ML13053A210

Annual Corporate Financial Reports

ML13053A210
Person / Time
Site:	San Onofre
Issue date:	01/30/2013
From:	St.Onge R Southern California Edison Co
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
Download: ML13053A210 (279)

Text

Richard J. St. Onge JSOUTHERN EDISON CALIFORNIA An EDISON INTERNATIONAL Company Director, Nuclear Regulatory Affairs and Emergency Planning 10 CFR 50.71 January 30, 2013 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D. C. 20555

Subject:

Docket Nos. 50-361 and 50-362 Annual Corporate Financial Reports San Onofre Nuclear Generating Station (SONGS) Units 2 and 3

Dear Sir or Madam:

In accordance with the requirements of 10 CFR Part 50, Section 50.71(b), enclosed are copies of the annual financial reports for the licensees of the San Onofre Nuclear Generation Station (SONGS), Units 2 and 3, who do not submit a Form 10-Q with the Securities and Exchange Commission or a Form 1 with the Federal Energy Regulatory Commission: the City of Riverside, California (for the fiscal year ending June 30, 2012); and the City of Anaheim, California (for the fiscal year ending June 30, 2012). Each report includes the appropriate certified financial statement required by Section 50.71(b).

There are no new commitments or required actions resulting from this letter.

If you have any questions or require additional information, please contact the SONGS Licensing Lead, Mr. Mark Morgan, at (949) 368-6745.

Sincerely, Enclosures cc: E. E. Collins, Regional Administrator, NRC Region IV R. Hall, NRC Project Manager, San Onofre Units 2 and 3 B. Benney, NRC Project Manager, SONGS Units 2 and 3 G. G. Warnick, NRC Senior Resident Inspector, San Onofre Units 2 and 3

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CITY OF RIVERSIDE, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2012 Prepared by the Finance Department Brent A. Mason, Finance Director/Treasurer 3900 Main Street, Riverside, California 92522 (951) 826-5660 This report was printed on recycled stock

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CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS INTRODUCTORY SECTION Page L etter of Transm ittal ........................................................................................................ i GFOA Certificate of Achievement ....................................................................................... v Legislative and City Officials ............................................................................................ vi O rganization Chart ......................................................................................................... vi FINANCIAL SECTION Report of Independent Auditors .......................................................................................... I Management's Discussion and Analysis ................................................................................. 3 Basic Financial Statements:

Government-wide Financial Statements:

Statem ent of N et A ssets .......................................................................................... 21 Statement of Activities ........................................................................................... 22 Fund Financial Statements:

Balance Sheet - Governmental Funds .......................................................................... 23 Reconciliation of the Balance Sheet of Governmental Funds to Statement of Net Assets ............... 24 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ......... 25 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................................... 26 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual -

General Fund ................................................................................................ 27 Statement of Net Assets - Proprietary Funds ................................................................. 28 Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds ............... 30 Statement of Cash Flows - Proprietary Funds ................................................................ 31 Statement of Fiduciary Net Assets .............................................................................................. 33 Statement of Changes in Net Assets - Private-Purpose Trust Fund ............................. 34 N otes to Financial Statem ents ....................................................................................... 35 Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet - Nonmajor Governmental Funds ............................................... 65 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor G overnm ental Funds ........................................................................................ 67 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual -

Nonmajor Governmental Funds ............................................................................ 69 Combining Statement of Net Assets - Nonmajor Enterprise Funds ......................................... 73 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Nonmajor Enterprise Funds ............................................................................................ 75

CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS FINANCIAL SECTION (CONT.)

Combining Statement of Cash Flows - Nonmajor Enterprise Funds ....................................... 76 Combining Statement of Net Assets - Internal Service Funds ............................................... 79 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service Funds .................................................................................................... . . 80 Combining Statement of Cash Flows - Internal Service Funds ............................................. 81 Combining Statement of Changes in Assets and Liabilities - Agency Fund ............................ 83 Capital Assets Used in the Operation of Governmental Funds:

Schedule by Source .......................................................................................... 85 STATISTICAL SECTION Table I Net Assets by Component - Last Ten Fiscal Years ............................................................ 87 2 Changes in Net Assets - Last Ten Fiscal Years ................................................................. 88 3 Fund Balances of Governmental Funds - Last Two Fiscal Years ........................................................ 90 4 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years ............................. 91 5 Business-Type Activities Electricity Revenues By Source - Last Ten Fiscal Years ...................... 93 6 Governmental Activities Tax Revenues By Source - Last Ten Fiscal Years ............................... 94 7 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years ............ 95 8 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years ...................................... 96 9 Principal Property Taxpayers - Current Year and Nine Years Ago ......................................... 97 10 Property Tax Levies and Collections - Last Nine Fiscal Years .............................................. 98 11 Electricity Sold by Type of Customer - Last Ten Fiscal Years ............................................. 99 12 Electricity Rates - Last Ten Fiscal Years ....................................................................... 100 13 Top 10 Electricity Customers - Current Year and Nine Years Ago ........................................ 101 14 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years .............................................. 102 15 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years ..................................... 103 16 D irect and Overlapping Debt .................................................................................... 104 17 Legal Debt Margin Information - Last Ten Fiscal Years .................................................... 106 18 Pledged-Revenue Coverage Business Type Activity Debt - Last Ten Fiscal Years .................... 107 19 Demographic and Economic Statistics - Last Ten Calendar Years ....................................... 108 20 Principal Employers - Current Year and Nine Years Ago ................................................. 109 21 Full-Time Equivalent City Government Employees by Function - Last Ten Fiscal Years ............ 110 22 Operating Indicators by Function - Last Ten Fiscal Years ................................................ 111 23 Capital Asset Statistics by Function - Last Ten Fiscal Years .............................................. 112

October 24, 2012 To the Honorable Mayor, Members of the City Council and Citizens of the City of Riverside:

It is our pleasure to submit the Comprehensive Annual Financial Report (CAFR) of the City of Riverside (the City) for the fiscal year ended June 30, 2012.

This report consists of management's representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed both to protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, internal controls have been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The City's financial statements have been audited by Moss Adams LLP, a firm of certified public accountants. The independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unqualified opinion on the City's financial statements for the fiscal year ended June 30, 2012. The independent auditor's report is presented as the first component of the financial section of this CAFR.

The independent audit of the financial statements of the City was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on internal controls and compliance with legal requirements, with emphasis on those involving the administration of federal awards. These reports are available in the City's separately issued Single Audit Report.

Management has provided an overall analysis of the financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City's MD&A

can be found immediately following the report of the independent auditors.

Profile of the City of Riverside The City of Riverside, incorporated on October 11, 1883, is located in the western portion of Riverside County about 60 miles east of Los Angeles. The City currently occupies a land area of 81.507 square miles.

The City operates under the council-manager form of government, with a seven-member council elected by ward for four-year overlapping terms. The mayor is elected at large for a four-year term and is the presiding officer of the Council, but does not have a vote except in the case of a tie. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, City Attorney and City Clerk. The City Manager is responsible for carrying out the policies and ordinances of the Council, for overseeing the day-to-day operations of the City, and for appointing the heads of various departments. The Council is elected on a non-partisan basis.

The City provides a full range of services which include general government, public safety (police, fire, disaster preparedness and building inspection), construction and maintenance of highways and streets, economic development, culture and recreation, electric, water, airport, refuse, sewer, and senior citizen/handicap transportation. In addition to general City activities, the Council is financially accountable for the Riverside Housing Authority, Riverside Public Financing Authority, Riverside Municipal Improvements Corporation and the Successor Agency, which was formed to hold the assets of the former Redevelopment Agency; therefore, these entities are included as an integral part of the City's financial statements. Additional information on these legally separate entities can be found in Note 1 in the notes to the financial statements.

The annual budget serves as the foundation for the City's financial planning and control. The City Manager presents the proposed budget to the City Council for review at least thirty-five calendar days prior to the beginning of each fiscal year. The Council is required to hold public hearings on the proposed budget and to adopt a final budget no later than June 30, which is the close of the City's fiscal year. The appropriated budget is prepared by fund and department. Department heads may make transfers of appropriations within a department. Transfers of appropriations between departments, however, require the approval of the Council.

Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on page 27 as part of the basic financial statements for the governmental funds. For governmental funds other than the general fund, with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report, which begins on page 69.

Local economy: The City is located in the Inland Empire, which consists of Riverside and San Bernardino Counties (the "MSA").

The population of the Inland Empire at approximately 4.2 million is larger than 24 states. The City leads the Inland Empire in most measures of economic power, including population, income, employment, bank deposits, assessed valuation, office space and college enrollment. The population of the City is 308,511, which places it as the sixth largest in Southern California.

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Until recently the MSA has experienced a very strong economic environment. However, unemployment is currently at 12.3%. The budget for the City for fiscal year 2012/2013 projects a 4.5% increase in expenditures, but is balanced. The increase in expenditures is largely related to capital outlay.

The MSA is projected to grow rapidly in future years because land values remain well below those in Los Angeles, Orange and San Diego Counties. Among the City's challenges is a lack of available space for manufacturing and industrial development within current boundaries.

Goals and Vision: Seizing Our Destiny is Riverside's community-driven campaign that builds on the city's existing strengths to create an even better place to live, work and play for future generations. The Seizing Our Destiny Campaign was developed by City officials and civic leaders and encompasses a 20-year strategic vision that mobilizes the skills and resources of a broad cross-section of Riverside toward one common goal - a better community for us all. The goal, or Vision, has four primary aspects for Riverside:

• Nurture Intelligent Growth

• Catalyst for Innovation

• Location of Choice

• Evolve as a Unified City Long-term financial planning. Annually, the City updates a five (5) year Capital Improvement Program (CIP). Planned capital expenditures during fiscal years 2012/13 - 2016/17 total approximately $774 million. The projects encompass all seven Council wards and enhance the life of all residents. Funding comes from multiple sources, including existing funds; General Fund certificates of participation; Redevelopment Agency tax allocation bonds; and regional, state and federal funds. In addition to routine electric, water, sewer and transportation-related projects, the CIP includes improvements to parks in the City; railroad grade separations; library, museum, convention center and Municipal Auditorium improvements/expansions/rehabilitations; and, public safety projects.

Financial policies. A portion of fund balance within the General Fund is set aside and designated for future economic contingencies.

The amount that has been set aside is equal to approximately 15% of General Fund expenditures.

Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Riverside for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2011. This was the twenty-fourth consecutive year that the City has received this prestigious award. The City received this award for publishing an easily readable and efficiently organized CAFR that satisfied both GAAP and applicable legal requirements.

This award is valid for a period of one year only. We believe that our current CAFR continues to meet the Program's requirements and we are submitting it to the GFOA again this year.

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The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Division, particularly the leadership of Jason Al-Imam, Controller. We would like to express our appreciation to all members of the Division who assisted and contributed to its preparation. Credit also must be given to the Mayor and the City Council for their unfailing support for maintaining the highest standards of professionalism in the management of the City's finances.

Respectfully submitted, Scott C. Barber Brent A. Mason City Manager Finance Director/Treasurer iv

Certificate of The Government Finance Officers Association of the United States Achievement and Canada (GFOA) awarded a Certificate of Achievement for for Excellence Excellence in Financial Reporting to the City of Riverside for our in Financial Reporting Comprehensive Annual Financial Report for the fiscal year ended Presented to June 30, 2011.

City of Riverside California In order to be awarded a Certificate of Achievement, a governmental For its Comprehensive Annual Financial Report unit must publish an easily readable and efficiently organized for the Fiscal Year Ended June 30, 2011 Comprehensive Annual Financial Report, whose contents conform to A Certifw'te of Acticvceneet for Excellenerin Finnncial Reportmg ispresented by the iovermnentlFinance ilticers program standards. Such reports must satisfy both generally accepted Association of the United States andCanada to govennient units and public enploy,* retirement systemS whose otomprehea*ni- annual fhimncial accounting principles and applicable legal requirements.

reports(CAFRis) nchitvc ti, highest standards in goveiannentiacrcaonting and -inl reporting.

A Certificate of Achievement is valid for a period of one year only.

w~Tattnt We believe our current report continues to meet the Certificate of President Achievement Program requirements, and we are submitting it to

&Executive Director GFOA to determine its eligibility for another certificate.

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ORGANIZATION CHART LEGISLATIVE OFFICIALS Ronald 0. Loveridge ...................................................................... Mayor Mike Gardner .................................................. Councilmember - W ard 1 Andy Melendrez .............................................. Councilmember - W ard 2 Rusty Bailey .................................................... Councilmember - W ard 3 Paul Davis ....................................................... Councilmember - W ard 4 Chris Mac Arthur ............................................. Councilmember - W ard 5 Nancy Hart ...................................................... Councilmember - W ard 6 Steve Adams ................................................... Councilmember - W ard 7 CITY OFFICIALS Scott C. Barber ................................................................. City Manager*

Belinda Graham .................................................. Assistant City Manager Deanna Lorson ................................................... Assistant City Manager Mark S. Ripley .................................................................. Airport Director 7-- i 1 I City Ciuk Colleen J. Nicol ....................................................................... City Clerk*

Gregory P. Priamos ........................................................... City Attorney*

______ ____I Sergio G. Diaz ................................................................... Chief of Police Steve Reneker .................................................. Chief Information Officer Al Zelinka...................................... .Community Development Director Emilio Ramirez ...................................................... Development Director Rivwside ;;V;dý -L~Z Brent A. Mason .......... .......... ................... Finance Director/Treasurer Steve Earley ............................................................................. Fire Chief oewafswAm Kris Martinez .................................................. General Services Director Rhonda Strout .............................................. Human Resources Director Human Rneumn W-M-t Fie, Dqpmbtm~ Tonya Kennon ................................................................. Library Director Ennette Morton ............................................................ Museum Director Rhwsidt Pubr- L;_Yý Riu~,Publi U;Wiie Ralph Nuhez ........................................... Parks and Recreation Director David W right ....................................... General Manager - Public Utilities Rknift 11"Vopo Tom Boyd ....................................... Public W orks Director/City Engineer Paft, Rec.,and Communitygm-

• Appointed by City Council vi

. _. WWW.MOSSADAMS.COM REPORT OF INDEPENDENT AUDITORS Honorable Mayor and Members of the City Council City of Riverside 3900 Main Street Riverside, California We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Riverside, California ("the City"), as of and for the year ended June 30, 2012, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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 City's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Riverside, California, as of June 30, 2012, and the respective changes in financial position, and cash flows, where applicable, and the respective budgetary comparison for the general fund for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

As described further in note 1 to the financial statements, recent legislation in the State of California called for the dissolution of California redevelopment agencies. The accompanying financial statements reflect certain changes to account for the dissolution, including extraordinary gains and losses impacting governmental activities, the Redevelopment Debt Service and Capital Projects major funds, other governmental funds and the new Successor Agency to the Redevelopment Agency of the City of Riverside, a Private-Purpose Trust fiduciary fund.

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WWW.MOSSADAMS.COM MOSS-ADAMS In accordance with Government Auditing Standards,we have also issued our report dated October 24, 2012 on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standardsand should be considered in assessing the results of our audit.

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis on pages 3 through 19 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with the auditing standards generally accepted in the United States of America, which consisted of inquiries with management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual nonmajor fund financial statements, and other schedules, listed in the table of contents on pages 65 through 85, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with the auditing standards generally accepted in the United States of America. In our opinion the combining and individual nonmajor fund financial statements, and other schedules, on pages 65 through 85 are fairly stated in all material respects in relation to the financial statements taken as a whole.

The accompanying introductory and statistical sections, as listed in the table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. This information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we express no opinion or provide any assurance on it.

Los Angeles, California October 24, 2012 2

Management's Discussion and Analysis As management of the City of Riverside, we offer this narrative overview and analysis of financial activities for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with additional information furnished in our letter of transmittal, which can be found on page i of this report. All amounts, unless otherwise indicated, are expressed in thousands of dollars.

Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City's basic financial statements, compromised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains certain supplementary information.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business.

The statement of net assets presents information on all of the City's assets and liabilities, with the excess of assets over liabilities reported as net assets. Over time, increases or decreases in the net assets 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 City's net assets changed during the most recent fiscal year. All changes in net assets 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).

The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmentalactivities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business type activities). The governmental activities of the City include general government, public safety, highways and streets, and culture and recreation. The business type activities of the City include Electric, Water, Sewer, Refuse, Public Parking, Airport and Transportation services.

The government-wide financial statements include the activities of the- City and four blended component units, which consist of the Riverside Redevelopment Agency (which dissolved on January 31, 2012), Riverside Housing Authority, Riverside Public Financing 3

Authority and the Riverside Municipal Improvements Corporation. Although legally separate, these entities function for all practical purposes as departments of the City and therefore have been blended as part of the primary government. The Successor Agency to the Redevelopment Agency of the City of Riverside (Successor Agency) is included as a fiduciary component unit since it would be misleading to exclude the Successor Agency due to the nature and significance of the relationship between the City and the Successor Agency. The activity of the Successor Agency is reported with the City's fiduciary funds, which is not included in the government-wide statements since the resources of those funds are not available to support the City's own programs.

Both the Governmental Activities and the Business Type Activities are presented on the accrual basis of accounting, a basis of accounting that differs from the modified accrual basis of accounting used in presenting governmental fund financial statements. Note 1 of the Notes to the Basic Financial Statements fully describe these bases of accounting. Proprietary funds, discussed below, also follow the accrual basis of accounting.

The government-wide financial statements can be found on pages 21-22 of this report.

Fund financial statements. A fiund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories:

governmental, proprietary, and fiduciary.

Governmental funds. Governmental finds are used to account for the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year.

It is useful to compare the information presented for governmentalfuinds with similar information presented for governmental activities in the government-wide financial statements. Reconciliations to facilitate this comparison are provided for both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances. The major reconciling items relate to capital assets and debt. In the Governmental Funds, acquisitions of capital assets are treated as "expenditures" because upon purchase of a capital asset, cash used for the acquisition is no longer available for other purposes. The issuance of debt provides cash, which is now available for specified purposes. Accordingly, at the end of the fiscal year, the unreserved fund balances of the Governmental Funds reflect spendable resources available for appropriation by the City Council. Spendable balances are not presented on the face of the government-wide financial statements.

The City maintains sixteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Redevelopment Agency Debt Service Fund, the Capital Outlay Fund, and the Redevelopment Capital Project Fund all of which are major funds. Data from 4

the other twelve governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and can be found on pages 65-72 in this report.

The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided to demonstrate compliance with this budget.

The governmental fund financial statements can be found on pages 23-27 of this report.

Proprietary funds. The City maintains two different types of proprietary funds, enterprise and internal service funds. Enterprise funds are used to report the same functions presented as business type activities in the government-wide financial statements. The City uses enterprise funds to account for Electric, Water, Sewer, Refuse, Parking, Airport and Transportation services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for self-insured insurance programs, central stores and its fleet of vehicles. Because these services predominantly benefit governmental rather than business type functions, they have been included within governmental activities in the government-wide financial statements. Internal service funds are presented as proprietary funds because both enterprise and internal service funds follow the accrual basis of accounting.

Proprietary funds provide the same type of information as the government-wide financial statements (business type activities), only in more detail, The proprietary fund financial statements provide separate information for the Electric, Water and Sewer operations, all of which are considered to be major funds of the City. The four remaining proprietary funds noted above are combined into a single, aggregated presentation. All internal service funds are also combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the non-major proprietary funds and the internal service funds is provided in the form of combining statements and can be found on pages 73-82 in this report.

The basic proprietary fund financial statements can be found on pages 28-32 of this report.

Fiduciaryfunds. Fiduciary funds are used to account for situations where the City's role is purely custodial. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

The fiduciary fund financial statements can be found on pages 33-34 of this report, and the combining statement for the agency fund can be found on page 83.

Notes to the financial statements. The notes 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 financial statements begin on page 35 of this report.

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Government-wide Financial Analysis The following table presents a summarization of the City's assets, liabilities and net assets for its governmental and business type activities. As noted earlier, a government's net asset position may serve over time as a useful indicator of its financial position.

Governmental Business type Activities Activities Total 2012 2011 2012 2011 2012 2011 Current and other assets $ 417,734 $ 620,030 $ 901,982 $ 930,414 $1,319,716 $1,550,444 Capital assets, net 1,271,805 1,214,316 1,413,797 1,338,272 2,685,602 2,552,588 Total assets 1,689,539 1,834,346 2,315,779 2,268,686 4,005,318 4,103,032 Current liabilities 85,513 91,317 176,488 137,667 262,001 228,984 Long-term liabilities 414,859 732,476 1,132,387 1,163,610 1,547,246 1,896,086 Total liabilities 500,372 823,793 1,308,875 1,301,277 1,809,247 2,125,070 Net asset:

Invested in capital assets, net of related debt 1,066,855 1,019,892 666,919 654,974 1,733,774 1,674,866 Restricted 93,818 80,820 54,923 56,397 148,741 137,217 Unrestricted 28,494 (90,159) 285,062 256,038 313,556 165,879 Total net assets $1,189,167 $1,010,553 $1,006,904 $ 967,409 $2,196,071 $1,977,962 The City's assets exceeded liabilities by $2,196,071 at June 30, 2012, an increase of $218,109 from June 30, 2011.

By far the largest portion of the City's net assets (79 percent) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment and infrastructure), net of any related debt that is still outstanding used to acquire those assets and net of unspent bond proceeds and cash held in bond reserve accounts. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

An additional portion of the City's net assets (7 percent) represents resources that are subject to external restrictions on how they may be used. The remaining unrestricted net assets may be used to meet the government's ongoing obligations to citizens and creditors. Of this amount, $285,062 is held by the business type activities and $28,494 is held by the governmental activities. Unrestricted net assets for governmental activities increased in total in comparison to the prior year, which is primarily attributable to the dissolution of the Riverside Redevelopment Agency.

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On December 29, 2011, the California Supreme Court upheld Assembly Bill IX 26 that provided for the dissolution of all redevelopment agencies in the State of California. In accordance with the timeline set forth in the bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.

The Successor Agency is a separate legal entity, which was formed to hold the assets of the former Redevelopment Agency pursuant to City Council actions taken on March 15, 2011 and January 10, 2012. The activity of the Successor Agency is overseen by an Oversight Board comprised of individuals appointed by various government agencies and the City of Riverside as Successor Agency of the former Redevelopment Agency.

The transfer of the assets and liabilities of the former redevelopment agency as of February 1, 2012 (effectively the same date as January 31, 2012) from governmental funds of the City to fiduciary funds was reported in the governmental funds as an extraordinary loss in the governmental fund financial statements. The receipt of these assets and liabilities as of January 31, 2012 was also reported in the private-purpose trust fund as an extraordinary loss. Because of the different measurement focus of the governmental funds and the measurement focus of the trust funds, the extraordinary loss recognized in the governmental funds was not the same as the extraordinary loss recognized in the fiduciary fund financial statements.

The City's total net assets increased by $218,109 during the current fiscal year, which reflects growth in governmental activities

($178,614) and growth in business type activities ($39,495) activities. Governmental operating results is discussed on page 9 and business-type operating results is discussed on page 12.

On the following page is a condensed summary of activities of the City's governmental and business type operations for the period ended June 30, 2012 with the prior fiscal year presented for comparative purposes. Also included in the following analysis are revenue and expense graphs to aid in understanding the results of the current year's activities.

7

Governmental Business type Activities Activities Total 2012 2011 2012 2011 2012 2011 Revenues:

Program Revenues:

Charge for services $ 43,653 $ 42,481 $ 462,249 $ 434,581 $ 505,902 $ 477,062 Operating Grants and Contributions 31,581 21,127 2,738 2,159 34,319 23,286 Capital Grants and Contributions 54,476 38,138 21,164 7,337 75,640 45,475 General Revenues:

Sales taxes 47,701 44,157 47,701 44,157 Property taxes 74,179 100,802 74,179 100,802 Other taxes and fees 35,549 35,644 35,549 35,644 Investment income 4,440 7,439 11,405 17,548 15,845 24,987 Other 9,273 9,544 3,110 4,808 12,383 14,352 Total Revenues 300,852 299,332 500,666 466,433 801,518 765,765 Expenses:

General government 48,731 72,606 48,731 72,606 Public safety 148,605 139,364 148,605 139,364 Highways and streets 35,342 32,131 35,342 32,131 Culture and recreation 54,594 50,017 54,594 50,017 Interest on long-term debt 25,262 33,638 25,262 33,638 Electric 288,799 275,922 288,799 275,922 Water 56,715 56,390 56,715 56,390 Sewer 43,702 42,276 43,702 42,276 Refuse 19,979 20,046 19,979 20,046 Airport 2,646 2,320 2.,646 2,320 Transportation 3,667 3,493 3,667 3,493 Public parking 4,984 4,401 4,984 4,401 Total expenses 312,534 327,756 420,492 404,848 733,026 732,604 Increase (decrease) in net assets before transfers and extraordinary items (11,682) (28,424) 80,174 61,585 68,492 33,161 Transfers, net 40,679 34,378 (40,679) (34,378)

Extraordinary items:

Transfer of assets and liabilities to Succesor Agency 98,022 98,022 Transfer of assets from Successor Agency 56,522 56,522 Assumption of obligation (4,927) (4,927)

Total changes in net assets 178,614 5,954 39,495 27,207 218,109 33,161 Net assets - beginning 1,010,553 1,004,599 967,409 940,202 1,977,962 1,944,801 Net assets - ending 1,189,167 $1,010,553 $1,006,904 $ 967,409 $2,196,071 $1,977,962 8

Governmental activities. Net assets for governmental activities increased by $178,614, accounting for an 18 percent increase in total net assets. Governmental net assets in the prior fiscal year increased by $5,954. Key elements of this year's activity in relation to the prior year are as follows:

Revenues:

• While variances between years exist for the various revenue categories, the total net increase was approximately $1.5 million, which is largely attributable to an increase in sales tax revenue. Sales tax revenue increased by $3.5 million (8%) due to an increase in taxable sales. Higher fuel prices and usage, robust sales of new autos and rebounds in restaurants and general consumer goods helped boost overall receipts.

Expenses:

• While variances between years exist for the various expense functions, the total net decrease was approximately $15.2 million. The more significant items are as follows:

- In fiscal year 2010-11, payments from the redevelopment agency were made to the Supplemental Educational Revenue Augmentation Fund ("SERAF") in the amount of $3.5 million as required by State Legislation. However, no such payment was made in the current fiscal year.

- Decreased costs associated with interest expense of $8.4 million, which primarily related to the dissolution of the Redevelopment Agency. The last five months of the fiscal year of the Redevelopment Agency was reported in the fiduciary trust fund of the Successor Agency, which reported interest expense of $6.1 million. Additionally, the total amount of principal outstanding on debt decreased by approximately 8 percent (primarily related to the refunding of the 2011 Redevelopment Agency Tax Allocation Bonds) and therefore, the related interest paid decreased accordingly.

9

Expenses and Programs Revenues - Governmental Activities - Fiscal Year Comparison 2012 vs. 2011

$160,000

$140,000

$120,000

$100,000 M 2012 Expenses

$80,000 M 2011 Expenses U 2012 Program revenues

$60,000 N 2011 Program revenues

$40,000

$20,000

$0 - -,

General Public safety Highways and Culture and Interest on government streets recreation long-term debt 10

Revenues by Source - Governmental Activities - Fiscal Year Comparison 2012 2011 nvestment income Investmert income 1.43%,

243% Mi-claneou, Charges for Operaing grants & Intsrgaverrmental, services 19%

cortributions unrestricted 14.:-9% Operatinggrants &

10.5c% 043% ccotributions 7.06%

Other Capitallgrarr &

,.contnbuticns 18.11% Utility userstaxes Capita grants &

contributions F1ancisetaxes 12.74%

1.65%

Prpryaxes

• axesJ Sales taxes]

---

• Properti tax.s 24.66% 14.75%

1 Sales taxes 1586%

11

Business-type activities. Business type activities increased the City's net assets by $39,495, accounting for a 4.1 percent increase in total net assets. The net assets of business type activities increased by $27,207 in the prior year. Key elements of this year's activity in relation to the prior year are as follows:

" In 2012, charges for services increased $27,668 to $462,249. The increase primarily related to increases in Electric, Sewer and Water revenues, which is explained in further detail as follows:

• Electric charges for services increased by $19,326 (6%). The increase was due to expanded customer base, a 4.6% increase in retail consumption and higher transmission revenues authorized by the Federal Energy Regulatory Commission.

" Sewer charges for services increased by $4,978 (15%). New rates and charges went into effect on July 1, 2011 for residential, commercial and industrial customers. Rates for basic single family and multi-family dwellings increased by 15%, which is the primary reason for the increase in Sewer charges for services.

• Water charges for services increased by $3,122 (5%). The increase was primarily due to a full year rate increase to support the Water Utility's Master, Water Supply and Asset Management Plans as well as a 4.4% increase in retail consumption.

• Expenses increased $14,459 primarily due to a $13 million increase in Electric Utility operating expenses, which primarily related to an increase in interest expense, transmission costs and distribution expenses.

Revenues by Source - Business Type Activities - Fiscal Year Comparison 2012 Operating 2011 Operating grants and grants and contributions contributions 0.5%

0.5%

Capital grants and Capital grants

_contributions and 3.9% Charges f contributions Charges for L Investment 1.6%

Income services services 2.3% 93.2% Investment 92.5%

Income Miscellaneous 3.8%

0.8% Miscellaneous 1.0%

12

Financial Analysis of the City's Funds Governmentalfunds. The focus of the City's governmentalfunds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassignedfiund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

The following table summarizes the balance sheet of the City's General, Redevelopment Debt Service, Capital Outlay, Redevelopment Capital Projects, and Other Governmental Funds. As previously mentioned, with the dissolution of the Redevelopment Agency all assets and liabilities of the Redevelopment Agency were transferred to the Successor Agency. As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.

Redevelopment General Fund Debt Service Capital Outlay 2012 2011 2012 2011 2012 2011 Total assets $ 123,992 $ 212,468 $ - $ 46531 $ 45,302 $ 48,975 Total liabilities $ 49,742 $ 51,625 $ $ 23,425 $ 26,948 $ 35,468 Fund balances Nonspendable 25,720 26,646 - -

Restricted 2,803 82249 23,106 18,354 13,507 Assigned 6,380 15,589 Unassigned 39,347 36,359 - - -

Total 74,250 160,843 23,106 18,354 13,507 Total liabilities and fundbalances $ 123,992 $ 212,468 $ $ 46,531 $ 45,302 $ 48,975 Redevelopment Other Total Capital Projects Governmental Funds Governmental Funds 2012 2011 2012 2011 2012 2011 Total assets $ 126,943 $ 121,028 $ 130,744 $ 290,322 S 565,661 Total liabilities $ 75,049 $ 49,376 $ 32,996 $ 126,066 $ 218,563 Fund balances Nonspendable I 1,539 1,625 27,259 28,272 Restricted 51,893 70,113 96,123 91,270 266,878 Assigned - - - 6,380 15.589 Unassigned - - - 39,347 36.359 Total 51,894 71,652 97,748 164,256 347,098 Total liabilities and fund balances $ $ 126,943 $ 121,028 $ 130,744 $ 290,322 $ 565,661 13

As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $164,256, a decrease of

$182,842 in comparison with the prior year. This was primarily due to the dissolution of the Redevelopment Agency. Additionally, 17% of the fund balance ($27,259) is nonspendable,which comprises the portion of fund balance that cannot be spent due to form. Approximately 56% ($91,270) of fund balance is restricted, which represents the portion of fund balance that is subject to externally enforceable limitations by law, enabling legislation or limitations imposed by creditors or grantors. $6,380 (4%) of fund balance is constrained by the City's intent to utilize fund balance for specific purposes, which is reported within the fund balance classification assigned. The remainder of the fund balance is unassigned,meaning it is available for spending at the City's discretion. Of that amount, $33,000 has been set aside for future economic contingencies, leaving $6,347; at June 30, 2011 the comparable amount was $4,359.

The City's governmental funds reported combined total assets of $290,322 at June 30, 2012, a decrease of $275,339 in comparison with the prior year which was offset by a decrease of $92,497 in total liabilities. The dissolution of the Redevelopment Agency was the primary reason for the overall decrease in related fund balances.

The General Fund is the principal operating fund of the City. At the end of the current fiscal year, total fund balance equaled $74,250 in comparison to $160,843 in the prior year. The portion of fund balance classified as unassigned was $39,347, most of which was set aside for future economic contingencies. Fund balance decreased during the current year by $86,593 in comparison to an increase of $81,653 in the prior year. The primary reason for this is due to the return of $76,334 of properties to the Redevelopment Agency Capital Projects Fund, which had been previously transferred to the General Fund in fiscal year 2010/11.

Fund balance for the Capital Outlay Fund increased by $4,847. The primary reason for the increase is due to the issuance of debt to finance the Ryan Bonaminio Park improvements at the Tequesquite Arroyo.

14

Proprietaryfunds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

Unrestricted net assets of the Electric, Water and Sewer operations at the end of the year amounted to $219,198, $61,859, and $3,343 respectively. The total change in net assets for these funds was an increase of $20,141, $9,678 and $597, respectively as a result of routine operations.

The Electric Fund reported strong operating results, with retail revenues exceeding the previous all-time record, primarily from the effects of an expanded customer base and a 4.6% increase in retail consumption which was partially offset by a reduction in investment income.

Retail sales (residential, commercial, industrial, and other sales) represent 82.2% of total revenues. Retail sales, net of reserve/recovery were $288,616 and $278,406 for years ended June 30, 2012 and 2011, respectively. Total expenses, excluding transfers, increased $13 million (4.7%), which primarily related to an increase in transmission costs and interest expense.

The Water Fund reported strong operating results, with retail sales exceeding the previous year's results. Retail sales (residential, commercial, industrial, and other sales) represent 80% of total revenues. Retail sales, net of reserve/recovery were $59,620 and $55,186 for years ended June 30, 2012 and 2011, respectively. The increase in sales was primarily due to a full year rate increase of 10% as part of the Water Utility's Master, Water Supply and Asset Management Plans and a 4.4% increase in retail consumption.

Net assets of the Sewer Fund increased by $70 and decreased by $5,418 for years ended June 30, 2012 and 2011, respectively. Total revenues increased by $4,978 (15%) primarily as a result of a rate increase. However, total expenses increased by $1,093 (3%) primarily as a result of an increase in routine operating expenses.

15

General Fund Budgetary Highlights Original Final Actual Variance with Budget Budget Amounts Final Budget Total Revenues $171,238 $188,090 $175,549 ($12,541)

Expenditures:

General Government 3,061 10,179 11,717 (1,538)

Public Safety 148,306 163,454 147,086 16,368 Highways & Streets 18,176 20,441 16,651 3,790 Culture & Recreation 27,405 32,069 28,814 3,255 Capital Outlay 153.00 2,202 1,140 1,062 Debt Service 14,138 45,082 44,804 278 Total Expenditures 211,239 273,427 250,212 23,215 Deficiency of Revenue Under Expenditures (40,001) (85,337) (74,663) 10,674 Other Financing Sources 40,001 (12,477) (11,930) 547 Net Change in Fund Balances (97,814) (86,593) 11,221 Beginning Fund Balance 160,843 160,843 160,843 Ending Fund Balance $160,843 $63,029 $74,250 Final budgeted revenues increased from the amount originally budgeted as a result of grant related programs and financing associated with capital projects. In addition, final budgeted expenditures increased from the amount originally budgeted as a result of grant related appropriations made during the year.

Actual amounts differed from the final fund budget as follows:

u Approximately $9.5 million of grant revenue was budgeted but not actually received during the year since the related grant expenditures had not been incurred.

0i Approximately $2.9 million of miscellaneous revenue was budgeted but not actually received during the year. This was primarily due to lower than expected one-time revenues.

u Actual tax revenue was more than the amounts budgeted for sales taxes ($4.2 million), property taxes ($1 million), and utility user taxes ($800 thousand) due to higher than anticipated taxable sales, assessed property values, and utility revenues.

o3 Actual expenditures were less than budgeted amounts by approximately $23 million. This is primarily associated with a decrease in grant related expenditures and capital projects not completed during the year (which are carried over to the next fiscal year).

16

Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for governmental and business type activities as of June 30, 2012 amounted to

$2,685,556 (net of accumulated depreciation). This investment includes land, intangibles, buildings and improvements, machinery and equipment, park facilities, roads, highways, and bridges. The total increase in the City's net investment in capital assets for the current fiscal year was $133,014 ($57,489 for governmental activities including internal service funds and $75,525 for business type activities).

Major capital improvements during the current fiscal year included: new infrastructure, consisting primarily of street improvements ($27 million); Sewer system improvements ($8 million); Electric Utility upgrades ($40 million) and Water Utility upgrades ($40 million).

Construction in progress totaled $153,609 at June 30, 2012. Some of the major projects in process are various Sewer system improvements including phase 1 of the Water Quality Control Plant and Santa Ana River Trunk Replacement, and the Riverside Transmission Reliability Project (RTRP) and related reliability improvements to the Riverside Public Utility's Sub-Transmission System.

Depreciation expense during the fiscal year was $39,594 for governmental activities and $49,082 for business type activities.

City of Riverside's Capital Assets (net of depreciation)

Governmental Business Type Activities Activities Total 2012 2011 2012 2011 2012 2011 Land $322,060 $290,692 $34,924 $34,905 $356,984 $325,597 Nuclear fuel 8,832 4,878 8,832 4,878 Intangibles 16,627 16,128 16,627 16,128 Buildings 123,128 123,319 143,678 144,579 266,806 267,898 Improvements other than Buildings 170,236 154,601 1,056,566 1,005,897 1,226,802 1,160,498 Machinery and equipment 20,064 19,754 26,227 29,114 46,291 48,868 Infrastructure 609,651 602,388 609,651 602,388 Construction in progress 26,666 23,562 126,943 102,771 153,609 126,333 Total $1,271,805 $1,214,316 $1,413,797 $1,338,272 $2,685,602 $2,552,588 Additional information on the City's capital assets can be found in note 5 on page 45 of this report.

17

Long-term debt. At the end of the current fiscal year, the City had total debt outstanding of $1,547,245 which includes bonded debt of

$1,388,028.

City of Riverside's Long-Term Debt Governmental Business Type Activities Activities Total 2012 2011 2012 2011 2012 2011 Revenue Bonds $0 $305,195 $1,041,739 $1,071,554 $1,041,739 $1,376,749 General Obligation Bonds 16,107 16,845 S- 16,107 16,845 Pension Obligation Bonds 127,480 132,095 S- 127,480 132,095 Certificates of Participation 202,703 207,246 - - 202,703 207,246 Notes Payable 7,749 29,680 31,178 29,680 38,927 Loans Payable 4,000 1,100 44,141 45,569 48,141 46,669 Capital Leases 5,220 6,670 1,332 1,720 6,552 8,390 Landfill Capping 6,695 6,915 6,695 6,915 Arbitrage Liability 190 102 190 102 Compensated Absences 21,674 21,153 - - 21,674 21,153 Claims liability 27,542 26,615 - - .27,542 26,615 Net OPEB Obligation 10,133 7,808 7,663 5,625 17,796 13,433 Water Acquisition Rights 947 947 947 947 Total $414,859 $732,476 $1,132,387 $1,163,610 $1,547,246 $1,896,086 The City's total debt decreased by $348,841 (18.4 percent) during the current fiscal year primarily due to the transfer of Redevelopment Agency Revenue Bonds to the Successor Agency Trust fund. The remaining decrease relates to payment of obligations related to Electric and Water Revenue Bonds.

The City's Water Utility maintains "AA+" and "AA" ratings, from Standard & Poors and Fitch, respectively, for their revenue bonds, while the Electric Utility maintains "AA-" ratings from both rating agencies. The City's general obligation bond ratings are "AA-" and "AA", respectively.

State statutes limit the amount of general obligation debt a governmental entity may issue to 15 percent of its total adjusted assessed valuation. The legal debt limit was $612,856 at June 30, 2012, which applies only to general obligation debt. At June 30, 2012, the City had $16,107 of general obligation debt, resulting in available legal debt capacity of $596,749.

18

Additional information on the City's long-term debt can be found in note 6 beginning on page 46 of this report.

Economic Factors and Next Year's Budget and Rates

[l Unemployment in the City of Riverside is 13.7% as compared to 14.8% for the prior year.

Ll The required employer contribution rates for the City's retirement program will remain relatively flat next fiscal year, with the rates (as a percentage of payroll) changing effective July 1, 2012 as follows:

" Miscellaneous Plan -18.438% to 18.277%. Employees are also required to contribute 8% of their annual covered salary.

The City pays the employees' contribution for employees hired on or before specific dates as outlined in the notes to the financial statements.

" Safety Plan - 25.303% to 25.091%. Employees are also required to contribute 9% of their annual covered salary. The City pays the employees' contribution for employees hired on or before specific dates as outlined in the notes to the financial statements.

At the time of budget preparation for fiscal year 2013, the economic outlook for the City was "considered to be stable. The General Fund Budget for fiscal year 2013 of approximately $220 million was adopted as balanced. It represents an increase from the prior year of approximately 4%, principally as a result of the absorption of costs previously funded by the Redevelopment Agency.

Request 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 City's finances.

Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Department, 3900 Main Street City of Riverside, CA 92522.

19

-I

-4 9-

City of Riverside Statement of Net Assets June 30, 2012 (amounts expressed In thousands)

Governmental Business-type Assets Activities Activities Total Cash and investments $ 76.341 $ 274,546 $ 350.887 Receivables, net 107,482 60,100 167,582 Inventory 6,787 1,992 8,779 Nuclear material inventory 1,334 1,334 Prepaid items 320 16,532 16,852 Deposits 176 851 1,027 Deferred charges - other 113,414 40,161 153,575 Deferred charges - derivative instruments 24,326 37,760 62,086 Internal balances 12.908 (12,908)

Land and improvements held for resale 5,253 5,253 Restricted assets:

Cash and cash equivalents 41,142 41,142 Cash and investments at fiscal agent 25,431 429,710 455,141 Other 954 954 Advances to Successor Agency 45,296 9.809 55,104 Nuclear fuel, at amortized cost 8,832 8,832 Land and other capital assets not being depreciated 348.726 192,636 541,362 Capital assets (net of accumulated depreciation) 923.079 1,212,329 2,135,408 Total assets 1,689,539 2,315,779 4.005,318 Liabilities Accounts payable and other current liabilities 22,988 34,358 57.346 Accrued interest payable 3.574 12,478 16,052 Deferred revenue 4,153 2,049 6,202 Deposits 24,826 3,873 28,699 Current liabilities payable from restricted assets 1,130 1,130 Derivative instruments 29.972 50,891 80,863 Decommissioning liability 71,709 71.709 Noncurrent liabilities:

Due within one year 59.613 33,288 92,901 Due in more than one year 355.246 1,099,099 1.454.345 Total liabilities 500,372 1,308,875 1.809,247 Net Assets Invested in capital assets, net of related debt 1.066.855 666,919 1.733.774 Restricted for:

Expendable:

Capital projects 19.784 19,784 Debt service 45.714 45.714 Economic development 13.934 13,934 Landfill capping - 2.295 2,295 Public works 12.692 12,692 Housing 45.869 45,869 Programs 6,914 6,914 Nonexpeydable 1.539 - 1,539 Unrestricted 28.494 285.062 313,556 Total net assets $ 1.189,167 $ 1.006.904 $ 2,196,071 The notes to the financial statements are an integral part of this statement 21

City of Riverside Statement of Activities For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Net (Expense) Revenue and Program Revenues Changes in Net Assets Indirect Operating Capital Expenses Charges for Grants and Grants and Governmental Business type Functions/Programs Expenses AIIocation Services Contributions Contributions Activities Activities Total Governmental activities:

General govemment $ 48,731 $ (11,782) $ 14,662 $ 11,695 $ 7,530 S (3,062) $ (3,062)

Public safety 148,605 6,270 7,837 8,213 2,335 (136,490) (136,490)

Highways and streets 35,342 3,008 16,532 859 43,279 22,320 22,320 Culture and recreation 54,594 2,504 4,622 10,814 1,332 (40,330) (40,330)

Interest on long-term debt 25.262 (25,262) (25,262)

Total governmental activities 312.534 43,653 31,581 54,476 (182,824) (182,824)

Business type activities:

Electric 288,799 333,029 9,744 $ 53,974 53,974 Water 56,715 65,206 7,627 16,118 16,118 Sewer 43,702 37,747 2,280 (3,675) (3,675)

Refuse 19,979 19,588 (391) (391)

Airport 2.646 1,524 174 (948) (948)

Transportation 3,667 352 2,738 1,339 762 762 Public parking 4,984 4,803 (181) (181)

Total business type activities 420,492 462,249 2,738 21,164 65,659 65,659 Total $ 733,026 $ 505,902 34.319 $ 75,640 (182,824) 65,659 (117,165)

General revenues:

Taxes:

Sales 47,701 47,701 Property 74,179 74,179 Utility users 27,320 27,320 Franchise 4,883 4,883 Other 2,995 2,995 Intergovemmental, unrestricted 351 - 351 Investment income 4,440 11,405 15,845 Miscellaneous 9,273 3,110 12,383 Subtotal 171,142 14,515 185,657 Transfers, net 40,679 (40,679)

Total general revenues and transfers 211,821 (26,164) 185,657 Extraordinary items:

Transfer of assets and liabilities to Successor Agency 98,022 98,022 Transfer of assets from Successor Agency 56,522 56,522 Assumption of obligation (4,927) - (4,927)

Change In net assets 178,614 39,495 218,109 Net assets - beginning 1,010,553 967,409 1,977,962 Net assets - ending $ 1,189,167 $ 1,006,904 $ 2,196,071 The notes to the financial statements are an integral part of this statement.

22

City of Riverside Balance Sheet Governmental Funds June 30, 2012 (amounts expressed in thousands)

Other Total Redevelopment Redevelopment Governmental Governmental Assets General Fund Debt Service Capital Outlay Capital Projects Funds Funds Cash and investments $ 47,677 $ $ - $ $ 23,470 $ 71,147 Cash and investments at fiscal agent 1,405 7,493 16,533 25,431 Receivables (net of allowance for uncollectibles)

Interest 214 73 88 375 Property taxes 6,851 - 6,851 Sales tax 11,140 11,140 Utility billed 1,171 - - 1,171 Accounts 10,034 823 373 11,230 Intergovernmental 3,375 36,737 4,901 45,013 Notes 1 - 31,386 31,387 Prepaid items 320 - 320 Deposits - 176 176 Due from other funds 16,287 - 16,287 Advances to other funds 24,706 - 24,706 Advances to Successor Agency 693 39,142 39,835 Land & improvements held for resale 118 - 5,135 5,253 Total assets: $ 123,992 $ $ 45,302 $ $ 121,028 $ 290,322 Liabilities and fund balances Liabilities:

Accounts payable $ 5,454 $ $ 2,203 $ $ 935 $ 8,592 Accrued payroll 11,036 - 27 11,063 Retainage payable 799 24 1,487 2,310 Intergovernmental 182 - - 182 Deferred revenue 7,118 10,218 32,902 50,238 Deposits 24,804 - 22 24,826 Due to other funds - 14,503 1,436 15,939 Advances from other funds 349 12,567 12,916 Total liabilities: 49,742 26,948 49,376 126,066 Fund balances:

Nonspendable:

Inventories, prepaids and noncurrent receivables 321 321 Advances 25,399 25,399 Permanent fund principal 1,539 1,539 Restricted for.

Housing and redevelopment 118 26,911 27,029 Debt service 1,992 29,080 31,072 Transportation and public works 18,354 12,721 31,075 Other purposes 693 1,401 2,094 Assigned to:

General government 3,129 3,129 Public safety 628 628 Highways and streets 508 508 Culture and recreation 877 877 Continuing projects 1,238 11,238 Unassigned 39,347 - - 39,347 Total fund balances 74,250 18,354 71,652 164,256 Total liabilities and fund balances $ 123,992 $ $ 45,302 $ $ 121,028 $ 290,322 The notes to the financial statements are an integral part of this statement.

23

CITY OF RIVERSIDE RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS June 30, 2012 (amounts expressed in thousands)

Total fund balances - governmental funds $164,256 Amounts reported for governmental activities in the Statement of Net Assets are different because:

Capital assets net of accumulated depreciation used in governmental activities that are not current financial resources and, therefore, are not reported in the funds. 1,268,494 Issuance costs from issuing debt are expenditures at the fund level but are deferred and subject to capitalization and amortization in the Statement of Net Assets. 3,212 Pension contributions were expenditures at the fund level but are deferred as a net pension asset and subject to capitalization and amortization in the Statement of Net Assets. 108,706 Revenues that do not meet the "availability" criteria for revenue recognition and therefore, are deferred in the funds. 46,085 Accrued interest payable for the current portion of interest due on various debt issues has not been reported in the governmental funds. (3,574)

Long-term liabilities, as listed below, are not due and payable in the current period and therefore are not reported in the funds.

Bonds payable $ (143,395)

Certificates of participation payable (202,020)

Capital leases payable (5,220)

Loan payable (4,000)

Bond premiums (875).

Net OPEB obligation (9,667)

Compensated absences (21,181)

(386,358)

The City uses derivative instruments to hedge its exposure to changing interest rates through the use of interest rate swaps. The following related items have been reflected in the Statement of Net Assets.

Fair value of interest rate swap $ (29,972)

Deferred amount related to the hedgeable portion of the derivative instrument 24,326 (5,646)

Internal service funds are used by management to charge the costs of insurance, centralized purchasing and fleet management to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the Statement of Net Assets. (6,008)

Net assets of governmental activities $1,189,167 24

City of Riverside Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Other Total Redevelopment Redevelopment Governmenta I Governmental General Fund Debt Service Capital Outlay Capital Projects Funds Funds Revenues Taxes $ 129,303 $ 27,258 $ $ $ 32 $ 156,593 Licenses and permits 7,119 2,1 73 9,292 Intergovernmental 9,168 31,774 170 25,5106 66,618 Charges for services 11,770 4 11,774 Fines and forfeitures 6,293 - 6,293 Special assessments 4,509 352 - 1,4 15 6,276 Rental and investment income 2,662 1,659 446 1,333 1,9195 8,095 Miscellaneous 4,725 1,462 276 4,1' 48 10,611 Total revenues 175,549 28,917 34,034 1,779 35,27F3 275,552 Expenditures Current:

General government 11,717 837 4,090 2,191 18,835 Public safety 147,086 3,792 150,878 Highways and streets 16,651 16,651 Culture and recreation 28,814 17,444 11,280 57,538 Capital outlay 1,140 33,187 15,811 25,344 75,482 Debt service:

Principal 37,620 41,008 - 4,750 83,378 Interest 7,015 7,117 538 9,463 24,133 Bond issuance costs 169 _ 169 Total expenditures 250,212 48,962 33,187 37,883 56,820 427,064 Excess (deficiency) of revenues over (under) expenditures (74,663) (20,045) 847 (36,104) (21,547) (151,512)

Other financing sources (uses)

Transfers in 40,266 43,541 96,428 16,624 196,859 Transfers out (83,292) (20,094) (41,799) (11,120) (156,305)

Issuance of long term debt 30,940 4,000 34,940 Sales of capital assets 156 _ 156 Total other financing sources and uses (11,930) 23,447 4,000 54,629 5,504 75,650 Extraordinary items Dissolution of Riverside Redevelopment Agency:

Transfer of assets and liabilities to Successor Agency - (26,508) - (70,419) (33,247) (130,174)

Transfer of assets from Successor Agency 28,121 28,121 Assumption of obligation - (4,927) (4,927)

Total extraordinary items - (26,508) - (70,419) (10,053) (106,980)

Net change in fund balances (86,593) (23,106) 4,847 (51,894) (26,096) (182,842)

Fund balances - beginning 160,843 23,106 13,507 51,894 97,748 347,098 Fund balances - ending $ 74,250 $ $ 18,354 $ - $ 71,652 $ 164,256 The notes to the financial statements are an integral part of this statement.

25

CITY OF RIVERSIDE RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the year ended June 30, 2012 (amounts expressed in thousands)

Net change in fund balances-total governmental funds ($182,842)

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 and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period, as listed below:

Capital Asset additions $ 96,331 Depreciation Expense (38,876) 57,455 Revenues in the statement of activities that do not meet the "availability" criteria for revenue recognition and therefore are not reported as revenue in the funds. 34,509 The amortization of the net pension asset reported in the statement of activities does not require the use of current financial resources and, therefore, is not reported as an expenditure in the governmental funds. (3,333)

The issuance of long-term debt (e.g., bonds, leases, notes) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds immediately report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities.

The net effect of these differences in the treatment of long-term debt and related items is listed below:

Principal repayments 83,378 Other post-employment benefit liabilities (2,209)

Compensated absences (492)

Interest (79)

Premiums on the issuance of LTD (667)

Proceeds from LTD (34,940) 44,991 Internal service funds are used by management to charge the costs of insurance, centralized purchasing and fleet management to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. (362)

The difference between the extraordinary loss related to the transfer of assets and liabilities to the Successor Agency as reported in the fund financial statements and the extraordinary gain reported in the government-wide financial statements. 228,196 Change in net assets of governmental activities $ 178,614 The notes to the financial statements are an integral part of this statement.

26

City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the year ended June 30, 2012 (amounts expressed in thousands)

Budgeted Amounts Actual Variance with Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Original Final Amounts Final Budget Revenues Public safety:

Taxes $ 128,121 $ 128,121 $ 129,303 $ 1,182 Police 91,244 102,282 91,062 11,220 Licenses and permits 7,421 7,421 7,119 (302) Fire 46,825 50,833 45,893 4,940 Intergovernmental 2,350 18,716 9,168 (9,548) Animal regulation 3,416 3,518 3,479 39 Charges for services 11,182 11,220 11,770 550 Building and zoning inspection 2,343 2,343 2,133 210 Fines and forfeitures 8,794 8,794 6,293 (2,501) Street lighting 4,478 4,478 4,519 (41)

Special assessments 4,525 4,536 4,509 (27) Total public safety 148,306 163,454 147,086 16,368 Rental and investment income 1,580 1,580 2,662 1,082 Miscellaneous 7,265 7,702 4,725 (2,977) Highways and streets 18,176 20,441 16,651 3,790 Total revenues 171,238 188,090 175,549 (12,541) Culture and recreation 27,405 32,069 28,814 3,255 Expenditures Capital Outay 153 2,202 1,140 1,062 General government:

Mayor 908 1,026 1,014 12 Debt service:

Council 1,252 1,316 1,187 129 Principal 6,930 37,705 37,620 85 Manager 11,072 12,252 11,824 428 Interest 7,208 7,208 7,015 193 Attorney 3,923 4,029 4,031 (2) Bond issuance costs 169 169 Clerk 1.291 1,712 1,314 398 Total debt service 14,138 45,082 44,804 278 Community Development 8,190 8,401 7,681 720 Human Resources 2,765 3,005 2,571 434 Total expenditures 211,239 273,427 250,212 23,215 General Services 7,293 8,269 7,354 915 Information System 13,981 16,164 12,032 4,132 Deficiency of revenue under expenditures (40,001) (85,337) (74,663) 10,674 Development 7,754 9,373 7,987 1,386 Other financing sources (uses)

Subtotal 58,429 65,547 56,995 8,552 Transfers in 39,936 39,791 40,266 475 Allocated expenditures (55,368) (55,368) (45,278) (10,090) Transfers out (83,273) (83,292) (19)

Issuance of long term debt 30,940 30,940 Total general government 3,061 10,179 11,717 (1,c38u Sale of capital assets 65 65 156 91 continued Total other financing sources 40,001 (12,477) (11,930) 547 The notes to the financial statements are an integral part of this statement. Net change in fund balances (97,814) (86,593) 11,221 Fund balance, beginning 160,843 160,843 160,843-Fund balance, ending $ 160,843 $ 63,029 $ 74,250 $ 11,221 27

City of Riverside Statement of Net Assets Proprietary Funds June 30, 3012 (amounts expressed in thousands)

Business-type Activities - Enterprise Funds Governmental Other Enterprise Total Enterprise Activities-Internal Assets Electric Water Sewer Funds Funds Service Funds Current assets:

Cash and investments 187,541 $ 63,927 $ 17,137 $ 5,941 $ 274,546 $ 5,194 Receivables (net allowances for uncollectibles)

Interest 825 280 98 28 1,231 34 Utility billed 16,904 4,261 2,109 983 24,257 Utility unbilled 13,139 3,423 1,409 599 18,570 Accounts 8,041 3,968 566 335 12,910 69 Intergovernmental 475 453 1,185 1,019 3,132 212 Nuclear materials inventory 1,992 1,992 Inventory 1,334 1,334 6,787 Prepaid items 16,507 23 2 16,532 Deposits 851 851 Due from other funds 2,277 976 3,253 Restricted assets:

Cash and cash equivalents 4,221 2,294 2,295 8,810 Public benefit programs receivable 834 120 _ 954 Total current assets 253,607 79,725 23,840 11,200 368,372 12,296 Non-current assets:

Restricted assets:

Cash and cash equivalents 19,808 5,764 6,760 32,332 Cash and investments at fiscal agent 238,254 41,810 143,049 6,597 429,710 Advances to other funds 7,946 7,946 5,489 Advances to Successor Agency 5,558 4,250 9,808 5,461 Deferred charges - other 18,836 7,209 4,537 9,579 40,161 1,497 Deferred charges - derivative instruments 30,922 6,838 37,760 Capital assets:

Nuclear fuel, at amortized cost 8,832 8,832 Land 7,654 10,996 2,698 13,576 34,924 Intangible assets, non-depreciable 9,821 6,307 16,128 Improvements, non-depreciable 14,641 14,641 Intangible assets, depreciable 292 353 645 Accumulated depreciation - intangible assets, depreciable (5) (141) (146) -

Buildings 21,450 18,209 190,416 16,533 246,608 1,488 Accumulated depreciation - buildings (5,524) (4,336) (88,488) (4,582) (102,930) (241)

Improvements other than buildings 882,340 510,374 84,096 23,994 1,500,804 Accumulated depreciation - improvements other than buildings (291,836) (145,933) (14,708) (6,402) (458,879)

Machinery and equipment 26,240 12,989 10,020 17,817 67,066 9,580 Accumulated depreciation - machinery and equipment (13,675) (9,835) (5,638) (11,691) (40,839) (8,160)

Construction in progress 43,205 10,692 50,759 22,287 126,943 644 Total non-current assets 1,016,813 471,296 395,697 87,708 1,971,514 15,758 Total assets 1,270,420 551,021 419,537 98,908 2,339,886 28,054 Continued 28

City of Riverside Statement of Net Assets Proprietary Funds June 30, 3012 (amounts expressed in thousands)

Business-type Activities - Enterprise Funds Governmental Other Enterprise Total Enterprise Activities-Internal Liabilities Electric Water Sewer Funds Funds Service Funds Current liabilities:

Accounts payable 13,055 3,331 2,269 2,821 21,476 755 Accrued payroll 5,460 1,808 1,424 891 9,583 580 Retainage payable 287 319 116 832 1,554 Unearned revenue 2,049 2,049 3,148 724 1 3,873 Deposits Due to other funds 348 348 3,253 Capital leases - current 402 7 409 Water stock acquisitions - current 150 150 Landfill capping - current 200 200 Notes payable - current 1,481 705 838 3,024 Claims and judgements - current 11,750 Current liabilities payable from restricted assets:

Revenue bonds 18,050 4,695 6,760 29,505 Accrued interest 6,100 1,858 4,520 12,478 Other payables 1,035 95 1,130 Total current liabilities 49,018 12,980 15,794 7,987 85,779 16,338 Non-current liabilities:

Revenue bonds 572,192 203,729 236,313 1,012,234 Notes payable 42,660 5,174 22,963 70,797 Capital leases 901 22 923 Advances from other funds 12,003 5,164 3,304 3,288 23,759 1,466 Decommissioning liability 71,709 71,709 Derivative instruments 38,123 12,768 50,891 Claims and judgements 15,792 Water stock acquisitions 797 797 Landfill capping 6,495 6,495 Other payables 3,999 1,644 1,135 2,820 9,598 466 Total non-current liabilities 741,587 224,102 245,926 35,588 1,247,203 17,724 Total liabilities 790,605 237,082 261,720 43,575 1,332,982 34,062 Net Assets Invested in capital assets, net of related debt 236,789 243,997 133,757 52,376 666,919 3,311 Restricted for debt service 19,808 5,764 20,142 45,714 Restricted for landfill capping 2,295 2,295 Restricted for programs 4,020 2,319 575 6,914 Unrestricted 219,198 61,859 3,343 662 285,062 (9,319)

Total net assets $ 479,815 313,939 $ 157,817 $ 55,333 1,006,904 $ (6,008)

The notes to the financial statements are an integral part of this statement.

29

City of Riverside Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Business-type Activities - Enterprise Funds Governmental Other Enterprise Total Enterprise Activities-internal Electric Water Sewer Funds Funds Service Funds Operating revenues:

Charges for services $ 333,029 $ 65,206 $ 37,747 $ 26,267 $ 462,249 $ 20,466 Operating expenses:

Personnel services 38,400 12,635 10,029 8,464 69,528 3,897 Contractual services 61821 2,314 975 5,177 15,287 228 Maintenance and operation 172,340 8,471 8,901 6,901 196,613 1,867 General 12,593 11,523 6,156 4,282 34,554 1,939 Materials and supplies 792 756 3,114 1,490 6,152 378 Claims/Insurance 1,244 682 457 343 2,726 12,264 Depreciation and amortization 27,482 11,824 6,600 3,581 49,487 718 Total operating expenses 259,672 48,205 36,232 30,238 374,347 21,291 Operating income (loss) 73,357 17,001 1,515 (3,971) 87,902 (825)

Non-operating revenues (expenses):

Operating grants 2,738 2,738 Interest income 6,196 1,428 3,717 64 11,405 278 Other 3,058 918 28 (899) 3,105 300 Gain (loss) on retirement of capital assets 487 187 (3) 5 676 (10)

Capital improvement fees 1,098 1,098 Interest expense and fiscal charges (29,127) (8,510) (7,470) (1,038) (46,145) (105)

Total non-operating revenues (expenses) (19,386) (5,977) (2,630) 870 (27,123) 463 Income before capital contributions and transfers 53,971 11,024 (1,115) (3,101) 60,779 (362)

Cash capital contributions 7,425 6,892 1,185 1,513 17,015 Noncash capital contributions 1,832 548 2,380 Transfers out (33,533) (6,258) (888) (40,679)

Change in net assets 29,695 12,206 70 (2,476) 39,495 (362)

Total net assets - beginning 450,120 301,733 157,747 57,809 967,409 (5,646)

Total net assets - ending $ 479,815 $ 313,939 $ 157,817 $ 55,333 $ 1,006,904 $ (6,008)

The notes to the financial statements are an integral part of this statement.

30

City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Governmental Other Total Activities-Enterprise Enterprise Internal Electric Water Sewer Funds Funds Service Funds Cash flows from operating activities:

Cash received from customers and users $ 329,608 $ 64,610 $ 35,399 $ 25.909 $ 455,526 $ 24,038 Cash paid to employees for services (38,731) (12.562) (9,369) (8,091) (68,753) (3,689)

Cash paid to other suppliers of goods or services (187.592) (22,783) (19,091) (16,276) (245,742) (19,918)

Other receipts 3,058 918 28 920 4,924 301 Net cash provided (used) by operating activities 106,343 30.183 6,967 2,462 145,955 732 Cash flows from noncapital financing activities:

Transfers out (33,533) (6,258) (888) (40,679)

Operating grants 2,819 2,819 Intra-equity property acquisition (976) (976)

Advances from interfund receivables 326 326 Payments on interfund receivables (378) (163) 6,243 (508) 5,194 (39)

Advances to other funds 1.918 (104) 1,814 963 Net cash provided (used) by noncapital financing activities (31,993) (7,397) 6,139 1,749 (31.502) 924 Cash flows from capital and related financing activities:

Purchase of capital assets (41.752) (27,794) (34,247) (12,114) (115.907) (949)

Purchase of nuclear fuel (4,908) (4,908)

Proceeds from the sale of capital assets 554 208 10 772 Principal paid on long-term obligations (26,611) (4,545) (1,464) (807) (33,427)

Interest paid on long-term obligations (30,764) (9,273) (7,470) (1,038) (48,545) (105)

Capital improvement fees 1,098 1,098 Capital contributions 6,818 4,810 1,513 13,141 Net cash (used) for capital and related financing activities (96.663) (36,594) (42,083) (12,436) (187,776) (1,054)

Cash flows from investing activities:

Sale/(purchase) of investments (60) 149 89 Income from investments 6,840 1,583 3,679 107 12,209 356 Net cash provided by investing activities 6,780 1,732 3,679 107 12,298 356 Net change in cash and cash equivalents (15,533) (12,076) (25,298) (8,118) (61,025) 958 Cash and cash equivalents, beginning (including $198,600 for Electric,

$68.532 for Water, $174,524 for Sewer and $17,794 for Other Enterprise Funds in restricted accounts.) 367,505 125,336 192,244 22,951 708,036 4,236 Cash and cash equivalents, ending (including $164,431 for Electric,

$49,333 for Water, $149,809 for Sewer and $8,892 for Other Enterprise Funds in restricted accounts.) $ 351,972 $ 113,260 $ 166,946 $ 14,833 $ 647,011 $ 5,194 continued 31

City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2012 (amounts expressed in thousands) continued Governmental Other Total Activities-Enterprise Enterprise Internal Electric Water Sewer Funds Funds Service Funds Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating Income (loss) 73,357 $ 17,001 $ 1,515 $ (3,971) $ 87,902 $ (825)

Other receipts 3,058 918 1,213 920 6,109 301 Adjustments to reconcile operating income to net cash provided (used) by operating activities:

Depreciation and amortization 27,482 11,824 6,600 3,581 49,487 718 Amortization of pension costs 356 153 98 66 673 134 Amortization (bum) of nuclear fuel 954 954 (Increase) in utility billed receivables (3,209) (1,136) (2,348) (6,693)

(Increase) in utility unbilled receivables (153) (118) (421) (692)

(Increase) decrease in accounts receivable 1,211 612 72 1,895 (132)

(Increase) decrease in intergovernmental receivables (414) 5 (9) (418)

(Increase) in prepaid items (4,698) (21) (2) (4,721)

(Increase) in nuclear materials inventory (87) (87)

(Increase) decrease in inventory (150) (150) 647 Increase (decrease) in accounts payable 3,129 189 (521) 2,137 4,934 (164)

Increase in accrued payroll 331 73 250 45 699 47 Increase in retainage payable 137 213 350 Increase in other payable 1,034 424 312 262 2,032 20 Increase in deposits 115 46 161 (Decrease) in due to other funds (942)

Increase in claims and judgments 928 Increase in decommissioning liabilitity 3,740 - 3,740 (Decrease) in landfill capping -(220) (220)

Net cash provided by operating activities $ 106,343 $ 30,183 $ 6,967 $ 2,462 $ 145,955 $ 732 Schedule of noncash financing and investing activities:

Capital contributions $ 1,832 $ 548 $ $ $ 2,380 $

Increase (decrease) in fair value of investments $ 136 $ - $ $ $ 136 $

The notes to the financial statements are an integral part of this statement.

32

City of Riverside Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2012 (amounts expressed In thousands)

Successor Agency Private-Purpose Agency Trust Fund Fund Assets Cash and investments $ 46,485 $ 7,515 Cash and investments at fiscal agent 31,188 6,569 Receivables:

Interest 144 28 Accounts 58 Notes 21,957 Capital lease receivable 22,545 Deposits 132 Property tax receivables 406 Deferred charges 5,215 Land & improvements held for resale 15,036 Capital assets:

Land 185 Equipment 6 Accumulated depreciation - equipment (6)

Total assets $ 142,945 $ 14,518 Liabilities Accounts payable $ 3,362 $

Retainage payable 1,174 Accrued interest 5,174 Advances from City of Riverside 55,104 Bonds payable 264,385 Notes payable 7,189 Loan payable 1,100 Held for bond holders 14,518 Total liabilities $ 337,488 $ 14,518 Net Assets/(Deflclt)

Held by Successor Agency $ (194,543)

Total net assets/(deficit) $ (194,543) $

The notes to the financial statements are an integral part of this statement 33

City of Riverside Statement of Changes in Net Assets Fiduciary Fund - Private-Purpose Trust Fund For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Successor Agency Private-Purpose Trust Fund Additions Property tax revenue $ 17,273 Rental and investment income 1,168 Miscellaneous 168 Total additions 18,609 Deductions Professional services and other deductions 1,259 Market value adjustment to land held for resale 45,113 Redevelopment projects 11,056 Interest expense 6,107 Total deductions 63,535 Extraordinary items Transfer of assets and liabilities from the former Riverside Redevelopment Agency (98,022)

Transfer of assets to the City of Riverside (56,522)

Transfer of obligation to the City of Riverside 4,927 Total extraordinary items (149,617)

Change in Net Assets (194,543)

Net Assets/(Deficit) - beginning Net Assets/(Deficit) - ending $ (194,543)

The notes to the financial statements are an integral part of this statement 34

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts exoressed in thousands)

1. Summary of Significant Accounting Policies Riverside Municipal Improvements Corporation (Municipal Improvements Corporation) was created in 1978 and operates under provisions of the The City of Riverside (City) was incorporated on October 11, 1883 as a Nonprofit Public Benefit Corporation Law of the State of California. The Charter City and operates under a Council-Manager form of Government. Municipal Improvements Corporation's primary purpose is to provide The more significant accounting policies reflected in the financial statements financing assistance by obtaining land, property and equipment on behalf of are summarized as follows: the City. Three members of the City Council serve as the Municipal Improvements Corporation's directors and have full accountability for fiscal A. Reporting Entity matters.

These financial statements present the City and its component units, entities Fiduciary Component Unit for which the City is financially accountable. Blended component units are legally separate entities, but in substance are part of the City's operations Successor Agency to the Redevelopment Agency of the City of Riverside and their data is combined with that of the City's. The City has no component (Successor Agency) is a separate legal entity, which was formed to hold the units that meet the criteria for discrete presentation. All of the City's assets and liabilities of the former Redevelopment Agency pursuant to City component units have a June 30 year end. Council actions taken on March 15, 2011 and January 10, 2012. The activity of the Successor Agency is overseen by an Oversight Board comprised of Blended Component Units individuals appointed by various government agencies and the City of Riverside as Successor Agency of the former Redevelopment Agency. The Riverside Redevelopment Agency (Redevelopment Agency) was established nature and significance of the relationship between the City and the in 1967 by the City. The Redevelopment Agency's primary purpose was to Successor Agency is such that it would be misleading to exclude the eliminate blighted areas in the City by encouraging commercial development. Successor Agency from the City's financial statements. The Successor City Council members served as the Redevelopment Agency's directors and Agency is presented herein in the City's fiduciary funds as a private-purpose had full accountability for fiscal matters. On December 29, 2011, the trust fund.

California Supreme Court upheld Assembly Bill 1X 26 that provided for the dissolution of all redevelopment agencies in the State of California. In Complete financial statements are prepared for the Riverside Public accordance with the timeline set forth in the bill (as modified by the California Financing Authority and the Successor Agency to the Redevelopment Supreme Court on December 29, 2011) all redevelopment agencies in the Agency of the City of Riverside, which can be obtained from the City's State of California were dissolved and ceased to operate as a legal entity as Finance Department, 3900 Main Street, Riverside, California, 92522 or online of February 1, 2012. at www.riversideca.gov.

Riverside Housing Authority (Housing Authority) was established in 2006 by B. Government-wide and Fund Financial Statements the City. The Housing Authority's primary purpose is to provide safe and sanitary housing accommodations for persons with low or moderate income. The government-wide financial statements (i.e., the statement of net assets City Council members serve as the Housing Authority's commissioners and and the statement of activities) report information on all of the nonfiduciary have full accountability for fiscal matters. activities of the City and its component units. Interfund activity has been removed from these statements except for utility charges, as this would Riverside Public Financing Authority (Public Financing Authority) was distort the presentation of function costs and program revenues.

organized in December 1987 by the City and the Redevelopment Agency. Governmental activities, which normally are supported by taxes and The purpose of the Public Financing Authority is to provide financing for intergovernmental revenues, are reported separately from business type public capital improvements to the City or the Redevelopment Agency. City activities, which rely to a significant extent on fees and charges for support.

Council members serve as the Public Financing Authority's directors and have full accountability for fiscal matters. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues.

35

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed inthousands)

Direct expenses are those that are clearly identifiable with a specific function as described below. Grant revenue is recognized if received within six (6) or segment. Program revenues include 1) charges to customers or months of year end to enable the matching of revenue with applicable applicants who purchase, use, or directly benefit from goods, services, or expenditures. Expenditures generally are recorded when a liability is privileges provided by a given function or segment and 2) grants and incurred, as under accrual accounting. However, debt service expenditures, contributions that are restricted to meeting the operational or capital as well as expenditures related to compensated absences and claims and requirements of a particular function or segment. Taxes and other items not judgments, are recorded only when payment is due.

properly included among program revenues are reported instead as general revenues. Indirect expenses are allocated to the various functions based on In 2004, the State temporarily began to exchange 25% of sales taxes for an a proportionate utilization of the services rendered. Such allocations consist equal amount of property taxes to securitize a short-term State bond issue.

of charges for accounting, human resources, information technology and The State bond issue will remain outstanding for an uncertain number of other similar support services. years, but is currently estimated not to exceed eight (8) years. These in-lieu sales taxes will be paid to the City by the State on a different calendar than Separate financial statements are provided for governmental funds, sales taxes, which are paid monthly, three months in arrears. The vast proprietary funds, and fiduciary funds, -even though the latter are excluded majority of the in-lieu amount will be paid during the applicable fiscal year; from the government-wide financial statements. Major individual however, the final payment of the in-lieu sales taxes will not be paid until the governmental funds and major individual enterprise funds are reported as January following the end of the applicable fiscal year. The City has separate columns in the fund financial statements. budgeted this final payment in the current fiscal year and will continue this I

practice during this temporary period, effectively extending the availability C. Measurement Focus, Basis of Accounting and Financial period to seven (7) months for the in-lieu sales taxes and thus provide Statement Presentation consistency in the reporting of sales tax revenue.

The government-wide, proprietary and private-purpose trust fund financial Property taxes, special assessments, sales taxes, franchise taxes, licenses, statements are reported using the economic resources measurement focus charges for services, amounts due from other governments and interest and the accrual basis of accounting. Agency funds report only assets and associated with the current fiscal period are all considered to be susceptible liabilities, therefore have no measurement focus. Revenues are recorded to accrual. Other revenue items such as fines and permits are considered to when earned and expenses are recorded when a liability is incurred, be measurable and available only when the government receives cash, and regardless of the timing of related cash flows. Property taxes are recognized are therefore not susceptible to accrual.

as revenues in the year for which they are levied on the property. Grants and similar items are recognized as revenue as soon as all eligibility The government reports the following major governmental funds:

requirements have been met. An allowance for doubtful accounts is maintained for the utility and other miscellaneous receivables. The General fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those Governmental fund financial statements are reported using the current required to be accounted for in another fund.

financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable The Redevelopment Agency's debt service fund accounts for the and available. Revenues are considered to be available when they are resources accumulated and payments made for principal and interest on collectible within the current period or soon enough thereafter to pay liabilities long-term obligation debt of the Redevelopment Agency through of the current period. For this purpose, the government considers revenues dissolution, January 31, 2012.

to be available if they are collected within 60 days of the end of the current fiscal period, except for revenue associated with neglected property The Capital Outlay fund accounts for the construction and installation of abatement which is eleven (11) months and except for grant revenue, street and highway capital improvements for the City, including including reimbursements received from Transportation Uniform Mitigation improvements funded by the 1/2% sales tax approved by Riverside County Fees, which is (6) months and sales tax revenue which is seven (7) months, in 1988.

36

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

The Redevelopment Agency's capital project fund accounts for the Amounts reported as program revenues include 1) charges to customers for acquisition, relocation, demolition and sale of land for those portions of goods, services, or privileges provided, 2) operating grants and contributions, the City designated to be in need of redevelopment activities through and 3) capital grants and contributions, including special assessments.

dissolution, January 31, 2012. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

The government reports the following major proprietary funds:

Proprietary funds distinguish operating revenues and expenses from non-The Electric fund accounts for the activities of the City's electric operating items. Operating revenues and expenses generally result from distribution operations. providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The sewer fund also The Water fund accounts for the activities of the City's water distribution recognizes as operating revenue the portion of connection fees intended to operations. recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of The Sewer fund accounts for the activities of the City's sewer systems. sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported Additionally, the government reports the following fund types: as non-operating revenues and expenses.

Internal service funds account for self-insurance, central stores and D. Cash and Investments central garage on a cost reimbursement basis.

The City values its cash and investments in accordance with the provisions Fiduciary funds include private-purpose trust and agency funds. The of Government Accounting Standards Board (GASB) Statement No. 31, private-purpose trust fund accounts for assets and activities of the "Accounting and Financial Reporting for Certain Investments and External dissolved Redevelopment Agency, which is accounted for in the Investment Pools (GASB 31)," which requires governmental entities, Successor Agency Trust. The agency fund is used to account for special including governmental external investment pools, to report certain assessments that service no-commitment debt. investments at fair value in the statement of net assets/balance sheet and recognize the corresponding change in the fair value of investments in the The permanent fund is a governmental fund that is used to report year in which the change occurred. Fair value is determined using published resources that are legally restricted to the extent that only earnings, and market prices.

not principal, may be used for purposes that support the City's Library programs. Non-expendable net assets on the Statement of Net Assets Cash accounts of all funds are pooled for investment purposes to enhance includes $1 million of permanent fund principal which are considered safety and liquidity while maximizing interest earnings. Investments are nonexpendable net assets. stated at fair value. All highly liquid investments (including restricted assets) with a maturity of 90 days or less when purchased are considered cash Pronouncements regarding accounting and financial reporting issued by the equivalents. Cash and investments held on behalf of proprietary funds by Financial Accounting Standards Board prior to December 1, 1989 generally the City Treasurer are considered highly liquid and are classified as cash are followed in both the government-wide and proprietary fund financial equivalents for the purpose of presentation in the Statement of Cash Flows.

statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. E. Restricted Cash and Investments Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to Certain proceeds of Enterprise fund revenue bonds, as well as certain this same limitation. The City has elected not to follow subsequent private- resources set aside for their repayment, are classified as restricted assets on sector guidance. the statement of net assets because their use is limited by applicable bond 37

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 i Lao '"~uns Lasa xpes OCU A ;

IIL 4k

'JOIl 4

aJ covenants. Additionally, unspent proceeds received from the City's landfill The costs of normal maintenance and repairs that do not add to the value of capping surcharge are also recorded as restricted assets. the asset or materially extend asset lives are not capitalized. Capital assets other than land are depreciated using the straight-line method.

F. Land and Improvements Held for Resale Interest incurred during the construction phase is reflected in the capitalized Land and improvements held for resale were generally acquired for future value of the asset constructed for proprietary funds. For the year ended June development projects. The properties are carried at the lower of cost or net 30, 2012, business-type activities capitalized net interest costs of $5,992 in realizable value. In the current fiscal year, certain properties that were the government-wide and fund financial statements. Total interest expense previously held for resale were transferred to the City upon dissolution of the incurred by the business-type activities (and the enterprise funds on the former Redevelopment Agency and are accounted for as capital assets. proprietary funds statements) before capitalization was $52,137.

G. Inventory Nuclear Fuel Supplies are valued at cost using the average-cost method. Costs are The City amortizes the cost of nuclear fuel to expense using the "as burned" charged to user departments when consumed rather than when purchased. method. In accordance with the Nuclear Waste Disposal Act of 1982, the City is charged one dollar per megawatt-hour of energy generated by the H. Prepaid Items City's share of San Onofre Nuclear Generating Station's Units 2 and 3 to provide for estimated future storage and disposal of spent fuel. The City Payments to vendors for services benefiting future periods are recorded as pays this fee to its operating agent, Southern California Edison Company, on prepaid items and expenditures are recognized when items are consumed. a quarterly basis.

I. Capital Assets and Nuclear Fuel J. Compensated Absences Capital Assets City employees receive 10 to 25 vacation days a year based upon length of service. A maximum of two years' vacation accrual may be accumulated and Capital assets, which include property, plant, equipment, and infrastructure unused vacation is paid in cash upon separation.

assets ( e.g., roads, bridges, sidewalks, right of way, and similar items), are reported in the applicable governmental or business-type activities columns City employees generally receive one day of sick leave for each month of in the government-wide financial statements. The government defines capital employment with unlimited accumulation. Upon retirement or death, certain assets as assets with an initial, individual cost of more than five thousand employees or their estates receive a percentage of unused sick leave paid in dollars and an estimated useful life in excess of one year. Such assets are a lump sum based on longevity. The General, Housing and Community recorded at historical cost or estimated historical cost if purchased or Development Special Revenue, Electric and Water funds have been primarily constructed. Costs include: labor; materials; interest during construction; used to liquidate such balances.

allocated indirect charges such as engineering, construction and transportation equipment, retirement plan contributions and other fringe The liability associated with these benefits is reported in the government-benefits. Donated capital assets are recorded at estimated fair market value wide statements. Vacation and sick leave of proprietary funds is recorded as at the date of donation. Intangible assets that cost more than one hundred an expense and as a liability of those funds as the benefits accrue to thousand dollars with useful lives of at least three years are capitalized and employees.

are recorded at cost. Donated intangible assets are recorded at estimated fair market value at the date of donation. K. Derivative Instruments The City's derivative instruments are accounted for in accordance with Govemment Accounting Standards Board (GASB) Statement No. 53, 38

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

"Accounting and Financial Reporting for Derivative Instruments" (GASB 53), Decommissioning which requires the City to report its derivative instruments at fair value.

Changes in fair value for effective hedges that are achieved with derivative Federal regulations require the Electric Utility to provide for the future instruments are reported as deferrals in the statements of net assets. decommissioning of its ownership share of the nuclear units at San Onofre.

The Electric Utility established a trust account to accumulate resources for The City uses derivative instruments to hedge its exposure to changing the decommissioning of the nuclear power plant and restoration of the interest rates through the use of interest rate swaps. The City had debt that beachfront at San Onofre. Each year the Electric Utility recognizes an was layered with "synthetic fixed rate" 'swaps, which was refunded in 2008 expense in the amount of the contribution to the trust account. The funding and 2011. At the time of the refunding, hedge accounting ceased to be will occur over the useful life of the generating plant.

applied. The balance of the deferral account for each swap was included in the net carrying amount of the new bonds. The swaps were also employed Amounts held in the trust account are classified as restricted assets in the as a hedge against the new debt. Hedge accounting was applied to that accompanying balance sheet. To date, the Electric Utility has set aside portion of the hedging relationship, which was determined to be effective. $71,709 in cash and investments with the trustee as Riverside's estimated The negative fair value of the interest rate swaps related to the new hedging share of the decommissioning cost of San Onofre. Based on a cost estimate relationship has been recorded and deferred on the statement of net assets. completed by Southern California Edison and approved by the California See Note 9 for further discussion related to the City's interest rate swaps. Public Utilities Commission, the Electric Utility plans to set aside approximately $1,600 per year to fund this obligation. The plant site Various transactions permitted in the Utility's Power Resources Risk easement at San Onofre terminates May 2024. The plant must be Management Policies may be considered derivatives, including energy decommissioned and the site restored by the time the easement terminates.

and/or gas transactions for swaps, options, forward arrangements and congestion revenue rights. The City has determined that all of its contracts M. Claims and Judgments Payable including congestion revenue rights fall under the scope of "normal purchases and normal sales" and are exempt from GASB 53. Claims and judgments payable are recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably L. Long-Term Obligations estimated. Such claims, including an estimate for claims incurred but not reported at year end, are recorded as liabilities in the appropriate internal Long-Term Debt service fund.

In the government-wide financial statements and proprietary fund types in the N. Fund Equity fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type In the fund financial statements, governmental fund balance is made up of activities, or proprietary fund type statement of net assets. Bond premiums the following components:

and discounts, as well as issuance costs, are classified as deferred charges " Nonspendable fund balance is the portion of fund balance that cannot and amortized over the life of the bonds using the effective interest method. be spent due to form. Examples include inventories, prepaid amounts, Bonds payable are reported net of the applicable bond premium or discount. long-term loans, notes receivable, and property held for resale, unless the proceeds are restricted, committed or assigned. Also, amounts In the fund financial statements, government fund types recognize bond that must be maintained intact legally or contractually, such as the issuance costs as expenditures during the current period. The face amount principal of a permanent fund are reported within the nonspendable of debt issued is reported as other financing sources. Premiums received on category.

debt issuances are reported as other financing sources while discounts on " Restricted fund balance is the portion of fund balance that is subject to debt issuance are reported as other financing uses. externally enforceable limitations by law, enabling legislation or limitations imposed by creditors or grantors.

39

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts exoressed in thousands)

" Committed fund balance is the portion of fund balance that is subject to types, are equally offset by a fund balance reserve to indicate that the self-imposed constraints due to formal action of the City Council. No receivable does not constitute available expendable financial resources.

amounts have been reported within this category of fund balance. Interfund payables also include accrued interest, which has been offset by

• Assigned fund balance is the portion of fund balance that is deferred revenue.

constrained by the City's intent to utilize fund balance for a specific purpose. On February 22, 2011, the City Council approved a policy Any residual balances outstanding between the governmental activities and whereby the authority to assign fund balance was delegated to the business-type activities are reported in the government-wide financial City's chief financial officer. statements as "internal balances".

• Unassigned fund balance is the residual classification that includes all spendable amounts in the General Fund not contained in other Q. Deferred Revenue classifications.

Governmental and proprietary funds report unearned revenue on the When expenditures are incurred for purposes for which both restricted and statement of net assets. Unearned revenues arise when the government unrestricted (committed, assigned or unassigned) fund balances are receives resources before it has a legal claim to them, as when grant monies available, the City's policy is to use restricted amounts before unrestricted are received prior to meeting all eligibility requirements. In subsequent amounts. Within unrestricted resources, committed resources are used first periods, when both revenue recognition criteria are met, or when the followed by assigned resources, and finally unassigned resources. government has a legal claim to the resources, revenue is recognized.

Deferred revenues arise in governmental funds when potential revenue does

0. Net Assets not meet both the "measurable" and "available" criteria for recognition in the current period.

Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt, consists of capital R. Property Tax Calendar assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or Under California law, general property taxes are assessed for up to 1% of the improvement of those assets. Net assets invested in capital assets, net of property's assessed value. General property taxes are collected by the related debt excludes unspent debt proceeds. Net assets are reported as counties along with other special district taxes and assessments and voter restricted when there are limitations imposed on their use either through approved debt. General property tax revenues are collected and pooled by legislation adopted by the City or through external restrictions imposed by the county throughout the fiscal year and then allocated and paid to the creditors, grantors or laws or regulations of other governments. Restricted county, cities and school districts based on complex formulas prescribed by resources are used first to fund appropriations. State statutes.

P. Interfund Transactions Property taxes are calculated on assessed values as of January 1 for the ensuing fiscal year. On July 1 of the fiscal year the levy is placed and a lien Interfund transactions are accounted for as revenues and expenditures or is attached to the property. Property taxes are due in two installments. The expenses. Transactions, which constitute reimbursements, are eliminated in first installment is due November 1 and is delinquent on December 10. The the reimbursed fund and accounted for as expenditures or expenses in the second installment is due February 1 and is delinquent on April 10. Property fund to which the transaction is applicable. taxes receivable represent current and prior years' uncollected tax levies, adjusted for uncollectable amounts.

During the year, transactions occur between individual funds for goods provided or services rendered. Related receivables and payables are S. Use of Estimates classified as "due from/to other funds" on the accompanying fund level statements. The noncurrent portion of long-term interfund loans receivable The preparation of financial statements in conformity with accounting are reported as interfund receivables/payables and, for governmental fund principles generally accepted in the United States of America requires 40

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands) management to make estimates and assumptions that affect the reported legal determination will be made at a later date by an appropriate judicial amounts of assets and liabilities, disclosure of contingent assets and authority that will resolve this issue favorably to the City and confirm the liabilities at the date of the financial statements, and the reported amounts of obligations as enforceable.

revenue and expenditures. Specifically, the City has made certain estimates and assumptions relating to the revenues due and expenditures incurred In accordance with the timeline set forth in the bill (as modified by the through fiscal year end, collectability of its receivables, the valuation of California Supreme Court on December 29, 2011) all redevelopment property held for resale, the useful lives of capital assets, and the ultimate agencies in the State of California were dissolved and ceased to operate as outcome of claims and judgments. Actual results may differ from those a legal entity as of February 1, 2012.

estimates and assumptions.

Prior to that date, the final seven months of the activity of the redevelopment T. Dissolution of Riverside Redevelopment Agency agency continued to be reported in the governmental funds of the City. After the date of dissolution, the assets and activities of the dissolved On December 29, 2011, the California Supreme Court upheld Assembly Bill redevelopment agency are reported in a fiduciary fund (private-purpose trust 1X 26 that provided for the dissolution of all redevelopment agencies in the fund) in the financial statements of the City.

State of California. The bill provided that upon dissolution of the Redevelopment Agency, either the city or another unit of local government The transfer of the assets and liabilities of the former redevelopment agency will agree to serve as the "successor agency" to hold the assets until they are as of February 1, 2012 (effectively the same date as January 31, 2012) from distributed to other units of state and local government. On March 15, 2011, governmental funds of the City to fiduciary funds was reported in the the City Council elected to become the Successor Agency for the former governmental funds as an extraordinary loss in the governmental fund Redevelopment Agency in accordance with the bill as part of City resolution financial statements. The receipt of these assets and liabilities as of January number 22184. 31, 2012 was reported in the private-purpose trust fund as an extraordinary loss.

After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations Because of the different measurement focus of the governmental funds or commitments. Subject to the control of a newly established oversight (current financial resources measurement focus) and the measurement focus board, remaining assets can only be used to pay enforceable obligations in of the trust funds (economic resources measurement focus), the existence at the date of dissolution (including the completion of any extraordinary loss recognized in the governmental funds was not the same unfinished projects that were subject to legally enforceable contractual amount as the extraordinary loss that was recognized in the fiduciary fund commitments). financial statements.

Successor agencies will only be allocated revenue in the amount that is The difference between the extraordinary loss related to the transfer of necessary to pay the estimated annual installment payments on enforceable assets and liabilities recognized in the fund financial statements and the obligations of the former redevelopment agency until all enforceable extraordinary loss recognized in the fiduciary fund financial statements is obligations of the prior redevelopment agency have been paid in full and all reconciled as follows:

assets have been liquidated.

Extraordinary loss reported in governmental funds related Management believes, in consultation with legal counsel, that the obligations to transfer of assets and liabilities to Successor Agency of the former redevelopment agency due to the City are valid enforceable upon dissolution: $ 130,174 obligations payable by the successor agency trust under the requirements of Capital assets (net of accumulated depreciation) reported the Bill. The City's position on this issue is not a position of settled law and in the government-wide financial statements 185 there is considerable legal uncertainty regarding this issue. In the event that the California Department of Finance ultimately maintains that the obligations Issuance costs reported in the government-wide financial are not enforceable, the City's legal counsel believes that it is likely that a statements 5,312 41

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Revenues reported in the government-wide financial 3. Cash and Investments statements 45,436 Cash and investments at fiscal year-end consist of the following:

Accrued bond interest reported in the government-wide financial statements (6,249) Investments $ 435,966 Investments at fiscal agent 480,979 Long-term debt reported in the government-wide financial 916,945 statements (272,880) Cash on hand and deposits with financial institutions 168 Non-negotiable certificates of deposit 21,814 Net decrease to net assets of the Successor Agency Trust $ 938.927Z as a result of initial transfers (equal to amount of extraordinary gain reported in the government-wide The amounts are reflected in the government-wide statement of net assets:

financial statements of the City)

Cash and investments $ 350,887

2. Legal Compliance - Budgets Restricted cash and cash equivalents 41,142 Restricted cash and investments at fiscal agent 455,141 Budgets are adopted on a basis consistent with accounting principles Total per statement of net assets 847,170 generally accepted in the United States of America. Annual appropriated Fiduciary fund cash and investments 91,757 budgets are adopted for all departments within the general, special revenue $_938,927 and capital project funds. Formal budgets are not employed for debt service funds because debt indenture provisions specify payments. The permanent The City follows the practice of pooling cash and investments of all funds fund is not budgeted. except for funds required to be held by outside fiscal agents under the During the period December through February of each fiscal year, provisions of bond indentures, which are administered by outside agencies.

department heads prepare estimates of required appropriations for the following fiscal year. These estimates are compiled into a proposed Interest income earned on pooled cash and investments is allocated monthly operating budget that includes a summary of proposed expenditures and to funds based on the beginning and month-end balances. Interest income financial resources and historical data for the preceding fiscal year. The from cash and investments held at fiscal agents is credited directly to the operating budget is presented by the City Manager to the City Council for related account. Bank deposits are covered by federal depository insurance review. Public hearings are conducted to obtain citizen comments. The City for the first $250 or by collateral held in the pledging bank's trust department Council generally adopts the budget during one of its June meetings. The in the name of the City.

City Manager is legally authorized to transfer budgeted amounts between divisions and accounts within the same department. Transfer of Authorized Investments appropriations between departments or funds and increased appropriations must be authorized by the City Council. Expenditures may not legally exceed Under provisions of the City's investment policy, and in accordance with budgeted appropriations at the departmental level within a fund. All California Government Code Section 53601, the City Treasurer may invest or appropriations shall lapse at the end of the fiscal year to the extent they have deposit in the following types of investments:

not been expended or lawfully encumbered, except for appropriations for Max Max % of capital projects which shall continue to their completion. Maturity Portfolio Securities of the U.S. Gov't.

and its sponsored agencies 5 Years 100%

Repurchase Agreements 1 Year 100%

Reverse Repurchase Agreements 90 Days 20%

42

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Negotiable Certificates of Deposit 5 Years 30% Disclosures Relatinci to Interest Rate Risk Bankers Acceptances 180 Days 40%

Commercial Paper of "prime" quality 270 Days 25% Interest rate risk is the risk that changes in market interest rates will Local Agency Investment Fund (State Pool) N/A 100% 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 Mutual Funds N/A 20%

changes in market interest rates. The City's investment policy requires that Medium-Term Corporate Notes 5 Years 30% the interest rate risk exposure be managed by purchasing a combination of Local Agency Bonds N/A N/A 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 Investments in Medium Term Corporate Notes may be invested in securities maturity evenly over time as necessary to provide the cash flow and liquidity rated A or better by Moody's or Standard and Poor's rating services and no needed for operations.

more than 15% of the market value of the portfolio may be invested in one corporation. Information about the sensitivity of the fair values of the City's investments (including investments held by fiscal agent) to market interest rate The City's investment policy provides two exceptions to the above; one is for fluctuations is provided by the following table that shows the distribution of investments authorized by debt agreements (described below) and the other the City's investments by maturity:

for funds reserved in the San Onofre Nuclear Generating Station Decommissioning Account for which the five-year maturity limitation may be Remaining Maturity (in Months) extended to the term of the operating license. 12 13 to 24 25 to 60 More than Investment Tvve Total Months Months Months 60 Months or Less Investments Authorized by Debt Agreements Money Market Funds $ 74,700 $ 74,700 $ 44,643 $ $

Provisions of debt agreements, rather than the general provisions of the Federal Agency Securities 193,919 23,587 125,689 California Government Code or the City's investment policy, govern Corp Medium Term Notes 59,818 10,128 20,765 28,925 State Investment Pool 99,647 99,647 investments of debt proceeds held by bond fiscal agents. Permitted Negotiable CDs 7,882 249 4,931 2,702 investments are specified in related trust agreements and include the Held by Fiscal Agent following: Money Market Funds 22,229 22,229 Banker's Acceptance 274 274 State Investment Pool 31,913 31,913 Securities of the U.S. Government and its sponsored agencies Investment Contracts 343,725 158,604 148,754 25,606 10,761 Bankers' Acceptances rated in the single highest classification Commercial Paper 3,733 3,733 Commercial Paper rated in the single highest classification Fed Agency Securities 55,921 4,676 4,187 47,058 Investments in money market funds rated in the single highest Corp Med Term Notes 23 184 3 070 20,114 Total classification Municipal obligations rated Aaa/AAA or general obligations of states with The City assumes that callable investments will not be called.

ratings of at least A2/A or higher by both Moody's and S&P Investment Agreements Disclosures Relating to Credit Risk No maximum percentage of the related debt issue or maximum investment in Generally, credit risk is the risk that an issuer of an investment will not fulfill one issuer is specified. its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

43

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Presented below is the actual rating as of year-end for each investment type: Investment in State Investment Pool Ratings as of Year End The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under Investment Type the oversight of the Treasurer of the State of California. The fair value of the Total AAA AA A Unrated City's investment in this pool is reported in the accompanying financial Money Market Funds $ 74,700 $ 1,816 $43,249 $29,635 statements at amounts based upon the City's pro-rata share of the fair value Federal Agency Securities 193,919 193,919 provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost Corp Medium Term Notes 59,818 49,101 10,717 of that portfolio). The balance available for withdrawal is based on the State Investment Pool 99,647 99,647 Negotiable CDs 7,882 7,882 accounting records maintained by LAIF, which are recorded on an amortized Held by Fiscal Agent cost basis.

Money Market Funds 22,229 15,572 6,657 Banker's Acceptance 274 274 4. Capital Lease Receivable State Investment Pool 31,913 31,913 Investment Contracts 343,725 343,725 The former Redevelopment Agency had a direct financing lease arrangement Commercial Paper 3,733 3,733 Fed Agency Securities 55,921 55,921 with the State of California (the State) for a twelve-story office building, which Corp Med Term Notes 23,184 17,552 5.632 was transferred to the Successor Agency. The lease term is for thirty years Total $916,945 i*228 _$49211t and the State takes ownership of the facility at the conclusion of that term.

The lease calls for semi-annual payments not less than the debt service Concentration on Credit Risk owed on the related lease revenue bonds issued by the former Redevelopment Agency for the purchase and renovation of the building. The The investment policy of the City contains no limitations on the amount that future minimum lease payments to be received are as follows:

can be invested in any one issuer beyond that stated above. Investments in any one issuer (other than U.S. Treasury securities, money market funds, 2013 $ 2,443 and external investment pools) that represent 5% or more of total City 2014 2,473 investments are as follows: 2015 2,507 2016 2,533 Issuer Investment Type Reported Amount Trinity Funding Investment Contract $195,144 2017 2,561 Deutsche Bank Securities Inc. Thereafter 21,666 Investment Contract $141,213 Total Due 34,183 Custodial Credit Risk Less: amount applicable to interest (11.638)

Total capital lease receivable $22-545 Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City's investment policy requires that a third party bank trust department hold all securities owned by the City. All trades are settled on a delivery vs. payment basis through the City's safekeeping agent. The City has no deposits with financial institutions; bank balances are swept daily into a money market account.

44

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the Year ended June 30, 2012 For he Yar ededJune30. 012(amounts exoressed in thousands)

5. Capital Assets Business type activities: Beginning Deletions/ Ending Balance Additions Transfers Balance Capital assets, not depreciated:

The following is a summary of changes in the capital assets during the fiscal Land $ 34,905 $ 144 $ (125) $ 34,924 year ended June 30, 2012. Intangibles, non-depreciable 16,128 16,128 Improvements, non-depreciable' 14,641 14,641 Beginning Deletions/ Ending Construction in progress 1025,71 119,582 (95.410) 126,943 Total capital assets not depreciated 153,804 119,726 192,636 Governmental activities: Balance Additions Transfers Balance (80,894)

Capital assets, not depreciated: Capital assets being depreciated:

Land $ 290,692 $ 32,387 $ (1,019) $ 322,060 Buildings 241,742 4,867 (1) 246,608 Construction in progress 23,562 31 868 (28.764) 26.666 Improvements Total capital assets not depreciated 314,254 64.255 (29.783) 348,726 other than buildings 1,497,956 88,373 (85,525) 1,500,804 Capital assets being depreciated: Intangibles, depreciable 137 508 645 Machinery and equipment 66,200 2 831 (1,965) 67,066 Buildings 165,101 3,998 169,099 Total capital assets being Improvements Depreciated 1,806,035 96,579 (87.491) 1815,123 other than buildings 202,911 25,010 (370) 227,551 Less accumulated depreciation for:

Machinery and equipment 74,503 6,564 (2,189) 78,878 Buildings (97,163) (5,767) - (102,930)

Infrastructure 849,090 27.422 876,512 Improvements Total capital assets being other than buildings (492,059) (37,704) 70,884 (458,879) depreciated 1,291605 6299 (2.559) 1,352,40 Intangibles, depreciable (137) (146)

(9) 1,849 Less accumulated depreciation for: Machinery and equipment (37,086) (5,602 (40,839)

Buildings (41,782) (4,189) (45,971) Total accumulated depreciation (626.445) (49.082) 72,733 (602.794)

Improvements Total capital assets being other than buildings (48,310) (9,208) 203 (57,315) depreciated, net 1,179,590 47497 (14,758 1.212,329 Machinery and equipment (54,749) (6,038) 1,973 (58,814)

Infrastructure (246,702) (20,159) (266.861) Nuclear fuel, at amortized cost 4,878 4,907 (953) 8,832 Total accumulated depreciation (391,543) (39.594) 2,176 (428.961) Business type activities Total capital assets being capital assets, net depreciated, net 900,062 23 400 (383) 923,079 Governmental activities 1 The San Onofre Nuclear Generating Station (SONGS) Units 2 and 3 were capital assets, net taken offline in January 2012 and remain offline for extensive inspections, testing and analysis resulting from excessive wear of tubes in the steam generators. It is anticipated that Unit 2 could restart months in advance of Unit 3. Due to the uncertainty of the restart date for Unit 3, the capital assets of Unit 3 are reclassified from a depreciable to a non-depreciable plant asset until it is restored to service. Unit 2 will remain classified as a depreciable plant asset since it is anticipated that it could be restored to service in the coming months. See footnote 16 for additional information.

Estimated useful lives used to compute depreciation are as follows:

Buildings and Improvements 30-50 years Improvements other than Buildings 20-99 years Intangibles - Depreciating 3-5 years Machinery and Equipment 3-15 years Infrastructure 20-100 years 45

CITY OF RIVERSIDE I NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Depreciation expense was charged to various functions as follows: Business-type activities:

Due Governmental activities: Beginning Ending Within General government $ 4,571 Balance Additions Reductions Balance One Year Public safety 3,997 Revenue Bonds $1,071,554 $ - $29,816 $1,041,739 $29,505 Loan Payable 45,569 - 1,428 44,141 1,481 Highways and streets, including depreciation of Notes Payable 31,178 - 1,498 29,680 1,543 general infrastructure assets 21,699 -

Capital Leases 1,720 388 1,332 409 Culture and recreation 99327 - 220 200 Landfill Capping 6,915 6,695 Total depreciation expense - governmental activities Arbitrage Liability 102 88 - 190 Water Stock Business type activities: Acquisition Electric $27,482 Rights 947 947 150 Water 11,824 Net OPEB Sewer 6,600 Obligation 5,6252,70 667 7,6 Refuse 1,106 Total Special Transportation 615 Airport 645 The following debt has been issued for the purpose of generating capital Public Parking 810 resources for use in acquiring or constructing municipal facilities or Total depreciation expense - business type activities $49.082 infrastructure projects.

6. Long-Term Obligations Long-Term Obligations at June 30, 2012:

Changes in Long-Term Obligations: Below is a summary of changes in long- Principal term obligations during the fiscal year: Revenue Bonds: Outstanding Governmental Activities: Electric Due Beginning Ending Within $75,405 2003 Electric Revenue Bonds; 2.0% to 5.0%,

Balance Additions Reductions Balance One Year due in annual installments from $1,035 to $8,535 Redevelopment Agency bonds $305,195 $ $305,195 $ - $

through October 1, 2013. $15,415 General Obligation Bonds 16,845 - 738 16,107 780 $27,500 2004 Electric Revenue Bonds; Series A fixed Pension Obligation rate bonds, 4.0% to 5.5%, due in annual installments Bonds 132,095 30,940 35,555 127,480 36,415 from $2,615 to $3,695 through October 1,2014. 9,845 Certificates of Participation 207,246 4,543 202,703 4,920 $141,840 2008 Electric Refunding/Revenue Bonds; Capital leases 6,670 1,450 5,220 1,248 Series A and C. The bonds were issued at a variable Notes Payable 7,749 7,749 rate; however the City entered into an agreement to Loan Payable 4,000 4,000 convert to a fixed rate of 3.1% for the Series A bonds Commercial Loan 1,100 1,100 and 3.2% for the C bonds. For information on the swap Compensated Absences 21,153 4,954 4,433 21,674 4,500 agreements see note 9. Bonds are due in annual Claims liability 26,615 12,286 11,359 27,542 11,750 installments from $1,325 to $8,560 through October 1, Net OPEB 2035. 139,640 Obligation Total $132716$55264 Z1 46

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

$209,740 2008 Electric Revenue Bonds; Series D fixed $59,000 2011 Water Refunding/Revenue Bonds; Series rate bonds, 3.6% to 5.0%, due in annual installments A. The bonds were issued at a variable rate; however from $125 to $24,960 through October 1, 2038. 209,740 the City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements

$34,920 2009 Electric Refunding/Revenue Bonds; see note 9. Bonds are due in annual installments from Series A fixed rate bonds, 0.35% to 5.0%, due in $800 to $3,950 through October 1, 2035. 58,200 annual installments from $450 to $6,105 through October 1,2018. The bonds refunded the 1998 series Subtotal 213,320 and partially refunded the 2001 series. 24,335 Add: Unamortized bond premium 4,341 Less: Unamortized deferred bond refunding costs (9,237)

$140,380 2010 Electric Revenue Bonds; Series A and B $208,424 fixed rate bonds, 3% to 4.9%, due in annual installments Sewer from $2,300 to $33,725 through October 1, 2040. 140,380

$240,910 2009 Sewer Revenue Bonds; Series A & B

$56,450 2011 Electric Revenue Refunding Bonds; Series fixed rate bonds, 3.65% to 5.0%, due in annual A. The bonds were issued at a variable rate; however installments from $5,555 to $13,350 through August 1, the City entered into an agreement to convert to a fixed 2039. $240,910 rate of 3.2%. For information on the swap agreements Add: Unamortized bond premium 24163 see note 9. Bonds are due in annual installments from $243,073

$725 to $5,175 through October 1, 2035. 55,125 Total Revenue Bonds $1,041,739 Subtotal 594,480 Add: Unamortized bond premium 8,639 Remaining revenue bond debt service payments will be made from revenues Less: Unamortized deferred bond refunding costs (12,877) of the Electric, Water and Sewer Enterprise funds. Annual debt service

$590,242 requirements to maturity are as follows:

Water Electric Utility Fund Water Utility Fund

$20,000 2001 Water Revenue Bonds; 2.6% to 5.0%,

due in annual installments from $345 to $585 through Fiscal Year Principal Interest Total Principal Interest Total October 1, 2031 (partially advance refunded in 2005 2013 $18,050 $ 25,455 $ 43,505 $ 4,695 $ 8,678 $13,373 and 2009, with final maturity in 2014). $1,000 2014 14,685 24,543 39,228 4,870 8,487 13,357 2015 20,480 23,745 44,225 5,015 8,276 13,291

$58,235 2008 Water Revenue Bonds; Series B fixed 2016 15,415 23,113 38,528 5,260 8,046 13,306 2017 12,745 22,620 35,365 5,180 7,814 12,994 rate bonds, 4.0% to 5.0%, due in annual installments 2018-2022 70,800 105,832 176,632 29,315 35,597 64,912 from $1,210 to $7,505 through October 1, 2038. 58,235 2023-2027 78,415 91,074 169,489 35,270 29,439 64,709 2028-2032 110,365 71,403 181,768 42,730 21,747 64,477

$31,895 2009 Water Refunding/Revenue Bonds; 2033-2037 127,900 46,144 174,044 51,960 12,229 64,189 Series A fixed rate bonds, 0.65% to 5.0%, due in 2038-2041 125,625 12,823 138,448 29,025 1,647 30,672 Premium 8,639 8,639 4,341 4,341 annual installments from $500 to $3,835 through Refunding October 1, 2020. The bonds refunded the 1998 series Costs (124877) 4 (12.8774 - (9.237) and partially refunded the 2001 series. 28,095 Total $590.242 4? $208,424 $141,960 ~

$67,790 2009 Water Revenue Bonds; Series B fixed rate bonds, 3.33% to 4.13%, due in annual installments from $2,475 to $4,985 through October 1, 2039. 67,790 47

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Sewer Utility Fund Principal Fiscal Year Prncipal Interest Total Pension Obligation Bonds: Outstanding 2013 $ 6,760 $10,712 $17,472 2014 7,035 10,436 17,471

$89,540 California Statewide Community Development 2015 7,325 10,149 17,474 2016 7,660 9,811 17,471 Authority (Public Safety) 2004 Taxable Pension 2017 8,055 9,418 17,473 Obligation Bond; 2.65% to 5.896%, due in annual 2018-2022 37,565 42,179 79,744 installments from $1,125 to $10,715 through June 1, $ 73,935 2023-2027 33,390 34,930 68,320 2023.

2028-2032 41,935 26,377 68,312 2033-2037 52,935 15,376 68,311 2038-2040 38,250 2,741 40,991 $30,000 2005 Taxable Pension Obligation Bonds Premium 2-163 2.163 Series A; 3.85% to 4.78%, due in annual installments Total 22,605

$630 to $3,860 through June 1,2020.

Principal General Obligation Bonds: Outstanding $30,940 2012 Taxable Pension Obligation Refunding Bond Anticipation Notes; rate at June 30, 2012 was

$20,000 Fire Facility Projects, Election of 2003 General 0.75%, $30,940 due June 1, 2013.

Obligation Bond; 3.0% to 5.5%, due in annual installments from $410 to $1,740 through August 1, Total Pension Obligation Bonds $127,a~Q 2024. $15,915 Add: Unamortized bond premium 192 Remaining pension obligation bond debt service payments will be made from unrestricted revenues of the General fund. Annual debt service requirements Total General Obligation Bonds to maturity are as follows:

Remaining general obligation bond debt service payments will be made from unrestricted revenues of the General fund. Annual debt service requirements Fiscal Year Principal Interest Total to maturity are as follows: 2013 $36,415 $ 5,589 $ 42,004 2014 6,230 5,080 11,310 Fiscal Year Principal Interest Total 2015 7,050 4,759 11,809 2013 $ 780 $ 737 $1,517 2016 7,930 4,391 12,321 2014 840 706 1,546 2017 8,880 3,971 12,851 2015 900 671 1,571 2018-2022 50,260 11,677 61,937 2023 10,715 632 11,347 2016 965 634 1,599 2017 1,040 592 1,632 Total 2018-2022 6,450 2,152 8,602 2023-2025 4,940 417 5,357 Principal Premium 192 192 Certificates of Participation: Outstandinq Total

$53,185 2003 Riverside Public Financing Authority Certificates of Participation; 2.0% to 5.0%, due in annual installments from $755 to $2,830 through September 1, 2033. $44,025 48

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

$19,945 2006 Galleria at Tyler Public Improvements Principal Certificates of Participation; 4.0% to 5.0%, due in Loan Payable - Governmental Activities: Outstanding annual installments from $435 to $1,270 through September 1, 2036. 19,510 In March 2012 the City entered into a financing $4.000 arrangement in the amount of $4,000 with Pinnacle

$128,300 2008 Riverside Renaissance Certificates of Public Finance, Inc. for the construction of Ryan Participation; issued at a variable rate; however the Bonaminio Park at the Tequesquite Arroyo. The debt City entered into an agreement to convert to a fixed will be paid with resources from the General Fund in rate of 3.4%. For information on the swap agreement 122,400 semi-annual debt service payments of approximately see note 9. Due in annual installments from $2,900 to $468 per year over a 10 year period, which includes

$7,200 through March 1, 2037. interest at an annualized rate of 3.05%.

$20,660 2010 Recovery Zone Facility Hotel Project Principal Certificates of Participation; 4.0% to 5.5%, due in Loan Payable - Electric Fund: Outstandinq annual installments from $415 to $1,410 through March 1,2040. The City entered into the Clearwater Power Plant ~JA4 Purchase and Sale Agreement dated March 3, 2010 Subtotal 206,595 with the City of Corona for the acquisition of Clearwater Add: Unamortized bond premium 683 Cogeneration Facility (Clearwater) located in Corona.

Less: Unamortized deferred bond refunding costs (4,575) The total purchase price for Clearwater is $46,569, and Total Certificates of Participation $202.73 will be funded through a series of semi-annual payments ranging from $1,158 to $2,664 through 2013, Remaining certificates of participation debt service payments will be made and $182 to $413 in 2014 and 2015. In addition, two from unrestricted revenues of the Debt Service funds. Annual debt service payments of $36,406 and $7,367 are due in 2013 and requirements to maturity are as follows: 2015, respectively, and will be funded primarily from bond proceeds.

Fiscal Year Principal Interest Total 2013 $ 4,920 $ 8,155 $13,075 2014 5,085 7,979 13,064 Notes payable - Enterprise Funds: Principal 2015 5,680 7,785 13,465 Outstanding 2016 5,990 7,560 13,550 2017 6,200 7,332 13,532 Sewer fund loan from State of California for 2018-2022 34,835 32,849 67,684 Cogeneration project, 2.336%, payable in net annual 2023-2027 40,750 25,340 66,090 installments of $339, beginning January 29, 2003 2028-2032 48,695 16,544 65,239 through January 29, 2021 $2,761 2033-2037 50,420 6,254 56,674 2038-2040 4,020 450 4,470 Sewer fund loan from State of California for Headworks Premium 683 683 project, 1.803%, payable in net annual installments of Refunding Costs (4,575) (4,575) $477, beginning November 6, 1999 through November Total $2O2273 $322.51 6,2018 3,118 Public parking fund loan from City National Bank for Fox Entertainment Plaza project, 3.85%, payable in net annual installments of $1,747, beginning June 16, 2011 49

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands) through December 16, 2031 23,801 Amortization applicable to proprietary assets acquired through capital lease arrangements is included with depreciation for financial statement Total notes payable - Enterprise Funds $29.680 presentation.

Remaining notes payable debt service payments will be made from The assets acquired through capital leases are as follows:

unrestricted revenues of the Sewer fund. Annual debt service requirements to maturity are as follows: Governmental Business-Type Sewer Fund Asset Activities Activities Fiscal Year Principal Interest Total 2013 $ 817 Buildings and improvements $1,103 5,595 $ -

$ 705 $112 Equipment 2,763 2014 718 99 817 Subtotal 6,698 2,763 2015 731 86 817 Less: Accumulated depreciation (2.580) (859) 2016 745 72 817 817 Total $4-11a 2017 759 58 2018-2021 2,221 92 2,313

$6.398 The future minimum lease obligations as of June 30, 2012 were as follows:

Total Governmental Business-type Public Parking Fund Years Ending June 30, Activities Activities Fiscal Year Principal Interest Total 2013 $1,425 $ 442 2013 $ 838 $909 $ 1,747 2014 1,190 442 2014 871 876 1,747 2015 1,098 428 2015 905 842 1,747 2016 1,099 65 2016 940 807 1,747 2017 670 2017 977 770 1,747 Thereafter 74 2018-2022 5,483 3,251 8,734 Copiers 188 29 2023-2027 6,634 2,100 8,734 Total Minimum lease payments 5,744 1,406 2028-2032 7,153 707 7,860 Less: Amount representing interest Total $IO262 (rates ranging from 2.5% to 9%) (524) (74)

Total capital lease payable 15.22 $1332 Principal Contracts - Enterprise Funds: Outstanding The following are legally required debt service cash reserves. These amounts, at a minimum, are held by the City or fiscal agents at June 30, Water stock acquisition rights payable on 2012:

demand to various water companies $947 Governmental long-term obligations:

Capital Leases: Certificates of Participation $13,778 Total $13,778 The City leases various equipment through capital leasing arrangements in the governmental and proprietary fund types. These activities are recorded Enterprise funds:

for both governmental and business-type activities in the government-wide Electric $22,332 financial statements. The assets and related obligations under leases in Water 535 Sewer 20,142 governmental funds are not recorded in the fund statements. For proprietary funds, the assets and their related liabilities are reported directly in the fund. Total s43OO 50

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

The City has a number of debt issuances outstanding that are collateralized comprised of approximately 120 acres, operated as a "Class II Sanitary by the pledging of certain revenues. The amount and term of the remainder Landfill" until its closure in 1985. During its operation, the landfill did not of these commitments are indicated in the debt service to maturity tables accept hazardous waste and no clean up and abatement or cease and desist presented in the accompanying notes. The purposes for which the proceeds orders have been issued to the City. The capacity used at June 30, 2012 was of the related debt issuances were utilized are disclosed in the debt 100%.

descriptions in the accompanying notes. For the current year, debt service payments as a percentage of the pledged gross revenue (or net of certain The estimated costs as determined by an independent consultant and expenses where so required by the debt agreement) are indicated in the updated by the City's Engineering Department are associated with flood table below. The debt service coverage ratios also approximate the control upgrades, remediation of possible ground water contamination and relationship of debt service to pledged revenue for the remainder of the term control of methane gas. All potential costs have been recognized in the of the commitment. financial statements. There is the potential for these estimates to change due to inflation, deflation, technology, or change in laws or regulations. To Debt Service fund the cost, the City imposed a landfill capping surcharge on customers Annual Amount of Annual Debt Service Coverage effective August 1, 1988. The minimum unamortized estimated cost is Pledged Revenue Payments (of all Ratio Description of (net of expenses, debt secured by for FYE recorded as a deferred charge in the accompanying financial statements of Pledged Revenue where reauired) this revenue) 6/30/12 the Refuse fund and is being amortized on a straight-line basis over the Electric revenues 118,222 52,804 2.24 remaining post closure period, currently 21 years.

Water revenues 38,248 13,580 2.82 Sewer revenues 12,930 6,163 2.10

7. Risk Management There are also a number of limitations and restrictions contained in Assessment Bond indentures. The City believes they are in compliance with The City is exposed to various risks of loss related to torts; theft of, damage all significant limitations and restrictions. to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Property insurance coverage has a limit of Defeasance of Debt: $1,000,000, with a deductible of $50. Earthquake and flood insurance coverage has a limit of $25,000, with a deductible of 5% for earthquake and In prior years, the City defeased certain bonds by placing the proceeds of $100 for flood. Workers' compensation insurance coverage has a limit of new bonds in an irrevocable trust to provide for all future debt service $25,000, with a self-insured retention of $3,000 per occurrence. The City payments on the old debt issues. Accordingly, the trust account assets and carries commercial insurance in the amount of $20,000 for general and auto liability for the defeased debt issues are not included in the City's financial liability claims greater than $3,000. There were no claims settled in the last statements. three fiscal years that exceed insurance coverage. Internal service funds have been established to account for and finance the uninsured risks of loss.

At June 30, 2012, the following amounts are considered defeased:

All funds of the City participate in the Risk Management program and make 1993 Sewer Revenue Bonds payments to the Internal Service Funds based on actuarial estimates of the

$4,745 amounts needed to fund prior and current year claims and incidents that Landfill Capping: have been incurred but not reported. Interfund premiums are accounted for as quasi - external transactions and are therefore recorded as revenues of State and Federal laws and regulations require the City to place a final cover the Internal Service funds in the fund financial statements.

on all active landfills when closed and to perform certain maintenance and monitoring functions at the landfill site for 30 years after closure. To comply with these laws and regulations, the City is funding the costs of closure and "final capping" of the Tequesquite landfill located in the City. This area, 51

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Changes in the self-insurance trust fund's claims liability amounts are: Bonds, Series B; $1,900 serial bonds, 4.5% to 5.5%

due in annual installments from $35 to $190 through Unpaid Claims, June 30, 2010 $25,541 Sept. 1, 2013; $1,135 term bonds at 5.5% due Sept. 1, Incurred claims (including IBNR's) 10,576 2018; and $3,020 term bonds at 5.625% due Sept. 1, Claim payments and adjustments (9.502) 2027. 4,525 Unpaid Claims, June 30, 2011 26,615 Incurred claims (including IBNR's) 12,286 $20,395 1999 Casa Blanca Project Area, Tax Claim payments and adjustments (11,359) Allocation Bonds, Series A; $8,925 serial bonds, 3.4%

Unpaid Claims, June 30, 2012 $2L54 to 4.7% due in annual installments from $455 to $780 through Aug. 1, 2014; $2,565 term bonds at 4.75% due

8. Other Long-Term Obligations Aug. 1, 2017; $4,035 term bonds at 4.75% due Aug. 1, 2021; and $4,870 term bonds at 5% due Aug. 1, 2025.

Changes in Long-Term Obligations: Below is a summary of changes in long- 13,710 term obligations during the fiscal year for the former Redevelopment Agency, $4,550 Arlington Redevelopment Project, 2004 Tax which is accounted for in the Successor Agency Trust (a fiduciary fund): Allocation Bonds, Series A; $420 term bonds at 3.8%

Successor Agency Trust: due Aug. 1, 2014; $615 term bonds at 4.6% due Aug.

Due 1, 2024; $3,515 term bonds at 4.7% due Aug. 1, 2034. 4,270 Beginning Ending Within Balance Additions Reductions Balance One Year $2,975 Arlington Redevelopment Project Area, 2004 Redevelopment Agency bonds Tax Allocation Bonds; Series B: 5.5% due in annual

$ - $264,591 $ 206 $264,385 $ 7,575 Notes Payable - 7,189 7,189 960 installments from $85 to $235 through August 1, 2024. 2,265 Commercial Loan - 1.100 1,100 1,100 $26,255 State of California Department of General Total $2o6 Services Project, 2003 Lease Revenue Refunding Principal Bonds, Series A; 2% to 5% due in annual installments Redevelopment Agency Bonds: Outstanding from $545 to $2,230 through October 1, 2024. 19,805

$13,285 1991 Public Financing Authority Revenue $4,810 State of California Department of General Bonds, Series A, Multiple Project Areas; $1,470 serial Services Project, 2003 Lease Revenue Refunding revenue bonds 7.15% to 7.6%, due in annual Bonds, Series B; $310 serial bonds 1.20% to 1.42%

installments from $100 to $145 through February 1, through October 1, 2004; $620 term bonds at 3.090%

2003; and $4,175 term bonds, 8.0%, due in annual due Oct. 1, 2008; $1,110 term bonds at 4.340% due installments from $155 to $450 through February 1, Oct. 1, 2014 and $2,770 term bonds at 5.480% due 2018 (portion not refunded). $ 115 Oct. 1, 2024. 3,360

$17,025 1999 University Corridor/Sycamore Canyon $40,435 Downtown/Airport Merged Project Area, 2003 Merged Project Area, Tax Allocation Bonds, Series A; Tax Allocation and Refunding Bonds; $32,720 serial

$6,205 serial bonds, 3.4% to 4.7% due in annual bonds 2.0% to 5.25% due in annual installments from installments from $40 to $570 through August 1, 2014; $1,220 to $1,955 through August 1, 2023; and $7,715

$4,810 term bonds at 4.75% due August 1, 2021; and term bonds at 5.0% due in annual installments from

$6,010 term bonds at 5.0% due August 1, 2027. 12,455 $195 to $2,060 through August 2034. 29,830

$6,055 1999 University Corridor/Sycamore Canyon $24,115 2005 Housing Set-Aside Tax Allocation Bonds; Merged Project Area, Subordinate Tax Allocation $17,025 serial bonds 3.0% to 4.625% due in annual 52

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands) installments from $505 to $1,165 through August 1, 2025; $2,425 term bonds at 5.0% due August 1, 2028; Remaining debt service will be paid by the Successor Agency Trust from and $4,665 term bonds at 4.85% due August 1, 2034. 19,870 future property tax revenues. Annual debt service requirements to maturity are as follows:

$8,340 Downtown/Airport Merged Project Area and Casa Blanca Project Area 2007 Tax Allocation Bonds, Fiscal Year Principal Interest Total Tax Exempt, Series A, serial bonds 4.0% to 4.25% due 2013 $ 7,575 $ 12,750 $ 20,325 in annual installments from $20 to $590,000 through 2014 7,930 12,408 20,338 Aug. 1, 2025; $4,980 term bonds at 4.5% due Aug. 1, 2015 8,310 12,047 20,357 2029; $410 term bonds at 4.375% due Aug. 1, 2037. 2016 8,520 11,665 20,185 8,260 2017 8,905 11,256 20,161

$1,465 California Statewide Communities Development Authority 2005 Taxable Revenue Bonds, Series A 2018-2022 54,585 48,646 103,231 (CRA/ERAF Loan Program); 3.87% to 5.01% due in 2023-2027 63,035 32,971 96,006 annual installments of $105 to $180 through August 1, 2028-2032 49,025 18,606 67,631 2015. 520 2033-2037 43,685 7,122 50,807 2038 6,775 169 6,944

$14,850 Downtown/Airport Merged Project Area and Premium 5,704 5,704 Casa Blanca Project Area 2007 Tax Allocation Bonds, Refunding Costs 336 336 Taxable, Series B, $4,050 term bonds at 5.2% due Total $26.35 $167.640 $432.025 August 1, 2017; $10,800 term bonds at 5.8% due August 1, 2028. 13,380 Principal

$89,205 University Corridor/Sycamore Canyon Merged Notes Payable - Successor Agency: Outstandinq Project Area, Arlington Project Area, Hunter Park/Northside Project Area, Magnolia Center Project These notes payable have been issued to promote Area, and La Sierra/Arlanza Project Area 2007 Tax development and expansion within the City's Allocation Bonds, Tax-Exempt, Series C, serial bonds redevelopment areas.

4.0% to 5.0% due in annual installments from $50 to

$3,210 through August 1, 2025; $17,955 term bonds at Pepsi Cola Bottling Company of Los Angeles, 10.5%,

4.5% due August 1, 2030; $47,775 term bonds at 5.0% payable in net annual installments of $341, subject to due August 1, 2037. 88,170 recording of completion. $2,987

$43,875 University Corridor/Sycamore Canyon Merged Project Area, Arlington Project Area, Hunter HUD Section 108 loan for University Village, 5.36% to Park/Northside Project Area, Magnolia Center Project 7.66%, payable in semi-annual installments beginning Area, and La Sierra/Arlanza Project Area 2007 Tax August 1, 1996 of $272 to $425 through August 1, 2015 1,445 Allocation Bonds, Taxable, Series D, $15,740 term bonds due August 1, 2017; $28,135 term bonds due HUD Section 108 loan for Mission Village August 1, 2032. Project, 6.15% to 6.72%, payable in 37,810 semi-annual installments beginning Subtotal 258,345 August 1, 1999 of $110 to $420 Add: Unamortized bond premium 5,704 through August 1, 2018 2,430 Add: Unamortized deferred bond refunding costs 336 Total Redevelopment Agency Bonds $264.385 53

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Note payable to California Housing Finance Agency, Assessment Districts and Community Facilities Districts Bonds interest at 3%, payable in annual installments of $88 327 (Not obligations of the City) through 2013, for housing projects.

As of June 30, 2012, the City has several series of Assessment District and Total notes payable - Successor Agency $7.19 Community Facility District Bonds outstanding in the amount of $48,360.

Bonds were issued for improvements in certain districts and are long-term Remaining debt service will be paid by the Successor Agency Trust from obligations of the property owners. The City Treasurer acts as an agent for future property tax revenues. Annual debt service requirements to maturity the property owners in collecting the assessments, forwarding the collections are as follows: to bondholders and initiating foreclosure proceedings, if applicable. Since the debt does not constitute an obligation of the City, it is not reflected as a Fiscal Year Principal Interest Total long-term obligation of the City and is not reflected in the accompanying 2013 $ 960 $ 444 $ 1,404 basic financial statements.

2014 681 400 1,081 2015 739 377 1,116 Conduit Debt Obligations 2016 778 350 1,128 2017 407 329 736 Industrial Development Revenue Bonds of $7,000 are not included in the 2018-2022 1,096 1,448 2,544 accompanying financial statements. These bonds are special obligations of 2023-2027 471 1,238 1,709 a third party and is payable solely from and secured by a pledge of the 2028-2032 777 933 1,710 receipts 'received from a loan and certain other reserve funds and related 2033-2037 430 1i710 monies. The bonds are not payable from any other revenues or assets of the Total City. Neither the faith and credit nor the taxing power of the City, the State of California or any political subdivision thereof is pledged to the payment of the Commercial Loan - Successor Agency:

principal and interest on the bonds.

The Successor Agency has a $20,000 commercial loan with City National Bank, which is being used to purchase, rehabilitate and resell foreclosed 9. Derivative Instruments homes. As of June 30, 2012, the Agency had borrowed $1,100. The interest rate is based on "prime" less 75 basis points, which was 2.5% as of June 30, Interest Rate Swaps 2012. Interest is paid monthly. Principal is due in full on July 1, 2012.

The City has five cash flow hedging derivative instruments, which are pay-For the current year, debt service payments as a percentage of the pledged fixed swaps. These swaps were employed as a hedge against debt that was gross revenue (or net of certain expenses where so required by the debt refunded in 2008 and 2011. At the time of the refunding, hedge accounting agreement) are indicated in the table below. The debt service coverage ceased to be applied. The balance of the deferral account for each swap is ratios for the Successor Agency also approximate the relationship of debt included in the net carrying amount of the new bonds. The swaps were also service to pledged revenue for the remainder of the term of the commitment. employed as a hedge against the new debt. Hedge accounting was applied to that portion of the hedging relationship, which was determined to be Debt Service Annual Amount of Annual Debt Service Coverage effective.

Pledged Revenue Payments (of all Ratio Description of (net of expenses, debt secured by for FYE Pledqed Revenue where required) this revenue) 6/30/12 Property Taxes:

Non-Housing $38,874 $15,311 2.54 Housing 8,247 2,768 2.98 54

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 For he yar ededJune30. 012(amounts expressed in thousands)

The following is a summary of the derivative activity for the year ended June As of June 30, 2012 rates were as follows:

30, 2012: 2011 Water 2011 Electric Change in Refunding/ Refunding/

Fair Value Fair Value Revenue Revenue Notional as of for Fiscal Bonds Bonds Amount 6130112 Year Series A Series A Governmental Activities Terms Rates Rates 2008 Renaissance Certificates of Participation 128,300 (29,972) (15,150) Interest rate swap:

Business-Type Activities Fixed payment to counterparty Fixed 3.20000% 3.20100%

2008 Electric Refunding/Revenue Bonds Series A 84,515 (14,985) (7,957) 62.68 LIBOR 2008 Electric Refunding/Revenue Bonds Series C 57,325 (11,584) (6,476) Variable payment from counterparty + 12 bps (0.26684%) (0.26627%)

2011 Electric Refunding/Revenue Bonds Series A 56,450 (11,554) (6,474) Net interest rate swap payments 2.93316% 2.93473%

2011 Water Refunding/Revenue Bonds Series A 59,000 (12,768) (7,320) Variable-rate bond coupon payments 0.21969% 0.13270%

Synthetic interest rate on bonds 3-L5285% 3.O6743%

Objective: In order to lower borrowing costs as compared to fixed-rate bonds, the City entered into interest rate swap agreements in connection with 2008 Electric 2008 Electric its $141,840 2008 Electric Revenue Bonds (Series A and C), $56,450 2011 Refunding/ Refunding/

Electric Revenue Bonds and $59,000 2011 Water Revenue Bonds. Also, in Revenue Revenue Bonds Bonds 2008, the City entered into an additional interest rate swap agreement in Series C Series A connection with its $128,300 2008 Certificates of Participation.

Terms Rates Rates Terms: Per the existing swap agreements, the City pays a counterparty a Interest rate swap:

Fixed payment to counterparty Fixed 3.20400% 3.11100%

fixed payment and receives a variable payment computed as 62.68% of the 62.68 LIBOR London Interbank Offering Rate ("LIBOR") one month index plus 12 basis Variable payment from counterparty + 12 bps (0.51505%) (0.51321%)

points for the Electric and Water swaps. For the COP swap, the City again Net interest rate swap payments 2.68895% 2.59779%

pays a fixed payment and receives a variable payment computed as 63.00% Variable-rate bond coupon payments 0.46955% 0.47253%

of the LIBOR one month index plus 7 basis points. The swaps have notional Synthetic interest rate on bonds _.15850% _a.=Z02%

amounts equal to the principal amounts stated above. The notional value of the swaps and the principal amounts of the associated debt decline by $975 COP 2008 to $7,200 until the debt is completely retired in fiscal year 2037. Bonds Terms Rates The bonds and the related swap agreements for the 2008A Electric Revenue Interest rate swap:

Bonds mature on October 1, 2029, 2008C Electric and 2011A Electric and Fixed payment to counterparty Fixed 3.36200%

2011A Water Revenue/Refunding Bonds mature on October 1, 2035. The 63.00 LIBOR Variable payment from counterparty + 7 bps (0.4932%)

2008 Certificates of Participation mature on March 1, 2037.

Net interest rate swap payments 2.86880%

Variable-rate bond coupon payments 0.50543%

Synthetic interest rate on bonds _37.3423%

Fair Value: As of June 30, 2012, in connection with all swap arrangements, the transactions had a total negative fair value of <$80,863>. Because the coupons on the City's variable-rate bonds adjust to changing interest rates, the bonds do not have a corresponding fair value decrease. The fair value was developed by a pricing service using the zero-coupon method. This method calculates the future net settlement payments required by the swap, 55

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands) assuming that the current forward rates implied by the yield curve correctly Variable-Rate Bonds anticipate future spot interest rates. These payments are then discounted Fiscal Year Interest using the spot rates implied by the current yield curve for hypothetical zero- Ending Rate coupon bonds due on the date of each future net settlement of the swap. June 30 Principal Interest Swaps, Net Total 2013 $ 6,675 $1,466 $ 10,416 $ 18,557 Credit risk: As of June 30, 2012, the City was not exposed to credit risk 2014 6,900 1,440 10,222 18,562 because the swap had a negative fair value. The swap counterparties, Bank 2015 8,975 1,408 9,984 20,367 of America, J.P. Morgan Chase & Co. and Merrill Lynch were rated A, A and 2016 16,700 1,352 9,576 27,628 A- respectively by Standard & Poor's. To mitigate the potential for credit risk, 2017 15,700 1,289 9,136 26,125 the swap agreements require the fair value of the swap to be collateralized 2018-2022 68,925 5,646 40,243 114,814 by the counterparty with U.S. Government securities if the counterparties' 2023-2027 76,485 4,119 29,840 110,444 rating decreases to negotiated trigger points. Collateral would be posted with 2028-2032 88,105 2,435 18,546 109,086 a third-party custodian. At June 30, 2012, there is no requirement for 2033-2037 86,900 752 5,493 938145 collateral posting for any of the outstanding swaps. Total $37.36 $143.45B $538.728

$19.907 Basis risk: As noted above, the swaps expose the City to basis risk should 10. Economic Contingency the relationship between LIBOR and the variable interest rate, changing the synthetic rate on the bonds. If a change occurs that results in the rates' A portion of unassigned fund balance within the General Fund is set aside for moving to convergence, the expected cost savings may not be realized. future economic contingencies. The amount that has been set aside is equal to approximately 15% of General Fund expenditures.

Termination risk: The derivative contract uses the International Swap Dealers Association Master Agreement, which includes standard termination 11. Interfund Assets, Liabilities and Transfers events, such as failure to pay and bankruptcy. The Schedule to the Master Agreement includes an "additional termination event." That is, a swap may Due From/To Other Funds: These balances resulted from expenditures be terminated by the City if either counterparty's credit quality falls below being incurred prior to receipt of the related revenue source.

"BBB-" as issued by Standard and Poor's. The City or the counterparty may terminate a swap if the other party fails to perform under the terms of the The following table shows amounts receivable/payable between funds within contract. If a swap is terminated, the variable-rate bond would no longer the City at June 30, 2012:

carry a synthetic interest rate. Also, if at the time of termination a swap has a negative fair value, the City would be liable to the counterparty for a payment Receivable Fund Payable Fund Amount equal to the swap's fair value. General Nonmajor Governmental Funds $1,436 Capital Outlay Fund 14,503 Swap payments and associated debt: As of June 30, 2012, the debt service Nonmajor Enterprise Funds 348 requirements of the variable-rate debt and net swap payments assuming 16,287 current interest rates remain the same, for their term are summarized in the Electric Central Stores

• 2,277 following table. As rates vary, variable-rate bond interest payments and net swap payments will vary.

Water Central Stores

• 976 Total $19.54

• Internal service fund 56

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Advances To/From Other Funds: These balances consist of advances used General fund to finance various programs accounted for in the other funds in to fund capital projects in advance of related financing/assessments and for accordance with budgetary operations.

other long-term borrowing purposes.

The following table shows amounts transferred to/from funds within the City The following table shows amounts advanced from funds within the City to as of June 30, 2012:

other funds within the City at June 30, 2012:

Transfer In Fund Transfer Out Fund Amount Receivable Fund Payable Fund Amount General Electric $33,533 General Electric $12,003 Water 6,258 Water 5,164 Redevelopment Capital Project 472 Sewer 3,304 Nonmajor Governmental Funds 3 Nonmajor Governmental Funds 549 40,266 Nonmajor Enterprise Funds 2,220 Self-Insurance Trust

• 217 Redevelopment Debt Redevelopment Capital Project 40,365 Central Stores

• 227 Service Nonmajor Governmental Funds 34176 Central Garage

• 1,022 43,541 24,706 Self-Insurance Trust

• Nonmajor Enterprise Funds 1,068 Nonmajor Governmental General Fund 6,958 General 349 Funds Redevelopment Capital Project 962 Nonmajor Governmental Funds 4,072 Nonmajor Governmental Funds 7,941 5,489 Nonmajor Enterprise Funds 763 16,624 Sewer Nonmajor Governmental Funds 7,946 Redevelopment Capital General Fund 76,334 Total Projects Redevelopment Debt Service 20,094 96,428 In addition, the following advances to the former Redevelopment Agency are accounted for in the Private-Purpose Trust Fund of the Successor Agency:

Total $195.&52 Receivable Fund Amount General $ 693 In addition, the Public Parking Fund transferred a capital asset with an Nonmajor Governmental Funds 39,142 original carrying value of $125 to the City. The difference in interfund Electric 5,558 transfers at the fund level is due to the difference in measurement focus and Sewer 4,250 basis of accounting between governmental funds and proprietary funds.

Self-Insurance Trust

• 5,461 Total 12. Deficit Fund Balances/Net Assets Deficit fund balance/net assets exist in the Special Capital Improvement Transfers In/Out: Transfers are used to (1) move revenues to the fund that statute or budget requires to expend them, (2) move receipts restricted to Fund ($963), Self-Insurance Internal Service Trust Fund ($14,901) and debt service from the funds collecting the receipts to the debt service fund as Successor Agency Private-Purpose Trust Fund ($194,543). The deficit in the debt service payments become due, (3) return properties to the fund Self-Insurance Internal Service Trust Fund will be primarily reduced Redevelopment Agency, (4) use unrestricted revenues collected in the based on a rate increase implemented in the subsequent fiscal year.

57

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

Management's analysis shows that continuing cost control together with the requirements are established by state statute and City ordinance. Copies of rate increase will eliminate these deficits over the next few years. The deficit CalPERS annual financial report may be obtained from their executive in the Successor Agency Trust Fund will be reduced over the years as the office: 400 P Street, Sacramento, CA 95814.

related debt is paid-off with funds received from the Redevelopment Property Tax Trust Fund (RPTTF), which is administered by the County Auditor- (B) Funding Policy. For each of the fiscal years shown on the following page, Controller. the City has contributed at the actuarially determined rate provided by PERS' actuaries. Participants are required to contribute 8% (9% for safety

13. Litigation employees) of their annual covered salary. The City has a multiple tier retirement plan with benefits varying by plan. The City pays the employees' The City is a defendant in various lawsuits arising in the normal course of contribution to CalPERS for both miscellaneous and safety employees hired business. Present lawsuits and other claims against the City are incidental to on or before specific dates as follows:

the ordinary course of operations and are largely covered by the City's self-insurance program. In the opinion of management and the City Attorney, Safety (Police):

such claims and litigation will not have a materially adverse effect upon the a 1 st Tier (RPOA, RPOA Supervisory & RPAA) - The retirement financial position or results of operation of the City. formula is 3% at age 50 for employees hired before February 17, 2012. The City pays the employee share (9%) of contributions on The City continues to participate in key FERC dockets impacting the City's their behalf and for their account.

Electric Utility, such as the California Independent System Operator's (ISO)

• 2 nd Tier (RPOA only) - The retirement formula is 3% at age 50 and Market Redesign and Technology Upgrade (MRTU). new employees hired on or after February 17, 2012 pay their share (9%) of contributions.

The Water Utility is also a plaintiff in a lawsuit against the manufacturers and Safety (Fire):

distributors of methyl tertiary-butyl ether (MTBE) and its by-products, and of fuel containing these chemicals, arising out of the threat to the Water Utility 0 1st Tier - The retirement formula is 3% at age 50 for employees hired wells of contamination with those chemicals from leaking underground before June 11, 2011. The City pays the employee share (9%) of storage tanks. contributions on their behalf and for their account.

The defendants removed this lawsuit to federal court and then transferred the

• 2 nd Tier - The retirement formula is 3% at age 55 and new case to the Judicial Panel on Multidistrict Litigation, New York, where it was employees hired on or after June 11, 2011 pay their share (9%) of consolidated with all other pending MTBE water contamination litigation contributions.

cases in the country. Although the City has tentatively settled with a number Miscellaneous:

of the defendants, the settlement has not been approved by the court and no

• 1st Tier - The retirement formula is 2.7% at age 55. The City pays trial date for the remainder of the case.

the employee share (8%) of contributions on their behalf and for their

14. City Employees Retirement Plan account.

• 2nd Tier - The retirement formula is 2.7% at age 55 and new (A) Plan Description. The City of Riverside contributes to the California Public employees hired on or after October 19, 2011 pay their share (8%) of contributions.

Employees Retirement System (CalPERS), an agent multiple employer public employee defined benefit pension plan. CalPERS provides retirement The contribution requirements of plan members and the City are established and disability benefits, annual cost-of-living adjustments, and death benefits and may be amended by CalPERS.

to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of (C) Annual Pension Cost. The required contribution was determined as part California. PERS issues a publicly available financial report that includes of the June 30, 2009 actuarial valuation using the entry age normal actuarial financial statements and required supplementary information for the cost cost method. The actuarial assumptions included (a) 7.75% investment rate sharing plans that are administered by PERS. Benefit provisions and all other of return (net of administrative expenses), (b) projected salary increases of 58

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts exoressed in thousands) 3.25% per year compounded annually, attributable to inflation, and (c) 3.0% Schedule of funding for CalPERS:

expected long term inflation. The actuarial value of CaIPERS assets was Entry determined using techniques that smooth the effects of short-term volatility in Age Unfunded/

the market value of investments (smoothed market value). All changes in the Normal (Overfunded)

Actuarial Actuarial UAAL as unfunded actuarial accrued liability due to plan amendments, changes in Actuarial Accrued Actuarial Accrued Annual a %of actuarial assumptions, or changes in actuarial methodology are amortized Valuation Liability Value of Liability Funded Covered Covered separately as a level percentage of pay over a closed 20-year period. All Plan Date (AAL) Assets (UAAL) Ratio Payroll Payroll gains or losses are tracked and amortized over a rolling 30-year period with the exception of special gains and losses in fiscal years 2008-2009, 2009- Misc. 6/30/08 $828,351 $779,481 $ 48,870 94.1 $110,870 44.1 Misc. 6/30/09 921,349 810,929 110,420 88.0 110,318 100.1 2010 and 2010-2011. Each of these years' gains or losses has been isolated Misc. 6/30/10* 952,499 846,368 106,131 88.9 106,590 99.6 and amortized over fixed and declining 30 year periods (as opposed to the current rolling 30 year amortization). Safety 6/30/08 608,192 570,661 37,531 93.8 63,966 58.7 Safety 6/30/09 660,742 595,018 65,724 90.1 63,924 102.8 Safety 6/30/10* 685,213 621,107 64,106 90.6 61,778 103.8 Three-year trend information for CalPERS:

Annual Net Pension

• Information presented is for the most recent valuation date available.

Fiscal Year Pension  % of APC Obligation Contributed (Asset) 15. Other Post-Employment Benefits June 30, Plan Cost (APC) 2010 Misc $16,463 93*8% $ (56,529) The City provides healthcare benefits to retirees in the form of an implied rate 2010 Safety 13,949 89.0% (84,369) subsidy. Retirees and active employees are insured together as a group, 2011 Misc 16,888 92.4% (55,253) thus creating a lower rate for retirees than if they were insured separately.

2011 Safety 14,956 86.7% (82,379) Although the retirees are solely responsible for the cost of their health 2012 Misc 21,661 92.8% (53,694) insurance benefits through this plan, the retirees receive the benefit of a 2012 Safety 18,542 86.6% (79,890) lower rate. The difference between these amounts is the implied rate A total of $133,584 of net pension assets is included as a deferred charge in subsidy, which is considered an other post-employment benefit (OPEB) the Government-wide Statement of Net Assets. The deferred charge relating under GASB 45.

to the net pension assets is amortized in accordance with the method used by CalPERS for calculating actuarial gains and losses over a 19-year period. Retiree coverage terminates either when the retiree becomes covered under another employer health plan, or when the retiree reaches Medicare eligibility Determination of Net Pension Asset as of June 30, 2012: age, which is currently age 65. Spousal coverage is available until the retiree Misc Safety becomes covered under another employer health plan, attains Medicare eligibility age, or dies. However, the retiree benefit continues to the surviving Annual required contribution $ 20,102 $16,053 spouse if the retiree elects the CalPERS survivor annuity.

Interest on net pension asset (4,282) (6,384)

Adjustment to annual required contribution 5,841 8,873 The contribution requirements are established by the City Council. The City Annual pension cost 21,661 18,542 is not required by law or contractual agreement to provide funding other than Less contributions made (20,102) (16.053) the pay-as-you-go amount necessary to provide current benefits to eligible Decrease in net pension asset 1,559 2,489 retirees and beneficiaries.

Net pension asset, beginning of year (55,253) (82,379)

Net pension asset, end of year The City's annual OPEB cost (expense) is reported based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with GASB 45. The ARC represents a level of 59

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 For theyear ened June30. 201 tallLU" IILO Ah2JIQ "O~U UtUOO UO funding that, if paid on an ongoing basis, is projected to cover normal cost Three-year trend information:

each year and amortize any unfunded actuarial liability (or funding excess)

(UAAL) over a period not to exceed thirty years. The ARC for the year ended Fiscal Year Actual Yoof ARC June 30, 2012 was $5,821, which consisted of normal cost of $3,276 and June 30 ARC Contributions ntributed UAAL amortization of $2,545. The ARC as a percentage of payroll was 3.9%

2010 $5,291 $1,440 27%

for the year ended June 30, 2012.

2011 5,617 1,734 31%

As of June 30, 2011, the most recent actuarial valuation date, the OPEB plan 2012 5,821 1,426 24%

was 0.0% funded. The actuarial accrued liability for benefits was $56 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial Fiscal Year Annual  % of OPEB Cost Net OPEB accrued liability (UAAL) of $56 million. June 30, OPEB Cost Contributed Obliqation 2010 $5,101 28% 9,853 Determination of the Net OPEB Obligation as of June 30, 2012: 2011 5,314 33% 13,433 2012 5,789 25% 17,796 Annual required contribution $ 5,821 Interest on net OPEB obligation 578 Fiscal Year Covered UAAL as a % of Amortization of net OPEB obligation (610) June 30, UAAL Payroll Covered Payroll Annual benefit pension cost 5,789 2010 $54,869 $144,621 38%

Less contributions made (1.426) 2011 54,869 149,321 37%

Increase in net OPEB obligation 4,363 2012 56,060 148,607 38%

Net OPEB liability, beginning of year 13,433 Net OPEB liability, end of year S17.79

16. Commitments and Contingencies Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts A. Long-Term Electric Utility Commitments determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual Intermountain Power Agency results are compared to past expectations and new estimates are made about the future. The method used by the actuary was the entry age normal The Electric Utility has entered into a power purchase contract with cost method. The actuarial assumptions included (a) discount rate of 4.30%, Intermountain Power Agency (IPA) for the delivery of electric power. The (b) 2.75% inflation, (c) projected salary increases of 3.25% annually and (d) Electric Utility's share of IPA power is equal to 7.6 percent, or approximately healthcare cost trend rates ranging from 4.5% to 8.0%. 137.1 MW, of the net generation output of IPA's 1,800 MW coal-fueled generating station located in central Utah. The contract expires in 2027 and Projections of benefits are based on the substantive plan (the plan as the debt fully matures in 2024.

understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs The contract constitutes an obligation of the Electric Utility to make payments between the city and the plan members to that point. Actuarial calculations solely from operating revenues. The power purchase contract requires the reflect a long-term perspective and employ methods and assumptions that Electric Utility to pay certain minimum charges that are based on debt service are designed to reduce short-term volatility in actuarial accrued liabilities and requirements. Such payments are considered a cost of production.

the actuarial value of assets.

60

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed inthousands)

Southern California Public Power Authority SCPPA On November 1, 1980, the City of Riverside joined with the Imperial Irrigation Fiscal Year IPA PV STS Hoover MPP MAT Total District and the cities of Los Angeles, Anaheim, Vernon, Azusa, Banning, Colton, Burbank, Glendale and Pasadena to create the Southern California 2013 $17,514 $ 672 $ 8,191 $ 717 $ 318 $ 3,090 $ 30,502 Public Power Authority (SCPPA) by a Joint Powers Agreement under the 2014 22,693 676 8,213 719 274 3,117 35,692 laws of the State of California. As of July 2001, the City of Cerritos was 2015 21,114 680 8,242 718 265 3,004 34,023 2016 23,975 683 8,093 718 257 2,901 36,627 admitted as a member. The primary purpose of SCPPA is to plan, finance, 2017 14,046 687 8,001 717 258 2,905 26,614 develop, acquire, construct, operate and maintain projects for the generation Thereafter 104,377 63,175 772 8.719 177.043 and transmission of electric energy for sale to its participants. SCPPA is Total governed by a Board of Directors, which consists of one representative for each of the members. During the 2011-12 and 2010-11 fiscal years, the Final maturities of outstanding debt associated with take-or-pay obligations Electric Utility paid approximately $20,855 and $18,725, respectively, to and related contract expirations are as follows:

SCPPA under various take-or-pay contracts. These payments are reflected as a component of production and purchased power or transmission expense Proiect Final Maturity Contract Expiration in the financial statements. Palo Verde Nuclear Generating Station 2017 2030 Southern Transmission System 2027 2027 The projects and the Electric Utility's proportionate share of SCPPA's Hoover Dam Uprating 2017 2017 obligations, including final maturities and contract expirations are as follows: Mead - Phoenix Transmission 2020 2030 Mead - Adelanto Transmission 2020 2030 Proiect Percent Share Entitlement Palo Verde Nuclear Generating Station (PV) 5.40% 12.3MW In addition to debt service, Riverside's entitlements require the payment of Southern Transmission System (STS) 10.20% 244.0MW fuel costs, operating and maintenance, administrative and general and other Hoover Dam Uprating (Hoover) 31.90% 30.0MW miscellaneous costs associated with the generation and transmission Mead - Phoenix Transmission (MPP) 4.00% 18.0MW facilities discussed above. These costs do not have a similar structured Mead - Adelanto Transmission (MAT) 13.50% 118.0MW payment schedule as debt service and vary each year. The costs incurred for the year ended June 30, 2012 and 2011, are as follows (in thousands):

Terms of Take or Pay Commitments As part of the take-or-pay commitments with IPA and SCPPA, the Electric Fiscal Year IPA Pv STS MAT MPT Hoover Total 2011 $29,530 $2,792 $2,460 $ 298 $ 43 $ 100 $35,223 Utility has agreed to pay its share of current and long-term obligations. 2012 $22,555 $2,843 $2,677 $ 300 $ 40 $ 102 $28,517 Management intends to pay these obligations from operating revenues received during the year that payment is due. A long-term obligation has not These costs are included in production and purchased power or transmission been recorded on the accompanying financial statements for these expense on the Statements of Revenues, Expenses and Changes in Equity.

commitments. Take-or-pay commitments terminate upon the later of contract expiration or final maturity of outstanding bonds for each project. B. Other Commitments Outstanding debts associated with the take-or-pay obligations have variable interest rates for the Palo Verde Nuclear Generating Station Project and the Power Purchase Agreements:

remaining projects have fixed interest rates which range from 1.25 percent to 6.13 percent. The schedule below details the amount of principal and interest The Electric Utility executed two firm power purchase agreements with that is due and payable by the Electric Utility as part of the take-or-pay Bonneville Power Administration (BPA). The first agreement with BPA was contract for each project in the fiscal year indicated. for the purchase of firm capacity (23 megawatts in the summer months and 16 megawatts in the winter months) beginning February 1, 1991, for a period of 20 years. This agreement terminated on March 3, 2011. The second BPA 61

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands) agreement is for the purchase of capacity (50 megawatts during the summer On November 10, 2006, the City of Riverside entered into a second months and 13 megawatts during the winter months) beginning April 30, Renewable Power Purchase Agreement with Wintec Energy, Ltd for wind 1996, for 20 years. Effective May 1, 1998, these summer and winter capacity generation capacity of up to 8 MW. The contract term is for 15 years, with amounts increased to 60 megawatts and 15 megawatts, respectively, for the additional capacity available upon completion of Wintec's Facility II Wind remainder of the second agreement. Turbine Project. The developer is encountering challenges in finding suitable wind turbines to complete the project and the project is expected to continue On April 12, 2011, the California Renewable Energy Resources Act (SBX1-2) to be delayed.

was passed by the State Legislature and signed by the Governor. SBX1-2 revised the amount of statewide retail electricity sales from renewable The Hoover Uprating project has contractors from Arizona, Nevada, and resources in the State Renewable Energy Resources Program to 33% by California. Over the past two years, the Contractors have been meeting to December 31, 2020 in three stages: average of 20% of retail sales during negotiate terms for the renewal of contracts for electric services, which are 2011-2012; 25% of retail sales by December 31, 2016; and 33% of retail set to expire on September 30, 2017. The Contractors developed proposed sales by December 31, 2020. The Riverside Public Utilities Board and City legislation, that became known as the Hoover Power Allocation Act (the Act),

Council approved the enforcement program required by SBX1-2 on which would extend the availability of Hoover power to the existing November 18, 2011 and December 13, 2011, respectively. The Utility met Contractors for an additional fifty years and create a pool for new entrants.

SBXI-2 Stage 1 requirement for 2011 requiring an average of 20% of retail sales coming from renewable resources. The Utility does not anticipate it will In December 2011, President Obama approved and signed the Hoover have significant difficulty in meeting the remaining requirements of SBX1-2. Power Allocation Act of 2011. The new legislation requires the Utility to relinquish 5% (1.5 MW) of their current power for replacement of a new The contracts in the following table were executed as part of compliance with entitlement of 28.5 MW, effective October 1, 2017. The power relinquished this standard. The Utility also has an agreement with Bonneville Power will be used to create a new resource pool equal to 5% of the full rated Administration for the purchase of energy credits that add to the total capacity of 2,074,000 KW, and associated firm energy, and would be renewable portfolio. allocated to new entities as follows: two-thirds to the Western Area Power Administration and one-third allocated equally in Nevada, California and Long-term renewable power purchase agreements: Arizona including fully recognized Indian tribes that do not currently purchase Estimated Hoover power. The new entities will be required to execute the Boulder Maximum Contract Annual Cost Canyon Project Implementation Agreement which will include a provision Supplier Tyve Contract Expiration for 2013 requiring them to pay a proportionate share of their State's respective Wintec Wind 1.3MW 12/30/2018 $ 205 Salton Sea Power Geothermal 46.0MW 5/31/2020 21,176 contribution to the cost of the Lower Colorado River Multi-Species Total 54 MW WA=8_ Conservation Program and the Uprate Program. Any of the capacity and firm energy not allocated to the new entities and not placed under contract by All contracts are contingent on energy production from specific related October 1, 2017, will be returned to the existing contractors in the same generating facilities. Riverside has no commitment to pay any amounts proportion as the contractor's allocations.

except for energy produced on a monthly basis from these facilities.

Construction Commitments:

On August 23, 2005, the City Council approved an amendment to the Power Purchase Agreement between Salton Sea and the City. The agreement As of June 30, 2012, the Sewer, Electric and Water Utilities had increases the amount of renewable energy available to the City from the approximately $225 million, $13.3 million and $8.6 million, respectively, in current 20 MW to 46 MW effective June 1, 2009 through May 31, 2020, at major construction commitments related to unfinished capital projects. The the same price under the current contract until 2013, with escalation Capital Outlay Fund also had major construction commitments of thereafter based on an inflationary type index. Similar to other renewable approximately $33.7 million related to the renovation and expansion of the power purchase agreements, the City is only obligated for purchases of Riverside Convention Center. These construction commitments are energy delivered to the City. expected to be funded primarily with bond proceeds.

62

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 (amounts expressed in thousands)

C. Jointly-Owned Utility Project - SONGS share. On January 31, 2012, a water leak was detected in one of the heat transfer tubes in Unit 3 steam generators which required Unit 3 to be taken Pursuant to a settlement agreement with SCE, dated August 4, 1972, the offline. During this same timeframe, Unit 2 was offline for a planned City was granted the right to acquire a 1.79 percent ownership interest in San maintenance and refueling outage. During inspections of Unit 2 in February Onofre Nuclear Generating Station (SONGS), Units 2 and 3, equating to 19.2 2012, similar unexpected wear was observed in some Unit 2 heat transfer MW and 19.3 MW respectively, of the available capacity. In the settlement tubes albeit much less extensive than Unit 3 tube wear. Both Units 2 and 3 agreement, SCE agreed to provide the necessary transmission service to remain offline for extensive inspections, testing and analysis of the steam deliver the output of SONGS to Riverside. SCE and the City entered into the generators.

SONGS Participation Agreement that sets forth the terms and conditions under which the City, through the Electric Utility, participates in the ownership In March 2012, the NRC issued a Confirmatory Action Letter that required and output of SONGS. Other participants in this project include SCE, 75.05 NRC permission to restart Units 2 and 3 and further outlined actions that percent; San Diego Gas & Electric Company, 20.00 percent; and the City of SCE must complete before permission to restart either Unit may be Anaheim, 3.16 percent. In 2006, Anaheim sought and received approval to considered. SCE is continuing to evaluate repairs and mitigation plans. Each transfer its 3.16 percent to SCE for a total of 78.21 percent ownership. The Unit will be restarted only when the repairs and appropriate mitigation plans Amended and Restated Operating Agreement was updated to reflect the are completed in accordance with the NRC's letter and SCE is satisfied that it change in ownership. Maintenance and operation of SONGS remain the is safe to do so.

responsibility of SCE, as operating agent for the City.

On August 3, 2012, SCE declared an "operating impairment", as defined in The original operating license for SONGS units 2 and 3 was set to expire in the Operating Agreement, for SONGS Units 2 and 3 and provided formal 2013; however, this was subsequently extended due to a construction notification to the co-owners that the impairment resulted from excessive recapture provision, and now expires February 16, 2022 and November 15, wear of the tubes in the steam generators. To date, SCE does not have a 2022 for Units 2 and 3 respectively. It has been reported that SCE is cost estimate and schedule for completing Restoration Work that will return pursuing a license extension from the Nuclear Regulatory Commission both Units to service. SCE understands that the tube-to-tube contact arose

("NRC") to continue operations through 2042. To date, no final ruling on this from excessive vibration of the tubes in certain areas of the steam extension request has been made. generators. Because Unit 2 experienced considerably less tube-to-tube wear, it is currently anticipated that Unit 2 could restart months in advance of Unit 3 There are no separate financial statements for the jointly-owned utility plant and would only be able to operate at reduced power levels and with mid-since each participant's interests in the utility plant and operating expenses cycle outages to provide assurance of safe operation.

are included in their respective financial statements. The Electric Utility's 1.79 percent share of the capitalized construction costs for SONGS totaled On October 4, 2012, SCE submitted its response to the NRC Confirmatory

$164,945 and $159,907 and accumulated depreciation totaled $135,664 and Action Letter, along with its restart plan for SONGS Unit 2. The response and

$133,260 for fiscal years ended June 30, 2012 and 2011, respectively. restart plans are being submitted simultaneously to provide the NRC with all Capital assets are depreciated through 2022, to include the construction the relevant information needed to evaluate the full spectrum of repairs, recapture extension period. The Electric Utility sets aside approximately corrective actions and additional safety measures proposed to restart safe

$1,600 per year to fund decommissioning costs. The Electric Utility's portion operations at the plant. SONGS Unit 3 will remain offline while the utility of current and long-term debt associated with SONGS is included in the continues to study the potential solutions that are unique to this unit. The unit accompanying financial statements. cannot be restarted until all plans have been approved by the NRC.

Recent Developments 17. Water Utility Revenue Transfer In fiscal years 2010 and 2011, SCE completed the replacement of four steam Section 1304 of the Riverside City Charter requires the City's water generators at SONGS Units 2 and 3. The total cost of the project was enterprise (the "Water Utility") to transfer, in monthly installments, an amount

$758,000 of which approximately $13,600 represented the Electric Utility's not to exceed 11.5% of the gross operating revenues of the Water Utility 63

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2012 A I IIU) II For~~~~~~~~~~anu th yearss ene Junen 30a02,UIUIL

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("Water Revenue Transfer"). This requirement has been in the City Charter units to service. SCE understands that the tube-to-tube contact arose from since 1907, when the City's charter was approved and adopted by the excessive vibration of the tubes in certain areas of the steam generators electorate. On November 5, 1996, California voters approved Proposition Because Unit 2 experienced considerably less tube-to-tube wear, it is 218. Proposition 218 added Articles XIIIC and XIIID to the State currently anticipated that Unit 2 could restart months in advance of Unit 3 and Constitution, which affect the ability of local governments to levy and collect would only be able to operate at reduced power levels and with mid-cycle both existing and future taxes, assessments, and property-related fees and outages to provide assurance of safe operation.

charges.

2012A Lease Revenue Refunding Bonds:

After Proposition 218 was enacted in 1996, appellate court cases and an Attorney General's opinion initially indicated that fees and charges levied for On August 15, 2012, the City issued the Series 2012A Lease Revenue water and wastewater services would not be considered property-related Refunding Bonds in the amount of $41,240. The bonds were issued to fees and charges levied for water and wastewater services would not be refinance the 2003 Certificates of Participation. Interest on the bonds is considered property-related fees and charges, and thus not subject to the payable semi-annually on May 1 and November 1 of each year, commencing requirements of Article XIIID. However, recent cases have held that certain May 1, 2013. The rate of interest varies from 2% to 5% per annum types of water and wastewater charges could be subject to the requirements depending on maturity date. Principal is payable in annual installments of Article XIIID under certain circumstances. This means that the revenues ranging from $1,295 to $2,840 commencing November 1, 2013 and ending derived from these charges may, in certain circumstances, not exceed the November 1, 2033.

cost to the City of providing the related services.

Convention Center Financing:

A claim has been filed with the City regarding the legality of including the Water Revenue Transfer as a cost of providing the related services. If a On July 19, 2012, the City secured financing in the amount of $41,650 with court were to conclude that the Water Revenue Transfer is not a cost of BBVA Compass Bank for the renovation and expansion of the Riverside providing the service of the Water Utility, then the Water Utility might be Convention Center. The financing consists of a variable rate lease-required to revise its rates and charges to eliminate the revenues needed to leaseback financing that will have a swap transaction layered over the pay the Water Revenue Transfers, and the Water Utility could be required to variable rate financing resulting in a "synthetic fixed" rate of 3.24% for 20 of rebate to its customers the amount of any rates and charges in excess of the the 22 years of the financing. The financing consist of an initial 21-month cost of service. In such an event, the Water Utility most likely would require variable rate interest only period during construction in which the required

• the City to return the challenged Water Revenue Transfer and the Water interest payments are made from the borrowed proceeds. At the end of that Utility would be prohibited from making any future Water Revenue Transfers. term, the swap begins and the interest rate "swaps" to fixed for the remaining In that situation, the City would prepare a cost study calculating the Water 20-year amortization with principal and interest due on the first of each Utility's cost impact on the City, and the City would assess the Water Uitlity month, with equal payments each year of approximately $2,850.

for such costs. It is unclear if such costs would equal the current Water Revenue Transfer. VOIP Capital Lease:

18. Subsequent Events In August 2012, the City entered into a lease purchase agreement in the amount of $1,650 with Pinnacle Public Finance, Inc., for the financing of the San Onofre Nuclear Generating Station: City's voice over IP (VOIP) phone system for City Hall and various satellite locations. The lease requires semi-annual debt service payments totaling On August 3, 2012, SCE, as Operating Agent, declared an Operating $186 over a 10-year term at an interest rate of 2.38%, which is payable on Impairment and provided formal notification to the co-owners regarding the February 1 and August 1 of each year, commencing February 1, 2013.

impairment for SONGS Units 2 and 3 resulting from excessive wear of the tubes in the steam generators for both units. SCE does not yet have a cost estimate and schedule for completing Restoration Work that will return both 64

Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.

Urban Areas Security Initiative (UASI) Fund - To account for UASI grants received from the U.S. Department of Homeland Security.

Special Gas Tax Fund - To account for the construction and maintenance of the road network system of the City. Financing is provided by the City's share of state gasoline taxes which state law requires to be used to maintain streets.

Air Quality Improvement Fund - To account for qualified air pollution reduction programs funded by the South Coast Air Quality Management District.

Housing and Community Development Fund - To account for Federal grants received from the Department of Housing and Urban Development (HUD). The grants are used for the development of a viable urban community by providing decent housing, a suitable living environment, and expanding economic opportunities, principally for persons with low and moderate incomes.

Redevelopment Agency Fund - To account for the portion of Redevelopment tax increment monies which California Redevelopment Law requires be set aside for the development of low and moderate income housing.

National Pollution Discharge Elimination System (NPDES) - To account for storm drain maintenance and inspection required for California storm water permits. Activities are funded by a special assessment district of Riverside County, California.

Housing Fund - To account for the housing activities for persons with low or moderate income.

Capital Projects Funds Capital Projects Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds.

Special Capital Improvements Fund - To account for the acquisition, construction and installation of capital improvements and a Community Facilities District within the City.

Storm Drain Fund - To account for the acquisition, construction and installation of storm drains in the City.

Transportation Fund - To account for the construction and installation of street and highway improvements in accordance with Articles 3 and 8 of the Transportation Development Act of 1971 of the State of California.

Debt Service Fund Debt Service Funds are used to account for the accumulation of resources for, and the payment of, long-term debt principal, interest, and related costs.

The General Debt Service Fund accounts for the resources accumulated and payments made for principal, interest and related costs on long-term general obligation debt of governmental funds, other than debt of the Redevelopment Agency which dissolved on January 31, 2012.

Permanent Fund Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs.

Library Special Fund - To account for the monies held in trust for the benefit of the Riverside City Public Library System.

City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2012 (amounts expressed in thousands)

Special Revenue Housing &

Urban Areas Air Quality Community Redevelopment Assets Security Initiative Gas Tax Improvements Development Agency NPDES Storm Drain Housing Total Cash and investments $ - $ 13,332 $ 656 $ $ - $ - $ 1.341 $ 15,329 Cash and investments at fiscal agent Receivable (net of allowance for uncollectibles):

Interest 55 63 Accounts 28 - 28 Intergovernmental 883 194 - 3.032 342 - 4,451 Notes - - 10,562 - 20,824 31,386 Advances to Successor Agency - 20,571 20,571 Land & improvements held for resale - 1,522 - 3.613 5,135 Total assets $ 883 $ 13,581 $ 687 $ 15,116 $ $ 342 $ 46,354 $ 76,963 Liabilities and fund balances Liabilities:

Accounts payable $ 259 $ 169 $ 10 $ 450 $ $ 4 $ 5 $ 897 Accrued payroll 27 - - 27 Retainage payable 1.397 - - 1,397 Deferred revenue - 12,085 20,807 32,892 Deposits - - 22 22 Due to other funds 624 156 338 - 1.118 Advance from other funds - - - 549 - 458 1.007 Total liabilities 883 1,566 10 13,267 342 21.292 37,360 Fund balances Restricted for:

Housing and redevelopment - - - 1,849 25,062 26,911 Transportation and public works 12,015 677 - - 12,692 Total fund balances 12,015 677 1,849 - 25,062 39,603 Total liabilities and fund balances 883 $ 13,581 $ 687 $ 15.116 $ $ 342 $ 46,354 $ 76,963 65

City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2012 (amounts expressed in thousands)

Permanent Capital Projects Fund Total Nonmajor Special Capital General Governmental Assets Improvement Storm Drain Transportation Total Debt Service Library Special Funds Cash and investments $ 3,508 $ 2,271 $ $ 5,779 $ 823 $ 1,539 $ 23,470 Cash and investments at fiscal agent 2,351 - 2,351 14,182 - 16,533 Receivable (net of allowance for uncollectibles):

Interest 15 10 25 88 Accounts 345 345 373 Intergovernmental 92 358 450 4,901 Notes S- - - - 31,386 Advances to Successor Agency 18,571 39,142 Land & improvements held for resale - - - - - - 5,135 Total assets 6,219 $ 2,373 $ 358 $ 8,950 $ 33,576 $ 1,539 $ 121,028 Liabilities and fund balances Liabilities:

Accounts payable $ 1$ 9 $ 1$ 11 $ 27 $ $ 935 Accrued payroll 27 Retainage payable 90 90 1,487 Deferred revenue 10 10 32,902 Deposits S- - 22 Due to other funds - 318 318 1,436 Advance from other funds 7,091 - 7,091 4,469 12,567 Total liabilities 7,182 9 329 7,520 4,496 49,376 Fund balances Nonspendable:

Permanent fund principal 1,539 1,539 Restricted for:

Housing and redevelopment - - 26,911 Debt Service - - 29,080 - 29,080 Transportation and public works - - 29 29 - - 12,721 Other purposes (963) 2,364 - 1,401 - 1,401 Total fund balances (963) 2,364 29 1,430 29,080 1,539 71,652 Total liabilities and fund balances $ 6,219 $ 2,373 $ 358 $ 8,950 $ 33,576 $ 1,539 $ 121,028 66

City of Riverside Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Special Revenue Housing &

Urban Area Security Air Quality Community Redevelopment Initiative Gas Tax Improvement Development Agency NPDES Storm Drain Housing Total Revenues Taxes $ $ 32 $ - $ $ 32 Intergovernmental 3,792 8,440 363 12,369 24,964 Special assessments 340 340 Rental and investment income 110 1 19 41 112 283 Miscellaneous 204 2,105 1.081 - 175 3,565 Total revenues 3,792 8,550 568 14,493 1,154 340 287 29,184 Expenditures Current:

General government 496 773 716 78 2,063 Public Safety 3,792 3,792 Culture and recreation 11,084 11,084 Capital outlay 8,853 13,232 2 340 22,427 Debt service:

Interest - - 15 - - 3 18 Total expenditures 3,792 8,853 496 14,020 718 340 11,165 39,384 Excess (deficiency) of revenues over (under) expenditures (303) 72 473 436 - (10,878) (10,200)

Other financing sources (uses)

Transfers in 962 4,215 421 5.598 Transfers out (3,597) (4,215) (7,812)

Total other financing sources (uses) 962 618 (3,794) (2,214)

Extraordinary items Dissolution of Riverside Redevelopment Agency:

Transfer of assets and liabilities to Successor Agency - (33,247) (33,247)

Transfer of assets from Successor Agency 28,121 28,121 Assumption of obligation (458) (458)

Total extraordinary items - (33,247) 27,663 (5,584)

Net change in fund balances (303) 72 1,435 (32,193) 12,991 (17,998)

Fund balances - beginning 12,318 605 414 32,193 12,071 57,601 Fund balances - ending $ $ 12,015 $ 677 $ 1,849 $ -$ $ 25,062 $ 39,603 67

City of Riverside Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Permanent Capital Projects Fund Total Nonmajor Special Capital General Library Governmental Improvement Storm Drain Transportation Total Debt Service Special Funds Revenues Taxes $ $ -$

$ $ 32 Licenses and permits 2,035 138 2,173 2,173 Intergovernmental 92 450 542 25,506 Charges for services 4 4 4 Special assessments - - 1,075 - 1,415 Rental and investment income 41 - 41 1,647 24 1,995 Miscellaneous 26 1 - 27 470 86 4,148 Total revenues 2,106 231 450 2,787 3,192 110 35,273 Expenditures Current:

General government 102 102 26 2,191 Public Safety 3,792 Culture and recreation 196 11,280 Capital outlay 608 1,859 450 2,917 25,344 Debt service:

Principal - - 4,750 4,750 Interest 151 - - 151 9,294 9,463 Total expenditures 861 1,859 450 3,170 14,070 196 56,820 Excess (deficiency) of revenues over (under) expenditures 1,245 (1,628) (383) (10,878) (86) (21,547)

Other financing sources (uses)

Transfers in 19 19 11,007 - 16,624 Transfers out (3,308) (3,308) (11,120)

Total other financing sources (uses) (3,289) (3,289) 11,007 - 5,504 Extraordinary items Dissolution of Riverside Redevelopment Agency:

Transfer of assets and liabilities to Successor Agency -- - (33,247)

Transfer of assets from Successor Agency -- - 28,121 Assumption of obligation (4,469) - (4,927)

Total extraordinary items (4,469) - (10,053)

Net change in fund balances (2,044) (1,628) - (3,672) (4,340) (86) (26,096)

Fund balances - beginning 1,081 3,992 29 5,102 33,420 1,625 97,748 Fund balances - ending $ (96 $ 2,364 $ 29 $ 1,430 $ 29,080 $ 1,539 $ 71,652 68

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

SGecial Revenue Urban Area Security Initiative Gas Tax Air Quality Improvement Variance Variance Variance Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Taxes $ $ $ $ $ $ $3 $

Intergovernmental 10,394 3,792 (6,602) 8,094 8,440 346 333 363 30 Licenses and permits Charges for services Fines and forfeitures Special assessments Rental and investment income 150 110 (40) -1 Miscellaneous 100 204 104 Total revenues 10,394 3,792 (6,602) 8,244 8,550 306 433 568 135 Expenditures Current:

General government 1,034 496 538 Public Safety 10,507 3,792 6,715 Culture and recreation Capital outlay 19,948 8,853 11,095 Debt service:

Principal Interest Total expenditures 10,507 3,792 6,715 19,948 8.853 11,095 1.034 496 538 Excess (deficiency) of revenues over (under) expenditures (113) 113 (11,704) (303) 11,401 (601) 72 673 Other financing courccs (uses)

Transfers in Transfers out Issuance of long-term debt Sale of capital assets Total other financing sources (uses)

Extraordinary items Dissolution of Riverside Redevelopment Agency:

Transfer of assets and liabilities to private-purpose trust fund Assumption of obligation Total extraordinary items Net change in fund balances (113) 113 (11,704) (303) 11,401 (601) 72 673 Fund balances (deficit), beginning - 12,318 12,318 605 605 Fund balances (deficit), ending $ (113) $ $ 113 $ 614 $ 12,015 $ 11,401 $ 4 $ 677 $ 673 (continued) 69

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Special Revenue Housing & Community Development Redevelopment Agency NPDES Storm Drain Variance Variance Variance Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Taxes $ 9 $ $ - $ 10,020 $ 32 $ (9.988) $

Intergovernmental 9,804 12,369 2,565 -

Licenses and permits Charges for services Fines and forfeitures Special assessments 574 340 (234)

Rental and investment income 13 19 6 212 41 (171)

Miscellaneous 202 2,105 1,903 29 1,081 1,052 Total revenues 10,019 14,493 4,474 10,261 1,154 (9,107) 574 340 (234)

Expenditures Current:

General government 707 773 (66) 22,909 716 22,193 Public Safety Culture and recreation Capital outlay 23,518 13,232 10,286 4,857 2 4,855 574 340 234 Debt service Principal Interest - 15 (15)

Total expenditures 24,225 14,020 10,205 27,766 718 27.048 574 340 234 Excess (deficiency) of revenues over (under) expenditures (14,206) 473 14,679 (17,505) 436 17,941 Other financing sources (uses)

Transfers in 962 962 1 4,215 4,215 Transfers out - - (14,840) (3,597) (11,243)

Issuance of long-term debt Sale of capital assets Total other financing sources (uses) -962 962 (14,840) 618 (7,28 Extraordinary items Dissolution of Riverside Redevelopment Agency:

Transfer of assets and liabilities to Successor Agency -- - - (33,247) 33,247--

Transfer of assets from Successor Agency Assumption of obligation Total extraordinary items (33,247) 33,247 Net change in fund balances (14,206) 1,435 15,641 (32,345) (32,193) 44,160 Fund balances (deficit), beginning 414 414 32.193 32,193 Fund balances (deficit), ending $ (13,792) $ 1,849 $ 15,641 $ (152) $ $ 44,160 (continued) 70

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Special Revenue Capital Projects Housing Capital Outlay Redevelopment Variance Variance Variance Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Taxes $ - $ - $ - $ t $ $ $

Intergovernmental 82,854 31,774 (51,080) 681 170 (511)

Licenses and permits Charges for services Fines and forfeitures Special assessments 45 352 307 Rental and investment income 112 112 175 446 271 1,147 1,333 186 Miscellaneous 175 175 3,200 1,462 (1,738) 238 276 38 Total revenues 86,274 34,034 2,066 1,779 (287) 287 287 152,2403 Expenditures Current:

General government 204 78 126 8,166 4,090 4,076 Public Safety Culture and recreation 11,084 11,084 13,050 17,444 (4,394)

Capital outlay 134,790 33,187 101,603 70,792 15,811 54,981 Debt service Principal Interest 3 (3) 538 Total expenditures 11,288 11,165 123 134,790 33.187 101,603 92,008 37,883 54,663 Excess (deficiency) of revenues over (under) expenditures (11,288) (10,878) 410 (48,516) 847 49,363 (89,942) (36,104) 54,376 Other financing sources (uses)

Transfers in 121 96.428 96,428 Transfers out (4,215) 4,215 (41,799) (41,799)

Issuance of long-term debt 4,000 4,000 Sale of capital assets Total other financing sources (uses) (3.794) 4,215 4,000 4,000 54,629 54.629 Extraordinary items Dissolution of Riverside Redevelopment Agency:

Transfer of assets and liabilities to Successor Agency (70,419)

Transfer of assets from Successor Agency 28,121 Assumption'of obligation (458)

Total extraordinary items 27,663 (70,419)

Net change in fund balances (11,288) 12,991 4,625 (44.516) 4,847 49,363 (35,313) (51,894) 54,376 Fund balances (deficit), beginning 12,071 12,071 13,507 13,507 51,894 51,894 Fund balances (deficit), ending $ 783 $ 25,062 $ 4,625 $ (31,009) $ 18,354 $ 49,363 $ 16.581 $ $ 54,376 (continued) 71

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Capital Projects Storm Drain Transportation Variance Variance Variance Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Taxes $ - $ - $ $ - $ - $ $

Intergovernmental 2,916 (2,824) 815 450 (365) 92 Licenses and permits 2,035 2,035 130 138 8 Charges for services 4 4 Fines and forfeitures Special assessments Rental and investment income 41 41 Miscellaneous 26 26 1 1 Total revenues 2,106 2,106 (2,815) 815 450 (365) 3,046 231 Expenditures Current:

General government 461 102 359 Public Safety Culture and recreation Capital outlay 5.203 608 4,595 6.681 1,859 4,822 815 450 365 Debt service Principal Interest 106 151 (45)

Total expenditures 5,770 861 4,909 6,681 1,859 4,822 815 450 365 Excess (deficiency) of revenues over (under) expenditures (5,770) 1,245 7,015 (3,635) (1.628) 2,007 Other financing sources (uses)

Transfers in -19 19 Transfers out (3,305) (3,308) 3 Issuance of long-term debt Sale of capital assets Total other financing sources (3,305) (3,289) 22------

Extraordinary items Dissolution of Riverside Redevelopment Agency:

Transfer of assets and liabilities to private-purpose trust fund Assumption of obligation Total extraordinary items Net change in fund balances (9,075) (2,044) 7.037 (3,635) (1,628) 2,007 Fund balances (deficit), beginning 1,081 1,081 3,992 3,992 29 29 Fund balances (deficit), ending $ (7,994) $ (963) $ 7,037 $ 357 $ 2.364 $ 2.007 $ 29 $ 29 $

72

Nonmajor Enterprise Funds Enterprise Funds are used to account for the operations that are financed and operated in a manner similar to private business enterprises. The City's intent is to demonstrate that the cost of services provided to the general public on a continuing basis is financed or recovered through user charges; or the City has decided that the periodic determination of net income is appropriate for accountability purposes.

Airport Fund - To account for the operations of the City's airport.

Refuse Fund - To account for the operations of the City's solid waste and sanitation program which provides for the collection and disposal of solid waste on a user charge basis to residents and businesses.

Transportation - To account for the operations of the City's Senior Citizens' and Handicapped Transportation System in accordance with Article 4 of the Transportation Development Act of 1971 (SB325) of the State of California. Federal Transit Administration Funds are also accounted for in this fund.

Public Parking - To account for the operations and construction of the City's public parking facilities.

City of Riverside Combining Statement of Net Assets Nonmajor Enterprise Funds June 30, 2012 (amounts expressed in thousands)

Assets Airport Refuse Transportation Public Parking Total Current assets:

Cash and investments $ $ 1,250 $ 1,838 $ 2,853 $ 5,941 Receivables (net of allowance for uncollectibles)

Interest 18 5 5 28 Utility billed 983 983 Utility unbilled 599 599 Accounts 88 236 5 6 335 Intergovernmental 951 68 1,019 Restricted assets:

Cash and cash equivalents - 2,295 - 2,295 Total current assets 88 5,381 2,799 2,932 11,200 Non-current assets:

Restricted assets:

Cash and investments at fiscal agent 6,597 6,597 Deferred charges - other 231 8,571 606 171 9,579 Capital assets:

Land 9,988 3,588 13,576 Buildings 2,632 22 13,879 16,533 Accumulated depreciation-buildings (1,113) (9) (3,460) (4,582)

Improvements other than buildings 18,032 47 5,915 23,994 Accumulated depreciation-improvements other than buildings (5,342) (6) (1,054) (6,402)

Machinery and equipment 412 12,427 3,319 1,659 17,817 Accumulated depreciation-machinery and equipment (249) (8,149) (2,058) (1,235) (11,691)

Construction in progress 581 1,329 20,377 22,287 Total non-current assets: 25,172 12,849 3,250 46,437 87,708 Total assets 25,260 18,230 6,049 49,369 98,908 (continued) 73

City of Riverside Combining Statement of Net Assets Nonmajor Enterprise Funds June 30, 2012 (amounts expressed in thousands)

Liabilities Airport Refuse Transportation Public Parking Total Current liabilities:

Accounts payable 41 642 287 1,851 2,821 Accrued payroll 55 631 115 90 891 Retainage payable 832 832 Unearned revenue 2,049 2,049 Deposits 1 Due to other funds 348 348 Capital leases-current 7 7 Notes-current - 838 838 Landfill capping-current -_ 200 200 Total current liabilities 445 1,473 2,458 3,611 7,987 Non-current liabilities:

Notes payables 22,963 22,963 Capital leases 22 22 Advances from other funds 226 1,234 594 1,234 3,288 Landfill capping 6,495 6,495 Other payables 67 564 253 1,936 2,820 Total non-current liabilities 293 8,293 869 26,133 35,588 Total liabilities 738 9,766 3,327 29,744 43,575 Net Assets Invested in capital assets, net of related debt 24,941 4,278 2,615 20,542 52,376 Restricted for landfill capping 2,295 2,295 Unrestricted (419) 1,891 107 (917) 662 Total net assets $ 24,522 $ 8,464 $ 2,722 $ 19,625 $ 55,333 74

City of Riverside Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Nonmajor Enterprise Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Airport Refuse Transportation Public Parking Total Operating revenues:

Charges for services $ 1,524 $ 19,588 $ 352 $ 4,803 $ 26,267 Operating expenses:

Personnel services 762 4,619 1,997 1,086 8,464 Contractual services 171 3,784 10 1,212 5,177 Maintenance and operation 269 5,568 471 593 6,901 General 278 3,512 349 143 4,282 Materials and supplies 482 839 161 8 1,490 Insurance 29 112 48 154 343 Depreciation and amortization 645 1,511 615 810 3,581 Total operating expenses 2,636 19,945 3,651 4,006 30,238 Operating Income (loss) (1,112) (357) (3,299) 797 (3,971)

Nonoperating revenues (expenses):

Operating grants 2,738 2,738 Interest income 47 16 64 Other 3 242 (1,144) (899)

Gain/loss on retirement of capital assets 7 3 (5) 5 Interest expense and fiscal charges (10) (34) (16) (978) (1,038)

Total non-operating revenues (7) 262 2,741 (2,126) 870 Income before capital contributions and transfers (1,119) (95) (558) (1,329) (3,101)

Cash capital contributions 174 1,339 1,513 Transfers out (888) (888)

Change in net assets (945) (95) 781 (2,217) (2,476)

Total net assets - beginning 25,467 8,559 1,941 21,842 57,809 Total net assets - ending $ 24,522 $ 8,464 $ 2,722 $ 19,625 55,333 75

City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2012

_amounts expressed in thousands)

Funds in year ended June 30, Cash ofthousands) 2012 Flows For City of Riverside the Combining Nonmajor

.(amounts Enterprise Statement fiscal expressed Trans- Public Airport Refuse portation Parking Totals Cash flows from operating activities:

Cash received from customers and users $ 1,542 $ 19,167 $ 356 $ 4,844 $ 25,909 Cash paid to employees for services (728) (4,398) (1,921) (1,044) (8,091)

Cash paid to other suppliers of goods or services (1,299) (14,085) (773) (119) (16,276)

Other receipts 3 242 - 675 920 Net cash provided (used) by operating activities (482) 926 (2,338) 4,356 2,462 Cash flows from noncapital financing activities:

Transfers out S- (888) (888)

Operating grants 2,819 2,819 Advances from (to) other funds 344 (18) 326 Payments on interfund receivables (7) (39) (462) (508)

Net cash provided (used) by noncapital financing activities 337 (39) 2,801 (1,350) 1,749 Cash flows from capital and related financing activities:

Purchase of capital assets (21) (999) (1,138) (9,956) (12,114)

Proceeds from the sale of capital assets 7 10 Principal paid on long-term obligations S- (807) (807)

Interest paid on long-term obligations (10) (34) (16) (978) (1,038)

Capital contributions 174 - 1,339 _ 1,513 Net cash (used) provided for capital and related financing activities 143 (1,026) 188 (11,741) (12,436)

Cash flows from investing activities:

Income from investments 59 20 28 107 Net cash provided by investing activities 59 20 28 107 Net change in cash and cash equivalents (2) (80) 671 (8,707) (8,118)

Cash and cash equivalents, beginning 2 3,625 1,167 18,157 22,951 Cash and cash equivalents, ending $ $ 3,545 $ 1,838 $ 9,450 $ 14,833 continued 76

City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Trans- Public Airport Refuse portation Parking Totals Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating Income (loss) $ (1,112) $ (357) $ (3,299) 797 $ (3,971)

Other receipts 3 242 675 920 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation and amortization 645 1,511 615 810 3,581 Amortization of pension costs 7 37 18 4 66 Increase in utility unbilled receivable (421) (421)

Decrease in accounts receivable 18 4 50 72 Increase in intergovernmental receivable (9) (9)

Increase (decrease) in accounts payable (70) (50) 266 1,991 2,137 Increase in accrued payroll 6 39 (3) 3 45 Increase in other payable 21 145 61 35 262 Decrease in landfill capping - (220) - (220)

Net cash provided (used) by operating activities $ (482) $ 926 $ (2,338) $ 4,356 $ 2,462 77

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Internal Service Funds Internal Service Funds are used to account for the financing of goods and services provided by one City department to other City departments on a cost-reimbursement basis.

Self-Insurance Trust - To account for the operations of the City's self-insured workers' compensation, unemployment and liability programs.

Central Stores Fund - To account for the operations of the City's centralized supplies inventory, including receiving and delivery services provided to City departments.

Central Garage Fund - To account for the maintenance and repair of all city-owned vehicles and motorized equipment, except for Police vehicles.

City of Riverside Combining Statement of Net Assets Internal Service funds June 30, 2012 (amounts expressed in thousands)

Self-insurance Assets Trust Central Stores Central Garage Totals Current assets:

Cash and investments $ 1,996 $ $ 3,198 $ 5,194 Receivables (net of allowance for uncollectibles):

Interest 22 12 34 Accounts 22 47 69 Intergovernmental 101 111 212 Inventory 6,349 438 6,787 Total current assets 2,141 6,349 3,806 12,296 Advances to other funds 5,489 5,489 Advances to Successor Agency 5,461 5,461 Deferred charges - other 221 232 1,044 1,497 Capital assets:

Buildings 1,488 1,488 Accumulated depreciation-buildings (241) (241)

Machinery and equipment 139 9,441 9,580 Accumulated depreciation-machinery and equipment (137) (8,023) (8,160)

Construction in Progress 644 644 Capital assets (net of accumulated depreciation) 2 3,309 3,311 Total noncurrent assets 11,171 234 4,353 15,758 Total assets 13,312 6,583 8,159 28,054 Liabilities Current liabilities:

Accounts payable 353 229 173 755 Accrued payroll 38 100 442 580 Due to other funds 3,253 3,253 Claims and judgements - current 11,750 11,750 Total current liabilities 12,141 3,582 615 16,338 Noncurrent liabilities:

Other payables 63 76 327 466 Advances from other funds 217 227 1,022 1,466 Claims and judgements 15,792 15,792 Total noncurrent liabilities 16,072 303 1,349 17,724 Total liabilities 28,213 3,885 1,964 34,062 Net Assets Invested in capital assets 3,309 3,311 Unrestricted (14,901) 2,696 2,886 (9,319)

Total net assets $ (14,901) $ 2,698 $ 6,195 $ (6,008) 79

City of Riverside Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Internal Service Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Self-Insurance Trust Central Stores Central Garage Totals Operating revenues:

Charges for services $ 11,937 $ 1,593 $ 6,936 $ 20,466 Operating expenses:

Personnel services 473 649 2,775 3,897 Contractual services 113 115 228 Maintenance and operation 1 28 1,838 1,867 General 897 344 698 1,939 Materials and supplies 14 364 378 Claims/Insurance 12,220 9 35 12,264 Depreciation and amortization 4 714 718 Total operating expenses 13,704 1,048 6,539 21,291 Operating income (loss) (1,767) 545 397 (825)

Non-operating revenues (expenses):

Interest income 234 44 278 Other 257 43 300 Gain (loss) on retirement of capital assets (10) (10)

Interest expense and fiscal charges (71) (6) (28) (105)

Total non-operating revenue (expenses) 420 (6) 49 463 Change in net assets (1,347) 539 446 (362)

Total net assets - beginning (13,554) 2,159 5,749 (5,646)

Total net assets - ending $ (14,901) $ 2,698 $ 6,195 $ (6,008) 80

City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Self-Insurance Central Central Trust Stores Garage Total Cash flows from operating activities:

Cash received from customers and users $ 11,900 $ 1,593 $ 10,545 $ 24,038 Cash paid to employees for services (446) (617) (2,626) (3,689)

Cash paid to other suppliers of goods or services (12,216) (963) (6,739) (19,918)

Other 257 44 301 Net cash provided (used) by operating activities (505) 13 1,224 732 Cash flows from noncapital financing activities:

Payments on interfund payables (6) (33) (39)

Advances to other funds 970 963 Net cash provided (used) by noncapital financing activities 964 (7) (33) 924 Cash flows from capital and related financing activities:

Interest paid on long-term obligation (71) (6) (28) (105)

Purchase of capital assets (949)

(949)

Net cash (used) for capital and related financing activities (71) (6) (977) (1,054)

Cash flows from investing activities:

Income from investments 302 54 356 302 54 356 Net increase in cash and cash equivalents 690 268 958 Cash and cash equivalents, beginning 1,306 2,930 4,236 Cash and cash equivalents, ending $ 1,996 $ $ 3,198 $ 5,194 continued 81

City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Self-Insurance Central Central Reconciliation of operating income to net cash provided Trust Stores Garage Total (used) by operating activities:

Operating (loss) income $ (1,767) $ 545 $ 397 $ (825)

Other 257 - 44 301 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation and amortization 4 714 718 Amortization of pension costs 16 7 111 134 (Increase) in account receivable (37) (95) (132)

Decrease in inventory 333 314 647 (Decrease) increase in accounts payable 94 41 (299) (164)

Increase in other payable 20 20 Increase in accrued payroll 4 5 38 47 (Decrease) in due to other funds (942) (942)

Increase in claims and judgments 928 -_ 928 Net cash provided (used) by operating activities $ (505) $ 13 $ 1,224 $ 732 82

Agency Fund The City's Agency Fund is used to account for special assessments that service no-commitment debt.

City of Riverside Fiduciary Fund - Agency Fund Combining Statement of Changes in Assets and Liabilities For the fiscal year ended June 30, 2012 (amounts expressed in thousands)

Balance Balance July 1, 2011 Additions Deductions June 30, 2012 Assets Cash and investments $ 8,655 $ 5,708 $ 6,848 $ 7,515 Cash and investments at fiscal agent 8,962 8,252 10,645 6,569 Interest receivable 58 420 450 28 Property taxes receivable 262 407 263 406 Total assets $ 17,937 $ 14,787 $ 18,206 $ 14,518 Liabilities Accounts payable $ 28 $ 107 $ 135 Held for bond holders 17,909 4,533 7,924 14,518 Total liabilities $ 17,937 $ 4,640 $ 8,059 $ 14,518 83

-I Y--.

CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS

City of Riverside Capital Assets Used in the Operation of Governmental Funds Schedule By Source June 30, 2012 (amounts expressed in thousands)

Governmental funds capital assets:

Land $ 322,060 Buildings and improvements 169,099 Improvements other than buildings 227,553 Machinery and equipment 876,513 Infrastructure 78,875 Construction in progress 26,666 Total governmental funds capital assets $ 1,700,766 Investments in governmental funds capital assets by source:

Certificates of participation $ 121,108 Gifts 312,512 Operating revenue 472,382 General obligation bonds 4,484 Revenue bonds 21,229 County contracts and grants 110 State grants 40,374 Asset forfeiture - state 961 Asset forfeiture - federal 2,501 Housing and community development grants 18,545 Other federal grants 32,667 Community facilities bonds 1,026 Assessment district bonds 397 Capital leases 5,399 RDA tax increment bonds 2,278 Capital projects funds 664,793 Total governmental funds capital assets $ 1,700,766 85

-II IIII

-~ I-

Statistical Section This part of the City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health.

Contents Page Financial Trends 87 These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time.

Revenue Capacity 93 These schedules contain information to help the reader assess the factors affecting the City's ability to generate property and sales taxes.

Debt Capacity 102 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future.

Demographic and Economic Information 108 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments.

Operating Information 110 These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

Table I City of Riverside Net Assets by Component Last Ten Fiscal Years (accrual basis of accounting) (in thousands)

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 Governmental activities Invested in capital assets, net of related debt $ 471,380 $ 484,784 $ 515,354 $ 622,336 $ 712,801 $ 850,740 $ 950,496 $ 976,614 $ 1,019,892 $1,066,855 Restricted 106,862 137,126 154,957 158,038 107,982 102,677 98,903 108,932 80,820 93,818 Unrestricted (10,227) (41,353) (46,419) (51,261) (34,245) (31,429) (41,861) (80,947) (90,159) 28,494 Total govemmentalactivities netassets $ 568,015 $ 580,557 $ 623,892 $ 729,113 $ 786,538 $ 921,988 $1,007,538 $ 1,004,599 $1,010,553 $1,189,167 Business-type activities Invested in capital assets, net of related debt $ 323,094 $ 341,041 $ 402,377 $ 425,285 $ 520,059 $ 601,999 $ 659,904 $ 660,619 $ 654,974 $ 666,919 Restricted 40,869 49,242 54,540 71,386 57,613 43,341 38,621 59,863 56,397 54,923 Unrestricted 181,985 217,762 229,462 250,041 242,966 225,281 207,405 219,720 256,038 285,062 Total business-type activities net assets $ 545,948 $ 608,045 $ 686,379 $ 746.712 $ 820,638 $ 870,621 $ 905,930 $ 940,202 $ 967,409 $ 1,006,904 Primary government Invested in capital assets, net of related debt $ 794,474 $ 825,825 $ 917,731 $ 1,047,621 $ 1,232,860 $ 1,452,739 $ 1,610,400 $ 1,637,233 $ 1,674,866 $ 1,733,774 Restricted 147,731 186,368 209,497 229,424 165,595 146,018 137,524 168,795 137,217 148,741 Unrestricted 171,758 176,409 183,043 198,780 208,721 193,852 165,544 138,773 165,879 313,556 Total primary government net assets $ 1,113,963 $ 1,188,602 $ 1,310,271 $ 1,475,825 $ 1,607,176 $1,792,609 $1,913,468 $ 1,944,801 $1,977,962 $ 2,196,071 The increase in total governmental activities net assets (and related unrestricted net assets) is due to the due to the dissolution of the Redevelopment Agency.

87

Table 2 City of Riverside Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Page 1 of 2 Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Expenses Governmental activities:

General government $ 59,530 $ 63,000 $ 58,460 $ 74,458 $ 105,486 $ 113,897 $ 71,391 $ 85,110 $ 72,606 $ 48,731 Public safety 88,969 102,500 110,969 120,470 114,312 122,783 142,353 137,338 139,364 148,605 Highways and streets 15,625 22,017 20,364 20,757 22,556 26,986 29,700 31,492 32,131 35,342 Culture and Recreation 29,236 22,988 26,353 32,602 28,016 31,659 29,423 44,319 50,017 54,594 Interest on long-term debt 7,696 10,996 15,885 16,358 26,378 34,075 34,361 32,049 33,638 25,262 Total governmental activities expenses 201,056 221,501 232,031 264,645 296,748 329,400 307,228 330,308 327,756 312,534 Business-type activities:

Electric 186,917 196,727 200,030 226,186 232,346 271,412 269,209 256,860 275,922 288,799 Water 29,715 33,921 36,709 39,486 42,108 47,570 53,931 55,402 56,390 56,715 Sewer 20,053 23,273 26,108 27,299 29,510 31,209 34,853 41,248 42,276 43,702 Refuse 11,577 11,510 12,841 14,546 16,490 18,430 18,425 20,527 20,046 19,979 Airport 1,151 1,088 1,185 1,004 1,201 1,418 1,734 2,206 2,320 2,646 Transportation 2,110 2,286 2,557 2,917 2,831 3,190 3,194 3,368 3,493 3,667 Public parking 1,392 1,389 824 2,701 3,762 4,093 5,095 4,024 4,401 4,984 Total business-type activities expenses 252,915 270,194 280,254 314,139 328,248 377,322 386,441 383,635 404,848 420,492 Total primary government expenses $ 453,971 $ 491,695 $ 512,285 $ 578,784 $ 624,996 $ 706,722 $ 693,669 $ 713,943 $732,604 $733,026 Program Revenues Governmental activities:

Charges for services:

General government $ 22,675 $ 26,160 $ 25,995 $ 24,683 $ 10,245 $ 23,969 $ 13,691 $ 12,933 $ 14,241 $ 14,662 Public safety 6,427 6,799 6,982 5,845 12,410 9,924 8,414 8,177 8,075 7,837 Highways and streets 20,867 22,286 23,108 25,412 30,563 19,695 14,391 17,847 16,985 16,532 Culture and recreation 8,304 5,056 7,002 7,716 8,302 4,370 3,168 2,367 3,180 4,622 Operating grants and contributions 12,716 12,935 16,140 13,150 12,101 15,024 23,313 32,853 21,127 31,581 Capital grants and contributions 2,144 1,136 5,292 18,618 10,557 115,982 69,745 23,395 38,138 54,476 Total governmental activities program revenues 73,133 74,372 84,519 95,424 84,178 188,964 132,722 97,572 101,746 129,710 Business-type activities:

Charges for services:

Electric 204,293 233,102 252,322 259,572 278,888 305,299 314,164 309,910 313,703 333,029 Water 28,637 32,382 34,002 37,613 47,080 49,855 54,923 57,534 62,084 65,206 Sewer 21,172 21,672 21,967 21,510 24,057 22,525 23,247 27,342 32,769 37,747 Refuse 11,795 13,759 14,492 15,160 15,833 16,289 18,394 18,712 19,134 19,588 Airport 1,046 1,051 1,088 1,162 1,263 1,423 1,232 1,315 1,342 1,524 Transportation 170 185 200 238 302 313 336 328 344 352 Public parking 2,385 2,760 2,961 2,837 3,431 3,717 4,332 4,876 5,205 4,803 Operating grants and contributions 3,663 1,723 2,261 2,704 1,939 3,308 1,929 2,487 2,159 2,738 Capital grants and contributions 4,976 26,390 32,317 29,293 40,066 29,215 17,288 6,838 7,337 21,164 Total business-type activities program revenues 278,137 333,024 361,610 370,089 412,859 431,944 435,845 429,342 444,077 486,151 Total primary government program revenues $ 351,270 $ 407,396 $ 446,129 $ 465,513 $ 497,037 $ 620,908 $ 568,567 $526,914 $545,823 $615,861 (coninued) 88

Table 2 City of Riverside Changes in Net Assets Last Ten Fiscal Years laturual basis of accunuitinig, QIIn~O thsn s, y Page. o Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 Net Revenues (Expense)

Governmental activities 127.923) $(147,129) $ (147,512) $(169,221) $ (212,570) $ (140,436) $ (174.506) $ (232,736) $(226,010) $(182,824)

Business-type activities 25,222 62,830 81,356 55,950 84,611 54.622 49,404 45,707 39.229 65,659 Total primary government net expense 102,701) $ (84,299) $ (66,156) $(113,271) $ (127.959) $ (85,814) $ (125.102) $ (187.029) $(186,781) $(117,165)

General Revenues and Other Changes in Net Asssets Governmental activities:

Taxes Sales $ 41,691 $ 46,624 $ 53,348 $ 57,522 $ 55,666 $ 50,526 $ 41,882 $ 39,645 $ 44,157 $ 47,701 Property 33,584 35,911 61,553 80,934 106,114 114,176 116,420 104,087 100,802 74,179 Utility Users 19.928 21,362 22,133 23,502 25,384 26,267 25,964 25,975 26.691 27,320 Franchise 3,811 4,261 4,481 4.813 5.031 4,972 5,144 4,477 4,937 4,883 Other 2.967 3,213 3.828 4,372 3,581 3.795 2,912 2,488 2,731 2,995 Intergovernmental, unrestricted 15,533 12.528 1,795 1,747 1.863 2,074 4,569 1,339 1,285 351 Unrestricted grants and contributions 18,710 15,220 39,653 29,743 Investment earnings 8,064 1,284 7,815 10,150 18,582 25,670 15,941 8,289 7,439 4,440 Miscellaneous 2,241 5,476 5,756 26.173 4,228 9,480 5,137 3,344 9,544 9,273 Transfers 18,218 10,302 14,918 25,576 31,171 32,326 42,087 40,153 34,378 40,679 Extraordinary items 149,617 Contributions (2.800t Total governmental activities 146,037 156,871 190,847 274,442 281,363 269,286 260.056 229,797 231,964 361,438 Business-type activities:

Unrestricted grants and contributions 15,972 - - - -

Investment income 9,115 5,016 7,548 11,259 16.988 22,756 23.402 21,271 17,548 11,405 Miscellaneous 3,849 4,553 7,362 18,700 3,498 4,931 4,590 7,447 4,808 3,110 Special item - (3,014) - - - -

Transfers (18.2181 (10,302) (14,918) (25,576) (31,171) (32,326) (42,087) (40,153) (34,378) (40,679)

Total business-type activities 10,718 (733) (3,022) 4,383 (10,685) (4,639) (14,095) (11.435) (12,022) (26,164)

Total primary government 156,755 156,138 187,825 278,825 270,678 264,647 245,961 218,362 219.942 335,274 Change in Net Assets Governmental activities $ 18,114 $ 9,742 $ 43,335 $ 105,221 $ 68,793 $ 128.850 $ 85,550 $ (2,939) $ 5,954 $ 178,614 Business-type activities 35,940 62,097 78,334 60,333 73,926 49,983 35,309 34,272 27,207 39,495 Total primary government $ 54.054 $ 71,839 $ 121.669 $ 165,554 $ 142,719 $ 178,833 $ 120,859 $ 31.333 $ 33,161 $ 218,109 1 The increase in total governmental activities net assets is due to the dissolution of the Redevelopment Agency.

89

Table 3 City of Riverside Fund Balances of Governmental Funds Last Two Fiscal Years (modified accrual basis of accounting, in thousands) 2011 20121'2 General fund Nonspendable $ 26,646 $ 25,720 Restricted 82,249 2,803 Assigned 15,589 6,380 Unassigned 36,359 39,347 Total general fund $ 160,843 $ 74,250 All other governmental funds Nonspendable $ 1,626 $ 1,539 Restricted:

Housing and redevelopment 96,571 26,911 Debt service 56,526 29,080 Transportation and public works 26,459 31,075 Other purposes 5,073 1,401 Total all other governmental funds $ 186,255 $ 90,006 The decrease in fund balance of the General Fund primarily relates to the transfer of land held for resale (in the amount of $76.3 million) to the Redevelopment Agency Capital Projects Fund, which had been transferred to the General Fund during the fiscal year ended June 30, 2011.

2 The decrease in fund balance of all other governmental funds relates to the dissolution of the Redevelopment Agency.

The City of Riverside implemented GASB 54 in the fiscal year ended June 30, 2011.

The City has elected to show two years of data for this schedule.

90

Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting) *IH LII*U*IlUOI I a*l* I *1 (modfiedaccual asisaccuntig)'in 4k,,, d P- -~,.

1 -f2 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Revenues:

Taxes $ 102,286 $ 113,118 $ 142,056 $ 170,638 $ 191,131 $ 200,438 $ 192,322 $ 177,255 $ 179,318 $ 156,593 Licenses and permits 14,394 11,343 14,389 16,351 12,984 10,027 7,368 6,899 7,657 9,292 Intergovernmental 43,829 42,609 42,568 55,178 47,934 79,423 86,873 60,550 61,082 66,618 Charges for services 8,878 10,046 11,299 11,538 11,914 11,325 9,099 9,570 10,720 11,774 Fines and forfeitures 2,095 2,188 2,006 2,098 2,778 4,573 6,213 7,512 8,928 6,293 Special assessments 6,324 10,259 6,272 6,247 6,170 5,245 5,431 5,464 6,014 6,276 Use of money and property 11,255 10,587 10,915 14,324 22,587 27,970 18,620 11,173 10,173 8,095 Miscellaneous 5,042 7,133 9,996 8,502 6,164 12,796 7,596 7,082 16,605 10,611 Total revenues $ 194,103 $ 207,283 $ 239,501 $ 284,876 $ 301,662 $ 351,797 $ 333,522 $ 285,505 $ 300,497 $ 275,552 Expenditures:

General government $ 22,031 $ 25,108 $ 21,800 $ 25,193 $ 39,093 $ 26,177 $ 25,995 $ 23,835 $ 26,090 $ 18,835 Public safety 96,487 107,386 117,267 126,007 139,739 151,773 145,802 138,594 140,994 150,878 Highways and streets 12,034 11,990 11,695 11,281 19,722 25,209 18,452 14,987 14,587 16,651 Culture and recreation 27,579 24,836 28,939 31,017 31,039 30,622 26,859 40,373 44,345 57,290 Capital outlay 39,098 50,333 64,127 121,978 149,325 171,952 180,394 131,908 105,689 75,482 Debt Service:

Principal 4,470 2,422 8,599 9,733 12,045 11,257 44,349 48,078 89,264 83,378 Interest 7,785 9,945 15,025 19,205 21,330 31,239 33,033 31,267 32,611 24,133 Debt issuance costs - 950 1,538 - 2,551 697 259 231 174 169 Total expenditures $ 209,484 $ 232,970 $ 268,990 $ 344,414 $ 414,844 $ 448,926 $ 475,143 $429,273 $ 453,754 $ 426,816 Excess of revenues over (under) expenditures $ (15,381) $ (25,687) $ (29,489) $ (59,538) $ (113,182) $ (97,129) $ (141,621) $(143,768) $(153,257) $(151,264)

(continued) 91

Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting) (in thousands) Page 2 of 2 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Other financing sources (uses):

Transfers in $ 36,202 $ 41,440 $ 49.944 $ 59,545 $ 84,306 $ 62,841 $ 100,797 $ 88.303 $ 214.631 $ 196,859 Transfers out (17.984) (31,338) (35,026) (33,969) (53,135) (30,515) (58.710) (48,150) (180,280) (156,305)

Sales of general capital assets 1,314 (675) 6,230 1,281 541 8,931 (5,798) 529 (1,629) (92)

Advances from other funds 81 -

Long-term obligation proceeds 750 247,594 85,578 20,969 295,190 164,408 30,425 52,360 104,875 34,940 Capital lease proceeds - - - - 3,116 2,000 -

Premiums (discounts) on bonds issued 113 4,455 (539) -

Payments to refunded bond agent * (58,657) (9,167) - - (148,975) - -

Total Other financing sources (uses) 20,363 198,364 97,672 47,826 331,357 56,690 66,714 95,619 139,597 75,402 Special item - pension contribution - (88,300) (32,141) - - - - - - -

Extraordinary items:

Dissolution of Riverside Redevlopment Agency:

Transfer of assets and liabilities to Successor Agency (130,174)

Transfer of assets from Successor Agency 28,121 Assumption of obligation (4,927)

Total extraordinary items S- - - (106,980)

Net change in fund balances $ 4,982 $ 84,377 $ 36,042 $ (11,712) $ 218,175 $ (40,439) $ (74,907) $ (48,149) $ (13,660) $ (182,842)

Debt service as a percentage of noncapital expenditures 6.545% 7.173% 15.301% 13.777% 14.011% 16.947% 26.058% 23.211% 32.757% 32.531%

(1) (2) (3) (4) (5)

(1) Increase in debt service related to the issuance of the 2003 and 2004 Redevelopment Agency Tax Allocation Bonds.

(2) Increase in debt service related to the issuance of the 2007 Redevelopment Agency Tax Allocation Bonds and 2008 Riverside Renaissance Certificates of Participation.

(3) Increase relates to $30 million refinancing of 2005B pension bonds that took place in May 2008, which became due in-full in June 2009. The $30 million Pension Bond Anticipation Notes have been paid in-full and immediately re-issued each year in 2009, 2010, 2011 and 2012.

(4) Increase in debt service related to one-time early redemption of $31.7 million of 2011 Redevelopment Tax Allocation Bonds and $9.1 million of loan proceeds that were drawn-down during the year and re-paid within the year.

(5) Includes one-time early redemption of $33.3 million of 2011 Redevelopment Tax Allocation Bonds.

92

Table 5 City of Riverside Business-Type Activities Electricity Revenue By Source Last Ten Fiscal Years (accrual basis of accountina) (in thousands)

(accrual basis of accountinal Other Fiscal Residential Commercial Industrial Wholesale Other Transmission Operating Total Year Sales Sales Sales Sales Sales Revenue Revenue Revenues 2003 $ 68,649 $ 48,974 $ 52,380 $ 17,806 $ 5,619 $ 8,661 $ 2,230 $ 204,319 2004 80,872 57,079 56,117 9,581 6,354 20,917 2,182 233,102 2005 79,786 59,998 59,157 15,249 6,337 20,213 12,697 253,437 2006 85,243 53,773 71,084 11,952 7,139 20,043 9,183 258,417 2007 94,426 55,421 83,698 9,913 5,713 20,097 9,536 278,804 2008 99,981 60,768 92,697 14,805 5,425 19,211 12,405 305,292 2009 105,525 65,532 97,100 4,674 5,684 18,673 12,250 309,438 2010 107,301 65,091 97,458 1,466 5,639 21,100 11,855 309,910 2011 107,792 64,039 102,067 124 5,529 22,091 12,061 313,703 2012 110,471 66,047 107,455 50 5,614 30,735 12,657 333,029 The City started receiving Transmission Revenue in 2003.

93

Table 6 City of Riverside Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (in thousands)

Utility Fiscal Sales Property Users Franchise Other Total Year Tax Tax 1 Tax Tax Tax Taxes 2003 41,691 33,584 19,928 3,811 2,967 101,981 2004 46,624 35,911 21,362 4,261 3,213 111,371 2005 53,348 61,553 22,133 4,481 1,795 143,310 2006 57,522 80,934 23,502 4,813 4,372 171,143 2007 55,666 101,469 25,384 5,031 3,581 191,131 2008 50,526 114,176 26,267 4,972 3,795 199,736 2009 41,882 116,420 25,964 5,144 2,912 192,322 2010 39,645 104,087 25,975 4,477 2,488 176,672 2011 44,157 100,802 26,691 4,937 2,731 179,318 2012 47,701 74,179 27,320 4,883 2,995 157,078 1 Decrease in property taxes in fiscal year 2012 relates to the dissolution of the Redevelopment Agency.

Upon the dissolution of the Redevelopment Agency on February 1, 2012, property taxes received by the Successor Agency are reported in a private-purpose trust fund and therefore are excluded from the activities of the primary government.

94

Table 7 City of Riverside Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands)

City Dissolved Redevelooment Aaencv1 Fiscal Total Year Taxable Taxable Direct Ended Less: Assessed Less: Assessed Tax June 30 Secured Unsecured Exemptions Value Secured Unsecured Exemptions Value Rate 2003 13,071,416 980,529 (2,406,961) 11,644,984 1,390,108 276,506 (27,690) 1,638,924 0.268 2004 14,188,658 845,858 (2,526,503) 12,508,013 1,508,478 228,775 (30,286) 1,706,967 0.264 2005 15,540,982 951,211 (2,751,844) 13,740,349 1,775,655 158,148 (33,654) 1,900,149 0.266 2006 17,557,341 1,058,995 (4,002,177) 14,614,159 2,914,600 210,025 (51,992) 3,072,633 0.309 2007 20,672,126 1,140,891 (5,417,388) 16,395,629 4,145,700 410,625 (93,261) 4,463,064 0.304 2008 23,618,776 1,291,972 (6,960,666) 17,950,082 5,509,441 553,124 (138,490) 5,924,075 0.334 2009 24,428,633 1,330,053 (7,515,667) 18,243,019 5,998,768 581,943 (224,025) 6,356,686 0.343 2010 22,644,262 1,299,353 (7,103,040) 16,840,575 5,598,484 564,825 (266,257) 5,897,052 0.349 2011 22,056,793 1,260,923 (6,920,720) 16,396,996 5,396,219 544,906 (268,323) 5,672,802 0.347 2012 22,031,328 1,264,151 (6,952,649) 16,342,830 5,395,632 572,153 (270,313) 5,697,472 0.348 Notes:

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 re-assessed 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.

Assessed valuations are based on 100 percent of estimated actual value.

1 In accordance with the timeline set forth in Assembly Bill 1X 26 (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of Califomia were dissolved and ceased to operate as a legal entity as of February 1, 2012.

Source: Riverside County Auditor-Controller 95

Table 8 City of Riverside Direct and Overlapping Property Tax Rates (Rate per $100 of Assessed Valuation)

Last Ten Fiscal Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Basic Levy 1 2 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Unified School Districts Debt Service 0.250 0.210 0.234 0.220 0.155 0.185 0.291 0.326 0.334 0.363 City of Riverside Debt Service - - 0.011 0.009 0.008 0.006 0.007 0.006 0.006 0.006 Eastern Municipal Water Improvement District 0.024 0.022 0.023 0.010 0.009 0.008 - - - -

Metropolitan Water District Original Area 0.007 0.006 0.006 0.005 0.005 0.005 0.004 0.004 0.004 0.004 Riverside City Community College Debt Service - - 0.018 0.018 0.018 0.013 0.013 0.012 0.015 0.017 Rubidoux Community Service Debt Service 0.004 0.003 0.003 - - - - - - -

Total Direct & Overlapping 3 Tax Rates 1.285 1.241 1.295 1.262 1.195 1.217 1.315 1.348 1.359 1.390 City's Share of 1% Levy Per Prop 13`4 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 General Obligation Debt Rate - - 0.011 0.009 0.009 0.006 0.007 0.006 0.006 0.006 7

Redevelopment Rate5' 1.007 1.006 1.006 1.005 1.005 1.005 1.004 1.004 1.004 1.004 Total Direct Rate6 0.268 0.264 0.266 0.309 0.304 0.334 0.343 0.349 0.347 0.348 In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of the various intergovernmental overlapping debt.

2 Includes: Alvord Unified School District, Corona Norco Unified School District, Jurupa Unified School District, Moreno Valley Unified School District, Riverside Unified School District and Val Verde Unified School District.

3 Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners.

4 City's share of 1% levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city. ERAF general fund tax shifts may not be included in tax ratio figures.

5 RDA rate is based on the largest RDA tax rate area (TRA) and includes only rate(s) from indebtedness adopted prior to 1989 per California State statue. RDA direct and overlapping rates are applied only to the incremental property values.

6 Total Direct Rate is the weighted average of all individual direct rates.

7 In accordance with the timeline set forth in Assembly Bill 1X 26 (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.

Source: Riverside County Assessor 2002/03 - 2011/12 Tax Rate Table.

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Table 9 City of Riverside Principal Property Taxpayers Current Year and Nine Years Aao (in thousands) 2012 2003 Percentage of Percentage of Taxable Total Taxable Taxable Total Taxable Assessed Assessed Assessed Assessed Property Owner Value Rank Value Value Rank Value Tyler Mall $ 186,759 1 0.8%

La Sierra University 126,273 2 0.6%

Riverside Healthcare System 107,935 3 0.5% $ 89,701 3 0.7%

State Street Bank & Trust Co of Calif 88,078 4 0.4% 92,987 2 0.7%

Rohr Inc 86,512 5 0.4% 75,965 5 0.6%

Press Enterprise Co 76,314 6 0.3% 46,941 8 0.4%

JSP Corona Pointe, LLC 74,739 7 0.3%

BRE Properties, Inc. 69,300 8 0.3%

Canyon Springs Marketplace Corp 67,991 9 0.3%

Riverside Plaza 67,343 10 0.3%

Mountain View Power Partners, LLC 88,300 4 0.7%

Metal Container Corp 48,209 7 0.4%

Ohio Teacher Retirement 146,436 1 0.8%

Toro Company 46,705 9 0.4%

Lyon Corona Pointe 54,743 6 0.4%

Mission Grove Park Apartments 42,833 10 0.3%

Totals $ 951,244 4.3% $ 732,820 5.4%

Notes:

The amounts shown above include assessed value data for both the City and the Redevelopment Agency.

Source: Riverside County Assessor 2011/12 and 2002/03 Combined Tax Rolls 97

Table 10 City of Riverside Property Tax Levies and Collections Last Ten Fiscal Years Last Ten Fiscal Years (in thousands)

(i husns Collections Fiscal Year Taxes Collected within the in Ended Levied for Fiscal Year of the Levy Subsequent Total Collections To Date June 30 Fiscal Year Amount Percentage of Levy Years Amount Percentage of Levy 2003 $ 25,809 25,479 98.72% 318 25,797 99.95%

2004 31,829 31,429 98.74% 376 31,805 99.93%

2005 36,825 36,332 98.66% 469 36,801 99.94%

2006 52,532 51,815 98.64% 681 52,496 99.93%

2007 69,246 67,046 96.82% 2,141 69,187 99.91%

2008 83,996 82,345 98.03% 1,556 83,901 99.89%

2009 86,251 84,134 97.55% 1,939 86,073 99.79%

2010 77,228 74,491 96.46% 2,476 76,967 99.66%

2011 74,608 72,327 96.94% 1,842 74,169 99.41%

2012 46,059 45,379 98.52% 45,379 98.52%

Note:

The table reflects amounts related to the City. In addition, it includes amounts related to the Redevelopment Agency through dissolution (1/31/12). The amounts collected by the Redevelopment Agency include monies that were passed-though to other agencies. Current tax levies are the original charge as provided by the County of Riverside. Current tax collections do not include supplemental taxes, aircraft taxes or other property taxes.

Source: Riverside County Auditor Controller's Office and City Finance Department 98

Table 11 City of Riverside Electricity Sold by Type of Customer Last Ten Fiscal Years (in millions of kilowatt-hours) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Type of Customer:

Residential 618.0 707.0 675.0 696.0 748.0 734.0 733.0 701.0 666.0 688.0 Commercial 451.0 522.0 530.0 474.0 456.0 441.0 433.0 406.0 400.0 413.0 Industrial 658.0 687.0 707.0 810.0 924.0 960.0 946.0 906.0 912.0 969.0 Wholesale sales 378.0 354.0 470.0 287.0 295.0 357.0 137.0 44.0 7.0 2.0 Other 49.0 52.0 50.0 58.0 39.0 34.0 33.0 32.0 31.0 31.0 Total 2,154.0 2,322.0 2,432.0 2,325.0 2,462.0 2,526.0 2,282.0 2,089.0 2,016.0 2,103.0 Total direct rate Monthly Base Rate 3.18 3.28 3.36 3.36 5.00 11.35 13.06 18.06 18.06 18.06 Rate per 250 KWH 20.98 21.65 22.20 22.20 22.20 25.88 25.88 25.88 25.88 25.88 1 Rates are based on a monthly base rate plus energy charge for the first 250 KWH.

The Utility charges an excess use rate over 250 KWH.

Source: Riverside Public Utilities, Finance Services 99

Table 12 City of Riverside Electricity Rates Last Ten Fiscal Years (Average Rate in Dollars per Kilowatt-Hour)

Fiscal Year Ended June 30 Residential Commercial Industrial Other 2003 0.10990 0.10779 0.07901 0.11869 2004 0.11439 0.10936 0.08167 0.12271 2005 0.11813 0.11321 0.08369 0.12768 2006 0.12222 0.11330 0.08798 0.12373 2007 0.12621 0.12164 0.09059 0.14493 2008 0.13613 0.13781 0.09658 0.16099 2009 0.14389 0.15122 0.10271 0.17169 2010 0.15307 0.16014 0.10756 0.17876 2011 0.16173 0.16001 0.11194 0.18089 2012 0.16068 0.15991 0.11088 0.17938 NOTE:

Rates are based on a monthly base rate plus an energy charge for the first 250 KWH. The Utility charges an excess use rate over 250 KWH.

Source: Riverside Public Utilities, Finance Services 100

Table 13 City of Riverside Top 10 Electricity Customers Current Year and Nine Years Ago 2012 2003 Percent of Percent of Electricity Total Electric Electricity Total Electric Electricity Customer Charges Revenues Charges Revenues Local University $10,005,990 3.46% N/A N/A Local Government 7,880,131 2.72% N/A N/A Local Government 7,343,622 2.54% N/A N/A Local School District 4,014,894 1.39% N/A N/A Corporation 3,951,734 1.36% N/A N/A Corporation 2,833,591 0.98% N/A N/A Hospital 2,410,157 0.83% N/A N/A Local School District 2,051,858 0.71% N/A N/A Corporation 1,963,047 0.68% N/A N/A Shopping Mall 1,942,657 0.67% N/A N/A

$44,397,681 15.34% N/A N/A Retail Sales Per Financial Statements $289,587,035 N/A - not available Source: Riverside Public Utilities, Finance Services 101

Table 14 City of Riverside Ratios of Outstanding Debt by Type Last Ten Fiscal Years (in thousands)

Governmental Activities General Pension Certificates Fiscal Obligation Redevelopment Revenue Assessment Obligation of Capital Notes/Loans Year Bonds Bonds Bonds Bonds Bonds Participation Leases Payable 2003 109,615 4,650 5,517 11,447 2004 20,285 131,590 89,540 58,706 8,938 11,057 2005 20,280 144,024 148,280 57,336 7,431 10,645 2006 19,858 140,195 146,470 55,571 6,008 10,215 2007 19,331 296,598 144,450 192,874 4,929 9,759 2008 18,774 292,244 142,170 200,273 9,391 9,040 2009 18,171 285,743 139,410 198,268 7,455 8,749 2010 17,533 278,867 136,050 211,212 6,303 9,291 2011 16,845 305,195 132,095 207,246 6,670 8,849 2012 16,107 127,480 202,703 5,220 4,000 Business-Type Activities Total Percentage Debt Fiscal Revenue Notes/Loans Capital Primary of Personal Per Year Bonds Payable Leases Government Income1 Capita1 2003 342,559 11,524 498 485,810 9.89% 1.79 2004 440,970 11,066 439 772,591 15.02% 2.79 2005 419,581 10,459 392 818,428 14.98% 2.91 2006 509,577 9,841 317 898,052 15.47% 3.13 2007 482,929 9,211 253 1,160,334 18.67% 4.01 2008 720,749 8,569 211 1,401,421 21.51% 4.80 2009 670,512 7,915 2,574 1,342,931 20.15% 4.54 2010 968,393 7,249 2,151 1,637,049 24.83% 5.44 2011 1,071,554 76,747 1,720 1,826,921 27.58% 6.01 2012 1,041,739 73,821 1,332 1,472,402 21.62% 4.77 1 These ratios are calculated using personal income and population data for the prior calendar year.

Source: City of Riverside Notes to Financial Statements and Statistical Table 19.

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Table 15 City of Riverside Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (in thousands, except per capita amount)

General Certificates Tax Percent of Fiscal Obligation Pension of Allocation Assessed Per 2 Year Bonds Bonds Participation Bonds Total Value 1 Capita 2003 4,650 109,615 114,265 0.98% 422 2004 20,285 89,540 58,706 131,590 300,121 2.40% 1,083 2005 20,280 148,280 57,336 144,024 369,920 2.69% 1,316 2006 19,858 146,470 55,571 140,195 362,094 2.48% 1,264 2007 19,331 144,450 192,874 296,598 653,253 3.98% 2,260 2008 18,774 142,170 200,273 292,244 653,461 3.64% 2,239 2009 18,171 139,410 198,268 285,743 641,592 3.52% 2,167 2010 17,533 136,050 211,212 278,867 643,662 3.82% 2,140 2011 16,845 132,095 207,246 305,195 661,381 4.03% 2,175 2012 16,107 127,480 202,703 346,290 2.12% 1,122 Notes:

General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (which, the City has none.)

'Assessed value has been used because the actual value of taxable property is not readily available in the State of California.

2 These ratios are calculated using population data for the prior calendar year.

Source: City of Riverside Notes to Financial Statements and Reserve Cash Reconciliation maintained by City Finance Department.

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Table 16 City of Riverside Direct and Overlapping Debt As of June 30, 2012 Page 1 of 2 2011-12 Assessed Valuation: $ 22,040,302,315 Less Dissolved Redevelopment Agency Incremental Valuation: 5,697,472,391 Adjusted Assessed Valuation: $ 16,342,829,924 City's Share Total Debt  % Applicable (1) of Debt Direct and Overlapping Tax and Assessment Debt:

Metropolitan Water District $ 1,965,450 0.919% $ 1,806,249 Riverside City Community College District 230,858,371 28.657 66,157,083 Alvord Unified School District 205,160,854 62.393 128,006,074 Riverside Unified School District 147,135,000 84.115 123,762,605 Corona-Norco Unified School District 274,072,570 0.002 5,481 Jurupa Unified School District 51,252,972 0.003 1,538 Moreno Valley Unified School District 41,983,521 6.075 2,550,499 City of Riverside 16,107,000 100. 16,107,000 Alvord Unified School District Community District No.2006-1 8,340,000 69,778 5,819,485 Riverside Unified School District Community Facilities Districts 92,660,000 89.192-100. 92,508,688 City of Riverside Community Facilities Districts 13,600,000 100. 13,600,000 City of Riverside 1915 Act Bonds 29,360,000 100. 29,360,000 Total Direct and Overlapping Tax and Assessment Debt: $ 479,684,702 Ratios to 2011-12 Assessed Valuation:

Direct Debt ($16,107,000) ............................................. 0.07%

Total Direct and Overlapping Tax and Assessment Debt ...... 2.14%

(continued) 104

Table 16 City of Riverside Direct and Overlapping Debt As of June 30, 2012 Page 2 of 2 Direct and Overlapping General Fund Debt:

Riverside County General Fund Obligations $ 655,042,180 11.440% $ 74,936,825 Riverside County Pension Obligations 357,540,000 11.440 40,902,576 Riverside County Board of Education Certificates of Participation 5,055,000 11.440 578,292 Alvord Unified School District Certificates of Participation 2,027,061 62.393 1,264,744 Corona-Norco Unified School District Certificates of Participation 30,035,000 0.002 601 Jurupa Unified School District Certificates of Participation 7,220,000 0.003 217 Moreno Valley Unified School District Certificates of Participation 19,535,000 6.075 1,186,751 Riverside Unified School District General Fund Obligations 13,260,000 84.115 11,153,649 City of Riverside General Fund Obligations 202,703,000 100. 202,703,000 (1)

City of Riverside Pension Obligations 127,480,000 100. 127,480,000 Total Gross Direct and Overlapping General Fund Debt 460,206,655 Less: Riverside County supported obligations 1,418,092 Total Net Direct and Overlapping General Fund Debt $ 458,788,563 Total Direct Debt $ 346,290,000 Total Gross Overlapping Debt $ 593,601,357 Total Net Overlapping Debt $ 592,183,265 Gross Combined Total Debt $ 939,891,357 (2)

Net Combined Total Debt $ 938,473,265 (1) Excludes issues to be sold.

(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Qualified Zone Academy Bonds are included based on principal due at maturity.

Ratios to Adjusted Assessed Valuation:

Combined Direct Debt ($346,290,000) .............................. 2.12%

Gross Combined Total Debt .............................................. 5.75%

Net Com bined Total Debt ................................................. 5.74%

Overlapping governments are those that coincide at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

Source: The information in this table is provided by California Municipal Statistics, Inc., except for the assessed valuation information which was provided by the County of Riverside Auditor-Controller.

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Table 17 City of Riverside Legal Debt Margin Information Last Ten Fiscal Years (in thousands) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Assessed valuation $11,644,984 $12,508,013 $13,740,349 $14,614,159 $16,395,629 $17,950,082 $18,243,019 $16,840,575 $ 16,396,996 $16,342,830 Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%

Adjusted assessed valuation 2,911,246 3,127,003 3,435,087 3,653,540 4,098,907 4,487,521 4,560,755 4,210,144 4,099,249 4,085,708 Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

Debt limit 436,687 469,050 515,263 548,031 614,836 673,128 684,113 631,522 614,887 612,856 Total net debt applicable to limit: - 20,285 20,280 19,858 19,331 18,774 18,171 17,533 16,845 16,107 Legal debt margin 436,687 448,765 494,983 528,173 595,505 654,354 665,942 613,989 598,042 596,749 Total net debt applicable to the limit as a percentage of debt limit 0.0% 4.3% 3.9% 3.6% 3.1% 2.8% 2.7% 2.8% 2.7% 2.6%

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 upon 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 a the time that the legal debt margin was enacted by the State of California for local governments located within the State.

Source: City of Riverside, Statistical Table 7 and Notes to Financial Statements.

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Table 18 City of Riverside Pledged-Revenue Coverage Business Type Activity Debt Last Ten Fiscal Years (in thousands)

Electric Revenue Bonds Water Revenue Bonds Less: Net Less: Net Fiscal Pledged Operating Available Debt Service Pledged Operating Available Debt Service 1

Year Revenue Expenses' Revenue Principal Interest Coverage Revenue' Expenses' Revenue Principal Interest Coverage 2003 211,553 157,450 54,103 7,840 10,966 2.88 36,837 19,928 16,909 3,895 2,720 2.56 2004 239,842 168,162 71,680 10,780 10,183 3.42 47,093 23,767 23,326 4,010 2,622 3.52 2005 262,350 164,159 98,191 14,555 12,143 3.68 45,348 26,436 18,912 4,045 2,591 2.85 2006 265,086 184,421 80,665 15,015 15,245 2.67 66,226 27,028 39,198 3,875 3,790 5.11 2007 289,784 187,700 102,084 18,815 14,200 3.09 55,699 29,461 26,238 4,300 3,454 3.38 2008 314,733 219,680 95,053 19,460 16,790 2.62 67,312 33,827 33,485 4,355 4,275 3.88 2009 320,447 202,904 117,543 20,572 24,941 2.58 60,886 35,639 25,247 4,473 6,728 2.25 2010 320,560 199,040 121,520 21,574 22,572 2.75 61,985 35,953 26,032 4,533 8,008 2.08 2011 319,177 212,878 106,299 23,029 25,087 2.21 84,328 35,220 49,108 4,799 9,263 3.49 2012 340,098 221,876 118,222 25,174 27,630 2.24 73,557 35,309 38,248 4,708 8,872 2.82 2

Sewer Revenue Bonds Less: Net Fiscal Pledged Operating Available Debt Service 1

Year Revenue Expenses' Revenue Principal Interest Coverage 2010 31,470 26,865 4,605 666 151 5.64 2011 37,772 27,575 10,197 692 125 12.48 2012 42,562 29,632 12,930 692 5,471 2.10 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

1 Amounts have been calculated in accordance with the provisions set forth in the debt covenants. Total operating expenses exclusive of depreciation.

2 $240,910 of Sewer Revenue Bonds were issued August 6, 2009 The City of Riverside does not have any pledged revenue related to Govermental Activities.

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Table 19 City of Riverside Demographic and Economic Statistics Last Ten Calendar Years Per Personal2 Capita Calendar Income Personal Unemployment Year Population1 (in thousands) Income 2 Rate 3 2002 270,805 4,914,404 18,147 6.5 2003 277,177 5,145,118 18,563 6.6 2004 281,192 5,462,823 19,427 6.1 2005 286,572 5,806,339 20,261 5.4 2006 289,045 6,214,628 21,501 5.1 2007 291,814 6,514,489 22,324 6.1 2008 296,038 6,665,142 22,514 8.6 2009 300,769 6,592,294 21,918 13.7 2010 304,051 6,623,143 21,783 14.8 2011 308,511 6,811,923 22,080 13.7 Sources:

1 California State Department of Finance.

2 Demographic Estimates for 2002-2009 are based on the last available Census. Projections are devloped by incorporating all fo the prior census data released to date. Demographic Data is totaled from Census Block Groups that overlap the City's boundaries. Demographic Estimates for 2010 and later are per the US Cenus Bureau, most recent American Community Survey.

3 State of California Empolyment Development Department.

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Table 20 City of Riverside Principal Employers Current Year and Nine Years Ago 2012 2003 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment County of Riverside 11,187 1 7.8% N/A N/A N/A Riverside Unified School District 5,580 3 3.9% N/A N/A N/A University of California 5,554 2 3.9% N/A N/A N/A Kaiser 4,500 4 3.1% N/A N/A N/A City of Riverside 2,693 5 1.9% N/A N/A N/A Riverside Community College District 2,087 7 1.4% N/A N/A N/A Riverside Community Hospital 1,880 6 1.3% N/A N/A N/A Alvord Unified School District 1,654 9 1.1% N/A N/A N/A Riverside County Office of Education 1,627 8 1.1% N/A N/A N/A Parkview Community Hospital 1,350 10 0.9% N/A N/A N/A Total 38,112 26.5% N/A N/A N/A - not available Source: City of Riverside, Development Department 109

Table 21 City of Riverside Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Function General government 314.39 318.36 331.88 377.15 412.22 436.35 439.10 433.40 431.40 440.40 Public safety Police 569.65 567.83 568.83 589.33 618.33 637.33 591.93 589.93 589.93 599.93 Fire 218.65 219.65 221.11 221.73 251.73 254.21 254.21 255.46 255.46 255.46 Firefighters and Police Officers 561.00 557.00 557.46 566.46 620.46 632.46 633.46 632.46 632.46 632.46 Highways and streets 280.10 285.10 281.35 262.35 286.35 318.35 369.65 349.50 348.11 357.11 Sanitation 44.49 48.49 48.49 59.49 60.29 64.29 58.60 59.00 56.00 56.00 Culture and recreation 301.97 302.92 300.92 311.45 324.26 339.52 340.71 328.07 328.07 341.22 Airport 6.00 6.00 6.00 6.00 7.00 7.00 7.00 7.00 - 9.50 9.50 Water 123.00 130.00 130.00 133.00 142.00 167.00 167.00 177.65 180.15 181.15 Electric 291.60 295.60 305.60 337.60 351.35 404.60 408.10 419.45 448.50 452.50 Total 2,149.85 2,173.95 2,194.18 2,298.10 2,453.53 2,628.65 2,636.30 2,619.46 2,647.12 2,693.27 In fiscal year 2009 the Crossing Guards program (46.40 FTEs) was moved from the Police Department to the Public Works Department (highways and streets).

Source: City of Riverside, Finance Department 110

Table 22 City of Riverside Operating Indicators by Function Last Ten Fiscal Years Function/Program 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Police Arrests 10,541 11,951 11,280 10,093 9,827 9,367 10,150 8,690 8,118 7,736 Fire Number of calls answered 24,886 25,876 26,505 26,696 27,458 27,429 26,397 26,484 27,322 27,637 Inspections 14,229 16,306 17,028 19,261 7,261 10,812 7,638 7,234 6,505 10,074 Public works:

Street resurfacing (miles) 67.39 62.37 102.45 51.26 73.40 26.27 18.90 20.00 21.25 18.43 Parks and recreation Number of recreation classes 14,787 15,135 15,195 16,272 19,079 22,146 21,884 27,762 37,303 43,318 Number of facility rentals 26,854 27,014 27,074 27,483 32,980 35,076 36,822 34,565 42,638 43,288 Water Number of accounts 60,625 61,668 62,492 62,985 63,431 63,494 64,062 64,231 64,349 64,367 Annual consumption (ccf) 29,283,851 30,596,320 27,875,253 28,865,030 32,110,208 30,583,266 29,721,236 26,687,271 25,902,439 27,062,142 Electric Number of accounts 99,018 100,766 103,463 104,294 105,226 106,015 106,385 106,335 106,855 107,321 Annual consumption (kwh) 2,154 2,322 2,432 2,359 2,462 2,526 2,282 2,089 2,016 2,103 Sewer.

New connections 5,825 7,034 9,621 16,717 15,423 16,412 18,765 16,971 17,746 18,166 Average daily sewage treatment 33.15 35.24 38.07 35.91 32.50 32.10 33.00 33.29 30.06 29.84 (millions of gallons)

Inspections were not tracked prior to 2003 2Amounts expressed in millions N/A - not available Source: City of Riverside, various departments 111

Table 23 City of Riverside Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2003 2004 2005(1) 2006 2007 (2) 2008 2009 2010 2011 2012 Function Public Safety Police Stations 2 2 2 3 3 3 3 3 3 3 Substations 7 11 7 5 4 4 5 4 4 4 Helicopters 4 4 4 4 4 4 4 4 4 4 Fire Stations 13 13 13 13 14 14 14 14 14 14 Active apparatus 30 30 30 29 30 30 30 30 26 27 Reserve apparatus 6 5 5 6 6 6 7 7 9 9 Training facilities 1 1 1 1 1 1 1 1 1 1 Highways and streets Streets (miles) 819.00 829.00 836.00 845.35 852.04 864.68 866.89 867.96 868.39 868.70 Streetlights 28,246 28,401 28,581 28,847 29,028 29,312 29,675 29,757 29,868 29,933 Traffic signals 320 322 322 353 358 363 365 362 362 365 Culture and recreation Parks acreage 2,534.00 2,500.00 2,534.00 2,534.00 2,773.00 2,773.00 2,773.00 2,773.00 2,811.00 2,811.00 Community centers 10 10 11 11 11 11 11 11 11 11 Playgrounds 30 26 26 27 38 38 41 41 41 41 Swimming pools 6 6 7 6 7 7 7 7 7 7 Softball & baseball diamonds 34 34 35 33 44 44 44 44 49 51 Library branches 7 5 5 6 6 6 7 7 8 8 Museum exhibit-fixed 6 11 8 7 13 8 6 5 8 5 Museum exhibit-special - 4 1 - 2 5 2 2 2 1 Water Fire hydrants 6,763 6,763 6,926 7,127 7,187 7,381 7,523 7,593 7,632 7,682 Sewer Sanitary sewers (miles) 745 755 765 775 785 794 794 820 823 829 Electric Miles of overhead distribution system 593.3 539.0 531.0 527.0 528.0 523.5 522.0 519.0 517.0 515.0 Miles of underground system 538.2 608.0 622.0 663.0 704.0 741.6 769.0 782.0 791.0 804.0 Source: City of Riverside, various departments (1) During the 2004/05 fiscal year, four police substations closed.

(2) Museum Fixed Exhibits - In 2007, the Riverside Municipal Museum remodeled a number of the spaces within the museum allowing the museum the opportunity to debut new exhibitions and to display more permanent collections in addition to partnering with others on exhibits that were available that year.

112

ANAHEIM, CALIF RNIA Al cof ANCIAL YAR O ANJ Y EAR :EN D ED J]UN RED BY EPARTM OF F

CITY OF ANAHEIM CITY COUNCIL GAIL EASTMAN HARRY S. SIDHU, P.E. Tom TAIT LORRI GALLOWAY KRIS MURRAY COUNCIL MEMBER MAYOR PRO TEM MAYOR COUNCIL MEMBER COUNCIL MEMBER

INTRODUCTORY SECTION INTRODUCTORY SECTION

CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2012 Page SECTION INTRODUCTORY Letter of Transmittal 1 GFOA Certificate of Achievement for Excellence in Financial Reporting 5 Organization Chart 7 Administrative Personnel 8 FINANCIAL SECTION Independent Auditors' Report 9 Management's Discussion and Analysis (Unaudited) 11 Basic Financial Statements Government-wide Financial Statements Statement of Net Assets 23 Statement of Activities 25 Fund Financial Statements Balance Sheet - Governmental Funds 27 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 28 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 29 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 30 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Budgetary Basic Actual - General Fund 31 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Budgetary Basic Actual - Housing Authority 32 Statement of Fund Net Assets - Proprietary Funds 33 Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds 35 Statement of Cash Flows - Proprietary Funds 36 Statement of Fiduciary Net Assets 39 Statement of Changes in Fiduciary Net Assets 41 Notes to the Financial Statements 43 Required Supplementary Information (Unaudited) 77 Combining Individual Fund Statements and Schedules Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds by Fund Type 79 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds by Fund Type 80 Combining Balance Sheet - Nonmajor Special Revenue Funds 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) - Nonmajor Special Revenue Funds 83 Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) - Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds 85 (continued)

CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2012 (continued)

Page Combining Balance Sheet - Nonmajor Debt Service Funds 90 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 91 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Debt Service Funds 92 Combining Balance Sheet - Nonmajor Capital Projects Funds 94 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) - Nonmajor Capital Projects Funds 95 Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficit) - Budget and Budgetary Basis Actual - All Capital Projects Funds 96 Internal Service Funds Combining Statement of Fund Net Assets - Internal Service Funds 99 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service Funds 100 Combining Statement of Cash Flows - Internal Service Funds 101 Fiduciary Funds Statement of Changes in Fiduciary Assets and Liabilities - Agency Fund - Mello-Roos 103 STATISTICAL SECTION (Unaudited)

Net Assets by Component - Last Ten Fiscal Years 106 Changes in Net Assets - Last Ten Fiscal Years 107 Governmental Activities Tax Revenues by Source - Last Ten Fiscal Years 109 Fund Balances of Governmental Funds - Last Ten Fiscal Years 110 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 111 General Government Tax Revenues by Source - Last Ten Fiscal Years 112 Assessed Value of Taxable Property - Last Ten Fiscal Years 113 Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years 114 Principal Property Tax Payers - Current Year and Nine Years Ago 115 Property Tax Levies and Collections - Last Ten Fiscal Years 116 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 117 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years 118 Direct and Overlapping Governmental Activities Debt - as of June 30, 2012 119 Legal Debt Margin - Last Ten Fiscal Years 121 Pledged-Revenue Coverage - Last Ten Fiscal Years 122 Demographic and Economic Statistics - Last Ten Fiscal Years 124 Principal Employers - Current Year and Eight Years Ago 125 Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years 127 Operating Indicators by Function - Last Nine Fiscal Years 128 Capital Assets Statistics by Function - Last Nine Fiscal Years 129 City of Anaheim Map 132

ECONOMIC CONDITION AND OUTLOOK City of Anaheim, California Finance Department The City is located in northwestern Orange County, about 28 miles southeast of downtown Los Angeles and 90 miles north of San Diego. The City lies on a coastal plain, which is bordered by the Pacific Ocean to the west and the Santa Ana Mountains to the east. The City is the oldest and most populous city in Orange County. Anaheim is home to the Disneyland Resort, the Anaheim Convention Center, and two major league professional sports teams-the Los Angeles Angels of Anaheim American League Baseball team that utilizes the Angel Stadium of Anaheim, and the December 19, 2012 Anaheim Ducks National Hockey League team that utilizes the Honda Center.

Anaheim and Orange County are home to a wide spectrum of industries-more than To the Honorable Mayor and City Council 4,600 manufacturing plants are located in the county, most notably defense and City of Anaheim aerospace, biomedical, electronics, machinery, and computer product Anaheim, California manufacturers. The City has over 17,000 active business licenses, of which 15,000 are businesses operating within the City's boundaries In accordance with the Charter of the City of Anaheim (City), we are submitting the As the City continues to attract population growth and economic expansion, its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, municipal services are constantly being improved to serve residential and business 2012. Responsibility for both the accuracy of the data and the completeness and needs. This growth in City service demand presents the City with significant fairness of the presentation, including all disclosures, rests with the City. We believe challenges; and if the high level of service is to be maintained, the City will need to the data, as presented, is accurate in all material aspects; that it is presented in a continue to explore new methods of obtaining financial resources and more efficient manner designed to fairly set forth the financial position and results of operations of methods to deliver services. The unemployment rate in the Orange County, California the City, as measured by the financial activity of its various funds; and that all area for June 2012 was 7.9%, which is below both the national average (8.2%) and disclosures necessary to enable the reader to gain maximum understanding of the the state average (10.7%l.

City's financial activities have been included.

Tourism related spending provides significant discretionary revenue to the City of The City Charter requires an annual audit of the financial statements of the City by an Anaheim, and the City closely monitors and projects trends related to this market.

independent certified public accountant. Accordingly, this year's audit was Revenue from tourism strengthened in fiscal year 2012, and local economic forecasts completed by KPMG LLP. In addition to meeting the requirements set forth in the City expect modest growth to continue in fiscal year 2013. The City's revenue from sales Charter, the audit was also designed to meet the requirements of the Single Audit Act and use taxes began its recovery in fiscal year 2011 and is expected to continue Amendments of 1996 and related OMB Circular A-] 33. The auditors' report on the modest growth in fiscal year 2013.

basic financial statements is included in the financial section of this report. The auditors' reports related specifically to the single audit are presented as a separate MAJOR INITIATIVES document.

City management, under the direction of the Mayor and City Council, identifies Management's discussion and analysis (MD&A) immediately followed the priorities that will determine the path of the City's future. Initiatives are reevaluated independent auditor's report and provides a narrative introduction, overview, and regularly, and new ones added, to ensure that they are consistent with the priorities analysis of the basic financial statements. MD&A complements this letter of of our policy body and the community. Through a commitment to position the City transmittal and should be read in conjunction with it. of Anaheim to better fulfill its mission of delivering outstanding municipal services that are responsive to our entire community, the City of Anaheim is continuing its I

CITY OF ANAHEIM tradition of innovation, ingenuity, and opportunity by focusing on community needs, Anaheim Anytime and the City's 311 hotline also provide residents with seamless building neighborhood connections, and governing for results that strengthen access to services at any time of day. In our continued commitment to excellence in communities. The City's dedication to improvement and modernization has created customer service, we have made accessing Anaheim services instantaneous through an environment where residents and businesses are free to choose how best to enjoy the My Anaheim smartphone application. The application can be used to find events all that Anaheim has to offer. in Anaheim or request any City service. Anaheim's efforts at outreach extend beyond event notification or the submission of service requests. In support of the Anaheim COMMUNITY FOCUS: The City of Anaheim is dedicated to ensuring an equitable Police Department's (APD) problem-solving and community policing philosophy, the and sustainable future for all Anaheim residents and businesses by investing in City's newly developed crime mapping tool helps Anaheim residents learn about and cultural and neighborhood amenities, parks and recreational spaces, and thriving prevent crime in their neighborhoods. In addition, through the Hi Neighbor program, commercial corridors to improve the livability and sustainability of the community. the City has partnered with the Community and Regional Resilience Institute (CARRI),

Foremost, the City understands that Anaheim neighborhoods are unique, ranging as one of seven leading communities in the nation to pilot their Community from the historical to the contemporary, and as such the needs of our neighborhoods Resilience System (CRS) in an effort to better prepare Anaheim to respond to and vary as well. Because the City takes pride in its neighborhoods and embraces the recover from disasters. Although the CRS is a critical piece of the City's emergency diversity of our residents, significant resources have been dedicated to restore funding preparedness program, in the case of an emergency, the City's Anaheim Alert to the Neighborhood Improvement Fund to pre-recession levels. Because general emergency text messaging system will notify residents of fire evacuations, power economic conditions continue to improve, the City is expanding library services at outages, public safety information, traffic information, road closures and other time the newly built Ponderosa Library; developing parks, trails, and open spaces sensitive news.

including construction and renovation of Miraloma Park and Community Center; and is completing all-inclusive neighborhood maintenance projects to improve the GOVERNING FOR RESULTS:The impacts of "The Great Recession" continue to have drivability, reliability, and aesthetics of Anaheim roads, sidewalks, and streetscapes. an impact on g6vernment finances. Although the national economy appears to have turned the corner, the City has taken a balanced approach in response to the ongoing The City is always searching for new and innovative ways to enhance the Anaheim economic climate to ensure that core services are protected while continuing to experience for our residents, visitors, and businesses. The Anaheim Regional invest in the community. Providing residents with safe and vibrant neighborhoods is Transportation Intermodal Center (ARTIC) and the Anaheim Rapid Connection (ARC) a top priority of the Anaheim City Council, and the City is continuing to manage the projects are further illustration of the City's commitment to developing transportation economic environment by making prudent adjustments that make it possible to solutions for the region, while relieving traffic congestion and paving the way for new maintain and, in some instances, enhance service levels for maximum community investment and economic growth in Anaheim. Combined with the efforts of the outcomes. To that end, the City has dedicated more resources to deter and abate Anaheim Regulatory Relief Task Force to help foster more economic freedom and less graffiti in Anaheim in a committed effort to remove all reports of graffiti within 24 red-tape for Anaheim's business community, the City is situating itself as a business hours.

friendly, community-oriented service organization; one that is well positioned to meet the challenges ahead. The City is also making considerable investments in public safety even at a time when the state, and the nation itself, are making or contemplating significant service and NEIGHBORHOOD CONNECTIONS: The City of Anaheim has a rich and storied employee reductions. The Anaheim Police Department is continuing its proactive tradition of strong and involved neighborhoods that actively participate in making our efforts to intervene on behalf of at-risk youth through the expansion of the Gang community a better place. Over the years, the City has been a leader in adapting the Reduction Intervention Program (GRIP). The GRIP program focuses on community latest trends in technology and social media to develop connections between the City engagement and education of faculty parents, and students on the risks and impacts and its residents. In an effort to build robust networks of neighborhoods, through the of gang behavior. Moreover, APD has a host of school and neighborhood based City of Anaheim's Hi Neighbor program residents can now connect with one another crime prevention programs that result in a Police Department that is actively engaged like never before through Nextdoor, a free and secure neighbor-to-neighbor social in the community to not only enforce the law but to prevent criminal activity.

networking site. With Nextdoor, Anaheim residents can meet daily to find recommendations on local businesses, share information, ask and answer questions The Anaheim Fire Department (AF&R) is reorganizing into a modern and efficient fire of each other, get updates on City events, and much more in a friendly, safe, active, and rescue operation dedicated, above all else, to ensuring the safety and welfare of and fun online environment. the public through the services it provides. AF&R is participating in the industry 2

CITY OF ANAHEIM leading Commission on Fire Accreditation International's (CFAI) accreditation for RELEVANT FINANCIAL POLICIES: Over the years, through sound fiscal public safety agencies to ensure that Anaheim residents receive the very best in fire management, the City has positioned itself well to weather economic downturns, services. Through the accreditation process, AF&R will complete a comprehensive create a positive atmosphere for economic development, and allow flexibility in self-assessment and evaluation model that will enable the Department to examine addressing budgetary challenges. As of June 30, 2012, the City's General Fund has a past, current, and future service levels and performance, and compare them to spendable, unrestricted fund balance of $22.6 million, which represents 10% of total industry best practices. In addition to organizational improvements, AF&R has expenditures. Traditionally, the policy has been to maintain General Fund reserves at acquired new vehicles and equipment in order to provide Anaheim firefighters the a minimum of 7 to 10% of expenditures.

tools and resources they need to respond to hazards of any scale while providing timely and responsive emergency services to Anaheim neighborhoods. Further, the City has a long-standing practice of recognizing and reserving for known and anticipated liabilities. The City fully funds its compensated absences and self FINANCIAL INFORMATION insurance liabilities. Additionally, the City has established an irrevocable trust for other post-employment benefits (also known as retiree medical) and continues to Management of the City is responsible for establishing and maintaining internal make the annual required contribution (ARC) to ensure this future obligation is fully control designed to ensure that the assets of the government are protected from loss, funded.

theft, or misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with U.S. generally accepted LONG-TERM FINANCIAL PLANNING: On June 19, 2012, the City Council adopted accounting principles. Internal control is designed to provide reasonable, but not the fiscal year 2013 budget. Additionally, as a companion to approving the budget absolute, assurance that these objectives are met. The concept of reasonable plan, a five-year Capital Improvement Plan was presented to the City Council. The assurance recognizes that: (1) the cost of a control should not exceed the benefits five-year plan links anticipated expenditures for infrastructure development with likely to be derived; and (2) the valuation of costs and benefits requires estimates and community needs and desires, and provides a citywide perspective of recommended judgments by management. projects and proposed funding sources. The Capital Improvement Plan was finalized in June 2012, and totaled $694.2 million for the five-year fiscal period ending June This report consists of management's representations concerning the finances of the 30, 2017. The five-year Capital Improvement Plan has been submitted and annually City. As a result, management assumes full responsibility for the completeness and updated, in its present form, since 1982, for effective long-range planning purposes.

reliability of all of the information presented in this report. Management asserts that, It is City Management's belief that these two plans give City Council members an to the best of their knowledge and belief, this financial report is complete and reliable expanded opportunity to set policy and provide direction for implementation, in all material respects. resulting in improved management efficiency and improved financial results.

BUDGETARY CONTROLS: The City maintains budgetary controls, the objective of AWARD which is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund, GOVERNMENT FINANCE OFFICERSASSOCIATION OF THE UNITED STATES AND special revenue funds, debt service funds, capital projects funds, and all the CANADA (GFOA) CERTIFICATE OFACHIEVEMENT AWARD: The GFOA awarded a proprietary funds are included in the annual appropriated budget. The level of Certificate of Achievement for Excellence in Financial Reporting to the City of budgetary control (that is, the level at which expenditures cannot legally exceed the Anaheim, California, for its comprehensive annual financial report for the fiscal year appropriated amount) is established at the departmental level. The City also maintains ended June 30, 2011. This was the 36th consecutive year that the City has achieved an encumbrance accounting system as one technique of accomplishing budgetary this prestigious award (fiscal years ended June 30, 1976 through 2011). In order to be control. Encumbrances generally are re-appropriated as part of the following year's awarded the Certificate of Achievement, a government must publish an easily budget. readable and efficiently organized comprehensive annual financial report. This report must satisfy both U.S. generally accepted accounting principles and applicable legal requirements.

3

CITY OF ANAHEIM A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to conform to the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate.

ACKNOWLEDGMENTS The preparation of this report oil a timely basis is a team effort involving many dedicated people across the entire organization. I would like to extend a special thanks to the talented finance professionals throughout the City, led by Peggy Au, Financial Accounting Manager. Appreciation is also expressed to Mayor Tait and former Mayor ProTein Harry Siclhu for their significant contributions as members of the Audit Committee. In closing, without the leadership and support of the City Council, preparation and results of this report would not have been possible. Its leadership has made possible the implementation of these important and innovative concepts in fiscal management by the City.

Respectfully submitted, Bob Wingenroth Deborah A. Moreno City Manager Finance Director 4

CITY OF ANAHEIM The Government Finance Officers Association of the United Certificate of States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City Achievement of Anaheim, California for its Comprehensive Annual for Excellence Financial Report for the fiscal year ended June 30, 2011. The Certificate of Achievement is a prestigious national award in Financial recognizing conformance with the highest standards for Reporting preparation of state and local government financial reports.

Presented to In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and City of Anaheim efficiently organized Comprehensive Annual Financial California Report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting For its Comprehensive Annual principles and applicable legal requirements.

Financial Report for the Fiscal Year Ended A Certificate of Achievement is valid for a period of one year June 30, 2011 only. We believe our current report continues to conform to ACertificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Certificate of Achievement program requirements, and we Association of the United States and Canada to are submitting it to GFOA.

government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting.

CZAW President Executive Director 5

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CITY OF ANAHEIM 12 US ud Gt iti Nit Lhc1,t(ut 7

CITY OF ANAHEIM Administrative Personnel June 30, 2012 City Manager Bob Wingenroth Deputy City Manager Greg Garcia Chief of Police John Welter City Attorney Cristina L.Talley City Clerk Linda N. Andal City Treasurer Henry W. Stern Community Development Executive Director John E. Woodhead IV Community Services Director Terry D. Lowe Convention, Sports & Entertainment Executive Director Thomas Morton Finance Director Deborah A. Moreno Fire Chief Randy R. Bruegman Human Resources Director Kristine Ridge Planning Director Sheri Vander Dussen Public Utilities General Manager Marcie L. Edwards Public Works Director Natalie Meeks 8

FINANCIAL SECTION FINANCIAL SECTION .

KLPM'ý6-

-- I - 1ý KPMG LLP Suite 700 20 Pacifica Irvine, CA 92618-3391 Independent Auditors' Report The Honorable Mayor and City Council As discussed in note 3 to the financial statements, effective February 1, 2012, the City of Anaheim, California: Redevelopment Agency of the City of Anaheim, California was dissolved and the assets and liabilities of the Redevelopment Agency were transferred to the City as the We have audited the accompanying financial statements of the governmental City Council elected to become the Successor Agency for the former redevelopment activities, the business type activities, each major fund, and the aggregate remaining agencies.

fund information of the City of Anaheim, California (the City) as of and for the year ended June 30, 2012, which collectively comprise the City's basic financial In accordance with Government Auditing Standards,we have also issued our report statements as listed in the table of contents. These financial statements are the dated December 19, 2012 on our consideration of the City's internal control over responsibility of the City's management. Our responsibility is to express opinions on financial reporting and on our tests of its compliance with certain provisions of laws, these financial statements based on our audit. regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial We conducted our audit in accordance with auditing standards generally accepted reporting and compliance and the results of that testing, and not to provide an in the United States of America and the standards applicable to financial audits opinion on the internal control over financial reporting or on compliance. That report contained in GovernmentAuditing Standards, issued by the Comptroller General of is an integral part of an audit performed in accordance with Government Auditing the United States. Those standards require that we plan and perform the audit to Standards and should be considered in assessing the results of our audit.

obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over U.S. generally accepted accounting principles require that the Management's financial reporting as a basis for designing audit procedures that are appropriate in Discussion and Analysis on pages 11 through 22 and the required schedules of the circumstances, but not for the purpose of expressing an opinion on the funding progress on page 77 be presented to supplement the basic financial effectiveness of the City's internal control over financial reporting. Accordingly, we statements. Such information, although not a part of the basic financial statements, is express no such opinion. An audit also includes examining, on a test basis, evidence required by the Governmental Accounting Standards Board who considers it to be an supporting the amounts and disclosures in the financial statements, assessing the essential part of financial reporting for placing the basic financial statements in an accounting principles used and significant estimates made by management, as well appropriate operational, economic, or historical context. We have applied certain as evaluating the overall financial statement presentation. We believe that our audit limited procedures to the required supplementary information in accordance with provides a reasonable basis for our opinions. auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the In our opinion, the financial statements referred to above present fairly, in all material information and comparing the information for consistency with management's respects, the respective financial position of the governmental activities, the business responses to our inquiries, the basic financial statements, and other knowledge we type activities, each major fund, and the aggregate remaining fund information of the obtained during our audit of the basic financial statements. We do not express an City of Anaheim, California, as of June 30, 2012, and the respective changes in opinion or provide any assurance on the information because the limited procedures financial position, and where applicable, cash flows thereof and the respective do not provide LIswith sufficient evidence to express an opinion or provide any budgetary comparison for the General and Housing Authority Funds for the year then assurance.

ended, in conformity with U.S. generally accepted accounting principles.

9

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying introductory section, combining individual fund statements and schedules, and the statistical section as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The combining individual fund statements and schedlules have been subjected to the auditing procedures applied in the audit of the basic financial statements and in our opinion, are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section and statistical section are presented for the purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

'M LCP December 19, 2012 i, , D'I-',

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MANAGEMENT'S DISCUSSION AND ANALYSIS MNAGEMENT'S DISCUSSION AND ANALYISICS SU

CITY OF ANAHEIM Government-wide financial statements. The government-wide financial statements Management's Discussion and Analysis are comprised of the Statement of Net Assets and the Statement of Activities. These two statements are designed to provide readers with a broad overview of the City's (Unaudited) finances utilizing the full accrual method of accounting, in a manner similar to a private-sector business. Under the full accrual method of accounting, transactions are As management of the City of Anaheim (City), we offer readers of the City's basic reported as soon as the underlying event giving rise to the change occurs, regardless financial statements this narrative overview and analysis of the financial activities of of the timing of related cash flows. Thus, assets, liabilities, revenues and expenses are the City as of and for the fiscal year ended June 30, 2012. We encourage readers to reported in these statements for some items that will only result in cash flows in future consider the information presented here in conjunction with additional information fiscal periods (e.g. uncollected revenues and accrued but unpaid interest expense).

that we have furnished in our letter of transmittal, which can be found in the introductory section of this report, and the City's basic financial statements in the The Statement of Net Assets presents information on all of the City's assets and financial section of this report. All amounts, unless otherwise indicated, are expressed liabilities, including capital assets and long-term liabilities, with the difference in thousands of dollars. between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City as a whole OVERVIEW OF THE BASIC FINANCIAL STATEMENTS is improving or deteriorating.

This discussion and analysis are intended to serve as an introduction to the City's The Statement of Activities presents information showing how the City's net assets basic financial statements. The City's basic financial statements are comprised of changed during the most recent fiscal year. Functional activities are highlighted in this three components: 1) government-wide financial statements, 2) fund financial statement, whereby direct and indirect functional costs are shown net of related statements, and 3) notes to financial statements. This report also contains other program revenue. This statement shows the extent to which the various functions supplementary information in addition to the basic financial statements themselves.

depend on general taxes and non-program revenues for support.

COMPONENTS OF The government-wide financial statements distinguish functions of the City that are THE ANNUAL FINANCIAL REPORT principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The Management's BscFinancial governmental activities of the City include general government, Police, Fire, Discussion and Stasi inanc Community Development, Planning, Public Works, Community Services, Public Analysis I statements Utilities (street lighting), Convention, Sports and Entertainment (Visitor and Convention Bureau and the Honda Center), and interest on related long-term debt.

The business-type activities of the City include the electric, water and sanitation utilities, golf courses, and convention, sports and entertainment venues (Anaheim Convention Center, Angel Stadium of Anaheim, and The City National Grove of I Financial Fund I Notes to Financial Anaheim) operations.

Statements Statements The government-wide financial statements include not only the City itself, but also the Anaheim Housing Authority, Anaheim Redevelopment Agency (Redevelopment Summary 4 0 Detail Agency), Community Center Authority, Anaheim Public Improvement Corporation, and Anaheim Public Financing Authority. Although these entities are legally separate, they function for all practical purposes as a part of the City, and therefore have been 11

CITY OF ANAHEIM included as blended component units as an integral part of the primary government. The City adopts an annually appropriated budget for all governmental and proprietary It should be noted that only the first seven months of operation are reported for the funds. Budgetary comparison statements for the General Fund and the major special Redevelopment Agency before its dissolution on January 31, 2012. See note 3 on revenue fund (Housing Authority) are required to be presented and are included in page 54 of this report for discussion of the dissolution of the Redevelopment Agency. the basic financial statements on pages 31-32 of this report. Additionally, budgetary schedules for the other governmental funds have been provided to demonstrate The government-wide financial statements can be found on pages 23-25 of this compliance with the budget and can be found as part of other supplementary report. schedules on pages 85-89, 92-93, and 96-98 of this report.

Fund financial statements. The fund financial statements focus on current available The governmental funds financial statements can be found on pages 27-30 of this resources and are organized and operated on the basis of funds, each of which is report.

defined as a fiscal and accounting entity with a self-balancing set of accounts, established for the purpose of carrying on specific activities or attaining certain Proprietary funds. The City maintains two different types of proprietary funds.

objectives in accordance with special regulations, restrictions or limitations. All of the Enterprise funds are used to report the same functions presented as business-type funds of the City can be divided into three categories: governmental funds, activities in the government-wide financial statements. The City uses its enterprise proprietary funds, and fiduciary funds. funds to account for its electric, water and sanitation utilities, golf courses, and convention, sports and entertainment venues operations. Internal service funds are an Governmental funds. Governmental funds are used to account for essentially the accounting device used to accumulate and allocate costs internally among the City's same functions reported as governmental activities in the governnment-wide financial various functions. The City uses internal service funds to account for its general statements. However, unlike the government-wide financial statements, the benefits and insurance, motorized equipment, information services, and municipal governmental funds financial statements utilize the modified accrual basis of facilities maintenance functions. Because these services predominantly benefit accounting, which focuses on near-term inflow and outflow of spendable resources, governmental rather than business-type functions, they have been included with as well as on balances of spendable resources available at the end of the fiscal year. governmental activities in the government-wide financial statements.

Such information may be useful in evaluating a government's near-term financial requirements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements Because the focus of the governmental funds is narrower than that of the government- provide separate information for all of the enterprise funds, which are considered to wide financial statements, it is useful to compare the information presented for the be major funds of the City. Conversely, all of the internal service funds are combined governmental funds with similar information presented for governmental activities in into a single, aggregated presentation in the proprietary funds financial statements.

the government-wide financial statements. By doing so, readers may better Individual fund data for the internal service funds is provided in the form of understand the long-term impact of the government's near-term financing decisions. combining statements elsewhere in this report..

Both the governmental funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to The proprietary funds financial statements can be found on pages 33-37 of this report.

facilitate this comparison between governmental funds and governmental activities.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit The City maintains 21 individual governmental funds. Information is presented of parties outside the government. Fiduciary funds are not reflected in the separately in the governmental funds Balance Sheet and in the governmental funds government-wide financial statements because the resources of those funds are not Statement of Revenues, Expenditures and Changes in Fund Balances for the General available to support the City's own programs.

Fund and Housing Authority Special Revenue Fund, both of which are considered to be major funds. Data for the other 19 governmental funds are combined into a single, The City maintains three different types of fiduciary funds. The Investment Trust Fund aggregated presentation. Individual fund data for each of these nonmajor is used to account for the external portion of the City's investment pool; the Private-governmental funds is provided in the form of supplementary combining statements Purpose Trust Fund is used to account for the assets and liabilities held in trust for the on pages 79-84, 90-91, and 94-95 of this report. Successor Agency to the former Redevelopment Agency (Successor Agency); the 12

CITY OF ANAHEIM Agency Fund is used to account for monies collected and disbursed in a custodial

• The City's net assets increased as a result of this year's operations. Net Assets of capacity for the Mello-Roos districts in the City. the City's governmental, activities increased $148,432 (17%), mainly due to the dissolution of the Redevelopment Agency, discussed above; business-type The fiduciary fund financial statements can be found on page 39-41 of this report. activities net assets increased $3,578 (less than 1%).

Notes to the financial statements. The notes provide additional information that is " At the close of the current fiscal year, the City's governmental funds reported a essential to a full understanding of the data provided in the government-wide and combined fund balance of $202,078, a decrease of $57,925 in comparison with fund financial statements. The notes to the financial statements can be found on pages the prior fiscal year, again, mainly due to the dissolution of the Redevelopment 43-75 of this report. Agency above.

Other supplementary information. In addition to the basic financial statements and " At the end of the current fiscal year, spendable, the unassigned fund balance for accompanying notes, this report also presents combining individual fund statements the General Fund was $22,636 or 10% of total General Fund expenditures.

referred to earlier in connection with nonmajor governmental funds and internal service funds. Also included are the budgetary comparison Schedules of Revenues,

• The City's total capital assets decreased by $27,879 (1%). Capital assets in the Expenditures and Changes in Fund Balances for all nonmajor special revenue funds, City's governmental activities decreased by $42,573 (3%) and business-type all debt service funds, and all capital projects funds. These statements and schedules activities capital assets increased by $14,694 (10%) during the current fiscal year.

can be found on pages79-102 of this report.

" The City's total long-term liabilities decreased by $245,333 (12%) during the current fiscal year; of this amount, long-term liabilities in the City's governmental FINANCIAL HIGHLIGHTS (Amounts in thousands) activities decreased by $216,372 (23%), mainly due to the dissolution of the Redevelopment Agency, and in business-type activities decreased by $28,961

" The City's total assets exceeded its liabilities at the end of the current fiscal year (3%).

by $2,000,182. Of this amount, $128,919 represents unrestricted net assets, which may be used to meet the City's ongoing obligations to citizens and creditors. Net assets of the City's governmental activities represent $1,040,358 (52%) and the business-type activities account for $959,824 (48%) of the City's total net assets.

• The City's governmental funds reported an extraordinary loss of $67,235; in the government-wide Statement of Activities, the City reported an extraordinary gain of $102,882 as a result of the dissolution of the former Redevelopment Agency pursuant to the enactment of the California Assembly Bill AB IX 26 that dissolved all redevelopment agencies in the State of California.

13

CITY OF ANAHEIM GOVERNMENT-WIDE FINANCIAL ANALYSIS NET ASSETS IUNE 30, 2012 AND 2011 Governmental Business-type Total Activities Activities Government 2012 2011 2012 2011 2012 2011 Current and other assets $ 487,499 $ 527,558 $ 616,607 $ 636,071 $1,104,106 $1,163,629 Capital assets, net 1,315,507 1,358,080 1,543,673 1,528,979 2,859,180 2,887,059 Total assets 1,803,006 1,885,638 2,160,280 2,165,050 3,963,286 4,050,688 Other liabilities 52,773 67,465 124,868 104,255 177,641 171,720 Long-term liabilities 709,875 926,247 1,075,588 1,104,549 1,785,463 2,030,796 Total liabilities 762,648 993,712 1,200,456 1,208,804 1,963,104 2,202,516 Net assets:

Invested in capital assets, net of related debt 832,730 834,337 786,430 786,175 1,619,160 1,620,512 Restricted 190,868 182,011 61,235 54,626 252,103 236,637 Unrestricted (deficit) 16,760 (124,422) 112,159 115,445 128,919 (8,977)

Total net assets $1,040,358 $ 891,926 $ 959,824 $ 956,246 $2,000,182 $1,848,172 By far the largest portion of the City's net assets $1,619,160 (81%) reflects its The remaining balance of $128,919 (6%) is unrestricted net assets and may be used investment in capital assets (e.g. land, buildings, utility plant, machinery, equipment, to meet the City's ongoing obligations to citizens and creditors. The City's total and infrastructure), net of any related outstanding debt that was used to acquire those unrestricted net assets increased by $137,896, of which governmental activities assets. The City uses these assets to provide services to citizens; consequently, these increased by $141,182 and business-type activities decreased by $3,286. The assets are not available for future spending. Although the City's investment in capital increase of unrestricted net assets in governmental activities is mainly due to the assets is reported net of related debt, it should be noted that the resources needed to dissolution of the Redevelopment Agency, whereby the assets and liabilities of the repay this debt must be provided from other sources, since the capital assets former Redevelopment Agencies were removed from the primary government and themselves cannot be used to liquidate these liabilities. are now reported in the City's fiduciary funds. At the close of the prior fiscal year, the Redevelopment Agency reported an ending unrestricted net deficit of $144,283.

An additional portion of the City's net assets $252,103 (13%) represents resources that are subject to external restrictions on how they may be used. The increase in restricted net assets of $15,466 is primarily due to the dissolution of the former Redevelopment Agency.

14

CITY OF ANAHEIM CHANGE IN NET ASSETS YEAR ENDED JUNE 30, 2012 AND 2011 Governmental Business-type Total Activities Activities Government 2012 2011 2012 2011 2012 2011 REVENUES Program revenues:

Charges for services $ 57,962 $ 54,448 $546,500 $526,145 $ 604,462 $ 580,593 Operating grants and contributions 108,620 124,358 1,101 746 109,721 125,104 Capital grants and contributions 44,184 70,080 8,954 12,667 53,138 82,747 General revenues:

Taxes:

Property taxes 87,574 106,093 87,574 106,093 Sales and use taxes 59,654 54,711 59,654 54,711 Transient occupancy taxes 90,376 82,605 90,376 82,605 Motor vehicle license lees 1,783 1,783 Other taxes 7,272 7,288 7,272 7,288 Unrestricted investment earnings 3,598 3,667 10,216 9,617 13,814 13,284 Other 873 614 873 614 Total revenues 460,113 505,647 566,771 549,175 1,026,884 1,054,822 EXPENSES Program activities:

Governmental activities:

General government 11,617 10,911 11,617 10,911 Police 117,840 119,504 117,840 119,504 Fire 58,027 56,393 58,027 56,393 Community Development 95,683 105,937 95,683 105,937 Planning 15,648 15,627 15,648 15,627 Public Works 41,228 44,109 41,228 44,109 Community Services 28,282 30,958 28,282 30,958 Public Utilities 2,315 2,218 2,315 2,218 Convention, Sports and Entertainment 13,584 13,633 13,584 13,633 Interest on long-term debt 42,910 48,014 42,910 48,014 Business-type activities:

Electric Utility 386,698 371,689 386,698 371,689 Water Utility 58,369 56,249 58,369 56,249 Sanitation Utility 55,957 49,864 55,957 49,864 Golf Courses 4,114 4,256 4,114 4,256 Convention, Sports and Entertainment Venues 45,484 44,707 45,484 44,707 Total expenses 427,134 447,304 550,622 526,765 977,756 974,069 Excess before transfers and extraordinary gain 32,979 58,343 16,149 22,410 49,128 80,753 Transfers in (out) 12,571 8,537 (12,571) (8,537)

Extraordinary gain 102,882 102,882 Increase in net assets 148,432 66,880 3,578 13,873 152,010 80,753 Net assets at beginning of year 891,926 825,046 956,246 942,373 1,848,172 1,767,419 Net assets at end of year $1,040,358 $891,926 $959,824 $956,246 $2,000,182 $1,848,172 15

CITY OF ANAHEIM REVENUES BY SOURCE - Governmental activities. The most significant revenues of the governmental activities GOVERNMENTAL ACTIVITIES are general taxes (54%), which include transient occupancy taxes (20%), property taxes (19%), sales and use taxes (13%), and other taxes (2%). Program revenues are 45% of the total revenues of the governmental activities, which include operating Unrestricted investment grants and contributions (23%), charges for services (12%), and capital grants and earnings 2%

contributions (10%).

Other taxes 0 ther

<1% Charges for services Public safety (Police and Fire) expenses are the most significant (41%) of all 13%

governmental activities expenses, followed by Community Development (22%),

interest on long-term debt (10%), Public Works (10%), Community Services (7%) and Transient occupancy taxes various other programs (10%). Included in these amounts is depreciation expense, Operating grants and 19% contributions which is 7% of the total expenses for governmental activities.

23%

Governmental activities revenues decreased $45,534 (9%) in the current fiscal year due to the following:

Sales and use taxes " Taxes decreased $7,604 (3%) of which motor vehicle license fees (VLF) decreased 13%

Capital C. grants and by $1,783 (100%) as part of the State of California fiscal year 2012 budget, and contributions property tax decreased by $18,519 as a result of the dissolution of the 101/

Property taxes Redevelopment Agency; property tax increment was allocated to the former 19% Redevelopment Agency up to the January 31, 2012 dissolution. These decreases were partially offset by increased transient occupancy tax (TOT) and sales and use EXPENSES AND PROGRAM REVENUES - tax. TOT increased $7,771 (9%) due to an improvement in the leisure and hospitality sector. Sales and use tax increased $4,943 (9%) as a result of higher GOVERNMENTAL ACTIVITIES gas prices, increased new car sales and general improvement across most business sectors.

" Charges for services increased $3,514 (6%) primarily due to a full year of special assessments generated from the new Anaheim Tourism Improvement District (ATID). The ATID was established in November of the previous fiscal year.

• Operating grants decreased by $15,738 (13%) mainly due to a $2,712 decrease in Urban Area Security Initiative (UASI) grant reimbursements due to the nature and timing of projects; $7,844 primarily due to one-time homebuyer grants in the previous fiscal year; and $3,829 decrease in U.S. Department of Housing and Urban Development (HUD) Section 8 Housing ChoiceVoucher (Section 8) rental assistance.

tf

" Capital grants and contributions decreased by $25,896 (37%) primarily due the ut's P5 ,u1 one-time developer contributions of $41,007 for the Platinum Triangle c0n infrastructure developments in fiscal year 2011 and partially offset by an increase of $10,142 in grant reimbursements for the Anaheim Regional Transportation Intermodal Center (ARTIC) as the project progressed to the construction phase,

-r- INxW- and a one-time capital contribution of $2,500 for the Canyon Business District from the Solid Waste Franchisee.

16

CITY OF ANAHEIM Governmental activities net transfers in increased $4,034 (47%) primarily due to one- Governmental activities expenses decreased $20,170 (5%) in the current fiscal year.

time transfers out of capital assets funded by grants and development fees in the The decreases in expenses were primarily due to decreases from Community amount of $8,414 from the governmental activities to the business-type activities in Development of $10,254 (10%), Community Services of $2,676 (9%), Public Works the prior fiscal year offset by increase in transfer out of $4,298 to the Convention, of $2,881 (7%) and interest on long-term debt of $5,104 (11%).

Sports and Entertainment Venues for debt services. Additional information regarding The decrease in Community Development was mainly due to decreases in transfers can be found in note 4 of the notes to the financial statements on page 55- expenses of $12,248 due to dissolution of the Redevelopment Agency and 56 of this report. partially offset by the increase in Section 8 Housing Choice Voucher rental assistance of $2,491 resulting in an increase of 131 families assisted per month.

Governmental activities reported an extraordinary gain of $102,882 as a result of the dissolution of the Redevelopment Agency. This amount represented assets and

• The decreases in Community Services and Public Works expenses were primarily liabilities transferred out to the Successor Agency. Assets of the transfer included cash, due to managed savings due to resource constraints from the continued effects of the economic downturn.

accounts receivables and other prepaid assets, unamortized cost of debt issuance, notes receivable, land held for resale, and capital assets. Liabilities of the transfer

• The decrease in interest on long-term debt is mainly due to the dissolution of the included accounts payable and other current liabilities, interest payable, and long- Redevelopment Agency. Accrued interest expense of $6,572 was reported in the term debt. Additional information regarding the dissolution of the Redevelopment City's fiduciary fund.

Agency can be found in note 3 of the notes to the financial statements on page 54 of this report.

REVENUES BY SOURCE - EXPENSES AND PROGRAM REVENUES -

BUSINESS-TYPE ACTIVITIES BUSINESS-TYPE ACTIVITIES I

S400,t000 Unrestricted insestosont earnings Capital grants and 2%

cinnribut.ons 2% S300,5210 Operatin ggrantsand

'I%% $250,000 S20QOtW I-

$100,000 t-

$100,000 t-

\_Charges for services 96% $50,00 -

so Electric11010,t Watt Utility Sanitation Golf C-ores Con eni, Sp.. and Sprott-r onese 0llspeo- Enwainnnot Venes 17

CITY OF ANAHEIM Business-type activities. Business-type activities increased the City's net assets by

• The increase in the Electric Utility expenses is partly attributable to the increase

$3,578. Key elements of this change are as follows: in purchased power costs of $6,103 (3%). The increase in purchased power costs is primarily due to the new Canyon power costs of $14,494; this increase was Charges for services of $546,500 increased $20,355 (4%). The increase in charges for partially offset by a decrease in natural gas costs of $7,755 when more purchased services was primarily due to an increase from the Electric Utility of $1 6,435 (4%), gas was used for the Magnolia and Combustion Turbine plants in the current Water Utility of $2,150 (4%) and $1,408 (5%) from Convention, Sports and fiscal year. Maintenance, operations and administration expense increased by Entertainment Venues. $4,198 (10%) mainly due to $6,073 less overhead from maintenance, operations and administration that were allocable to capital assets as less capital

" The increase in the Electric Utility charges for services is partly due to increased construction was performed during the fiscal year; this increase offset a $1,935 retail sales revenue of $13,399 (5%). In response to sustained increased power decrease in maintenance expense due to certain delayed maintenance projects.

costs, the City Council approved an increase in the electric billing base rates by Interest expense increased by $2,820 due to the full year of interest expense 5% effective on December 11, 2011. Additionally, transmission revenues recognition for the 2011 Electric Revenue Bonds issued in May 2011.

increased $9,333 (38%) mainly due to the increased statewide transmission demand and rates set by the California Independent System Operator (CAISO).

• The increase in Sanitation Utility expenses is primarily due to $4,284 loss on The increase in the Electric Utility charges for services is partially offset by disposal of capital assets. In June 2012, the Sanitation Utility transferred decreases of $6,329 (69.6%) in surplus natural gas sales mainly due to less ownership of 24 City-owned automated trash collection vehicles to Republic natural gas available for resale in the spot market when more purchased gas was Services, the City's solid waste collection franchisee, for one dollar in accordance used for Magnolia, Canyon and Kraemer Combustion Turbine plants in this fiscal with the Franchise Agreement.

year.

FINANCIAL ANALYSIS OF THE CITY'S FUNDS

• The increase in Water Utility charges for services is mainly due to an increase of

$2,170 (4%) in revenues from the sale of water. Effective on July 1, 2011 the Governmental funds. The focus of the City's governmental funds is to provide Water System Reliability Adjustment (WSRA) charge increased by 7.5 cents to a information on near-term inflows, outflows, and balances of spendable resources.

total of 22.5 cents per cubic foot . The WSRA is charged to customers in order to Such information is useful in assessing the City's financing requirements. In particular, recover projected capital costs, including rehabilitation and construction of water unassigned fund balance may serve as a useful measure of a government's net and reclaimed water system infrastructure, as well as the related debt service resources available for spending at the end of the fiscal year.

payments. In addition, the Water Utility experienced a small increase (0.7%) in customer demand, from 59,923 to 60,371 acre feet. As of the end of the current fiscal year, the City's governmental funds reported total ending fund balances of $202,078, a decrease of $57,925 in comparison with the

• The increase in Convention, Sports and Entertainment Venues charges for services prior fiscal year. The decrease was primarily due to the transfer of the former is primarily due to an increase in facility rental revenues of $843 (4%) as a result Redevelopment Agency residual fund balance of $67,235 to the Successor Agency.

of an increase in the total numbers of public events from 56 to 79 during fiscal Of the total fund balance of $202,078, restricted fund balance totaled $189,850 and year 2012 indicates the use of resources are constrained by external parties, resource providers, constitutions or enabling legislations. Fund balance of $120,942 was restricted for Transfers out of $12,571 increased by $4,034 (47%) as discussed in the government- capital projects, $53,398 was restricted for debt service, and $15,510 was restricted wide financial analysis of governmental activities. for various grant programs. Assigned fund balance totaled $18,957, of which $12 was assigned to debt service, $18,165 was assigned to capital and housing projects, Total expenses of $550,622 increased $23,857 (5%). The increase is primarily due to and $780 was assigned for other purposes. Nonspendable fund balance of $3,083 increases of $15,009 (4%) in the Electric Utility and $6,093 (12%) in the Sanitation represents financial resources that are not anticipated to be liquidated in the near-Utility. term. The remaining fund balance deficit of $9,812 is unassigned and includes the unassigned fund balance of the General Fund of $22,636 and the unassigned fund 18

CITY OF ANAHEIM balance deficit of the nonmajor governmental funds of $32,448. The unassigned The Electric Utility fund net assets increased $4,411 (1%) in the current fiscal year.

fund balance deficit of the nonmajor governmental funds will be eliminated in future The most significant factors of the change in fund net assets are discussed in the years by the receipt of various grant revenues. government-wide financial analysis of business-type activities.

General Fund revenues were $7,403 (3%) greater than the prior fiscal year primarily The Water Utility fund net assets decreased $292 (less than 1%) in the current fiscal year. There were no significant or unusual changes.

due to an increase in taxes of $11,102 (5%/). Due to an improvement in the overall economy, transient occupancy taxes (TOT) increased $7,771 (9%) and sales and use The Sanitation fund net assets increased $155 (less than 1%) in the current fiscal year.

taxes increased $3,555 (6%). The increases were partially offset by a decrease of The most significant factors of the change in fund net assets are discussed in the

$2,386 (46%) in intergovernmental revenues, primarily clue to the elimination of the government-wide financial analysis of business-type activities.

motor vehicle license fee revenue ($1,783) allocation by the State of California.

General Fund expenditures decreased $8,285 (4%) due to overall managed savings The Golf Courses fund net assets increased $106 (2%) in the current fiscal year. There and the elimination of General Fund commitment for Convention Center marketing were no significant or unusual changes.

and promotion costs ($5,046) that are now funded by the special assessments in the Anaheim Transportation Improvement District (ATID) Fund. The Convention, Sports and Entertainment Venues fund net assets increased $293 (less than 11%) in the current fiscal year. The most significant factors of the change in fund net assets are discussed in the government-wide financial analysis of business-The Housing Authority Fund revenues decreased by $2,953 (4%) primarily due to a type activities.

decrease of $3,829 in HUD funding for Section 8 rental assistance, partially offset by an increase in land sales of $854. Housing Authority expenditures increased by GENERAL FUND BUDGETARY HIGHLIGHTS

$4,079 (6%), primarily due to increased HUD Section 8 rental assistance of $2,491, utilizing carryover funding in order to maximize assistance to qualifying families During the year, the original budget was amended to increase appropriations by which resulted in an average of 131 more families being assisted each month. Also, $2,189 (less than 1%). The increase in appropriations was primarily the result of the housing development and administration costs increased by $1,338 due to the carryover of prior year appropriations amounting to $269 and the reallocation of Housing Authority assuming the housing functions after the dissolution of the appropriations from other funds of $1,920. These amendments were to be funded Redevelopment Agency in January 2012. from savings in other programs of the General Fund during the year General Fund revenues of $253,218 were greater than budgeted revenues of The Nonmajor governmental funds reported an extraordinary loss of $67,235 as a

$244,850 by $8,368 (3%), primarily clue to stronger than anticipated performance of result of the dissolution of the Redevelopment Agency. This amount represented the sales and use taxes and transient occupancy taxes.

current financial resources ($73,924) and obligations ($6,689) that were included in the extraordinary gain explanation in the governmental activities. General Fund expenditures were less than budgeted. Of the total appropriations of

$229,776, approximately 1%, or $2,796, went unspent. Expenditure reductions were Proprietary funds. The City's proprietary funds provide the same type of information managed to reduce the reliance on reserves, while working toward a structurally found in the government-wide financial statements, but in more detail. balanced budget where ongoing revenues are sufficient to cover ongoing expenditures. There were no unusual variances.

19

CITY OF ANAHEIM CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS (net of accumulated depreciation)

JUNE 30, 2012 AND 2011 Governmental Business-type Total Activities Activities Government 2012 2011 2012 2011 2012 2011 Land $ 606,611 $ 616,994 $ 58,410 $ 58,369 $ 665,021 $ 675,363 Construction in Progress 89,486 80,054 80,795 58,560 170,281 138,614 Buildings, structures and improvements 163,024 203,740 386,547 385,574 549,571 589,314 Utility plant 1,008,373 1,013,805 1,008,373 1,013,805 Machinery and ecluipment 29,647 33,087 9,548 12,671 39,195 45,758 Infrastructure 426,739 424,205 426,739 424,205 Total $1,315,507 $1,358,080 $1,543,673 $1,528,979 $2,859,180 $2,887,059 Capital assets. The City's investment in capital assets for its governmental and The increase in business-type activities is primarily due to increases in the following:

business-type activities at June 30, 2012 amounted to $2,859,180 (net of accumulated depreciation). This investment in capital assets included land, " The Electric Utility increase of $3,735 (less than 1%) is mainly due to additions construction in progress, buildings, structures and improvements, utility plant, of $41,098 construction work in progress which include the expansion or machinery and equipment, and infrastructure. The total decrease over the prior fiscal improvement of existing substations, transmission and distribution systems, and year was 1% ($27,879), of which governmental activities decreased 3% ($42,573) the replacement of aging overhead electrical lines with underground facilities and business-type activities increased 1% ($14,694). and upgrading equipment for the San Juan and Combustion Turbine plants offset by the current year additions to accumulated depreciation of $38,995.

The decrease of capital assets in governmental activities is primarily due to the dissolution of the Redevelopment Agency. Capital assets, net of accumulated " The Water Utility increase of $11,100 (4%) is primarily due to additions of depreciation in the amount of $72,560, were transferred out to the Successor Agency. $18,894 construction work in progress for ongoing expansion and refurbishment Partially offsetting this decrease are capital asset additions of $63,626. Major capital of water transmission and distribution infrastructure, pumping plant and source asset projects during the current fiscal year include the following: of water supply offset by the current year additions to accumulated depreciation of $9,739.

" Additions of $52,645 for construction work in progress which include construction of the Colony Park Street improvement, the Anaheim Regional

• The Sanitation Utility increase of $4,020 (5%) includes replacement of street Transportation Intermodal Center (ARTIC), the Anaheim Fixed Guideway project, sweeping vehicles ($3,038) and sanitary sewer improvements ($7,893), partially Gene Autry Way, Brookhurst Street, Anaheim Canyon Station pedestrian offset by the transfer of title to collection vehicles of $4,284, as previously connections and various other public infrastructure construction. discussed, and current year additions to accumulated depreciation of $2,627.

• Land and right-of-way acquisitions for street-widening and other capital projects

• Convention, Sports and Entertainment decrease of $3,621 (1p) primarily totaling $4,372. includes capital asset additions of $9,425 for the construction of the Grand Plaza and various capital projects offset by current year additions to accumulated

" Acquisitions of various vehicles and equipment totaling $3,890. depreciation of $12,840.

• Completion of $29,388 of construction work in progress that includes the " Additionally, the business-type activities completed $51,663 of construction Anaheim Coves recreation area at Burris Basin ($6,889), Founders Park ($2,036), work in progress which include improvements to the electric and water utility streets ($1 3,527), traffic signals (1,395), and storm drains ($2,976). facilities, sanitary improvetnents and the Convention Center transit plaza.

Additional information on the City's capital assets can be foundl in note 6 of the notes 20 to the financial statements, on pages 57-58 of this report.

CITY OF ANAHEIM LONG-TERM LIABILITIES JUNE 30, 2012 AND 2011 Governmental Business-type Total Activities Activities Government 2012 2011 2012 2011 2012 2011 General obligation bonds $ 3,185 $ 3,735 $ 3,185 $ 3,735 Revenue bonds 610,669 609,683 $ 882,155 $ 908,683 1,492,824 1,518,366 Tax allocation b)onds 208,169 208,169 Certificates of participalion 11,085 12,070 38,000 38,000 49;085 50,070 Capital lease obligations 1,694 2,341 1,694 2,341 Notes and loans payable 25,546 34,566 24,488 30,519 50,034 65,085 Self-insurance 39,343 35,405 39,343 35,405 Compensated absences 18,353 19,558 18,353 19,558 Pollution remediation obligation 720 720 Decommissioning provision 130,945 127,347 130,945 123,347 Total $709,875 $926,247 $1,075,588 $1,104,549 $1,785,463 $2,030,796 Long-term liabilities. The City's outstanding long-term liabilities, including bonds, accounting and reporting for pensions that are required to be implemented for certificates of participation, capital leases, notes and loans payable, self-insurance, the fiscal year beginning July 1, 2014. The City is currently evaluating the compensated absences, and the provision for decommissioning costs totaled potential impacts to the financial statements from implementation of these new

$1,785,463 at June 30, 2012. Of this total, $709,875 (40%) was in governmental standards. Additional information about the City's retirement plans can be activities and $1,075,588 (60%) was in business-type activities. The City's outstanding found in note 10 of the notes to the financial statements on pages 67 and 68 long-term liabilities decreased $245,333 (12%) in fiscal year 2012. The decrease is of this report, as well as multi-year trend information as part of the required primarily due to the transfer of $217,983 in long-term liabilities of the former supplementary information on page 77.

Redevelopment Agency to the SI'ccessor Agency. There were no significant or unusual changes during the year. Recently, the State of California enacted pension legislation that will go into effect in January 2013 and apply mainly to new public employees. Some of Additional information on the City's long-term liabilities can be found in notes 7 and the major changes include mandatory cost sharing by employees, reducing the 8 of the notes to the financial statements, on pages 58-67 and 65 of this report. overall benefit level (e.g. percentage of pay), increasing the retirement age, and placing a cap on the salary used to determine retirement benefits. The impacts ECONOMIC FACTORS to the City for these changes for future employees has yet to be determined.

There remains a focus on public pensions and their sustainability. Many " For the 2013 fiscal year, the City appropriated $247,147 in estimated available assumptions are used to estimate the ultimate liability of pensions and the resources of $269,079 for General Fund spending. This leaves approximately contributions that will be required to meet those obligations. One of the most $21,932 in estimated available reserves, which is 9% of General Fund significant factors used in determining the liability and the funding appropriations. The City's long-standing policy is to maintain General Fund requirements is the rate of return that investments will yield prior to making reserves of at least 7% to 10% of annual appropriations.

payments, known as the discount rate. The City's pension plans currently utilize a discount rate of 7.75%, which was reduced to 7.50% to establish rates " The City annually reviews all of its fees as part of the budget adoption process.

beginning luly 1, 2013, in determining the pension liability and funding Development, construction, and other fees applicable to residents and requirements. If it is determined in the future that an even lesser rate of return developers doing business with the City are adjusted in June of each year, is more appropriate, there will be a significant increase in the liability and the generally by the average of the Consumer Price Index (CPI). Although CPI for contributions required to meet those obligations. The Governmental 12 months was 2.1 in January 2012, in light of the current economic Accounting Standards Board also has issued new standards related to the environment, most fees were not increased.

21

CITY OF ANAHEIM

• California Senate Bill lX 2 signed into law in April 2011 mandated that all 2

California utilities are required to reach 0% renewable power in their power portfolios by 2013, and 33% by 2020. The higher renewable power costs will raise future power supply costs in fiscal year 2013.

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 information should be addressed to the Office of the Finance Director, City of Anaheim, 200 South Anaheim Boulevard, Suite 643, Anaheim, California, 92805.

22

BASIC FINANCIAL STATEMENTS BASIC FINANCIAL STATEMENTS

CITY OF ANAHEIM Statement of Net Assets June 30, 2012 (In thousands)

Governmental Business-type Activities Activities Total ASSETS Cash and cash equivalents $ 70,687 $ 52,703 $ 123,390 Investments 113,068 69,290 182,358 Accounts receivable, net 18,388 57,715 76.103 Accrued interest receivable 660 1,920 2,580 Internal balances, net 16,244 (16,244)

Due from other governments 55,274 55,274 Notes receivable, net 68,845 68,845 Inventories 978 8,875 9,853 Land held for resale, net 23,684 23,684 Prepaid and other assets 6,352 57,493 63,845 Restricted cash and cash equivalents 45,959 115,990 161,949 Restricted investments 31,607 252,410 284,017 Unamortized debt issuance costs 3,008 7,799 10,807 Bond payment receivable 8,555 8,555 Pipeline receivable 101 101 Net other post-employment benefits (OPEB) asset 9,765 9,765 Due from the Successor Agency 22,980 22,980 Capital assets, net:

Nondepreciable 696,097 139,205 835,302 Depreciable 619,410 1,404,468 2,023,878 Tutal assets 1,803,006 2,160,280 3,963,286 LIABILITIES Accounts payable 27,787 39,060 66,847 Wages payable 6,071 1,086 7,157 Due to other governments 872 872 Interest payable 6,861 11,581 18,442 Arbitrage rebate liability 211 211 Deposits 5,150 7,215 12,365 Due to the Successor Agency 1,551 1,551 Regulatory credits 65,402 65,402 Unearned revenues 4,481 313 4,794 Long-term liabilities:

Due within one year 41,275 34,043 75,318 Due in more than one year 668,600 1,041,545 1,710,145 Total liabilities 762,648 1,200,456 1,963,104 NET ASSETS Invested in capital assets, net of related debt 832,730 786,430 1,619,160 Restricted for:

Debt service 14 17,248 17,262 Capital projects 64,677 36,736 101,413 Community development 83,702 83,702 Streets, roads and transportation improvement projects 30,089 30,089 Grant purposes 12,386 7,251 19,637 Unrestricted 16,760 112,159 128,919 Total net assets $1,040,358 $ 959,824 $2,000,182 The accompanying notes are an integral part of these financial statements. 23

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CITY OF ANAHEIM Statement of Activities Year Ended June 30, 2012 (inthousands)

Net (Expense) Revenue and Program Revenues Changes in Net Assets Indirect Operating Capital Expense Charges for Grants and Grants and Governmental Business-type Fundions/Programs Expenses Allocation Services Contributions Contributions Activities Activities Total Governmental activities:

General government $ 23,187 $011,570) $ 1,872 $ 655 $ (9,090) $ (9,090)

Police 114,322 3,518 10,122 9,905 (97,813) (97,813)

Fire 57,818 209 9,431 1,182 (47,414) (47,414)

Community Development 95,229 454 7,281 78,319 (10,083) (10,083)

Planning 14,688 960 5,327 2,213 (8,108) (8,108)

Public Works 40,979 249 11,401 14,843 $38,198 23,214 23,214 Community Services 27,710 572 3,386 1,503 2,353 (21,040) (21,040)

Public Utilities 2,315 (2,315) (2,315)

Convention, Sports and Entertainment 13,394 190 9,142 3,633 (809) (809)

Interest on long-term debt 42,910 (42,9101 (42,910)

Total governmental activities 432,552 (5,418) 57,962 108,620 44,184 (216,368) (216,368)

Business-type activities:

Electric Utility 383,642 3,056 397,931 5,518 $ 16,751 16,751 Water Utility 57,404 965 57,748 463 1,799 1,641 1,641 Sanitation Utility 55,595 362 56,630 91 1,022 1,786 1,786 Golf Courses 3,979 135 4,802 688 688 Convention, Sports and Entertainment Venues 44,584 900 29,389 547 615 (14,933) (14,933)

Total business-type activities 545,204 5,418 546,500 1,101 8,954 5,933 5,933 Total government $977,756 $ $604,462 $1 09,721 $53,138 (216,368) 5,933 (210,435)

General revenues:

Taxes:

Property taxes 87,574 87,574 Sales and use taxes 59,654 59,654 Transient occupancy taxes 90,376 90,376 Other taxes 7,272 7,272 LUnrestricted investment earnings 3,598 10,216 13,814 Other 873 873 Transfers 12,571 (12,571)

Extraordinary gain 102,882 102,882 Total general revenues, transfers and extraordinary gain 364,800 (2,355) 362,445 Change in net assets 148,432 3,578 152,010 Net assets at beginning of year 891,926 956,246 1,848,172 Net assets at end of year $1,040,358 $959,824 $2,000,182 The accompanying notes are an integral part of these financial statements. 25

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CITY OF ANAHEIM Balance Sheet Governmental Funds June 30, 2012 (In thousands)

Nonmajor Total Housing Governmental Governmental General Authority Funds Funds ASSETS Cash and cash equivalents $ 7,033 $ 6,149 $ 24,193 $ 37,375 Investments 11,250 9,836 38,699 59,785 Accounts receivable, net 11,383 26 1,414 12,823 Accrued interest receivable 54 68 227 349 Notes receivable, net 44,788 24,001 68,789 Due from other funds 4,129 10,796 14,925 Due from other governments 15,063 48 40,163 55,274 Inventories 253 253 Land held for resale, net 23,684 23,684 Prepaid and other assets 176 13 6,105 6,294 Restricted cash and cash equivalents 2,783 43,176 45,959 Restricted investments 31,607 31,607 Due from the Successor Agency 8,176 14,804 22,980 Total assets $49,341 $ 95,571 $235,185 $380,097 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 5,974 $ 523 $ 13,434 $ 19,931 Wages payable 2,462 66 217 2,745 Deposits 3,849 211 1,090 5,150 Due to the Successor Agency 1,551 1,551 Due to other funds 65 11,724 11,789 Due to other governments 817 55 872 Deferred revenues 9,154 53,544 73,283 135,981 Total liabilities 22,321 54,399 101,299 178,019 Fund balances:

Nonspendable:

Interfund receivable 2,653 2,653 Inventory 253 253 Prepaid and other assets 176 177 Restricted:

Anaheim Resort maintenance and improvement 7,588 7,588 Capital projects 2,902 2,902 Debt service 53,398 53,398 Development impact projects 61,399 61,399 Grant purposes 982 4,555 5,537 Homebuyer assistance programs 38 6,037 6,075 Low and moderate income housing 25,999 25,999 Rental assistance 3,898 3,898 Streets, roads and transportation improvement projects 23,054 23,054 Assigned:

Debt service 12 12 Capital projects 7,388 7,388 Housing projects 10,777 10,777 Other purposes 320 460 780 Unassigned 22,636 132,4481 (9,812)

Total fund balances 27,020 41,172 133,886 202,078 Total liabilities and fund balances $49,341 $ 95,571 $235,185 $380,097 27 The accompanying notes are an integral part of these financial statements.

CITY OF ANAHEIM Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2012 (Inthousands)

Total fund balances - governmental funds $ 202,078 Amounts reported for governmental activities in the Statement of Net Assets are different because:

Capital assets used in the operation of governmental funds are not current financial resources and, therefore, are not reported in the funds. These assets consist of:

Land $606,611 Construction in progress 89,486 Buildings, structures and improvements 262,617 Machinery and equipment 48,073 Infrastructure 761,001 Accumulated depreciation (470,392)

Total capital assets, net 1,297,396 Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. 132,999 Unamortized debt issuance costs are not current financial resources and, therefore, are not reported in the funds. 3,008 Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets. 62,472 Compensated absences, not otherwise included in the internal service funds, are not due and payable in the current period and, therefore, are not reported in the funds. (249)

Long-term liabilities of governmental funds, including bonds, certificates of participation, notes and loans payable ($650,485), and accrued interest payable ($6,861), are not due and payable in the current period and, therefore, are not reported in the funds. (657,346)

Net assets of governmental activities $1,040,358 The accomlpanying notes are an integral part of these financial statements. 28

CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended June 30, 2012 (Inthousands)

Nonma*o Total 1-losinsGovrnmetalGovernmental Rvne:General AuhrF'Funds Funds Property taxes $ 58,220 $ 29,354 $ 87,574 Sales and use taxes 58,589 58,589 Transient occupancy taxes 90,376 90,376 Other taxes 6,401 6,401 Licenses, fees and permits 15,982 $ 38 1,047 17,067 Intergovernmental revenues 2,788 70,735 69,825 143,348 Charges for services 13,110 16,562 29,672 Fines, forfeits and penalties 3,515 3,515 Use of money and property 2,916 1,297 3,444 7,657 Other 834 1,993 3,790 6,617 Total revenues 252,731 74,063 124,022 450,816 Expjenditures:

Current:

City Council 506 506 City Admiinistration 3,099 3,099 City Attorney 4,788 120 4,908 City Clerk 635 635 Huma n Resources 1,312 1,312 Finance 3,584 24 3,608 City Treasurer 2,434 2,434 Police 104,060 8,596 112,656 Fire 55,003 883 55,886 Community Developmneit 263 76,192 18,897 95,352 Planning 12,728 1,680 14,408 Public Works 12,828 10,033 22,861 Community Services 22,453 2,165 24,618 Public Utilities 2,313 2,313 Convention, Sports and Entertainment 899 8,826 9,725 Capital outlay 75 1,290 54,140 55,505 Debt service:

Principal retirement 16,294 16,294 Interest charges _________26,927 26,c)27 Total expenditures 226,980 77,482 148,585 453,047 Excess (deficiency) of revenues over (undler) expenditures 25,751 (3,419) (24,563.) (2,231)

Other financing sources (uses):

Transfers in 26,100 35,482 69,511 131,093 Transfers out (51,319) (8,6331 (59,600) 1119,5521 Total other financing sources (uses) (25,219) 26,849 9,911 11,541 Extraordinary loss _____(67,2351 (67,235)

Net change in fund balances 532 23,430 (81,887) (57,925)

Fund( balances at beginning of year 26,488 17,742 215,773 260,003 Fund balances at end of year $ 27,020 $41,172 $133,886 $202,078 The accompanying notes are an integral part of these financial statements. 229

CITY OF ANAHEIM Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2012 (Inthousands)

Net change in fund balances - total governmental funds $ (57,925)

Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlay as expenditures. However, in the Statement of Activities the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay ($55,505) exceeded depreciation ($27,830) in the current period. 27,675 Transfers of capital assets between governmental funds and proprietary funds do not require the use of financial resources and are not reported as transfers in the funds. (470)

The net effect of other miscellaneous transactions involving capital assets (i.e., sales, trade-ins, retirements and contributions) is to increase net assets. 4,285 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in governmental funds. 3,398 Payments of principal on long-term debt use current financial resources in the governmental funds but the repayment reduces long-term liabilities in the Statement of Net Assets. 16,294 Certain expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (14,277)

Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual funds. The net expense of the internal service funds is reported with governmental activities. (665)

Transfer of capital assets ($72,560), other long-term assets ($5,581) and long-term liabilities

($248,258) of the former Anaheim Redevelopment Agency to the Successor Agency is to increase net assets. 170,117 Change in net assets of governmental activities $148,432 The accompanying notes are an integral part of these financial statements. 30

CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basic Actual - General Fund Year Ended June 30, 2012 (Inthousands)

Original Final Budgeted Budgeted Actual Variance with Amounts Amounts Amounts Final Budget Revenues:

Property taxes $ 59,045 S 59,045 $ 58,220 $ (825)

Sales and use taxes 52,504 52,504 58,589 6,085 Transient occupancy taxes 84,471 84,471 90,376 5,905 Other taxes 6,248 6,248 6,401 153 Licenses, fees and permits 17,951 17,951 15,982 (1,969)

Intergovernmental revenues 3,624 3,624 2,788 (836)

Charges for services 13,540 13,540 13,110 (430)

Fines, forfeits and penalties 3,294 3,294 3,515 221 Use of money and property 2,349 2,349 2,916 567 Other 1,824 1,824 1,321 (503)

Total revenues 244,850 244,850 253,218 8,368 Expenditures:

City Council 579 584 506 (78)

City Administration 3,733 3,733 3,099 (634)

City Attorney 4,923 4,933 4,822 (111)

City Clerk 670 670 635 (35)

Human Resources 1,384 1,384 1,312 (72)

Finance 3,830 3,830 3,584 (246)

City Treasurer 2,545 2,557 2,434 (123)

Police 104,115 104,164 104,060 (104)

Fire 53,756 55,011 55,011 Community Development 479 479 263 (216)

Planning 13,893 13,897 12,728 (1,169)

Public Works 12,725 12,861 12,861 Community Services 21,871 22,453 22,453 Public Utilities 2,177 2,313 2,313 Convention, Sports and Entertainment 907 907 899 (8)

Total expenditures 227,587 229,776 226,980 (2,796)

Excess of revenues over expenditures 17,263 15,074 26,238 11,164 Other financing sources (uses):

Transfers in 28,163 28,163 26,100 (2,063)

Transfers out (45,544) (45,544) (51,319) (5,775)

Total other financing uses (17,381) (17,381) (25,219) (7,838)

Net change in fund balance (118) (2,307) 1,019 3,326 Fund balance at beginning of year 26,488 26,488 26,488 Fund balance at end of year $ 26,370 $ 24,181 27,507 $ 3,326 Adjustment to reconcile to GAAP:

Receipt of interfund receivable (487)

Ending fund balance - GAAP basis $ 27,020 The accompanying notes are an integral part of these financial statements. 31

CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual - Housing Authority Year Ended June 30, 2012 (in thousands)

Original Final Budgeted Budgeted Actual Variance with Amounts Amounts Amounts Final Budget Revenues:

Licenses, fees and permits $ 32 $ 32 $ 38 $ 6 Intergovernmental revenues 74,905 74,905 70,735 (4,170)

Use of money and property 310 2,688 2,821 133 Other 1,759 1,759 1,993 234 Total revenues 77,006 79,384 75,587 (3,797)

Expenditures:

Community Development 76,842 77,482 77,482 Total expenditures 76,842 77,482 77,482 Excess (deficiency) of revenues over (under) expenditures 164 1,902 (1,895) (3,797)

Other financing sources (uses):

Transfers in 274 1,744 1,470 Total other financing sources 274 1,744 1,470 Net change in fund balance 164 2,176 (151) (2,327)

Fund balance at beginning of year 17,742 17,742 17,742 Fund balance at end of year $17,906 $19,918 17,591 $(2,327)

Adjustments to reconcile to GAAP:

Proceeds on sale of land held for resale (2,378)

Gain on disposition of land held for resale 854 Transfer in of housing assets frorn Anaheim Redevelopment Agency 25,105 Ending fund balance - GAAP basis $41,172 The accompanying notes are an integral part of these financial statements. 32

CITY OF ANAHEIM Statement of Fund Net Assets Proprietary Funds June 30, 2012 (In thousands)

I Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities -

Electric Water Sanitation Golf Entertainment Internal Utility Utility Utility Courses Venues Total Service Funds ASSETS Current assets:

Cash and cash equivalents $ 12,999 $ 12,407 $ 15,580 $ 3355 $ 11,362 $ 52,703 $ 33,312 Investments 20,794 10,918 21,282 5 68 15,728 69,290 53,283 Restricted cash and cash equivalents 11,007 1,957 2,060 1,796 16,820 Restricted investments 15,298 528 15,826 Accounts receivable, net 42,269 6,701 7,259 93 1,393 57,715 3,580 Accrued interest receivable 1,343 122 169 2 284 1,920 311 Note receivable 56 Interfund receivable 12 Inventories 8,305 567 3 8,875 725 Bond payment receivable 2,010 2,010 Prepaid and other assets 5,371 1,014 36 6,421 58 Total current assets 117,386 34,214 46,350 1,C)18 32,612 231,580 91,337 Noncurrent assets:

Restricted cash and cash equivalents, less current portion 47,807 11,571 20,900 18,892 99,170 Restricted investments, less current portion 222,388 7,707 6,489 236,584 Unamortized debt issuance costs' 6,084 707 394 614 7,799 Bond payment receivable, less current portion 6,545 6,545 Pipeline receivable 101 101 Accounts receivable, less current portion 1,985 Interfund receivable, less current portion 53 Prepaid and other assets 51,072 51,072 Net other post-employment benefits (OPEB) asset ________ _______

_____ ________9,765 Capital assets:

Land 35,671 2,339 316 1,949 18,135 58,410 Buildings, structures and improvements 89,388 16,632 493,039 599,059 6,938 Utility plant 1,126,422 380,997 1,507,419 Machinery and equipment 4,767 983 24,066 29,816 56,889 Construction in progress 46,201 22,871 7,492 4,231 80,795 Total Capital assets 1,208,294 406,207 101,963 19,564 539,471 2,275,499 63,827 Less accumulated depreciation (386,832) (112,214) (9,144) (10,029) (213,607) (731,826) (45,716)

Capital assets, net 821,462 293,993 92,819 9,535 325,864 1,543,673 18,111 Total noncurrent assets 1,148,813 314,079 114,113 9,535 358,404 1,944,944 29,914 Total assets 1,266,199 348,293 160,463 10,553 391,016 2,176,524 121,251 (continued) 33

CITY OF ANAHEIM Statement of Fund Net Assets Proprietary Funds June 30, 2012 (In thousands) (continued)

Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities -

Electric Water Sanitation Golf Enfertainment Internal Utility Utility Utility Courses Venues Total Service Funds LIABILITIES Current liabilities (payable from current assets):

Accounts payable $ 16,918 $ 12,567 $ 3,321 $ 325 $ 711 $ 33,842 $ 7,856 Wages payable 406 184 81 5 296 972 3,326 Interest payable 503 503 Compensated absences 13,956 Long-term obligations 4,749 513 12,756 18,018 9,122 Unearned revenues 313 313 1,499 Deposits 4,105 758 544 5 1,803 7,215 Interfund payable 548 548 Regulatory credits 59,392 6,010 65,402 Total current liabilities (payable from current assets) 85,570 19,519 4,459 883 16,382 126,813 35,759 Current liabilities (payable from restricted assets):

Accounts payable 3,199 799 1,220 5,218 Wages payable 103 11 114 Interest payable 8,551 1,068 883 576 11,078 Arbitrage rebate liability 206 5 211 Long-term obligations 14,246 1,412 367 16,025 Total current liabilities (payable from restricted assets) 26,305 2,485 2,060 1,796 32,646 Total current liabilities 111,875 22,004 6,519 883 18,178 159,459 35,759 Noncurrent liabilities:

Interfund payable, less current portion 2,653 2,653 Long-term obligations, less current portion 687,670 94,027 45,564 83,339 910,600 36,063 Provision for decommissioning costs 130,945 130,945 Total noncurrent liabilities 818,615 94,027 45,564 2,653 83,339 1,044,198 36,063 Total liabilities 930,490 116,031 52,083 3,536 101,517 1,203,657 71,822 FUND NET ASSETS Invested in capital assets, net of related debt 238,623 216,040 59,858 9,535 262,374 786,430 16,417 Restricted for:

Debt service 13,633 1,301 367 1,947 17,248 Capital projects 15,503 2,711 8,287 10,235 36,736 Other purposes 7,251 7,251 Unrestricted 60,699 12,210 39,868 (2,518) 14,943 125,202 33,012 Total fund net assets $ 335,709 $ 232,262 $108,380 $ 7,017 $ 289,499 972,867 $ 49,429 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (13,043)

Net assets of business-type activities $ 959,824 The accompanying notes are an integral part of these financial statements. 34

CITY OF ANAHEIM Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2012 (Inthousands)

Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities -

Electric Water Sanitation Golf Entertainment Internal Utility Utility Utility Courses Venues Total Service Funds Operating revenues:

Sales of light and power $360,194 $360,194 Transmission revenues 33,923 33,923 Sales of water $ 57,041 57,041 Solid waste collection fees $ 40,462 40,462 Wastewater fees 11,676 11,676 Street cleaning fees 3,243 3,243 Green fees and cart rentals $4,631 4,631 Facilities rental $ 22,412 22,412 Concession fees 134 5,609 5,743 Other 3,814 707 1,249 37 1,368 7,175 $161,197 Total operating revenues 397,931 57,748 56,630 4,802 29,389 546,500 161,197 Operating expenses:

Cost of purchased )ower 245,442 245,442 Fuel and generation of power 21,884 21,884 Cost of purchased water 28,088 28,088 Treatment and pumping of water 5,739 5,739 Maintenance, operations and administration 46,905 10,788 47,105 3,516 26,628 134,942 36,665 Insurance premniums and claims 11,174 Compensated absences and other benefits 113,673 Depreciation and amortization 38,995 9,739 2,627 540 12,840 64,741 4,540 Total operating expenses 353,226 54,354 49,732 4,056 39,468 500,836 166,052 Operating income (loss) 44,705 3,394 6,898 746 (10,079) 45,664 (4,855)

Nonoperating income lexpensesi: 2,194 463 Intergovernmental revenues 1,113 3,770 480 Interest income 7,662 1,119 682 10 743 10,216 1,014 Debt service recovery 547 547 Interest expense (32,899) (3,803) (1,817) (50) (5,770) (44,339) (911 Gain (loss) from disposal of capital assets (4,284) (68) (4,352) 192 Total nonoperating income (expenses) (23,043) (2,221) (4,306) (40) (4,548) (34,158) 1,595 Income (loss) before contributions and tranfers 21,662 1,173 2,592 706 (14,627) 11,506 (3,260)

Capital contributions 3,533 1,799 261 615 6,208 Transfers in 67 14,305 14,372 1,500 Transfers out (20,851) (3,264) (2,698) (600) (27,413)

Change in fund net assets 4,411 (292) 155 106 293 4,673 (1,760)

Fund net assets at beginning of year 331,298 232,554 108,225 6,911 289,206 51,189 Fund net assets at end of year $335,709 $232,262 $108,380 $7,017 $289,499 $ 49,429 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (1,095)

Change in net assets of business-type activities $ 3,578 The accompanying notes are an integral part of these financial statements. 35

CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2012 (Inthousands)

Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities -

Electric Water Sanitation Golf Entertainment Internal Utility Utility Utility Courses Venues Total Service Funds Cash flows from operating activities:

Receipts from customers and users $ 408,260 $ 57,656 $ 55,515 $ 4,630 $ 30,463 $ 556,524 Receipts from interfund services provided 1,590 322 21 1,933 $161,090 Payments to suppliers (254,277) (26,245) (37,107) (2,675) (6,367) (326,671) (22,262)

Payments for salaries, wages and other benefits (35,808) (12,964) (7,047) (569) (16,620) (73,008) (126,282)

Payments for interfund services used (8,098) (4,309) (3,161) (216) (2,506) (18,290) (3,176)

Payments for insurance premiums and claims (9,059)

Other receipts 1,228 171 1,399 205 Net cash provided by operating activities 111,667 14,460 9,449 1,341 4,970 141,887 516 Cash flows from noncapital financing activities:

Receipt of interfund balances 17 Transfers in 13,366 13,366 1,500 Transfers out (19,912) (3,1971 (2,698) 600) (26,407)

Operating grant receipts 441 91 532 Net cash provided by (used for) noncapital financing activities (19,912) (2,756) (2,607) 6001 13,366 (12,509) 1,517 Cash flows from capital and related financing activities:

Proceeds from sale of capital assets 16 16 308 Capital contributions 2,575 3 2,578 Capital purchases (40,7811 (18,264) (10,390) (7,666) (77,101) (2,691)

Capital grant receipts 1,986 568 2,554 480 Principal payment on long-term debt (18,175) (2,262) 1835) (11,638) (32,910) (1,423)

Interest payments (34,684) (4,736) (2,161) (66) (4,986) (46,633) (95)

Debt service recovery 2,437 2,437 Payment of interfund balances of capital purploses 482) 482 Transfers in (out) fur capital purposes 39 (39)

Net cash used for capital and related financing activities (89,040) (25,298) (12,818) 548) (21,837) (149,541) (3,421)

Cash flows from investing activities:

Purchase of investment securities (100,745) (6,429) (13,279) (490) (10,660) (131,603) (35,315)

Proceeds from sale and maturity of investment securities 87,745 8,600 13,029 350 9,630 119,354 32,633 Interest received 7,832 1,217 744 2 749 10,544 1,023 Collection of note receivable 16 16 Net cash provided by (used for) investing activities (5,168) 3,404 494 138) (281) (1,689) (1,659)

Increase (decrease) in cash and cash equivalents (2,453) (10,1901 (5,482) 55 (3,782) (21,852) (3,047)

Cash and cash equivalents at beginning of the year 74,266 36,125 44,022 300 35,832 190,545 36,359 Cash and cash equivalents at end of the year $ 71,813 $25,935 $ 38,540 $ 355 $ 32,050 $ 168,693 $ 33,312 (continued) 36

CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2012 (inthousands) (continued)

Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities -

Electric Water Sanitation Golf Entertainment Internal Utility Utility Utility Courses Venues Total Service Funds Reconciliation of operating income (loss) to net cash provided by operating activities:

Operating income (loss) $ 44,705 $ 3,394 $ 6,898 $ 746 $(10,079) $ 45,664 $ (4,855)

Adjustments to reconcile operating income (loss) to net cash provided by operating activities:

Depreciation and amortization 38,995 9,739 2,627 540 12,840 64,741 4,540 Increase in provision for decommissioning costs 3,598 3,598 Changes in assets and liabilities:

Accounts receivable (2,143) 171 174 1 1,022 (775) (3,199)

Inventories 1,470 (222) 2 1,250 25 Prepaid and other assets 6,475 (3) 6,472 Note receivable 13 Accounts payable 4,931 1,484 (129) 72 1,326 7,684 1,455 Wages payable (426) (165) (81) (16) (190) (878) (224)

Unearned revenues (89) (89) 175 Compensated absences, OPEB and self-insurance liability 2,586 Deposits 975 (6) (40) (2) 141 1,068 Regulatory credits 13,087 65 13,152 Total adjustments 66,962 11,066 2,551 595 15,049 96,223 5,371 Net cash provided by operating activities $111,667 $14,460 $ 9,449 $ 1,341 $ 4,970 $141,887 $ 516 Schedule of noncash investing, capital and nonca)pital financing activities:

Capital assets financed through capital leases $ 462 Capital contributions $ 958 $ 1,796 $ 615 $ 3,369 Transfers in (out) of capital assets (9114 (28) $ 261 939 261 Increase (decrease) in fair value of investments 14 (58) (11) $ 6 10 (39) 52 Reconciliation of cash and cash equivalents:

Cash and cash equivalents $ 12,999 $ 12,407 $ 15,580 $ 355 $11,362 $ 52,703 $ 33,312 Restricted cash and cash equivalents, current portion 11,007 1,957 2,060 1,796 16,820 Restricted cash and cash equivalents, noncurrent portion 47,807 11,571 20,900 18,892 99,170 Total cash and cash equivalents $ 71,813 $25,935 $ 38,540 $ 355 $ 32,050 $168,693 $ 33,312 The accompanying notes are an integral part of these financial statements. 37

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CITY OF ANAHEIM Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2012 (In thousands)

Successor Agency to the Former Anaheim Redevelopment Agency Investment Private Purpose Agency Trust Funds Trust Fund Total Fund ASSETS Restricted cash and cash equivalents $ 396 $ 54,425 $ 54,821 $5,085 Restricted investments 634 1,865 2,499 3,256 Accrued interest receivable 7 156 163 Accounts receivable, net 4 4 48 Notes receivable, net 1,499 1,499 Prepaid and other assets 560 560 Unamortized debt issuance costs 3,980 3,980 Due from City of Anaheim 1,551 1,551 Land held for resale, net 18,098 18,098 Capital assets, net Depreciable 30,533 30,533 Nondepreciable 43,121 43,121 Total assets 1,037 155,792 156,829 $8,389 LIABILITIES Accounts payable 5,196 5,196 Wages payable 25 25 Interest payable 6,572 6,572 Due to other governments 13,897 13,897 Deposits 316 316 Due to bond holders $8,389 Long-term liabilities:

Due within one year 6,622 6,622 Due in more than one year 239,196 239,196 Total liabilities 271,824 271,824 $8,389 NET ASSETS Held in trust for pool participants 1,037 1,037 Held in trust for other purposes (116,032) (116,032)

Total net assets $1,037 $ (116,032) $ (114,995)

The accompanying notes are an integral part of these financial statements. 39

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CITY OF ANAHEIM Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2012 (In thousands)

Successor Agency to the Former Anaheim Redevelopment Agency Investment Private Purpose Trust Funds Trust Fund Total ADDITIONS Property taxes $ 15,146 $ 15,146 Contributions to pooled investments $1,959 1,959 Interest and investment income 20 250 270 Rental income 685 685 Other 9 9 Total additions 1,979 16,090 18,069 DEDUCTIONS Distribution from pool investments 2,204 2,204 Salaries and administration 1,403 1,403 Professional services 54 54 Project costs 7,677 7,677 State of California 13,897 13,897 Depreciation 646 646 Interest expense 5,563 5,563 Total deductions 2,204 29,240 31,444 Extraordinary loss (102,882) (102,882)

Change in net assets (225) (116,032) (1 I 6,257)

Net assets held in trust at beginning of year 1,262 1,262 Net assets held in trust at end of year $1,037 $(116,032) $(114,995)

The accompanying notes are an integral part of these financial statements. 41

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CITY OF ANAHEIM been blended into the City's CAFR in the government-wide governmental activities Notes to Financial Statements and in the fund financial statements as the Redevelopment Housing Set-Aside Special (Amounts in thousands) Revenue Fund, the Redevelopment Agency Debt Service Fund, and the Redevelopment Projects Capital Projects Fund. On February 1, 2012, The Anaheim NOTE 1 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES:

Redevelopment Agency dissolved per the State of California Assembly Bill I X26. See note 3 for more information related to the dissolution of the Anaheim Redevelopment The financial reporting entity Agency.

As defined by U. S. generally accepted accounting principles (GAAPI that are Community Center Authority (CCA) a joint powers authority, was created primarily established by the Governmental Accounting Standards Board (GASB), the financial to finance the initial construction of the Anaheim Convention Center. A five-member reporting entity consists of the primary government, as well as its component units, board appointed by the City Council governs the CCA. The City has entered into a which are legally separate organizations for which the elected officials of the primary noncancelable long-term lease with the CCA, which provides for lease payments in government are financially accountable. Financial accountability is defined as amounts sufficient to meet the annual debt service requirements on the certificates of appointment of a voting majority of the component unit's board, and either a) the participation issued by the CCA to finance the construction of the facility. The lease ability to impose will by the primary government, or b) the possibility that the is a financing arrangement, which transfers the ownership of the facility to the City at component unit will provide a financial benefit to or impose a financial burden on the end of the lease term, and the sole activity of the CCA is to provide financing for the primary government.

the City. As such, the financial data for the CCA has been blended into the City's CAFR in the government-wide business-type activities and in the fund financial statements The accompanying financial statements present the City of Anaheim (City), the with the City's Convention, Sports and Entertainment Venues Fund, as all activity primary government, and its component units. The financial data of the component related to the Anaheim Convention Center is accounted for in this enterprise fund.

units are included in the City's reporting entity because of the significance of their The capital lease has been eliminated in the financial statements. For a copy of the operational or financial relationships with the City.

CCA's separate financial statements, contact the Finance Director of the City.

The component units described below are each legally separate from the City, but are Anaheim Public Improvement Corporation (APIC) a non-profit corporation, was so intertwined with the City that they are, in substance, the same as the City. They are created primarily to finance several construction projects in the City. City Council reported as part of and accountable to the City and blended into the government-members, in separate session, serve as the governing board of APIC. The City has wide and fund financial statements.

entered into noncancelable long-term leases with APIC, which provide for lease payments in amounts sufficient to meet the annual debt service requirements on the Anaheim Housing Authority (Housing Authority) is a separate entity primarily funded certificates of participation issued by APIC to finance these construction projects. The by the U.S. Department of Housing and Urban Development to administer funds leases are financing arrangements, which transfer ownership of the constructed assets received under the Federal Housing Assistance Payments program. City Council to the City at the end of the lease terms. The financial data of APIC has been blended members, in separate session, serve as the governing board of the Housing Authority into various governmental and business-type activities and funds of the City as and all accounting and administrative functions are performed by the City. The applicable, and the capital leases have been eliminated.

financial activity of the Housing Authority- has been blended into the City's Comprehensive Annual Financial Report (CAFR) in the government-wide Anaheim Public Financing Authority (Authority) a joint powers authority, was governmental activities and in the fund financial statements as the Housing Authority established as a vehicle to reduce local borrowing costs and promote greater use of Special Revenue Fund.

existing and new financial instruments and mechanisms. City Council members, in separate session, serve as the governing board of the Authority. Financial activity of Anaheim Redevelopment Agency (Redevelopment Agency) is a separate government the Authority has been blended into the City's CAFR into various governmental and entity created to develop and execute plans for improvement, rehabilitation and business-type activities and funds of the City as applicable.

redevelopment of blighted areas within the City. City Council members, in separate session, serve as the governing board of the Redevelopment Agency, and all The City is a participant in three joint ventures and jointly-owned properties (see note accounting and administrative functions are performed by the City. The financial 11 ), which are not considered part of the financial reporting entity, as the City does activity of the first seven months of fiscal year 2012 of the Redevelopment Agency has not have significant equity interests in the joint ventures and jointly-owned properties.

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CITY OF ANAHEIM New Accounting Pronouncements

• GASB Statement No. 63, Financial Reporting of Deferred Outflow of Resources, Deferred Inflows of Resources, and Net Position. Issued in June On July 1, 2011, the city adopted GASB Statement No. 64, Derivative Instruments: 2011, This Statement provides guidance for deferred outflows of resources and Application of Hedge Accounting Termination Provisions - an amendment of GASB deferred inflows of resources. Deferred outflows and deferred inflows of Statement No. 53. This Statement clarifies whether an effective hedging relationship resources are defined as a consumption of net assets by the government that continues after the replacement of a swap counterparty or a swap counterparty's is applicable to a future reporting period and the acquisition of net assets by credit support provider. It also sets forth criteria that establish when the effective the government that is applicable to a future reporting period. Net position is hedging relationship continues and hedge accounting should continue to be applied. defined as the residual of all other elements presented in a statement of This Statement has no material effects on amounts reported in the City's financial financial position. This Statement is effective for financial statements for statements for the fiscal year ended June 30, 2012. periods beginning after December 15, 2011.

The City is currently reviewing its accounting practices to determine the potential " GASB Statement No. 65, Items Previously Reported as Assets and Liabilities.

impacts on the financial statements for the following GASB Statements: Issued in March 2012, this Statement establishes accounting and financial reporting standards that reclassify as deferred outflows of resources or deferred GASB Statement No. 60, Accounting and Financial Reporting for Service inflows of resources, certain items that were previously reported as assets and Concession Arrangements. Issued in November 2010, this Statement liabilities and recognizes as outflows of resources or inflows of resources, addresses issues related to service concession arrangements (SCAs) between a certain items that were previously reported as assets and liabilities. This transferor (a government) and an operator (governmental or nongovernmental Statement is effective for financial statements for period beginning after entity) in which (1) the transferor conveys to an operator the right and related December 15, 2012.

obligation to provide services through the use of infrastructure or another public asset (a "facility") in exchange for significant consideration, and (2) the " GASB Statement No. 66, an Amendment of GASB Statement No. 10 and No.

operator collects and is compensated by fees from third party. The 62. Issued in March 2012, this Statement resolves the conflicting guidance that requirements of this Statement are effective for financial statements for periods resulted from the issuance of two pronouncements. The statement amends beginning after December 15, 2011. Statement No. 10, Accounting and FinancialReporting for Risk Financingand Related Insurance Issues, by removing the provision that limits fund based

" GASB Statement No. 61, The Financial Reporting Entity: Omnibus - an reporting of an entity's risk financing activities to the general fund and the amendment of GASB Statement No. 14 and No. 34. Issued in November internal service fund type. It also amends Statement No. 62, Fund Balance 2010, this Statement modifies certain requirements for inclusion of Reporting and Governmental Fund Type Definition, by providing specific component units in the financial reporting entity; it amends the criteria for guidance on accounting for operating lease payments, purchased loan or reporting component units as if they were part of the primary government in group of loans, and service fees related to mortgaged loans. This Statement is certain circumstances, it also clarifies the reporting of equity interests in legally effective for periods beginning after December 15, 2012.

separate organizations. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2012. " GASB Statement No. 68, this Statement provides guidance for employers offering defined benefit pensions through plans administered as trusts or

• GASB Statement No. 62, Codification of Accounting and FinancialReporting equivalent arrangements. It replaces certain requirements related to plan trusts Guidance Contained in Pre-November 30, 1989 FASB and AICPA in Statement No. 27 Accounting for Pension by State and Local Governmental Pronouncements. Issued in December 2010, this Statement incorporates into Employers, as well as the requirements of Statement No. 50, Pension the GASB's authoritative literature certain accounting and financial reporting Disclosures. This Statement establishes standards for measuring and guidance from all sources of generally accepted accounting principles for state recognizing liabilities, deferred outflows of resources, and deferred inflows of and local governments so that they derive from a single source. This resources, and expense/expenditures. For defined benefit pensions, this Statement is effective for financial statements for periods beginning after Statement identifies the methods and assumptions that should be used to December 15, 2011. project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. This Statement is effective for periods beginning after lune 15, 2014.

44

CITY OF ANAHEIM Basic financial statements with a specific function or program. Indirect expenses for administrative overhead are allocated among the functions and programs using a full cost allocation approach In accordance with GASB Statement No. 34 - Basic Financial Statements and and are presented separately to enhance comparability of direct expenses between Management's Discussion and Analysis for State and Local Governments, the basic governments that allocate direct expenses and those that do not. Interest on general financial statements include both government-wide and fund financial statements.

/

long-term debt is not allocated to the various functions. Program revenues include: 1) charges to customers or users who purchase, use or directly benefit from goods, The government-wide financial statements (Statement of Net Assets and Statement of services or privileges provided by a particular function or program and 2) grants and Activities) report on the City and its component units as a whole, excluding fiduciary contributions that are restricted to meeting the operational or capital requirements of activities. Governmental activities, which normally are supported by taxes and a particular function or program. Taxes, unrestricted investment income and other intergovernmental revenues, are reported separately from business-type activities, revenues not identifiable with particular functions or programs are included as which rely to a significant extent on fees and charges for support. All activities, both general revenues. The general revenues support the net costs of the functions and governmental and business-type, are reported in the government-wide financial programs not covered by program revenues.

statements using the economic resources measurement focus and the accrual basis of accounting, which includes long-term assets and receivables as well as long-term Also, part of the basic financial statements are fund financial statements for debt and obligations. The government-wide financial statements focus more on the governmental funds, proprietary funds and fiduciary funds, even though the latter are sustainability of the City as an entity and the change in aggregate financial position excluded from the government-wide financial statements. The focus of the fund resulting from the activities of the fiscal period. financial statements is on major funds, as defined by GASB Statement No. 34.

Although this reporting model sets forth minimum criteria for determination of major Generally, the effect of interfund activity has been removed from the government- funds (a percentage of assets, liabilities, revenues, or expenditures/expenses of fund wide financial statements, except for interfund services provided and used. Net category and of the governmental and enterprise funds combined), it also gives interfund activity and balances between governmental activities and business-type governments the option of displaying other funds as major funds. Other nonmajor activities are shown in the governnment-wicle financial statements. The "doubling up" funds, as well as the internal service funds, are combined in a single column on the effect of internal service fund activity has been eliminated from the government-wide fund financial statements.

financial statements with the expenses shown in the various functions and programs on the Statement of Activities. The City reports the following major governmental funds:

The government-wide Statement of Net Assets reports all financial and capital The General Fund is the City's primary operating fund. It accounts for all financial resources of the City (excluding fiduciary funds). It is displayed in a format of assets resources of the general government, except those required to be accounted for less liabilities equal net assets, with the assets and liabilities shown in order of their in another fund.

relative liquidity. Net assets are required to be displayed in three components: 1) invested in capital assets, net of related debt, 2) restricted, and 3) unrestricted. The Housing Authority Special Revenue Fund accounts for the providing of Invested in capital assets, net of related debt, represents capital assets net of housing assistance to low and moderate-income families in the Anaheim area.

accumulated depreciation which is reduced by outstanding balances of any bonds, Financing is provided primarily from Federal Section 8, U.S. Department of notes or other borrowings that are'attributable to the acquisition, construction, or Housing and Urban Development (HUD) receipts.

improvement of those assets. Restricted net assets are those with constraints placed on their use by either: 1) creditors (such as through debt covenants), grantors, The City reports the following major enterprise funds:

contributors, or laws or regulations of other governments, or 2) law through constitutional provisions or enabling legislation. All net assets not otherwise classified The Electric Utility Fund accounts for the operation of the City's electric utility, a as restricted, are shown as unrestricted. Generally, the City would first apply restricted self-supporting activity, which renders services on a user charge basis to residents resources when an expense is incurred for purposes for which both restricted and and businesses located in Anaheim.

unrestricted net assets are available.1 The Water Utility Fund accounts for the operation of the City's water utility, a self-The government-wide Statement of Activities demonstrates the degree to which both supporting activity, which renders services on a user charge basis to residents and direct and indirect expenses of the various functions and programs of the City are businesses located in Anaheim.

offset by program revenues. Direct expenses are those that are clearly identifiable 45

CITY OF ANAHEIM The Sanitation Utility Fund accounts for the operation of the City's solid waste and local boards. The City separately maintains these entities' money in two individual sanitation program, a self-supporting activity, which provides for the collection funds; these funds represent the assets, primarily cash and investment, and the and disposal of solid waste, street sweeping, and sanitary sewer cleaning on a user related liability of the City to disburse these monies on demand.

charge basis to residents and businesses located in Anaheim.

The Private PurposeTrust Fund is used to account for resources legally held in trust The Golf Courses Fund accounts for the operation of the Anaheim Municipal for use by the Successor Agency to the Former Anaheim Redevelopment

("Dad Miller") Golf Course and the Anaheim Hills Golf Course, a self-supporting (Successor Agency). The Successor Agency was established on February 1, 2012 activity that renders services on a user charge basis. and represents five months of activities for fiscal year 2012.

The Convention, Sports and Entertainment Venues Fund accounts for the The Agency Fund is used to account for the monies collected and paid on behalf operations of the Anaheim Convention Center, Angel Stadium of Anaheim, and of the Mello-Roos Districts located in the City.

The City National Grove of Anaheim. See note 12 for further discussions of the Angel Stadium of Anaheim and The City National Grove of Anaheim. Measurement focus and basis of accounting The internal service funds, which provide services to the other funds of the City, are The governmental funds financial statements are prepared on a current financial presented in a single column in the proprietary funds financial statements. Because resources measurement focus and modified accrual basis of accounting. To conform the principal users of the internal service funds are the City's governmental activities, to the modified accrual basis of accounting, certain modifications must be made to the assets and liabilities of the internal service funds are consolidated into the the accrual method. These modifications are outlined below:

governmental activities column of the government-wide Statement of Net Assets. The

• Revenue is recorded when it becomes both measurable and available costs of the internal service fund services are spread to the appropriate function or (received within 60 days after year-end). Revenue considered susceptible to program on the government-wide Statement of Activities and the revenues and accrual includes: property taxes, sales and use taxes, transient occupancy expenses within the internal service funds are eliminated from the government-wide financial statements to avoid any doubling effect of these revenues and expenses. The taxes, licenses, fees and permits, intergovernmental revenues (including motor vehicle license fees), charges for services, fines, forfeits and penalties, and City operates four internal service funds:

interest.

The General Benefits and Insurance Fund is used to account for employee

" Expenditures are recorded when the related fund liability is incurred. Principal compensated absences, retirement and health benefits, and self-insurance and interest on general long-term debt are recorded as fund liabilities when programs.

due or when amounts have been accumulated in the debt service fund for The Motorized Equipment Fund is used to account for motorized equipment used payments to be made early in the following year.

by City departments.

" Disbursements for the purchase of capital assets providing future benefits are The Information and Communication Services Fund is used to account for data considered expenditures. Bond proceeds are reported as other financing processing and telecommunication services provided to City departments. source.

The Municipal Facilities Maintenance Fund is used to account for office With this measurement focus, operating statements present increases (revenues and maintenance services and equipment used by City departments. other financing sources) and decreases (expenditures and other financing uses) in net current assets. This is the traditional basis of accounting for governmental funds and Fiduciary Funds account for assets held by the City in a trustee or agency capacity on also is the manner in which these funds are normally budgeted. This presentation is behalf of others and, therefore, are not available to support City programs. The deemed most appropriate to: 1) demonstrate legal and covenant compliance, 2)

Fiduciary Funds are not included in the government-wide financial statements as they demonstrate the sources and uses of liquid resources, and 3) demonstrate how the City's actual revenues and expenditures conform to the annual budget. Since the are not an asset of the City. The City reports the following fiduciary funds:

governmental funds financial statements are presented on a different basis than the The Investment Trust Fund is used to account for the external portion of the City's governmental activities column of the government-wide financial statements, a investment pool, which commingles resources of legally separate entities reconciliation is provided immediately following each fund statement. These administered by the City in an investment portfolio for the benefit of all reconciliations briefly explain the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide 46 participants. The entities include two Joint Powers Authorities (JPA) governed by financial statements.

CITY OF ANAHEIM The proprietary funds financial statements are prepared on the same basis (economic Cash and investments resources measurement focus and accrual basis of accounting) as the government-wide financial statements. Therefore, most lines for the total enterprise funds on the The City pools available cash from all funds for the purpose of increasing income proprietary funds financial statements will directly reconcile to the business-type through investment activities. Investments in U.S. Treasury obligations and agency activities column on the government-wide financial statements. Because the securities and medium term corporate notes are carried at fair value based on quoted enterprise funds are combined into a single business-type activities column on the market prices. Participating guaranteed investment contracts and flexible repurchase government-wide financial statements, certain interfund activities between these agreements are carried at fair value. Money market mutual funds are carried at fair funds are eliminated in the consolidation for the government-wide financial value based on the fund's share price. The City's investment in the State of California statements, but are included in the fund columns in the proprietary funds financial Local Agency Investment Fund (LAIF) is carried at fair value based on the value of statements. The net costs of the internal service funds are also partially allocated to each participating dollar as provided by LAIF. LAIF is authorized by California the business-type activities column on the government-wide financial statements. A Government Code (Government Code) Section 16429 under the oversight of the reconciliation of the total enterprise funds on the fund financial statements to the Treasurer of the State of California. Commercial paper, participating guaranteed business-type activities column on the government-wide financial statements is investment contracts and negotiable certificates of deposit are carried at amortized provided on the face of the fund financial statements. cost (which approximates fair value). Interest income, which includes changes in fair value, on investments is allocated to all funds on the basis of daily cash and Enterprise funds account for operations where the intent of the City is that the costs investment balances. See note 2 for further discussion.

of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges and fees. Under GASB Statement No. 34, For purposes of the basic financial statements, the City considers cash equivalents to enterprise funds are also required for any activity whose principal revenue sources be highly liquid short-term investments that are readily convertible to known amounts meet any of the following criteria: 1) any activity that has issued debt backed solely of cash and mature within three months of the date they are acquired. Cash and cash by the fees and charges of the activity, 2) the cost of providing services for an activity, equivalents are included in the City's cash and investments pool and in accounts held including capital costs such as depreciation or debt service, must legally be recovered by fiscal agents.

through fees and charges, or it is the policy of the City to establish activity fees or charges to recover the cost of providing services, including capital costs. Notes receivable On the proprietary funds financial statements, operating revenues are those that flow In the government-wide financial statements, notes receivable of $68,845 includes directly from the operations of the activity, i.e. charges to customers or users who accrued interest receivable of $10,667, ranging from 3% to 10% interest per annum, purchase or use the goods or services of that activity. Operating expenses are those and is net of allowances of $8,593 for uncollectible accounts at June 30, 2012.

that are incurred to provide those goods or services. Non-operating revenues and Allowances for uncollectible accounts were estimated based on certain assumptions; expenses are items such as investment income and interest expense that are not a therefore, actual results could differ from the estimates.

result of the direct operations of the activity.

In the governmental funds financial statements, due to the extended period of time Under GASB Statement No. 20, Accounting and FinancialReporting for Proprietary over which notes receivable are to be collected and the contingent nature of certain Funds and Other Governmental Entities That Use ProprietaryFund Accounting, the sources of repayment, the City has recorded deferred revenue equal to the City has elected for proprietary funds not to apply Financial Accounting Standards outstanding principal and accrued interest balance of the notes receivable.

Board (FASB) statements issued after November 30, 1989.

Inventories The Electric and Water Utility funds follow the uniform system of accounts prescribed Inventories are stated at average cost. Inventories in the General Fund are recorded by the Federal Energy Regulatory Commission (Electric Utility) and the California as expenditures when used and are reported under the consumption method of Public Utilities Commission (Water Utility). The utilities are not subject to the accounting.

regulations of these commissions.

Prepaid and other assets The reporting focus for the investment trust fund and the private-purpose trust fund is upon net assets and changes in net assets and employs accounting principles similar Certain payments to vendors such as insurance premiums, prepaid rents, and deposits to proprietary funds. The agency fund has no measurement focus but utilizes the for real property acquisitions reflect costs applicable to future periods and are accrual basis of accounting for reporting its assets and liabilities.

recorded as prepaid and other assets in both government-wide and fund financial statements. These costs will be recognized in the period when services are received or when the City receives title to the real property. 47

CITY OF ANAHEIM Land held for resale constructed. Interest incurred during the construction phase of projects is reflected in the capitalized value of the asset constructed for proprietary funds. For the year ended The Housing Authority received transfers in of certain parcels of land from the former June 30, 2012, business-type activities capitalized net interest costs of $3,072 in the Redevelopment Agency, for the primary purpose of developing low and moderate government-wide and fund financial statements. Total interest expense incurred by income housing. The Housing Authority records these parcels as land held for resale the business-type activities (and the enterprise funds on the proprietary funds in their financial records. The properties held for resale are recorded at the lower of statements) before capitalization was $47,411.

cost or estimated net realizable value. At June 30, 2012, land held for resale with an original cost of $44,171 was recorded net of the allowance for decline in value of Capital assets are depreciated using the straight-line method over the following

$20,487 and totaled $23,684, with this amount offset by a restriction of fund balance estimated useful lives:

for low and moderate income housing in the Housing Authority major governmental fund financial statement. See notes 3 and 4 for discussion of the transfer of housing Buildings, structures and improvements 5 to 85 years assets. Utility plant 5 to 75 years Machinery and equipment 2 to 40 years Restricted assets Infrastructure 25 to 75 years Certain proceeds of the City's bonds, as well as certain resources set aside for their The net book value of capital assets retired or disposed of, related salvage value repayment, are classified as restricted on the Statement of Net Assets, Balance Sheet, proceeds and the costs of removal are recorded in accumulated depreciation in the or Statement of Fund Net Assets, because they are maintained in separate bank Electric Utility and Water Utility Funds. In all other cases, these amounts are recorded accounts and their use is limited by applicable debt covenants. Additionally, resources as gains or losses on disposal of capital assets.

set aside by the Electric Utility for future decommissioning of its former ownership share of the San Onofre Nuclear Generating Station, Units 2 and 3 (SONGS) and the Capital assets transferred between funds are transferred at their net book value (cost San Juan Generating Station, Unit 4, are classified as restricted on both the less accumulated depreciation), as of the date of the transfer.

government-wide Statement of Net Assets and proprietary funds Statement of Fund Net Assets. Debt costs Capital assets Debt issuance costs in the amount of $10,807 are included in noncurrent assets at June 30, 2012. Unamortized discounts, consisting of refunding costs of $10,182 Under GASB Statement No. 34, all capital assets, whether owned by governmental reduced by premiums net of discounts of $8,811, are reflected in net long-term activities or business-type activities are recorded and depreciated in the government- obligations. Both debt issuance costs and premiums net of discounts are amortized wide financial statements. No long-term capital assets or depreciation are shown in over tile life of the related bond issue using the effective interest method. Refunding the governmental funds financial statements. costs are amortized over the life of the new bond or the life of the old bond, whichever is shorter, using the effective interest method.

Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks and other assets that are immovable and of value only to the City), are defined as Accretion assets with an initial, individual cost of more than $5 ($50 for infrastructure) and an estimated useful life of greater than one year. Capital assets are recorded at cost or Accretion is an adjustment of the difference between the price of a bond or certificate estimated historical cost if purchased or constructed. Donated capital assets are of participation (COP) issued at an original discount and the par value of the bond or recorded at the estimated fair market value at the date of donation. COP. The accreted value is recognized as it accrues by fiscal year.

The costs of normal maintenance and repairs that do not add to the value of the Regulatory credits capital asset or materially extend capital assets lives are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the The Electric Utility's Rates, Rules, and Regulations provide for the Rate Stabilization related capital assets. Account (RSA), formerly referred to as Power Cost Adjustment/Rate Stabilization Account, which contains two components: the Power Cost Adjustment (PCA) that was Major outlays for capital assets and improvements are capitalized as the projects are adopted by City Council on April 1, 2001, and the Environmental Mitigation Adjustment (EMA) that was adopted by the City Council on January 13, 2009. The 48

CITY OF ANAHEIM PCA will reflect variations in the power supply or fuel costs. The EMA will allow the Deferred revenues in the governmental funds amounted to $135,981 at June 30, recovery of environmental mitigation costs, such as greenhouse gas emissions costs, 2012 as follows:

the marginal cost differential between renewable power and traditional fossil fuel based power. The RSA provides the City with operational and billing flexibility to Nonmajor mitigate material fluctuations in the cost of energy, loss of revenues or unbudgeted General Housing Governmental Fund Authority Funds Total costs including unexpected long-term loss of a generating facility, unplanned limits on the ability to transmit energy to the City, or major disasters. The RSA funded by Availability:

Notes receivable $44,788 $24,001 $ 68,789 PCA and EMA collections are billed to customers through standard rates.

Long-term receivable clue from the Successor Agency 8,176 14,804 22,980 Since inception, the Electric Utility has collected $164,658 in regulatory credits Other revenues $ 6,681 71 34,478 41,230 related to PCA. As of March 15, 2012, the PCA rates were changed from $0.0100 to Uneamed 2,473 509 2,982

$0.0190 per kWh for all domestic retail customers, excluding residential lifeline Total $ 9,154 $53,544 $73,283 $135,981 customers, and from $0.0100 to $0.0145 per kWh for all commercial, industrial and municipal customers. At June 30, 2012, the liability recorded for regulatory credits Compensated absences related to PCA totaled $56,996 for the Electric Utility. During fiscal year 2012, $9,076 was recognized as RSA revenues to mitigate the impact of energy costs and operation Compensated absences, vacation and sick pay, for all City employees are generally costs.

paid by the General Benefits and Insurance Fund, an internal service fund. The Since inception, the Electric Utility has collected $35,225 in regulatory credits related General Benefits and Insurance Fund is reimbursed through payroll charges to all other funds based on estimates of benefits to be earned and used during the fiscal to EMA. As of April 20, 2010, the EMA rate was changed from $0.0050 to $0.0100 year. It is the policy of the City to pay all accumulated vacation pay when an per kWh for all domestic customers, and $0.0050 for all other customers. At June 30, employee retires or terminates. Accumulated sick pay in excess of 175 hours0.00203 days <br />0.0486 hours <br />2.893519e-4 weeks <br />6.65875e-5 months <br /> per 2012, the liability recorded for regulatory credits related to EMA totaled $2,396.

employee is paid to employees at their then current rate of pay in January each year During fiscal year 2012, $14,924 was recognized as RSA revenues to mitigate the impact of environmental mitigation costs.

or upon termination from the City. Employees are paid for all accumulated sick pay when they retire from the City. Vested vacation and sick pay benefits are accrued when incurred in the General Benefits and Insurance Fund and at June 30, 2012, The Water Utility's rates, rules and regulations provide for a water regulatory credit totaled $18,104 and is included in long-term liabilities in the Statement of NetAssets.

account to reflect variations in the cost of water to the Water Utility and provide more Also included in long-term liabilities in the Statement of Net Assets at June 30, 2012, stable retail water rates to the customers of the City's Water Utility. This rate is compensatory time liability of $249.

stabilization account (RSA) provides increased flexibility by allowing the Water Utility to maintain financial performance indicators and goals specified in bond covenants.

Changes in the City's compensated absences liability in fiscal year 2012 were as The account is funded through expense reimbursements such as water supply cost follows:

refunds received from the Metropolitan Water District and Orange County Water District and other miscellaneous credits and revenue. At June 30, 2012 the liability Compensated absences liability at beginning of year $19,558 recorded for regulatory credits totaled $6,010 for the Water Utility During fiscal year Estimated compensated absences benefits earned 20,873 2012, no PCA revenue was recognized for the Water Utility. Compensated absences used (22,078)

Compensated absences liability at end of year $18,353 Deferred revenues Nuclear fuel and decommissioning costs Deferred revenues arise in governmental funds when revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred Federal regulations require the Electric Utility to provide for the future revenues also arise, in both governmental and proprietary funds, when resources are decommissioning costs of its former ownership share of San Onofre Nuclear received by the government before it has a legal claim to them, as when grant monies Generating Station (SONGS). The Electric Utility has established a provision for are received prior to incurring qualifying expenditures/expenses (unearned). In decommissioning costs of SONGS and restoration of the beachfront at San Onofre, subsequent periods, when both revenue recognition criteria are met, or when the California where it is located. The Electric Utility funds the reserve and recognizes this government has a legal claim to the resources, revenue is recognized. expense over the remaining useful life of the generating plant. A separate irrevocable 49

CITY OF ANAHEIM trust account has been established for prior and future amounts funded and these Fund balances amounts are classified as restricted assets in the accompanying balance sheets. At June 30, 2012, the provision for decommissioning costs totaled $127,425. For tile In the fund financial statements, governmental funds report the following year ended June 30, 2012, the Electric Utility has recorded decommissioning costs classifications:

incurred for SONGS in the amount of $3,158, which is included in the fuel and generation component in operating expenses. " Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required The City sold its ownership share in SONGS to Southern California Edison (SCE) on to be maintained intact. The "not in spendable form" criterion includes items December 29, 2006. The Electric Utility's decision to divest SONGS was largely based that are not expected to be converted to cash, for example, inventories, on the need for operating flexibility to provide both peak and base load power, ongoing prepaid or long term loans and notes receivable.

cost concerns for environmental disposal of nuclear waste and marine mitigation, as well as escalating decommissioning costs. See note 11 for further discussion.

• Restricted fund balance includes amounts when constraints placed on the use of the resources are either imposed by external resource providers, The California Public Utilities Commission approved a cost estimate by SCE for the constitutional provisions or enabling legislation.

decommissioning costs of SONGS. At June 30, 2012, SCE's future cost estimate for the Electric Utility's share of decommissioning costs is $114,840. The Electric Utility " Committed fund balance includes amounts that can be used only for the currently has $127,425 in irrevocable trust for the decommissioning costs. Based on specific purposes pursuant to constraints imposed by formal action of the an assumed 2.5% rate of return, it is estimated that the Electric Utility's current reserve City's highest level of the decision-making authority, the City Council. The of $127,425 will grow to $163,116 by 2022, which exceeds SCE's future cost City Council can modify or remove the commitments by taking the same kind estimate of $147,170. Based on these estimates the Electric Utility does not expect of action it previously employed to commit those amounts. At June 30, 2012, that it will need to further fund the provision for decommissioning costs with cash the City does not have any committed fund balances.

contributions for SONGS.

" Assigned fund balance includes amounts that the City intends to use for The Electric Utility has a 10.04% ownership interest of the San Juan Generating specific purposes but do not meet the criteria to be classified as restricted or Station, Unit 4 (SJ). The Electric Utility is providing for the future demolition and committed. The City Council has by Resolution authorized the City Manager reclamation costs of its ownership share of SJ. As of June 30, 2012, the Electric Utility or his designee to establish, modify or rescind an assigned fund balance.

has recorded a provision for decommissioning costs for SJ of $3,520. For the year ended June 30, 2012, the Electric Utility has recorded decommissioning costs " Unassigned fund balance accounts for the residual balance of the City's incurred for S) of $440 in operating expenses. Based on the cost projections, the general fund and includes all spendable amounts not contained in other Electric Utility has estimated $440 in costs per year until 2027 to fund this obligation. classifications. In other governmental funds, the unassigned classification reports a deficit balance resulting from overspending for specific purposes for Pension plan which amounts had been restricted, committed or assigned.

Full-time City employees are members of the State of California Public Employees' In all governmental funds, encumbered amounts have been restricted or assigned for Retirement System (PERS). The City's policy is to fund all pension costs accrued; such specific purposes for which resources have already been allocated. At June 30, 2012, costs to be funded are determined annually as of July 1 by the System's actuary. See encumbrances totaled $320, $60 and $9,381 in the General Fund, Housing Authority note 10 for further discussion. Special Revenue Fund, and other nonmajor governmental funds, respectively.

Net assets restricted by enabling legislation Generally, the City would first apply restricted resources when expenditures incurred for which both restricted and unrestricted resources are available.

The government-wide Statement of Net Assets reports $190,868 of governmental activities restricted net assets, of which $42,731 is restricted by enabling legislation. The accumulated deficit fund balances at June 30, 2012, for Workforce Development, and Transportation Improvement Projects included in nonmajor governmental funds in the amount of $33 and $10,801 respectively, will be eliminated in future years by the receipt of reimbursements for grant expenditures. 50

CITY OF ANAHEIM Budgetary principles The County is permitted by State law (Proposition 13) to levy taxes at 1% of full market value (at time of purchase) and can increase the property tax rate no more than 2%

The City is required by its charter to adopt an annual budget on or before June 30 for per year from the full market value at the time of purchase. The City receives a share the ensuing fiscal year. The General, special revenue, debt service, and capital of this basic levy proportionate to what it received in the 1976 and 1978 periods.

projects governmental fund types and proprietary fund types have legally adopted budgets approved by City Council. The level of budgetary control (that is, the level at Entitlements, shared revenues and grants which expenditures cannot legally exceed the appropriated amount) is established at the department level. From the effective date of the budget, the amounts stated herein Entitlements and shared revenues are recorded at the time of receipt or earlier if the as proposed expenditures/expenses become appropriations to the various City susceptible to accrual criteria are met. Expenditure-driven grants are recognized in departments. Throughout the fiscal year the budget was amended to acid the fund financial statements as revenue when the qualifying expenditures have been supplemental appropriations. All amendments to the budget which change the total incurred, all eligibility requirements have been met, and reimbursement is received appropriation amount for any department require City Council approval and all within the availability period.

increases in appropriations must be accompanied by an increase in revenue sources of a like amount to maintain a balanced budget. The City Manager has the authority Revenue recognition for Electric Utility, Water Utility, and Sanitation Utility Funds to change individual budget line items within a department as long as the total Revenue is recorded in the period in which services are provided. Residential and department's appropriation amount is not changed.

smaller commercial customers are billed bimonthly and all other customers monthly.

At June 30, 2012 unbilled but earned service charges recorded in accounts receivable The City utilizes an encumbrance system as a management control technique to assist in controlling expenditures. All appropriations lapse at the end of the fiscal year, for the Electric Utility, Water Utility, and Sanitation Utility Funds amounted to

$18,517, $3,840, and $3,537, respectively. See note 8 for discussion of pledged except for capital projects (other than the Redevelopment Agency Capital Projects Fund), which are carried forward until such time as the project is completed or revenues.

terminated and for encumbered balances that are re-appropriated in the next year.

Use of estimates GASB Statement No. 34 allows that budgetary comparison statements for the General The preparation of financial statements in conformity with GAAP requires Fund and major special revenue funds be presented in the basic financial statements management to make estimates and assumptions that affect the reported amounts of rather than as Required Supplementary Informations. These statements must display certain assets and liabilities and disclosures of contingent assets and liabilities at the original budget, amended budget and actual results.

date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. As such, actual results could differ Budgeted revenue amounts represent the original budget modified by City Council from those estimates.

authorized adjustments during the year, which were contingent upon new or additional revenue sources. Budgeted expenditure amounts represent original NOTE 2 - DEPOSITS AND INVESTMENTS:

appropriations adjusted for supplemental appropriations during the year. Budgets are generally prepared in conformity with GAAP using the modified accrual basis of The City maintains a cash and investment pool, which includes the cash balances of accounting, with the exception of capital leases, or other similar instruments, and all funds, and is invested by the City Treasurer to enhance interest earnings. The land held for resale, which are budgeted on a cash basis. pooled interest earned, net of administrative fees, is reallocated to each fund based on their respective average daily cash balances.

Property taxes The City's pooled investment fund has been reviewed by Standard and Poor's Property taxes attach as an enforceable lien on property as of January 1. Taxes are Corporation (S&P) and received a credit rating of AAf in July 2011.

levied on July 1 and are payable in twvo installments due on November 1 and February 1 and become delinquent after December 10 and April 10. The County of The City's investment policy further limits the permitted investments in Government Orange, California (County) bills and collects the property taxes and remits them to Code Sections 53600 et al, 16429.1 and 53684 to the following: obligations of the the City in installments during the year. City property tax revenues are recognized United States government, federal agencies, and government sponsored enterprises; when levied in the governmental funds to the extent that they result in current medium-term corporate notes; certificates of deposit; bankers' acceptances; receivables collectable within 60 days after year-end. See note 8 for discussion of commercial paper; LAIF; repurchase agreements; reverse repurchase agreements; and pledged property tax revenues. money market mutual funds. 51

CITY OF ANAHEIM Deposits and investments are comprised of the following at June 30, 2012. The policy provides the basis for the management of a prudent, conservative investment program. Public funds are invested for the maximum security of principal Restricted and to meet daily cash flow needs while providing a return. All investments are made Cash and Cash and in accordance with the Government Code and, in general, the City Treasurer's policy Cash Cash Restricted Equivalents Investments Equivalents tnvestments Total is more restrictive than Government Code.

Governmental activities:

General Fund $ 7,033 $ 11,250 $ 18,283 Investments authorized by the Government Code and the City's investment policy Housing Authority 6,149 9,836 $ 2,783 18,768 Nonmajor governmental funds 24, t19 38,6499 43,t176 $ 31,607 137,675 The following table identifies the investment types that are authorized for the City by Infernal service [UL(IS 33,312 53,283 86,595 its investment policy which is more restrictive thaan Government Code. The table also Total governmental activities 70,687 113,068 45 959 261,321 identifies certain provisions of the City's investment policy that address interest rate Business-type activities:

Electric Utility 12,999 20,794 58,814 237,686 330.293 risk, credit risk, and concentration of credit risk. This table does not address Water Utility 12,407 10,918 13,528 8,235 45.088 investments of debt proceeds held by bond trustees that are governed by the Sanitation 15,580 21,282 22,960 59.822 provisions of debt agreements of the City, rather than the general provisions of the Golf Courses 355 568 923 Government Code or the City's investment policy.

Convention, Sports and Mininsum Entertainment Venues 112362 15,728 20,688 6,489 54,267 Maximum Rating Total business-type activities 52,703 115,990 490,393 69,290 Maximumn Investment (S&P/

Government-wide totals 123,390 182,358 161,949 284,017 751,714 Maxinsum Percentage in One Moody's Fiduciary funds 59,c06 5,755 65,661 Authorized Investment Type Maturity of Portfolio* Issuer /Fitch)

Total casts and investments $123,390 $112,358 $221.855 $289,772 $817,375 U.S. Treasury obligations 5 years 1001y. 100% None U.S. agency securities 5 years 100% 40% None Bankers' acceptances 180 days 40%, 51% None Deposits and investments are comprised of the following at June 30, 2012:

Commercial paper 270 dlays 25% 5% A-i/P-1I/F-1 Negotiable certificates of deposit 360 days 25% 5I' None Deposits $ 2,925 Investments 814,450 Repurchase agreements 360 days 30% None None Total deposits and investments Reverse repurchase agreements 90 days 20% None None

$817,375 30%,

Mediumn-term corporate notes 5 years 5% A/A/A Money market mutual funds N/A 20% 10% None At June 30, 2012, deposits of $2,925 with a corresponding bank balance of $8,444 $50 million $50 million were maintained in various federally regulated financial institutions. The difference of LAIF N/A per account per account None

$5,519 represents deposits in transit, outstanding checks, and other reconciling items. Time certificates of deposit (TCD) 1 year 20% 5n, None Deposits with bank balances of $594 are insured by the Federal Depository Insurance Corporation. For deposits with bank balances totaling $7,850, California state statutes *Excluding amounts held by bond trustees that are not subject to Government Code require federally regulated financial institutions to secure a city's deposits by pledging restrictions collateral consisting of either government securities with a value of I110% of a city's total deposits or by pledging first trust deed mortgage notes having a value of 150% The City's pooled investments comply with the requirements of the investment policy.

of a city's total deposits. The collateral is required by regulation to be held by the GAAP requires disclosure of certain investments in any one issuer that exceed five counterparty's agent in the name of the City. percent concentration of the total investments. At June 30, 2012, the following investments represent five percent or more of the City's total pooled investments:

Investments Fair The City Treasurer prepares an investment policy statement annually, which is Issuer Investment Type Value Federal Farm Credit Bank U.S. agency securities $57,844 14 %

presented to the Budget, Investment and Technology Commission for review and the 9v/

Federal Home Loan Bank U.S. agency securities 36,398 City Council for approval. The approved investment policy Statement is submitted to 9%

Federal Home Loan Mortgage Corporation U.S. agency securities 38,637 the California Debt and Investment Advisory Committee in accordance with Federal National Mortgage Association U.S. agency securities 65,178 15%

Government Code. LAIF LAIF 83,849 20% 52

CITY OF ANAHEIM Investments authorized by debt agreements in trust for safekeeping with the bond trustee, which is different from the City's primary bank.

Investment of debt proceeds held by bond trustees is governed by provisions of the debt agreements, rather than the general provisions of the Government Code or the Interest rate risk 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 Interest rate risk is the risk that changes in interest rates will adversely affect the fair provisions of these debt agreements that address interest rate risk, credit risk, and value of an investment. The City Treasurer mitigates this risk by investing in longer-concentration of credit risk. term securities only with funds that are not needed for current cash flow purposes and holding these securities to maturity. The City Treasurer uses the segmented time Maximum Percentage Investment distribution method to identify and manage interest rate risk. In accordance with the Authorized Investment Type Maturity All owed in One Issuer City investment policy the City Treasurer monitors the segmented time distribution of U.S. Treasury obligations None None None its investment portfolio and analysis of cash flow demand.

U.S. agency securities None None None Guaranteed investment contracts None None None Collateralized investment contracts None Investments held by bond trustees are typically long-term securities which are not None None Flexible repurchase agreements None None None adversely affected by interest rate changes. Guaranteed investment contracts for Money market mutual funds None None None construction funds are usually limited to three years or less. Information about the LAIF None None None sensitivity of the fair values of the City's investments (including investments held by City of Anaheim Treasurer's investment portfolio None None None bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity at June 30, 2012:

At June 30, 2012, the following investments represent five percent or more of the City's total investments controlled by bond trustees: Credit 12 13 25 37 More Rating Fair Months to to to Than Fair (S&P/ Value or 24 36 36 60 Issuer Investment Type Value Investments Moody's) 6/30/2012 Less Months Months Months Months Investments control led Iy City Treasurer:

Federal Home Loan Bank U.S. agency securities $51,272 U.S. agency securities AA+/Aaa $198,057 $ 35.239 $ 55,916 $ 59,149 $ 47.753 Federal National Mortgage Association U.S. agency securities 41,939 Medium-term corporate notes A-/A3 7,292 2,291 5,001 Ferderal Farm Credit Bank U.S. agency securities 29,301 7% Medium-tern corporate notes A-/Baa2 8,371 8,371 Morgan Stanley Flexible repurchase agreement 26,299 7% Medium-term corporate nltes A-/A2 6,258 6,258 U.S. Bank Money Market Mutual Fund 39,484 101%i Medium-term corporate nltes A+/A2 5,152 5,152 IAIF I.AIF 63,903 169% Medium-term corporate notes A+/A2 9,176 8,175 1,001 Medium-ternn corporate notes AA/Aa2 3,023 3.023 All guaranteed investment contracts have downgrade language that requires Medium-term corporate notes AA+/AI 10,351 5,084 5.267 Medium-term corporale notes AAA/Aaa 11t,351 3.041 8.310 collateral should credit ratings drop below certain levels.

Commercial paper A-I/P-I 51,992 51,992 Money market mutual funds AAA/Aaa 25,972 25,972 Custodial credit risk LAIF Unrated 83,849 83,849)

Total investments controlled Custodial credit risk for investments is the risk that the City will not be able to recover by City Treasurer 420.844 221,041 58,957 71,492 69,354 the value of investment securities that are in the possession of an outside party. All Investments controlled by bond trustees:

securities owned by the City with the exception of LAIF and money market mutual U.S. Treasury obligations Exempt 85 85 U.S. agency securities AA+/Aaa 125.822 10,175 50,431 18,715 46.501 funds are deposited in trust for safekeeping with a custodial bank different from the Guaranteed investment contracts Unrated 36.952 10,135 $26,817 City's primary bank. Securities are not held in broker accounts. Funds held by LAIF Collateralized investment contracts Unrated 4,879 1,210 3,669 and money market mutual funds are held in the City's name. Flexible repurchase agreements Unrated 45,367 10,703 34,664 Money market mutual funds AAA/Aaa 116.598 116,598 Custodial credit risk for investments held by bond trustees is the risk that the City will LAIF Unrated 63,903 63,903 Total investments controlled not be able to recover the value of investment securities that are in the possession of by bond trustees 393,606 190,761 50,431 2 57.846 65,150 an outside party. All securities held by bond trustees are in the name of the bond issue Totalinvestmenis $814,450 $411,802 $109,388 $100,9t0 $127.200 $65,150 53

CITY OF ANAHEIM NOTE 3 - SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER ANAHEIM Finance in advance of the property tax distribution from the Redevelopment Property REDEVELOPMENT AGENCY: Tax Trust Fund (RPTTF).

On December 29, 2011, the California Supreme Court upheld Assembly Bill IX 26 In accordance with the timeline set forth in the Bill (as modified by the California

("the Bill") that provides for the dissolution of all redevelopment agencies in the State Supreme Court on December 29, 2011) all redevelopment agencies in the State of of California. This action impacted the reporting entity of the City of Anaheim that California were dissolved and ceased to operate as a legal entity as of February 1, previously had reported a redevelopment agency within the reporting entity of the 2012.

City as a blended component unit.

Prior to that date, the final seven months of the activity of the redevelopment agency The Bill provides that upon dissolution of a redevelopment agency, either the city or continued to be reported in the governmental funds of the City. After the date of another unit of local government will agree to serve as the "successor agency" to hold dissolution, the assets and activities of the dissolved redevelopment agency are the assets until they are distributed to other units of state and local government. On reported in a fiduciary fund (private-purpose trust fund) in the financial statements of January 10, 2012, the City Council elected to become the Successor Agency for the the City.

former Redevelopment Agency in accordance with the Bill as part of City resolution numl)er 2012-001. The transfer of the assets and liabilities of the former redevelopment agency as of February 1, 2012 from governmental funds of the City to fiduciary funds was reported While Assembly Bill I X 26 ("the Bill") dissolved all redevelopment agencies in the in the Redevelopment Housing Set-Aside special revenue fund, Redevelopment State of California as of February 1, 2012, it also allowed the City to retain the housing Agency debt service fund and Redevelopment Projects capital project fund as an assets and functions previously performed by the Anaheim Redevelopment Agency extraordinary loss in the governmental fund financial statements. The receipt of these

("the Agency"). On January 24, 2012, the City Council passed resolution number assets and liabilities as of February 1, 2012 was reported in the private-purpose trust 2012-008 electing not to have the City retain the responsibility for performing fund as an extraordinary gain. The transfer of the assets and liabilities as of February housing functions previously performed by the Agency and, instead, allowed the 1, 2012 from the governmental activities of the government-wide statements is Anaheim Housing Authority to make the election authorized under the Bill. In reported as an extraordinary gain and in the private-purpose trust fund as an resolution number AHA-2012-001, the governing board of the Anaheim Housing extraordinary loss.

Authority elected to assume the housing assets and functions previously performed by the Agency. The City Council reaffirmed the transfer of all housing assets in the Because of the different measurement focus of the governmental funds (current former housing set-aside fund to be provided to the Anaheim Housing Authority in financial resources measurement focus) and the measurement focus of the trust funds resolution number 2012-068 on June 19, 2012. (economic resources measurement focus), the extraordinary loss recognized in the governmental funds was not the same amount as the extraordinary loss that was After enactment of the law, which occurred on June 28, 2011, redevelopment recognized in the fiduciary fund financial statements.

agencies in the State of California generally cannot enter into new projects, The difference between the extraordinary loss recognized in the fund financial obligations or commitments. Subject to the control of a newly established oversight statements and the extraordinary loss recognized in the fiduciary fund financial board, remaining liquid assets can only be used to pay enforceable obligations in statements is as follows:

existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments). Total extraordinary loss reported in governmental funds-Increase to net assets of the Successor Agency Trust Fund $ 67,235 In future fiscal years, successor agencies will only be allocated revenue in the amount Amount recorded in government-wide financial statements:

that is necessary to pay the estimated annual installment payments on enforceable Increase to net assets of the Successor Agency Trust Fund:

Capital Assets, net 72,560 obligations of the former redevelopment agency until all enforceable obligations of Unamortized cost of debt issuance 4,109 the prior redevelopment agency have been paid in full and all assets have been Notes Receivable, net 1,472 liquidated. In order to receive these revenue allocations, the successor agencies must Decrease to net assets of the Successor Agency Trust Fund:

prepare and get approval of their semi-annual Recognized Obligation Payment Accrued interest payable (7,295)

Department of Long-term liabilities (240,963)

Schedule (ROPS) from their Oversight Board and the California State Net decrease to net assets of the Successor Agency Trust Fund as a result of initial transfers equal to amount of extraordinary gain reported in the government-wide financial statements of the City 54

CITY OF ANAHEIM NOTE 4 - ACCOUNTS RECEIVABLE, DUE FROM OTHER GOVERNMENTS, DUE Due from the Successor Agency FROM THE ANAHEIM REDEVELOPMENT SUCCESSOR AGENCY, INTERFUND RECEIVABLE AND PAYABLE BALANCES, AND CERTAIN INTERFUND The amount clue from the Successor Agency at June 30, 2012 is $22,980. Due to the TRANSACTIONS: extended period of time over which the receivables are to be collected, the City has recorded deferred revenue eqlual to the amount Clue.

Accounts receivable

" On April 1, 2003 the former Anaheim Redevelopment Agency entered into a Accounts receivable for the City's governmental and business-type activities, Cooperation Agreement with the City whereby the City will assist the including the applicable allowance for uncollectible accounts at June 30, 2012, are Redevelopment Agency with the development of Westgate utilizing $10,000 as follows: I of funds from the HUD Section 108 loan program. The amount is clue to the Less: City by annual installment through June 2024. At June 30, 2012, the amount Accounts Allowance for due to the City is $8,130.

Receivable Uncollectibles Total Governmental activities:

General Fund $14,982 $13,599) $11,383 " On June 1, 2010, the former Anaheim Redevelopment Agency entered into a Housing Authority 131 (105) 26 Cooperation Agreement with the City whereby the City will assist the Nonmajor governmental funds 1,414 1,414 Redevelopment Agency with the rehabilitation of the historic Packing House Internal service funds 5,565 5.565 site utilizing $7,000 of funds from the HUD Section 108 $15,000 loan Total governmental activities 22,092 (3,704) 18,388 proceeds. The amount is clue to the City by annual installment through June Business-type activities:

Electric Utility 42,693 t424) 42,269 2031. At June 30, 2012, the amount due to the City is $6,674.

Water Utility 6,762 (61) 6,701 Sanitation ttility 7,423 1064) 7,259 " In fiscal years 2010 and 2011, the former Anaheim Redevelopment Agency Golf Courses 93 93 paid a total of $19,163 to the State of California Supplement Educational Convention, Sports and Entertainment Venues 1,462 (69) 1,393 Total business-type activities Revenue Augmentation Fund (SERAF). Of this amount, $8,500 was paid with 58,433 (71 8) 57,715 Total accounts receivable S80,525 $04,422) $76,103 funds borrowed from Housing Set-Aside property tax increment. At June 30, 2012, the amount due to the City is $8,1176.

Due from other governments Interfund receivable and payable balances Due from other governments for the City's governmental activities at June 30, 2012, Net internal balances between governmental activities and business-type activities of are as follows: $16,244 are included in the government-wide financial statements at June 30, 2012.

Taxes Grants Other Tota I Interfund receivables and payables that are included in the fund financial statements Governmental activities:

General Faund $14,388 $ 198 $477 $15,063 at June 30, 2012, are as follows:

Housing Authority 48 48 Interfund Interfund Nonmajor governmental funds 20 40,138 5 40,163 Receivable Payable Total Clue from Governmental funds:

other governments $14,408 $40,384 $482 $55,274 General Fund $ 4,129 $ 65 Nonmajor governmental funds 11,724 Total governmental funds 14,925 11,789 Revenues are reported net of estimated uncollectible amounts. Total estimated Enterprise funds:

uncollectible amounts related to revenues of the current period are as follows: Golf Courses 3,201 Total enterprise funds General Fund $ 647 Internal service funds 65 Electric Utility 581 Total $14,990 $14,990 Water Utility 65 Sanitation Utility 196 Others 70 Total $1,559 55

CITY OF ANAHEIM Certain interfund balances at June 30, 2012 are generally short-term loans to relieve The following interfuncl transfers are reflected in the fund financial statements at June temporary cash deficits in various funds. The following interfund balance is expected 30, 2012:

to be repaid in more than one year:

Transfers In Transfers Out General Fund Governmental funds:

General Fund $ 26.100 $ 51,319 Of the total interfund receivable in the General Fund, $3,201 is clue from the Golf Housing Authority 35,482 8,633 Courses Fund. On September 24, 2002, the City Council approve(] a loan up to Nonmajor governmental funds 59,600

$6,400 from the General Fund to the Golf Courses Fund for construction of the Total governmental funds 131,093 119,552 Anaheim Hills Golf Clubhouse. The loan is payable in annual amounts of not less Enterprise funds:

Electric Utility 67 20,851 than $548 beginning in July 2005 until July 2023 and bears interest at the City's Water Lltilitv 3,264 investment yield as of June 30th of each year. Sanitation Utility 2,608 Golf Courses 600 Certain interfund transactions Convention, Sports and Entertainment Venues 14,305, Total enterprise funds 14,372 27,413 The net transfers of $12,571 from the business-type activities to the governmental Internal service funds 1,500 activities on the government-wide Statement of Activities are primarily comprised of Total $146,965 $146,965 operational subsidies from business-type activities to the General Fund offset by debt service subsidies to the Convention, Sports and Entertainment Venues Fund and the transfers of capital assets from governmental activities to business-type activities.

The Interfund transfers generally are made for the purpose of debt service payments made from a debt service fund but funded from an operating fund or subsidy transfers.

Capital assets with net book value totaled $470 were transferred from the Except for the transfers of capital assets and the housing assets detailed previously, governmental activities to Business-type activities: street light installations to Electric there were no other significant transfers during the fiscal year that were either non-Utilities ($210), sanitary sewer improvements to Sanitation ($260). These amounts routine in nature or inconsistent with the activities of the fund making the transfer.

were accounted for as Capital Contribution in the respective Enterprise Fund financial statements. NOTE 5 - BOND PAYMENT RECEIVABLE:

On February 1, 2012, upon dissolution of the former Redevelopment Agency, On August 3, 1995, the Los Angeles Rams Football Company, currently the St. Louis housing assets of $25,105 consisted of land held for resale, net of allowance for Rams (Rams), exercised its right to terminate its lease under the Fourth Amendment decline in value ($25,207) and deposits payable ($102) were transferred to the to the Exhibition Agreement between the Rams and the City (Rams Agreement).

Housing Authority from the Redevelopment Housing Set-Aside and Redevelopment Under the Rams Agreement, the Rams became obligated to repay the City for the debt Projects nonmajor governmental funds. Additionally, the former Redevelopment service on the 1979 Anaheim (California) Stadium Inc. Lease Revenue Bonds in the Agency also transferred housing assets of $41,087 consisting of notes receivable, net principal amount of $28,110, which obligation is supported by an irrevocable of allowance ($19,147), due from the Successor Agency ($8,176) and capital assets, standby letter of credit with Dresdner Bank AG, will be repaid by August 15, 2015.

net of accumulated depreciation ($13,764) to the Housing Authority in the The 1979 Anaheim (California) Stadium Inc. Lease Revenue Bonds were governmental activities. The effect of the interfund activities from the housing asset subsequently refunded, and are no longer outstanding, by a portion of the transfers was removed from the Government-wide Statement of Activities. Convention, Sports and Entertainment Venues Fund 1993 Refunding Projects Certificates of Participation. In December 2008, the 1993 Refunding Projects Certificates of Participation were refunded and replaced by the 2008 Lease Revenue Refunding Bonds. At June 30, 2012, there remained principal outstanding of $8,555 on the 2008 Lease Revenue Refunding Bonds. During fiscal year 2012, the Rams reimbursed the City $2,437 (representing $1,890 for principal and $547 for interest) for the current portion of their debt service obligation. The City accounted for the termination of the lease by recording a bond payment receivable from the Rams and a contribution to the Convention, Sports and Entertainment Venues Enterprise Fund in the amount of the debt obligation assumed by the Rams under the Rams Agreement.

56

CITY OF ANAHEIM NOTE 6 - CAPITAL ASSETS: Fiduciary Funds Capital asset activities for the year ended June 30, 2012, were as follows: Successor Agency Dissolution Capital asset activities for the year ended June 30, 2012 are as follows:

of lie Anaheis, Beginning Transfer Redevelopment Ending Transfer in Balance Additions In (Out) Deletions Agency Balance from fomser Governmental activities.

Redevelopment Ending Nondepreciable assets:

Agency Additions Deletions Balance Land $ 616,994 $ 4,372 $ 814 $ (I) $1(5,568) $ 606.611 Construction in progress 80,054 52.645 (29,388) (600) 113,225t 89,486 Nonclepreciable assets:

Total 697,048 57,017 (28,574) 1601) 128,7931 696,097 l~and $15,568 $15,568 Depreciable assets: Construction in progress 13,225 $ 2,331 $ (5911 14,965 Buildings, structures Total 28,793 2,331 1591) 30,533 and improvements 323,658 1,243 10,071 (72) (65.345, 26c.555 Machinery and eqcuilpment 104,481 3,8q0 88 (2,61R) (8791 104,962 Depreciable assets:

Infrastructure 741.736 1.476 17,898 11091 761 .001 Buildings, Structures and improvements 43,502 43,502 Total 1,169,875 6,609 28,057 (2,799) (66,224) 1,135,518 Machinery and equipment 265 265 Total assets 1,866,923 63,626 (517) 3,400) (95,0171 1,831,615 Total 43,767 43,767 Less accumulated depreciation for: Total assets 72,560 2,331 (591) 74,300 Buildings, strudures anm improvements (119,518) 1B,487) 31 21,943 t106.5311 Less accumulated depreciation for:

Machinery andI equipment (71,3941 17,05111 46 2,469 614 (75,3 151 Buildings, Structures and improvements (609) (609)

Infrastructure (317.531 1116,833) 102 (334,2621 Machinery and equipment (37) 1337)

Total accumnulated Total depreciation (646) (646) depreciation (508,843) (32,3701 46 2602 22,457 516,1081 Total governmental activities Total capital assets, net $72,360 $ 1,685 $ (591) $73,654 capital assets, net $1 35_8080 $ 31,256 $ (471) $ (7981 $(72,560) $1,315,507 Business-type activities: Capital leases Nondepreciahle assets:

Land $ 58,369 $ 41 $ $ $ $ 58,410 Included in the capital assets amounts listed above are the following capitalized Construction in progress 58,560 74,022 151,663) (124t 80.795 leased assets:

Total 116,929 74,063 151,663) 11241 139.205 Governmental Depreciable assets: Activities Buildings, structures Machinery and equipment $ 3,979 and improvements 584,995 2,167 12,023 (1261 599.059 Less accumulated amortization (2,159)

Utility plant 1,468,061 2,502 39,976 13,1201 1,507.419 Capitalized leased assets, net $1,820 Machinery and equipment 33,721 3,898 135 (7,9381 29,816 2,13(.,294 Total 2,086,777 8,567 52,134 111,14W)

Total assets 2,203,706 82,630 471 111,3081 2,275,499 Operating leases Less accumulated depreciation for:

Buildings, structures Housing Authority and improvements (199,421) (13,1931 102 (212,512)

Utility plant (454,256) (48.734) 3,944 (499,0461 At June 30, 2012, the Housing Authority earned revenues as the lessor of land, carried Machinery and equipment (21,0501 (2.814) 3,596 (20,268, at cost of $52,714 in the government-wide financial statements, under seven Total accumulated operating ground leases. These leases to developers are noncancelable. Two of the (674,727) (64,741) 7,642 1731,826) depreciation leases are for a term of 55 years, expiring in 2055 and 2057; three of the leases are Total I)usiness-typoe activities 79 for a term of 57 years, expiring in 2060, 2063 and 2064 and two of the leases are for capital assets, net $I,52a $ 17,989 $ 471 $L36 S $1,543,673 a term of 65 years, expiring in 2076. The total base rent amounts to be collected over the terms of the leases are $12,400, $8,700, $7,505, $7,900, $5,200, $5,600 and

$5,600 respectively, with simple interest accruing on unpaid portions at a rate of 57

CITY OF ANAHEIM 4.0%, 4.5%, 4.0%, 4.0%, 4.0%, 2% and 2% respectively. Minimum lease payments factors. It is the City's practice to obtain full actuarial studies annually for general are calculated annually, based on residual receipts, as defined in the lease liability and workers' compensation coverages. Premiums are charged by the General agreements. At June 30, 2012, the Housing Authority has recorded notes receivable Benefits and Insurance Fund using various allocation methods that include actual due from developers related to these transactions of $10,276 and is net of allowances costs, trends in claims experience, exposure base, and number of participants.

of $2,120 for uncollected accounts in the government-wide financial statements.

Changes in claims liability of the General Benefits and Insurance Fund and that Successor Agency relates to the governmental funds and reported in the governmental activities in the government wide Statement of Net Assets in fiscal years 2012 and 2011 were as At June 30, 2012, the Redevelopment Successor Agency earned revenues as lessor follows:

from certain parking structure properties, carried at cost of $9,564, less accumulated depreciation of $8,896, under operating leases. The following is a schedule of 2012 2011 minimum future rentals on noncancelable operating leases at June 30, 2012: Claims liability at beginning of year $35,405 $37,756 Current year claims and changes in estimates 10,281 6,293 Fiscal Year Ending June 30 Claims payments (6,343) (8,644)

Claims liability at end of year $39,343

$35,40 5 2013 $ 273 2014 274 2015 277 Above the self-insured retention of $750 per occurrence for workers' compensation 2016 277 losses, the City purchases excess coverage, utilizing both commercial insurance and 2017 278 2018-2022 1,384 an intergovernmental risk pooling program (CSAC-EIA) to statutory limits.

2023-2027 1,231 2028-2032 1,231 Above the self-insured retention of $1,000 per occurrence for liability losses, the City 2033-2034 492 maintains excess coverage for all City operations to $100,000 per occurrence, Total minimum future rentals $5,717 excluding helicopter operations for which the City purchases $50,000, per occurrence, of commercial liability insurance (on a first-dollar basis). The first layer of NOTE 7 - SELF INSURANCE: excess liability loss coverage is procured through the Authority for California Cities Excess Liability (ACCEL), a joint powers insurance authority, formed in 1986, pooling The General Benefits and Insurance Fund, an internal service fund, is used to account catastrophic general, automobile, personal injury, and public officials errors and for self-insured workers' compensation related benefits, self-insured general liability omissions liability losses among twelve California cities, through both risk-sharing claims, commercial insurance purchases, alternative risk financing vehicles as well as and commercial insurance joint-purchase arrangements. The City, therefore, employee compensated absences, retirement and health benefits. Revenues of the continues to maintain some limited excess liability risk sharing exposure, above General Benefits and Insurance Fund are derived from charges to City departments $1,000 per occurrence, directly with ACCEL. This pooled coverage has exposure (i) using estimates of benefits earned and cost allocation charges established at the from the run-out periods from prior years in which commercial excess insurance was beginning of the year and from interest income on reserves. not obtained, and (ii) from an ACCEL retained layer for fiscal year 2012 of $4,000 in excess of $1,000. Each ACCEL member's share of pooled losses is based on a At June 30, 2012, the City was fully funded for self-insured workers' compensation retrospectively-rated risk-sharing formula which includes, but is not limited to, and general liability claims (self-insured retention levels of $750 per occurrence for exposure and loss experience factors.

workers' compensation claims and $1,000 per occurrence for general liability claims). Above these self-insured retention levels, the City's potential liability is In order to provide funds to pay claims, ACCEL collects a deposit from each member.

covered through various commercial insurance and intergovernmental risk pooling The deposits are credited with investment income at the rate earned on ACCEL's programs (collectively, "Insurance"). Settled claims have not exceeded total insurance investments. At June 30, 2012, ACCEL's cash and investments totaled $42,469, of coverage in any of the past three years, nor does management believe that there are which $5,202 consists of deposits and interest on deposits provided by the City. The any pending claims that will exceed total insurance coverage. City has no specific equity interest in ACCEL. Deposits provided to ACCEL by the City are expensed when paid by the General Benefits and Insurance Fund.

The unpaid claims liability included in the General Benefits and Insurance Fund is based on the results of actuarial studies and includes amounts for claims incurred but ACCEL is responsible for deciding the risks it will underwrite, monitoring and not reported, known-claim development, and allocated loss adjustment expenses. handling of large claims, and arranging risk-financing programs. ACCEL does not Claims liabilities are calculated using a discount rate of 3% and consider the effects have any debt outstanding. For a copy of ACCEL's separate financial statements, of inflation, multi-year loss development trends, and other economic and social contact the Finance Director of the City. 58

CITY OF ANAHEIM NOTE 8 - LONG-TERM LIABILITIES: GOVERNMENTAL ACTIVITIES:

The following is a summary of changes in long-term liabilities reported in the BONDS PAYABLE government-wide financial statements for the year ended June 30, 2012:

At June 30, 2012, bonds payable consisted of the following:

Dissolution of the Anaheim Range of Authorized Out-Beginning Additions/ Reductions/ Redevelopment Ending within Date Final Interest Rates and standing Balance Proceeds Payments Agency Balance One Year Issued Maturity at Issue Date Issued 6/30/12 Governmental activities:

Bonds payable:

City 1993 General Obligation General obligati*cn $ 3,735 $ (550) $ 31.1,5 580 Refunding Bonds 11/01/93 10/01/16 4.034-7.0% $ 10,055 $ 3,185 City lease revenue 481,769 (13,4091 468,360 15,134 1997 Anaheim lease Redevelopment Agency 208,195 $(208,195)

Revenue Bonds 2/01/97 3/01/37 4.5%-6.0'% 510,427 211,662 Accretion 132,945 $ 14,349 147,294 Mi*torize.d Equipment 314 (314)

Accretion 147,294 Unamorlized hond 2007 Anaheim Lease premiul-l(discount), net (5,3711 691 (305) (4,985) Revenue Refunding Bonds 6/13/07 3/01/37 3.25/-5.5% 256,320 252,785 Total 821.587 l3,5921) (208,5001 6l3,854 15,714 2008 Anaheim Lease Revenue Refunding Bonds 12/10/08 8/01/19 3.0%-5.0% 5,084 3,913 COPs:

12,070 (985) 11,085 1,065 Total 618,839 City COPs Unamortized bond refunding Total 12,070 (9851 11.085 1,055 (4,985) costs/laremniunt/discounts, net Capitalized lease obligations:

Internal Service Funds 2,341 462 (1,109) 1,694 999 Total government activities b $613.854 Total 2,341 462 (1,1091 1,064 919 Notes and loans payable: Bonds Payable - City City 24,929 (1,1241 23,805 1,169 Redevelopment Agency 7,896 (226) (7,670)

General obligation refunding bonds Housing Authority 1,741 1,741 Total 34,566 (1,350) (7,670, 25,546 1,169 14,219 The 1993 General Obligation Refunding Bonds were issued to finance storm drain Self-insurance (note 7) 35.405 (10,281) 39,343 8,123 Compensated absences (nole 1) 19.558 20,873 (22,078) 18,353 14.205 improvements and are payable from the levy of ad valorem taxes. Total principal and Pollution remediation Liability 720 1,542 (449) (1.813)} interest remaining on the bonds is $3,517, payable through October 2016. During 41.2 75 the fiscal year ended June 30, 2012, total principal and interest paid was $695.

Governmental activities total 926,247 51,445 (49,834) (217.983) 709,875 Business-type activities:

Bonds payable: Debt service requirements to maturity for the 1993 General Obligation Refunding Electric Utility 719,930 (18,175) 701.755 18,995 Bonds to be paid by the General Obligation Bonds Debt Service Fund from future Water Utility 86,655 (915) 85,740 950 property tax revenues are as follows:

46,1301 (835) 45,245 880 Sanitation ULtility Convention, Sports and Entertainment Venues 52,505 (6,9181 45,587 7,756 Fiscal Year Ending 6/30 Principal Interest Total Unarmortized bond preinium/ldiscount, net 3,463 315 3,778 2013 $ 580 $118 $ 698 Total 908,683 (26,528) 882,155 28,581 2014 610 92 702 2015 635 67 702 cops:

2016 660 41 701 Convention, Sports antI Entertainment Venues 38,000 38,000 2017 700 14 714 Total $3,185 $332 $3,517 Total 38,0 38,000 Notes and loans payable:

Water Utility 10,719 (1,347) 9,372 462 Lease pavynent measurement revenues Convention, Sp.rL and Entertainment Venues 20,000 (4,720) 15,280 5,000 Unamortized note discount (200) 36 (1641 In February 1997, the Anaheim Public Financing Authority sold $510,427 of lease Total 30,519 (6,031) 24.488 5,462 revenue bonds to construct public improvements in The Anaheim Resort. In June Decommissioning provision 127,347 3,598 130,945 2007, the Authority sold $256,320 of lease revenue bonds to defease $248,335 of the Business-type activities total 1104549 3,598 (32,559) 1,075.588 34,043 1997 lease revenue bonds. The bonds are special obligations of the Authority payable Governmental-wide total $2 030 796 $ 55,043 $182393) $ (217,983) $1.785.463 $75,318 solely from lease payments to be made by the City to the Authority for the use and 59

CITY OF ANAHEIM occupancy of the leased premises. Debt service requirements to maturity for these CERTIFICATES OF PARTICIPATION lease revenue bonds are paid from lease payment measurement revenues (LPMR) defined as amounts equal to: 1) 3% of the 15% transient occupancy taxes (TOT) (i.e. At June 30, 2012, certificates of participation consisted of the following:

20% of the total transient occupancy taxes) for all hotel properties in the City, excluding Disney properties, and 2) 100% of the incremental TOT, sales, and Range of Authorized Out-property tax revenues from all Disney properties over the 1995 base, adjusted each Date Final Interest Rates and standing year by the CPI change, with a minimum 2% increase annually. The City is not Issued Maturity at Issue Date Issued 6/30/12 required to pay any additional sums should the LPMR fall short of the amount City required to pay debt service on the bonds. The Walt Disney Company provided a 1993 Arena Land Refinancing 11/01/93 11/01/19 5.9%.-7.50'X 21,210 $11,085 guarantee to the bond insurer to enable the issuer to obtain municipal bond Total governmental insurance. activities COPs $11,085 LPMR began on January 1, 2001, with the first payment made to the trustee on July 7, 2001, for the LPMR generated during the period January through June 2001. Certificates of Participation Payable - City Subsequent to that date, LPMR is collected and remitted to the trustee monthly.

During the fiscal year ended June 30, 2012, $32,936 was remitted to the trustee. Certificates of participation debt service payments are to be paid from unrestricted revenues of the Certificates of Participation Debt Service Fund. COP debt service Debt service requirements to maturity for the 1997 Anaheim Lease Revenue Bonds, requirements to maturity are as follows:

and the 2007 Anaheim Lease Revenue Refunding Bonds to be paid by the Anaheim Resort Improvements Debt Service Fund from future LPMR are as follows: Fiscal Year Ending 6/30 Principal Interest Total 2013 $ 1,065 $ 686 $ 1,751 Fiscal Year Ending 6/30 Principal Interest Total 2014 1,140 614 1,754 2013 $ 14,705 $ 17,828 $ 32,533 2015 1,225 537 1,762 2014 16,540 16,917 33,457 2016 1,315 455 1,770 2015 18,510 15,894 34,404 2017 1,415 366 1,781 2016 20,630 14,750 35,380 2018-2020 4,925 495 5,420 2017 22,900 13,479 36,379 Total COPs $11,085 $3,153 $14,238 2018-2022 63,375 138,860 202,235 2023-2027 77,762 156,618 234,380 CAPITAL LEASE OBLIGATIONS 2028-2032 92,953 177,583 270,536 2033-2037 137,072 214,282 351,354 Total 464,447 766,211 1,230,658 The City has a long-term noncancelable agreement with HP Financial Services to Unamortized bond discount (4,684) (4,684) finance the acquisition of the City's server, desktop, and portable computer Total bonds $459,763 $766,211 $1,225,974 equipment. The agreement qualifies as a capital lease for accounting purposes as defined under the FASB Statement No. 13, Accounting for Leases, and therefore has Included in interest is $147,294 related to accretion on capital appreciation bonds. been recorded at the present value of future minimum lease payments at the date of inception of the lease. Future minimum lease payments to be made frotn unrestricted Lease revenue refunding bonds - City revenues of the Information Services Internal Service Fund under the capital lease are Debt service requirements to maturity for the City's lease revenue bonds to be paid as follows:

from unrestricted revenues of the Municipal Facilities Debt Service Fund are as Fiscal Year Ending 6/30 follows:

2013 $ 1,076 Fiscal Year Ending 6/30 Principal Interest Total 2014 671 2013 2015 84

$ 429 $ 170 $ 599 2016 4 2014 460 151 611 2015 479 131 610 Total 1,835 2016 506 111 Less amount representing interest, variable (141) 617 2017 463 89 552 Present value of future minimum lease payments $ 1,694 2018-2020 1,576 120 1,696 Total 3,913 772 4,685 Unamortized bond discount (301) (301)

Total bonds $3,612 $ 772 $4,384 60

CITY OF ANAHEIM NOTES AND LOANS PAYABLE Helicopter loan payable At June 30, 2012, notes and loans payable are as follows: In January 2009, the City entered into an agreement with Government Capital Corporation to finance the acquisition of a police helicopter. The amount of the loan Notes and Loans Payable - City totaled $1,799 and bears interest at 5.391 % per annum for a term of 12 years. On January 29, 2009, Government Capital Corporations assigned this loan agreement to HUD Section 108 guaranteed loans payable Bank of America which subsequently assigned it to Western Alliance Equipment Finance on March 21, 2012. Principal and interest payments of $206 are due In May 2003, the City entered into an agreement with HUD, making available annually beginning on December 16, 2009, until December 16, 2020. The

$10,000 to provide financial assistance related to the development of Westgate on a outstanding balance at June 30, 2012 was $1,441. Loan debt service requirements to former landfill site located at the northeast corner of Beach Boulevard and Lincoln maturity are as follows:

Avenue. The loan is payable from sales tax revenue generated by Westgate, from The Community Development Block Grant yearly entitlement, and from receipts of the Fiscal Year Ending 6/30 Principal Interest Total Successor Agency receivable. The outstanding balance at June 30, 2012 was $8,314. 2013 $ 129 $ 77 $ 206 The loan bears interest ranging from 1.74% to 5.97% and is payable over 20 years 2014 136 70 206 2015 143 63 206 beginning on February 1, 2005, until August 1, 2023. Loan debt service requirements 2016 150 56 206 to maturity are as follows: 2017 158 48 206 2018-2021 725 101 826 Fiscal Year Ending 6/30 Principal Interest Total Total notes and loans $1,441 $415 $1,85 6 2013 $ 435 $ 449 $ 884 2014 478 427 905 2015 517 402 919 Notes and Loans Payable - Housing Authority 2016 561 374 935 2017 670 342 1,012 3,948 1,097 5,045 Housin2 Authority CHFA loan agreements 2018-2022 2023-2027 1,705 94 1,799 Total notes and loans $8,314 $3,185 $11,499 In October 2003 and October 2007, the Housing Authority entered into separate loan agreements with the California Housing Finance Agency (CHFA), to provide funding In March 2010, the City entered into an agreement with HUD, making available for down payment assistance to first-time homebuyers. The 2003 loan is for an amount

$15,000 to fund the acquisitions of the Anaheim Family Justice Center and Miraloma up to $1,800 and bears 3% simple interest, with principal and accrued interest due in Park site, construction of theThornton Brady storm drain and the rehabilitation of the October 2013. At June 30, 2012, the outstanding balance of the 2003 loan was $707.

historic Packing House site. The loan is payable from the Community Development The 2007 note is for an amount up to $1,250 and bears 3.5% interest with principal Block Grant yearly entitlement and from the receipts of the Successor Agency and accrued interest due in October 2017. At June 30, 2012, the outstanding balance receivable. The outstanding balance of the loan at June 30, 2012, was $14,050. The of the 2007 loan was $1,034.

3 97 loan bears interest ranging from 1.74% to .  % and is payable over 20 years beginning on February 1, 2011 through August 1, 2030. Loan debt service requirements to maturity are as follows:

Fiscal Year Ending 6/30 Principal Interest Total 2013 $ 605 $ 478 $ 1,083 2014 615 471 1,086 2015 625 462 1,087 2016 640 449 1,089 2017 655 433 1,088 2018-2022 3,555 1,850 5,405 2023-2027 4,185 976 5,161 2028-2031 3,170 392 3,562 Total notes and loans $14,050 $5,511 $19,561 61

CITY OF ANAHEIM BUSINESS-TYPE ACTIVITIES: Bond debt service requirements to maturity for the Electric Utility to be paid from revenues are as follows:

BONDS PAYABLE Range of Authorized Out-Fiscal Year Ending 6/30 Principal Interest Total Date Final Interest Rates and standing 2013 $ 18,995 $ 33,816 $ 52,811 Issued Maturity at Issue Date Issued 6/30/12 2014 19,765 32,944 52,709 Electric Utility 2015 20,745 31,975 52,720 1999 Revenue Bonds 9/01/99 10/01/27 3.0%-5.0% $ 45,000 S 34,650 2016 21,725 30,969 52,694 2002 Revenue Bonds 2/15/02 10/01/31 3.3%-5.25% 178,705 164,310 2017 24,590 29,866 54,456 2003 Revenue Bonds 4/01/03 10/01/22 3.0%-5.0% 60,415 29,640 2018-2022 123,495 130,859 254,354 2004 Revenue Bonds 6/01/04 1O/01/34 2.5%-5.25% 131,265 113,960 2023-2027 139,520 98,950 238,470 2007 Revenue Bonds 2/01/07 10/01/37 4.0%-5.0% 2028-2032 178,200 60,154 238,354 206,035 201,040 2033-2037 126,390 22,044 148,434 2009 Revenue Bonds 3/10/09 10/01/39 3.0%-5.25% 70,000 67,765 2038-2041 28,330 1,370 29,700 2011 Revenue Bonds 5/11/11 10/01/36 3.0%-5.375X. 90,390 90,390 Total 701,755 472,947 1,174,702 Total 701,755 Unamortized bond refunding Unamortized bond refunding costs/premium,net 4,910 costs/premium, net 4,910 4.910 Total Electric Utility 706,665 Total bonds $706,665 $472,947 $I,179L612 Water Utility 2004 Revenue Bonds 5/01/04 10/01/16 12,105 2,635 Bonds Payable - Water Utility 2008 Revenue Bonds 7/09/08 10/01/38 48,580 48,580 2010 Revenue Bonds 10/28/10 10/01/40 2 .0%-4.75% 34,525 34,525 The City's Water Utility has pledged future revenues from the sale of water, net of Total 85,740 Unamortized bond refunding costs/discount,net 492 certain costs, to repay a total of $168,648 for outstanding long-term obligations, Total Water Utility 86,232 principal and interest. Proceeds from bonds provided financing for various capital improvements, primarily distribution assets. The bonds are payable solely from water Sanitation Utility net revenues and are payable through 2041. At June 30, 2012, the annual principal 2007 Revenue Bonds 5/23/07 2/01/39 3.9%-5.O% 47,710 45,295 and interest payments on the bonds were less than 35.4% of net revenues. Principal Unamortized bond premium 1,149 and interest paid for current fiscal year and total net revenues were $5,207 and Total Sanitation 46,444

$14,715 respectively.

Convention, Sports and Entertainment Venues Bond debt service requirements to maturity for the Water Utility to be paid from 2002 Revenue Bonds 7/02/02 8/01/t23 3.0%-5.5% 26,260 9,280 revenues are as follows:

2008 Anaheim Lease Revenue Refunding Bonds 12/10/08 8/01/I 9 3.0%-5.0% 45,847 36,307 Fiscal Year Ending 6/30 Principal Interest Total Total 45,587 2013 $ 950 $ 4,255 $ 5,205 Unamortized bond refunding costs/premium,net (2,773) 2014 920 4,217 5,137 Total Convention, Sports and Entertainment Venues 42,814 2015 960 4,178 5,138 Total business-type activities bonds S 99b,837 5882,155 2016 1,000 4,135 5,135 2017 1,045 4,092 5,137 Bonds Payable - Electric Utility 2018-2022 6,525 19,763 26,288 2023-2027 13,970 17,469 31,439 The City's Electric Utility has pledged future electric revenues, net of certain costs, to 2028-2032 17,345 13,656 31,001 2033-2037 21,735 8,711 30,446 repay a total of $1,174,702 outstanding long-term obligations, principal and interest. 2038-2041 2,432 23,722 Proceeds from bonds provided financing for various capital improvements, primarily Total 85,740 82,908 168,648 distribution assets. The Electric Utility's bonds are payable solely from electric Unamortized bond refunding customer net revenues and are payable through 2040. At June 30, 2012, the annual costs/premium, net 492 492 Total bonds 586,232 $82,908 $169,140 principal and interest payments on the bonds were less than 55.9% of net revenues.

Principal and interest paid for the current fiscal year and total net revenues were 62

$52,279 and $93,556 respectively.

CITY OF ANAHEIM Bonds Payable - Sanitation Utility CERTIFICATES OF PARTICIPATION Range of Authorized Out-The City's Sanitation Utility has pledged future sanitation system net revenues to pay Date Final Interest Rates and standing a total of $80,928 for revenue bonds issued in May 2007. Proceeds fronm the bonds Issued Maturity at Issue Date Issueed 6/30/12 provided financing for capital improvements to the sanitation sewer collection Convention, Sports and Entertainment Venues system. The bonds are payable solely from system net revenues and are payable 1992 Convention Center through February 2039. At June 30, 2012, total principal and interest payments on the Financing Project 1/01/92 8/01/23 3.9%-6.4% $ 92,777 $ 0 bonds were less than 42.2% of net revenues. Total principal and interest paid and Total Convention, Sports and Entertainment Venues $38,000 total system net revenues for the current fiscal year were $2,996 and $7,101 respectively. Certificates of Participation Payable - Convention, Sports and Entertainment Venues Bond debt service requirements to maturity for the Sanitation Utility to be paid from Certificates of participation debt service requirements to maturity for the Convention, revenues are as follows: Sports and Entertainment Venues Fund to be paid from unrestricted revenues are as follows:

Fiscal Year Ending 6/30 Principal Interest Total Fiscal Year Ending 6/30 Principal Interest Total 2013 $ 880 $ 2,119 $ 2,999 2014 920 2,079 2,999 2013 $ 2,350 $ 2,350 2015 955 2,042 2,997 2014 2,350 2,350 2016 1,005 1,994 2,999 2015 $ 3,500 2,345 5,845 2017 1,045 1,954 2,999 2016 4,500 1,895 6,395 2018-2022 5,985 8,998 14,983 2017 4,800 1,601 6,401 2023-2027 7,560 7,424 14,984 2018-2022 23,200 3,216 26,416 2028-2032 9,445 5,544 14,989 2023-2024 2,000 74 2,074 2033-2037 11,910 3,078 14,988 Total COPs $38,000 $13,831 2038-2039 5,590 401 5,991 Total 45,295 35,633 80,928 NOTES AND LOANS PAYABLE Unamnortizecl bond premium 1,149 1,149 Total bonds $46,444 $35,633 $82=077 Note Payable- Water Utility Bonds Payable - Convention, Sports and Entertainment Venues At June 30, 2012, note payable is as follows:

Bond debt service requirements to maturity for the Convention, Sports and State of California Revolvin2 Fund note oavable Entertainment Venues to be paid from revenues are as follows:

In June 2001, tile Water Utility executed a note payable to the State of California Revolving Fund at a rate of 2.8% in the amount of $18,063. There are semi-annual Fiscal Year Ending 6/30 Principal Interest Total payments of principal and interest in the amount of $592 through July 31, 2021. The 2013 $ 7,756 $ 1,962 $ 9,718 outstanding balance on this note at June 30, 2012, totaled $9,372 2014 8,120 1,579 9,699 2015 4,995 1,280 6,275 201b 4,424 1,091 5,515 Note debt service requirements to maturity for the Water Utility are as follows:

2017 4,662 887 5,549 2018-2022 15,520 1,224 16,744 Fiscal Year Ending 6/30 Principal Interest Total 2023-2024 110 7 117 2013 $ 462 $ 131 $ 593 Total 45,587 8,030 53,617 2014 943 242 1,185 Unamortized bond refunding 2015 969 216 1,185 costs/premium, net (2,773) (2,773) 2016 996 189 1,185 Total bonds 8,030 $50844 2017 1,024 161 1,185 2018-2022 4,978 354 5,332 Total 9,372 1,293 10,665 Unamortized note discount (164) (164)

Total notes and loans $ 9,208 $1,293 $10,501 63

CITY OF ANAHEIM Note Payable - Convention, Sports and Entertainment Venues Date Final Amount Outstanding Issued Maturity Issued 6/30/12 We~ll Fairon Rannk lp~ire rpvpniie notp 1985 West Anaheim Convalescent Home 12/30/85 12/01/15 $ 3,204 $ 1,195 In December 2010, the City executed a lease revenue note with the Wells Fargo Bank, 1993 Anaheim Memorial Hospital Association 10/15/93 05/15/20 46,690 21,300 National Association to provide financing for the capital improvements of the 2003 Anaheim Arena Anaheim Convention Center Grand Plaza. Principal amount of the note is $20,000 33,000 85 Financing Project 12/11/03

• 06/01/23 42,600 and bears a 1. % interest per annum. The note is payable monthly, commencing in $92,494 $55,495 Total January 2011 and matures in December 2014.

Anaheim Housing Authority Note debt service requirements to maturity to be paid from the unrestricted revenues of the Convention, Sports and Entertainment Venues Fund are as follows: The Anaheim Housing Authority has entered into conduit debt financings on behalf of various developers to assist with the acquisition, construction, equipping, Fiscal Year Ending 6/30 Principal Interest Total rehabilitation and refinancing of multifamily residential rental projects within the City 2013 $ 5,000 $ 237 $ 5,237 of Anaheim. In accordance with the bond documents, neither the City nor the 2014 5,095 143 5,238 Housing Authority has an obligation for debt service payments and therefore, the debt 2015 5,185 48 5,233

$15_280 UM570 is not reflected in the accompanying basic financial statements. Housing Authority Total note $ 428 revenue bonds related to conduit financings outstanding at June 30, 2012, were as follows:

ARBITRAGE Date Final Amount Outstanding Issued Maturity Issued 6/30/12 The Tax Reform Act of 1986 (Act) substantially revised the treatment to be afforded to 1985 West Anaheim Royale 12/01/85 12/01/35 $ 4,664 $ 1,744 earnings on the proceeds of tax-exempt debt, and now requires the City to calculate 1992 Heritage Village 11/12/92 11/12/33 8,485 5,485 and remit rebatable arbitrage earnings to the Internal Revenue Service. Certain of the 1997 Casa Granada Apartments 05/15/97 05/15/27 3,795 2,995 City's debt and interest earned on the proceeds thereof are subject to the requirements 1997 Port Trinidad Apartments 05/15/97 05/15/27 2,140 1,640 1998 Sage Park Project 11/01/98 11/01/28 5,500 5,500 of the Act. The City has accrued a liability for estimated rebatable arbitrage earnings 2000 Cobblestone Apartments 07/20/00 03/15/33 3,980 3,580 and has set aside such earnings as restricted cash. At June 30, 2012, the arbitrage 2000 Park Vista Apartments 07/24/00 07/01/33 27,180 27,180 rebate liability for governmental and business-type activities was zero and $211 2000 Seawinds Apartments 07/20/00 07/15/33 7,000 6,300 respectively. 2001 Solara Court Apartments 01/01/01 12/01/34 8,200 5,637 2008 Bel Age Manor Apartments 02/01/08 02/01/44 22,350 21,440 COMPLIANCE WITH DEBT COVENANTS 2009 Lincoln Anaheim Apartments Phase B 05/15/09 04/15/39 23,217 9,121 There are various limitations and restrictions contained in the City's bond and Total $116,511 $ 90,622 certificates of participation indentures. The City believes they are in compliance with all significant limitations and restrictions. FIDUCIARY FUNDS Successor Agency CONDUIT FINANCINGS The following is a summary of changes in long-term liabilities for the year ended June City 30, 2012:

Transfer in from the former The City has entered into two conduit financings on behalf of a community care Redevelopment Additions/ Reductions/ Ending Within Agency Proceeds Rayments Balance One Year provider facility and one to facilitate the management agreement for the Honda Bonds payable $ 208,195 $ (205) $ 207,990 $ 210 Center (formerly the Arrowhead Pond) of Anaheim. In accordance with applicable premium/(discount), net 305 237 542 agreements, the City has no obligation for debt service payments and therefore, the Notes and loans payable: 7,670 (4) 7,666 429 Due to City of Anaheim 22,980 22,980 761 debt is not reflected in the accompanying basic financial statements. Bonds payable Pollution remedialion liability 1,813 $ 5,337 (510) 6,640 5,222 and certificates of participation related to conduit financings outstanding at lune 30, $ 240,963 $ 5,337 $ (4821 $ 245,818 $ 6,622 64 2012, were as follows:

CITY OF ANAHEIM Bonds Payable Fiscal Year Ending 6/30 Principal Interest Total 2013 $ 210 $ 367 $ 577 2014 215 361 576 2007 Tax Allocation Refunding Bonds 2015 225 354 579 2016 230 346 576 The Successor Agency will repay a total of $344,490, principal and interest, for the 2017 240 337 577 outstanding 2007 tax allocation bonds issued in December 2007 from the semi- 2018-2022 1,395 1,496 2,891 annual Redevelopment Property Tax Trust Fund (RPTTF) revenue allocations. 2023-2027 1,840 1,049 2,889 2028-2031 1,955 354 2,309 Proceeds from the bonds provided financing for public improvements related to the merged project areas, for the supply of low-and moderate-income housing within the Total bonds ,$6310 $4,664 $10,974 City, to repay certain Redevelopment Agency loan obligations and to advance refund the 1992, 1997 and 2000 bonds. The bonds bear interest at rates ranging from 4.25% Notes and Loans Payable to 6.5% and are payable through February 2031. During the fiscal year ended June 30, 2012, total interest paid was $10,766. Savi Ranch Associates note payable Debt service requirements to maturity for 2007 Tax Allocation bonds are as follows:

In July 1989, the former Redevelopment Agency executed a note with Savi Ranch Fiscal Year Ending 6/30 Principal Interest Tota I Associates, a California general partnership. The amount of the note totaled $2,707 2013 $ 10,766 S 10,766 and bears interest at 9.5% per annum. The note is payable from net property tax 2014 $ 1,860 10,766 12,626 increment as defined in the Redevelopment Agency note. If there is insufficient 2015 2,205 10,659 12,864 RPTTF revenue to pay for principal and interest at the termination of the River Valley 2016 3,280 10,532 13,812 project area plan in November 2031, the note ceases to be an obligation of the 2017 5,565 10,350 15,915 2018-2022 44,185 45,847 90,032 Successor Agency. For the fiscal year ended June 30, 2012, total interest paid was 2023-2027 63,195 32,671 95,866 $339.

2028-2031 81,390 11,219 92,609 Total 201,680 142,810 344,490 Contractual obligations Unamortized bond refunding cots/rdiscount, net 542 542

$142,810 $345,032 As part of the Redevelopment Agency's economic development program to attract Total bonds $202,222 and retain businesses in the City, the former Redevelopment Agency has entered into various contractual obligations to reimburse tenant improvement costs to be paid 2010 Recovery Zone Economic Develornment Bonds from property tax increment revenues (thereafter RPTTF). At lune 30, 2012, the outstanding balance of these obligations totaled $160.

The Successor Agency will repay a total of $10,974, principal and interest, outstanding Recovery Zone Economics Development Bonds issued in October 2010 In December 1992, the former Redevelopment Agency has entered into an from the semi-annual RPTTF revenue allocations. Proceeds from the bonds provided financing for public improvements related to the merged project areas. The bonds agreement with California State Teachers Retirement System (CALSTRS), to share in bear interest at rates ranging from 1.44% to 6.22% and are payable through February the development costs of the Plaza Redevelopment Project. In March 2004, CALSTRS 2031. During the fiscal year ended June 30, 2012, total principal and interest paid assigned the agreement to the new owners, Pan Pacific Retail Properties, Inc. (PPRP).

were $205 and $371 respectively. In October 2006, Kimco Realty Corporation (KRC) acquired PPRP including the assumption of the assigned plaza project agreement. The KRC participation note Debt service requirements to maturity for 2010 Recovery Zone Development bonds are as follows: bears 7% simple interest rate, and has a maximum term of 25 years. The Successor Agency's obligation to repay the note is entirely contingent on the revenues generated by the project. The note will be forgiven at the end of the term whether or not the entire amount has been repaid. At June 30, 2012, the outstanding balance of the participation note was $4,415.

The former Redevelopment Agency entered into a purchase and sale agreement dated November 24, 2002, with a property owner for the purchase of a future commercial 65

CITY OF ANAHEIM development site located at 1687 West Lincoln Avenue for $900. One half of the Successor Agency will repay this amount from future RPTTF revenue allocations. At purchase price or $450 was paid in cash and the balance of $450 by a promissory June 30, 2012, the outstanding balance is $8,176.

note bearing 6% simple interest per annum. The note is payable over 10 years at $3 per month with a balloon payment of $379 on its maturity date of March 1, 2013. Westgate Pollution Remediation Obligation The outstanding balance of this note at June 30, 2012 was $384.

In June 2003, the former Redevelopment Agency acquired property located at 2951 Debt service recluirements to maturity for the Successor Agency notes payable and West Lincoln Avenue as a part of a redevelopment project named the Westgate contractual commitments to be paid from future RPTTF revenues are as follows: project. Approximately 11 acres of the property were formerly known as the Sparks Fiscal Year Ending 6/30 Principal Interest Total and Rains Landfills. The County of Orange was the operator of these landfills until 2013 $ 429 $ 800 $ 1,229 1960. In November 2008, the County paid the Redevelopment Agency $5,176 in 2014 186 662 848 settlement of claims related to the pollution remediation for the Westgate project site 2015 207 661 868 prior to the development of a shopping center. The total costs of the pollution 2016 229 660 889 remediation work amounted to $12,420 based on actual contract received for the 2017 234 656 890 3,674 2,846 6,520 project. At June 30, 2012, the outstanding pollution remediation obligation for the 2018-2022 2023-2027 841 1,648 2,489 Westgate project was $6,640.

2028-2032 483 2,349 Total notes and loans $7,666 $ 8,416 $16,0192 Mello-Roos Community Facilities Districts The City issued special tax bonds to finance construction in various Community Due to the City of Anaheim Facilities Districts. These bonds were authorized pursuant to the Mello-Roos The Successor Agency will repay a total of $11,500 outstanding long-term Community Facilities Act of 1982. The bonds are payable from a special assessment obligations, principal and interest from the semi-annual RPTTF revenue allocations tax and are non-recourse bonds secured by the properties. Neither the faith and credit for the $10,000 Cooperation Agreement dated April 1, 2003, between the former nor the taxing power of the City, the State of California or any political subdivision of Redevelopment Agency and the City, whereby the City assisted the former Agency either of the foregoing is pledged to the payment of the bonds. The bonds are not with the development of the Anaheim Westgate Center (Westgate project) utilizing general or special obligations of the City, nor do they contain any credit

$10,000 of funds from the HUD Section 108 loan. As of June 30, 2012, the former enhancements that secondarily pledge existing or future resources of the City, Agency has utilized $9,915 of the loan proceeds to finance land acquisition and accordingly they are not reflected in the accompanying basic financial statements.

certain legal and environmental costs of the Westgate project. This Cooperation The City is acting as agent only for the property owners in collecting the special Agreement obligation (HUD Section 108 loan) bears interest ranging from 1.74% to assessments and forwarding the collections to the fiscal agent. This activity is 5.97% and is payable semi-annually through August 2023. At June 30, 2012, the recorded in an agency fund in the basic financial statements.

outstanding principal due to the City for the Westgate project obligation was $8,130, At lune 30, 2012, the City has the following outstanding Mello-Roos special tax principal and interest paid for the current fiscal year were $866.

bonds:

The Successor Agency will repay a total of $9,203 outstanding long-term obligations, In June 1989, the City issued $26,620 in special tax bonds to finance a portion of the principal and interest from the semi-annual RPTTF revenue allocations for the $7,000 cost of acquisition and construction of facilities in East Anaheim Hills. In April 1995, Cooperation Agreement dated June 2010 between the former Redevelopment

$15,389 of the 1989 bonds were advance refunded through the Anaheim Public Agency and the City, whereby the City assisted the former Redevelopment Agency Financing Authority and in June 2004, $11,160 of the 1995 bonds were refunded with the rehabilitation of the historic Packing House site utilizing proceeds from the through the Authority. In December 1999, $7,720 of the 1989 bonds were refunded HUD Section 108 loan. This Cooperation Agreement obligation (HUD 108 Section by the City. At June 30, 2012, the 2004 Anaheim Public Financing Authority bonds loan) bears interest ranging from 1.68% to 3.98% and is payable over 20 years outstanding amounted to $3,890, and the 1999 Mello-Roos bonds outstanding beginning on February 1, 2011 through August 1, 2030. As of June 2012, the amounted to $2,240.

outstanding principal due to the City for the Packing House site project obligation was

$6,674. Principal and interest paid for the current fiscal year were $551. In February 2007, the City issued $9,060 in special tax bonds to finance a portion of the cost of acquisition and construction of facilities in the Platinum Triangle of The former Redevelopment Agency paid a total of $19,163 to the State of California Anaheim. At June 30, 2012, the 2007 Mello-Roos bonds outstanding amounted to Supplemental Education Revenue Augmentation Fund (SERAF) in fiscal years 2010

$8,425. 60 and 2011. Of this amount, $8,500 was borrowed from the housing fund. The

CITY OF ANAHEIM In August 2010, the City issued $28,630 in special tax bonds, Series 2010 to finance Condensed Statement of Revenues, Expenses and Changes in Fund Net Assets a portion of the cost of acquisition and construction of facilities in the Platinum Triangle of Anaheim, Community Facility District 08-1 and to fund a reserve fund for Waste water fees (pledged against bonds) $ 11,717 the Series 2010 Bonds. At June 30, 2012, the 2010 Mello-Roos bonds outstanding Depreciation and amortization (1,666) amounted to $27,125. Other operating expenses (4,832)

Total operating income 5,219 NOTE 9 - SEGMENT INFORMATION: Nonoperating income (expenses)

Interest income 210 The Sanitation Utility Fund issued revenue bonds to finance sewer system expansion Other nonoperating income 1,009 and improvements. The Sanitation Utility Fund accounts for three activities: solid Interest expense (1,817) waste collection, wastewater, and street cleaning. However, investors in the revenue Capital contribution 261 bonds rely solely on revenue generated through wastewater activities for repayment. Transfers out (415)

Summary financial information for wastewater activities is presented below: Total nonoperating expense (752)

Change in net assets 4,467 Assets: Net assets at beginning of year 80,289 Cash and cash equivalents $ 8,711 $ 84,756 10,295 Net assets at end of year Investments Other current assets 2,280 Condensed Statement of Cash Flows Restricted cash and cash equivalents 22,960 88,893 Capital assets, net Net cash provided by (used in):

Total assets 133,139 Operating activities $ 7,087 Liabilities: Noncapital financing activities (410)

Current liabilities 759 Capital and related financing activities (9,780)

Current liabilities payable from restricted assets 2,060 Investing activities (146)

Noncurrent liabilities 45,564 Net decrease (3,249)

Total liabilities 48,383 34,920 Beginning cash and cash equivalents Ending cash and cash equivalents $ 31,671 Net Assets:

Invested in capital assets, net of related debt 55,932 Reconciliation of cash and cash equivalents Restricted for debt services 367 Restricted for capital projects 8,287 Cash and cash equivalents $ 8,711 Unrestricted 20 170

$ 84,756 Restricted cash and cash equivalents 22,960 Total net assets $ 311671 Total cash and cash equivalents NOTE 10- RETIREMENT PLANS:

Retirement System The City contributes to the California Public Employees' Retirement System (PERS),

an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California.

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CITY OF ANAHEIM Benefit provisions and all other requirements are established by State statute and City required contributions of the employer are subject to continual revision as actual ordinance. A copy of PERS' annual financial report may be obtained results are compared with the past expectations and new estimates are made about

@www.calpers.ca.gov. the future.

Funding Policy The table below displays the funding progress of the three plans and is based upon the most recent actuarial valuation data:

Participants are required to contribute 8.0% (9.0% for fire and police safety (A) (B) (C) (D) (E) (F) employees) of their annual covered salary. For miscellaneous employees the City pays 7% of the participant contributions and the employee pays 1%. For police safety, the Actuarial Unfunded ULasa Actuarial Value oa Liabilily Funded Ratios Annual  % of city pays the entire 9% of the participant contributions. For fire safety employees, the Valuation Assets Accrued (UL) AVA Market Covered Payroll entire 9%/uis paid by the employees. In addition, the City is required to contribute at Plan Date (AVA) Liability (B)-(A) (A01B) Value Payroll (C)lIE) an actuarially determined rate applied to annual covered payroll; the current rates are Miscellaneous 06/30/11 $823,258 $1.004,444 $1l,186, 82.0%/. 72.6% $110,234 164.4'1.,

20.389% for miscellaneous employees, 30.623% for police safety employees and Police Safety 06/30/11 453,318 548,400 95.082 82.7% 73.7% 44,567 213.3%

29.228% for fire safety employees. The contribution requirements of plan members FireSafety 06/30/11 274,471 335,781 61.310 81.7% 72.6% 23,681 258.9%

and the City are established and may be amended by PERS. $1,551,047 $1,888,625 $337,5781 82.1% 72.9% $178,4112 1)9.1%

PERS Contribution Rate The schedule of funding progress, presented as required supplementary information City Contribution Employee Contribution following the notes to the financial statements, presents multi-year trend information, Paicl hy Paid by Paid by Paid by which shows whether the actuarial value of plan assets is increasing or decreasing Plan City Employee City Employee Total over time relative to the actuarial accrued liability for benefits.

Miscellaneous 18.120% 2.269%, 7.000% 1.000% 28.389%

Miscellaneous Managenment' 20.389% 0.000% 0.0001y, 8.000% 28.389% Actuarial Methods and Assumptions Police Safety 30.623% 0.000% 9.000% 0.000% 39.623%

Fire Safety 29.228% 0.000% 0.000% 9.000% 38.228% In the June 30, 2011, actuarial valuations, the entry age actuarial cost method was

'new hires since January 10, 2012 used. The actuarial assumptions included: (a) 7.50% investment rate of return (net of Annual Pension Cost administrative expenses), (b) projected annual salary increases that vary by duration of service, and (c) 2.0% per year cost-of-living adjustments. Both (a) and (b) included For fiscal year 2012, the City's annual pension cost of $57,560 for PERS was equal to an inflation component of 2.75%. The actuarial value of PERS assets was determined the City's required and actual contributions. The required contribution was using techniques that smooth the effects of short-term volatility in the market value of determined as a part of the June 30, 2009 actuarial valuations. investments over a 15-year period (smoothed market value). The PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected The City's annual pension cost, the percentage of annual pension cost contributed to payroll on a closed basis. The average remaining amortization periods were 22 years the plans, and the net pension obligation for the fiscal years ended June 30, 2010, for the miscellaneous plan and 30 years for safety police and fire plans for years of 2011 and 2012 are as follows: service unfunded.

Annual Other Post-employment Benefits Fiscal Year Percentage of Net Pension Ending Pension Cost (APC) APC Contributed Obligation 6/30/10 In addition to the pension benefits described above, the City provides other post-

$56,000 100% $0 6/30/11 51,913 100% $0 employment benefits (OPEB) as a single-employer defined benefit healthcare plan.

6/30/12 57,560 1001 $0 The OPEB provides medical, dental and life insurance benefits to eligible retirees (hired prior to January 1, 1996, Anaheim Police Association employees hired prior to Funded Status and Funding Progress July 6, 2001, and Anaheim Fire Association employees hired prior to November 9, 2001) in accordance with City Personnel Resolutions and various Memoranda of Actuarial valuation of an ongoing plan involves estimates of the value of reported Understanding. Eligible employees hired after the dates above have access to the amounts and assumptions about the probability of occurrence of events far into the City's medical and dental plans but do not receive a defined benefit. There are no 68 future. Amounts determined regarding the funded status of the plan and the annual separately issued financial statements for the OPEB.

CITY OF ANAHEIM Funding Policy The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB asset for the fiscal year ended June 30, 2012 are as follows:

The contribution requirements of plan members and the City are established in accordance with City Personnel Resolutions and various Memoranda of Fiscal Year Annual Percentage of Annual OPEB Understanding. The retired plan members receiving benefits make varying Ending OPEB Cost OPEB Cost Contributed Asset contributions toward the cost of these benefits depending on the retiree's Medicare 6/30/10 $ 7,108 102.21% $9,495 6/30/11 10,132 101 .3% 9,629 eligibility, year of hire, age and employee group. Retiree contributions for the fiscal 6/30/12 9,530 101.4%', 9,765 year ended June 30, 2012, were 2.2% of total payroll.

Funded Status and Funding Progress In June 2008, the City joined the California Employer's Retiree Benefit Trust program (CERBT) to pre-fund OPEB liabilities. The CERBT is an agent multiple employer plan Actuarial valuation of an ongoing plan involves estimates of the value of reported consisting of an aggregation of single-employer plans, with pooled administrative amounts and assumptions about the probability of occurrence of events far into the and investment functions that are administered by PERS. A copy of the aggregated future. Amounts determined regarding the funded status of the plan and the annual CERBT annual financial report may be obtained @www.calpers.ca.gov.

required contributions of the employer are subject to continual revision as actual The City contributes an amount not less than the annual required contribution (ARC) results are compared with the past expectations and new estimates are made about of the employer. The ARC is an amount actuarially determined in accordance with the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multi-year the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and trend information in subsequent years, that will show whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued amortize any unfunded actuarial liabilities over a period not to exceed thirty years.

liability for benefits.

The ARC rate for the fiscal year ended June 30, 2012, was 6.26% of total payroll.

The table below displays the funding progress of the plan and is based upon the most Annual OPEB Cost and Net OPEB Asset recent actuarial valuation data:

The City's annual OPEB cost, amount actually contributed to the plan, and changes (A) (B) (C) (D) (E) (F) in the City's net OPEB asset for the fiscal year ended June 30, 2012, are as follows: Actuarial Unfunded UL as a Actuarial Value of Liability Funded Ratios Annual  % of ARC $ 9,666 Valuation Assets Accrued (UL) AVA Covered Payroll Date (AVA) Liability (B)-(A) (A)I/(B) Payroll (C)I/(E)

Interest on net OPEB asset (746) 06/30/11 $67,747 $201,108 $133,361 33.7% $169,331 78.8%

Adjustment to ARC 610 Annual OPEB cost $ 9,530 Actuarial Methods ancl Assumptions Contributions made $ 9,666 Projections of benefits for financial reporting purposes are based oti the substantive Annual OPEB cost (9,530) plan (the plan as understood by the employer and plan members) and include the Change in OPEB asset 136 types of benefits provided at the time of each valuation and the historical pattern of Net OPEB asset - beginning of year 9,629 sharing of benefits costs between the City and plan members to that point. The Net OPEB asset - end of year $9,765 actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in the actuarial accrued liability and the actuarial value of assets, consistent with the long-term perspective of the calculations.

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CITY OF ANAHEIM In the July 1, 2011, actuarial valuation, the entry age normal actuarial cost method Metro Cities Fire Authority was used. The actuarial assumption included a 7.75% investment rate of return, an annual healthcare cost trend rate ranging from 8.00% - 9.50% initially and declining The City participates in a joint powers authority, Metro Cities Fire Authority (Fire to 5.50% by 2020, and an inflation factor of 3.00%. The OPEB unfunded actuarial Authority), for the purpose of providing a central communication network and record accrued liability is being amortized as a level percentage of payroll over a closed 30- keeping system to support fire suppression, emergency medical assistance, rescue year period. The remaining amortization period as of July 1, 2011, is 26 years. service, and related services provided by the members of the Fire Authority.

NOTE 11 - JOINT VENTURES AND JOINTLY-OWNED PROPERTIES: The following entities are members of the Fire Authority: City of Anaheim, City of Fountain Valley City of Fullerton, City of Garden Grove, City of Huntington Beach, Authority for Orange County - City Hazardous Materials Emergency Response City of Newport Beach, and the City of Orange.

The City participates in a joint powers authority the Authority for Orange County-City Public entities in Orange County may receive services from the Fire Authority by Hazardous Materials Emergency Response (Hazmat), for the purposes of responding executing an agreement and paying a fair share contribution. Unaudited financial information for the Fire Authority as of and for the year ended June 30, 2012, was as to, assessing the nature of, and stabilizing any emergency created by the release or threatened release of hazardous materials. follows:

Total assets $2,623 The following entities are members of Hazmat: City of Anaheim, Orange County Fire Total liabilities 654 Authority, the City of Santa Ana, and the City of Huntington Beach. Members of the Members' equity 1,969 Board of Directors (Hazmat Board) consist of one voting Board member and an Total revenues 4,943 alternate appointed by the governing body from the City of Anaheim, Orange County Total expenses 4,641 Fire Authority the City of Santa Ana, and the City of Huntington Beach.

Revenues over expenses 302 Distribution of fair share contributions to reimburse the provider agencies are as The City has no significant equity interest in the Fire Authority, and accordingly follows: City of Anaheim, 27.3%; Orange County Fire Authority, 27.3%; City of Santa neither assets nor liabilities of the Fire Authority have been recorded in the City's Ana, 27.3%; and City of Huntington Beach, 18.1%.

basic financial statements. For a copy of the Fire Authority's separate financial statements, contact the Finance Director of the City.

At the direction of the Hazmat Board, revenues are disbursed to the provider agencies at the end of each preceding quarter. Unaudited financial information for Jointly-owned utility plants the joint powers authority as of and for the year ended June 30, 2012, was as follows:

The City's Electric Utility owns a 10.04% ownership interest in the coal-fired San Juan Total assets $ 64 Generating Station, Unit 4 (SJ), located near Waterflow, New Mexico. The other Total liabilities 43 participants in SJ and their respective ownership include: Public Service of New Members' equity 21 Mexico, 45.48%; City of Farmington, New Mexico, 8.48%; County of Los Alamos, Total revenues 120 New Mexico, 7.20%; and M-S-R Public Power Agency, 28.80%. There are no Total expenses 113 separate financial statements for this venture, as each participant's interest in the Revenues over expenses 7 utility plant is included in their respective financial statements. The City's cumulative share of construction costs included in the utility plant at June 30, 2012, amounted Hazmat does not have any debt outstanding at June 30, 2012. to $80,139. The City's bonded indebtedness incurred to finance the purchase of the 10.04% ownership interest is also included in the basic financial statements.

The City has no significant equity interest in Hazmat, and accordingly neither assets nor liabilities of Hazmat have been recorded in the City's basic financial statements. The City sold its 3.16% ownership interest of SONGS to SCE on December 29, 2006.

For a copy of Hazmat's separate financial statements, contact the Finance Director of Accordingly, the Electric Utility ceased recording all related operating expenses, the City. except marine mitigation costs and spent fuel storage charges, as of December 29, 2006. Based on the SONGS settlement agreement, the Electric Utility is responsible for the City's share of marine mitigation costs up to $2,300, and SCE is responsible 70

CITY OF ANAHEIM for costs between $2,300 and $7,300. The Electric Utility is responsible for spent fuel Take or pay commitments storage charges until the federal government takes possession.

As part of the take or pay commitments with IPA and SCPPA, the Electric Utility has As a former participant in SONGS, the Electric Utility is subject to assessment of agreed to pay its share of current and long-term obligations. Payment for these retrospective insurance premiums in the event of a nuclear incident at SONGS or any obligations will be made from the operating revenues received during the year that other licensed reactor in the U.S. the payment is due. A long-term obligation has not been recorded on the accompanying basic financial statements as these commitments do not represent an NOTE 12 - COMMITMENTS AND CONTINGENCIES: obligation of the Electric Utility until the year the power is available to be delivered to the Electric Utility. The following schedule details the amount of debt service that Intermountain Power Agency is due and payable by the Electric Utility for each project and the final maturity date.

The Electric Utility has entered into a power purchase contract with the Intermountain Fiscal Power Agency (IPA) for delivery of electric power. The share of IPA power is equal to Year Natural 13.225% of the generation output of IPA's two recently uprated coal-fueled Ending 6/30 IPA STS MAP MPP Hoover Magnolia Gas Canyon Total generating units located in Delta, Utah (Unit 1 and 2 net output is 900 mega watts 2013 $ 39,138 $ 12,905 $ 2,571 $ 1,630 $ 834 $ 6,255 $ 6,486 $ 6,385 $ 76,204 2014 38,913 14,222 3,090 1,925 957 10,732 7,369 12,770 89,978 each). The City is obligated for the following percentage of electrical facilities at IPA:

2015 39,800 14,259 3,117 1,660 958 8,547 7,147 12,769 88,257 2016 33,898 14,310 3,003 1,600 957 8,549 7,091 12,770 82,178 Generation Entitlement Expiration 2017 30,532 14,051 2,901 1,555 957 8,550 6,831 19,505 84,882 Intermountain Power Project 13.2%. 2027 2018-2022 144,993 71,310 11,625 6,229 956 33,317 25,364 97,511 391,305 2023-2027 10,392 45,904 35,994 16,935 97,510 206,735 2028-2032 6,364 38,521 11,625 97,519 154,029 The contract constitutes an obligation of the Electric Utility to make payments from 2033-2037 58,106 1,832 97,512 157,450 revenues and requires payment of certain minimum charges. These minimum charges 2038-2041 78,014 78,014 include debt service requirements on the financial obligations used to construct the Total $337_666 $19325 Q26,307 $4,599 619 $208_571 $ 90,680 32265 $1 409 032 plant. These requirements are considered a cost of purchased power.

Southern California Public Power Authority In addition to debt service, the City's entitlement requires the payment for fuel costs, operations and maintenance (O&M), administration and general (A&G) and other miscellaneous costs associated with the generation and transmission facilities The Electric Utility is a member of the Southern California Public Power Authority discussed above. These costs do not have a similar structured Iayment schedule as (SCPPA), a joint powers agency. SCPPA provides for the financing and construction debt service, however, prior experience indicates that annual costs are generally of electric generating and transmission projects for participation by some or all of its consistent from year to year. The fiscal year 2012 expenses for fuel, O&M, A&G and members. To the extent the Electric Utility participates in projects developed by other costs at these projects were as follows:

SCPPA, it is obligated for its proportional share of the cost of the project. The City is Natural obligated for the following percentage of electrical facilities owned by SCPPA: Fiscal Year IPA STS MAP MPP Hoover M Gas Canyon Total 2012 $45,936 $6,075 $276 $227 $489 $25,221 $1,172 54,450 $83,846 Transmission Entitlement Expiration Southern Transmission System (STS) 17.6% 2027 Operating Leases Mead-Adelanto Project (MAP) 13.5% 2030 Mead-Phoenix Project (MPP) 24.2% 2030 In January 2005, the City entered into a long-term noncancelable ground lease with City of Fullerton, for an approximately 1.56 acre site at the Fullerton Municipal Generation Entitlement Expiration Airport for the operation of the Anaheim Police Department Heliport. The term of the Hoover Dam Uprating (Hoover) 42.6% 2018 lease is 40 years with two 10-year extensions commencing from January 2005 and Magnolia Generating Station (Magnolia) 38.0% 2037 ending December 2044. The base rent is adjusted every five years by ten percent Canyon Power Project (Canyon) 100.00/,, 2040 (10%). The City constructed a building of approximately 30,000 square feet that includes offices, aircraft maintenance and storage facilities and other infrastructure Natural Gas Reserve Projects (Natural Gas) supporting such facilities on the leased premise. Future minimum lease payments to SCPPA Natural Gas Project - Pinedale, Wyoming 35.7% 2033 be made from unrestricted revenues of the General Fund are as follows:

SCPPA Natural Gas Project - Barnett, Texas 45.5% 2033 71

CITY OF ANAHEIM Fiscal Year Ending Lune 30 In March 2003, the former Redevelopment Agency sub-leased a portion of the 2013 $ 54 easement to G.D. Heil, Inc., a developer, for a period of 5 years with an option to 2014 54 extend up to 32 years or a total of 37 years. The initial sub-lease is at $5 per month 2015 57 and increase by 6% every 3 years. The following are the annual future minimum RO 2016 2017 59 lease revenues under this lease.

2018-2022 311 2023-2027 342 Fiscal Year Ending June 30 2028-2032 376 $ 71 2013 2033-2037 414 71 2014 2038-2042 455 71 2015 2043-2044 239 76 Total minimum future rentals $ 2,42O0 2016 2017 76 2018-2022 402 Successor Agency 2023-2027 441 2028-2032 490 2033-2037 537 In January 2012, upon dissolution of the Redevelopment Agency the City elected to 2038-2039 114 become the Successor Agency and assumes the following leases: Total In April 2001, the former Redevelopment Agency entered into an agreement with In January 2003, the former Redevelopment Agency entered into a ground lease Katella Operating Properties II, LLC to sublicense/sublease an 8.9 acre Southern agreement with Loan Pham, a property owner, for a period of 55 years, which is California Edison easement (easement) located between Anaheim Boulevard and payable in advance at $71 per year, increasing by 10% every 4 years. Future Claudina Way. The former Redevelopment Agency gained long term control of the minimum lease payments to be made from the Redevelopment Property Tax Trust property as part of its overall efforts to redevelop the area for hotel or commercial Fund are as follows:

development. The term of the sublicense/sublease is for 40 years commencing on May 1, 2001 and ending on April 30, 2041. The Agreement was amended on Fiscal Year Ending tune 30 October 15, 2003 to extend the term of the lease to February 28, 2043. In January 2013 $ 86 2003, the former Redevelopment Agency converted its sublicense to a sublease and 2014 86 is paying $34 in monthly rent through January 2006. The agreement also provides for 2015 95 2016 95 the rent to increase by 6% every 3 years. Future minimum lease payments to be 2017 95 made from the Redevelopment Property Tax Trust Fund are as follows: 2018-2022 510 2023-2027 583 Fiscal Year Ending June 30 2028-2032 654 2013 $ 479 2033-2037 733 2014 479 2038-2042 821 2015 492 2043-2047 939 2016 508 2048-2052 1,053 2017 508 2053-2057 1181 2018-2022 2,721 Total $6,931 2023-2027 2,987 2028-2032 3,301 2033-2037 3,642 2038-2042 3,999 2043-2044 572 Total $19,688 72

CITY OF ANAHEIM The Honda Center At June 30, 2012, the outstanding conduit debt on the Honda Center totaled

$33,000. The debt is non-recourse, payable from revenues generated by the facility.

On January 26, 1999, the City entered into a series of lease transactions for the Neither the faith and credit nor the taxing power of the City is pledged to the payment Honda Center, Under these transactions, the City leased the Honda Center to a third of the debt. The debt is not a general or special obligation of the City, nor does it party trustee acting for the benefit of an equity investor for a term of approximately contain any credit enhancements that secondarily pledge existing or future resources 39.2 years. The trustee sublet the facility back to the City for 20 years, which was of the City (other than revenues generated by the facility), and accordingly it is not shorter than the then remaining term of the management agreement between the reflected in the accompanying basic financial statements.

third-party manager at that time (Manager) and the City in consideration of an advance rental payment for the entire lease term. At the end of the sublease, the City Angel Stadium of Anaheim has a purchase option to purchase the trustee's rights under the lease for a fixed amount. The advance rent payments to the City were deposited into a trust fund and On May 14, 1996, the City and the California Angels, LP (Team), which was then invested. The cash scheduled to be available from this trust fund is sufficient to pay managed by Disney Sports Enterprises, Inc. (subsequently known as Anaheim Sports, the City's rent payments for the term of the sublease and to exercise the City's Inc.), entered into an agreement to provide for the operation and refurbishment of the purchase option at the end of the sublease. The excess of the amount of the advance Stadium. Pursuant to the agreement, the Team assumed responsibility for the rent payment made by the trustee to the City over the deposit to the trust funds, after operation of the Stadium on October 1, 1996. The agreement runs for 33 years the payment of transaction expenses and payment to the Manager for agreeing to (subject to a limited Team option to cancel at 20 years and the Team's right to extend pledge its interest as Manager under the management agreement then in effect and the term).

agreeing to undertake certain additional obligations to the transaction, was approximately $4,000. This amount was recognized by the City as deferred revenue Under the terms of the agreement, the Team assumed full responsibility for all and is being amortized over the sublease term. The City has secured its obligations to Stadium operations and maintenance, including capital maintenance. The Team the other parties to these lease transactions by a pledge of its respective interest in books all Stadium and parking lot events (except for ten annual City events), pays all revenues from the facility, subordinate (with certain exceptions) to any interests of the expenses, and retains all revenue (subject to the City's rights to share in certain net debt holders of the facility. The City's obligations under these lease transactions are revenues) except that the City credits the Team up to $500 per year adjusted annually considered to be defeased in substance, and therefore the related liabilities as well as for CPI for a capital reserve, calculated on the basis of property taxes. The City's the trust assets have been excluded from the City's financial statements. The City's and participation in net revenues includes amounts received by the Team above certain AAM's respective rights under the FMA are subject in certain respects to the effect of thresholds including paid admissions ($2.00 per paid admission in excess of 2.6 the 1999 lease transaction. million admissions per year), net income from nongame events (in excess of $2,000 per year adjusted annually for CPI), and parking lot net income (25% in excess of Effective December 16, 2003, the City and Anaheim Arena Management LLC (AAM) $4,000 per year adjusted annually for CPI). Additionally, as indicated above, the City entered into a Facility Management Agreement (FMA) whereby AAM has the retained the right to book and retain all revenue from ten parking lot events per year.

exclusive right and license to manage, maintain and operate all aspects of the Honda Major League Baseball consented to the transfer of the Team in fiscal year 2003 to Center in accordance with the FMA through June 30, 2023, with an option to extend interests controlled by Arte Moreno. No changes in the terms of the agreement with the term for an additional period not to exceed 10 years. Annual distributions to the the Team were made in connection with that transfer.

City, AAM and the County of Orange are required for their respective share of adjusted net revenues, as defined in the FMA. In the event that cash on hand is The Agreement also provided that the City had the right to develop approximately 42 insufficient to pay operating expenses, debt service, distributions to the City, the acres of the parking lot development site. In 1998 a land sale of $1,000 for a 1.25 County of Orange, or other amounts payable, AAM shall make or cause an affiliate acre site was approved for the construction of a 1,100-seat theatre called "Tinseltown or third-party lending institution to make loans for such purposes, as defined in the Studios" (now known as "City National Grove of Anaheim"). In November 2002, the FMA. Such funds will be repaid from gross revenues or adjusted net revenues, if any, City purchased the facility and the land for $6,700 from its then owner, SMG, a as defined in and in accordance with disbursement priorities established in the FMA. Pennsylvania partnership, an affiliate of Aramark Entertainment, Inc. Concurrent with 73

CITY OF ANAHEIM the purchase, the City granted to Nederlander-Grove LLC (Nederlander) a license to Grants operate the facility for three years with the right to extend another five years. In May 2009, the management agreement was amended extending the term to December Amounts received or receivable from grant agencies are subject to audit and 31, 2015 with the right to extend another five year period. Additionally, under the adjustment by grantor agencies. Any disallowed claims, including amounts already amended management agreement, effective January 1, 2009, Nederlander no longer collected, may constitute a liability of the applicable funds. The amount, if any, of receives a management fee of $150 and the City's share in the annual net profits and expenditures that may be disallowed by the grantor cannot be determined at this losses from operations increased from 50% to 60%. Nederlander is responsible for time, although the City expects such amounts, if any, to be immaterial.

100% of losses in excess of $400, thereby limiting the City's share of net losses to a maximum of $240 in any given year. The City may elect to terminate the agreement Construction and other significant commitments prior to expiration of the term under certain conditions, and pay the unamortized balance of capital assets purchased during the term to Nederlander. Concurrent with At June 30, 2012, the City had the following commitments with respect to unfinished the amendment to the management agreement, the parking license fee agreement capital projects, disposition and development agreements, reimbursement was amended, wherein the parking license fees from Nederlander were reduced to agreements and cooperation agreements:

$176 and are subject to adjustment annually based on CPI increases. Nederlander paid the City $184 for the year ended June 30, 2012, for parking and common area Remaining Expected maintenance. Construction Completion Descriotion Commitment Date Muzeo Aircraft acquisition $ 2,104 2012 Anaheim Boulevard Residential Housing Project 2,300 2014 In October 2007, the City and the former Redevelopment Agency entered into a Anaheim Convention Center Grand Plaza 13,540 2012 property operating agreement with the Muzeo Foundation to operate and provide Anaheim Fixed-Guideway Transit Corridor Study 724 2012 programming for the Muzeo, the downtown museum. The property operating Anaheim Regional Transportation tntermodal Center Professional Services 5,972 2015 agreement is for a term of 30 years and provides for a line of credit for the first 3 years Avon Dakota Neighborhood Revitalization Housing Project 17,427 2015 from the City to the Muzeo Foundation in an amount not to exceed $1,000 or 95% Colony Park Phase IIIHome Buyer Assistance 4,775 2014 of pledges at an annual interest rate of 5%. The property operating agreement was Colony Park Phase IV Home Buyer Assistance and Remediation Costs 2,000 2016 amended on August 1, 2010, to extend the maturity date to June 30, 2015. It also Gene Autry Way Highway Construction 6,217 2013 amended the aggregate amount of the line of credit to $500 during fiscal year 2011 Hidden Canyon Pump Station Upgrade 1,536 2013 and $200 during each fiscal year thereafter with amounts being converted to grants Linda Vista Reservoir and Pump Station Replacement 5,971 2013 upon achieving fund raising thresholds. At June 30, 2012, there was no amount due Orangewood, Mountain View Sanitary Sewer System Improvement 1,537 2012 to the City. Transformers 752 2013 Underground District No. 53 La Palma Avenue 614 2013 Litigation Underground District No. 59 Brookhrust 5,157 2013 Vehicle Acquisitions 1,347 2013 A number of claims and suits are pending against the City for alleged damages to Water Recycling Demonstration Project 2,227 2013 persons and/or property and for other alleged liabilities arising out of matters usually Well 158 at Anaheim Lake - Drilling 1,208 2013 incident to the operation of a city such as Anaheim. Although the aggregate amount West Anaheim Sanitary Sewer System Improvement 1,230 2013 asserted for such lawsuits and claims is significant, in the opinion of City management, the City has strong defenses against such claims, and thus the ultimate loss, if any relating to these claims and suits not covered by insurance or reflected in the financial statements, will not materially affect the financial position of the City.

74

CITY OF ANAHEIM At June 30, 2012, the Successor Agency had the following commitments with respect On September 19, 2012, the Electric Utility issued 2012-A Revenue Refunding Bonds to unfinished capital projects: in total amount of $92,130 at a premium of $9,254 to refund the outstanding balance of $96,210 on the 2002-A Revenue Bond. The true interest cost is 3.38% maturing Remaining Expected serially from October 1, 2021 to 2023. Annual debt service requirements, beginning Construction Completion April 1, 2013 range from $2,084 to $17,456 at rates ranging from 3.125% to 5.000%.

Capital Project Commitment Date This 2012-A refunding bond will reduce its total debt service payments by $24,970 Historic Citrus Packing House Renovation $ 3,648 2013 at the net present value of $17,815.

PRcking District Capital Improvement 1,878 2014 Successor Agency Recognized Payment Schedule NOTE 13 - SUBSEQUENT EVENTS:

On December 18, 2012, the Successor Agency received a final determination letter On July 10, 2012, the City Council approved an agreement for the purchase and sale from the State of California Finance Department that denied $8.9 million in of real property located at 1750 South Douglass Road in Anaheim. The parcel is enforceable obligations to be paid from tax increment for the period January 1, 2013 approximately 13.58 acres in size and was purchased from the Orange County through June 30, 2013. The full impact of this decision as it relates to the City and Transportation Authority (OCTA). The purchase price for the site is $32,500, payable Successor Agency has yet to be determined.

over 13 years and bears 2% simple interest per annum in accordance with the Purchase and Sale Agreement. Annual Principal Payments are due on or before July 10th each year commencing 2012. The payment of accrued interest is deferred until eqlual payments of $2,065 are due and payable on or before July 10, 2024 and July 10, 2025. Interest begins accrual on the first day of July each year based on the principal. The purchase price shall be paid with Measure M2 Local Fair Share funds.

OCTA shall retain payments from Anaheim's "Local Fair Share" funds allocated by OCTA under Measure M2 each year until the final payment is made on July 10, 2025.

The City may elect to provide alternative funding from other City funds for transportation related purposes, such as gas tax funds.

75

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CITY OF ANAHEIM Required Supplementary Information (Unaudited)

(In thousands)

Employee Retirement System - Schedule of Funding Progress Value of Assets Unfunded Liability Funded Ratios June 30, 2011 Actuarial Market Annual UL as Actuarial Value of Valule of Accrued Covered a % of Valuation Date Assets (AVA) Assets (MVA) Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 823,258 $ 729,226 $1,004,444 $181,186 $275,218 82.0% 72.6% $110,234 164.4%

Police Safety 453,318 404,171 548,400 95,082 144,229 82.7% 73.7% 44,567 213.3%

Fire Safety 274,471 243,777 335,781 61,310 92,004 81.7% 72.6% 23,681 258.9%

Total $1,551,047 $1,377,174 $1,888,625 $337,578 $511,451 82.1% 72.9% $178,482 189.1%

Value of Assets Unfunded Liability Funded Ratios June 30, 2010 Actuarial Market Annual UL as Actuarial Value of Valule of Accrued Covered a % of Valuation Date Assets (AVA) Assets (MVA) Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 783,241 $ 611,101 $ 968,464 $185,223 $357,363 80.9% 63.1% $116,877 158.5%

Police Safety 432,262 339,467 519,062 86,800 179,595 83.3% 65.4% 45,620 190.3%

Fire Safety 263,280 206,169 317,672 54,392 111,503 82.9% 64.9% 24,746 219.8%

Total $1,478,783 $1,156,737 $1,805,198 $326,415 $648,461 81.9% 64.1% $187,243 174.3%

Value of Assets Unfunded Liability Funded Ratios June 30, 2009 Actuarial Market Annual UL as Actuarial Value of Valule of Accrued Covered a % of Valuation Date Assets (AVA) Assets (MVA) Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 747,033 $ 542,838 $ 918,508 $171,475 $375,670 81.3% 59.1% $120,606 142.2%

Police Safety 411,137 300,336 496,423 85,286 196,087 82.8% 60.5% 46,022 185.3%

Fire Safety 252,862 184,820 308,033 55,171 123,213 82.1% 60.0% 26,098 211.4%

Total $1,411,032 $1,027,994 $1,722,964 $311,932 $694,970 81.9% 59.7% $192,726 161.9%

Other Post-employmet Benefits - Schedule of Funding Progress Actuarial Unfunded Funded Annual UL as Actuarial Value of Accrued Liability- Ratios- Covered a % of Valuation Date Assets (AVA) Liability AVA AVA Payroll Payroll June 30, 2011 $ 67,747 $ 201,108 $133,361 33.7% $169,331 78.8%

June 30, 2010 63,920 211,914 147,994 30.2% 177,229 83.5%

June 30, 2008 63,097 155,728 92,631 40.5% 165,137 56.1%

See accompanying independent auditors' report. 77

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NONMAJOR GOVERNMENTAL FUNDS

• ii NONMAJOR FUNDS GOVERNMENTAL

NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS are used to account for revenue derived from specific taxes or other earmarked revenue sources (other than for major capital projects) that are restricted by law or administrative action to expenditures for specified purposes.

GAS TAX AND ROADS FUND - Established to account for the construction and maintenance of the road network system of the City. Financing is provided primarily by the City's share of Federal, State, and local gasoline taxes. Federal, State, and local regulations require that these gasoline taxes be used to improve and maintain streets, and includes programs intended to improve the air quality of the region.

WORKFORCE DEVELOPMENT FUND - Established to account for the City's involvement in Federal, State, and local programs to create jobs and provide the unemployed citizens in the Anaheim area with job training opportunities.

COMMUNITY DEVELOPMENT BLOCK GRANT FUND - Established to account for financing of the development of viable urban communities through the provision of decent housing, suitable living environments and economic opportunity, principally for persons of low and moderate income. Financing is provided by the Federal Housing and Urban Development (HUD) grants.

COMMUNITY SERVICES FACILITIES - Established to account for the development of new parksites, playgrounds and library facilities. Federal and State grantlprograms, ie conjunction with fees charged to residential and commertal developers provide financing. Much of this cpta revenue is used to support the capital construction of A marks and otheri recr nal faclities throughout the City. Budget fluctuations from yert erar eut Ih of vaitin... . rorm URANSPORTATOR NIMPOE MENT PNROCTIOS FUND - Established to account for trayonsprttioni th of e einty's projen ertthe inty paril dispn osuportethe ainaheimg Regionid e ROETSFUD Etblshd oacout orifrstucue mpovmnt, riarl i te DEELPMNTIPAT ltiumTranl aea wih roids eelpmntopotuite fTanes Porgtationresidente alCent Aaraortationg er and mixed-use actioviyenter f EANSELOMUENT IMPA PROh ECETS FUND - Established to accounte frin freasatrucurne ipovementsg, in primancinl P tu Tinge laead ithed which povds development opportut redeeopet revi eiatced atvte.Fncigspriddby property tax increment adbn rces ATAHER APOIRTAI NMENENCSFUNDRICE stalisedto account for miscellane for the c and cojlection of e ter almn ed by Cou the City cit. C f tlostfinancing i provide by fees.f whith are sCurdb n aal rmtepoed a nulseilassssen onterpet wihithedstit redevelopmentsfretinf atrctuire Fimaovintts pHrc8loashan subsidies from the General Fund proeeds.

fo ighrodensty, mie sofcrsarnadrsdnilpoet.Fiacntspoie rmrl ydvlpetipc es whch are sencuedi MELLSO-RTTO N MPROJECTSPOJC FN to

- Established account forn rodtee ae mrovmntsotaionthepcomemunity fajctsihitydsrcs F is sprovide rinancing ofs eiatxbonds by thesnalei

CITY OF ANAHEIM Combining Balance Sheet Nonmajor Governmental Funds by Fund Type June 30, 2012 (In thousands)

Nonmajor Nonma'or Nonmajor Total Special Debt Capital Nonmajor Revenue Service Projects Governmental Funds Funds Funds Funds ASSETS Cash and cash equivalents $ 11,396 $ 255 $ 12,542 $ 24,193 Investments 18,229 408 20,062 38,699 Accounts receivable, net 1,370 44 1,414 Accrued interest receivable 113 23 91 227 Notes receivable, net 24,001 24,001 Due from other funds 3,401 7,395 10,796 Due from other governments 28,840 5 11,318 40,163 Prepaid and other assets 4,248 1,857 6,105 Restricted cash and cash equivalents 82 21,190 21,904 43,176 Restricted investments 31,522 85 31,607 Due from the Successor Agency 6,674 8,130 14,804 Total assets $ 98,354 $53,403 $ 83,428 $235,185 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 8,565 $ 5 $ 4,864 $ 13,434 Wages payable 186 31 217 Deposits 1,090 1,090 Due to the Successor Agency 1,551 1,551 Due to other funds 4,329 7,395 11,724 Deferred revenues 53,792 19,491 73,283 Total liabilities 67,962 5 33,332 101,299 Fund balances:

Nonspendable:

Prepaid and other assets 1 1 Restricted:

Anaheim Resort maintenance and improvement 7,588 7,588 Capital projects 46 2,856 2,902 Debt service 53,398 53,398 Development impact projects 10,407 50,992 61,399 Grant purposes 4,555 4,555 Homebuyer assistance program 6,037 6,037 Streets, roads and transportation improvement projects 21,864 1,190 23,054 Assigned:

Debt service 12 12 Capital projects 351 7,037 7,388 Unassigned (20,457) (11,991) (32,448)

Total fund balances 30,392 53,398 50,096 133,886 Total liabilities and fund balances $ 98,354 $53,403 $ 83,428 $235,185

_______ 79

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds by Fund Type Year Ended June 30, 2012 (Inthousands)

Nonmajor Nonmajor Total Special Nonmajor Capital Nonmajor Revenue Debt Service Projects Governmental Funds Funds Funds Funds Revenues:

Property taxes $ 8,603 $20,751 $ 29,354 Licenses, fees and permits 589 $ 458 1,047 Intergovernmental revenues 42,608 9 27,208 69,825 Charges for services 16,562 16,562 Use ot money and property 1,224 273 1,947 3,444 Other 876 2,914 3,790 Total revenues 70,462 21,033 32,527 124,022 Expenditures:

Current:

City Attorney 120 120 Finance 24 24 Police 8,596 8,596 Fire 883 883 Community Development 9,947 3,755 5,195 18,897 Planning 1,680 1,680 Public Works 9,613 1 419 10,033 Community Services 1,686 479 2,165 Convention, Sports and Entertainment 8,826 8,826 Capital outlay 21,747 32,393 54,140 Debt service:

Principal retirement 727 15,170 397 16,294 Interest charges 567 25,891 469 26,927 Total expenditures 64,392 44,841 39,352 148,585 Excess (deficiency) of revenues over (under) expenditures 6,070 (23,808) (6,825) (24,563)

Other financing sources (uses):

Transfers in 944 45,335 23,232 69,511 Transfers out (28,763) (7,200) (23,637) (59,600)

Total other financing sources (uses) (27,819) 38,135 (405) 9,911 Extraordinary loss (13,916) (24,483) (28,836) (67,235)

Net change in fund balances (35,665) (10,156) (36,066) (81,887)

Fund balances at beginning of year 66,057 63,554 86,162 215,773 Fund balances at end of year $ 30,392 $ 53,398 $50,096 $133,886 80

CITY OF ANAHEIM Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2012 (In thousands)

Gas Tax Community Community Sewer and and Workforce Development Services Storm Drain Roads Development Block Grant Facilities Construction ASSETS Cash and cash equivalents $1,698 $1,570 Investments $ 1 2,716 2,512 Accounts receivable, net $ 3 1 215 54 Accrued interest receivable 18 1 Notes receivable, net 6,920 Due from other funds 3,401 Due from other governments 21,453 $649 908 217 Prepaid and other assets 3,977 1 Restricted cash and cash equivalents 81 Due from the Successor Agency 6,674 Total assets $25,433 $649 $14,585 $4,865 $7,538 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 3,959 $422 $ 167 $ 64 $ 245 Wages payable 50 23 35 3 2 Deposits 1,090 Due to other funds 3,401 185 743 Deferred revenues 17,798 52 13,594 186 54 Total liabilities 25,208 682 14,539 253 1,391 Fund balances (deficits):

Nonspendable:

Prepaid and other assets 1 Restricted:

Anaheim Resort maintenance and improvement Capital projects 46 Development impact projects 4,260 6,147 Grant purposes Homebuyer assistance program Street, roads and transportation improvement projects 17,764 Assigned:

Capital projects 351 Unassigned: (17,539) (33)

Total fund balances (deficit) 225 (33) 46 4,612 6,147 Total liabilities and fund balances (deficit) $25,433 $649 $14,585 $4,865 $7,538 (continued) 81

CITY OF ANAHEIM Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2012 (Inthousands) (continued)

Anaheim Anaheim Resort Tourism Narcotic Redevelopment Maintenance Improvement Asset Housing Grants District District Forfeiture Set-Aside Total ASSETS Cash and cash equivalents $ 1,805 $3,055 $1,638 $1,630 $ $ 11,396 Investments 2,887 4,886 2,619 2,608 18,229 Accounts receivable, net 1,097 1,370 Accrued interest receivable 32 30 13 19 113 Notes receivable, net 17,081 24,001 Due from other funds 3,401 Due from other governments 5,598 15 28,840 Prepaid and other assets 270 4,248 Restricted cash and cash equivalents 1 82 Due from the Successor Agency 6,674 Total assets $27,404 $7,986 $5,367 $4,527 $ $ 98,354 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 1,651 $ 392 $1,266 $ 399 $ $ 8,565 Wages payable 26 6 1 40 186 Deposits 1,090 Due to other funds 4,329 Deferred revenues 22,108 53,792 Total liabilities 23,785 398 1,267 439 67,962 Fund balances (deficits):

Nonspendable:

Prepaid and other assets 1 Restricted:

Anaheim Resort maintenance and improvement 7,588 7,588 Capital projects 46 Development impact projects 10,407 Grant purposes 467 4,088 4,555 Homebuyer assistance program 6,037 6,037 Street, roads and transportation improvement projects 4,100 21,864 Assigned:

Capital projects 351 Unassigned (2,885) (20,457)

Total fund balances (deficit) 3,619 7,588 4,100 4,088 30,392 Total liabilities and fund balances (deficit) $27,404 $7,986 $5,367 $4,527 $ $ 98,354 82

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Nonmajor Special Revenue Funds Year Ended June 30, 2012 (Inthousands)

Gas Tax Community Community Sewer and and Workforce Development Services Storm Drain Roads Development Block Grant Facilities Construction Revenues:

Property taxes Licenses, fees and permits $ 38 $ 353 $ 178 Intergovernmental revenues 26,497 $3,628 $ 4,954 367 Charges for services 178 Use of money and property 5 22 168 98 Other 8 194 Total revenues 26,726 3,628 5,170 888 276 Expenditures:

Current:

City Attorney 120 Police Fire Community Development 3,658 1,491 Planning 1,680 Public Works 5,511 171 Community Services 1,162 496 Convention, Sports and Entertainment Capital outlay 20,427 88 421 102 Debt service:

Principal retirement 605 Interest charges 483 Total expenditures 25,938 3,658 5,629 917 273 Excess (deficiency) of revenues over (under) expenditures 788 (30) (459) (29) 3 Other financing sources (uses):

Transfers in 482 113 73 Transfers out (6,689)

Total other financing sources (uses) 482 -(6,576) 73 Extraordinary loss Net change in fund balances (deficits) 1,270 (30) (7,035) (29) 76 Fund balances (deficits) at beginning of year (1,045) (3) 7,081 4,641 6,071 Fund balances (cleficit) at end of year $ 225 $ (33) $ 46 $4,612 $6,147 (continued) 83

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Nonmajor Special Revenue Funds Year Ended June 30, 2012 (Inthousands) (continued)

Anaheim Anaheim Resort Tourism Narcotic Redevelopment Maintenance Improvement Asset Housing Grants District District Forfeiture Set-Aside Total Revenues:

Property taxes $ 8,603 $ 8,603 Licenses, fees and permits $ 20 589 Intergovernmental revenues 4,483 $2,679 42,608 Charges for services $4,497 $11,887 16,562 Use of money and property 149 101 36 445 200 1,224 Other 183 3 488 876 Total revenues 4,835 4,601 $11,923 3,124 9,291 70,462 Expenditures:

Current:

City Attorney 120 Police 5,457 3,139 8,596 Fire 883 883 Community Development 3,023 1,775 9,947 Planning 1,680 Public Works 3,931 9,613 Community Services 28 1,686 Convention, Sports and Entertainment 8,826 8,826 Capital outlay 461 204 11 33 21,747 Debt service:

Principal retirement 122 727 Interest charges _ 84 567 Total expenditures 9,852 3,931 9,030 3,356 1,808 64,392 Excess (deficiency) of revenues over (under) expenditures (5,017) 670 2,893 (232) 7,483 6,070 Other financing sources (uses):

Transfers in 63 200 13 944 Transfers out (385) (119) (21,570) (28,763)

Total other financing sources (uses) (322) 200 (119) (21,557) (27,819)

Extraordinary loss (13,916) (13,916)

Net change in fund balances (deficits) (5,339) 870 2,774 (232) (27,990) (35,665)

Fund balances (deficits) at beginning of year 8,958 6,718 1,326 4,320 27,990 66,057 Fund balances (deficit) at end of year $ 3,619 $7,588 $ 4,100 $4,088 $ $30,392 84

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2012 (Inthousands)

Gas Tax and Roads Workforce Development Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Property taxes Licenses, fees and permits $ 38 $ 38 Intergovernmental revenues $ 70,928 26,497 (44,431) $4,973 $3,628 $(1,345)

Charges for services 360 178 (182)

Use of money and property 5 5 Other 8 8 Total revenues 71,296 26,726 (44,570) 4,973 3,628 (1,345)

Expenditures:

Current:

City Attorney Police Fire Community Development 4,932 3,658 (1,274)

Planning 74 38 (36)

Public Works 79,359 25,900 (53,459)

Community Services Convention, Sports and Entertainment Total expenditures 79,433 25,938 (53,495) 4,932 3,658 (1,274)

Excess (deficiency) of revenues over (under) expenditures (8,137) 788 8,925 41 (30) (71)

Other financing sources (uses):

Transfers in 482 482 Transfers out Total other financing sources (uses) 482 482 Net change in fund balances (deficits) (8,137) 1,270 9,407 41 (30) (71)

Fund balances (deficits) at beginning of year (1,045) (1,045) (3) (3)

Fund balances (deficit) at end of year $ (9,182) 225 $ 9,407 $ 38 (33) $ (71)

Adjustments to reconcile to GAAP:

Reclassification of long-term interfund receivable to transfer out Transfer out of housing assets to Anaheim Housing Authority Extraordinary loss Ending fund balances (deficit) - GAAP basis $ 225 $ (33)

(continued) 85

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30,12012 (In thousands) (continued)

Community Development Block Grant Community Services Facilities Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Property taxes Licenses, fees and permits $ 353 $ 353 Intergovernmental revenues $ 8,421 $ 4,954 $ (3,467) $4,227 367 (3,860)

Charges for services 393 (393)

Use of money and property 30 22 (8) 91 168 77 Other 187 194 7 Total revenues 8,638 5,170 (3,468) 4,711 888 (3,823)

Expenditures:

Current:

City Attorney 120 120 Police Fire Community Development 6,100 2,592 (3,508)

Planning 1,680 1,680 Public Works 75 75 Community Services 1,162 1,162 4,424 917 (3,507)

Convention, Sports and Entertainment Total expenditures 9,137 5,629 (3,508) 4,424 917 (3,507)

Excess (deficiency) of revenues over (under) expenditures (499) (459) 40 287 (29) (316)

Other financing sources (uses):

Transfers in 439 113 (326)

Transfers out (15) (15)

Total other financing sources (uses) 439 98 (341)

Net change in fund balances (deficits) (60) (361) (301) 287 (29) (316)

Fund balances (deficits) at beginning of year 7,081 7,081 4,641 4,641 Fund balances (deficit) at end of year $ 7,021 6,720 $ (301) $ 4,928 4,612 $ (316)

Adjustments to reconcile to GAAP:

Reclassification of long-term interfund receivable to transfer out (6,674)

Transfer out of housing assets to Anaheim Housing Authority Extraordinary loss Ending fund balances (deficit) - GAAP basis $ 46 $4,612 (continued) 86

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2012 (Inthousands) (continued)

Sewer and Storm Drain Construction Grants Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Property taxes Licenses, fees and permits $ 202 $ 178 $ (24) $ 30 $ 20 $ (10)

Intergovernmental revenues 31,040 4,483 (26,557)

Charges for services Use of money and property 98 98 91 149 58 Other 23 183 160 Total revenues 202 276 74 31,184 4,835 (26,349)

Expenditures:

Current:

City Attorney Police 16,111 5,833 (10,278)

Fire 1,560 953 (607)

Community Development 8,164 3,023 (5,141)

Planning Public Works 1,049 273 (776)

Community Services 408 43 (365)

Convention, Sports and Entertainment Total expenditures 1,049 273 (776) 26,243 9,852 (16,391)

Excess (deficiency) of revenues over (under) expenditures (847) 3 850 4,941 (5,017) (9,958)

Other financing sources (uses):

Transfers in 73 73 72 63 (9)

(274) (385) (111)

Transfers out Total other financing sources (uses) 73 73 (202) (322) (120)

Net change in fund balances (deficits) (847) 76 923 4,739 (5,339) (10,078)

Fund balances (deficits) at beginning of year 6,071 6,071 8,958 8,958 Fund balances (deficit) at end of year $5,224 6,147 $ 923 $13,697 3,619 $(10,078)

Adjustments to reconcile to GAAP:,

Reclassification of long-term interfund receivable to transfer out Transfer out of housing assets to Anaheim Housing Authority Extraordinary loss Ending fund balances (deficit) - GAAP basis $6,147 $ 3,619 (continued) 87

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2012 (Inthousands) (continued)

Anaheim Resort Maintenance District Anaheim Tourism Improvement District Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Property taxes Licenses, fees and permits Intergovernmental revenues $10,169 $11,887 $1,718 Charges for services $4,487 $4,497 $ 10 Use of money and property 67 101 34 36 36 Other 4 3 (1)

Total revenues 4,558 4,601 43 10,169 11,923 1,754 Expenditures:

Current:

City Attorney Police Fire Community Development Planning 83 83 Public Works 5,077 3,931 (1,146) 414 121 (293)

Community Services Convention, Sport and Entertainment 8,826 8,826 5,077 9,030 Total expenditures 3,931 (1,146) 9,323 (293)

Excess (deficiency) of revenues over (under) expenditures (519) 670 846 2,893 2,047 Other financing sources (uses):

Transfers in 200 200 Transfers out (119) (119)

Total other financing sources (uses) 200 200 1,189 (119) (119)

Net change in fund balance (deficits) (319) 870 846 2,774 1,928 Fund balances (deficits) at beginning of year 6,718 6,718 $1,189 1,326 1,326 Fund balances (deficit) at end of year $6,399 7,588 $ 2,172 4,100 $1,928 Adjustments to reconcile to GAAP:

Reclassification of long-term interfund receivable to transfer out Transfer out of housing assets to Anaheim Housing Authority Extraordinary loss Ending fund balances (deficit) - GAAP basis $7,588 $ 4,100 (continued) 88

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2012 (Inthousands) (continued)

Narcotic Asset Forfeiture Redevelopment Housing Set-Aside Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Property taxes $ 8,603 $ 8,603 Licenses, fees and permits Intergovernmental revenues $ 3,201 $2,679 $ (522)

Charges for services Use of money and property 429 445 16 2,680 200 $(2,480)

Other 182 488 306 Total revenues 3,630 3,124 (506) 11,465 9,291 (2,174)

Expenditures:

Current:

City Attorney Police 4,160 3,356 (804)

Fire Community Development 10,401 1,808 (8,593)

Planning Public Works Community Services Convention, Sports and Entertainment Total expenditures 4,160 3,356 (804) 10,401 1,808 (8,593)

Excess (deficiency) of revenues over (under) expenditures (530) (232) 298 1,064 7,483 6,419 Other financing sources (uses):

Transfers in 11,200 13 (11,187)

Transfers out (22) (2,436) (2,414)

Total other financing sources (uses) 11,178 (2,423) (13,601)

Net change in fund balance (530) (232) 298 12,242 5,060 (7,182)

Fund balances (deficits) at beginning of year 4,320 4,320 27,990 27,990 Fund balances (deficit) at end of year $3,790 $4,088 $ 298 $40,232 33,050 $(7,182)

Adjustments to reconcile to GAAP:

Reclassification of long-term interfund receivable to transfer out (8,176)

Transfer out of housing assets to Anaheim Housing Authority (10,958)

Extraordinary loss (13,916)

Ending fund balances (deficit) - GAAP basis $4,088 $

89

CITY OF ANAHEIM Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2012 (In thousands)

General Redevelopment Municipal Anaheim Resort Obligation Bonds Agency Facilities Improvements Total ASSETS Cash and cash equivalents $252 $ $ 3 $ 255 Investments 403 5 408 Accrued interest receivable 2 21 23 Due from other governments 5 5 Restricted cash and cash equivalents 495 $20,695 21,190 Restricted investments 1,875 29,647 31,522 Total assets $662 $ $2,399 $50,342 $53,403 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 5 $ 5 Total liabilities 5 5 Fund balances:

Restricted for debt service $662 $2,394 $50,342 53,398 Total fund balances 662 2,394 50,342 53,398 Total liabilities and fund balances $662 $ $2,399 $50,342 $53,403 90

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds Year Ended June 30, 2012 (In thousands)

General Redevelopment Municipal Anaheim Resort Obligation Bonds Agency Facilities Improvements Total Revenues:

Property taxes $676 $ 20,075 $ 20,751 Intergovernmental revenues 9 9 Use of money and property 6 140 $ 126 $ 1 273 Total revenues 691 20,215 126 1 21,033 Expenditures:

Current:

Finance 24 24 Community Development 3,755 3,755 Public Works 1 1 Debt service:

Principal retirement 550 226 1,399 12,995 15,170 Interest charges 145 6,170 940 18,636 25,891 Total expenditures 696 10,151 2,339 31,655 44,841 Excess (deficiency) of revenues over (under) expenditures (5) 10,064 (2,213) (31,654) (23,808)

Other financing sources (uses):

Transfers in 9,238 2,188 33,909 45,335 Transfers out (7,200) (7,200)

Total other financing sources 2,038 2,188 33,909 38,135 Extraordinary loss (24,483) (24,483)

Net change in fund balances (5) (12,381) (25) 2,255 (10,156)

Fund balances at beginning of year 667 12,381 2,419 48,087 63,554 Fund balances at end of year $662 $ $ 2,394 $50,342 $53,398 91

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - All Debt Service Funds Year Ended June 30, 2012 (In thousands)

General Obligation Bonds Redevelopment Agency Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Property taxes $677 $676 $ (1) $ 36,971 $ 20,075 $(16,896)

Intergovernmental revenues 6 9 3 Use of money and property 8 6 (2) 390 140 (250)

Total revenues 691 691 37,361 20,215 (17,146)

Expenditures:

Finance Community Development 17,436 10,151 (7,285)

Public Works 697 696 (1)

Convention, Sports and Entertainment Total expenditures 697 696 (1) 17,436 10,151 (7,285)

Excess (deficiency) of revenues over (under) expenditures (6) (5) 19,925 (9,861)

Other financing sources (uses):

Transfers in 2,578 1,062 (1,516)

Transfers out (27,578) (7,200) 20,378 Total other financing sources (uses) (25,000) (6,138) 18,862 Net change in fund balances (6) (5) (5,075) 3,926 9,001 Fund balances at beginning of year 667 667 12,381 Fund balances at end of year $661 662 $1 $ 7,306 16,307 $ 9,001 Adjustment to reconcile to GAAP:

Reclassification of long-term interfund payable to transfer in 8,176 Extraordinary loss (24,483)

Ending fund balances - GAAP basis $662 $

(continued) 92

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - All Debt Service Funds Year Ended June 30, 2012 (in thousands) (continued)

Municipal Facilities Anaheim Resort Improvements Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Property taxes Intergovernmental revenues Use of money and property $ 124 $ 126 $ 2 $ 29 $ 1 $ (28)

Total revenues 124 126 2 29 1 (28)

Expenditures:

Finance 31,663 31,655 (8)

Community Development Public Works 601 601 Convention, Sports and Entertainment 1,738 Total expenditures 2,339 2,339 31,663 31,655 (8)

Excess (deficiency) of revenues over (under) expenditures (2,215) (2,213) 2 (31,634) (31,654) (20)

Other financing sources (uses):

Transfers in 2,188 2,188 29,555 33,909 4,354 Transfers out Total other financing sources (uses) 2,188 2,188 29,555 33,909 4,354 Net change in fund balances (27) (25) 2 (2,079) 2,255 4,334 Fund balances at beginning of year 2,419 2,419 48,087 48.087 Fund balances at end of year $ 2,392 2,394 $ 2 $ 46,008 50,342 $ 4,334 Adjustment to reconcile to GAAP:

Reclassification of long-term interfund payable to transfer in Extraordinary loss Ending fund balances - GAAP basis $ 2,394 $ 50,342 93

CITY OF ANAHEIM Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2012 (In thousands)

Transportation Development Redevelopment Improvement Impact Other Capital Mello-Roos Projects Projects Projects Improvements Projects Total ASSETS Cash and cash equivalents $ 8,009 $ 1,024 $ 3,509 $ 12,542 Investments 12,810 1,638 5,614 20,062 Accounts receivable, net 44 44 Accrued interest receivable 24 41 26 91 Due from other funds 387 7,008 7,395 Due from other governments $11,179 139 11,318 Prepaid and other assets 868 989 1,857 Restricted cash and cash equivalents 122 21,782 21,904 Restricted investments 85 85 Due from the Successor Agency 8 130 Total assets $12,047 $22,402 $18,048 $30,931

$ 83,428 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 4,251 $ 269 $ 12 $ 332 $ 4,864 Wages payable 23 4 1 3 31 Due to the Successor Agency 1,551 1,551 Due to other funds 7,395 7,395 Deferred revenue 182 8,130 Total liabilities 22,848 2,006 8,143 335 33,332 Fund balances (deficit):

Restricted:

Capital projects 2,856 2,856 Development impact projects 20,396 30,596 50,992 Streets, roads and transportation improvement projects 1,190 1,190 Assigned:

Debt service 12 12 Capital projects 7,037 7,037 Unassigned (11,991) (11,991)

Total fund balances (deficit) (10,801) 20,396 9,905 30,596 50,096 Total liabilities and fund balances $12,047 $22,402 $30,931 94

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit)

Nonmajor Capital Projects Funds Year Ended June 30, 2012 (in thousands)

Transportation Development Redevelopment Improvement Impact Other Capital Mello-Roos Projects Projects Projects Improvements Projects Total Revenues:

Licenses, fees and permits $ 458 $ 458 Intergovernmental revenues $ 67 $24,970 2,171 27,208 Use of money and property 1,285 275 $ 224 $ 163 1,947 Other 184 2,730 2,914 Total revenues 1,536 24,970 2,904 2,954 163 32,527 Expenditures:

Community Development 5,195 5,195 Public Works 237 105 77 419 Community Services 270 209 479 Capital outlay 6,882 21,271 1,718 2,522 32,393 Debt service:

Principal retirement 397 397 Interest charges 469 - 469 Total expenditures 12,077 21,508 2,093 1,075 2,599 39,352 Excess (deficiency) of revenues over (under) expenditures (10,541) 3,462 811 1,879 (2,436) (6,825)

Other financing sources (uses):

Transfers in 22,903 329 23,232 Transfers out (15,018) (489) (8,1 30) (23,637)

Total other financing sources (uses) 7,885 (489) (7,801) -(405)

Extraordinary loss (28,836) (28,836)

Net change in fund balances (deficit) (31,492) 2,973 811 (5,922) (2,436) (36,066)

Fund balances (deficit) at beginning of year 31,492 (13,774) 19,585 15,827 33,032 86,162 Fund balances (deficit) at end of year $ $(10,801) $20,396 $ 9,905 $ 30,596 $ 50,096 95

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficit)

Budget and Budgetary Basis Actual - All Capital Projects Funds Year Ended June 30, 2012 (inthousands)

Redevelopment Projects Transportation Improvement Projects Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Licenses, fees and permits Intergovernmental revenues $ 67 $ 67 $ $176,009 $24,970 $0151,039)

Use of money and property 5,752 1,285 (4,467)

Other 190 184 (6)

Total revenues 6,009 1,536 (4,473) 176,009 24,970 (151,039)

Expenditures:

Police Fire Community Development 25,204 12,065 (13,139)

Planning 55 55 Public Works 175,637 21,453 (154,184)

Community Services Total expenditures 25,204 12,065 (13,139) 175,692 21,508 (154,184)

Deficiency of revenues under expenditures (19,195) (10,529) 8,666 317 3,462 3,145 Other financing sources (uses):

Transfers in 15,592 8,099 (7,493)

Transfers Out (1,467) (871) 596 (489) (489)

Total other financing sources (uses) 14,125 7,228 (6,897) (489) (489)

Net change in fund balances (5,070) (3,301) 1,769 317 2,973 2,656 Fund balances at beginning of year 31,492 31,492 (13,774) (13,774)

Fund balances at end of year $26,422 28,191 $ 1,769 $ (13,457) (10,801) $ 2,656 Adjustments to reconcile to GAAP:

Use of transportation credit (12)

Reclassification of long-term interfund payable to transfer in 14,804 Reclassification of long-term interfund receivable to transfer out Transfer out of housing assets to Anaheim Housing Authority (14,147)

Extraordinary loss (28,836)

Ending fund balances - GAAP basis $ $010,801)

(continued) 96

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficit)

Budget and Budgetary Basis Actual - All Capital Projects Funds Year Ended June 30, 2012 (In thousands) (continued)

Development Impact Projects Other Capital Improvements Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Licenses, fees and permits $ 810 $ 458 $ (352)

Intergovernmental revenues 2,000 2,171 171 Use of money and property 100 275 175 $ 224 $ 224 Other $ 230 2,730 2,500 Total revenues 2,910 2,904 (6) 230 2,954 2,724 Expenditures:

Police Fire 90 (90) 360 (360)

Community Development 866 866 Planning Public Works 5,973 797 (5,176)

Community Services 1,296 (2,215) 394 209 (185)

Total expenditures 9,574 2,093 (7,481) 1,620 1,075 (545)

Deficiency of revenues under expenditures (6,664) 811 7,475 (1,390) 1,879 3,269 Other financing sources (uses):

Transfers in 726 329 (397)

Transfers out (292) 292 Total other financing sources (uses) 434 329 (105)

Net change in fund balances (6,664) 811 7,475 (956) 2,208 3,164 Fund balances at beginning of year 19,585 19,585 15,827 Fund balances at end of year $12,921 20,396 $ 7,475 $14,871 18,035 $3,164 Adjustments to reconcile to GAAP:

Use of transportation credit Reclassification of long-term interfund payable to transfer in Reclassification of long-term interfund receivable to transfer out (8,130)

Transfer out of housing assets to Anaheim Housing Authority Extraordinary loss Ending fund balances - GAAP basis $20,396 $ 9,905 (continued) 97

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual - All Capital Projects Funds Year Ended June 30, 2012 (Inthousands) (continued)

Mello-Roos Projects Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues:

Licenses, fees and permits Intergovernmental revenues Use of money and property $ 148 $ 163 $ 15 Other Total revenues 148 163 15 Expenditures:

Police Fire Community Development Planning Public Works 37,149 2,599 (34,550)

Community Services Total expenditures 37,149 2,599 (34,550)

Deficiency of revenues under expenditures (37,001) (2,436) 34,565 Other financing sources (uses):

Transfers in Transfers out Total other financing sources (uses)

Net change in fund balances (37,001) (2,436) 34,565 Fund balances at beginning of year 33,032 33,032 Fund balances at end of year $ (3,969) 30,596 $ 34,565 Adjustments to reconcile to GAAP:

Use of transportation credit Reclassification of long-term interfund payable to transfer in Reclassification of long-term interfund receivable to transfer out Transfer out of housing assets to Anaheim Housing Authority Extraordinary loss Ending fund balances - GAAP basis $ 30,596 98

INTERNAL SERVICE FUNDS

\'* INTERNAL SERVICE FUNDS

INTERNAL SERVICE FUNDS INTERNAL SERVICE FUNDS are used to account for the financing of centralized services to City departments on a cost-reimbursement basis (including depreciation).

GENERAL BENEFITS AND INSURANCE FUND - Established to account for employee compensated absences, retirement and health benefits, and self-insurance programs.

MOTORIZED EQUIPMENT FUND - Established to account for motorized equipment used by City departments.

INFORMATION AND COMMUNICATION SERVICES FUND - Established to account for data processing and communication services to City departments.

MUNICIPAL FACILITIES MAINTENANCE - Established to account for City building maintenance services and equipment used by City departments.

CITY OF ANAHEIM Combining Statement of Fund Net Assets Internal Service Funds June 30, 2012 (In thousands)

General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total ASSETS Current assets:

Cash and cash equivalents $25,142 $ 2,534 $ 3,442 $2,194 $33,312 Investments 40,216 4,053 5,505 3,509 53,283 Accounts receivable, net 3,580 3,580 Accrued interest receivable 246 28 18 19 311 Note receivable 56 56 Interfund receivable 12 12 Inventories 725 725 Prepaid and other assets 58 58 Total current assets 69,310 7,340 8,965 5,722 91,337 Noncurrent assets:

Accounts receivable, less current portion 1,985 1,985 Interfund receivable, less current portion 53 53 Net other post-employment benefits (OPEB) asset 9,765 9,765 Capital assets:

Buildings, structures and improvements 3,230 3,708 6,938 Machinery and Equipment 81 35,987 18,515 2,306 56,889 Less accumulated depreciation (81) (28,237) (12,786) (4,612) (45,716)

Capital assets, net 10,980 5,729 1,402 18,111 Total noncurrent assets 11,803 10,980 5,729 1,402 29,914 Total assets 81,113 18,320 14,694 7,124 121,251 LIABILITIES Current liabilities:

Accounts payable 4,342 530 2,594 390 7,856 Wages payable 3,237 42 11 36 3,326 Compensated absences 13,956 13,956 Self-insurance liability 8,123 8,123 Long-term debt 999 999 Unearned revenues 1,499 1.499 Total current liabilities 31,157 572 3,604 426 35,759 Noncurrent liabilities:

Compensated absences, less current portion 4,148 4,148 Self-insurance liability, less current portion 31,220 31,220 Long-term debt, less current portion 695 695 Total noncurrent liabilities 35,368 695 36,063 Total liabilities 66,525 572 4,299 426 71,822 FUND NET ASSETS Invested in capital assets, net of related debt 10,980 4,035 1,402 16,417 Unrestricted 14,588 6,768 6,360 5,296 33,012 Total fund net assets $14,588 $17,748 $10,395 $6,698 $49,429 99

CITY OF ANAHEIM Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds Year Ended June 30, 2012 (Inthousands)

General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Operating revenues:

Charges for services $128,298 $10,135 $14,342 $8,315 $161,090 Other 10 6 90 1 107 Total operating revenues 128,308 10,141 14,432 8,316 161,197 Operating expenses:

Salaries and wages 3,827 3,423 640 2,842 10,732 Maintenance and operations 2,442 5,950 12,513 5,028 25,933 Insurance premiums and claims 11,174 11,174 Compensated absences and other benefits 113,673 113,673 Depreciation 2,214 2,114 212 4,540 Total operating expenses 131,116 11,587 15,267 8,082 166,052 Operating income (loss) (2,808) (1,446) (835) 234 (4,855)

Nonoperating income (expenses):

Intergovernmental revenues 480 480 Interest income 792 76 79 67 1,014 Interest expense (3) (88) (91)

Gain from disposal of capital assets 192 192 Total nonoperating income 792 745 (9) 67 1,595 Income (loss) before transfers (2,016) (701) (844) 301 (3,260)

Transfers in 900 600 1,500 Change in fund net assets (2,016) 199 (844) 901 (1,760)

Fund net assets at beginning of year 16,604 17,549 11,239 5,797 51,189 Fund net assets at end of year $ 14,588 $17,748 $10,395 $6,698 $ 49,429 100

CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2012 (in thousands)

General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Cash flows from operating activities:

Receipts from interfund services provided $128,298 $10,135 $14,342 $8,315 $161,090 Payments to suppliers (1,023) (5,962) (10,807) (4,470) (22,262)

Payments for salaries and wages to employees (3,941) (3,462) (645) (2,878) (10,926)

Payments for interfund services used (1,455) (370) (792) (559) (3,176)

Payments for insurance premiums and claims (9,059) (9,059)

Payments for compensated absences and other benefits (115,356) (115,356)

Other receipts 108 6 90 1 205 Net cash provided by (used for) operating activities (2,428) 347 2,188 409 516 Cash flows from noncapital financing activities:

Receipt of interfund balances 17 17 Transfer in 900 600 1,500 Net cash provided by noncapital financing activities 17 900 600 1,517 Cash flows from capital and related financing activities:

Proceeds from sale of capital assets 308 308 Capital purchases (2,591) (100) (2,691)

Capital grant receipts 480 480 Principal payments on long-term debt (314) (1,109) (1,423)

Interest payments (7) (88) (95)

Net cash used for capital and related financing activities (2,124) (1,297) (3,421)

Cash flows from investing activities:

Purchase of investment securities (25,681) (2,475) (4,207) (2,952) (35,315)

Proceeds from sale and maturity of investment securities 24,621 2,489 3,370 2,153 32,633 Interest received 785 100 77 61 1,023 Net cash provided by (used for) investing activities (275) 114 (760) (738) (1,659)

Increase (decrease) in cash and cash equivalents (2,686) (763) 131 271 (3,047)

Cash and cash equivalents at beginning of the year 27,828 3,297 $ 3,211 1,923 36,359

$ 25,142 $ 2,534 $ 3,442 $ 2,194 $ 33,312 Cash and cash equivalents at end of the year (continued) 101

CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2012 (Inthousands) (continued)

General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:

Operating income (loss) $ (2,808) $ (1,446) $ (835) $ 234 $ (4,855)

Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities:

Depreciation 2,214 2,114 212 4,540 Changes in assets and liabilities:

Accounts receivable (3,199) (3,199)

Inventories 25 25 Note receivable 13 13 Accounts payable 949 (407) 914 (1) 1,455 Wages payable (144) (39) (5) (36) (224)

Unearned revenues 175 175 Compensated absences (1,216) (1,216)

Self-insurance liability 3,938 3,938 Other post retirement employment benefits (OPEB) assets (136) (136)

Total adjustments 380 1,793 3,023 175 5,371 Net cash provided (used for) by operating activities $ (2,428) $ 347 $ 2,188 $ 409 $ 516 Schedule of noncash financing and investing activities:

Capital assets financed through capital leases $ 462 $ 462 Increase (decrease) in fair value of investments $ 44 $ (15) 15 $ 8 52 102

FIDUCIARY FUNDS FIDUCIARY FUNDS

CITY OF ANAHEIM Statement of Changes in Fiduciary Assets and Liabilities Agency Fund - Mello-Roos Year Ended June 30, 2012 (Inthousands)

Beginning Ending Balance Additions Deductions Balance ASSETS Restricted cash and cash equivalents $5,782 $ 5,148 $ (5,845) $5,085 Restricted investments 3,386 (130) 3,256 Due from other governments 56 4,918 (4,926) 48 Total assets $9,224 $10,066 $(10,901) $8,389 LIABILITIES Due to bond holders $9,224 $ 5,011 $ (5,846) $8,389 103

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STATISTICAL SECTION

-'\_. STATISTICAL SECTION

STATISTICAL SECTION The Statistical Section is included to provide detailed data on the physical, economic, social and political characteristics of the reporting government. It is intended to provide the user with a broader and more complete understanding of the government and its financial affairs than is possible from the basic financial statements and supplementary information included in the Financial Section.

CITY OF ANAHEIM STATISTICAL INFORMATION (Unaudited)

The Statistical Section is included to provide financial statement users with additional historical perspective, context, and detail for them to use in evaluating the information contained within the financial statements, notes to the financial statements, and required supplementary information with the goal of providing the user a better understanding of the City's economic condition.

Contents Page Financial trends These schedules contain information to help the reader understand how the City's financial performance and well-being have changed over time.

Net Assets by Component - Last Ten Fiscal Years 106 Changes in Net Assets - Last Ten Fiscal Years 107 Governmental Activities Tax Revenues by Source - Last Ten Fiscal Years 109 Fund Balances of Governmental Funds - Last Ten Fiscal Years 110 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 111 Revenue capacity These schedules contain information to help) the reader assess the City's most significant local revenue sources.

General Government Tax Revenues by Source - Last Ten Fiscal Years 112 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 113 Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years 114 Principal Property Tax Pyers - Current Year and Nine Years Ago 115 Property Tax Levies and Collections - Last Ten Fiscal Years 116 Debt capacity These schedules contain information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future.

Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 117 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years 118 Direct and Overlapping Government Activities Debt - As of June 30, 2012 119 Legal Debt Margin infornation - Last Ten Fiscal Years 121 Pledged-Revenue Coverage - Last Ten Fiscal Years 122 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.

Demographic and Economic Statistics - Last Ten Fiscal Years 124-Principal Employers - Current Year and Eight Years Ago 125 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.

Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years 127 Operating Indicators by Function - Last Nine Fiscal Years 128 Capital Assets Statistics by Function - Last Nine Fiscal Years 129 City of Anaheim Map 132 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

105

CITY OF ANAHEIM Net Assets by Component Last Ten Fiscal Years (Inthousands)

(Accrual basis of accounting)

Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Governmental Activities Invested in capital assets, net of related debt $ 832,730 $ 834,337 $ 795,579 $ 753,409 $ 733,305 $ 667,414 $ 668,628 $ 613,300 $ 584,875 $ 522,073 Restricted 190,868 182,011 150,750 154,306 87,566 69,949 99,443 87,505 111,344 112,168 Unrestricted 16,760 (124,422) (121,283) (92,773) (70,621) (33,187) (61,368) (56,074) (66,860) (14,286)

Total Governmental Activities 1,040,358 891,926 825,046 814,942 750,250 704,176 706,703 644,731 629,359 619,955 Business-type Activities Invested in capital assets, net of related debt 786,430 786,175 762,236 754,157 752,632 707,119 660,769 697,647 673,244 666,361 Restricted 61,235 54,626 49,325 45,493 47,406 38,572 36,008 28,855 26,187 33,188 Unrestricted 112,159 115,445 130,812 145,269 165,196 203,967 215,685 229,051 242,888 232,569 Total Business-type Activities 959,824 956,246 942,373 944,919 965,234 949,658 912,462 955,553 942,319 932,118 Total Government Invested in capital assets, net of related debt 1,619,160 1,620,512 1,557,815 1,507,566 1,485,937 1,374,533 1,329,397 1,310,947 1,258,119 1,188,434 Restricted 252,103 236,637 200,075 199,799 134,972 108,521 135,451 116,360 137,531 145,356 Unrestricted 128,919 (8,977) 9,529 52,496 94,575 170,780 154,317 172,977 176,028 218,283 Total Government $2,000,182 $1,848,172 $1,767,419 $1,759,861 $1,715,484 $1,653,834 $1,619,165 $1,600,284 $1,571,678 $1,552,073 Source: Finance Department, City of Anaheim 106

CITY OF ANAHEIM Changes in Net Assets Last Ten Fiscal Years (in thousands)

(Accrual basis of accounting)

Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Program Revenues Governmental activities:

Charges for services General government $ 1,872 $ 1,872 $ 1,708 $ 1,890 $ 2,088 $ 1,238 $ 1,385 S 1,442 $ 1,413 $ 1,651 Police 10,122 10,435 10,127 10,089 10,235 9,715 10,477 9,840 7,460 8,369 Fire 9,431 9,518 9,361) 9,122 9,850 9,070 8,9)42 7,909 6,879 6,475 Community Development 7,281 8,143 7,306 5,459 6,212 6,713 6,122 4,667 9,972 6,843 Planning 5,327 6,263 6,453 7,724 9,084 10,778 9,031 6,994 3,739 3,869 Public Works 11,401 9,837 7,619 7,421 8,619 8,234 11,196 6,544 5,501 6,339 Community Services 3,386 4,024 4,561 4,833 4,855 4,043 18,421 4,985 4,490 3,936 Convention, Sports andl Entertainment 9,142 4,356 202 200 218 200 200 200 200 200 Total charges for services 57,962 54,448 47,345 46,738 51,161 49,991 65,774 42,581 39,654 37,682 Operating grants and contributions 108,620 124,358 121,731 110,200 100,393 98,699 88,076 78,846 82,727 76,419 Capital grants and contributions 44,184 70,080 31,828 66,347 30,361 42,997 28,804 20,906 11,704 12,809 Governmental activities progranm revenues 210,766 248,886 2 00, 9 04 223,285 181,915 191,687 182,654 142,333 134,085 126,910 Business-type activities:

Charges for services Electric Utility 397,931 381,496 377,387 365,526 351,160 310,074 322,845 284,740 295,723 272,024 Water Utility 57,748 55,598 56,368 50,807 49,125 49,600 46,926 43,427 44,395 41,801 Sanitation Utility 56,630 56,359 56,023 55,424 54,017 53,215 49,397 46,480 48,085 43,045 Golf Courses 4,802 4,711 5,168 5,634 5,947 6,022 5,736 5,394 5,546 5,401 Convention, Sports and Entertainment 29,389 27,981 30,797 26,987 31,197 32,308 27,357 27,412 28,146 22,509 Total charges for services 546,500 526,145 525,743 504,378 491,446 451,219 452,261 407,4S3 421,895 384,780 Operating grants andl contributions 1,101 746 1,990 965 1,194 1,160 2,556 2,473 1,471 1,560 Capital grants and contributions 8,954 12,667 5,622 6,620 12,332 4,808 5,749 11,513 7,468 5,389 Business-type activities program revenues 556,555 539,558 533,355 511,963 504,972 457,187 460,566 421,439 430,834 391,729 Total government program revenues 767,321 788,444 734,259 735,248 686,887 648,874 643,220 563,772 564,919 518,639 Expenses Governmental activities:

General government 11,617 10,911 10,917 12,144 12,610 10,951 7,394 8,943 7,582 9,793 Police 117,840 119,504 125,121 121,162 122,883 115,714 98,484 91,713 77,541 78,313 Fire 58,027 56,393 58,229 57,768 56,434 50,727 50,957 46,596 37,610 36,928 Community Development 95,683 105,937 117,621 109,523 105,651 93,089 87,814 83,183 86,542 89,212 Planning 15,648 15,627 16,822 17,057 17,199 16,107 14,493 13,206 12,628 11,118 Public Works 41,228 44,109 39,017 47,226 43,680 44,473 42,029 39,463 41,672 37,443 Community Services 28,282 30,958 35,372 37,704 39,033 36,827 31,712 28,314 27,050 27,397 Public Utilities 2,315 2,218 1,952 1,515 2,128 1,800 1,704 1,557 1,566 1,811 Convention, Spurts and Entertainment 13,584 13,633 9,931 10,069 10,781 10,539 8,652 7,703 7,536 7,211 interest on long-term debt 42,910 48,014 47,694 47,859 45,509 50,053 46,430 47,105 48,503 47,405 Governmental Activities Expenses 427,134 447,304 462,676 462,027 455,908 430,280 389,669 367,783 3 48u, 2 30 346,631 (continued) 107

CITY OF ANAHEIM Changes in Net Assets Last Ten Fiscal Years '(in thousands)

(Accrual basis of accounting) (continued)

Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Expenses Business-type activities:

Electric Utility 386,698 371,689 375,491 358,882 353,502 338,514 365,277 274,622 280,878 264,583 Water Utility 58,369 56,249 55,514 48,976 49,248 51,672 47,225 41,313 42,949 37,065 Sanitation 55,957 49,864 50,540 S2,721 49,712 48,946 47,163 45,467 41,431 40,249 Golf Courses 4,114 4,256 4,436 4,495 4,810 4,365 4,433 4,062 4,278 3,699 Convention, Sports and Entertainment Venues 45,484 44,707 46,143 45,643 47,795 46,743 47,965 47,351 43,406 43,197 Business-type activities expense 550,622 526,765 532,124 510,717 505,067 490,240 512,063 412,815 412,942 388,793 Total government expenses 977,756 974,069 994,800 972,744 960,975 920,520 901,732 780,598 761,172 735,424 Net (Expense)/Revenue Governmental activities (216,368) (198,418) (261,772) (238,742) (273,993) (238,593) (207,015) (225,450) (214,145) (219,721)

Business-type activities 5,933 12,793 1,231 1,246 (95) (33,053) (51,497) 8,624 17,892 2,936 Total government, net (expense) revenue (210,435) (185,625) (260,541) (237,496) (274,088) (271,646) (258,512) (216,826) (196,253) (216,785)

General Revenues and Other Changes in Net Assets Governmental activities:

Taxes:

Property taxes $ 58,896 $ 59,053 $ 59,689 $ 60,806 $ 59,592 $ 57,937 $ 49,415 $ 43,636 $ 25,589 $ 26,047 Property tax increments 28,678 47,040 47,731 47,115 45,719 40,710 37,341 34,984 31,650 27,762 Sales tax and use tax 59,654 54,711 51,214 56,035 62,510 64,878 66,972 60,803 55,716 52,426 Transient occupancy taxes 90,376 82,605 77,139 80,055 87,183 83,914 75,979 67,141 63,268 56,199 Motor vehicle license fees 1,783 1,026 1,180 1,532 1,866 2,595 2,113 21,143 19,360 Other taxes 7,272 7,288 7,288 8,041 9,529 10,337 10,817 10,175 9,561 8,935 Unrestricted investment earnings 3,598 3,667 7,012 8,667 15,337 17,597 12,346 8,071 3,991 12,678 Other 873 614 1,175 394 2,670 1,701 5,078 1,499 1,097 361 Gain from disposal of capital assets 2,491 Transfers 12,571 8,537 19,602 41,141 15,573 (42,874) 8,444 12,400 11,534 3,996 Extraordinary gain 102,882 Governmental activities 364,800 265,298 271,876 303,434 299,645 236,066 268,987 240,822 223,549 210,255 Business-type activities:

Unrestricted investment earnings 10,216 9,617 15,825 19,580 31,244 27,375 16,850 16,592 6,120 13,658 Other 418 1,723 51 Transfers (12,571) (8,537) (19,602) (41,141) (15,5731 42,874 (8,444) (12,400) (11,534) (3,996)

Business-type activities (2,355) 1,080 (3,777) (21,561) 15,671 70,249 8,406 4,610 (3,691) 9,713 Total government 362,445 266,378 268,099 281,873 315,316 306,315 277,393 245,432 219,858 219,968 Change in Net Assets Governmental activities 148,432 66,880 10,104 64,692 25,652 (2,527) 61,972 15,372 9,404 (9,466)

Business-type activities 3,578 13,873 (2,546) (20,315) 15,576 37,196 (43,091) 13,234 14,201 12,649 Total government change in net assets $152,010 $ 80,753 $ 7,558 $ 44,377 $ 41,228 $ 34,669 $ 18,881 $ 28,606 $ 23,605 $ 3,183 Note: Certain reclassifications have been made to prior fiscal years' data to confirm to the fiscal year 2011 presentation.

108 Source: Finance Department, City of Anaheim

CITY OF ANAHEIM Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (in thousands)

(Accrual basis of accounting)

Amounts Motor Property Sales Transient Vehicle Fiscal Property Tax and Use Occupancy License Other Year Taxes Increments Taxes Taxes Fees' Taxes Total 2012 $58,896 $ 28,6782 $59,654 $90,376 $ 3 $ 7,272 $244,876 2011 59,053 47,040 54,711 82,605 1,783 7,288 252,480 2010 59,689 47,731 51,214 77,139 1,026 7,288 244,087 2009 60,806 47,115 56,035 80,055 1,180 8,041 253,232 2008 59,592 45,719 62,510 87,183 1,532 9,529 266,065 2007 57,937 40,710 64,878 83,914 1,866 10,337 259,642 2006 49,415 37,341 66,972 75,979 2,595 10,817 243,119 2005 43,636 34,984 60,803 67,141 2,113 10,175 218,852 2004 25,589 31,650 55,716 63,268 21,143 9,561 206,927 2003 26,047 27,762 52,426 56,199 19,360 8,935 190,729 I The decrease in motor vehicle license fees starting from fiscal year 2005 is due to the shifting of revenue from motor vehicle license fees category to the property tax category.

This was part of the State of California 2004 Budget Act.

2 The decrease in property tax increments from fiscal year 2012 was due to the dissolution of Redevelopment Agency on February 1, 2012.

Motor Vehicle License Fees allocation was eliminated per the fiscal year 2012 State Budget.

Note: Certain reclassifications have been made to prior fiscal years' data to conform to the fiscal year 2011 presentation.

Source: Finance Department, City of Anaheim 109

CITY OF ANAHEIM Fund Balances of Governmental Funds Last Ten Fiscal Years (Inthousands)

(Modified accrual basis of accounting)

Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 General Fund Nonspendable $ 3,082 $ 3,626 Restricted 982 582 Assigned 320 141 Unassigned 22,636 22,139 Reserved $ 4,092 $ 4,530 $ 5,001 $ 8,525 $ 9,701 $ 9,892 $ 10,225 $ 6,873 Unreserved - designated 293 4,872 Unreserved - undesignated 29,490 47,729 37,347 47,409 44,978 39,179 34,458 31,268 Total General Fund 27,020 26,488 33,582 52,259 42,348 55,934 54,679 49,071 44,976 43,013 Housing Authority Fund Nonspendable 42 Restricted 29,935 7,778 Assigned 11,237 9,922 Unassigned Reserved 1,373 1,830 830 162 158 Unreserved - undesignated 11,603 5,669 6,474 7,935 3,932 5,682 5,525 4,894 Total Housing Authority Fund 41,172 17,742 12,976 7,499 7,304 8,097 3,932 5,682 5,525 5,052 Nonmajor Governmental Funds Nonspendable 1 631 Restricted 158,933 241,674 Assigned 7,400 7,761 Unassigned (32,448) (34,293)

Reserved 130,313 142,760 138,402 120,885 110,289 76,568 91,787 87,547 U~nreserved - designated, reported in:

Special revenue funds 7,349 7,211 6,809 2,415 9,102 14,974 7,993 Debt service funds 156 4,433 1,656 2,276 1,137 1,457 Capital projects funds 31,899 41,544 32,809 38,430 45,495 36,497 24,538 36,501 Unreserved - undesignated, reported in:

Special revenue funds 14,350 5,342 4,199 4,183 14,902 25,955 27,016 29,688 Capital projects funds (3,376) (7,037) (15,551) (25,687) (22,787) (4,735)

Total nonmajor governmental funds 133,886 215,773 180,691 194,253 168,324 142,502 158,138 150,716 151,334 153,736 Total governmental funds' $202,078 $260,003 $227,249 $254,011 $217,976 $206,533 $216,749 $205,469 $201,835 $201,801 The City implemented Governmental Accounting Standards Board Statement No. 54 (GASB 54) for the fiscal year ended June 30, 2011.

Fund balance classifications prior to the implementation of GASB 54 are not available Source: Finance Department, City of Anaheim 1I0

CITY OF ANAHEIM Changes in Fund Balances of Governmental Funds

[ast Ten Fiscal Years (In thousands)

(Modified accrual basis of accounting)

Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Revenues Property taxes $ 58,896 $ 59,053 $ 59,689 $ 60,806 $ 59,592 $ 57,937 $ 49,415 $ 43,636 $ 25,589 $ 26,047 Property tax increments 28,678 47,040 47,731 47,115 45,719 40,710 37,341 34,984 31,650 27,762 Sales and use taxes 58,589 55,034 48,210 56,493 64,296 65,695 64,993 59,000 54,559 53,241 Transient occupancy taxes 90,376 82,605 77,139 80,055 87,183 83,914 75,979 67,141 63,268 56,199 Other taxes 6,401 6,486 6,303 6,451 6,753 7,531 7,862 7,542 7,095 6,570 Licenses, fees and permits 17,067 18,772 21,580 21,062 24,705 37,991 40,625 18,749 15,578 15,731 intergovernmental revenues 143,348 150,394 141,418 158,729 135,072 112,593 104,705 102,423 109,523 108,798 Charges for services 29,672 24,408 18,351 17,874 17,730 16,799 16,216 15,459 18,565 17,911 Fines, forfeits and penalties 3,515 3,304 3,255 3,409 3,767 3,689 3,464 3,454 2,812 2,673 Use of money and property 7,657 10,159 10,236 9,293 16,923 18,208 13,203 9,144 8,408 12,354 Other 6,617 43,645 4,009 10,137 3,755 7,601 18,164 6,143 3,490 3,436 Total revenues 450,816 500,900 437,921 471,424 465,495 452,668 431,967 367,675 340,537 330,722 Expenditures General government 16,502 16,055 15,822 16,953 16,325 15,354 13,667 12,276 11,370 12,823 Police 112,656 114,678 115,379 112,057 115,195 109,467 94,602 86,529 74,356 74,518 Fire 55,886 55,802 55,713 55,966 54,685 48,201 48,383 44,182 36,277 35,684 Community Development 95,352 110,138 126,590 112,406 104,991 94,789 89,098 83,384 87,778 91,984 Plann in 14,408 14,560 15,173 15,489 15,949 14,762 13,907 12,313 11,904 10,285 22,861 27,087 19,957 29,321 25,810 26,820 24,646 22,248 25,224 21,425 Community Services 24,618 27,813 31,311 33,572 35,203 32,788 28,753 25,724 25,203 25,938 Public Utilities 2,313 2,220 1,939 1,507 2,120 1,791 1,704 1,557 1,566 1,811 Convention, Sports and Entertainment 9,725 9,917 6,369 6,699 7,390 7,399 6,131 5,140 5,353 4,677 Capialotlay 55,505 70,918 62,422 52,229 60,906 76,161 77,738 41,301 32,195 40,881 Principal 16,294 12,219 12,777 16,085 27,472 18,065 19,032 10,134 9,391 8,020 Interest charges 26,927 33,032 33,509 34,830 28,324 41,187 39,037 38,681 38,630 38,330 Debt issuance costs 227 _____ 70 5,182 4,017 ___ ____ ____

Total expenditures 453,047 494,666 496,961 487,184 499,552 490,801 456,698 383,469 359,247 366,376 Revenues over (under) expenditures (2,231) 6,234 (59,040) (15,760) (34,057) (38,133) (24,7311 (15,794) (18,710) (35,654)

Other Financing Sources (Uses)

Transfers-in 131,093 99,571 83,498 121,987 299,410 101,249 95,535 99,166 73,939 67,407 Transfers out (119,552) (86,621) (59,9701 (76,304) (288,985) (91,028) (84,325) (88,277) (62,970) (63,759)

Issuance of refunding bonds 5,084 201,680 253,134 Payments to refunded bond escrow agent (5,683) (171,222) (255,325)

Premium on long-term debt 94 4,641 Discount on long-term debt (199)

Issuance of long-term debt 13,570 8,000 2,769 175 18,238 22,583 7,289 7,775 4,450 tssuance of refunding bonds Proceeds from the sale of capital assets 20 5,754 Capital leases 1,649 2,198 Claims settlement proceeds 750 3,848 Special items 1,250 Extraordinary loss (67,235) _____ _____

Total other financing sources (55,694) 26,520 32,278 51,795 45,500 27,917 36,011 19,428 18,744 13,852 Net change in fund balances $ (57,92S) $ 32,754 $ (26,762) $ 36,035 $ 11,443 $ (10,216) $ 11,280 $ 3,634 $ 34 $1(21,802)

Debt service as a percentage of non-capital expenditures 10,87% 10.68%/ 10.65% 11.71% 12.72% 14.29%/ 15.32%/ 14.27% 14.68%/ 14.24%/

III Source: Finance Department, City of Anaheim

CITY OF ANAHEIM General Government Tax Revenues By Source Last Ten Fiscal Years (Inthousands)

(Modified accrual basis of accounting)

Amounts in Dollars Property Taxes Property Tax Increments Secured Unsecured Supplemental Secured Unsecured Supplemental Property Sales Transient Fiscal Property Property Property Property Property Property Taxes and Use Occupancy Other Year Taxes Taxes Taxes Taxes Taxes Taxes in-lieu of VILF Taxes Taxes Taxes Total 2012 $31,770 $ 1,289 $ 207 $21,5762 $ 6,8842 $ 2182 $25,630 $58,589 $90,376 $6,401 $242,940 2011 31,848 1,300 373 36,824 8,859 1,357 25,532 55,034 82,605 6,486 250,218 2010 32,267 1,341 385 38,809 8,221 701 25,696 48,210 77,139 6,303 239,072 2009 32,496 1,351 712 37,710 7,986 1,419 26,247 56,493 80,055 6,451 250,920 2008 31,073 1,343 1,326 34,772 9,105 1,842 25,850 64,296 87,183 6,753 263,543 2007 29,919 1,384 1,551 29,090 8,591 3,029 25,083 65,695 83,914 7,531 255,787 2006 26,537 1,171 1,887 27,067 7,954 2,320 19,820 64,993 75,979 7,862 235,590 2005 24,820 1,173 1,824 25,380 7,802 1,802 15,819 59,000 67,141 7,542 212,303 2004 23,399 1,136 1,054 23,124 7,455 1,071 54,559 63,268 7,095 182,161 2003 23,775 1,245 1,027 20,914 6,113 735 53,241 56,199 6,570 169,819 Collection of property taxes in-lieu of VLF starting in fiscal year 2005 is due to the shifting of revenue from motor vehicle license fees category to the property tax category.

This was part of the State of California 2004 Budget Act.

2 Decrease in property tax increments revenues in fiscal year 2012 was due to dissolution of the Redevelopment Agency on February 1, 2012. Property tax increments were received up to January 31, 2012.

Note: Certain reclassifications have been made to prior fiscal years' data to conform to the fiscal year 2011 presentation.

Source: Finance Department, City of Anaheim 112

CITY OF ANAHEIM Assessed Value of Taxable Property

[ast Ten Fiscal Years (Inthousands)

(Modified accrual basis of accounting)

Fiscal Year 2012 2011 2010 2009 2008.

City of Anaheim Secured property $28,808,849 $28,600,152 $28,775,989 $29,329,062 $28,473,221 Unsecured property 1,232,825 1,278,062 1,283,263 1,226,209 1,198,812 Total City of Anaheim 30,041,674 29,878,214 30,059,252 30,555,271 29,672,033 Anaheim Redevelopment Agency Secured property 3,977,843 3,751,227 3,762,168 3,644,931 3,360,645 Unsecured property 656,505 743,403 762,903 789,618 818,255 Total Anaheim Redevelopment Agency 4,634,348 4,494,630 4,525,071 4,434,549 4,178,900 Total Taxable Assessed Value $34,676,022 $34,372,844 $34,584,323 $34,989,820 $33,850,933 Total Direct Tax Rate 0.11075% 0.11075% 0.11031% 0.11024% 0.11041%

Fiscal Year 2007 2006 2005 2004 2003 City of Anaheim Secured property $26,507,229 $24,081,039 $22,288,504 $20,826,232 $20,145,764 Unsecured property 2,442,959 1,117,310 1,162,358 1,287,967 2,641,697 Total City of Anaheim 28,950,188 25,198,349 23,450,862 22,114,199 22,787,461 Anaheim Redevelopment Agency Secured property 2,838,528 2,574,542 2,332,303 2,177,936 2,057,045 Unsecured property 813,249 734,299 748,144 731,733 564,089 Total Anaheim Redevelopment Agency 3,651,777 3,308,841 3,080,447 2,909,669 2,621,134 Total Taxable Assessed Value $32,601,965 $28,507,190 $26,531,309 $25,023,868 $25,408,595 Total Direct Tax Rate 0.11041% 0.11083% 0.11117% 0.11161% 0.11103%

Note: 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.

Source: Auditor-Controller, California Municipal Statistics, Inc, County of Orange, HdL Coren & Cone 113

CITY OF ANAHEIM Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years  :(Rate per $100 assessed value)

Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 City Direct Rate',

City Basic Rate 2' 0.10851 0.10851 0.10816 0.10816 0.10816 0.10816 0.10816 0.10816 0.10816 0.10816 Anaheim General Obligation Bond Fund 0.00224 0.00224 0.00215 0.00208 0.00225 0.00225 0.00267 0.00301 0.00345 0.00287 0.11075 0.11075 0.11031 0.11024 0.11041 0.11041 0.11083 0.11117 0.11161 0.11103 Overlapping Rates:

Anaheim Elementary General Fund 0.29873 0.29873 0.29778 0.29778 0.29778 0.29778 0.29778 0.29778 0.29778 0.29778 Anaheim High General Fund 0.19043 0.19043 0.18982 0.18982 0.18982 0.18982 0.18982 0.18982 0.18982 0.18982 Educational Revenue Augmentation Fund 0.15592 0.15592 0.15543 0.15543 0.15543 0.15543 0.15543 0.15543 0.15543 0.15543 North Orange Co. Community 0.07755 0.07755 0.07730 0.07730 0.07730 0.07730 0.07730 0.07730 0.07730 0.07730 College General Fund Orange County Cemetery District 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 Orange County Department Of Education 0.01579 0.01579 0.01574 0.01574 0.01574 0.01574 0.01574 0.01574 0.01574 0.01574 Orange County Flood Control District General 0.02197 0.02197 0.02190 0.02190 0.02190 0.02190 0.02190 0.02190 0.02190 0.02190 Orange County General Fund 0.06849 0.06849 0.06827 0.06827 0.06827 0.06827 0.06827 0.06827 0.06827 0.06827 Orange County Harbors Beaches & Parks CSA 0.01698 0.01698 0.01693 0.01693 0.01693 0.01693 0.01693 0.01693 0.01693 0.01693 Orange County Sanitation District #2 Operating 0.03227 0.03227 0.03469 0.03469 0.03469 0.03469 0.03469 0.03469 0.03469 0.03469 Orange County Transportation Authority 0.00312 0.00312 0.00311 0.00311 0.00311 0.00311 0.00311 0.00311 0.00311 0.00311 Orange County Vector Control 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 Orange County Water District 0.00831 0.00831 0.00893 0.00893 0.00893 0.00893 0.00893 0.00893 0.00893 0.00893 Orange County Water District Water Reserve 0.00012 0.00012 0.00013 0.00013 0.00013 0.00013 0.00013 0.00013 0.00013 0.00013 Anaheim Elementary School Districts 0.05371 0.03363 0.03193 0.02248 0.03544 0.02240 0.02811 0.02641 0.02495 0.02846 Anaheim High School Districts 0.02678 0.02745 0.02617 0.02363 0.02516 0.02355 0.02444 0.02770 0.02370 0.02567 North Orange County Community College 0.01742 0.01758 0.01662 0.01493 0.01502 0.01444 0.00520 0.00580 0.00610 0.00670 Water District Rate 0.00370 0.00370 0.00430 0.00430 0.00450 0.00470 0.01666 0.01441 0.01597 0.01573 Total Direct and Overlapping Rates 1.10385 1.08460 1.08117 1.06742 1.08237 1.06734 1.07708 1.07733 1.07417 1.07943 Excludes rates associated with Mello-Roos Districts.

In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1% fixed amount. This 1% is shared by all taxing agencies for which the subject property resides. In 1986, the State Constitution was amended to allow rates over the 1% base rate for voter approved general obligation debt. Valuations of real property are frozen at the value of the property in 1975, with an allowable adjustment up to 2% per year for inflation. However, property is assessed to its current value when a change of ownership occurs.

New construction, including tenant improvements, is assessed at its current value.

Source: Auditor-Controller, Orange County 114

CITY OF ANAHEIM Principal Property Tax Payers Current Year and Nine Years Ago (in thousands)

Fiscal Year 2012 2003 Percentage Percentage of Total Taxable of Total Taxable Assessed Assessed Assessed Assessed Tax Payer Rank Value Value Rank Value Value Walt Disney World Company 1 12.6% $4,115,943 1 13.56% $3,011,080 Makar Anaheim LLC 2 0.40% 130,668 Kilroy Realty LP 3 0.39% 126,821 Lennar Platinum Triangle 4 0.38% 124,932 Irvine Company LLC 5 0.34% 112,872 PPC Anaheim Apartments 6 0.28% 90,667 Angeli LLC 7 0.26% 85,104 5 0.32% 71.001 Worldmark Club 8 0.25% 82,020 Avalon Anaheim Stadium 9 0.25% 81,627 La Palma/Miller Owner LLC 10 0.23% 74,877 Boeing North America 2 0.61% 135,401 Allstate Life Insurance Company 3 0.54% 120,300 Reef America REIT II 4 0.47% 104,316 Joan MTR Schlund 6 0.32% 70,488 Atrium Plaza LLC 7 0.29% 64,971 Fairfield Resorts, Inc. 8 0.25% 56,048 OTR 9 0.23% 51,849 PC and RS Chao Family LTD 10 0.22% 49,455 Total 15.33% $5,025,531 16.82% $3,734,909 Source: Finance Department, City of Anaheim, California Municipal Statistics, Inc.

115

CITY OF ANAHEIM Property Tax Levies and Collections Last Ten Fiscal Years (Inthousands)

Collected within the Total Collected within the Total Fiscal Year of the Levy Collections to Date Fiscal Year of the Levy Collections to Date Collections Collections Total in Total Tax in Fiscal Taxes Percentage Subsequent Percentage Increments Percentage Subsequent Percentage Year Levy Amount' of Levy Years Amount of Levy Levy Amount of Levy Years Amount of Levy 2012 $33,598 $32,560 96.91% $ 241 $32,801 97.63% $49,004 $28,3272 57.81% $28,327 57.81%

2011 33,512 32,517 97.03% 558 33,075 98.70% 49,294 45,906 93.13% $ 282 46,188 93.70%

2010 33,627 32,490 96.62% 796 33,286 98.99% 49,119 46,584 94.84% 524 47,108 95.91%

2009 34,579 33,068 95.63% 1,231 34,299 99.19% 48,432 46,057 95.10% 622 46,679 96.38%

2008 34,283 32,798 95.67% 1,237 34,035 99.28% 46,785 44,793 95.74% 552 45,345 96.92/%

2007 33,897 32,324 95.36% 789 33,113 97.69% 42,472 39,807 93.73% 549 40,356 95.02%

2006 30,123 29,187 96.89% 446 29,633 98.37% 38,278 36,692 95.86% 669 37,361 97.60%

2005 28,106 27,452 97.67% 341 27,793 98.89% 35,284 33,819 95.85% 321 34,140 96.76%

2004 25,780 25,118 97.43% 302 25,420 98.60% 32,794 31,026 94.61% 738 31,764 96.86%

2003 26,221 25,569 97.51% 383 25,952 98.97% 29,730 27,189 91.45% 248 27,437 92.29%

' Excludes property taxes in-lieu of vehicle license fees.

2 Decrease in property tax collection is due to the dissolution of the Redevelopment Agency on February 1, 2012. Property tax increments were received up to January 31, 2012.

Note: Certain reclassifications have been made to prior fiscal years' data to conform to the fiscal year 2012 presentation.

116 Source: Auditor-Controller, County of Orange

CITY OF ANAHEIM Ratios of Outstanding Debt by Type Last Ten Fiscal Years (inthousands, except per capita amount)

Fiscal Year 2012 2011 2010 2009 2008 Governmental Activities Bonds $ 613,854 $ 821,587 $ 810,504 $ 805,068 $ 793,343 Certificates of participation 11,085 12,070 12,990 13,840 23,333 Notes and loans 25,546 34,566 29,094 24,621 27,538 Capital leases 1,694 2,341 2,605 1,235 2,353 Total governmental activities 652,179 870,564 855,193 844,764 846,567 Business-Type Activities Bonds 882,155 908,683 805,925 829,707 689,791 Certificates of participation 38,000 38,000 38,000 38,000 88,185 Notes and loans 24,488 30,519 11,379 12,299 13,189 Capital leases Total business-type activities 944,643 977,202 855,304 880,006 791,165 Total Government $1,596,822 $1,847,766 $1,710,497 $1,724,770 $1,637,732 Percentage of Personal Income 20.45% 24.57% 23.322% 23.96% 21.93%

Per Capita $ 4,645 $ 5,418 $ 5,088 $ 5,193 $ 4,953 Fiscal Year 2007 2006 2005 2004 2003 Governmental Activities______

Bonds $ 740,107 $ 740,959 $ 739,775 $ 737,538 $ 734,079 Certificates of participation 26,788 30,066 33,174 36,107 38,941 Notes and loans 57,614 43,342 28,669 22,747 17,152 Capital leases 2,484 2,220 1,523 2,001 269 Total governmental activities 826,993 816,587 803,141 798,393 790,441 Business-Type Activities Bonds 706,126 513,874 528,130 543,780 429,957 Certificates of participation 96,475 125,087 132,952 140,355 144,564 Notes and loans 14,081 14,976 15,842 16,678 17,485 Capital leases 267 275 180 349 509 Total business-type activities 816,949 654,212 677,104 701,162 592,515 Total Government $1,643,942 $1,470,799 $1,480,245 $1,499,555 $1,382,956 Percentage of Personal Income 22.17% 20.01% 21.48% 21.60% 20.11%

Per Capita $ 4,985 $ 4,465 $ 4,466 $ 4,507 $ 4,174 Note: Per capita amounts are estimates.

Sources: California State Department of Finance and Finance Department, City of Anaheim US Census Yearly American Community Survey 117

CITY OF ANAHEIM Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (Inthousands, except per capita amount)

Fiscal Year 2012 2011 2010 2009 2008 Bonds General Obligation $ 3,185 $ 3,735 $ 4,255 $ 4,750 $ 5,220 Lease Revenue 610,669 609,683 605,252 600,064 588,692 Tax Allocation 208,169 200,997 200,254 199,431 613,854 821,587 810,504 805,068 793,343 Less amounts available in debt service fund 53,398 67,363 69,043 63,560 57,995 Total net obligation bonds outstanding $560,456 $754,224 $741,461 $741,508 $735,348 Percentage of Assessed Value of Property 1.62% 2.19% 2.14% 2.12% 2.17%

Per capita $ 1,630 $ 2,212 $ 2,205 $ 2,233 $ 2,224 Fiscal Year 2007 2006 2005 2004 2003 Bonds General Obligation $ 5,700 $ 6,170 $ 6,625 $ 7,060 $ 7,460 Lease Revenue 582,272 575,125 569,016 562,118 554,361 Tax Allocation 152,135 159,664 164,134 168,360 172,258 740,107 740,959 739,775 737,538 734,079 Less amounts available in debt service fund 39,075 39,232 30,812 44,132 41,461 Total net obligation bonds outstanding $701,032 $701,727 $708,963 $693,406 $692,618 Percentage of Assessed Value of Property 2.15% 2.46% 2.67% 2.77% 2.73%

Per capita $ 2,126 $ 2,130 $ 2,139 $ 2,084 $ 2,090 Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.

Source: Finance Department, City of Anaheim 118

CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2012 (In thousands) 2011-12 Assessed Valuation $34,676,022 Redevelopment Incremental Valuation 4,634,348 Adjusted Assessed Valuation $30 041 674 DIRECT TAX AND ASSESSMENT DEBT: Outstanding City of Anaheim $ 3,185 DIRECT GENERAL FUND DEBT:

City of Anaheim General Fund Obligations 563,032 TOTAL GROSS DIRECT DEBT 566,217 Less: City of Anaheim Public Financing Authority (100Y self-supporting) 551,947 TOTAL NET DIRECT DEBT 14,270 City's Share Total Debt of Debt OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/12  % Applicable(I) 6/30/12 Metropolitan Water District $ 196,545 1.662% $ 3,267 North Orange Joint Community College District 206,464 28.504 58,850 Rancho Santiago Community College District 302,556 15.381 46,536 Anaheim Union High School District 110,074 72.119 79,384 Fullerton Joint Union High School District 55,153 0.306 169 Garden Grove Unified School District 128,500 0.828 1,064 Placentia - Yorba Linda Unified School District 268,181 11.040 29,607 Anaheim School District 157,100 99.821 156,818 Magnolia School District 14,618 79.959 11,689 Other School Districts 83,690 Various 12,560 City of Anaheim Community Facilities Districts 41,835 100.000 41,835 Orange Unified School District Community Facilities Districts 10,025 9.786-100.000 4,224 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 1,574,741 446,003 OVERLAPPING GENERAL FUND DEBT:

Orange County General Fund Obligations 233,751 7.9731% 18,637 Orange County Pension Obligations 214,405 7.973 17,095 Orange County Board of Education Certificates of Participation 16,000 7.973 1,276 Yorha Linda County Water District Certificates of Participation 8,965 0.868 78 North Orange County Regional Occupation Program Certificates of Participation 11,130 29.402 3,272 Orange Unified School District Certificates of Participation 48,555 30.332 14,728 Orange Unified School District Benefit Obligations 89,865 30.332 27,258 Placentia-Yorba Linda Unified School District Certificates of Participation 108,411 11.040 11,969 Anaheim Union High School District Certificates of Participation 37,465 72.119 27,019 Fullerton joint Union High School District Certificates of Participation 22,255 0.306 68 Centralia School District Certificates of Participation 500 11.862 59 Fullerton School District Certificates of Participation 6,770 .201 14 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT 798,072 121,473 TOTAL GROSS OVERLAPPING DEBT 567,476 TOTAL NET OVERLAPPING DEBT 567,476 GROSS COMBINED TOTAL DEBT 1,133,693 (2)

NET COMBINED TOTAL DEBT $ 581,746 119 (continued)

CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2012 (in thousands)

(continued)

(1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non-bonded capital lease obligations.

(2) Percentage of overlapping agency's assessed valuation located within boundaries of the city.

Ratios to 2010-12 Assessed Valuation:

Direct Debt ($3,185) 0.01%

Total Direct and Overlapping Tax and Assessment Debt 1.30%

Ratios to Adjusted Assessed Valuation:

Gross Combined Direct Debt ($566,217) 1.88%

Net Combined Direct Debt ($14,270) 0.05%

Gross Combined Total Debt 3.77%

Net Combined Total Debt 1.94%

State School Building Aid Repayable as of 6/30/12: $0 Source: California Municipal Statistics, Inc.

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

120

CITY OF ANAHEIM Legal Debt Margin Last Ten Fiscal Years (Inthousands)

Fiscal Year 2012 2011 2010 2009 2008 Debt limit $ 4,321,327 $ 4,290,023 $ 4,316,398 $ 4,399,359 $ 4,270,983 Total net debt applicable to limit (3,185) (3,735) (4,255) (4,750) (5,220)

Legal debt margin $ 4,318,142 $ 4,286,288 $ 4,312,143 $ 4,394,609 $ 4,265,763 Total net debt applicable to the limit as a percentage of debt limit 0.07% 0.09% 0.10% 0.11% 0.12%

Legal Debt Margin Assessed value $28,808,849 $28,600,152 $28,775,989 $29,329,062 $28,473,221 Debt limit (15% of total assessed value) 4,321,327 4,290,023 4,316,398 4,399,359 4,270,983 Fiscal Year 2007 2006 2005 2004 2003 Debt limit $ 3,976,084 $ 3,612,156 $ 3,343,276 $ 3,123,935 $ 3,418,119 Total net debt applicable to limit (5,700) (6,170) (6,625) (7,060) (7,460)

Legal debt margin $ 3,970,384 $ 3,605,986 $ 3,336,651 $ 3,116,875 $ 3,410,659 Total net debt applicable to the limit as a percentage of debt limit 0.14% 0.17% 0.20% 0.23% 0.22%

Legal Debt Margin Assessed value $26,507,227 $24,081,039 $22,288,504 $20,826,232 $22,787,461 Debt limit (15% of total assessed value) 3,976,084 3,612,156 3,343,276 3,123,935 3,418,119 Note:

Under State Finance Law, the City's outstanding general obligation debt should not exceed 15 percent of total assessed property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds.

Source: Finance Department, City of Anaheim 121

CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (Inthousands)

Redevelopment - Tax Allocation Revenue Bonds' Tax Less Net Fiscal Increment Operating Available Debt Service Year Revenue Expenses' Revenue Principal Interest Total Coverage 2011 $45,940 $ 8,848 $37,092 $ 55 $10,862 $10,917 3.3976 2010 46,652 21,409 25,243 10,766 10,766 2.3447 2009 46,101 5,300 40,801 10,766 10,766 3.7898 2008 45,719 4,722 40,997 6,000 6,275 12,275 3.3399 2007 40,710 2,729 37,981 3,983 13,417 17,400 2.1828 2006 37,341 5,196 32,145 2,977 11,727 14,704 2.1861 2005 34,984 5,361 29,623 3,014 11,700 14,714 2.0133 2004 31,650 3,321 28,329 4,620 9,996 14,616 1.9382 2003 27,762 2,628 25,134 4,370 10,251 14,621 1.7190 I Operating expenses consist of SERAF contributions and pass through agreements.

2 The Redevelopment Agency dissolved on February 1, 2012.

Electric Utility Revenue Bonds Less Net Debt Service Fiscal Electric Operating Available Year Revenue Expenses' Revenue Principal Interest Total Coverage 2012 $407,787 $314,231 $93,556 $18,175 $34,104 $52,279 1.7896 2011 391,218 309,274 81,944 17,825 30,825 48,650 1.6844 2010 390,364 309,112 81,252 15,995 31,788 47,783 1.7004 2009 378,916 300,269 78,647 15,370 28,798 44,168 1.7806 2008 373,842 299,534 74,308 14,690 29,450 44,140 1.6835 2007 330,421 265,340 65,081 13,765 24,424 38,189 1.7042 2006 336,091 268,274 67,817 13,145 25,132 38,277 1.7717 2005 297,443 218,562 78,881 15,875 24,780 40,655 1.9403 2004 295,988 232,050 63,938 14,840 20,102 34,942 1.8298 2003 280,471 216,841 63,630 14,716 19,179 33,895 1.8773

-! Operating expenses excludes amortization and depreciation.

Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.

Source: Finance Department, City of Anaheim 122 (continued)

CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (Inthousands)

(continued)

Water Utility Revenue Bonds Less Net Fiscal Water Operating Available Debt Service Year Revenue Expenses4 Revenue Principal Interest Total Coverage 2012 $59,330 $44,615 $14,715 $ 915 $4,292 $5,207 2.8260 2011 56,935 45,293 11,642 880 3,275 4,155 2.8019 2010 57,787 45,231 12,556 1,490 2,544 4,034 3.1125 2009 53,039 40,123 12,916 1,435 1,967 3,402 3.7966 2008 51,052 41,190 9,862 1,375 325 1,700 5.8012 2007 51,595 43,203 8,392 1,325 379 1,704 4.9249 2006 47,904 39,110 8,794 1,870 450 2,320 3.7905 2005 44,484 33,312 11,172 1,340 485 1,825 6.1216 2004 44,659 35,602 9,057 1,625 819 2,444 3.7058 2003 43,669 29,775 13,894 1,540 906 2,446 5.6803 4 Operating expenses excludes amortization and depreciation.

Sanitation Revenue Bonds Less Net Fiscal Wastewater Operating Available Debt Service Year Revenue' Expenses" Revenue Principal Interest Total Coverage 2012 $11,933 $4,832 $7,101 $835 $2,161 $2,996 2.3702 2011 11,813 4,030 7,783 805 2,193 2,998 2.5961 2010 11,773 5,452 6,321 775 2,224 2,999 2.1077 2009 10,913 5,176 5,737 2,224 2,224 2.5796 2008 10,299 5,167 5,132 1,532 1,532 3.3499 2007 10,113 6,734 3,379 Amounts based on the notes to the basic financial statement, segment reporting.

Operating expenses excludes amortization and depreciation.

Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.

Source: Finance Department, City of Anaheim 123

CITY OF ANAHEIM Demographic and Economic Statistics Last Ten Fiscal Years Personal Per Education Orange Income Capita Level in County Fiscal (thousands Personal Median Years of School Unemployment Year Population" of dollars) Income Age' Schooling Enrollment Rate 2012 343,793 $7,807,701 $22,7101", 32.4 12.2 67,760 7.90%

2011 341,034 7,519,459 22,049 32.4 12.2 67,884 9.20%

2010 336,208 7,333,705 21,813 32.4 12.2 68,331 9.50%

2009 332,120 7,198,701 21,675 32.4 12.2 68,890 9.30%

2008 330,659 7,467,272 22,583 32.4 12.2 68,663 5.30%

2007 329,780 7,416,752 22,490 32.4 12.2 69,296 3.90%

2006 329,373 7,351,605 22,320 32.4 12.2 70,793 3.70%

2005 331,458 6,892,338 20,794 32.4 12.2 71,314 3.90%

2004 332,727 6,943,347 20,868 32.4 12.2 71,637 3.60%

2003 331,350 6,878,163 20,758 32.4 12.2 71,488 4.00%

Population and Median Age were updated to reflect Census 2010 counts.

Per capita income for FY 2012 is estimated. Data not readily available.

Sources: California State Department of Finance Anaheim City Superintendent of Schools State of California, Employment Development Department State Department of Commerce and Labor State Department of Education US Census Yearly American Community Survey 124

CITY OF ANAHEIM Principal Employers Current Year and Eight Years Ago Fiscal Year 2012 2004 Percentage Percentage of Total of Total City City Employer Rank Employees Employment Rank Employees Employment Walt Disney Resort 1 22,200 13.8% 1 21,750 24.0%

Kaiser Permanente Hospital 2 5,400 3.4% 4 1,500 1.7%

Kaiser Permanente Anaheim Medical Center 3 3,700 2.3%

Northgate Gonzalez Supermarkets 4 1,900 1.2%

AHMC Anaheim Regional Medical Center 5 1,200 0.7%

AT &T Inc 6 1,000 0.6%

Hilton Anaheim 7 967 0.6% 7 900 1.0%

L-3 Communications 8 950 0.5%

Time Warner 9 800 0.5%

West Anaheim Medical Center 10 796 0.8% 10 700 0.8%

Boeing North America 2 3,500 3.9%

Opal Concepts Inc 3 2,000 2.2%

Alstyle Apparel 5 1,500 1.7%

Anaheim Memorial Medical Center 6 1,185 1.3%,

Long Beach Mortgage 8 800 0.9%

Specialty Restaurant Corp. 9 700 0.8%

Total 38,913 24.1% 34,535 38.3%

Note: Statistics prior for Fiscal Year 2004 is not readily available.

Source: Inside Prospects Database 125

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CITY OF ANAHEIM Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Function/Program City Council 7 7 7 7 7 7 7 7 7 7 City Administration 21 21 24 24 24 22 19 18 17 18 City Attorney 30 30 35 35 35 35 32 32 32 33 City Clerk 6 6 7 7 7 7 7 7 6 Human Resources 36 36 40 40 40 40 38 37 37 38 Finance 34 35 40 41 42 42 42 42 44 44 City Treasurer 12 12 12 12 12 12 12 12 12 12 Police 530 554 610 610 604 591 582 570 568 593 Fire 275 277 289 289 290 290 288 285 285 288 Community Development 102 105 106 109 108 114 120 119 112 111 Planning 73 75 93 94 97 96 95 96 96 97 Public Works 235 252 252 252 252 249 247 245 245 245 Community Services 115 123 180 183 184 183 183 179 188 192 Public Utilities 355 377 377 377 367 354 337 335 331 330 Convention, Sports and Entertainment 91 91 91 91 88 88 86 86 86 86 Total 1,922 2,001 2,163 2,171 2,157 2,130 2,095 2,070 2,067 2,100 Source: City of Anaheim 127

CITY OF ANAHEIM Operating Indicators by Function Last Nine Fiscal Years Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 Function/Program Police Department Number of calls for service 189,751 195,587 185,934 191,037 196,241 203,832 173,669 173,669 174,906 Number of 911 calls received 179,313 165,698 140,529 129,998 125,174 134,938 103,586 92,710 89,723 Number of Part I Crimes per 100,000 population 3,057 2,886 2,857 2,764 2,899 3,042 3,042 3,250 3,598 Number of Arrest 11,494 13,345 17,650 15,951 16,212 14,135 Number of Field Reports processed by Records Bureau 33,050 35,807 35,256 37,999 40,232 43,000 54,401 62,842 64,382 Number of traffic collisions 4,044 4,046 4,027 4,251 4,626 4,461 4,837 5,055 4,808 Number of Hours of Volunteer service 25,309 20,335 18,038 16,201 16,820 15,654 Fire Department Fire responses 923 983 1,275 1,016 1,082 649 687 519 590 False alarm responses 1,390 1,487 1,467 1,503 1,398 719 678 581 579 Mutual aid responses 2,744 2,707 2,560 2,532 2,662 2,296 2,271 2,530 2,441 Medical responses 23,061 22,202 24,045 21,553 21,301 16,326 16,679 13,783 14,130 Hazardous condition responses 201 199 207 224 203 263 322 138 134 (spills, leaks, bomb removal, power line down, etc.)

Public Works Centerline miles of arterial highway pavement improved 8.7 5.8 9.0 8.1 9.1 8.7 3.5 2.9 5.6 Square feet of deteriorated pavement replaced 2,977,482 4,274,463 820,000 780,500 890,500 890,500 920,500 910,250 887,156 Square feet of deteriorated pavement slurry sealed 4,208,194 4,167,569 1,975,000 2,532,000 3,483,000 3,483,000 3,522,000 4,175,500 2,704,599 Number of traffic intersections maintained 318 319 318 318 316 316 308 15 298 Number of traffic control hubs maintained 18 18 18 17 16 16 15 1 15 Square feet of deteriorated sidewalk replaced 74,780 62,940 60,000 50,500 50,200 50,200 46,500 48,850 56,725 Linear feet of damaged curb/gutter replaced 27,661 24,755 11,500 12,500 11,500 11,500 11,500 1,350 2,230 Square feet of medians/parkways maintained 5,511,065 5,460,655 5,400,000 5,350,000 5,350,000 5,350,000 5,212,600 5,209,500 5,132,700 Square feet of landscape maintained in the Anaheim Resort 1,430,486 1,430,486 1,430,486 1,419,286 1,419,286 1,419,286 1,419,286 1,419,286 1,419,286 Square feet of hardscape maintained in the Anaheim Resort 858,828 1,001,743 858,828 858,828 858,828 858,828 858,828 858,828 858,828 Number of vehicles maintained 1,152 1,162 1,331 1,331 1,351 1,283 1,273 1,273 1,283 Number of vehicles per mechanic 50 47 50 55 59 48 50 50 54 Square feet of interior space maintained 2,176,265 2,176,265 2,176,265 2,176,265 2,176,265 1,941,287 1,882,400 1,882,400 1,903,000 Square feet of exterior space maintained 39,138,187 39,138,187 39,138,187 39,138,187 39,138,187 35,298,000 35,238,900 35,238,900 35,283,600 Number of facility square feet (interior) per worker 120,904 114,540 103,631 103,631 103,631 77,651 75,296 75,500 75,500 Number of construction projects 100 136 130 130 132 167 158 130 192 Number of permit inspections 404 355 800 800 802 1,623 1,567 1,659 1,717 Parks Number of park acres maintained per full-time equivalent employee 75 75 12.00 12.00 10.52 10.52 10.52 10.39 10.39 Number of sports fields prepared 66 66 66 66 66 66 66 66 69 Cost per acre of parks maintained. $8,031 $8,333 $9,651 $9,950 $10,699 $10,288 $9,960 $8,791 $9,144 Cost per sports field maintained. $4,133 $4,261 $5,134 $5,134 $4,937 $4,747 $4,596 $4,828 $4,377 128 (continued)

CITY OF ANAHEIM Operating Indicators by Function

[ast Nine Fiscal Years (continued)

Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 Function/Program Golf Courses Cost per acre of golf course maintained $9,010 $9,569 $11,327 $10,674 $10,617 $10,305 59,625 $9,242 $8,921 Number of rounds played 120,675 116,287 124,404 137,948 153,661 157,649 160,614 156,991 168,168 Number of acres maintained 200 200 200 200 200 2100 200 200 200 City Libraries Computer assistance 99,550 115,475 150,318 156,716 95,068 37,725 Total circulation - books 1,635,627 1,700,104 1,655,922 1,489,849 1,648,398 1,536,044 1,363,327 1,422,072 1,689,744 Reference questions answvered 91,434 95,436 102,557 98,026 80,564 87,318 67,663 93,964 151,379 Information assistance 143,908 164,698 247,221 255,644 184,301 294,940 318,089 375,944 450,052 Patrons (patron visits) 1,321,309 1,403,995 1,572,138 1,752,838 1,615,640 1,373,002 1,176,441 1,147,079 1,267,487 Library cardholders 157,278 156,444 149,501 138,826 147,638 161,278 139,611 114,700 100,690 Programs offered 3,235 3,927 3,991 4,777 4,410 3,293 2,740 3,559 3,572 Program attendance 101,696 124,401 146,357 158,669 152,532 129,661 84,631 79,912 99,330 Public internet sessions 220,931 279,564 328,901 369,463 323,645 257,089 227,005 206,569 201,739 Community Services Programs Number of youth program participants 129,215 110,013 134,611 146,381 455,725 362,839 362,839 354,505 346,171 Number of youth program participants in recreation classes 9,213 10,231 10,125 16,332 16,006 13,675 15,200 14,886 14,886 Number of adult program spnrts teams 845 908 885 875 840 756 812 820 639 Number of park ranger contacts 275,014 232,132 187,000 208,176 161,038 140,000 139,773 88,935 132,633 Public Utilities Department Electric Utility:

Number of meters 115,113 114,662 113,434 112,548 111,784 111,319 110,729 110,635 110,592 Megawatt-hours - sales 2,966,119 2,976,014 3,344,188 3,208,123 2,979,396 3,233,508 3,223,728 3,090,382 3,282,236 Megasvatt-hours; - purchased power 2,707,466 2,737,174 3,085,358 2,836,962 2,978,800 2,708,318 2,606,275 2,459,836 2,603,955 Megawatt-hoCUrs - nwned generation 430,323 431,027 410,784 435,835 301,021 696,563 929,787 936,471 974,395 Water Utility:

Number of meters 63,283 62,717 62,532 62,456 62,445 62,372 62,045 62,205 61,704 Millions of gallons sold 19,672 19,526 20,492 22,238 23,154 24,075 22,887 22,550 23,881 Millions of gallons purchased from Metropolitan Water District 7,023 7,398 8,054 6,614 4,978 8,049 10,188 9,144 8,169 Millions of gallons punmped from water system wells 14,100 13,399 14,669 17,034 18,961 16,844 13,580 14,244 16,784 Anaheim Convention Center Number of events serviced 222 200 232 310 339 347 337 310 262 Number of attenrdees 1,059,000 935,000 944,000 917,000 1,008,000 1,098,000 1,002,000 1,202,000 992,000 Percentage of occupancy 62.0%, 56.0%. 68.0%X 56.0%, 61.0% 70.0%, 58.0%'. 66.0% 7 1.09%

Source: Various City Departments 129

CITY OF ANAHEIM Capital Assets Statistics by Function Last Nine Fiscal Years Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 Function/Program Police Department Police Facilities 10 10 10 10 9 8 6 4 4 Motorized Equipment 242 242 250 266 255 251 248 Police Helicopters 3 3 4 4 3 3 3 3 Shooting Range 1 1 1 I 1 1 1 1 Communication/Radio Tower 1 1 1 1 1 1 1 1 1 Fixed Wing 1 Fire Department Fire stations 11 11 11 11 11 11 10 10 10 Training center 1 1 1 1 1 I 1 1 1 Fire trucks, engines, and other vehicles 74 69 74 74 79 79 72 72 71 Public Works Streets (center lane miles) 578 578 588.2 633.2 633.2 633.2 633.2 588.2 588.2 Traffic signals 318 318 306 318 314 312 312 309 308 Sewers (miles) 573.63 570.44 569.6 568.3 565.7 561.5 560 560 560 Storm Drains (miles) 151.24 151.24 151.24 148 148 148 148 148 148 Parks Community parks 1 I1 11 11 11 11 11 11 11 Mini parks 7 7 7 7 6 6 6 6 6 Neighborhood parks 21 21 21 21 20 20 20 21 21 Special use parks 6 6 6 6 6 6 6 6 6 City Libraries Branch libraries 7 7 7 7 7 6 5 4 5 Book mobiles 1 1 2 2 2 2 2 1 1 (continued) 130

CITY OF ANAHEIM Capital Assets Statistics by Function Last Nine Fiscal Years (continued)

Fiscal Year 2012 2011 2010 2009 2008 2007 2006 2005 2004 Function/Program Public Utilities Department Electric Utility:

Transmission, 69kV, circuit miles 86 90 80 80 80 77 69 70 70 Distribution, 12 kV and lower, circuit miles Overhead 428 440 446 446 453 458 468 800 791 Underground 656 658 617 625 615 582 564 620 612 Water Utility:

Active Wells 18 18 18 18 21 19 21 23 26 Reservoirs 14 14 13 13 13 13 13 13 13 Water Mains (miles) 753 752 753 750 750 747 746 747 749 Fire Hydrants 7,812 7,802 7,805 7,751 7,749 7,730 7,720 7,848 7,818 Anaheim Convention Center Square footage available 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 Number of exhibit halls 5 5 5 5 5 5 5 5 5 Source: Various City Departments 131

CITY OF ANAHEIM

41. CANYON RIM Rim 7305 E. Canyon PARK Rd.

PARKS 42. RONALD REAGAN PARK 945 SWeir Canyon Rd.

1. HANSEN PARK 11. WILLOW PARK 1625 W. Crone Ave. 21. COLONY SQUARE 210 E. Lincoln Ave. 31. OLIVE 4200 Nohl HILLS RanchPARK Rd.

1300 S. Knott St. 43. ROOSEVELT PARK

22. WALNUT GROVE PARK 32. RIVERDALE PARK 8160 E.Bauer Rd.

2. REID PARK 12. PALM LANE PARK 905 S. Anaheim Blvd.

1595 Palais Rd. 4545 E. Riverdale Ave. 44. ROSS PARK 3100 W, Orange Ave. 1280W. Santa Ana St.

13. SAGE PARK 23. CITRUS PARK 33. PERALTA CANYON PARK

3. SCHWEITZER PARK 1313 Lido Pl. 104 S. Atchison St. 115 N. Pinney Dr. 45. COTTONWOOD PARK 238 S. Bet Air St.

853 W, Cottonwood Cir.

14. STODDARD PARK 24. PONDEROSA PARK 34. PELANCONI PARK

4. MAXWELL PARK 901 S. Ninth St. 2100 S. Hester St. 46. DEER CANYON PARK 2660 W. Orange Ave. 222 S. Avenida Margarita Mohler & Santa Ana Rd.

15. MANZANITA PARK 25. LINCOLN PARK 35. IMPERIAL PARK

5. PETER MARSHALL PARK 1440 E. Lincoln Ave. 47. FOUNDERS PARK 801 N. Magnolia Ave. 1260 Riviera St. 450 S. Imperial Hwy.

400 N. West St.

16. LA PALMA PARK & STADIUM 26. EDISON PARK 36. EUCALYPTUS PARK

6. BROOKHURST COMMUNITY PARK 1151 La Palma Park Way 1145 Baxter St. 48. COLONY PARK 2271 W, Cresent Ave. 100 N. Quintana Dr.

501 E. Water St.

17. PEARSON PARK 27. BOYSEN PARK 37. OAK PARK 49. ENERGY FIELD

7. JOHN MARSHALL PARK 951 State College Blvd. 6400 E. Nohl Ranch Rd.

2066 Falmouth Ave. 400 N. Harbor Blvd. 1625 S. Ninth St.

18. LITTLE PEOPLES PARK 28. JUAREZ PARK 38. YORBA REGIONAL PARK 50. MAGNOLIA PARK

8. MODJESKA PARK 841 S. Sunkist St. 1515 Wright Cir.

220 W. Elm St. 7600 E. La Palma Ave.

1331 S. Nutwood St.

19. JULIANNA PARK 29. PIONEER PARK 39. OAK CANYON NATURE CENTER 51. WETLANDS

9. CLARA BARTON PARK 309 E. Juliana St. 2565 E. Underhill Ave. 6700 Walnut Canyon Rd. 8300 E. La Palma Ave.

1926 Clearbrook Ln.

20. GEORGE WASHINGTON PARK 30. RIO VISTA PARK 40. SYCAMORE PARK 52. ANAHEIM COVES

10. CHAPARRAL PARK 201 N.Parkvista St. 962 S. Rio Vista St.

1770 E. Broadway 250 E. Cypress St. 8268 Monte Vista Rd.

132