,400 96,400 136,345 39,945
96,400 96,400 136,345 39,945
117,068 117,068 117,068
$ 213,468 $ 213,468 $ 253,413 $ 39,945
118
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2023
Variance with
Final Budget
Budgeted Amounts
Positive
Original Final
Actual
(Negative)
REVENUES:
Investment income
$ - $
-
$ 11,400
$ 11,400
Intergovernmental revenue
176,000
176,000
203,493
27,493
TOTAL REVENUES
176,000
176,000
214,893
38,893
EXPENDITURES:
Current:
Public safety
142,300
117,293
53,357
63,936
TOTAL EXPENDITURES
142,300
117,293
53,357
63,936
EXCESS OF REVENUES OVER
EXPENDITURES
33,700
58,707
161,536
102,829
NET CHANGE IN FUND BALANCE
33,700
58,707
161,536
102,829
FUND BALANCE - BEGINNING OF YEAR
278,854
278,854
278,854
-
FUND BALANCE - END OF YEAR
$ 312,554 $
337,561
$ 440,390
$ 102,829
119
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
REVENUES:
Intergovernmental revenue
TOTAL REVENUES
EXPENDITURES:
Current:
General government
TOTAL EXPENDITURES
SPECIAL TAX B SPECIAL REVENUE FUND
For the year ended June 30, 2023
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 4,700,000 $ 4,812,929 $ 5,082,454 $ 269,525
4,700,000 4,812,929 5,082,454 269,525
7,000 (7,000)
7,000 (7,000)
EXCESS OF REVENUES OVER
EXPENDITURES 4,700,000 4,812,929 5,075,454 262,525
OTHER FINANCING SOURCES (USES):
Transfer out (4,700,000) (5,098,500) (5,059,557) 38,943
NET CHANGE IN FUND BALANCE - (285,571) 15,897 301,468
FUND BALANCE - BEGINNING OF YEAR 47,660 47,660 47,660 -
FUND BALANCE - END OF YEAR $ 47,660 $ (237,911) $ 63,557 $ 301,468
120
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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
TOTAL REVENUES
EXPENDITURES:
Current:
Public works
Capital outlay
TOTAL EXPENDITURES
For the year ended June 30, 2023
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Positive
(Negative)
$ - $ - $ 134,560 $ 134,560
1,590,300 1,823,800 1,794,306 (29,494)
1,590,300 1,823,800 1,928,866 105,066
22,400 23,874 23,911 (37)
1,050,000 4,041,670 1,723,140 2,318,530
1,072,400 4,065,544 1,747,051 2,318,493
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES 517,900 (2,241,744) 181,815 2,423,559
NET CHANGE IN FUND BALANCE
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
517,900 (2,241,744) 181,815 2,423,559
5,648,592 5,648,592 5,648,592
$ 6,166,492 $ 3,406,848 $ 5,830,407 $ 2,423,559
121
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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, 2023
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
REVENUES:
Taxes $
210,000 $
230,000
$ 209,868
$ (20,132)
Investment income
-
-
38,153
38,153
Intergovernmental revenue
-
114,000
85,574
(28,426)
Charges for services
10,000
10,000
63,146
53,146
Other revenue
-
-
381,029
381,029
TOTAL REVENUES
220,000
354,000
777,770
423,770
EXPENDITURES:
Current:
Public works
224,000
460,820
380,965
79,855
TOTAL EXPENDITURES
224,000
460,820
380,965
79,855
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES
(4,000)
(106,820)
396,805
503,625
NET CHANGE IN FUND BALANCE
(4,000)
(106,820)
396,805
503,625
FUND BALANCE - BEGINNING OF YEAR
1,316,634
1,316,634
1,316,634
-
FUND BALANCE - END OF YEAR $
1,312,634 $
1,209,814
$ 1,713,439
$ 503,625
122
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
REVENUES:
Investment income
Intergovernmental revenue
Otherrevenue
CITY OF TUSTIN
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
MEASURE M SPECIAL REVENUE FUND
For the year ended June 30, 2023
Budgeted Amounts
Original
$ 50,000
1,646,900
Final
$ 50,000
1,646,900
Actual
$ 90,815
2,245,938
452
Variance with
Final Budget
Positive
(Negative)
$ 40,815
599,038
452
TOTAL REVENUES
1,696,900
1,696,900
2,337,205
640,305
EXPENDITURES:
Capital outlay
1,070,000
2,879,089
1,997,764
881,325
TOTAL EXPENDITURES
1,070,000
2,879,089
1,997,764
881,325
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
626,900
(1,182,189)
339,441
1,521,630
OTHER FINANCING SOURCES (USES):
Transfer out
(40,000)
(150,000)
(179,054)
(29,054)
NET CHANGE IN FUND BALANCE
586,900
(1,332,189)
160,387
1,492,576
FUND BALANCE - BEGINNING OF YEAR
2,990,836
2,990,836
2,990,836
-
FUND BALANCE - END OF YEAR $
3,577,736 $
1,658,647 $
3,151,223 $
1,492,576
123
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
COMBINING STATEMENT OF FIDUCIARY NET POSITION
CUSTODIAL FUNDS
ASSETS
Cash and investments
Restricted cash and investments
Accounts receivable
TOTAL ASSETS
NET POSITION
Restricted for:
Bondholders
June 30, 2023
Community
Community
Community
Community
Facilities
Facilities
Facilities
Facilities
District
District
District
District
04-01
06-01
07-01
2014-1 Total
$ - $ 151,501 $ - $ 64,711 $ 216,212
1,160,655 6,480,895 1,938,962 3,571,623 13,152,135
12,399 53,156 - 35,661 101,216
$ 1,173,054 $ 6,685,552 $ 1,938,962 $ 3,671,995 $ 13,469,563
$ 1,173,054 $ 6,685,552 $ 1,938,962 $ 3,671,995 $ 13,469,563
124
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
CUSTODIAL FUNDS
For the year ended June 30, 2023
Community
Community
Community
Community
Facilities
Facilities
Facilities
Facilities
District
District
District
District
04-01
06-01
07-01
2014-1
Total
ADDITIONS
Tax revenue
$ 698,091
$ 3,707,670
$ 1,088,718
$ 1,617,739
$ 7,112,218
Investment Income
24,053
168,949
48,920
100,142
342,064
TOTAL ADDITIONS
722,144
3,876,619
1,137,638
1,717,881
7,454,282
DEDUCTIONS
Administrative expenses
17,903
84,595
41,770
29,595
173,863
Principal
390,000
1,335,000
425,000
285,000
2,435,000
Interest
285,406
2,171,769
596,466
1,265,875
4,319,516
TOTAL DEDUCTIONS
693,309
3,591,364
1,063,236
1,580,470
6,928,379
NET INCREASE (DECREASE)
IN FIDUCIARY NET POSITION
28,835
285,255
74,402
137,411
525,903
NET POSITION AT BEGINNING
OF YEAR
1,144,219
6,400,297
1,864,560
3,534,584
12,943,660
NET POSITION AT END OF YEAR
$ 1,173,054
$ 6,685,552
$ 1,938,962
$ 3,671,995
$ 13,469,563
125
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
,!2nL
STATISTICAL SECTION
ri.
Or
r
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DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
STATISTICAL SECTION
126
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CITY OF TUSTIN
Description of Statistical Contents
June 30, 2023
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. 128
Revenue Capacity — These schedules contain information to help the reader
assess the City's most significant local revenue source, the property tax. 138
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. 144
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. 150
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. 152
Sources:
Unless otherwise noted, the information in these schedules is derived from the
Annual Comprehensive Financial Reports for the relevant year.
127
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2014
2015
2016
2017
Governmental activities:
Net investment in capital assets
$
461,673,323
$
456,649,085
$
483,229,135
$
490,574,647
Restricted
36,693,458
72,929,522
95,241,025
102,027,853
Unrestricted
93,877,440
140,727,040
107,224,779
144,442,931
Total governmental activities net position
$
592,244,221
$
670,305,647
$
685,694,939
$
737,045,431
Business -type activities:
Net investment in capital assets
$
23,657,878
$
24,270,718
$
25,443,651
$
23,252,432
Restricted
-
-
-
-
Unrestricted
8,326,340
11,845,734
12,227,557
15,129,697
Total business -type activities net position
$
31,984,218
$
36,116,452
$
37,671,208
$
38,382,129
Primary government:
Net investment in capital assets
$
485,331,201
$
480,919,803
$
508,672,786
$
513,827,079
Restricted
36,693,458
72,929,522
95,241,025
102,027,853
Unrestricted
102,203,780
152,572,774
119,452,336
159,572,628
Total primary government net position
$
624,228,439
$
706,422,099
$
723,366,147
$
775,427,560
* Fiscal year 2020 net position was restated.
128
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Fiscal Year
2018
2019
2020*
2021
2022
2023
$
499,190,473
$
520,166,300
$
549,473,651
$
565,395,034
$
540,256,185
$
533,745,376
87,395,188
67,892,989
59,304,350
39,407,529
48,269,367
53,735,373
151,119,177
108,567,573
114,195,576
106,773,829
177,884,930
188,209,049
$
737,704,838
$
696,626,862
$
722,973,577
$
711,576,392
$
766,410,482
$
775,689,798
$
22,753,763
$
20,650,435
$
24,145,887
$
25,941,133
$
29,184,048
$
34,501,119
16,505,744
19,489,664
15,070,837
12,918,451
9,775,999
5,818,220
$
39,259,507
$
40,140,099
$
39,216,724
$
38,859,584
$
38,960,047
$
40,319,339
$
521,944,236
$
540,816,735
$
573,619,538
$
591,336,167
$
569,440,233
$
568,246,495
87,395,188
67,892,989
59,304,350
39,407,529
48,269,367
53,735,373
167,624,921
128,057,237
129,266,413
119,692,280
187,660,929
194,027,269
$ 776,964,345 $ 736,766,961 $ 762,190,301 $ 750,435,976 $ 805,370,529 $ 816,009,137
129
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
CHANGES IN NET POSITION
EXPENSES AND PROGRAM REVENUES
Last Ten Fiscal Years
(accrual basis of accounting)
Expenses:
Governmental activities:
General government
Public safety
Public works
Community services
Interest on long-term debt
Total governmental activities expenses
Business -type activities:
Water
Total business -type activities expenses
Program revenues:
Governmental activities:
Charges for services:
General government
Public safety
Public works
Community services
Operating grants and contributions
Capital grants and contributions
Total governmental activities
program revenues
Business -type activities:
Charges for services:
Water
Operating grants and contributions
Capital grants and contributions
Total business -type activities
program revenues
Net revenues (expenses):
Governmental activities
Business -type activities
Total net revenues (expenses)
Fiscal Year
2014
2015
2016
2017
$ 14,825,780
$ 17,121,057
$ 20,023,280
$ 24,504,764
28,440,799
29,886,284
27,779,830
34,611,078
49,538,371
34,435,214
47,326,664
24,822,480
3,498,460
3,699,059
7,869,124
19,524,660
-
-
-
5,802
96,303,410
85,141,614
102,998,898
103,468,784
16,100,137
15,982,078
15, 586,463
16, 654,429
16,100,137
15,982,078
15, 586,463
16, 654,429
249,237
252,074
2,072,540
1,979,211
920,112
1,071,099
1,195,350
1,255,299
1,710,813
1,564,314
3,538,906
1,861,045
967,134
892,102
953,149
1,101,294
3,325,304
3,546,823
2,722,978
2,742,140
12,222,106
20,244,479
48,711,583
26,535,693
18,682,821
19,375,359
16,511,795
17,100,836
$ (76,908,704) $ (57,570,723) $ (43,804,392) $ (67,994,102)
2,582,684 3,393,281 925,332 446,407
$ (74,326,020) $ (54,177,442) $ (42,879,060) $ (67,547,695)
130
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Fiscal Year
2018 2019 2020 2021 2022 2023
$ 23,949,544
$ 27,097,686
$ 29,282,004
$ 27,172,397
$ 19,435,937
$ 23,229,440
33,713,796
36,215,060
39,064,730
42,307,312
37,274,550
43,411,070
37,599,662
45,849,976
40,430,009
25,720,382
34,752,971
34,453,960
10,795,733
20,304,550
5,682,249
7,898,475
11,705,919
11,011,517
12,043
9,297
6,444
3,476
25,311
25,402
106,070, 778
129,476, 569
114,465,436
103,102,042
103,194,688
112,131,389
17,680,886
17,763,633
17,767,158
19,283,136
21,303,398
22,544,478
17,680,886
17,763,633
17,767,158
19,283,136
21,303,398
22,544,478
1,630,903
1,920,214
2,157,735
2,011,470
3,072,210
3,344,041
1,283,672
1,285, 584
1,205, 519
1,298, 587
1,222,841
1,400,441
2,167,726
3,300,906
3,123,961
2,586,033
5,825,437
7,436,265
1,434,988
2,426,578
1,892,126
1,232,539
2,654,817
3,445,025
3,863,547
4,952,271
4,911,642
8,618,631
12,264,401
12,781,132
7,641,510
3,942,834
4,565,393
4,422,891
12,852,760
3,133,846
18, 229,013 17,329,090 17,364,694 18,891,433 19,633,007 19,466,690
- - - - 48,914 -
1,575,140 4,090,446
$ (88,048,432) $ (111,648,182) $ (96,609,060) $ (82,931,891) $ (65,302,222) $ (80,590,639)
548,127 (434,543) (402,464) (391,703) (46,337) 1,012,658
$ (87,500,305) $ (112,082,725) $ (97,011,524) $ (83,323,594) $ (65,348,559) $ (79,577,981)
131
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
CHANGES IN NET POSITION
GENERAL REVENUES
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2014
2015
2016
2017
General revenues and other changes
in net position:
Governmental activities:
Taxes:
Property taxes
$
13,661,771
$
14,552,535
$
16,451,763
$
24,437,717
Transient occupancy taxes
616,897
1,090,675
1,554,754
1,609,318
Business license taxes
393,241
419,148
406,891
420,684
Other taxes
1,663,215
1,763,878
1,839,963
1,931,185
Sales tax
22,288,032
22,269,896
24,513,610
25,133,146
Motor vehicle in lieu, unrestricted
6,150,893
6,380,698
6,778,329
37,056
Investment income (loss)
628,180
1,052,276
2,430,087
611,964
Other general revenues
4,040,996
7,829,149
2,671,845
4,594,651
Gain on sale of land held for resale
-
48,136,121
-
24,241,261
Profit participation
-
-
-
31,327,612
Transfers
-
-
-
-
Contribution from successor agency
-
32,137,773
-
-
Extraordinary and special items
1,412,257
-
2,546,442
5,000,000
Total governmental activities
50,855,482
135,632,149
59,193,684
119,344,594
Business -type activities:
Investment income (loss)
144,381
249,863
480,050
108,669
Miscellaneous
408,749
489,090
149,374
155,845
Transfers
-
-
-
-
Total business -type activities
553,130
738,953
629,424
264,514
Total primary government
$
51,408,612
$
136,371,102
$
59,823,108
$
119,609,108
Changes in net position:
Governmental activities
$
(26,053,222)
$
78,061,426
$
15,389,292
$
51,350,492
Business -type activities
3,135,814
4,132,234
1,554,756
710,921
Total primary government
$
(22,917,408)
$
82,193,660
$
16,944,048
$
52,061,413
132
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Fiscal Year
2018 2019 2020 2021 2022 2023
$ 25,636,673
$
26,275,789
$
27,358,525
$
29,142,850
$
28,324,241
$
30,283,746
1,575,830
1,825,957
1,593,532
1,218,924
1,857,502
2,151,007
431,457
466,828
438,632
416,266
435,626
470,064
1,781,175
1,762,642
1,792,263
1,862,200
1,850,139
2,011,849
24,925,934
26,634,458
25,487,518
30,753,042
34,391,644
35,889,406
43,359
39,526
64,400
58,955
92,431
82,411
1,109,193
7,167,093
4,445,124
1,676,386
(3,500,691)
6,081,889
4,838,383
6,002,632
4,556,040
1,308,076
190,141
1,126,304
33,636,759
395,281
1,014,511
85,240
56,048,775
-
-
-
-
5,012,767
337,972
11,622,220
-
-
-
-
108,532
-
66,750,545
71,534,706
93,978,763
70,570,206
120,136,312
89,718,896
150,371
1,084,525
869,426
5,629
(173,093)
326,716
178,880
230,610
23,193
28,934
428,425
19,918
-
-
-
-
(108,532)
-
329,251
1,315,135
892,619
34,563
146,800
346,634
$ 94,308,014
$
71,885,341
$
67,643,164
$
71,569,269
$
120,283,112
$
90,065,530
$ 5,930,331
$
(41,077,976)
$
(29,858,515)
$
(11,397,185)
$
54,834,090
$
9,128,257
877,378
880,592
490,155
(357,140)
100,463
1,359,292
$ 6,807,709
$
(40,197,384)
$
(29,368,360)
$
(11,754,325)
$
54,934,553
$
10,487,549
133
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
2014
2015
2016
2017
General fund:
Nonspendable
$
129,049,954
$
122,458,642
$
88,579,214 s
$
84,344,748
Restricted
1,352,309
16,650,332
18,657,461
34,901,943
Unassigned
18,781,826
84,278,138 1
79,667,061
102,517,562
Total general fund
$
149,184,089
$
223,387,112
$
186,903,736
$
221,764,253
All other governmental funds:
Nonspendable
$
-
$
-
$
1,922
$
1,922
Restricted
29,820,853
24,048,818
54,438,343
51,069,708
Assigned
5,493,536
37,350,531 2
26,871,816
20,408,936
Unassigned
Total all other governmental funds $ 35,314,389 $ 61,399,349 $ 81,312,081 $ 71,480,566
134
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
2018
2019
2020*
2021
2022
2023
$ 82,868,217
$ 82,902,130
$ 107,921,521
$ 108,201,957
$ 103,464,420 $
107,508,711
41,269,878
31,250,893
16,438,469
15,684,164
24,668,684
27,466,991
116,332,458
88,768,803
74,972,202
78,811,634
136,230,562 4
139,772,869
$ 240,470,553
$ 202,921,826
$ 199,332,192
$ 202,697,755
$ 264,363,666 $
274,748,571
$ -
$ 1,922
$ -
$ 3,305
$ 5,731 $
7,301
46,322,996
37,215,903
37,107,137
27,060,075
21,976,212
19,752,931
17,719,394
5,762,048
1,432,974
4,918,161
4,807,905
12,277,742
-
-
(628,792)
-
-
(97,462)
$ 64,042,390 $ 42,979,873 $ 37,911,319 $ 31,981,541 $ 26,789,848 $ 31,940,512
1 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.
2 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.
a 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.
a Increase of $56 million due to the gain on sale of land in the former Marine Corp Air Station referred to as the Legacy.
* Fiscal year 2020 fund balance was restated.
135
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
Revenues:
Taxes
$ 22,808,488
$ 21,426,308
$ 23,525,899
$ 24,825,401
Licenses and permits
1,284,232
885,043
1,334,311
853,990
Fines and forfeitures
631,340
752,597
982,123
953,665
Investment income (loss)
621,786
1,041,661
2,422,072
608,888
Intergovernmental revenues
29,741,754
37,302,283
42,838,003
35,382,444
Charges for services
1,787,268
1,870,401
2,357,268
1,999,860
Rental income
751,724
1,113,340
1,308,852
1,542,281
Developer contributions
-
16,934,704
26,357,490
16,804,964
Profit participation
-
-
-
23,495,709
Gain on sale of land held for resale
-
48,136,121
-
24,241,261
Contribution from Successor Agency
-
32,137,773
-
-
Otherrevenues
6,110,735
6,302,392
4,714,101
5,849,937
Total revenues
63,737,327
167,902,623
105,840,119
136,558,400
Expenditures:
Current:
General government
14,205,424
17,568,297
20,372,454
24,052,915
Public safety
28,170,314
33,062,929
27,897,182
30,733,524
Public works
5,797,705
6,417,257
7,182,380
7,591,876
Community services
3,081,299
3,170,747
7,308,498
18,727,257
Capital outlay
74,422,436
23,800,093
22,498,621
26,657,177
Debt service:
Principal retirement
-
5,000,000
4,101,171
4,129,203
Interest and fiscal charges
-
-
-
5,802
Total expenditures
125,677,178
89,019,323
89,360,306
111,897,754
Excess (deficiency) of revenues
over (under) expenditures
(61,939,851)
78,883,300
16,479,813
24,660,646
Other financing sources (uses):
Transfers in
2,084,612
5,266,102
5,453,988
4,242,209
Transfers out
(2,084,612)
(5,266,102)
(5,453,988)
(4,242,209)
Leases issued
-
-
-
368,356
Total other financing sources (uses)
-
-
-
368,356
Extraordinary gain (loss)
1,412,257
-
976,042
-
Special item
-
21,404,683
(34,026,499)
-
Net change in fund balances
$ (60,527,594)
$ 100,287,983
$ (16,570,644)
$ 25,029,002
Debt service as a percentage of
noncapital expenditures
1.73%
8.86%
6.03%
5.28%
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.
136
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Fiscal Year
2018 2019 2020 2021 2022 2023
905,086
1,212,696
1,280,180
1,227,707
2,179,335
3,007,410
996,912
909,355
841,747
929,637
1,011,519
1,160,608
1,120,276
7,172,443
4,455,060
1,676,386
(3,500,691)
6,081,889
42,121,841
39,613,110
38,156,567
16,875,101 1
19,174,643
21,609,227
2,177,345
2,761,688
2,688,921
2,017,100
4,293,614
5,101,300
1,674,068
2,055,135
2,133,706
1,905,553
3,259,121
3,323,645
1,341,143
-
-
-
-
-
7,179,553
212,651
-
5,012,767
-
11,622,220
33,636,759
395,281
1,014,511
85,240
56,048,775
-
21,259,806
25,539,637
27,145,126
25,336,809
18,626,105
19,838,017
32,335,404
33,200,885
36,427,058
37,592,859
41,515,077
44,351,748
7,795,849
9,105,493
8,231,789
8,784,309
17,365,084
19,183,766
9,747,562
19,603,654
4,955,971
4,711,435
9,799,151
8,781,817
40,082,440
59,389,068
42,277,454
20,209,628
14,954,652
13,586,395
3,271,503
71,908
74,763
77,730
131,364
638,528
12,043
9,297
6,444
3,476
25,311
25,402
114,504,607
146,919,942
119,118,605
96,716,246
102,416,744
106,405,673
11,268,124
(58,611,244)
(36,442,475)
(2,564,215)
56,365,686
15,535,569
8,908,605
7,281,771
4,745,170
11,814,494
12,495,004
15,528,398
(8,908,605)
(7,281,771)
(4,745,170)
(11,814,494)
(12,386,472)
(15,528,398)
-
-
-
-
108,532
-
$ 11,268,124
$ (58,611,244)
$ 56,474,218
$ 15,535,569
$ (36,442,475)
$ (2,564,215)
3.46%
0.06%
0.09%
0.10%
0.16%
0.71%
137
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TUSTIN
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
(IN THOUSANDS)
Last Ten Fiscal Years
City
Fiscal Year
Taxable
Ended
Assessed
June 30
Secured
Unsecured
Value
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
2022
10,296,800
312,672
10,609,472
2023
10,921,736
408,806
11,330,542
Notes:
Exemptions are netted directly against individual categories.
In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of
1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased
by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only reassessed at the time
that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold
The assessed valuation data shown above represents the only data currently available with respect to the actual market
value of taxable property and is subject to the limitations described above.
1 Effective February 1, 2012, the Redevelopment Agency was dissolved. The Successor Agency took over the assets
and liabilities of the former Redevelopment Agency. See Note 18 for more information.
This rate represents the weighted average of all individual direct rates applied by the City of Tustin.
138
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Successor Agency 1
Taxable
Total
Assessed
Direct Tax
Secured
Unsecured
Value
Rate 2
$ 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%
4,077,588
125,960
4,203,548
0.116%
4,290,538
145,081
4,435,619
0.117%
139
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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
Fiscal Year
2014 2015 2016 2017
$ 0.1272
$ 0.1272
$ 0.1272
$ 0.1272
0.4397
0.4397
0.4397
0.4397
0.0886
0.0886
0.0886
0.0886
0.0617
0.0617
0.0617
0.0617
0.0198
0.0198
0.0198
0.0198
0.0167
0.0167
0.0167
0.0167
0.0161
0.0161
0.0161
0.0161
0.2302
0.2302
0.2302
0.2302
1.0000
1.0000
1.0000
1.0000
0.0891
0.0696
0.0775
0.0700
0.0035
0.0035
0.0035
0.0035
0.0333
0.0508
0.0504
0.0495
0.2155
0.0960
0.0960
0.1270
0.0736
0.0687
0.0660
0.0638
0.4150
0.2886
0.2934
0.3138
$ 1.4150
$ 1.2886
$ 1.2934
$ 1.3138
140
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Fiscal Year
2018 2019 2020 2021 2022 2023
$ 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
0.0687
0.0669
0.0638
0.0710
0.0652
0.0665
0.0035
0.0035
0.0035
0.0035
0.0035
0.0035
0.0509
0.0454
0.0518
0.0452
0.0429
0.0469
-
0.0269
0.0229
0.0166
0.0166
0.0256
0.1270
0.1270
0.1270
0.1270
0.1270
0.1270
0.0633
0.0556
0.0730
0.0813
0.0686
0.0698
0.0271
0.0280
0.0253
0.0280
0.0231
0.0258
0.3405
0.3532
0.3673
0.3727
0.3469
0.3651
$ 1.3405
$ 1.3532
$ 1.3672
$ 1.3727
$ 1.3469
$ 1.3651
141
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Taxpayer
Vestar Kimco Tustin LP
Raintree Tustin LLC
Legacy Villas LLC
Schools First Federal Credit Union
Flight Phase I Owner LLC
Costco Wholesale Corporation
Tustin Market Place
DPIF3 California 35 Valencia Ave
Borchard Redhill SKB-Tustin LLC
Tustin Parc LP
Irvine Company LLC
Avalon II California Value I
PK II Larwin Square SC LP
Irvine Apartment Communities
Ricoh Development
Cadigan Communities
CP II Park Place LLC
Source: HdL, Coren & Cone
CITY OF TUSTIN
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Nine Years Ago
2023 2014
Percent of
Percent of
Total City
Total City
Taxable
Taxable
Taxable
Taxable
Assessed
Assessed
Assessed
Assessed
Value
Value
Value
Value
$ 190,437,097
1.21%
$ 161,608,021
1.66%
155,680,536
0.99%
136,110,390
0.86%
125,729,499
0.80%
124,669,667
0.79%
89,421,969
0.57%
47,423,012
0.49%
88,871,492
0.56%
88,100,000
0.56%
69,839,286
0.44%
47,494,260
0.49%
67,280,224
0.43%
227,080,989
2.33%
97,699,746
1.00%
50,771,745
0.52%
50,674,680
0.52%
49,023,342
0.49%
47,268,376
0.48%
42,307,193
0.43%
$ 1,136,140,160
7.21%
$ 821,351,364
8.41%
142
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Fiscal
Year Ended
June 30
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Taxes Levied
forthe
Fiscal Year
CITY OF TUSTIN
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten FiscaL Years
Collected within the
Fiscal Year of Levy
Amount
$ 9,862,476
$ 9,655,778
9,287,149
9,007,785
10,847,984
10, 541, 516
11,278, 643
10,996, 314
11,844,150
11,615,833
12,335,873
12,072,342
12,732,756
12,500,616
13,346,141
13,122,458
13,867,033
13, 518,415
15,0 50, 249
14,717,998
Collections in
Percent Subsequent
of Levy Years
97.90% $
121,400
96.99%
163,497
97.17%
233,935
97.50%
207,332
98.07%
174,112
97.86%
183,788
98.18%
182,977
98.32%
180,669
97.49%
279,787
97.79%
277,170
Total Collections to Date
Amount
$ 9,777,178
9,171,282
10,775,451
11,203,646
11,789,945
12,256,130
12,683,593
13,303,126
13,798,202
14,995,168
Percent
of Levy
99.14%
98.75%
99.33%
99.34%
99.54%
99.35%
99.61%
99.68%
99.50%
99.63%
Notes:
The amounts presented for fiscal years 2009 through 2012 include City property taxes and former Redevelopment
Effective February 1, 2012, the former Redevelopment Agency was dissolved. See Notes 18 for more information.
Source: County of Orange Auditor Controller's Office
Millions
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
Property Tax Levies and Collections
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
■ Taxes Levied ■ Amount Collected
143
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CITY OF TUSTIN
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Fiscal
Governmental Activities
Year
Total
Ended
Notes
Lease
Lease
Subscription
Governmental
June 30
Payable 1
Payable z
Payable 3
Payable °
Activities
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
2022
-
564,529
564,529
2023
467,949
2,121,251
2,589,200
Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
' In December of 2008 the City executed a note payable to the Tustin Redevelopment Agency in the amount of
$18,881,750 to increase its deposit of probable compensation per court order pending litigation. As of
February 1, 2012, this note became payable to the Successor Agency to the Tustin Community Redevelopment
Agency. See Note 18 for more information.
2 In February 2017 the City entered into a lease to finance equipment with a present value of $368,356.
3 In fiscal year 2021-2022, the City implemented GASB 87 Lease Payable as a lessee for facilities, vehicles and
equipment. See Note # for more information.
° In fiscal year 2022-2023, the City implemented GASB 96 Subscription Payable as a lessee for facilities,
vehicles and equipment. See Note # for more information.
Source: LT Debt -City & Water
Revenue Bonds + Bond Premium
144
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Business -type Activity
Water
Water
Water
Water
Revenue
Revenue
Revenue
Revenue
Bonds s
Bonds'
Bonds 7
Bonds'
$ 21,034,111
$ 8,205,372
$ 14,160,362
$ - $
21,023,911
7,398, 615
14,111,418
21,013,711
6,571,858
14,062,474
-
-
5,720,101
14,013,530
22,790,666
4,843,344
13,959,586
22,738,061
3,931,858
13,905,642
22,685,456
2,989,831
-
22,632,852
2,023,074
22,580,247
1,021,317
22,527,643
-
22,475,037
Percentage
Water
Advance
Total
Total
of
Debt
Revenue
to
Business -type
Primary
Personal
Per
Bonds'
Water 10
Activity
Government
Income
Capita
$
$ 43,399,845
$ 64,804,528
2.73%
827
42,533,944
58,938,627
2.44%
752
41,648,043
53,951,555
2.21%
656
42,524,297
46,066,962
1.82%
559
41,540,991
41,812,153
1.63%
508
40,522,956
40,722,211
1.46%
500
14,910,000
40,532,683
40,657,175
1.37%
506
14,745,000
39,348,321
39,395,082
1.27%
492
14,540,000
38,088,960
38,653,489
1.18%
486
14,335,000
3,830,700
40,640,737
43,229,937
1.32%
543
5 In May 2011 the City issued $20,760,000 Water Revenue Bonds, 2011 Series A to finance water capital improvement projects.
B In March 2012 the City issued $8.91 million of Refunding Water Bonds to defease the outstanding 2003 Water Revenue Bonds.
7 In October 2013 the City issued $14,045,000 Water Revenue Bonds to finance water capital improvement projects.
e In September 2016 the City issued $21.515 million of Refunding Water Bonds to defease the outstanding 2011 Water Revenue Bonds.
o In February 2020 the City issued $14.91 million of Refunding Water Bonds to defease the outstanding 2013 Water Revenue Bonds.
io On June 1, 2023, the General Fund purchased a seven year Promisssory Note issued by the Water Enterprise Fund to provide cash flows.
145
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CITY OF TUSTIN
OVERLAPPING DEBT SCHEDULE
June 30, 2023
2022-23 Assessed Valuation: $ 15,767,387,612
Redevelopment Incremental Valuation (4,255,930,133)
Adjusted Assessed Value $ 11,511,457,479
OVERLAPPING TAX AND ASSESSMENT DEBT:
Metropolitan Water District
Rancho Santiago Community College District
Rancho Santiago Community College District School Facilities Improvement District No.1
Irvine Unified School District School Facilities Improvement District No. 1
Orange Unified School District
Santa Ana Unified School District
Tustin Unified School District School Facilities Improvement District No. 2002-1
Tustin Unified School District School Facilities Improvement District No. 2008-1
Tustin Unified School District School Facilities Improvement District No. 2012-1
Tustin Unified School District Community Facilities District No. 88-1
Tustin Unified School District Community Facilities District No. 06-1
City of Tustin Community Facilities Districts
Irvine Ranch Water District Improvement Districts
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
City's
Share of
Total Debt
Debt at
6/30/23
%Applicable 1
6/30/23
$ 19,215,000
0.433%
$ 83,201
176,539,286
0.151
266,574
149,820,000
0.26
389,532
155,185,000
2.783
4,318,799
277,865,000
0.028
77,802
418,970,373
0.319
1,336,515
40,350,000
46.966
18,950,781
76,275,000
45.491
34,698,260
51,825,000
45.872
23,773,164
7,360,000
100
7,360,000
12,995,000
100
12,995,000
89,260,000
100
89,260,000
432,232,738
4.964 - 88.258
51,620,961
Zwai3v,oaa
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Orange County General Fund Obligations
$ 451,165,000
2.175%
$ 9,812,839
Orange County Board of Education General Fund Obligations
10,860,000
2.175
236,205
Orange Unified School District Certificates of Participation
12,945,618
0.028
3,625
Orange Unified School District Benefit Obligations
58,570,000
0.028
16,400
Santa Ana Unified School District General Fund Obligations
46,436,043
0.319
148,131
City of Tustin Lease Payable
467,949
100
467,949
City of Tustin Subscription Payable
2,121,251
100
2,121,251
TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT
12,806,400
OVERLAPPING TAX INCREMENT DEBT (Successor Agencies
TOTAL OVERLAPPING DEBT
TOTAL DIRECT DEBT
COMBINED TOTAL DEBT
$ 100,500,000 0.001-100.% 44,045,565 Z
299,861,303 a
2.589200
$ 302,450,503
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 18 for more information
s Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non -bonded leases
Ratios to 2022-2023 Assessed Valuations:
Total Overlapping Tax and Assessment Debt 1.55%
Total Direct Debt 0.02%
Combined Total Debt 1.92%
Ratios to Redevelopment Successor Agencies Incremental Valuation (S4 255 930 133);
Total Overlapping Tax Increment Debt 1.03%
Source: California Municipal Statistics, Inc. via HdL
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CITY OF TUSTIN
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
Fiscal Year
2014 2015 2016
2017 2018
Assessed valuation $ 7,418,821,000 $ 7,790,632,000 $ 8,218,228,000 $
8,566,757,000 $ 8,995,570,000
Conversion percentage 25% 25% 25%
25% 25%
Adjusted assessed valuation 1,854,705,250 1,947,658,000 2,054,557,000
2,141,689,250 2,248,892,500
Debt limit percentage 15% 15% 15%
15% 15%
Debt limit 278,205,788 292,148,700 308,183,550
321,253,388 337,333,875
Total net debt applicable to limitation - - -
- -
Legal debt margin $ 278,205,788 $ 292,148,700 $ 308,183,550 $
321,253,388 $ 337,333,875
Total debt applicable to the limit
as a percentage of debt limit 0.0% 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
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Fiscal Year
2019 2020 2021 2022 2023
0.0% 0.0% 0.0% 0.0% 0.0%
1M.
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CITY OF TUSTIN
PLEDGED -REVENUE COVERAGE
Last Ten Fiscal Years
Fiscal Year
Less
Net
Water Revenue Bonds
Ended
Water Proceeds from
Operating
Available
Debt Service
June 30
Revenue Advance'
Expenses
Revenue
Principal
Interest
Coverage
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
2022
21,740,382
18,481,674
3,258,708
1,125,000
1,166,362
1.42
2023
18,550,021 3,830,700
18,072,628
4,308,093
1,165,000
1,126,308
1.88
1 On June 1, 2023, the General Fund purchased a seven year Promisssory Note issued by the Water Enterprise Fund to provide cash flows
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
149
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CITY OF TUSTIN
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
Personal
Per Capita
Calendar
City of Tustin
Income
Personal
Unemployment
Year
Population
(in Thousands)
Income
Rate
2013
78,360
$ 2,375,640
30,317
4.90%
2014
78,347
2,411,442
30,779
5.10%
2015
82,717
2,441,169
29,512
4.20%
2016
82,372
2,506,380
30,427
3.70%
2017
82,344
2,570,460
31,216
3.50%
2018
81,369
2,785,795
34,237
2.80%
2019
80,382
2,963,734
36,870
2.60%
2020
80,009
3,112,332
38,899
8.30%
2021
79,535
3,271,521
41,133
5.90%
2022
79,558
3,510,034
44,119
3.00%
Source: HdL Coren & Cone, LLC
100,000
80,000
60,000
40,000
20,000
k
50,000
40,000
30,000
20,000
10,000
il
I
City of Tustin Population
'P, -0, -,,e '01 'o- '0-
Per Capita Personal Income
Unemployment Rate
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
00
' � -P"�
J
150
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CITY OF TUSTIN
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
2023
2014
Percent of
Percent of
Number of
Total
Number of
Total
Employer
Employees
Employment
Employees
Employment
Tustin Unified School District
2,889
6.88%
1,313
3.07%
Schools First Federal Credit Union
1,165
2.77%
Costco Wholesale Corporation
770
1.83%
450
1.05%
Pacific Bell
472
1.12%
City of Tustin
440
1.05%
360
0.84%
Foothill Regional Medical Center
431
1.03%
New American Funding
354
0.84%
Rivian
338
0.80%
Lendistry
300
0.71%
Nogin
273
0.65%
Rockwell Collins
-
0.00%
600
1.40%
Ricoh Electronics Inc
-
0.00%
500
1.17%
Newport Specialty Hospital
-
0.00%
300
0.70%
Toshiba America Medical Systems
-
0.00%
300
0.70%
Tustin Hospital Medical Center
-
0.00%
300
0.70%
Micro Vention Inc.
-
0.00%
300
0.70%
Balboa Water Group
-
0.00%
253
0.59%
Sources: State of California Employment Development Department
City of Tustin
US Census Bureau
151
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CITY OF TUSTIN
FULL-TIME CITY EMPLOYEES
BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
Function
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
General Government
35
33
38
35
39
42
42
45
42
46
Community Development
15
16
19
19
19
20
20
23
24
24
Public Works
47
48
45
48
47
49
50
53
60
61
Police
140
141
141
137
142
140
143
150
147
163
Parks and Recreation
13
14
14
17
17
17
16
17
19
17
Water
17
18
19
18
18
19
17
21
16
20
Total
267
270
276
274
282
287
288
309
308
331
The City contracts with the OC Fire Authority for fire services.
Source: City of Tustin Human Resources Department
152
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CITY OF TUSTIN
CAPITAL ASSET STATISTICS
BY FUNCTION
Last Ten Fiscal Years
Function
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
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)
129.1
129.1
130.1
130.7
131.3
131.3
132.6
132.6
132.6
134.4
Street Lights
3,640
3,640
3,680
3,700
3,700
3,740
3,797
3,789
3,789
3,874
Traffic Signals
121
121
125
126
128
128
128
131
131
135
Storm Drain (miles)
51.2
51.4
51.8
52.9
53.9
53.9
53.9
54.8
54.8
56.5
Street Trees
16,073
15,815
15,706
15,542
15,574
15,042
14,606
14,546
14,546
14,566
Parks and Recreation
Parks
13
13
14
14
14
14
16
16
16
18
Parks (acres)
98.5
98.5
116.0
116.0
116.0
116.0
173.5
173.5
173.5
173.6
Community Centers
3
3
3
3
3
3
3
4
4
4
Senior Centers
1
1
1
1
1
1
1
1
1
1
Water
Metered Services
14,181
14,148
14,099
14,109
14,104
14,241
14,328
14,325
14,392
14,405
Average daily consumptic
13,975
13,975
9,975
10,601
11,770
11,098
11,098
12,494
11,755
10,389
Reservoirs
6
6
6
6
6
6
6
6
7
7
Wells
13
13
13
14
14
14
14
14
14
14
Water Main (miles)
178
178
178
178
178
178
178
178
178
183
Fire Hydrants
1,911
1,911
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
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CITY OF TUSTIN
WATER CONSUMPTION BY CUSTOMER TYPE
Last Ten Fiscal Years
Type of Customer
Residential
Apartment/Multiple Units
Commercial
Fire Services
Irrigation
Government
Restaurants
Hospitals
Non -Profit
Industrial
HoteL/Motels
All Others
Measured in hundred cubic feet.
*2021 data was restated.
Source: City of Tustin Finance Department
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
2014
Fiscal Year
2014 2015 2016 2017
L,yUb,Uby
L,bUZ5,b6b
l,y,i4,/bl
L,lly,/lb
1,163,159
1,139,321
1,003,808
987,688
321,125
310,585
259,459
271,649
577
837
646
504
167,346
155,766
96,082
105,750
276,292
229,262
134,446
162,843
52,520
51,658
45,069
44,947
7,634
10,018
11,166
11,276
45,920
41,601
22,989
26,751
60,438
59,292
40,407
45,071
12,866
21,379
23,387
25,185
87,785
71,324
68,830
70,721
5,100,731
4,694,581
3,641,050
3,872,101
Water Consumption By Customer
2015 2016 2017 2018
■ Residential ■Apartment/Multiple Units r Commercial N Fire Services N Irrigation keGovernment
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2018
2019
Fiscal Year
2020 2021* 2022
2023
2,398,744
2,199,236
2,264,772
2,498,332
2,407,301
2,079,303
1,039,878
1,029,284
1,026,696
1,093,537
1,045,809
988,524
274,943
267,541
255,245
247,832
252,125
229,890
589
564
475
595
767
479
146,941
131,579
127,429
151,390
147,165
112,562
195,695
177,321
158,344
195,034
214,756
174,594
45,086
45,905
37,786
30,574
36,088
37,173
10,536
13,102
10,158
10,256
9,687
15,232
34,539
32,021
28,491
28,792
30,534
26,749
45,062
44,693
37,520
43,009
45,838
32,634
28,908
32,594
32,754
33,598
31,621
26,531
75,208
76,873
70,777
66,722
68,762
68,168
4,296,129
4,050,713
4,050,447
4,399,671
4,290,453
3,791,839
2019 2020 2021 2022
■ Restaurants ■ Hospitals ■ Non -Profit ■ Industrial ■ Hotel/Motels ■ All Others
2023
155
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CITY OF TUSTIN
WATER RATES
Last Ten Fiscal Years
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
2014
$ 43.59
$ 0.79
$ 1.38
$ 1.81
$ 2.25
$ 2.79
$ 3.24
$ 3.70
2015
1 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
2022
43.84
11.44
3.08
3.08
3.08
3.08
3.08
3.08
2023
46.03
12.02
3.24
3.24
3.24
3.24
3.24
3.24
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
2015
1 $ 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
3 46.85
0.84
1.48
1.94
2.41
3.05
3.53
4.05
Notes:
HCF = Hundred Cubic Feet (1 HCF = 748 gallons)
1 A revised seven (7) tiered rate structure was approved on August 5, 2014 to address a stage 2 emergency drought water demand
reduction mandate.
A seven (7) tiered rate structure was implemented on July 1, 2010. Additionally, a new fixed charge (Capital Fee) was
implemented with the new rate structure, which has been included in the Bi-Monthly Fixed Charge. The rate shown is for a
standard residential customer.
The bi-monthly fixed rate shown is based on the standard residential customer meter (5/8"). The City uses the American Water
Works Association equivalent meter capacity ratios from the AWWA Manual M6 to calculate fixed charges for meters ranging
from 1 to 6 inches.
2 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
156
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Water Customer
Tustin Unified School District
Tustin Village Community Association
Tustin Acres Community Association
City of Tustin
Raintree Tustin LLC
Tustin Parc
15701 TV Way Partnership
Briarwood Investment Co. Ltd.
Contesta Immobilien Gmbh & Co
Tustin Plaza Center, LP
Vio Tustin Investment LP
Westchester Park LP
CMC Association Management
Schroeder Property Management
Arnel Management (Walnut East)
Raintree-Evergreen LLC
Waterstone Gardens Investments LP
Saddleback Mobilodge
Regency West
New Villa Valencia MHP
Roshan M.D.
Pointe Newport Appartments
Stonebrook Lmtd.
Alders Apartment Company
Alta Newport Hospitals Inc
CalTrans - District 12
AT&T Services, Inc.
Ricoh Electronics
HSA LP
Tustin Place HOA
SKB-Tustin LLC
Trinity United Presbyterian
Valencia Gardens Owner LLC
Red Hill Association
GRE Tustin Financial
Key Inn
Sierra Corporate Management
EMS Development
Cadigan Communities
School's First Credit Union
Atomic Investments
Sycamore Gardens Assoc.
Total Water Sales
Total Water Revenues
Source: City of Tustin Finance Department
CITY OF TUSTIN
WATER CUSTOMERS
Current Fiscal Year and Nine Years Ago
2023
2014
Percent of
Percent of
Water
Total Water
Water
Total Water
Charges
Revenues
Charges
Revenues
$ 708,396
3.64%
$ 778,935
4.11%
335,521
1.72%
314,228
1.61%
33,548.00
0.18%
216,076
1.11%
171,104.00
0.90%
201,086
1.03%
112,173
0.58%
90,570
0.47%
33,025.00
0.17%
87,547
0.45%
86,798
0.45%
78,401
0.40%
47,173.00
0.25%
75,665
0.39%
74,926
0.38%
28,767.00
0.15%
72,680
0.37%
25,374.00
0.13%
72,305
0.37%
44,598.00
0.24%
66,988
0.34%
64,624
0.33%
63,795
0.33%
63,492
0.33%
60,623
0.31%
57,651
0.30%
57,647
0.30%
57,272
0.29%
56,692
0.29%
55,863
0.29%
44,926
0.23%
83,238.00
0.44%
71,216.00
0.38%
78,935.00
0.42%
34,623.00
0.18%
48,439.00
0.26%
42,485.00
0.22%
31,115.00
0.16%
28,022.00
0.15%
29,176.00
0.15%
25,678.00
0.14%
25,046.00
0.13%
24,456.00
0.13%
32,212.00
0.17%
28,493.00
0.15%
27,080.00
0.14%
26,591.00
0.14%
26,133.00
0.14%
$ 3,175,945 16.32% $ 1,825,462 9.63%
$ 19,466,690
157
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
CITY OF TU STI N
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
Fiscal Year
2014
2015
2016
2017
Public Safety
Moving Citations
3,499
5,444
6,982
5,590
Parking Violations
7,136
11,994
13,855
14,514
Arrests
2,139
2,155
2,494
2,343
Calls for Service
29,527
33,114
36,618
35,172
Public Works
Number of Building Permits Issued
1,517
1,828
Number of Building Inspections Completed
5,655
6,344
Transportation Permits
Annual
59
55
Single
89
88
Encroachment Permits
148
124
Utility Permits
66
60
Curb Miles Swept
21,118
20,773
Community Services
Rentals
1,138
1,117
Classes
1,508
1,265
General Government
New Hires
65
49
Retiree/separations
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.
* Reduced rentals and classes due to COVID-19 pandemic restrictions.
Public Safety
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2,334 2,430
11,947 11,768
66
56
82
208
147
107
59
62
22,087
20,589
1,253
1,494
1,389
1,213
47
67
38
47
ti�y� ti�yy ti�y6 tidy^ ti�y� ti�y� ti��O ti��y ti��� ti�ry�
■ Moving Citations ■ Parking Violations ■ Arrests ■ Calls for Service
Public Works - Permits
3,500
3,000
2,500
2,000
1,500
1,000
500
0
■ Number of Building Permits Issued
■ Encroachment Permits
■ Transportation Permits (Annual)
■ Utility Permits
■ Transportation Permits (Single)
158
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
Fiscal. Year
2018
2019
2020
2021
2022
2023
4,762
4,355
2,811
3,079
3,312
2,788
16,836
17,017
12,609
16,256
17,898
16,094
2,302
2,463
2,448
2,774
2,810
2,605
36,571
38,326
38,288
37,616
39,168
47,564
2,078
2,425
1,915
1,560
2,265
2,330
9,816
11,348
15,884
9,907
10,073
14,962
46
77
74
73
81
73
137
127
104
64
84
62
155
136
161
117
147
209
71
65
57
65
55
43
20,270
22,162
20,766
20,766
20,766
19,276
1,483
1,326
550 *
187 *
1,102
1,176
1,160
854
805
362 *
758
735
48
62
46
24
26
35
63
56
37
24
30
34
Community Services
1,600
1,400
1,200
1,000
800
600
400
200
0
'L�yp ti�yy ti�y6 ti�y� ti�1$ A�1, ti��O ti��y ti(j
oti
ti
Rentals ■ Classes
General Government
80
70
60
50
40
30
20
10
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-New Hires -Retiree/separations
159
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The page left blank intentionally
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0 1 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
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, 2023. 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, 2023. 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.
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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 X1118
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 Mayor, City Council and
Management of the City of Tustin, California and is not intended to be, and should not be,
used by anyone other than the specified party.
c.4-P
Irvine, California
December 21, 2023
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
/-%«dLA II ient 3
DaDavis\ /IsFar Farr LLP
�/ 18201 Von Korman Avenue I Suite 1100 I Irvine, CA 92612
CERTIFIED PUBLIC ACCOUNTANTS Main: 949.474.2020 1 Fax:949.263.5520
Independent Auditor's Report on Internal Control Over Financial Reportina
and on Compliance and Other Matters Based on an Audit of the Air Quality
Improvement Special Revenue Fund 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 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, 2023, 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 21, 2023.
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) as a basis for designing 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.
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 financial statements. Such provisions
include those provisions of laws and regulations identified in Assembly Bill 2766 Chapter
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
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 21, 2023
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\LLCA l 1111V1 I 4
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
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") as of and for the year ended June 30, 2023 and have issued our report thereon dated
December 21, 2023. Professional standards require that we advise you of the following
matters relating to our audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our engagement letter dated April 14, 2023, our responsibility, as
described by professional standards, is to form and express opinions about whether the
financial statements that have been prepared by management with your oversight are
presented fairly, in all material respects, in accordance with accounting principles generally
accepted in the United States of America. Our audit of the financial statements does not
relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit
to obtain reasonable, rather than absolute, assurance about whether the financial statements
are free of material misstatement. An audit of financial statements includes consideration of
internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, as part of
our audit, we considered the internal control of the City solely for the purpose of determining
our audit procedures and not to provide any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial
reporting process. However, we are not required to design procedures for the purpose of
identifying other matters to communicate to you.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously
communicated to you in our letter dated April 14, 2023.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, and our firm have complied with all relevant ethical
requirements regarding independence under the American Institute of Certified Public
Accountants ("AICPA") independence standards, contained in the Code of Professional
Conduct.
We identified independence threats related to the preparation of the financial statements. We
have applied certain safeguards to reduce them to an acceptable level, including using an
independent party within the firm to perform a quality control review of the financial
statements, and obtaining confirmation from the City's management that their review of the
DocuSign Envelope ID: F5B9B721-6016-49F9-9B8B-4ED6E5B475C9
financial statements included comparing the financial statement footnotes to the underlying
accounting records.
Significant Risks Identified
We are required by the auditing standards to evaluate significant risks. We have identified
the following areas for additional audit emphasis:
The new subscription -based IT arrangement accounting standard, Governmental
Accounting Standards Board (GASB) Statement No. 96. As a result, we received the
City's inventory of subscriptions, reviewed a sample of subscription agreements, tested
the calculations of the subscription transactions, and ensured the City's subscription
disclosure footnotes are accurate and complete in accordance with the new standard.
The City's land management activities. As a result, we evaluated the accuracy and
completeness of the City's land held for resale records, reviewed the recent developer
agreements for financial impact, and evaluated whether related transactions have
been recorded properly in the City's accounting records.
• Federal government grant compliance for COVID-19 related grants. As a result, we
plan to test the City's federal expenditures of COVID-19 related grants for compliance
with federal guidelines when performing our single audit procedures. We also
evaluated grant revenue for proper revenue recognition in the financial statements.
Qualitative Aspects of the Entity's Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A
summary of the significant accounting policies adopted by the City is included in Note 1 to
the financial statements. As described in Note 1 to the financial statements, during the year,
the entity changed its method of accounting for subscription -based IT arrangement by
adopting Governmental Accounting Standards Board (GASB) Statement No. 96, Subscription -
Based Information Technology Arrangement, in the fiscal year 2023. No matters have come
to our attention that would require us, under professional standards, to inform you about (1)
the methods used to account for significant unusual transactions and (2) the effect of
significant accounting policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by
management and are based on management's current judgments. Those judgments are
normally based on 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 markedly from management's current judgments.
The most sensitive accounting estimates affecting the financial statements include:
• Judgements involving the calculation of the pension liability
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• Judeements involving the calculation of the other post employment benefit
(OPEB) liability.
• Judgements 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 actuarial valuation reports. We evaluated the key factors and assumptions used to
develop the pension liability, OPEB liability, and claims payable liability and determined that
it is reasonable in relation to the basic financial statements taken as a whole and in relation
to the applicable opinion units.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly
sensitive because of their significance to financial statement users. The most sensitive
disclosures affecting City's financial statements relate to the net pension liability and related
amounts and the net OPEB liability and related amounts.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the
performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also require us to accumulate all
known and likely misstatements identified during the audit, other than those that we believe
are trivial, and communicate them to the appropriate level of management. Further,
professional standards require us to also communicate the effect of uncorrected
misstatements related to prior periods on the relevant classes of transactions, account
balances or disclosures, and the financial statements as a whole and each applicable opinion
unit. The following uncorrected financial statement misstatement whose effects in the current
and prior periods, as determined by management, are immaterial, both individually and in
the aggregate, to the financial statements taken as a whole. Uncorrected misstatements or
matters underlying those uncorrected misstatements could potentially cause future -period
financial statements to be materially misstated, even though the uncorrected misstatements
are immaterial to the financial statements currently under audit. The only uncorrected
misstatements is to adjust the Water Fund beginning net position and grant revenue for a
billing error for the Beneta Well grant in the amount of $555,748.
In addition, professional standards require us to communicate to you all material, corrected
misstatements that were brought to the attention of management as a result of our audit
procedures. None of the misstatements identified by us as a result of our audit procedures
and corrected by management were material, either individually or in the aggregate, to the
financial statements taken as a whole or applicable opinion units.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management
as a matter, whether or not resolved to our satisfaction, concerning a financial accounting,
reporting, or auditing matter, which could be significant to the City's financial statements or
the auditor's report. No such disagreements arose during the course of the audit.
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Representations Requested from Management
We have requested certain written representations from management in a letter dated
December 21, 2023.
Management's Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing
and accounting matters. Management informed us that, and to our knowledge, there were no
consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a
variety of matters, including the application of accounting principles and auditing standards,
significant events or transactions that occurred during the year, operating and regulatory
conditions affecting the entity, and operational plans and strategies that may affect the risks
of material misstatement. None of the matters discussed resulted in a condition to our
retention as the City's auditors.
Other Information Included in the Annual Comprehensive Financial Report
Pursuant to professional standards, our responsibility as auditors for other information,
whether financial or nonfinancial, included in the City's annual comprehensive financial report,
does not extend beyond the information identified in the audit report, and we are not required
to perform any procedures to corroborate such other information. However, in accordance
with such standards, we have read the information and considered whether such information,
or the manner of its presentation, was materially inconsistent with its presentation in the
financial statements.
Our responsibility also includes communicating to you any information which we believe is a
material misstatement of fact. Nothing came to our attention that caused us to believe that
such information, or its manner of presentation, is materially inconsistent with the
information, or manner of its presentation, appearing in the financial statements.
Irvine, California
December 21, 2023