ML14036A052

The City of Riverside, CA, Comprehensive Annual Financial Report, Year Ended June 30, 2013

ML14036A052
Person / Time
Site:	San Onofre
Issue date:	06/30/2013
From:	Barber S, Mason B City of Riverside, CA
To:	Office of Nuclear Reactor Regulation
References
Download: ML14036A052 (132)

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Comprehensive Annual Financial Report Year Ended June 30, 2013 Seizing Our Destiny/The Movement for Riverside's Prosperous Future

CITY OF RIVERSIDE, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2013 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, 2013 TABLE OF CONTENTS INTRODUCTORY SECTION Page L etter of T ransm ittal........................................................................................................

i GFOA Certificate of Achievement.......................................................................................

v Legislative and City Officials............................................................................................

vi O rganization C hart.........................................................................................................

vi FINANCIAL SECTION R eport of Independent A uditors..........................................................................................

I Management's Discussion and Analysis...............................................................................

5 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position......................................................................................

21 Statem ent of A ctivities...........................................................................................

22 Fund Financial Statements:

Balance Sheet - Governmental Funds..........................................................................

23 Reconciliation of the Balance Sheet of Governmental Funds to Statement of Net Position............

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 -

G eneral Fund................................................................................................

27 Statement of Net Position - Proprietary Funds...............................................................

28 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds............

30 Statement of Cash Flows - Proprietary Funds................................................................

31 Statement of Fiduciary Net Position/(Deficit)..............................................................................

33 Statement of Changes in Net Position/(Deficit) - Private-Purpose Trust Fund.................................

34 Notes to Financial Statements.......................................................................................

35 Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet - Nonmajor Governmental Funds...............................................

67 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor G overnm ental Funds.......................................................................................

69 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual -

Nonmajor Governmental Funds............................................................................

71 Combining Statement of Net Position - Nonmajor Enterprise Funds.......................................

75 Combining Statement of Revenues, Expenses and Changes in Net Position - Nonmajor Enterprise F unds.....................................................................................................

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CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2013 TABLE OF CONTENTS FINANCIAL SECTION (CONT.)

Combining Statement of Cash Flows -Nonmajor Enterprise Funds.......................................

Combining Statement of Net Position - Internal Service Funds.............................................

Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service F u n d s..........................................................................................................

Combining Statement of Cash Flows - Internal Service Funds.............................................

Combining Statement of Changes in Assets and Liabilities - Agency Fund...............................

Capital Assets Used in the Operation of Governmental Funds:

Schedule by Source..........................................................................................

STATISTICAL SECTION Table 1

Net Position by Component - Last Ten Fiscal Years..........................................................

2 Changes in Net Position - Last Ten Fiscal Years...............................................................

3 Fund Balances of Governmental Funds - Last Three Fiscal Years......................................................

4 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years.............................

5 Business-Type Activities Electricity Revenues By Source - Last Ten Fiscal Years......................

6 Governmental Activities Tax Revenues By Source - Last Ten Fiscal Years...............................

7 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years............

8 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years......................................

9 Principal Property Taxpayers - Current Year and Nine Years Ago.........................................

10 Property Tax Levies and Collections - Last Ten Fiscal Years...............................................

11 Electricity Sold by Type of Customer-Last Ten Fiscal Years.............................................

12 Electricity Rates - Last Ten Fiscal Y ears........................................................................

13 Top 10 Electricity Customers - Current Year and Nine Years Ago.........................................

14 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years...............................................

15 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years......................................

16 Direct and Overlapping Governmental Activities Debt.......................................................

17 Legal Debt Margin Information - Last Ten Fiscal Years.....................................................

18 Pledged-Revenue Coverage Business Type Activity Debt - Last Ten Fiscal Years......................

19 Demographic and Economic Statistics - Last Ten Calendar Years.........................................

20 Principal Employers - Current Year and Nine Years Ago....................................................

21 Full-Time Equivalent City Government Employees by Function - Last Ten Fiscal Years..............

22 Operating Indicators by Function - Last Ten Fiscal Years...................................................

23 Capital Asset Statistics by Function - Last Ten Fiscal Years................................................

78 81 82 83 85 87 89 90 92 93 95 96 97 98 99 100 101 102 103 104 105 106 108 109 110 111 112 113 114

E October 25, 2013 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, 2013.

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 unmodified opinion on the City's financial statements for the fiscal year ended June 30, 2013.

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 71.

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 311,955, which places it as the sixth largest in Southern California.

Unemployment in the MSA is currently at 9.7% down from 13.7% for the same period last year with modest improvements in the real estate and home building sectors. The Citywide budget for the fiscal year 2013/2014 projects a 23% decrease in expenditures and is balanced. The decrease is attributable to capital projects.

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The MSA is projected to grow in future years because land values continue to 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 2013/14 - 2017/18 total approximately $448 million. The projects encompass all seven Council wards and enhance the life of all residents. Funding comes from multiple sources, including existing funds; bond proceeds, user fees, special tax revenues, and regional, state and federal funds. In addition to routine electric, water, sewer and transportation-related projects, the CIP includes improvements to Parks, Recreation and Community Services projects; railroad-related projects; and municipal buildings and facilities, such as library, police and fire facilities.

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, 2012. This was the twenty-fifth 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.

The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department, particularly the leadership of Jason Al-Imam, Controller. We would like to express our appreciation to all iii

members of the department 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 City Manager Brent A. Mason Finance Director/Treasurer iv

Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Riverside California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012 Executive Director/CEO The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Riverside for our Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012.

In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements.

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

We believe our current report continues to meet the Certificate of Achievement Program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate.

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ORGANIZATION CHART LEGISLATIVE OFFICIALS Rusty Bailey...................................................................................

Mayor Mike Gardner..................................................

Councilmember-W ard 1 Andy Melendrez..............................................

Councilmember -W ard 2 Ken Gutierrez..................................................

Councilmember - W ard 3 Paul Davis.......................................................

Councilmember - W ard 4 Chris Mac Arthur.............................................

Councilmember - W ard 5 Jim Perry.........................................................

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 Colleen J. Nicol.......................................................................

City Clerk*

Gregory P. Priamos...........................................................

City Attorney*

Sergio G. Diaz...................................................................

Chief of Police Lea Deesing.......................................................

Chief Innovation Officer Al Zelinka...........................................

Community Development Director Brent A. Mason.............................................

Finance Director/Treasurer Steve Earley.............................................................................

Fire Chief Kris Martinez..................................................

General Services Director Rhonda Strout..............................................

Human Resources Director Tonya Kennon.................................................................

Library Director Sarah Mundy....................................

Museum & Cultural Affairs Director Ralph Nufiez................. Parks, Recreation & Community Svcs. Director Stephen H. Badgett................ Interim General Manager - Public Utilities Tom Boyd.......................................

Public W orks Director/City Engineer

• Appointed by City Council

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REPORT OF INDEPENDENT AUDITORS Honorable Mayor and Members of the City Council City of Riverside 3900 Main Street Riverside, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the budgetary comparison of the general fund and the aggregate remaining fund information of the City of Riverside, California ("the City") as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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WWW.MOSSADAMS.COM MOSS-ADAMSLA, An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, the budgetary comparison of the general fund and the aggregate remaining fund information of the City of Riverside as of June 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter As discussed in Note 19 to the financial statements, for the year ended, June 30, 2013, the City adopted new accounting guidance that reflects certain changes to the presentation and the reclassification of certain accounts due to the implementation of Governmental Accounting Standards Board Statements Nos. 63 and 65. Our opinions are not modified with respect to these matters.

As discussed in Notes 1, 17, and 18 to the financial statements, for the year ended, June 30, 2013, the City recognized extraordinary losses due to the accelerated decommissioning of the San Onofre Nuclear Generating Station of which the City owns a partial interest. Our opinions are not modified with respect to these matters.

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WWW.MOSSADAMS.COM MOSS-ADAMSLIT Other Matters Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis on pages 5 through 20 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Riverside's basic financial statements. The accompanying supplementary information such as the combining and individual nonmajor fund financial statements, and the other information, such as the introductory and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and the individual fund financial statements and the budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and the individual fund financial statements and the budgetary comparison schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

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WWW.MOSSAOAMS.COM MOSS -ADAMS Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we issued our report dated October 25, 2013 on our consideration of the City of Riverside's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Riverside's internal control over financial reporting and compliance.

Los Angeles, California October 25, 2013 4

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, 2013. 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 position presents information on all of the City's assets, liabilities, and deferred inflows and outflows of resources, with the difference reported as net position. Over time, increases or decreases in the City's net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cashflows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

The government-wide financial statements distinguish functions of the City that are 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 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 three blended component units, which consist of the Riverside Housing Authority, Riverside Public Financing Authority and the Riverside Municipal Improvements Corporation. Although 5

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 fiend 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 governmental funds 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 thirteen 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 and Capital Outlay Fund, which are major funds. Data from the other eleven governmental funds are combined into a single, aggregated presentation. Individual 6

fund data for each of these non-major governmental funds is provided in the form of combining statements and can be found on pages 67-73 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 sen'ice 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 75-84 in this report.

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

Fiduciary funds. 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 85.

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, deferred inflows and outflows, and net position for its governmental and business type activities. As noted earlier, a government's net position may serve over time as a useful indicator of its financial position.

Governmental Activities Business type Activities Total Current and other assets Capital assets, net Total assets Deferred Outflows of Resources Current liabilities Long-temi liabilities Total liabilities Deferred Inflows of Resources Net position:

Net investment in capital assets Restricted Unrestricted Total net position 2013 368,905 1,318,614 1,687,519 19,763 71,349 452,721 524,070 1,026 1,083,485 80,712 17,989

$ 1,182,186 2012

• 390,196 1,271,805 1,662,001 28,901 85,513 419,434 504,947 2013 814,367 1,454,228 2,268,595 40,453 159,173 1,130,283 1,289,456 10,000 609,691 69,068 330,833 1,009,592 2012

• 864,492 1,413,797 2,278,289 59,604 168,991 1,161,998 1,330,989 2013

$ 1,183,272 2,772,842 3,956,114 60,216 230,522 1,583,004 1,813,526 11,026 1,693,176 149,780 348,822

$ 2,191,778 2012 *

$ 1,254,688 2,685,602 3,940,290 88,505 254,504 1,581,432 1,835,936 1,076,485 86,325 23,145 1,185,955 666,919 54,923 285,062

$ 1,006,904 1,743,404 141,248 308,207

$ 2,192,859

• Certain reclassifications have been made to prior year balances to conform with the current year's presentation.

The City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $2,191,778 at June 30, 2013, a decrease of $1,081 from June 30, 2012.

By far the largest portion of the City's net position (77 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.

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An additional portion of the City's net position (7 percent) represents resources that are subject to external restrictions on how they may be used. The remaining unrestricted net position may be used to meet the government's ongoing obligations to citizens and creditors. Of this amount, $330,833 is held by the business type activities and $17,989 is held by the governmental activities.

The City's total net position decreased by $1,081 during the current fiscal year, which reflects a decline in governmental activities of

$3,769 and growth of $2,688 in business type activities. Governmental operating results is discussed on page 11 and business-type operating results is discussed on page 14.

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, 2013 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.

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Govermmental Business type Activities Revenues:

Program Revenues:

Charge for services Operating Grants and Contributions Capital Grants and Contributions General Revenues:

Sales taxes Property taxes Other taxes and fees Investment income Other Total Revenues 2013 42,193 21,485 32,202 50,222 52,904 37,205 2,786 9,208 248,205 2012

• 43,653 31,581 54,476 47,701 74,179 35,549 4,440 9,273 300,852 Activitie 2013 487,540 2,718 11,734 es Total 2012

• 2013 2012 462,249 2,738 21,164 4,744 5,767 512.503 Expenses:

General government Public safety Highways and streets Culture and recreation Interest on long-term debt Electric Water Sewer Refuse Airport Transportation Public parking Total expenses 54,808 147,652 35,072 40,077 16,627 48,731 148,605 35,342 54,594 25,087 11,405 3,110 500,666 288,799 56,715 43,702 19,979 2,646 3,667 4,984 420,492 529.733 24,203 43,936 50,222 52.904 37,205 7.530 14,975 760.708 54,808 147,652 35,072 40.077 16,627 292.175 58,768 43,945 20,581 2.029 3,745 5,051 720,530 294,236 312,359 Increase (decrease) in net position before transfers and extraordinary items Transfers, net E.,xtraordinary items:

Transfer of assets and liabilities to Succesor Agency Transferofassets from Successor Agency Assumption of obligation Power Plant Closure Total changes in net position Net position - beginning. as restated Net position -ending 292,175 583768 43,945 20.581 2,029 3,745 5,051 426,294 86,209 (42,262)

(41.259) 2,688 1,006,904 1,009,592 505,902 34,319 75,640 47,701 74,179 35.549 15,845 12,383 801.518 48.731 148,605 35,342 54.594 25,087 288.799 56,715 433702 19.979 2,646 3.667 4,984 732,851 68.667 98.022 56,522 (4.927) 218,284 1,974,575

$ 2,1921859 (46,031) 42,262 (11,507) 40,679 80.174 (40,679) 40,178 98,022 56,522 (4,927) 178,789 1,007,166 1,185,955 (3,769) 1,185,955 1,182,186 39,495 967,409

$ 1.006,904 (41,259)

(1,081) 2,192,859 2,191,778

• Certain reclassifications have been made to prior year amounts to conform wvith the current year's presentation.

10

Governmental activities. Net position for governmental activities decreased by $3,769 accounting for 0.3 percent decrease in total net position. Governmental net position in the prior fiscal year increased by $178,789. 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 decrease was approximately $53 million, which is largely attributable to a decrease in grants and property taxes. Overall grants and contributions declined by $32 million or 38% and property tax revenue decreased by $21 million or 29%. The decrease in grant related revenue was attributable to the completion of several grade separation projects. The decrease in property tax revenue relates to the dissolution of the Redevelopment Agency.

Expenses:

While variances between years exist for the various expense functions, the total net decrease was approximately $18 million or 6%.

This primarily relates to a decrease in interest expense of approximately $8.5 million, which primarily relates to the dissolution of the Redevelopment Agency in 2012. Interest expense associated with the Redevelopment Agency during the first 7 months of fiscal year 2011/12 amounted to $7.7 million, which was included as part of governmental activities.

However, the activity of the former Redevelopment Agency since dissolution (February 1, 2012) has been reported in the private purpose trust fund of the Successor Agency.

Extraordinary items:

In the prior year, net position increased by $149.6 million due to the dissolution of the Redevelopment Agency.

11

Expenses and Programs Revenues - Governmental Activities - Fiscal Year Comparison 2013 vs. 2012

$160,000

$140,000

$120,000

$100,000 mm 2013 Expenses

$8o,oo00 2012 Expenses W 2013 Program revenues

$60,000 U 2012 Program revenues

$40,000

$20,000

$0 General government Public safety Highways and streets Culture and Interest on long-recreation term debt 12

Revenues by Source - Governmental Activities - Fiscal Year Comparison 2013 2012 Investment income 1.12%_

Mscellaneous Charges for

_3.71%

services

/-I/.00Y InvebLimift incume Intergovernmental, _\\

unrestricted 0.14%

Other-1.49o U

\\

Operating grants &

contributiors 8.66%

Capital grants &

V ortrihutions 12.97%

.. Operating grants &

contrbutlons 10.50%

Uti ity users taxesJ 11-36%

~'--...Capital grants &

18.11%

Franchise taxes 2.00%

-. _ PrnpPrty taxps 21.31%

_ Property taxes 24.bb%

Sales taxes 20.23%

13

Business-type activities. The net position of business type activities increased by $2,688, accounting for a 0.3 percent increase in total net position. The net position of business type activities increased by $39,495 in the prior year. Key elements of this year's activity in relation to the prior year are as follows:

In 2013, charges for services increased $25,291 to $487,540. 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 $14,904 (4.5%). The increase was due to expanded customer base, a 3.7% increase in retail consumption and higher transmission revenues authorized by the Federal Energy Regulatory Commission.

" Sewer charges for services increased by $6,025 (16%). New rates and charges went into effect on July 1, 2012 for residential, commercial and industrial customers. Rates for basic single family and multi-family dwellings increased by 13%, which is the primary reason for the increase in Sewer charges for services.

• The increase in charges for services was primarily offset by the following:

• Expenses increased by $5,802 primarily due to a $3.4 million increase in electric distribution and purchased power costs.

In 2013 there was an extraordinary loss of $41,259 related to the closure of the San Onofre Nuclear Power Plant.

Revenues by Source - Business Type Activities - Fiscal Year Comparison 2013 2012 Operating grants and contributions 0.5%

Capital grants and contributions 2.3%

Investment Income 0.9%

Miscellaneous 1.1%

Operating grants and contributions 0.5%

Capital grants and contributions 3.9%

Investment Income 2.3%

Miscellaneous 0.8%

Charges for services 95.1%

Charges for services 92.5%

14

Financial Analysis of the City's Funds Governmental funds. The focus of the City's governmental funds 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, unassignedfind balance may serve as a usefil 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, Capital Outlay, and Other Governmental Funds. As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.

Total assets Total liabilities General Fund 2013 2012

$114,204

$123,992

$ 30,309

$ 43,038 6,804 6,704 Capital Outlay 2013 2012 *

$42,321

$45,302

$34.353

$20,469 6,536 6,479 Other Governmental Funds 2013 2012 *

$120,689

$121,028

$ 15,525

$ 16,474 34,371 32,902 Deferred inflows of resources Unavailable revenue Total Governmental Funds 2013 2012 *

$277,214

$290,322

$ 80,187

$ 79,981 47,711 46,085 27,862 27,259 72,980 91,270 10,711 6,380 37,763 39,347 149.316 164,256

$277,214

$290,322 Fund balances Nonspendable Restricted Assigned Unassigned Total fund balance Total liabilities, deferred inflows and fund balances 26,421 25,720 1,441 1,539 2,196 10,711 37,763 77,091 2,803 6,380 39,347 74,250 1,432 18,354 69,352 70,113 1,432 18,354 70,793 71,652

$114.204

$123,992

$42,321

$45,302

$120,689

$121,028

• Certain reclassifications have been made to prior year balances to confomrrwith the current year's presentation.

15

As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $149,316 a decrease of

$14,940 in comparison with the prior year. Additionally, 19% of the fund balance ($27,862) is nonspendable, which comprises the portion of fund balance that cannot be spent due to form. $72,980 or 49% 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.

$10,711 or 7% 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, $34,000 has been set aside for future economic contingencies, leaving $3,763; at June 30, 2012 the comparable amount was $6,347. The City's governmental funds reported combined total assets of $274,789 at June 30, 2013, a decrease of $15,533 in comparison with the prior year. Liabilities and deferred inflows of resources amounted to $127,898, an increase of $1,832. This primary reason for the decrease in total assets and related fund balances is due to expenditures related to capital projects in the Capital Outlay Fund.

The General Fund is the principal operating fund of the City. At the end of the current fiscal year, total fund balance equaled $77,091 in comparison to $74,250 in the prior year. The portion of fund balance classified as unassigned was $37,763, most of which was set aside for future economic contingencies.

Fund balance for the Capital Outlay Fund decreased by ($16,922). The primary reason for the decrease is due to capital outlays on projects that are expected to be funded with proceeds from future borrowings.

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

Unrestricted net position of the Electric, Water and Sewer Funds at the end of the year amounted to $241,696, $69,996, and $18,65 1 respectively. The unrestricted net position for the Electric, Water and Sewer Funds in the prior year was $219,198, $61,859 and $3,343, respectively. The increase in unrestricted net position for the Electric, Water and Sewer Funds is primarily a result of operating activities as described below.

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 3.7% increase in retail consumption which was partially offset by a reduction in investment income.

Retail sales (residential, commercial, industrial, and other sales) represent 83.9% of total revenues. Retail sales, net of reserve/recovery were $300,238 and $288,616 for years ended June 30, 2013 and 2012, respectively. Total expenses, excluding transfers, increased $3.4 million (1.2%), which primarily relates to an increase in purchased power and distribution costs. The Electric Fund also recorded a $41 million loss related to the closure of the San Onofre Nuclear Power Plant, which was reflected as an extraordinary item.

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 84% of total revenues. Retail sales, net of reserve/recovery were $61,837 and $59,620 16

for the years ended June 30, 2013 and 2012, respectively. The increase in sales was primarily due to a 4.1% increase in retail consumption as a result of warmer than normal weather patterns.

Net position of the Sewer Fund increased by $2,173 and $70 for the years ended June 30, 2013 and 2012, respectively. Operating revenues increased by $6,025 or 16% primarily as a result of a rate increase, which was offset by a reduction in investment income and an increase in operating expenses.

General Fund Budgetary Highlights Original Final Actual Variance with Budget Budget Amounts Final Budget

$178,620

$194,754

$187,014

($7,740)

Total Revenues Expenditures:

General Government Public Safety Highways & Streets Culture & Recreation Capital Outlay Debt Service Total Expenditures 10,507 134,710 18,952 31,433 153 15,050 210,805 (32,185) 31,221 (964) 74,250

$73,286 17,596 149,699 20,472 35.775 4,481 49,248 277,271 (82,517) 71,095 (11,422) 74,250

$62,828 11,841 145,545 16,294 32,450 2,942 48,326 257,398 (70,384) 73,225 2,841 74,250

$77,091 5,755 4,154 4,178 3,325 1,539 922 19,873 12,133 2,130 14,263 Deficiency of Revenue Under Expenditures Other Financing Sources Net Change in Fund Balances Beginning Fund Balance Ending Fund Balance 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:

L Approximately $7.8 million of grant revenue was budgeted but not actually received during the year since the related grant expenditures had not been incurred.

o Actual expenditures were less than budgeted amounts by approximately $20 million. This is primarily associated with unspent appropriations for grants, capital projects and other special programs that were not completed during the year (which are carried over to the next fiscal year).

17

Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for governmental and business type activities as of June 30, 2013 amounted to

$2,772,842 (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 $87,240 ($46,809 for governmental activities including internal service funds and $40,431 for business type activities).

Major capital improvements during the current fiscal year included: new infrastructure, consisting primarily of street improvements of $34 million; Sewer system improvements of $45 million; Electric Utility upgrades of $40 million and Water Utility upgrades of $27 million.

Construction in progress totaled $187,900 at June 30, 2013.

Some of the major projects in process are various Sewer system improvements including phase 1 of the Water Quality Control Plant, the Convention Center Expansion Project, 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 $40,276 for governmental activities and $51,384 for business type activities.

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

Governmental Activities Business Type Activities Total Land Nuclear fuel Intangibles Buildings Improvements other than Buildings Machinery and equipment Infrastructure Construction in progress Total 2013

$325,215 130,051 182.249 19,612 622.972 38,515

$1,318,614 2012

$322,060 123,128 170,236 20,064 609,651 26,666

$1,271,805 2013

$42,636 21,890 158,428 1,052,832 29,057 149,385

$1,454,228 2012

$34,924 8,832 16.627 143,678 1,056,566 26,227 126,943

$1,413,797 2013

$367,851 21,890 288,479 1,235,081 48,669 622,972 187,900

$2,772,842 2012

$356,984 8,832 16,627 266,806 1,226,802 46,291 609,651 153,609

$2,685,602 Additional information on the City's capital assets can be found in note 5 on page 44 of this report.

18

Long-term debt. At the end of the current fiscal year, the City had total debt outstanding of $1,583,004 which includes bonded debt of

$1,371,617.

City of Riverside's Long-Term Debt Governmental Activities Business Type Activities Total Revenue Bonds General Obligation Bonds Pension Obligation Bonds Certificates of Participation Notes Payable Loans Payable Capital Leases Lease Revenue Bonds Landfill Capping Arbitrage Liability Compensated Absences Judgment Claims liability Net OPEB Obligation Water Acquisition Rights Total 2013 15,314 122,005 158.,697 28,652 8,424 43,762 213761 10,000 31,569 12.537

$452,721 2012 16,107 127,480 207,278 4,000 5,220 21,674 27,542 10,133

$4 19.434 2013

$1,031,839 28,137 42,661 2,558 6,457 269 7,638 9,780 944

$1,130,283 2012 *

$1,063,853 29,680 44,141 1,332 6,695 190 7,497 7.663 947

$1,161,998 2013

$1,031,839 15.314 122,005 158.697 28,137 71,313 10,982 43,762 6,457 269 29,399 10,000 31,569 22,317 944

$1,583,004 2012 *

$1,063,853 16,107 127,480 207,278 29,680 48,141 6,552 6,695 190 29,171 27.542 17,796 947

$1,581,432

• Certain reclassifications have been made to prior year balances to conform with the current year's presentation.

The City's total debt increased by $1,572 or less than 1.0% during the current fiscal year. The net increase primarily resulted from the issuance of new debt, normal scheduled principal maturities, debt refundings, and an increase in claims and judgments payable.

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 $615,589 at June 30, 2013, which applies only to general obligation debt. At June 30, 2013, the City had $15,314 of general obligation debt, resulting in available legal debt capacity of $600,275.

Additional information on the City's long-term debt can be found in note 6 beginning on page 45 of this report.

19

Economic Factors and Next Year's Budget and Rates I-Unemployment in the City of Riverside is 9.7% as compared to 13.7% for the prior year.

Li The required employer contribution rates as a percentage of payroll for the City's retirement program will be changing effective July 1, 2013 as follows:

" Miscellaneous Plan -18.277% to 18.314%.

• Safety Plan - 25.091% to 26.894%.

At the time of budget preparation for fiscal year 2014, the economic outlook for the City was considered to be stable. The General Fund Budget for fiscal year 2014 of approximately $223 million was adopted as balanced. It represents an increase from the prior year of approximately 1%, largely related to an increase in pension costs.

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.

20

City of Riverside Statement of Not Position June 30, 2013 (amounts expressed in thousands)

Assets Cash and investments Receivables, net Inventory Prepaid items Deposits Dedvative instruments Internal balances Restricted assets:

Cash and cash equivalents Cash and investments at fiscal agent Other Advances to Successor Agency Land and improvements held for resale Regulatory assets Net pension asset Land and other capital assets not being depreciated Capital assets (net of accumulated depreciation)

Total assets Governmental Activities S

55,519 108,522 6,690 1,493 1.026 14,064 24,789 45.997 4,709 106.096 363,730 954,884 1687519 Business-type Activities 286.806 72,084 1,657 21,042 853 (14,064) 52,455 331.787 1.050 10.134 27,788 22.575 213.513 1.240,715 2.268.595 Total 342,325 180.606 8,547 22,535 853 1,026 52,455 356,576 1,050 56,131 4,709 27,788 128.671 577,243 2,195,599 3.956,114 Deferred Outflows of Resources Deferred changes in derivative values Deferred charge on refunding Total deterred outflows of resources Liabilities Accounts payable and other current liabilities Accrued interest payable Unearned revenue Deposits Dedvabve instruments Decommissioning liability Noncurrent liabilties:

Due within one year Due in more than one year Total liabilities Deferred Inflows of Resources Deferred changes in derivative values Deferred regulatory charges Total deferred inflows of resources Net Position Net investment in capital assets Restricted for:

Expendable:

Capital projects Debt service Economic development Landfill capping Public works Hoosing Programs and regulatory requirements Nonexpendable Unrestdcted Total net position The notes to the financial statements are an ir 14,364 19,808 34,172 5.399 20,645 26,044 19,763 40,453 60.216 33.039 32,096 3.415 12,402 4.695 2.765 10,861 4.130 19,339 31,613 76.167 79,893 76,300 372.828 1,053,983 524,070 1,289,456 65,135 15.817 7,460 14,991 50,952 76,167 156,193 1.426.811 1,813,526 1,026 1,026 M1,000 10,000 1,026 10,000 11,026 1,083,485 609,691 1,693.176 3,504 14,631 14.98g 46.150 1,441 17,989 1,182,186 rtegral pay of this statement.

55,359 1,185 12,524 330,833 1,009,592 3.504 55,359 14,631 1,185 14,986 46,150 12,524 1,441 348.822 2,191,778 21

City of Riverside Statement of Activities For the fiscal year ended June 30, 2013 (amounts expressed In thousands)

Net (Expense) Revenue and Changes In Net Position Program Revenues Indirect Expenses Expenses Allocation Operating Charges for Grants and Services Contributions Capital Grants and Contributions Functions/Programs Governmental activities:

General government Public safety Highways and streets Culture and recreation Interest on long-term debt Total governmental activities Business type activities:

Electric Water Sewer Refuse Airport Transportation Public parking Total business type activities Total 54,808 147,652 35,072 40,077 16,627 294,236 292,175 58,768 43,945 20,581 2,029 3,745 5,051 426,294 720,530 (12,442) 6,296 3,480 2,666 13,338 7,793 15,825 5,237 6,789 10,071 840 3,785 454 4,110 24,628 3,010 Governmental Activities (21,785)

(131,974) 2,741 (30,711)

(16,627)

(198,356)

Business type Activities 42,193 21,485 32,202 Total (21,785)

(131,974) 2,741 (30,711)

(16,627)

(198,356) 60,738 14,003 1,057 248 129 (203)

(274) 75,698 (122,658) 347,933 68,489 43,772 20,829 1,396 344 4,777 487,540 529,733 4,980 4,282 1,230 2,718 2,718 24,203 762 480 11,734 43,936 60,738 14,003 1,057 248 129 (203)

(274) 75,698 75,698 (198,356)

General revenues:

Taxes:

Sales Property Utility users Franchise Other Intergovernmental, unrestricted Investment income Miscellaneous Subtotal Transfers, net Total general revenues and transfers Extraordinary item - power plant closure Change in net position Net position - beginning, as restated Net position - ending 50,222 52,904 28,206 4,959 3,703 337 2,786 9,208 152,325 42,262 194,587 (3,769) 1,185,955 1,182,186 4,744 5,767 10,511 (42,262)

(31,751)

(41,259) 2,688 1,006,904 1,009,592 50,222 52,904 28,206 4,959 3,703 337 7,530 14,975 162,836 162,836 (41,259)

(1.081) 2,192,859 2,191,778 The notes to the financial statements are an integral part of this statement.

22

City of Riverside Balance Sheet Governmental Funds June 30, 2013 (amounts expressed in thousands)

Assets Cash and investments Cash and investments at fiscal agent Receivables (net of allowance for uncollectibles)

Interest Property taxes Sales tax Utility billed Accounts Intergovernmental Notes Prepaid items Due from other funds Advances to other funds Advances to Successor Agency Land & improvements held for resale Total assets Liabilities Accounts payable Accrued payroll Retainage payable Intergovernmental Unearned revenue Deposits Due to other funds Advances from other funds Total liabilities Other Total Governmental Governmental General Fund Capital Outlay Funds Funds 26,980 24,330 51,310 4,116 5,756 14,917 24,789 49 94 133 276 6,909 6,909 12,065 12,065 1,173 1,173 9,965 1,000 2

10,967 4,647 35,471 3,812 43,930 33,045 33,045 1,491 2

1,493 21,879 21,879 24,250 24,250 680 39,739 40,419 4,709 4,709 114,204 42,321 120,689 277,214 7,710 8,043 3,163 18,916 10,878 25 10,903 114 1,863 33 2,010 195 195 313 4,382 4,695 10,841 20 10,861 20,065 246 20,311 258 12,038 12,296 30,309 34,353 15,525 80,187 6,804 6,536 34,371 47,711 6,804 6,536 34,371 47,711 Deferred Inflows of Resources Unavailable revenue Total deferred inflows of resources Fund Balances Nonspendable:

Inventories, prepaids and noncurrent receivables Advances Permanent fund principal Restricted for:

Housing and redevelopment Debt service Transportation and public works Other purposes Assigned to:

General government Public safety Highways and streets Culture and recreation Continuing projects Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances 1,491 24,930 1,792 404 2,300 868 1,432 1,441 26,410 25,884 15,055 2,003 1,491 24,930 1,441 26,410 27,676 16,487 2,407 2,300 868 1,216 1.216 1,671 1,671 4,656 4,656 37,763 37,763 77,091 1,432 70,793 149,316 114,204 42,321 120,689 277,214 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 POSITION June 30, 2013 (amounts expressed in thousands)

Total fund balances - governmental funds

$149,316 Amounts reported for governmental activities in the Statement of Net Position 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 1,315,401 The net pension asset is not an available resource and, therefore, is not reported in the funds.

104,651 Deferred refunding charges are not available resources and, therefore, are not reported in the funds.

5,399 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds.

47,711 Accrued interest payable for the current portion of interest due on various debt issues has not been reported in the governmental funds.

(3,415)

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

$ (178,380)

Certificates of participation payable (159,015)

Capital leases payable (8,424)

Loan payable (28,652)

Bond premiums (2,383)

Net OPEB obligation (11,957)

Compensated absences (21,269)

Judgment payable (10,000)

(420,080)

The City uses derivative instruments to hedge its exposure to changing interest rate!

through the use of interest rate swaps. The following related items have been reflected in the Statement of Net Position.

Net fair value of interest rate swaps (18,313)

Deferred amount related to the hedgeable portion of the derivative instrumen 13,338 (4,975)

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 Position.

(11,822)

Net position of governmental activities

$1,182,186 24

City of Riverside Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Rental and investment income Miscellaneous Total revenues Other Total Governmental Governmental General Fund Capital Outlay Funds Funds 139,994 139,994 7,395 2,778 10,173 8,632 22,076 20,026 50,734 12,062 12,062 6,234 6,234 4,406 370 1,893 6,669 2,148 111 1,619 3,878 6,143 2,234 6,556 14,933 187,014 24,791 32,872 244,677 Expenditures Current:

General government Public safety Highways and streets Culture and recreation Capital outlay Debt service:

Principal Interest Bond issuance costs Payment to escrow account for advance refunding Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)

Transfers in Transfers out Issuance of long term debt Other financing source - bond premium Capital lease proceeds Sales of capital assets Payment to escrow account for advance refunding Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending 11,841 145,545 16,294 32,450 2,942 3,872 4,745 164 17,124 66,257 41,451 3,555 6,781 8,335 94 255 232 3,521 257,398 66,512 41,548 (70,384)

(41,721)

(8,676) 15,713 150,290 16,294 32,614 86,323 45,006 15,116 581 3,521 365,458 (120,781) 56,572 (14,178) 97,180 2,573 7,203 82 (43,591) 105,841 (14,940) 164,256 149,316 44,115 (8,897) 30,940 (201) 25,000 12,457 (5,080) 41,240 2,573 218 6,985 82 (43,591) 73,225 24,799 7,817 2,841 (16,922)

(859) 74,250 18,354 71,652 77,091 1,432 70,793 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, 2013 (amounts expressed in thousands)

Net change in fund balances-total governmental funds

($14,940)

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 79,698 Depreciation expense (39,731) 39,967 The net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to increase net position.

6,940 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.

1,626 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.

(4,054)

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 position. Also, governmental funds immediately report the effect of 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

$ 45,006 Debt refunding 47,112 Judgment (10,000)

Other post-employment benefit liabilities (2,290)

Compensated absences (89)

Interest (277)

Premiums on the issuance of long-term debt (2,573)

Proceeds from long-term debt (104,383)

(27,494)

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.

(5,814)

Change in net position of governmental activities (3,769)

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, 2013 (amounts expressed in thousands)

Budgeted Amounts Original Final Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Rental and investment income Miscellaneous 137,263 7,456 1,220 11,749 4,955 4,749 1,783 9,445 137,263 7,456 16,412 11,836 4,955 4,893 1,783 10,156 Actual Amounts 139,994 7,395 8,632 12,062 6,234 -

4,406 2,148 6,143 Variance with Final Budget 2,731 (61)

(7,780) 226 1,279 (487) 365 (4,013)

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

Police Fire Animal regulation Building and zoning inspection Street lighting Total public safety Highways and streets 81,038 43,524 3,366 2,271 4,511 134,710 92,651 46,799 3,467 2,271 4,511 149,699 88,643 46,787 3,418 2,124 4,573 145,545 4,008 12 49 147 (62) 4,154 18,952 20,472 16,294 4,178 Total revenues 178,620 194,754 187,014 (7,740)

Culture and recreation 31,433 35,775 32,450 3,325 153 4,481 2,942 1,539 Expenditures General government:

Mayor Council Manager Attorney Clerk Community Development Human Resources General Services Finance Information System Subtotal Allocated expenditures Total general government Capital Outlay 849 1,330 7,276 3,826 1,157 10,273 2,881 8,172 7,474 10,818 1,068 1,337 7,467 3,996 1,417 10,861 3,309 9,269 7,529 14,892 1,019 1,231 6,959 3,993 1,285 9,570 2,697 7,692 7,375 11,686 49 106 508 3

132 1,291 612 1,577 154 3,206 Debt service:

Principal Interest Bond issuance costs Total debt service 8,006 7,044 15,050 41,896 7,184 168 49,248 41,451 6,781 94 48,326 445 403 74 922 Total expenditures Deficiency of revenue under expenditures 210,805 277,271 257,398 19,873 (32,185)

(82,517)

(70,384) 12,133 54,056 61,145 (43,549)

(43,549) 10,507 17,596 Other financing sources (uses) 53,507 7,638 Transfers in (41,666)

(1,883)

Transfers out Issuance of long term debt 11,841 5,755 Capital lease proceeds 40,891 (9,910) 240 31,221 41,340 (10,060) 32,590 6,985 240 71,095 continued Sale of capital assets Total other financing sources Net change in fund balances 44,115 (8,897) 30,940 6,985 82 73,225 2,841 74,250 2,775 1,163 (1,650)

(158) 2,130 14,263 The notes to the financial statements are an integral part of this statement.

(964)

(11,422)

Fund balance, beginning Fund balance, ending 74,250 74,250 73,286 62,828 77,091 14,263 27

City of Riverside Statement of Net Position Proprietary Funds June 30, 3013 (amounts expressed in thousands)

Business-type Activities - Enterprise Funds Assets Current assets:

Cash and investments Receivables (net allowances for uncollectibles)

Interest Utility billed Utility unbilled Accounts Intergovernmental Other Inventory Prepaid items Deposits Due from other funds Restricted assets:

Cash and cash equivalents:

Rate stabilization cash and cash equivalents Other restricted cash and cash equivalents Public benefit programs receivable Total current assets Electric Water Sewer Other Enterprise Funds Governmental Total Enterprise Activities-Internal Funds Service Funds Non-current assets:

Restricted assets:

Cash and investments at fiscal agent Regulatory assets Other receivables Advances to other funds Advances to Successor Agency Net pension asset Capital assets:

Land Intangible assets, non-depreciable Intangible assets, depreciable Accumulated depreciation - intangible assets, depreciable Buildings Accumulated depreciation - buildings Improvements other than buildings Accumulated depreciation - improvements other than buildings Machinery and equipment Accumulated depreciation - machinery and equipment Construction in progress Total non-current assets Total assets Deferred Outflows of Resources Deferred changes in derivative values Deferred charge on refunding Total deferred outflows of resources 197.823 1,089 16,953 14,917 6,987 2,098 507 21,016 853 1,765 25,591 922 290,521 211,072 18,281 5,742 11,954 7,683 10,651 292 (63) 22,009 (5,976) 822,335 (246.691) 30,786 (15,481) 53,502 926,096 1,216,617 17,371 11,917 29,288 73,081 384 4,479 3,476 1,507 776 3,330 19 756 12,197 87 2,456 1,597 150 659 1,350 7

6,935 11.036 25 1,033 699 1,897 815 1.185 1,585 24,921 20,689 10,541 4,348 3,330 1,857 21,042 853 2,521 3,705 286,806 7,708 128 95,644 6,935 45,520 1.050 431,998 11,056 36,474 9,359 4,209 47 50 60 6,690 25,072 1,523 6,670 5,143 10,996 10,841 353 (184) 18,192 (4,684) 526,924 (152,663) 12,930 (10,602) 95,643 1,079 7,581 4,392 3,290 2,698 191,523 (93,185) 99,122 (15,818) 10,745 (6,202) 6,905 2,188 21,259 35,508 (4,959) 26,886 (7,263) 20,065 (13,184) 331,787 27,788 6,670 7,581 10,134 22,575 42,636 21,492 645 (247) 267.232 (108,804) 1,475,267 (422,435) 74,526 (45,469) 4,767 5,578 1,445 2,084 (294) 9,583 (8,160) 10,175 85,093 460,686 385,961 556,330 422,435 615 149,385 88,020 1,860,763 15,003 97,379 2,292,761 26,059 2,437 19,808 8,728 20,645 11,165 40,453 Continued 28

City of Riverside Statement of Net Position Proprietary Funds June 30, 3013 (amounts expressed in thousands)

Business-type Activities - Enterprise Funds Liabilities Current liabilities:

Accounts payable Accrued payroll Relainage payable Unearned revenue Deposits Due to other funds Capital leases - current Water stock acquisitions - current Notes payable - current Landfill capping - current Claims and judgments - current Compensated absences - current Current liabilities payable from restricted assets:

Revenue bonds Accrued interest Total current liabilities Electric 15,917 1,122 190 3,371 637 35,248 3,598 20,685 5,970 86,738 562,934 7,413 1,913 11,781 76,167 23,729 761 4,928 269 689,895 776,633 Other Enterprise Total Enterprise Water Sewer Funds Funds 2,298 385 28 8,798 297 1,531 758 1,354 176 2,765 1

1,303 7

871 200 493 28,367 1,980 1,749 2,765 4,130 1,303 644 150 36,837 200 6,389 150 1,281 718 1,017 Non-current liabilities:

Revenue bonds Notes payable Capital leases Advances from other funds Decommissioning liability Derivative instruments Claims and judgments Water stock acquisitions Landfill capping Compensated absences Other postemployment benefits Other payables Total non-current liabilities Total liabilities 4,360 7,035 32,080 1,845 4,587 12,402 11,105 23,983 7,170 128,996 207,643 229,182 999,759 4,456 22,092 33,961 1

1,914 5,069 3,243 2,770 22,863 S-76,167 7,884 31,613 794 794 6,257 6,257 198 105 185 1,249 2,103 1,476 1,273 9,780 S-269 223,691 238,462 32,578 1,184,626 234,796 262,445 39,748 1,313,622 10,000 10,000 10,000 10,000 Governmental Activities-Internal Service Funds 925 90 2,786 19,337 249 23,387 1,439 12,232 243 580 14,494 37,881 Deferred Inflows of Resources Deferred regulatory charges Total deferred inflows of resources Net Position Net investment in capital assets Restricted for debt service Restricted for landfill capping Restricted for programs and regulatory requirements Unrestricted Total net position 201,765 16,354 244,937 5,479 107,033 33,526 9,457 2,287 780 241,696 69,996 18,651 469,272 322,699 159,990 55,956 1,185 490 57,631 609,691 55,359 1,185 12,524 330,833 1,009,592 3,213 (15,035)

(11,822)

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

29

City of Riverside Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

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

Charges for services Operating expenses:

Personnel services Contractual services Maintenance and operation General Materials and supplies Claims/Insurance Depreciation and amortization Total operating expenses Operating income (loss)

Non-operating revenues (expenses):

Operating grants Interest income Other Gain (loss) on retirement of capital assets Capital improvement fees Interest expense and fiscal charges Total non-operating revenues (expenses)

Income before capital contributions and transfers Cash capital contributions Noncash capital contributions Transfers in Transfers out Extraordinary item - power plant closure Change in net position Total net position - beginning Total net position - ending 347,933 68,489 43,772 27,346 487,540 21,239 38,261 6,630 177,461 11,055 941 1,476 28,728 264,552 83,381 11,871 2,507 8,771 12,617 795 632 12,698 49,891 18,598 10,322 1,634 7,375 6,806 3,400 462 6,788 36,787 6,985 1,172 (56)

(295) 1,065 (6,863)

(4,977) 2,008 165 8,357 5,404 6,942 4,345 1,321 363 3,576 30,308 (2,962) 2,718 3,060 3,487 584 503 609 191 (27,623)

(20,492) 62,889 3,557 1,423 33 (37,186)

(41,259)

(10,543) 479,815 469,272 (8,877)

(7,574) 11,024 4,097 185 33 (6,579) 8,760 313,939 322,699 949 (52)

(1,043) 2,581 (381) 1,242 2,277 (840) 2,298 55,333 57,631 68,811 16,175 200,549 34,823 6,457 2,933 51,790 381,538 106,002 2,718 4,744 4,989 428 1,065 (44,406)

(30,462) 75,540 9,061 1,608 2,343 (44,605)

(41,259) 2,688 1,006,904 1,009,592 249 (14) 4 3,866 121 2,405 1,963 211 17,907 545 27,018 (5,779)

(142) 97 (5,682)

(132)

(5,814)

(6,008)

(11,822) 2,173 157,817 159,990 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, 2013 (amounts expressed in thousands)

Electric Water Sewer Cash flows from operating activities:

Cash received from customers and users Cash paid to employees for services Cash paid to other suppliers of goods or services Payments related to extraordinary item Other receipts Net cash provided (used) by operating activities Cash flows from noncapital financing activities:

Transfers out Intra-equity property acquisition Advances from interfund receivables Payments on interfund receivables Advances to other funds Net cash (used) provided by noncapital financing activities Cash flows from capital arid related financing activities:

Purchase of capital assets Proceeds from the sale of capital assets Principal paid on long-term obligations Interest paid on long-term obligations Capital improvement fees Capital contributions Net cash (used) for capital and related financing activities Cash flows from investing activities:

Purchase (sales) of investments Income (Loss) from investments Net cash provided (used) by investing activities Net change in cash and cash equivalents 341,417 (37,180)

(205,555)

(3,707) 3,520 98,495 (37,186)

(437) 512 67,918 44,179 (11,369)

(8,337)

(26,742)

(13,990) 642 110 30,449 21,962 (6,579) 220 (187) 223 (61)

(37,111)

(6,546) 162 Governmental Other Total Activities-Enterprise Enterprise Internal Funds Funds Service Funds 26,014 479,528 21,410 (8,043)

(64,929)

(4,159)

(22,191)

(268,478)

(18,322)

(3,707) 4,147 8,419 (14)

(73) 150,833 (1,085) 2,277 (41,488) 220 441 441 (4)

(4)

(405)

(132) 451 638 1,874 (41,621) 502 (10,619)

(122,956)

(446) 3 919 4

(859)

(32,814)

(1,027)

(45,561)

(142) 1,065 762 11,516 (11,740)

(187,831)

(584)

(1,014)

(4) 4,269 182 (4) 3,255 182 (9,943)

(75,364)

(985) 14,833 647,011 5,194 4,890 571,647 4,209 continued (35,498) 646 (19,942)

(28,812) 4,193 (79,413)

(1,549) 2,691 1,142 (16,887) 351,972 335,085 (24,934)

(51,905) 270 (5,207)

(6,806)

(8,926)

(6,796) 1,065 6,561 (32,236)

(64,442) 535 399 1,183 934 1,183 (7,399)

(41,135) 113,260 166,946 105,861 125,811 Cash and cash equivalents, beginning (including $164,431 for Electric,

$49,333 for Water, $143,049 for Sewer and $8,892 for Other Enterprise Funds in restricted accounts.)

Cash and cash equivalents, ending (including $137,262 for Electric,

$32,780 for Water, $113,614 for Sewer and $1,185 for Other Enterprise Funds in restricted accounts.)

31

City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Other Enterprise Water Sewer Funds Electric Reconciliation of operating income (loss) to net cash provided Total Enterprise Funds 106,002 8,595 (3,707) continued Governmental Activities-Internal Service Funds (used) by operating activities:

Operating income (loss)

Other receipts (disbursements)

Payments related to extraordinary item Adjustments to reconcile operating income to net cash provided (used) by operating activities:

Depreciation and amortization Amortization of net pension asset Other regulatory assets (Increase) in utility billed receivables (Increase) in utility unbilled receivables (Increase) decrease in accounts receivable (Increase) in intergovernmental receivables Decrease in due from other funds (Increase) decrease in prepaid items (Increase) decrease in inventory (Increase) in regulatory assets Increase (decrease) in accounts payable Increase (decrease) in accrued payroll Increase (decrease) in retainage payable Increase (decrease) in other payables Increase in deposits (Decrease) in due to other funds Increase in claims and judgments Increase in decommissioning liability (Decrease) in landfill capping Net cash provided (used) by operating activities 83,381 3,520 (3,707) 28,728 426 (1,487)

(49)

(1,778) 674 (1,623) 512 (4,509)

(507)

(11,779) 2,862 (44)

(97)

(709) 223 18,598 642 12,698 184 (218)

(53)

(18)

(323) 220 4

(1,033) 5 (291) 34 6,985 110 6,788 118 407 (5)

(16) 5,708 1,526 341 (2,962) 4,323 3,576 79 (1,390)

(118)

(3,578)

(564) 799 (5,779)

(14) 51,790 807 (1,487)

(267)

(1,831)

(327)

(2,064) 732 (4,510)

(523)

(11,779) 3,959 923 (388) 431 257 545 45 171 97 176 (463) 578 (467) 4,026 4,458 (238) 98,495 30,449 21,962 (73) 4,458 (238) 150,833 (1,085)

Schedule of noncash investing, capital and financing activities:

Capital contributions - capital assets Borrowing under capital lease (Decrease) in fair value of investments Loss on power plant closure 1,423 1,659 (2,947)

(37,552) 185 1,608 1,659 (2,947)

(37,552)

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

32

City of Riverside Statement of Net Positionl(Deficit)

Fiduciary Funds June 30, 2013 (amounts expressed in thousands)

Successor Agency Private-Purpose Trust Fund 25,999 29,700 Agency Fund Assets Cash and investments Cash and investments at fiscal agent Receivables:

Interest Accounts Notes Capital lease receivable Deposits Property tax receivables Land & improvements held for resale Capital assets:

Land Equipment Accumulated depreciation - equipment Total assets Liabilities Accounts payable Retainage payable Accrued interest Advances from City of Riverside Bonds payable Notes payable Held for bond holders Total liabilities Deferred Inflows of Resources Deferred charge on refunding Total deferred inflows of resources Net Positionl(Deficit)

Held by Successor Agency Total net position/(deficit)

S 6,688 6,778 93 202 22,467 21,575 2

15,035 185 6

(6) 115,258 1,477 1,307 5,052 56,131 256,222 6,257 326,446 33 24 124 13,647 13,647 13,647 318 318 (211,506)

(211,506)

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

City of Riverside Statement of Changes in Net Positionl(Deficit)

Fiduciary Fund - Private-Purpose Trust Fund For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Additions Property tax revenue Rental and investment income Miscellaneous Total additions Successor Agency Private-Purpose Trust Fund 28,227 2,683 404 31,314 2,785 18,641 7,315 14,321 43,062 (11,748)

(199,758)

(211,506)

Deductions Professional services and other deductions Funds remitted to the county Redevelopment projects Interest expense Total deductions Change in Net Positionl(Deficit)

Net position/(deficit) - beginning, as restated Net position/(deficit) - ending 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, 2013 (amounts expressed in thousands)

1. Summary of Significant Accounting Policies The City of Riverside (City) was incorporated on October 11, 1883 as a Charter City and operates under a Council-Manager form of Government.

The more significant accounting policies reflected in the financial statements are summarized as follows:

A. Reporting Entity These financial statements present the City and its component units, entities for which the City is financially accountable. Blended component units are legally separate entities, but in substance are part of the City's operations and their data is combined with that of the City's. The City has no component units that meet the criteria for discrete presentation. All of the City's component units have a June 30 year end.

Blended Component Units Riverside Housing Authority (Housing Authority) was established in 2006 by the City. The Housing Authority's primary purpose is to provide safe and sanitary housing accommodations for persons with low or moderate income.

The Housing Authority's activity has been combined with that of the primary government because City Council members serve as the Housing Authority's commissioners and because the City is financially accountable and operationally responsible for all matters.

Riverside Public Financing Authority (Public Financing Authority) was organized in December 1987 by the City and the Redevelopment Agency.

Pursuant to Assembly Bill 1X 26 (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies were dissolved effective February 1, 2012. Subsequently, the City became the Successor Agency to the Redevelopment Agency. The Parking Authority of the City of Riverside was added as an additional member of the Public Financing Authority on August 14, 2012. The Public Financing Authority's activity has been combined with that of the primary government because City Council members serve as the Public Financing Authority's board members and because the Public Financing Authority exclusively provides financing assistance to the primary government.

The City is also financially accountable and operationally responsible for all matters.

Riverside Municipal Improvements Corporation (Municipal Improvements Corporation) was created in 1978 and operates under provisions of the Nonprofit Public Benefit Corporation Law of the State of California.

The Municipal Improvements Corporation's primary purpose is to provide financing assistance by obtaining land, property and equipment on behalf of the City. The activity of the Municipal Improvements Corporation has been combined with that of the primary government because three members of the City Council serve as the Municipal Improvements Corporation's directors and because the Municipal Improvements Corporation exists to serve exclusively the primary government. The City is financially accountable and operationally responsible for all matters.

Fiduciary Component Unit Successor Agency to the Redevelopment Agency of the City of Riverside (Successor Agency) is a separate legal entity, which was formed to hold the assets and liabilities 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 nature and significance of the relationship between the City and the Successor Agency is such that it would be misleading to exclude the Successor Agency from the City's financial statements. The Successor Agency is presented herein in the City's fiduciary funds as a private-purpose trust fund Complete financial statements are prepared for the Riverside Public Financing Authority and the Successor Agency to the Redevelopment Agency of the City of Riverside, which can be obtained from the City's Finance Department, 3900 Main Street, Riverside, California, 92522 or online at www. riversideca.gov.

B. Government-wide and Fund Financial Statements The government-wide financial statements report information on all of the nonfiduciary activities of the City and its component units. Interfund activity has been removed from these statements except for utility charges, as this would distort the presentation of function costs and program revenues.

Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business type activities, which rely to a significant extent on fees and charges for support.

The statement of net position presents financial information on all of the City's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

35

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues.

Direct expenses are those that are clearly identifiable with a specific function or segment.

Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Indirect expenses are allocated to the various functions based on a proportionate utilization of the services rendered. Such allocations consist of charges for accounting, human resources, information technology and other similar support services.

Separate financial statements are provided for governmental

funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements.

Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide, proprietary and private-purpose trust fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds report only assets and liabilities and therefore have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized 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 requirements have been met.

An allowance for doubtful accounts is maintained for the utility and other miscellaneous receivables.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues are considered to be available if they are generally collected within 60 days after year end, except for revenue associated neglected property abatement which is eleven (11) months and except for grant

revenue, including reimbursement received from Transportation Uniform Mitigation Fees, which is six (6) months and sales tax revenue which is seven (7) months, as described below. Grant revenue is recognized if received within six (6) months of year end to enable the matching of revenue with applicable expenditures. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.

However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

In 2004, the State temporarily began to exchange 25% of sales taxes for an equal amount of property taxes to securitize a short-term State bond issue.

The State bond issue will remain outstanding for an uncertain number of years, but the bonds are currently estimated to retire in 2016. These in-lieu sales taxes will be paid to the City by the State on a different calendar than sales taxes, which are paid monthly, three months in arrears. The vast majority of the in-lieu amount will be paid during the applicable fiscal year; however, the final payment of the in-lieu sales taxes will not be paid until the January following the end of the applicable fiscal year. Since 2004, the final "true-up" payment has been reported in the fiscal year that the revenue was earned and thus provides consistency in the reporting of sales tax revenue.

Property taxes, special assessments, sales taxes, franchise taxes, licenses, charges for services, amounts due from other governments and interest associated with the current fiscal period are all considered to be susceptible to accrual. Other revenue items such as fines and permits are considered to be measurable and available only when the government receives cash, and are therefore not susceptible to accrual.

The government reports the following major governmental funds:

The General fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Capital Outlay fund accounts for the construction and installation of street and highway capital improvements for the City, including improvements funded by the 1/2 % sales tax approved by Riverside County in 1988.

The government reports the following major proprietary funds:

The Electric fund accounts for the activities of the City's electric distribution operations.

36

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

The Water fund accounts for the activities of the City's water distribution operations.

The Sewer fund accounts for the activities of the City's sewer systems.

Additionally, the government reports the following fund types:

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

Fiduciary funds include private-purpose trust and agency funds.

The private-purpose trust fund accounts for assets and activities of the dissolved Redevelopment Agency, which is accounted for in the Successor Agency Trust. The agency fund is used to account for special assessments that service no-commitment debt.

The permanent fund is a governmental fund that is used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City's Library programs. Non-expendable net position on the Statement of Net Position includes $1 million of permanent fund principal which are considered nonexpendable.

Amounts reported as program revenues include 1) charges to customers for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments.

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

Proprietary funds distinguish operating revenues and expenses from non-operating items.

Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations.

The sewer fund also recognizes as operating revenue the portion of connection fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

D. Cash and Investments The City values its cash and investments in accordance with the provisions of Government Accounting Standards Board (GASB) Statement No. 31, "Accounting and Financial Reporting for Certain Investments and External Investment Pools (GASB 31)," which requires governmental entities, including governmental external investment pools, to report certain investments at fair value in the statement of net position/balance sheet and recognize the corresponding change in the fair value of investments in the year in which the change occurred. Fair value is determined using published market prices.

Cash accounts of all funds are pooled for investment purposes to enhance safety and liquidity while maximizing interest earnings. Investments are stated at fair value. All highly liquid investments (including restricted assets) with a maturity of 90 days or less when purchased are considered cash equivalents. Cash and investments held on behalf of proprietary funds by the City Treasurer are considered highly liquid and are classified as cash equivalents for the purpose of presentation in the Statement of Cash Flows.

E. Restricted Cash and Investments Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net position because their use is limited by applicable bond covenants. Restricted cash and investments also include cash set aside for nuclear decommissioning, public benefit programs, regulatory requirements and rate stabilization because their use is legally restricted to a specific purpose.

Unspent proceeds received from the City's landfill capping surcharge are also recorded as restricted assets.

F. Land and Improvements Held for Resale Land and improvements held for resale were generally acquired for future development projects. The properties are carried at the lower of cost or net realizable value.

G. Inventory Supplies are valued at cost using the average-cost method. Costs are charged to user departments when consumed rather than when purchased.

H. Prepaid Items Payments to vendors for services benefiting future periods are recorded as prepaid items and expenditures are recognized when items are consumed.

37

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

I. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets ( e.g., roads, bridges, sidewalks, right of way, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The government defines capital assets as assets with an initial, individual cost of more than five thousand dollars and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed.

Costs include: labor; materials; interest during construction; allocated indirect charges such as engineering, construction and transportation equipment, retirement plan contributions and other fringe benefits. Donated capital assets are recorded at estimated fair market value at the date of donation. Intangible assets that cost more than one hundred thousand dollars with useful lives of at least three years are capitalized and are recorded at cost. Donated intangible assets are recorded at estimated fair market value at the date of donation.

Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed for proprietary funds. For the year ended June 30, 2013, business-type activities capitalized net interest costs of $5,780 in the government-wide and fund financial statements. Total interest expense incurred by the business-type activities (and the enterprise funds on the proprietary funds statements) before capitalization was $50,170.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets other than land are depreciated using the straight-line method. Estimated useful lives used to compute depreciation are as follows:

City employees generally receive one day of sick leave for each month of employment with unlimited accumulation. Upon retirement or death, certain employees or their estates receive a percentage of unused sick leave paid in a lump sum based on longevity.

The General, Housing and Community Development Special Revenue, Electric and Water funds have been primarily used to liquidate such balances.

The liability associated with these benefits is reported in the government-wide statements. Vacation and sick leave of proprietary funds is recorded as an expense and as a liability of those funds as the benefits accrue to employees.

K. Derivative Instruments The City's derivative instruments are accounted for in accordance with Government Accounting Standards Board (GASB) Statement No. 53, "Accounting and Financial Reporting for Derivative Instruments" (GASB 53),

which requires the City to report its derivative instruments at fair value.

Changes in fair value for effective hedges that are achieved with derivative instruments are reported as deferrals in the statements of net position.

The City uses derivative instruments to hedge its e~posure to changing interest rates through the use of interest rate swaps. The City had debt that was layered with "synthetic fixed rate" swaps, which was refunded in 2008 and 2011.

At the time of the refunding, hedge accounting ceased to be applied. The balance of the deferral account for each swap is included as part of the deferred charge on refunding associated with the new bonds. The swaps were also employed as a hedge against the new debt.

Hedge accounting was applied to that portion of the hedging relationship, which was determined to be effective. The negative fair value of the interest rate swaps related to the new hedging relationship has been recorded and deferred on the statement of net position.

In 2012, the City also entered into an additional interest rate swap agreement, which has a positive fair value and is recorded and deferred on the statement of net position. See Note 10 for further discussion related to the City's interest rate swaps.

Various transactions permitted in the Utility's Power Resources Risk Management Policies may be considered derivatives, including energy and/or gas transactions for swaps, options, forward arrangements and congestion revenue rights. The City has determined that all of its contracts including congestion revenue rights fall under the scope of "normal purchases and normal sales" and are exempt from GASB 53.

Buildings and Improvements Improvements other than Buildings Intangibles - Depreciating Machinery and Equipment Infrastructure 30-50 years 20-99 years 3-5 years 3-15 years20-100 years J. Compensated Absences 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 unused vacation is paid in cash upon separation.

38

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 f-m~

nt vr eAr in fhk~ i

-4n L. Long-Term Obligations Long-Term Debt In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements, government fund types recognize bond issuance costs as expenditures during the current period.

The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuance are reported as other financing uses.

Decommissioning Federal regulations require the Electric Utility to provide for the future decommissioning of its ownership share of the nuclear units at San Onofre.

The Electric Utility has established trust accounts to accumulate resources for the decommissioning of the nuclear power plant and restoration of the beachfront at San Onofre. Based on the most recent site specific cost estimate as of July 2013, prepared by ABZ Incorporated, the Electric Utility has fully funded the SONGS nuclear decommissioning liability. With the recent retirement of SONGS units 2 and 3, there is much uncertainty as to future unknown costs to decommission SONGS. Although management believes the current cost estimate is the upper bound of decommissioning obligations, the Electric Utility has conservatively decided to continue to set aside $1,600 per year in an internally restricted cash reserve for unexpected costs not contemplated in the current estimates.

Increases to the funds held for the decommission liability are from amounts set aside and investment earnings. The investment earnings are included in investment income. These earnings, as well as amounts set aside, are reflected as decommissioning expense which is considered part of power supply costs. To date, the Electric Utility has set aside $76,035 in cash investments with the trustee and

$132 in an internally restricted decommissioning reserve as the Electric Utility's estimated share of the decommissioning cost of San Onofre, and these amounts are reflected as restricted assets and unrestricted cash and cash equivalents, respectively, on the Statements of Net Position. The Electric Utility's decommissioning liability is equivalent to the total funds accumulated and is reflected as a non-current liability. The plant site easement at San Onofre terminates May 2024.

The plant must be decommissioned and the site restored by the time the easement terminates.

M. Claims and Judgments Payable Claims and judgments payable are recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Such claims, including an estimate for claims incurred but not reported at year end, are recorded as liabilities in the self-insurance internal service trust fund. As of June 30, 2013, the City had incurred a $10 million-liability related to a judgment, which is reflected as a liability on the government-wide statements and is more fully described in Note 8.

N. Fund Equity In the fund financial statements, governmental fund balance is made up of the following components:

" Nonspendable fund balance is the portion of fund balance that cannot be spent due to form. Examples include inventories, prepaid amounts, long-term loans, notes receivable, and property held for resale, unless the proceeds are restricted, committed or assigned. Also, amounts that must be maintained intact legally or contractually, such as the principal of a permanent fund are reported within the nonspendable category.

• Restricted fund balance is the portion of fund balance that is subject to externally enforceable limitations by law, enabling legislation or limitations imposed by creditors or grantors.

" Committed fund balance is the portion of fund balance that can only be used for specific purposes due to formal action of the City Council through adoption of a resolution prior to the end of the fiscal year.

Once adopted, the limitation imposed by resolution remains in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation. No amounts have been reported within this category of fund balance.

" Assigned fund balance reflects the City's intended use of resources.

Intent can be expressed by the City Council or by an official to which the City Council delegates the authority. On February 22, 2011, the City Council approved a policy whereby the authority to assign fund balance was delegated to the City's chief financial officer.

39

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

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

When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned or unassigned) fund balances are available, the City's policy is to use restricted amounts before unrestricted amounts. Within unrestricted resources, committed resources are used first followed by assigned resources, and finally unassigned resources.

0. Net Position Net position represents the difference between assets and deferred outflows less liabilities and deferred inflows.

Net position invested in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the related acquisition, construction or improvement of those assets excluding unspent debt proceeds. A portion of net position is reported as restricted when there are limitations imposed on their use either through legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Restricted resources are used first to fund appropriations.

P. Interfund Transactions Interfund transactions are accounted for as revenues and expenditures or expenses. Transactions, which constitute reimbursements, are eliminated in the reimbursed fund and accounted for as expenditures or expenses in the fund to which the transaction is applicable.

During the year, transactions occur between individual funds for goods provided or services rendered.

Related receivables and payables are classified as "due from/to other funds" on the accompanying fund level statements. The noncurrent portion of long-term interfund loans receivable are reported as advances and, for governmental fund types, are equally offset by a fund balance reserve to indicate that the receivable does not constitute available expendable financial resources.

Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances".

Q. Unearned Revenue Unearned revenues arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to meeting all eligibility requirements.

In subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the resources, revenue is recognized.

R. Unavailable Revenue Unavailable revenue arises only under a modified accrual basis of accounting.

Accordingly, unavailable revenue is reported only in the governmental funds balance sheet.

These amounts are deferred and recognized as an inflow of resources (revenue) in the period that the amounts become available.

S. Deferred outflows and deferred inflows of resources When applicable, the statement of net position and the balance sheet will report a separate section for deferred outflows of resources.

Deferred outflows of resources represent outflows of resources (consumption of net position) that apply to future periods and that, therefore will not be recognized as an expense or expenditure until that time.

When applicable, the statement of net position and the balance sheet will report a separate section for deferred inflows of resources. Deferred inflows of resources represent inflows of resources (acquisition of net position) that apply to future periods and that, therefore, are not recognized as an inflow of resources (revenue) until that time.

T. Regulatory Assets and Deferred Regulatory Charges In accordance with GASB Statement No. 62, enterprise funds that are used to account for rate-regulated activities are permitted to defer certain expenses and revenues that would otherwise be recognized when incurred, provided that the City is recovering or expects to recover or refund such amounts in rates charged to its customers. Accordingly, regulatory assets and/or deferred regulatory charges have been recorded in the Electric, Water, Sewer and Refuse funds.

U. Property Tax Calendar Under California law, general property taxes are assessed for up to 1% of the property's assessed value. General property taxes are collected by the counties along with other special district taxes and assessments and voter 40

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts exoressed in thousands) approved debt. General property tax revenues are collected and pooled by the county throughout the fiscal year and then allocated and paid to the county, cities and school districts based on complex formulas prescribed by State statutes.

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 is attached to the property. Property taxes are due in two installments. The first installment is due November 1 and is delinquent on December 10. The second installment is due February 1 and is delinquent on April 10. The City generally accrues only those taxes, which are received within sixty days after the year-end. In the current year, the City initiated the process to participate in the Teeter plan under the California Revenue and Taxation Code, which provided for a one-time catch up payment for all outstanding delinquent property taxes. The catch-up payment is approximately $2 million, which is expected to be received in October 2013. Due to the unusual circumstances associated with the conversion to the Teeter plan, the availability period has been extended to include the revenue associated with the one-time catch up payment for delinquent property taxes. Under the Teeter plan, the County of Riverside has responsibility for the collection of delinquent taxes and the City receives 100% of the levy.

V. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenditures. Specifically, the City has made certain estimates and assumptions relating to the revenues due and expenditures incurred through fiscal year end, collectability of its receivables, the valuation of property held for resale, the useful lives of capital assets, and the ultimate outcome of claims and judgments.

Actual results may differ from those estimates and assumptions.

2. Legal Compliance - Budgets Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America.

Annual appropriated budgets are adopted for all departments within the general, special revenue and capital project funds. Formal budgets are not employed for debt service funds because debt indenture provisions specify payments. The permanent fund is not budgeted.

During the period December through February of each fiscal year, department heads prepare estimates of required appropriations for the following fiscal year.

These estimates are compiled into a proposed operating budget that includes a summary of proposed expenditures and financial resources and historical data for the preceding fiscal year. The operating budget is presented by the City Manager to the City Council for review. Public hearings are conducted to obtain citizen comments. The City Council generally adopts the budget during one of its June meetings. The City Manager is legally authorized to transfer budgeted amounts between divisions and accounts within the same department.

Transfer of appropriations between departments or funds and increased appropriations must be authorized by the City Council. Expenditures may not legally exceed budgeted appropriations at the departmental level within a fund.

All appropriations shall lapse at the end of the fiscal year to the extent they have not been expended or lawfully encumbered, except for appropriations for capital projects which shall continue to their completion.

3. Cash and Investments Cash and investments at fiscal year-end consist of the following:

Investments Investments at fiscal agent Cash on hand and deposits with financial institutions Non-negotiable certificates of deposit The amounts are reflected in the statements of net government-wide and fiduciary fund financial statements:

Cash and investments Restricted cash and cash equivalents Restricted cash and investments at fiscal agent Total per statement of net position Fiduciary fund cash and investments

$ 426,049 382,598 808,647 466 11,408

$ 820.521 position of the

$ 342,325 52,455 356,576 751,356 69,165

$ 820-521 The City follows the practice of pooling cash and investments of all funds except for funds required to be held by outside fiscal agents under the provisions of bond indentures, which are administered by outside agencies.

Interest income earned on pooled cash and investments is allocated monthly to funds based on the beginning and month-end balances. Interest income from cash and investments held at fiscal agents is credited directly to the 41

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands) related account. Bank deposits are covered by federal depository insurance for the first $250 or by collateral held in the pledging bank's trust department in the name of the City.

Authorized Investments Under provisions of the City's investment policy, and in accordance with California Government Code Section 53601, the City Treasurer may invest or deposit in the following types of investments:

Money Market Funds Securities of the U.S. Government and its sponsored agencies Corporate Medium-Term Notes Local Agency Investment Fund (State Pool)

Negotiable Certificates of Deposit Repurchase Agreements Reverse Repurchase Agreements Bankers Acceptances Commercial Paper of "prime" quality Local Agency Bonds Max Maturity N/A 5 Years 5 Years N/A 5 Years 1 Year 90 Days 180 Days 270 Days N/A Max % of Portfolio 20%

N/A 30%

100%

30%

N/A 20%

40%

25%

N/A Commercial Paper rated AA or higher at the time of purchase Investments in money market funds rated in the single highest classification, except for certain debt proceeds which have no minimum rating requirement Municipal obligations rated Aaa/AAA or general obligations of states with ratings of at least A2/A or higher by both Moody's and S&P Investment Agreements No maximum percentage of the related debt issue or maximum investment in one issuer is specified.

Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City's investment policy requires that the interest rate risk exposure be managed by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City's investments (including investments held by fiscal agent) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity:

Investments in Corporate Medium Term Notes may be invested in securities rated A or better by Moody's or Standard and Poor's rating services and no more than 15% of the market value of the portfolio may be invested in one corporation.

The City's investment policy provides two exceptions to the above; one is for investments authorized by debt agreements (described below) and the other for funds reserved in the San Onofre Nuclear Generating Station Decommissioning Account for which the five-year maturity limitation may be extended to the term of the operating license.

Investments Authorized by Debt Agqreements Provisions of debt agreements, rather than the general provisions of the California Government Code or the City's investment policy, govern investments of debt proceeds held by bond fiscal agents.

Permitted investments are specified in related trust agreements and include the following:

Securities of the U.S. Government and its sponsored agencies Bankers' Acceptances rated in the single highest classification Remaining Maturity (in Months) 12 Months 13 to 24 25 to 60 More than Total or Less Months Months 60 Months Investment Type Money Market Funds Federal Agency Securities Corp. Medium Term Notes State Investment Pool Negotiable CDs Held by Fiscal Agent Money Market Funds State Investment Pool Investment Contracts Commercial Paper Fed. Agency Securities Corp. Med. Term Notes Total

$ 60,975 193,763 60,487 99,255 11,569

$ 60,975 33,354 10,391 99,255 5,150 17,213 17,213 23,779 23,779 155,578 119,211 103,246 103,246 62,199 1,787 20,583 S808.647

$474361 18,399 18,005 3,725 24,173

$64-302 142,010 32,091 2,694 1,433 60,412 20 583

$259.223 10,761

$_1061 The City assumes that callable investments will not be called.

42

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Disclosures Relatinq to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.

This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

Presented below is the actual rating as of year-end for each investment type:

Ratings as of Year End Investment Type Money Market Funds Federal Agency Securities Corporate Medium Term Notes State Investment Pool Negotiable CDs Held by Fiscal Agent Money Market Funds State Investment Pool Investment Contracts Commercial Paper Federal Agency Securities Corporate Medium Term Notes Total Total

$ 60,975 193,763 60,487 99,255 11,569 17,213 23,780 155,578 103,246 62,198 20,583

$808.647 AAA 2,587 193,763 11,719 62,198 AA A

Unrated

$ 1,283 49,933

$57,105 10,554 99,255 11,569 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.

Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio).

The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

4. Capital Lease Receivable The former Redevelopment Agency had a direct financing lease arrangement with the State of California (the State) for a twelve-story office building, which was transferred to the Successor Agency. The lease term is for thirty years 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 owed on the related lease revenue bonds issued by the former Redevelopment Agency for the purchase and renovation of the building. The future minimum lease payments to be received are as follows:

5,494 23,780 155,578 103,246 10,444 10,139 Concentration on Credit Risk The investment policy of the City contains no limitations on the amount that 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, and external investment pools) that represent 5% or more of total City investments are as follows:

Issuer US Bank Deutsche Bank Securities Inc.

Investment Type Commercial Paper Investment Contract Reported Amount

$103,246

$111,671 2014 2015 2016 2017 2018 Thereafter Total Due Less: amount applicable to interest Total capital lease receivable

$ 2,473 2,507 2,533 2,561 2,598 19,068 31,740 (1 0,165)

Custodial Credit Risk 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-43

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 rnmn.rIf e -vnroce in th-,Vnrcn*et F_

5. Capital Assets The following is a summary of changes in year ended June 30, 2013.

the capital assets during the fiscal Governmental activities:

Capital assets, not depreciated:

Land Construction in progress Total capital assets not depreciated Capital assets being depreciated:

Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for:

Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Beginning Balance

$ 322,060 26,666 348,726 Deletions/

Additions Transfers Ending Balance 325,215 38,515 363,730

$ 3,460 46,524 49,984 (305)

(34.675)

(34,980) 169,099 11,238 180,337 227,551 78,878 876,512 22,508 4,328 34 188 (38)

(3,424) 250,021 79,782 910,700 Business type activities:

Capital assets, not depreciated:

Land Intangibles, non-depreciable Improvements, non-depreciable Construction in progress Total capital assets not depreciated Capital assets being depreciated:

Buildings Improvements other than buildings Intangibles, depreciable Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for:

Buildings Improvements other than buildings Intangibles, depreciable Machinery and equipment Total accumulated depreciation Total capital assets being depreciated, net Nuclear fuel, at amortized cost Business type activities capital assets, net Beginning Balance 34,924 16,128 14,641 126,943 192,636 Additions 7,712 5,364 115,863 128,939 Deletions/

Transfers (14,641)

(93.421)

(108,062) 1,352,040 72262 (3462) 1,420,840 Ending Balance 42,636 21,492 149,385 213,513 246,608 20,652 (28) 267,232 1,500,804 64,814 (90,351) 1,475,267 645 645 67,066 8,419 (959) 74,526 1,815,123 93,885 (91,338) 1,817,670 (102,930)

(5,899) 25 (108,804)

(458,879)

(39,923) 76,367 (422,435)

(146)

(101)

(247)

(40,839)

(5,461) 831 (45,469)

(602,794)

(51,384) 77.22 (5762955) 1,212,329 42,501 (14,115) 1,240,715 (45,971)

(4,315)

(50,286)

(57,315)

(58,814)

(266.861)

(428.961)

(10,495)

(4,599)

(20.867)

(40.276) 38 3,243 3,281 (67,772)

(60,170)

(287,728)

(465.956) 923,079 31,986 (181) 954,884

$1.271.80_5

$81.970 1.318.614 8,832 1,318 (10,150)

$1.413.797

$172-758

$1237

$1.454.228 Depreciation expense was charged to various functions as follows:

Governmental activities:

General government Public safety Highways and streets, including depreciation of general infrastructure assets Culture and recreation Total depreciation expense - governmental activities

$ 4,231 3,658 22,258 10,129

$4O276 44

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Business type activities:

Electric Water Sewer Refuse Special Transportation Airport Public Parking Total depreciation expense - business type activities Business-type activities:

$28,728 12,698 6,788 1,126 582 661 801

$51.84 Revenue Bonds Loan Payable Notes Payable Capital Leases Landfill Capping Arbitrage Liability Water Stock Acquisition Rights Compensated absences Net OPEB Obligation Total Beginning Balance*

$1,063,853 44,141 29,680 1,332 6,695 190 947 7,497 Additions Reductions

$32,014 1,480 1,543 1,659 433 238 79 Ending Balance

$1,031,839 42,661 28,137 2,558 6,457 269 944 7,638 Due Within One Year

$32,080 35,248 1,589 644 200 150 6,389

$76.30~

6. Long-Term Obligations Chanqes in Long-Term Obligations: Below is a summary of changes in long-term obligations during the fiscal year:

Governmental Activities:

6,492 3

6,351 General Obligation Bonds Pension Obligation Bonds Certificates of Participation Capital Leases Lease Revenue Bonds Loan Payable Compensated Absences Claims Liability Judgment Net OPEB Obligation Total Beginning Balance*

Additions

$ 16,107 127,480 30,94C S

Due Ending Within Balance One Year Reductions 793

$15,314 840 0

36,415 122,005 37,170 48,581 158,697 3,670 3

3,999 8,424 1,248 7,663 2,7 761 9,8

$lA-iS9B

$11,108

$4Z23

$1130-283

• Beginning balances have been restated to include compensated absences and to exclude the unamortized balances of deferred refunding charges that have been reclassified as deferred outflows of resources.

The following debt has been issued for the purpose of generating capital resources for use in acquiring or constructing municipal facilities or infrastructure projects.

Long-Term Obligations at June 30, 2013:

207,278 5,220 7,20:

43,813 4,000 25,000 51 43,762 348 28,652 21,674 27,542 12,437 20,897 10,000 12,350 16,870 21,761 31,569 10,000 1,295 602 12,398 19,337 3,333 Principal Outstanding Revenue Bonds:

Electric 10,13 3,26

$419.43

$153,559 865 12,537 S4_

SZT$21

• Beginning balances have been restated to exclude the unamortized balances of deferred refunding charges that have been reclassified as deferred outflows of resources.

$75,405 2003 Electric Revenue Bonds; 2.0% to 5.0%,

due in annual installments from $1,035 to $8,535 through October 1, 2013.

$27,500 2004 Electric Revenue Bonds; Series A fixed rate bonds, 4.0% to 5.5%, due in annual installments from $2,615 to $3,695 through October 1, 2014.

$141,840 2008 Electric Refunding/Revenue Bonds; Series A and C. The bonds were issued at a variable rate; however the City entered into an agreement to convert to a fixed rate of 3.1% for the Series A bonds

$6,880 6,340 45

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands) and 3.2% for the C bonds. For information on the swap agreements see note 9. Bonds are due in annual installments from $1,325 to $8,560 through October 1, 2035.

$209,740 2008 Electric Revenue Bonds; Series D fixed rate bonds, 3.6% to 5.0%, due in annual installments from $125 to $24,960 through October 1, 2038.

$34,920 2009 Electric Refunding/Revenue Bonds; Series A fixed rate bonds, 0.35% to 5.0%, due in annual installments from $450 to $6,105 through October 1, 2018. The bonds refunded the 1998 series and partially refunded the 2001 series.

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

$56,450 2011 Electric Revenue Refunding Bonds; Series A. The bonds were issued at a variable rate; however the City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements see note 9. Bonds are due in annual installments from

$725 to $5,175 through October 1, 2035.

Subtotal Add: Unamortized bond premium Water

$58,235 2008 Water Revenue Bonds; Series B fixed rate bonds, 4.0% to 5.0%, due in annual installments from $1,210 to $7,505 through October 1, 2038.

$31,895 2009 Water Refunding/Revenue Bonds; Series A fixed rate bonds, 0.65% to 5.0%, due in annual installments from $500 to $3,835 through October 1, 2020. The bonds refunded the 1998 series and partially refunded the 2001 series.

138,265 209,740 21,075 140,380

$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.

$59,000 2011 Water Refunding/Revenue Bonds; Series A. The bonds were issued at a variable rate; however the City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements see note 9. Bonds are due in annual installments from

$800 to $3,950 through October 1, 2035.

Subtotal Add: Unamortized bond premium Sewer

$240,910 2009 Sewer Revenue Bonds; Series A & B fixed rate bonds, 3.65% to 5.0%, due in annual installments from $5,555 to $13,350 through August 1, 2039.

Add: Unamortized bond premium Total Revenue Bonds 67,790 208,115 3,888

$212,003

$234,150 2,067

$236,217

$1031839 576,430 7,189

$583,619 Remaining revenue bond debt service payments will be made from revenues of the Electric, Water and Sewer Enterprise funds.

Annual debt service requirements to maturity are as follows:

Electric Utility Fund Water Utility Fund Fiscal Year Principal

$58,235 24,715 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 2039-2041 Premium Total

$ 20,685 14,480 15,415 12,745 13,170 73,335 88,305 108,250 133,575 96,470 7 189 Interest

$ 24,543 23,745 23,113 22,620 22,201 103,178 87,530 66,841 40,213 7,314

$ 45,228 38,225 38,528 35,365 35,371 176,513 175,835 175,091 173,788 103,784 7,189

$ 4,360 5,015 5,260 5,180 5,415 30,435 36,630 44,420 54,120 17,280 3,888 Total Principal Interest

$ 8,475 8,276 8,046 7,814 7,577 34,446 28,032 20,007 10,002 595 Total

$ 12,835 13,291 13,306 12,994 12,992 64,881 64,662 64,427 64,122 17,875 3,888 46

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Fiscal Year 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 2039-2040 Premium Total Sewer Utility Fund Principal Interest Total

$ 7,035

$ 10,436

$ 17,471 7,325 10,149 17,474 7,660 9,811 17,471 8,055 9,418 17,473 8,410 9,063 17,473 35,240 40,695 75,935 34,940 33,376 68,316 43,920 24,394 68,314 55,475 12,839 68,314 26,090 1,235 27,325 2,067 2,067

$236.217

$161.416

$39633 Pension Obligation Bonds:

Principal Outstanding

$89,540 California Statewide Community Development Authority (Public Safety) 2004 Taxable Pension Obligation Bond; 2.65% to 5.896%, due in annual installments from $1,125 to $10,715 through June 1, 2023.

$30,000 2005 Taxable Pension Obligation Bonds Series A; 3.85% to 4.78%, due in annual installments

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

$30,940 2013 Taxable Pension Obligation Refunding Bond Anticipation Notes; rate at June 30, 2013 was 0.65%, $30,940 due June 1, 2014.

$ 70,370 20,695 Principal Outstandinq General Obligation Bonds:

$20,000 Fire Facility Projects, Election of 2003 General Obligation Bond; 3.0% to 5.5%, due in annual installments from $410 to $1,740 through August 1, 2024.

Add: Unamortized bond premium Total General Obligation Bonds Total Pension Obligation Bonds

$122,005

$15,135 179

$15,314 Remaining pension obligation bond debt service payments will be made from unrestricted revenues of the General fund. Annual debt service requirements 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 to maturity are as follows:

Fiscal Year 2014 2015 2016 2017 2018 2019-2023 2024-2025 Premium Total Principal 840 900 965 1,040 1,110 6,900 3,380 179 EIi3I Interest 706 671 634 592 544 1,837 189 Total

$ 1,546 1,571 1,599 1,632 1,654 8,737 3,569 179

$20487 Fiscal Year 2014 2015 2016 2017 2018 2019-2023 Total Principal

$ 37,170 7,050 7,930 8,880 9,920 51,055

$122.0-05 Interest

$ 5,312 4,759 4,391 3,971 3,482 8 827

$30.742 Total

$ 42,482 11,809 12,321 12,851 13,402 59,882

$152.7-47 Certificates of Participation:

Principal Outstanding

$19,945 2006 Galleria at Tyler Public Improvements Certificates of Participation; 4.0% to 5.0%, due in annual installments from $435 to $1,270 through September 1, 2036.

$19,055 47

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

$128,300 2008 Riverside Renaissance Certificates of Participation; issued at a variable rate; however the City entered into an agreement to convert to a fixed rate of 3.4%. For information on the swap agreement see note 9. Due in annual installments from $2,900 to

$7,200 through March 1, 2037.

$20,660 2010 Recovery Zone Facility Hotel Project Certificates of Participation; 4.0% to 5.5%, due in annual installments from $415 to $1,410 through March 1,2040.

Principal Outstanding 119,300 Lease Revenue Bonds - Governmental Activities:

On August 15, 2012, the City issued the Series 2012A Lease Revenue Refunding Bonds in the amount of

$41,240. The bonds were issued to refinance the 2003 Certificates of Participation.

Interest on the bonds is payable semi-annually on May 1 and November 1 of each year, commencing May 1, 2013.

The rate of interest varies from 2% to 5% per annum depending on maturity date.

Principal is payable in annual installments ranging from

$1,295 to

$2,840 commencing November 1, 2013 and ending November 1, 2033.

The refunding transaction resulted in an economic gain of $2,455 and a reduction of $3,034 in future debt service payments.

Subtotal Less: Unamortized bond discount Total Certificates of Participation 159,015 (318)

$158.697

$41,240 Remaining certificates of participation debt service payments will be made from unrestricted revenues of the debt service fund. Annual debt service requirements to maturity are as follows:

Add: Unamortized bond premium 2,522 Total Lease Revenue Bonds - Governmental Activities Remaining lease revenue bond debt service payments will be made from unrestricted revenues of the debt service fund.

Annual debt service requirements to maturity are as follows:

Fiscal Year 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 2039-2040 Discount Total Principal

$ 3,670 4,210 4,445 4,580 4,720 26,505 31,830 38,455 37,850 2,750 (318)

$15.69 Interest 5,913 5,784 5,634 5,478 5,316 23,892 18,673 12,245 4,333 229

$8749 Total 9,583 9,994 10,079 10,058 10,036 50,397 50,503 50,700 42,183 2,979 (318)

$246.194 Fiscal Year 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 Premium Total Principal

$1,295 1,330 1,370 1,420 1,485 8,640 10,230 12,630 2,840 24522

$43-762 Interest

$ 1,775 1,743 1,702 1,653 1,588 6,715 4,518 1,921 57

$21.672 Total

$ 3,070 3,073 3,072 3,073 3,073 15,355 14,748 14,551 2,897 2,522 S65.4-34 48

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Principal Outstandinq Notes Payable - Enterprise Funds:

Principal Outstanding Loans Payable - Governmental Activities:

In March 2012 the City entered into a financing arrangement in the amount of $4,000 with Pinnacle Public Finance, Inc. for the construction of Ryan Bonaminio Park at the Tequesquite Arroyo. The debt will be paid with resources from the General Fund in semi-annual debt service payments of approximately

$468 per year over a 10 year period, which includes interest at an annualized rate of 3.05%.

On July 19, 2012, the City secured financing in the amount of $41,650 with BBVA Compass Bank for the renovation and expansion of the Riverside Convention Center. The financing consists of an initial 21-month variable rate interest only period during construction that has a swap transaction layered over the remaining 20-year amortization resulting in a "synthetic fixed" rate of 3.24% for 20 of the 22 years. At the end of the construction period, principal and interest are due on the first of each month, with equal payments each year of approximately $2,850. As of June 30, 2013, the City had borrowed $25,000.

Total Loans Payable - Governmental Activities Loan Payable - Electric Fund:

The City entered into the Clearwater Power Plant Purchase and Sale Agreement dated March 3, 2010 with the City of Corona for the acquisition of Clearwater Cogeneration Facility (Clearwater) located in Corona.

The total purchase price for Clearwater is $46,569, and will be funded through a series of semi-annual payments ranging from $1,158 to $2,664 through 2013, and $182 to $413 in 2014 and 2015. In addition, two payments of $36,406 and $7,367 are due in 2013 and 2015, respectively, and will be funded primarily from bond proceeds.

Sewer fund loan from State of California for Cogeneration project, 2.336%, payable in net annual installments of $339, beginning January 29, 2003 through January 29, 2021 Sewer fund loan from State of California for Headworks project, 1.803%, payable in net annual installments of

$477, beginning November 6, 1999 through November 6, 2018

$ 2,479

$ 3,652 2,695 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 through December 16, 2031 22,963 Total notes payable - Enterprise Funds 12_8_*Z Remaining notes payable debt service payments will be made from unrestricted revenues of the Sewer fund. Annual debt service requirements to maturity are as follows:

$2M652 Principal Outstanding

$42-661 Fiscal Year 2014 2015 2016 2017 2018 2019-2021 Total Fiscal Year 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2032 Total Principal 718 731 745 759 773 1,448

$5_ 174 Sewer Fund Interest

$ 99 86 72 58 44 49

$408 Public Parking Fund Principal Interest 871 876 905 842 940 807 977 770 1,014 733 5,695 3,039 6,892 1,842 S5,669 444

$22.96

$2-353a Total

$ 817 817 817 817 817 1,497

$5582 Total

$ 1,747 1,747 1,747 1,747 1,747 8,734 8,734 6113 49

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Principal Outstanding Contracts - Enterprise Funds:

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, 2013:

Water stock acquisition rights payable on demand to various water companies

$944 Governmental long-term obligations:

Certificates of Participation Total Capital Leases:

The City leases various equipment through capital leasing arrangements in the governmental and proprietary fund types. These activities are recorded for both governmental and business-type activities in the government-wide financial statements.

The assets and related obligations under leases in governmental funds are not recorded in the fund statements. For proprietary funds, the assets and their related liabilities are reported directly in the fund.

Amortization applicable to proprietary assets acquired through capital lease arrangements is included with depreciation for financial statement presentation.

The assets acquired through capital leases are as follows:

Enterprise funds:

Electric Sewer Total

$10.207

$10207

$22,369 2420,1

$42-511 The City has a number of debt issuances outstanding that are collateralized by the pledging of certain, revenues. The amount and term of the remainder of these commitments are indicated in the debt service to maturity tables presented in the accompanying notes. The purposes for which the proceeds of the related debt issuances were utilized are disclosed in the debt descriptions in the accompanying notes. For the current year, debt service payments as a percentage of the pledged gross revenue (or net of certain expenses where so required by the debt agreement) are indicated in the table below. The debt service coverage ratios also approximate the relationship of debt service to pledged revenue for the remainder of the term of the commitment.

Asset Buildings and improvements Equipment Subtotal Less: Accumulated depreciation Total Governmental Activities

$1,103 7,151 8,254 (2.476) 55 7-78 Business-Type Activities 4,423 4,423 (1.173)

$3-250 The future minimum lease obligations as of June 30, 2013 were as follows:

Description of Pledged Revenue Electric revenues Water revenues Sewer revenues Annual Amount of Pledged Revenue (net of expenses, where required)

$121,190 36,761 22,945*

Annual Debt Service Payments (of all debt secured by this revenue) 44,426 14,095 18,356 Debt Service Coverage Ratio for FYE 6/30/13 2.73 2.61 1.25 Years Ending June 30, 2014 2015 2016 2017 2018 Thereafter Copiers Total Minimum lease payments Less: Amount representing interest (rates ranging from 1.6% to 9%)

Total capital lease payable Governmental Activities

$1,685 1,685 1,685 1,062 1,062 1,714 80 8,973 (549)

$8.424 Business-type Activities

$ 700 687 324 259 259 505 8

2,742 (184)

S2-55a

• Includes $6,935 of cash set-aside in a rate stabilization account in accordance with applicable bond covenants.

There are also a number of limitations and restrictions contained in Assessment Bond indentures. The City believes they are in compliance with all significant limitations and restrictions.

Defeasance of Debt:

In prior years, the City defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old debt issues. Accordingly, the trust account assets and 50

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands) liability for the defeased debt issues are not included in the City's financial statements.

At June 30, 2013, the following amounts are considered defeased:

All funds of the City participate in the Risk Management program and make payments to the Internal Service Funds based on actuarial estimates of the amounts needed to fund prior and current year claims and incidents that have been incurred but not reported. Interfund premiums are accounted for as quasi - external transactions and are therefore recorded as revenues of the Internal Service funds in the fund financial statements.

Changes in the self-insurance trust fund's claims liability amounts are:

2003 Certificates of Participation

$42,660 Landfill Capping:

State and Federal laws and regulations require the City to place a final cover 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, comprised of approximately 120 acres, operated as a "Class II Sanitary Landfill" until its closure in 1985. During its operation, the landfill did not accept hazardous waste and no clean up and abatement or cease and desist orders have been issued to the City. The capacity used at June 30, 2013 was 100%. The remaining post closure period is currently 20 years.

The estimated costs as determined by an independent consultant and updated by the City's Engineering Department are associated with flood control upgrades, remediation of possible ground water contamination and control of methane gas. All potential costs have been recognized in the financial statements. However, there is the potential for these estimates to change due to inflation, deflation, technology, or change in laws or regulations.

The City is recovering such costs in rates charged to its customers.

The portion of costs to be recovered through future rates is classified as a regulatory asset and will be amortized over future periods.

7. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

Property insurance coverage has a limit of

$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

$100 for flood. Workers' compensation insurance coverage has a limit of

$25,000, with a self-insured retention of $3,000 per occurrence.

The City carries commercial insurance in the amount of $20,000 for general and auto liability claims greater than $3,000. There were no claims settled in the last three fiscal years that exceed insurance coverage. Internal service funds have been established to account for and finance the uninsured risks of loss.

Unpaid Claims, June 30, 2011 Incurred claims (including IBNR's)

Claim payments and adjustments Unpaid Claims, June 30, 2012 Incurred claims (including IBNR's)

Claim payments and adjustments Unpaid Claims, June 30, 2013

$26,615 12,286 (11,359) 27,542 20,897 (16,870)

8. Judgment In April 2013, the City settled a lawsuit challenging its century-old practice of transferring Water Fund monies to the General Fund. Under the settlement agreement, the General Fund agreed to pay $10 million over a three year period beginning in fiscal year 2013/14.

Accounting standards limit the amount of expenditures and liabilities that are recognized for claims and judgments in governmental funds to the amounts that will be liquidated with expendable available resources. Governments are normally expected to liquidate liabilities with expendable available financial resources to the extent that the liabilities mature (come due for payment) each period. Therefore, the judgment has been reflected as a liability in the government-wide statements and will be recognized as an expenditure in the General Fund when the payments become due.

51

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

9. Other Long-Term Obligations Chan-qes in Longq-Term Obligations: Below is a summary of changes in long-term obligations during the fiscal year for the former Redevelopment Agency, which is accounted for in the Successor Agency Trust (a fiduciary fund):

Successor Agency Trust:

Redevelopment Agency bonds Notes Payable Commercial Loan Total Beginning Balance*

$ 264,049 7,189 1,100 Due Ending Within Additions Reductions Balance One Year

$ 7,827 932 1,100

$256,222 6,257

$ 7,930 678

• Beginning balances have been restated to exclude the unamortized balances of deferred refunding charges that have been reclassified as deferred inflows of resources.

Principal Outstanding Redevelopment Agency Bonds:

$13,285 1991 Public Financing Authority Revenue Bonds, Series A, Multiple Project Areas; $1,470 serial revenue bonds 7.15% to 7.6%, due in annual installments from $100 to $145 through February 1, 2003; and $4,175 term bonds, 8.0%, due in annual installments from $155 to $450 through February 1, 2018 (portion not refunded).

$17,025 1999 University Corridor/Sycamore Canyon Merged Project Area, Tax Allocation Bonds, Series A;

$6,205 serial bonds, 3.4% to 4.7% due in annual installments from $40 to $570 through August 1, 2014;

$4,810 term bonds at 4.75% due August 1, 2021; and

$6,010 term bonds at 5.0% due August 1, 2027.

$6,055 1999 University Corridor/Sycamore Canyon Merged Project Area, Subordinate Tax Allocation Bonds, Series B; $1,900 serial bonds, 4.5% to 5.5%

due in annual installments from $35 to $190 through Sept. 1, 2013; $1,135 term bonds at 5.5% due Sept. 1, 2018; and $3,020 term bonds at 5.625% due Sept. 1, 2027.

$20,395 1999 Casa Blanca Project Area, Tax Allocation Bonds, Series A; $8,925 serial bonds, 3.4%

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

$4,550 Arlington Redevelopment Project, 2004 Tax Allocation Bonds, Series A; $420 term bonds at 3.8%

due Aug. 1, 2014; $615 term bonds at 4.6% due Aug.

1, 2024; $3,515 term bonds at 4.7% due Aug. 1, 2034.

$2,975 Arlington Redevelopment Project Area, 2004 Tax Allocation Bonds; Series B: 5.5% due in annual installments from $85 to $235 through August 1, 2024.

$26,255 State of California Department of General Services Project, 2003 Lease Revenue Refunding Bonds, Series A; 2% to 5% due in annual installments from $545 to $2,230 through October 1, 2024.

$4,810 State of California Department of General Services Project, 2003 Lease Revenue Refunding Bonds, Series B; $310 serial bonds 1.20% to 1.42%

through October 1, 2004; $620 term bonds at 3.090%

due Oct. 1, 2008; $1,110 term bonds at 4.340% due Oct. 1, 2014 and $2,770 term bonds at 5.480% due Oct. 1, 2024.

$40,435 Downtown/Airport Merged Project Area, 2003 Tax Allocation and Refunding Bonds; $32,720 serial bonds 2.0% to 5.25% due in annual installments from

$1,220 to $1,955 through August 1, 2023; and $7,715 term bonds at 5.0% due in annual installments from

$195 to $2,060 through August 2034.

$24,115 2005 Housing Set-Aside Tax Allocation Bonds;

$17,025 serial bonds 3.0% to 4.625% due in annual installments from $505 to $1,165 through August 1, 2025; $2,425 term bonds at 5.0% due August 1, 2028; and $4,665 term bonds at 4.85% due August 1, 2034.

$8,340 Downtown/Airport Merged Project Area and Casa Blanca Project Area 2007 Tax Allocation Bonds, Tax Exempt, Series A, serial bonds 4.0% to 4.25% due 12,995 18,835 4,225 2,140 3,170 100 11,935 28,330 19,155 4,345 52

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013

+=IIU lL A)~J

• )

ll III L 14*III For he ear nde Jun 30 201 Lal I 1UI LS CALj2IS "OC OI ItU00I 01 in annual installments from $20 to $590,000 through Aug. 1, 2025; $4,980 term bonds at 4.5% due Aug. 1, 2029; $410 term bonds at 4.375% due Aug. 1, 2037.

8,240 Remaining debt service will be paid by the Successor Agency Trust from future property tax revenues. Annual debt service requirements to maturity are as follows:

$1,465 California Statewide Communities Development Authority 2005 Taxable Revenue Bonds, Series A (CRA/ERAF Loan Program); 3.87% to 5.01% due in annual installments of $105 to $180 through August 1, 2015.

$14,850 Downtown/Airport Merged Project Area and Casa Blanca Project Area 2007 Tax Allocation Bonds, Taxable, Series B, $4,050 term bonds at 5.2% due August 1, 2017; $10,800 term bonds at 5.8% due August 1, 2028.

$89,205 University Corridor/Sycamore Canyon Merged Project Area, Arlington Project Area, Hunter Park/Northside Project Area, Magnolia Center Project Area, and La Sierra/Arlanza Project Area 2007 Tax Allocation Bonds, Tax-Exempt, Series C, serial bonds 4.0% to 5.0% due in annual installments from $50 to

$3,210 through August 1, 2025; $17,955 term bonds at 4.5% due August 1, 2030; $47,775 term bonds at 5.0%

due August 1, 2037.

$43,875 University Corridor/Sycamore Canyon Merged Project Area, Arlington Project Area, Hunter Park/Northside Project Area, Magnolia Center Project Area, and La Sierra/Arlanza Project Area 2007 Tax Allocation Bonds, Taxable, Series D, $15,740 term bonds due August 1, 2017; $28,135 term bonds due August 1, 2032.

Subtotal Add: Unamortized bond premium Total Redevelopment Agency Bonds 355 12,960 Fiscal Year 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 Premium Total Principal

$ 7,930 8,310 8,520 8,905 9,660 57,795 60,745 46,985 41,920 5,452

$256.222ý Interest

$12,408 12,047 11,665 11,256 10,799 45,783 29,782 16,173 4,976

$154.889 Total

$ 20,338 20,357 20,185 20,161 20,459 103,578 90,527 63,158 46,896 5,452

$411,111_

Notes Payable - Successor Agency:

Principal Outstandinq 87,650 These notes payable have been issued to promote development and expansion within the City's redevelopment areas.

Pepsi Cola Bottling Company of Los Angeles, 10.5%,

payable in net annual installments of $341, subject to recording of completion.

HUD Section 108 loan for University Village, 5.36% to 7.66%, payable in semi-annual installments beginning August 1, 1996 of $272 to $425 through August 1, 2015 HUD Section 108 loan for Mission Village Project, 6.15% to 6.72%, payable in semi-annual installments beginning August 1, 1999 of $110 to $420 through August 1, 2018 Total notes payable - Successor Agency

$2,987 1,125 36,335 250,770 5,452

$256.2

$ 6.257 53

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Remaining debt service will be paid by the Successor Agency Trust from future property tax revenues. Annual debt service requirements to maturity are as follows:

Fiscal Year 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 Total Principal

$ 678 736 774 403 432 706 471 777 1,280

$6&257 Interest

$ 403 380 354 333 319 1,430 1,238 933 430

$5-820 Total

$ 1,081 1,116 1,128 736 751 2,136 1,709 1,710 1$710 As a result of action by the State of California to dissolve all redevelopment agencies in the state, the Successor Agency no longer receives the full amount of tax increment previously pledged by the dissolved redevelopment agency to its bondholders. In its place is a new revenue stream provided to the Successor Agency that represents only that portion of tax increment that is necessary to pay the enforceable obligations approved by the California Department of Finance.

For the current year, debt service payments as a percentage of the pledged gross revenue (or net of certain expenses where so required by the debt agreement) are indicated in the table below. The debt service coverage ratios for the Successor Agency also approximate the relationship of debt service to pledged revenue for the remainder of the term of the commitment.

Assessment Districts and Community Facilities Districts Bonds (Not obligations of the City)

As of June 30, 2013, the City has several series of Assessment District and Community Facility District Bonds outstanding in the amount of $48,930.

Bonds were issued for improvements in certain districts and are long-term obligations of the property owners. The City Treasurer acts as an agent for the property owners in collecting the assessments, forwarding the collections 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 long-term obligation of the City and is not reflected in the accompanying basic financial statements.

Conduit Debt Obligations Mortgage Revenue Bonds outstanding of $6,540 and Industrial Development Revenue Bonds of $1,910 are not included in the accompanying financial statements. These bonds are special obligations of third parties and payable solely from and secured by a pledge of the receipts received from loans and certain other reserve funds and related monies. The bonds are not payable from any other revenues or assets of the 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 principal and interest on the bonds.

10. Derivative Instruments Interest Rate Swaps The City has six cash flow hedging derivative instruments, which are pay-fixed swaps. These swaps were employed as a hedge against debt that was refunded in 2008 and 2011 and against debt issued in 2012. At the time of the refundings, hedge accounting ceased to be applied. The balance of the deferral account for each swap is included as part of the deferred charge on refunding associated with the new bonds. The swaps were also employed as a hedge against the new debt. Hedge accounting was applied to that portion of the hedging relationship, which was determined to be effective.

Hedge accounting was also applied to the swap associated with the debt issued in 2012, which was also determined to be effective.

Description of Pledged Revenue Property Taxes:

Non-Housing Housing Annual Amount of Pledged Revenue (net of expenses, where required)

$37,811 8,244 Annual Debt Service Payments (of all debt secured by this revenue)

$15,313 2,769 Debt Service Coverage Ratio for FYE 6/30/13 2.47 2.98

• The computations above are based on the total tax increment generated for the year ended June 30, 2013 for each project area that had been pledged as collateral for the Bonds. As discussed above, only a portion of tax increment has been actually remitted to the Successor Agency and reported as revenue in the accompanying financial statements.

54

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

The following is a summary of the derivative activity for the year ended June 30, 2013:

2008 Certificates of Participation mature on March 1, 2037.

BBVA Compass Bank will be paid in full on April 1, 2034.

The loan with Fair Value Notional as of Amount 6/30/13 Change in Fair Value for Fiscal Year As of June 30, 2013 rates were as follows:

Governmental Activities 2008 Renaissance Certificates of Participation 2012 Convention Center Financing Business-Type Activities 2008 Electric Refunding/Revenue Bonds Series A 2008 Electric Refunding/Revenue Bonds Series C 2011 Electric Refunding/Revenue Bonds Series A 2011 Water Refunding/Revenue Bonds Series A

$128,300 (19,339) 10,633 41,650 1,026 1,026 84,515 57,325 56,450 59,000 (9,645)

(7,056)

(7,028)

(7,884) 5,340 4,528 4,526 4,884 Objective:

In order to lower borrowing costs as compared to fixed-rate bonds, the City entered into interest rate swap agreements in connection with its $141,840 2008 Electric Revenue Bonds (Series A and C), $56,450 2011 Electric Revenue Bonds, $59,000 2011 Water Revenue Bonds and $128,300 2008 Certificates of Participation ("COP").

Also, in 2012, the City entered into an additional interest rate swap agreement in connection with the Convention Center financing with BBVA Compass Bank.

Terms: Per the existing swap agreements, the City pays a counterparty a fixed payment and receives a variable payment computed as 62.68% of the London Interbank Offering Rate ("LIBOR") one month index plus 12 basis points for the Electric and Water swaps. For the COP swap, the City again pays a fixed payment and receives a variable payment computed as 63.00%

of the LIBOR one month index plus 7 basis points. The Convention Center financing consists of an initial 21-month variable rate interest only period during construction, which swaps to a fixed rate for the remaining 20-year amortization. Once the swap begins, the City will pay a fixed payment and will receive a variable payment computed at 65.01% of the LIBOR one month index plus 150 basis points.

The lease interest rate on the Convention Center has a cap at the lesser of 12% or the highest rate permitted by applicable law whereas the related swap does not have a cap. The swaps have notional 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 to $7,200 until the debt is completely retired in fiscal year 2037.

The bonds and the related swap agreements for the 2008A Electric Revenue Bonds mature on October 1, 2029, 2008C Electric and 2011A Electric and 2011A Water Revenue/Refunding Bonds mature on October 1, 2035. The Interest rate swap:

Fixed payment to counterparty Variable payment from counterparty Net interest rate swap payments Variable-rate bond coupon payments Synthetic interest rate on bonds Interest rate swap:

Fixed payment to counterparty Variable payment from counterparty Net interest rate swap payments Variable-rate bond coupon payments Synthetic interest rate on bonds Terms Fixed 62.68 LIBOR

+ 12 bps Terms Fixed 62.68 LIBOR

+ 12 bps 2011 Water Refunding/

Revenue Bonds Series A Rates 3.20000%

(0.26049%)

2.93951%

0.20403% 354%

2008 Electric Refunding/

Revenue Bonds Series C Rates 3.20400%

(0.46435%)

2.73965%

0.40613%

3.457M%

COP 2008 Bonds Rates 3.36200%

(0.43809%)

2.92391%

0.43967%

13.6358%

2011 Electric Refunding/

Revenue Bonds Series A Rates 3.20100%

(0.26036%)

2.94064%

0.15723%

_3109M%

2008 Electric Refunding/

Revenue Bonds Series A Rates 3.11100%

(0.46286%)

2.64814%

0.40854%

3.0566B%

Interest rate swap:

Fixed payment to counterparty Variable payment from counterparty Net interest rate swap payments Variable-rate bond coupon payments Synthetic interest rate on bonds Terms Fixed 63.00 LIBOR

+ 7 bps 55

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

The Convention Center financing consists of an initial 21-month variable rate interest only period during construction, which swaps to a "synthetic fixed" rate of 3.24% for the remaining 20-year amortization. The swap transaction is expected to commence in April 2014.

Fair Value: As of June 30, 2013, in connection with all swap arrangements, the transactions had a combined net negative fair value of <$49,926>.

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, assuming that the current forward rates implied by the yield curve correctly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement of the swap.

Credit risk:

The City is exposed to credit risk on one of its derivative instruments that has a positive fair value. The counterparty for this swap is BBVA/Compass Bank.

To mitigate credit risk, the City has the ability to offset swap payments due to it from BBVA/Compass pursuant to the swap, against current and future rental payments required to be made by the City to Compass Mortgage Corporation under the lease agreement. The City is not exposed to credit risk on the remaining swaps because those swaps have a negative fair value. The swap counterparties, Bank of America, J.P. Morgan Chase & Co. and Merrill Lynch were rated A, A and A-respectively by Standard & Poor's. To mitigate the potential for credit risk for these swaps, the swap agreements require the fair value of the swap to be collateralized by the counterparty with U.S. Government securities if the counterparties' rating decreases to negotiated trigger points. Collateral would be posted with a third-party custodian. At June 30, 2013, there is no requirement for collateral posting for any of the outstanding swaps.

Basis risk: The city is exposed to basis risk on its pay-fixed interest rate swap and rate cap hedging derivative instruments because the variable-rate payments received by the city on these hedging derivative instruments are based on a rate or index other than interest rates the city pays on its hedged variable-rate debt. If a change occurs that results in the rates' moving to convergence, the expected cost savings may not be realized.

Termination risk:

The derivative contract uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. The Schedule to the Master Agreement includes an "additional termination event." That is, a swap may be terminated by the City if either counterparty's credit quality falls below "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 contract. If a swap is terminated, the variable-rate bond would no longer 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 equal to the swap's fair value.

Swap payments and associated debt: As of June 30, 2013, the debt service requirements of the variable-rate debt and net swap payments assuming current interest rates remain the same, for their term are summarized in the following table. As rates vary, variable-rate bond interest payments and net swap payments will vary.

Variable-Rate Bonds Fiscal Year Ending June 30 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 Total Principal 7,144 10,492 18,263 17,314 13,217 82,771 87,811 102,099 71,229

$410,3-40 Interest

$ 1,678 1,910 1,837 1,757 1,684 7,247 5,067 2,607 432

$24.219 Interest Rate Swaps, Net

$10,531 10,778 10,341 9,867 9,489 41,243 29,765 16,983 31371

$142.3-68 Total

$19,353 23,180 30,441 28,938 24,390 131,261 122,643 121,689 75,032

$576,927

11. Economic Contingency A portion of unassigned fund balance within the General Fund is set aside for future economic contingencies. The amount that has been set aside is equal to approximately 15% of General Fund expenditures.

12. Interfund Assets, Liabilities and Transfers Due From/To Other Funds:

These balances resulted from expenditures being incurred prior to receipt of the related revenue source.

56

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

The following table shows amounts receivable/payable between funds within the City at June 30, 2013:

In addition, the following advances to the former Redevelopment Agency are accounted for in the Private-Purpose Trust Fund of the Successor Agency:

Receivable Fund General Payable Fund Nonmajor Governmental Funds Capital Outlay Fund Nonmajor Enterprise Funds Self-Insurance Trust

• Amount 246 20,065 1,303 265 21,879 1,765 756

$24.4O0 Receivable Fund General Nonmajor Governmental Funds Electric Sewer Self-Insurance Trust

• Total Amount 680 39,739 5,742 4,392 5,578 Electric Central Stores

• Central Stores

• Water Total Transfers In/Out: Transfers are used to (1) move revenues to the fund that statute or budget requires to expend them, and (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due.

The following table shows amounts transferred to/from funds within the City as of June 30, 2013:

• Internal service fund Advances To/From Other Funds: These balances consist of advances used to fund capital projects in advance of related financing/assessments and for other long-term borrowing purposes.

The following table shows amounts advanced from funds within the City to other funds within the City at June 30, 2013:

Transfer In Fund General Receivable Fund General Payable Fund Electric Water Sewer Nonmajor Governmental Funds Nonmajor Enterprise Funds Self-Insurance Trust

• Central Stores

• Central Garage

• Nonmajor Enterprise Funds General Nonmajor Governmental Funds Nonmajor Governmental Funds Amount

$11,781 5,069 3,243 539 2,179 213 223 1,003 24,250 591 258 3,918 4,767 7 581 Transfer Out Fund Electric Water Nonmajor Governmental Funds General Fund Capital Outlay Fund Nonmajor Governmental Funds Nonmajor Enterprise Funds Nonmajor Governmental Funds Amount

$37,186 6,579 350 44,115 8,897 201 2,519 840 12,457 33 33 2,211 66 2,277 Electric Water Central Garage

• Central Garage

• Self-Insurance Trust

• Nonmajor Enterprise Funds Nonmajor Governmental Funds Central Garage

• Total Sewer Total 57

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

13. Deficit Net Position Deficit net position exists in the Self-Insurance Internal Service Trust Fund

($21,739). In order to begin funding a portion of the deficit in the internal service fund, self-insurance rates were increased in the current year.

However, this was offset by unusually large losses incurred during the year combined with an adjustment for the increase in the amount estimated for claims and judgments. Management believes that there are sufficient funds on hand to cover current payment obligations and plans to continue to control costs and increase rates over the next few years as needed to match expected long-term payment requirements.

Deficit net position also exists in the Successor Agency Private-Purpose Trust Fund ($211,506). The deficit in the Successor Agency Trust Fund will be reduced over the years as the related debt is paid-off with funds received from the Redevelopment Property Tax Trust Fund (RPTTF), which is administered by the County Auditor-Controller.

14. Litigation The City is a defendant in various lawsuits arising in the normal course of business. Present lawsuits and other claims against the City are incidental to 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, such claims and litigation will not have a materially adverse effect upon the financial position or results of operation of the City.

The City continues to participate in key FERC dockets impacting the City's Electric Utility, such as the California Independent System Operator's (ISO)

Market Redesign and Technology Upgrade (MRTU).

The Water Utility is a plaintiff in a lawsuit against several entities that either owned or leased a property site in the City of Colton and City of Rialto that is contaminated by perchlorate. The lawsuit was filed March 31, 2009, and no trial date has been set.

15. City Employees Retirement Plan (A) Plan Description. The City of Riverside contributes to the California Public Employees Retirement System (CalPERS), an agent multiple employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. PERS issues a publicly available financial report that includes financial statements and required supplementary information for the cost sharing plans that are administered by PERS. Benefit provisions and all other requirements are established by state statute and City ordinance. A copy of CalPERS' annual financial report may be obtained online at www.calpersca..ov.

(B) Funding Policy. For each of the fiscal years shown on the following page, the City has contributed at the actuarially determined rate provided by PERS' actuaries. Participants are required to contribute 8%

(9% for safety employees) of their annual covered salary. The City has a multiple tier retirement plan with benefits varying by plan. The City pays the employees' contribution to CalPERS for both miscellaneous and safety employees hired on or before specific dates as follows:

Safety (Police):

Ist Tier (RPOA, RPOA Supervisory & RPAA) - The retirement formula is 3% at age 50 for employees hired before February 16, 2012. The City pays the employee share (9%) of contributions on their behalf and for their account.

0 2 nd Tier (RPOA only) - The retirement formula is 3% at age 50 and new employees hired on or after February 17, 2012 pay their share (9%) of contributions.

3 d Tier (RPOA, RPOA Supervisory & RPAA) - The retirement formula is 2.7% at age 57 for new members hired on or after January 1, 2013 and the employee must pay the employee share (9%).

Classic members (CalPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a different tier.

Safety (Fire):

0 1 st Tier - The retirement formula is 3% at age 50 for employees hired before June 11, 2011. The City pays the employee share (9%) of contributions on their behalf and for their account.

2 nd Tier - The retirement formula is 3% at age 55 and new employees hired on or after June 11, 2011 pay their share (9%) of contributions.

3 rd Tier - The retirement formula is 2.7% at age 57 for new members hired on or after January 1, 2013 and the employee must pay the employee share (9%). Classic members (CaIPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a different tier.

58

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Miscellaneous:

0 1 st Tier - The retirement formula is 2.7% at age 55. The City pays the employee share (8%) of contributions on their behalf and for their account.

2 nd Tier - The retirement formula is 2.7% at age 55, and:

o SEIU and SEIU Refuse employees hired on or after June 7, 2011 pay their share (8%) of contributions.

o All other miscellaneous employees hired on or after October 19, 2011 pay their share (8%) of contributions.

3 rd Tier - The retirement formula is 2% at age 62 for new members hired on or after January 1, 2013 and the employee must pay the employee share ranging from 7-8% based on bargaining group classification.

Classic members (CalPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a different tier.

The contribution requirements of plan members and the City are established and may be amended by CalPERS.

(C) Annual Pension Cost. The required contribution was determined as part of the June 30, 2010 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses), (b) projected salary increases of 3.25% per year compounded annually, attributable to inflation, and (c) 3.0%

expected long term inflation. The actuarial value of CalPERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments (smoothed market value). All changes in the unfunded actuarial accrued liability due to plan amendments, changes in actuarial assumptions, or changes in actuarial methodology are amortized separately as a level percentage of pay over a closed 20-year period. All 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, 2009-2010 and 2010-2011. Each of these years' gains or losses has been isolated and amortized over fixed and declining 30 year periods (as opposed to the current rolling 30 year amortization).

Three-year trend information for CaIPERS:

Fiscal Year June 30, 2011 2011 2012 2012 2013 2013 Plan Misc Safety Misc Safety Misc Safety Annual Pension Cost (APC)

$16,888 14,956 21,661 18,542 21,907 18,945

% of APC Contributed 92.4%

86.7%

92.8%

86.6%

91.5%

83.9%

Net Pension Obligation (Asset)

$(55,253)

(82,379)

(53,694)

(79,890)

(51,825)

(76,846)

In 2004 and 2005, the City issued pension obligation bonds to fund the unfunded actuarial accrued liability for safety and miscellaneous employees.

The deferred charge related to the net pension asset will be amortized in accordance with the method used by CalPERS for calculating actuarial gains and losses over a 19-year period. A total of $128,671 of net pension assets is included in the Government-wide Statement of Net Position and in the proprietary fund statements.

Determination of Net Pension Asset as of June 30, 2013:

Misc Safety Annual required contribution Interest on net pension asset Adjustment to annual required contribution Annual pension cost Less contributions made Decrease in net pension asset Net pension asset, beginning of year Net pension asset, end of year

$ 20,038 (4,161) 6,030 21,907 (20,038) 1,869 (53.694)

$(51.825)

$15,901 (6,191) 9,235 18,945 (15,901) 3,044 (79,890) 59

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Schedule of funding for CalPERS:

Actuarial Valuation Plan Date Misc.

6/30/09 Misc.

6/30/10 Misc.

6/30/1 1 Entry Age Normal Actuarial Accrued Liability (AAL)

$921,349 952,499 998,216

$660,742 685,213 731,074 Actuarial Value of Assets 810,929 846,368 887,857 595,018 621,107 650,954 Unfunded/

(Overfunded)

Actuarial Accrued Liability (UAAL) 110,420 106,131 110,359 65,724 64,106 80,120 funding that, if paid on an ongoing basis, is projected to cover normal cost 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 June 30, 2013 was $6,011, which consisted of normal cost of $3,383 and UAAL amortization of $2,628. The ARC as a percentage of payroll was 3.9%

for the year ended June 30, 2013.

Funded Ratio Annual Covered Payroll UAAL as a % of Covered Payroll 88.0 110,318 88.9 106,590 88.9 108,106 90.1 63,924 90.6 61,778 89.0 62,538 As of June 30, 2011, the most recent actuarial valuation date, the OPEB plan 100.1 was 0.0% funded. The actuarial accrued liability for benefits was $56 million, 99.6 and the actuarial value of assets was $0, resulting in an unfunded actuarial 102.1 accrued liability (UAAL) of $56 million.

Safety Safety Safety 6/30/09 6/30/10 6/30/11*

102.8 103.8 128.1 Determination of the Net OPEB Obligation as of June 30, 2013:

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

16. Other Post-Employment Benefits The City provides healthcare benefits to retirees in the form of an implied rate subsidy. Retirees and active employees are insured together as a group, thus creating a lower rate for retirees than if they were insured separately.

Although the retirees are solely responsible for the cost of their health insurance benefits through this plan, the retirees receive the benefit of a lower rate.

The difference between these amounts is the implied rate subsidy, which is considered an other post-employment benefit (OPEB) under GASB 45.

Retiree coverage terminates either when the retiree becomes covered under another employer health plan, or when the retiree reaches Medicare eligibility age, which is currently age 65. Spousal coverage is available until the retiree becomes covered under another employer health plan, attains Medicare eligibility age, or dies. However, the retiree benefit continues to the surviving spouse if the retiree elects the CalPERS survivor annuity.

The contribution requirements are established by the City Council. The City is not required by law or contractual agreement to provide funding other than the pay-as-you-go amount necessary to provide current benefits to eligible retirees and beneficiaries.

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 Annual required contribution Interest on net OPEB obligation Amortization of net OPEB obligation Annual benefit pension cost Less contributions made Increase in net OPEB obligation Net OPEB liability, beginning of year Net OPEB liability, end of year

$ 6,011 766 (630) 6,147 (1,626) 4,521 17,796

$22.31-7 Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual 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 cost method. The actuarial assumptions included (a) discount rate of 4.30%,

(b) 2.75% inflation, (c) projected salary increases of 3.25% annually and (d) healthcare cost trend rates ranging from 4.5% to 8.0%.

Projections of benefits are based on the substantive plan (the plan as 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 between the city and the plan members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets.

60

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

Three-year trend information:

Southern California Public Power Authority Fiscal Year June 30, 2011 2012 2013 Fiscal Year June 30, 2011 2012 2013 Actual ARC Contributions

$5,617 5,821 6,011 Annual OPEB Cost

$5,314 5,789 6,147

$1,734 1,426 1,626

% of OPEB C(

Contributed 33%

25%

26%

% of ARC Contributed 31%

25%

27%

)st Net OPEB Obligation

$13,433 17,796 22,317 On November 1, 1980, the City of Riverside joined with the Imperial Irrigation District and the cities of Los Angeles, Anaheim, Vernon, Azusa, Banning, Colton, Burbank, Glendale and Pasadena to create the Southern California Public Power Authority (SCPPA) by a Joint Powers Agreement under the laws of the State of California. As of July 2001, the City of Cerritos was admitted as a member. The primary purpose of SCPPA is to plan, finance, develop, acquire, construct, operate and maintain projects for the generation and transmission of electric energy for sale to its participants. SCPPA is governed by a Board of Directors, which consists of one representative for each of the members. During the 2012-13 and 2011-12 fiscal years, the Electric Utility paid approximately $16,171 and $20,855, respectively, to SCPPA under various take-or-pay contracts. These payments are reflected as a component of production and purchased power or transmission expense in the financial statements.

The projects and the Electric Utility's proportionate share of SCPPA's obligations, including final maturities and contract expirations are as follows:

The table below displays the funding progress of the plan and is based upon the most recent actuarial valuation data:

Actuarial Valuation Date 6/30/11 Actuarial Accrued Liability

$56,060 Actuarial Value of Assets Unfunded Actuarial Liability (UL)

$56,060 Funded Ratio 0%

Annual Covered Payroll

$149,321 UL as a

% of Covered Payroll 38%

Proiect Palo Verde Nuclear Generating Station (PV)

Southern Transmission System (STS)

Hoover Dam Uprating (Hoover)

Mead - Phoenix Transmission (MPP)

Mead - Adelanto Transmission (MAT)

Percent Share 5.4%

10.2%

31.9%

4.0%

13.5%

Entitlement 12.3MW 244.0MW 30.0MW 18.0MW 118.0MW

17. Commitments and Contingencies A. Long-Term Electric Utility Commitments Intermountain Power Agency The Electric Utility has entered into a power purchase contract with Intermountain Power Agency (IPA) for the delivery of electric power. The Electric Utility's share of IPA power is equal to 7.6 percent, or approximately 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 the debt fully matures in 2024.

The contract constitutes an obligation of the Electric Utility to make payments solely from operating revenues. The power purchase contract requires the Electric Utility to pay certain minimum charges that are based on debt service requirements. Such payments are considered a cost of production.

Terms of Take or Pay Commitments As part of the take-or-pay commitments with IPA and SCPPA, the Electric Utility has agreed to pay its share of current and long-term obligations.

Management intends to pay these obligations from operating revenues received during the year that payment is due. A long-term obligation has not been recorded on the accompanying financial statements for these commitments. Take-or-pay commitments terminate upon the later of contract expiration or final maturity of outstanding bonds for each project.

Outstanding debts associated with the take-or-pay obligations have variable interest rates for the Palo Verde Nuclear Generating Station Project and the remaining projects have fixed interest rates which range from 0.35 percent to 6.13 percent. The schedule below details the amount of principal and interest that is due and payable by the Electric Utility as part of the take-or-pay contract for each project in the fiscal year indicated.

61

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

SCPPA Fiscal Year 2014 2015 2016 2017 2018 Thereafter Total IPA PV STS Hoover MPP MAT Total

$ 6,876 21,289 21,965 17,825 16,398 84,917 664 668 672 675 679 8,181 8,335 9,823 6,685 7,980 62,242 705 703 701 701 699 333 277 261 262 258 700

$2.091

$ 3,273 3,141 2,959 2,952 2,910 7,877

$23123

$ 20,032 34,413 36,381 29,100 28,924 155,736 3o4.586 Final maturities of outstanding debt associated with take-or-pay obligations and related contract expirations are as follows:

respectively, for the remainder of the second agreement. On January 29, 2013, Riverside revised the delivery and return portion of the agreement to allow for a flat 40 MW of delivery during May and June through calendar year 2013, 2014 and 2015. The Agreement with BPA will terminate on May 1, 2016.

On April 12, 2011, the California Renewable Energy Resources Act (SB 2 (1X)) was passed by the State Legislative and signed by the Governor. SB 2 (1X) revised the amount of statewide retail electricity sales from renewable resources in the State Renewable Energy Resources Program to 33% by December 31, 2020 in three stages: average of 20% of retail sales during 2011-2013; 25% of retail sales by December 31, 2016; and 33% of retail sales by December 31, 2020. The Riverside Public Utilities Board and City Council approved the enforcement program required by SB 2 (1X) on November 18, 2011 and December 13, 2011, respectively, and further approved the City's RPS Procurement plan implementing the new RPS mandates on May 3, 2013 and May 14, 2013, respectively. It is expected that the City will be able to meet the new mandates with new resource procurement actions as outlined in the City's RPS Procurement Plan. For Calendar year 2012, renewable resources provided 21% of retail sales requirements.

In an effort to increase the share of renewables in the Electric Utility's power portfolio, the Electric Utility entered into power purchase agreements with various entities described below on a "take-and-pay" basis. The contracts in the following table were executed as part of compliance with this standard.

Proiect Palo Verde Nuclear Generating Station Southern Transmission System Hoover Dam Uprating Mead - Phoenix Transmission Mead - Adelanto Transmission Final Maturity 2017 2027 2017 2020 2020 Contract Expiration 2030 2027 2017 2030 2030 In addition to debt service, Riverside's entitlements require the payment of fuel costs, operating and maintenance, administrative and general and other miscellaneous costs associated with the generation and transmission facilities discussed above. These costs do not have a similar structured payment schedule as debt service and vary each year. The costs incurred for the year ended June 30, 2013 and 2012, are as follows (in thousands):

Fiscal Year 2013 2012 IPA PV

$26,445

$2,528

$22,555

$2,843 STS

$2,405

$2,677 MAT

$ 338

$ 300 MPT

$ 41

$ 40 Hoover

$ 97

$ 102 Total

$31,854

$28,517 Long-term renewable power purchase agreements:

These costs are included in production and purchased power or transmission expense on the Statements of Revenues, Expenses and Changes in Net Position.

B. Other Commitments Power Purchase Agreements:

The Electric Utility has a firm power purchase agreement with Bonneville Power Administration (BPA) for the purchase of capacity (50 megawatts during the summer months and 13 megawatts during the winter months) beginning April 30, 1996, for 20 years. Effective May 1, 1998, these summer and winter capacity amounts increased to 60 megawatts and 15 megawatts, Supplier Salton Sea Power LLC CalEnergy Wintec WKN Wagner AP North Lake Silverado Power Summer Solar Antelope Big Sky Ranch Total Thpe Geothermal Geothermal Wind WiPvnd Photovoltaic Photovoltaic Photovoltaic Maximum Contract 46.0MW 86.0MW 1.3MW 6.0MW 20.0MW 20.0MW 20.0MW 199.3MW Contract Expiration 5/31/20 12/31/39 12/30/18 12/22/32 Estimated Annual Cost for 2014

$ 24,170 209 1,100

$25.A79

• Power Purchase Agreements have a 25-year term. The contract expiration dates are 25 years from the commercial operation of the power plant. The 62

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands) plants are expected to become commercially operational by January 1, 2015, but in no event later than December 31, 2015.

All contracts are contingent on energy production from specific related generating facilities.

Riverside has no commitment to pay any amounts except for energy produced on a monthly basis from these facilities.

Construction Commitments:

As of June 30, 2013, the Sewer and Electric Utilities had approximately

$185.6 million and $14.7 million, respectively, in major construction commitments related to unfinished capital projects. The Capital Outlay Fund also had major construction commitments of approximately $7.5 million related to the renovation and expansion of the Riverside Convention Center.

These construction commitments are expected to be funded primarily with current and future bond proceeds.

C. Jointly-Owned Utility Project - SONGS The City has a 1.79% undivided ownership interest in Units 2 and 3 of SONGS, located south of the City of San Clemente in northern San Diego County; however, on June 7, 2013, Southern California Edison (SCE) announced in a press release its plan to retire Units 2 and 3 of SONGS permanently. Consequently, the units are no longer a source of supply for the Electric Utility, but remain associated with certain of its costs, including those associated with the units' shutdown and decommissioning.

SONGS was operated and maintained by SCE, under an agreement with the City and San Deigo Gas & Electric Company (SDG&E) that expires upon termination of the easement for the plant in 2024. The three-member SONGS Board of Review approved the budget for capital expenditures and operating expenses. The City and the two other owners each had one representative on that board. The participation agreement provided that each owner was entitled to its proportionate share of benefits of, and paid its proportionate share of costs and liabilities incurred by SCE for, construction, operation and maintenance of the project; each owner's obligation was several, and not joint or collective.

In 2005, the CPUC authorized a project to install four new steam generators in Units 2 and 3 at SONGS and remove and dispose of the predecessor generators. SCE completed the installation of these steam generators in 2010 and 2011 for Units 2 and 3, respectively.

Replacement of the steam generators was expected to enable plant operations to continue through at least 2022, and perhaps beyond, subject to the approval of the Nuclear Regulatory Commission (NRC).

In January 2012, a water leak occurred in one of the heat transfer tubes of Unit 3's steam generators, causing it to be shut down. At that time, Unit 2 was off-line for a planned outage when unexpected wear in areas of tube-to-support structure were found. Units 2 and 3 remained off-line for extensive inspections, testing and analysis of their steam generators. Due to challenges encountered during the regulatory process to bring the units back into operation SCE announced on June 7, 2013 its plan to retire Units 2 and 3 permanently.

The current plant site easement for SONGS terminates on May 12, 2024 and would need to be extended in order for the plant to be decommissioned and the site restored.

There are no separate financial statements for the jointly-owned utility plant since each participant's interests in the utility plant and operating expenses are included in their respective financial statements. Due to the retirement of SONGS Units 2 and 3, the asset and associated costs such as nuclear fuel and common facilities inventory has been written off totaling $41,259 to (see note 18 - Extraordinary Item). The Electric Utility will continue to set aside approximately $1,600 per year to fund decommissioning costs. The Electric Utility's portion of current and long-term debt associated with the decommissioning of SONGS is included in the accompanying financial statements.

Replacement Power Costs During the outage, the City has procured replacement power to serve its customers' requirements. These costs are in addition to the operating and maintenance expenses paid annually during normal operations.

Replacement power costs incurred by the City as a result of the outage (commencing on January 31, 2012 for Unit 3 and March 5, 2012 for Unit 2) through June 30, 2013 were approximately $13.2 million and are reported as regulatory assets on the Statements of Net Position.

Contractual Matters The replacement steam generators for Units 2 and 3 were designed and manufactured by Mitsubishi Heavy Industries (MHI) and were warranted for an initial period of 20 years from acceptance. MHI was contractually 63

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands) obligated to repair or replace defective items and to pay specified damages for certain repairs. On July 18, 2012, the NRC issued a report providing the result of the inspection performed by the Augmented Inspection Team. The inspection concluded that faulty computer modeling that inadequately predicted conditions in the steam generators at SONGS and manufacturing issues contributed to excessive wear of the components. This report also identified a number of still unresolved issues that are continuing to be examined. MHI's liability under the purchase agreement is limited to $138 million and excludes consequential damages, defined to include "the cost of replacement power." The limitations are subject to certain exceptions. SCE has reported that the disagreement with MHI as to whether MHI's liability is not limited to $138 million may ultimately become subject to dispute resolution procedures contained in the purchase agreement, including international arbitration. SCE, on behalf of itself and the other SONGS co-owners, has submitted five invoices to MHI totaling $139 million for steam generator repair costs incurred through February 28, 2013. MHI paid the first invoice of $45 million (of which the City has received its proportional share of

$812), while reserving its right to challenge any of the charges in the invoice.

In January 2013, MHI advised SCE that it rejected a portion of the first invoice and required further documentation regarding the remainder of it. The City expects to receive its proportional share of any recovery that SCE receives from MHI.

There are insurance policies for both property damage and accidental outage issued by Nuclear Electric Insurance Limited (NEIL), and SCE has notified NEIL of claims under the two policies. The City is a named insured on the SCE insurance policies covering SONGS and will assist SCE in pursuing claims recoveries from NEIL, as well as warranty claims with MHI, but there is no assurance that the City will recover all or any of its applicable costs under these arrangements. To the extent that any third-party recoveries are made, they will reduce cost to the Utility. At this time, the City continues to collect from customers, through its rates, the City's share of the operating costs related to SONGS.

According to a news release issued by SCE on July 18, 2013, SCE served a formal Notice of Dispute on MHI and Mitsubishi Nuclear Energy Systems and initiated a 90-day dispute resolution process under the purchase agreement.

On July 18, 2013, the City filed a lawsuit against MHI for breach of contract, negligence and misrepresentation in San Diego County Superior Court. On July 24, 2013, MHI moved the lawsuit to the United States District Court for the Southern District of California.

18. Extraordinary Item On June 7, 2013, SCE announced its decision to retire Units 2 and 3 of SONGS permanently. Consequently, the units are no longer a source of supply for the Electric Utility. As a result, capital assets associated with Units 2 and 3 with a combined net book value of $29,075 were considered impaired and expensed. The associated nuclear fuel with a net book value of

$10,149 and common facilities inventory with a net book value of $2,035 were also considered impaired and expensed. The total loss of $41,259 is reported as an extraordinary item on the Statement of Revenues, Expenses and Changes in Net Position.

19. Accounting Change The accompanying financial statements reflect the implementation of GASB Statements Nos. 63 and 65. Significant impacts of GASB Statement No. 63 include changing the title of the statement of net assets to the statement of net position and reformatting the statement of net position to add separate sections for deferred inflows of resources and deferred outflows of resources.

Significant impacts of GASB Statement No. 65 include reclassifying as deferred inflows of resources and deferred outflows of resources certain balances that were previously reported as assets and liabilities.

GASB Statement No. 65 also required that debt issuance costs be reported as expenses when incurred.

The retroactive effects of implementing this change in reporting debt issuance costs resulted in a restatement of beginning net position as set forth below:

Net position/(deficit) at beginning of year, as previously reported Adjustment to recognize debt issuance costs as an expense of prior periods Net position/(deficit) at beginning of year, as restated Governmental Activities

$1,189,167 (3,212)

$1.185.955 Successor Agency Private-Purpose Trust Fund

$(194,543)

(5,215)

$L199.58 64

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2013 (amounts expressed in thousands)

20. Subsequent Events 2013 Electric Revenue Refunding Bonds:

On July 25, 2013 the City issued $79,080 of 2013 Electric Revenue Refunding Series A Bonds and $780 of Taxable Electric Revenue Series B Bonds. The bonds were issued to: prepay the outstanding obligation to the City of Corona related to the Clearwater Power Plant; to refund certain outstanding variable rate bonds; and to pay a portion of the termination cost associated with the interest rate swaps allocated or related to the refunded portions of the applicable bonds. Interest on the Series A bonds is payable semi-annually on April 1 and October 1, commencing October 1, 2013.

Principal is due in annual installments from $175 to $12,685 through October 1, 2043. The rate of interest varies from 3% to 5.25% per annum. Series B bonds, with an interest rate of 0.5%, is due in one installment of $780 on October 1, 2013.

2013 Certificates of Participation:

In July 2013 the City issued Series 2013 Certificates of Participation in the amount of $35,235. The Certificates of Participation were issued to finance the design, acquisition, and construction of certain local roadway improvements and street resurfacing projects within the City. Interest is due semi-annually on June 1 and December 1, commencing December 1, 2013.

The rate of interest varies from 4.00% to 5.25% per annum.

Principal is payable in annual installments ranging from $1,285 to $2,855 commencing June 1, 2016 and ending June 1,2033.

65

-4 9-

-I I-

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.

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

Housing & 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.

National Pollution Discharge Elimination System (NPDES) Storm Drain Fund - 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 Improvement 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.

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, 2013 (amounts expressed in thousands)

Special Revenue Housing &

Urban Areas Security Air Quality Community Initiative Gas Tax Improvements Development NPDES Storm Drain Housing Total 14,529 314 384 1,947 17,174 218 192 410 Assets Cash and investments Cash and investments at fiscal agent Receivable (net of allowance for uncollectibles):

Interest Accounts Intergovernmental Notes Prepaid items Advances to Successor Agency Land & improvements held for resale Total assets 78 134 2

371 5

2 3,005 12,415 2

13 302 98 2

3,812 33,045 2

20,630 20,571 20,571 1,404 3,305 4,709 371 14,741 534 17,217 302 46,658 79,823 Liabilities Accounts payable Accrued payroll Deposits Due to other funds Advance from other funds Total liabilities 251 391 74 2,022 30 2,768 Deferred Inflows of Resources Unavailable revenue Total deferred inflows of resources Fund Balances (Deficits)

Restricted for:

Housing and redevelopment Transportation and public works Total fund balances (deficits)

Total liabilities deferred inflows of resources, and fund balances (deficits) 25 25 20 20 120 126 246 539 458 997 371 391 74 2,586 126 508 4,056 13,819 20,552 34,371 13,819 20,552 34,371 812 25,598 26,410 14,350 460 176 14,986 14,350 460 812 176 25,598 41,396 371 14,741 534 17,217 302 46,658 79,823 67

City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2013 (amounts expressed in thousands)

Capital Projects Permanent Fund Assets Cash and investments Cash and investments at fiscal agent Receivable (net of allowance for uncollectibles):

Interest Accounts Intergovemrmental Notes Prepaid items Advances to Successor Agency Land & improvements held for resale Total assets Total Nonmajor Special Capital General Governmental Improvement Storm Drain Transportation Total Debt Service Library Special Funds 2,951 1,985 69 5,005 710 1,441 24,330 4,164 4,164 10,343 14,917 25 10 35 133 2

S-3,812 S-33,045 2

19,168 39,739 4,709 7,140 1,995 69 9,204 30,221 1,441 120,689 213 24$

237 158$

3,163 S

25 33 33 33 S-20 S-246 6,862 6,862 4,179 12,038 7,108 24 7,132 4,337 15,525 S-34,371 34,371 Liabilities Accounts payable Accrued payroll Retainage payable Deposits Due to other funds Advance from other funds Total liabilities Deferred Inflows of Resources Unavailable revenue Total deferred inflows of resources Fund Balances (Deficits)

Nonspendable:

Permanent fund principal Restricted for:

Housing and redevelopment Debt Service Transportation and public works Other purposes Total fund balances (deficits)

Total liabilities, deferred inflows of resources, and fund balances (deficits) 1,441 1,441 26,410 25,884 25,884 69 69 15,055 32 1,971 2,003 2,003 32 1,971 69 2,072 25,884 1,441 70,793 7,140 1,995 69 9,204 30,221 1,441 120,689 68

City of Riverside Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Special Revenue Housing &

Urban Area Security Air Quality Community Initiative Gas Tax Improvement Development NPDES Storm Drain Housing Total Revenues Intergovernmental Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current:

General government Public safety Capital outlay Debt service:

Interest Bond issuance costs Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)

Transfers in Transfers out Capital lease proceeds Total other financing sources (uses)

Net change in fund balances Fund balances - beginning Fund balances - ending 4,745 7,078 369 7,738 65 18 19,930 837 837 101 184 729 1,835 837 830 22,786 255 851 4,745 7,143 624 8,607 1,059 4,745 1,384 7,273 1,250 3,693 4,745 12,742 4,808 661 14 5

19 12 12 4,745 4,808 1,059 8,683 661 1,255 21,211 2,335 (435)

(76) 176 (425) 1,575 S-(961) 218 218 (961) 2,335 (217)

(1,037) 12,015 677 1,849 14,350 460 812 176 176 1,111 1,111 (150)

(1,111) 218 961 218 536 1,793 25,062 39,603 25,598 41,396 69

City of Riverside Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Capital Projects Special Capital Improvement 2,499 Storm Drain Transportation Total 279 2,778 General

)ebt Service Revenues Licenses and permits Intergovernmental Special assessments Rental and investment income Miscellaneous Total revenues Permanent Fund Total Nonmajor Library Governmental Special Funds

-2,778 20,026 1,893 13 1,619 6,556 13 32,872 96 96 23 22 1

1,056 1,399 770 3,225 3,912 39 3,951 6,433 279 136 6,848 Expenditures Current:

General government 131 3

Public safety Culture and recreation 53 Capital outlay 3,617 669 96 Debt service:

Principal Interest 79 Bond issuance costs Payment to escrow account for advance refunding Total expenditures 3,880 672 96 Excess (deficiency) of revenues over (under) expenditures 2,553 (393) 40 Other financing sources (uses)

Transfers in Transfers out (1,558)

Issuance of long-term debt Capital lease proceeds Other financing source - bond premium Payment to escrow account for advance refunding Total other financing sources (uses)

(1,558)-

Net change in fund balances 995 (393) 40 Fund balances - beginning (963) 2,364 29 Fund balances - ending 32 1,971 69 134 53 4,382 45 111 3,872 4,745 164 17,124 79 4,648 3,555 8,237 220 3,521 15,578 3,555 8,335 232 3,521 111 41,548 2,200 (12,353)

(98)

(8,676)

(1,558)

(1,558) 642 1,430 2,072 11,346 12,457 (2,411)

(5,080) 41,240 41,240 S-218 2,573 2,573 (43,591)

(43,591) 9,157 7,817 (3,196)

(98)

(859) 29,080 1,539 71,652 25,884 1,441 70,793 70

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Special Revenue Urban Area Security Initiative Variance Gas Tax Air Quality Improvement Final Budget to Final Final Actual Budget Budget Variance to Final Final Actual Budget Budget Variance to Final Actual Budget Revenues Intergovernmental Rental and investment income Miscellaneous Total revenues 7,864 4,745 (3,119) 7,795 150 7,864 4,745 (3,119) 7,945 7,078 65 7,143 (717)

(85)

(802) 342 369 27 69 96 186 255 528 624 Expenditures Current:

General government Public safety Capital outlay Total expenditures 7,864 7,864 4,745 4,745 1,361 1,059 302 3,119 3,119 16,542 16,542 4,808 4,808 11,734 11,734 1,361 1,059 302 Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)

Capital lease proceeds Total other financing sources (uses)

(8,597) 2,335 10,932 (833)

(435) 398 218 218 218 218 Net change in fund balances Fund balances (deficit), beginning Fund balances (deficit), ending (8,597) 12,015 3,418 2,335 12,015 14,350 10,932 10,932 (833) 677 (156)

(217) 677 460 616 616 (continued) 71

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Special Revenue NPDES Storm Drain Housing & Community Development Variance Housing Revenues Intergovernmental Special assessments Rental and investment income Miscellaneous Total revenues Final Budget 7,044 8

483 7,535 1,066 16,138 20 18 17,242 to Final Final Actual Budget Budget Variance to Final Final Actual Budget Budget Variance to Final Actual Budget Expenditures Current:

General government Capital outlay Debt service:

Interest Bond issuance costs Total expenditures 7,738 18 851 8,607 1,384 7,273 14 12 8,683 694 10 368 1,072 832 832 87 5

837 5

837 5

14 31 45 1,700 172 101 729 830 1,250 87 698 785 450 172 (5) 617 (318) 8,865 836 661 175 6

5 6

8,559 836 661 175 1,872 1,255 Excess (deficiency) of revenues over (under) expenditures (9,707)

(76) 9,631 (4) 176 180 (1,827)

(425) 1,402 Other financing sources (uses)

Transfers in Transfers out Total other financing sources (uses)

Net change in fund balances Fund balances (deficit), beginning Fund balances (deficit), ending (961)

(961)

(10,668) 1,849 (8,819)

(961)

(961)

(1,037) 1,849 812 1,111 (150) 961 (866) 25,062 24,196 1,111 (150) 961 9,631 9,631 (4)

(4) 176 176 180 180 536 25,062 25,598 1,402 1,402 (continued) 72

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Capital Projects Capital Outlay Variance Special Capital Improvement Variance Storm Drain Transportation Revenues Licenses and permits Intergovernmental Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current:

General government Culture and recreation Capital outlay Debt service:

Interest Bond issuance costs Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)

Transfers out Issuance of long-term debt Total other financing sources (uses)

Net change in fund balances Fund balances (deficit), beginning Fund balances (deficit), ending Final Budget 82,836 65 175 5,683 88,759 to Final Final Actual Budget Budget Actual to Final Final Budget Budget Actual Variance to Final Budget Final Budget Actual 22,076 370 111 2,234 24,791 (60,760) 305 (64)

(3,449)

(63,968) 2,500 2,499 22 3,912 2,500 6,433 (1) 100 279 179 2,824 (2,824) 22 60 (60) 200 96 Variance to Final Budget (104) 1 39 (64) 3,912 39 3,933 2,984 279 (2,705) 200 136 180,206 180,206 66,257 255 66,512 113,949 3,843 131 53 3,617 (131)

(53) 226 4,967 3

669 (3) 4,298 117 96 21 208 79 129 (255) 113,694 4,051 3,880 171 4,967 672 4,295 117 96 21 (91,447)

(41,721) 49,726 (1,551) 2,553 4,104 (1,983)

(393) 1,590 83 40 (43)

(201)

(201)

(91,648) 18,354 (73,294)

(201) 25,000 24,799 (16,922) 18,354 1,432 25,000 25,000 74,726 74,726 (1,558)

(1,558)

(3,109)

(963)

(4,072)

(1,558)

(1,558) 995 (963) 32 4,104 (1,983)

(393) 2,364 2,364 4,104 381 1,971 1,590 83 40 29 29 1,590 112 69 (43)

(43) 73

I r-

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 Position Nonmajor Enterprise Funds June 30, 2013 (amounts expressed in thousands)

Assets Current assets:

Cash and investments Receivables (net of allowance for uncollectibles)

Interest Utility billed Utility unbilled Accounts Intergovernmental Restricted assets:

Other restricted cash and cash equivalents Total current assets Non-current assets:

Regulatory assets Net pension asset Capital assets:

Land Buildings Accumulated depreciation-buildings Improvements other than buildings Accumulated depreciation-improvements other than buildings Machinery and equipment Accumulated depreciation-machinery and equipment Construction in progress Total non-current assets:

Airport Refuse Transportation Public Parkin g Total 1

3,705 1,188 14 1,033 699 733 2,516 10 1

629 1,109 3

25 1,033 699 1,897 815 54 183 1,185 237 4,852 1,185 3,156 1,114 9,359 6,905 1,216 6,905 2,188 223 585 164 9,988 2,631 (1,179) 19,023 (5,908) 412 (278) 615 25,527 22 (9) 1,659 (15) 3,263 (2,496) 11,271 32,855 (3,771) 6,204 (1,340) 1,633 (1,413) 14,757 (8,997) 21,259 35,508 (4,959) 26,886 (7,263) 20,065 (13,184) 615 88,020 97,379 (continued) 13,881 3,009 45,603 Total assets 25,764 18,733 6,165 46,717 75

City of Riverside Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2013 (amounts expressed in thousands)

Liabilities Current liabilities:

Accounts payable Accrued payroll Unearned revenue Deposits Due to other funds Capital leases-current Notes payable - current Landfill capping - current Compensated absences - current Total current liabilities Airport Refuse Transportation Public Parking 127 13 176 1

453 720 100 6

42 2,589 501 21 850 871 7

40 810 200 340 1,360 61 52 2,705 2,295 Non-current liabilities:

Notes payables Capital leases Advances from other funds Landfill capping Compensated absences Other postemployment benefits Total non-current liabilities 22,092 Total 1,354 176 2,765 1

1,303 7

871 200 493 7,170 22,092 1

2,770 6,257 185 1,273 32,578 39,748 55,956 1,185 490 57,631 Total liabilities 222 86 308 1,118 25,304 (658) 24,646 1,211 6,257 185 714 8,367 9,727 5,760 1,185 2,061 9,006 583 323 150 907 22,996 754 3,612 25,291 Net Position Net investment in capital assets Restricted for landfill capping Unrestricted Total net position 2,416 22,476 137 (1,050) 2,553 21,426 76

City of Riverside Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Operating revenues:

Charges for services Operating expenses:

Personnel services Contractual services Maintenance and operation General Materials and supplies Insurance Depreciation and amortization Total operating expenses Operating Income (loss)

Airport Refuse Transportation Public Parking Total 1,396 20,829 344 4,777 27,346 635 53 255 153 225 32 661 2,014 (618) 4,662 3,956 5,717 3,552 911 139 1,532 20,469 360 4

257 (55)

(57) 149 509 2,041 21 463 385 178 48 582 3,718 (3,374) 2,718 5

(7) 3 (27) 2,692 (682) 480 33 1,019 1,374 507 255 7

144 801 4,107 670 Nonoperating revenues (expenses):

Operating grants Interest income Other Gain/loss on retirement of capital assets Interest expense and fiscal charges Total non-operating revenues Income before capital contributions and transfers Cash capital contributions Transfers in Transfers out Change in net position Total net position - beginning Total net position - ending 8,357 5,404 6,942 4,345 1,321 363 3,576 30,308 (2,962) 2,718 9

949 (52)

(1,043) 2,581 (381) 1,242 2,277 (840) 2,298 55,333 57,631 (5) 704 (15)

(20)

(638) 762 (944)

(240) 430 2,211 (840) 1,801 33 124 542 (169) 24,522 8,464 2,722 19,625 24,646 9,006 2,553 21,426 77

City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Cash flows from operating activities:

Cash received from customers and users Cash paid to employees for services Cash paid to other suppliers of goods or services Other receipts Net cash provided (used) by operating activities Cash flows from noncapital financing activities:

Transfers in Transfers out Advances from (to) other funds Payments on interfund receivables Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities:

Purchase of capital assets Proceeds from the sale of capital assets Principal paid on long-term obligations Interest paid on long-term obligations Capital contributions Net cash (used) provided for capital and related financing activities Cash flows from investing activities:

Income (loss) from investments Net cash provided by investing activities Net change in cash and cash equivalents Airport 1,423 (610)

(632)

(5) 176 Public Refuse Transportation Parking 20,182 670 3,739 (4,475)

(1,962)

(996)

(14,435)

(836)

(6,288) 257 3,191 704 1,529 1,063 (2,841) 33 33 105 (4) 101 (1,024)

(15) 762 (277) 2,211 (840) 370 (23)

(11) 10 22 1,741 Totals 26,014 (8,043)

(22,191) 4,147 (73) 2,277 (840) 441 (4) 1,874 (10,619) 3 (859)

(1,027) 762 (11,740)

(4)

(4)

(9,943) 14,833 4,890 continued (2,662)

(57)

(362) 3 (21)

(27)

(6,571)

(838)

(928)

(2,719)

(407)

(8,337) 8 (12) 8 (12)

(1,172) 678 (9,449) 3,545 1,838 9,450 2,373 2,516 1

Cash and cash equivalents, beginning Cash and cash equivalents, ending 78

City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Public Parking Totals Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating income (loss)

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

Depreciation and amortization Amortization of net pension asset (Increase) decrease in accounts receivable Increase (decrease) in intergovernmental receivables Increase (decrease) in accounts payable Decrease in accrued payroll Increase in other payables Decrease in landfill capping Airport (618) 171 661 8

34 (183) 86 (4) 21 Refuse Transportation 360 257 (3,374) 3,191 670 704 (2,962) 4,323 1,532 43 (647) 78 (531) 675 582 21 326 259 (12) 70 801 7

(1,103) 65 (4,001)

(17) 33 3,576 79 (1,390)

(118)

(3,578)

(564) 799 (238)

(238) 176 1,529 1,063 (2,841)

(73)

Net cash provided (used) by operating activities 79

-4 I-I

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 Position Internal Service Funds June 30, 2013 (amounts expressed in thousands)

Assets Current assets:

Cash and investments Receivables (net of allowance for uncollectibles)

Interest Accounts Intergovernmental Inventory Total current assets Non-current assets:

Advances to other funds Advances to Successor Agency Net pension asset Capital assets:

Buildings Accumulated depreciation-buildings Machinery and equipment Accumulated depreciation-machinery and equipment Total non-current assets:

Self-Insurance Trust Central Stores Central Garage Total 4,209 4,209 28 6

49 83 19 44 11 435 4,718 47 50 60 6,690 11,056 6,255 6,255 4,767 5,578 214 4,767 5,578 1,445 224 1,007 139 (139) 224 2,084 (294) 9,444 (8,021) 4,220 2,084 (294) 9,583 (8,160) 15,003 10,559 Total assets 10,642 6,479 8,938 26,059 Liabilities Current liabilities:

Accounts payable Accrued payroll Due to other funds Claims and judgments - current Compensated absences - current Total current liabilities 212 11 265 19,337 259 15 2,521 454 64 32 53 164 19,857 2,848 682 Non-current liabilities:

Advances from other funds Claims and judgments Compensated absences Other postemployment benefits Total non-current liabilities 213 12,232 223 1,003 35 79 95 12,524 353 Total liabilities 32,381 3,201 208 406 1,617 2,299 3,213 3,426 6,639 925 90 2,786 19,337 249 23,387 1,439 12,232 243 580 14,494 37,881 3,213 (15,035)

(11,822)

Net Position Net investment in capital assets Unrestricted Total net position (21,739) 3,278 (21,739) 3,278 81

City of Riverside Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Operating revenues:

Charges for services Operating expenses:

Personnel services Contractual services Maintenance and operation General Materials and supplies Claims/Insurance Depreciation and amortization Total operating expenses Operating income (loss)

Non-operating revenues (expenses):

Interest income Other Gain (loss) on retirement of capital assets Interest expense and fiscal charges Total non-operating revenue (expenses)

Income before capital contributions and transfers Transfers out Change in net position Total net position - beginning Total net position - ending Self-Insurance Trust Central Stores Central Garage Totals 12,430 1,594 7,215 21,239 481 65 4

977 17,846 19,373 (6,943) 653 32 296 11 9

3 1,004 590 2,732 56 2,369 690 200 52 542 6,641 574 3,866 121 2,405 1,963 211 17,907 545 27,018 (5,779) 249 (14) 4 (142) 97 (5,682)

(132)

(5,814)

(6,008)

(11,822) 204 (14) 45 (85) 105 (6,838)

(6,838)

(14,901)

(21,739)

(10)

(10) 580 580 2,698 3,278 (47) 2 576 (132) 444 6,195 6,639 82

City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Cash flows from operating activities:

Cash received from customers and users Cash paid to employees for services Cash paid to other suppliers of goods or services Other Net cash provided (used) by operating activities Cash flows from noncapital financing activities:

Advances from interfund receivables Operating transfers out Advances from (to) other funds Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities:

Interest paid on long-term obligation Loss from the sale of capital assets Purchase of capital assets Net cash (used) for capital and related financing activities Self-Insurance Trust 12,498 (453)

(14,743)

(14)

(2,712)

Central Stores Central Garage Total 1,594 7,318 21,410 (623)

(3,083)

(4,159)

(957)

(2,622)

(18,322)

(14) 14 1,613 (1,085)

(4) 661 657 (85)

(85) 144 144 (4)

(4)

(10)

(10)

(4)

(132)

(132)

(19) 638 (151) 502 (47)

(142) 4 4

(446)

(446)

(489)

(584) 38 182 38 182 Cash flows from investing activities:

Income from investments Net increase in cash and cash equivalents Cash and cash equivalents, beginning Cash and cash equivalents, ending (1,996) 1,011 (985) 1,996 3,198 5,194 4,209 4,209 continued 83

City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2013 (amounts expressed in thousands)

Reconciliation of operating income to net cash provided (used) by operating activities:

Operating income (loss)

Other disbursements Adjustments to reconcile operating income (loss) to net cash provided (used) by operating'activities:

Depreciation and amortization Amortization of net pension asset Decrease in accounts receivable Decrease in inventory (Decrease) increase in accounts payable Increase in other payables (Decrease) in accrued payroll Increase (decrease) in due to other funds Increase in claims and judgments Net cash provided (used) by operating activities Self-Insurance Trust (6,943)

(14)

Central Stores 590 Central Garage Total 574 (5,779)

(14) 3 8

68 (135) 21 265 4,026 94 30 106 (85)

(732) 542 37 103 3

281 451 (378) 545 45 171 97 176 578 (463)

(467) 4,026 (2,712) 14 1,613 (1,085) 84

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, 2013 (amounts expressed in thousands)

Balance Balance July 1, 2012 Additions Deductions June 30, 2013 Assets Cash and investments Cash and investments at fiscal agent Interest receivable Accounts receivable Property taxes receivable Total assets 7,515 6,569 28 5,646 10,772 252 24 6,473 10,563 247 6,688 6,778 33 24 406 125 407 124 14,518 16,819 17,690 13,647 Liabilities Accounts payable Held for bond holders Total liabilities 91 91 14,518 16,819 17,690 13,647 14,518 16,910 17,781 13,647 85

-9 r-I

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, 2013 (amounts expressed in thousands)

Governmental funds capital assets:

Land Buildings and improvements Improvements other than buildings Machinery and equipment Infrastructure Construction in progress Total governmental funds capital assets Investments in governmental funds capital assets by source:

Certificates of participation Gifts Operating revenue General obligation bonds Revenue bonds County contracts and grants State grants Asset forfeiture - state Asset forfeiture - federal Housing and community development grants Other federal grants Community facilities bonds Assessment district bonds Capital leases RDA tax increment bonds Capital projects funds Total governmental funds capital assets 325,215 180,337 250,021 79,782 910,700 38,515 1,784,570 122,429 313,087 515,738 4,484 21,229 100 40,442 1,008 2,647 18,545 34,639 1,026 397 7,930 2,278 698,591 1,784,570 87

-9

-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 Paqe Financial Trends 89 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 95 These schedules contain information to help the reader assess the factors affecting the City's ability to generate property and sales taxes.

Debt Capacity 104 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 110 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 112 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 Position by Component Last Ten Fiscal Years (accrual basis of accounting)

(in thousands)

Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012i 2013 Governmental activities Invested in capital assets, net of related debt 484,784 515,354 622,336 712,801 850,740 950,496 9

Restricted 137,126 154,957 158,038 107,982 102,677 98,903 1(

Unrestricted (41,353)

(46,419)

(51,261)

(34,245)

(31,429)

(41,861)

(1 Total governmental activities net position 580,557 623,892 729,113 786,538 921,988

$ 1,007,538

$ 1,0 Business-type activities Invested in capital assets, net of related debt 341,041 402,377 425,285 520,059 601,999 659,904 6t Restricted 49,242 54,540 71,386 57,613 43,341 38,621 Unrestricted 217,762 229,462 250,041 242,966 225,281 207,405 2

Total business-type activities net position 608,045 686,379 746,712 820,638 870,621 905,930 9'

Primary government Invested in capital assets, net of related debt 825,825 917.731

$ 1,047,621

$ 1,232,860

$ 1,452,739

$ 1,610,400

$ 1,6.

Restricted 186,368 209,497 229,424 165,595 146,018 137,524 11 Unrestricted 176,409 183,043 198,780 208,721 193,852 165,544 1i Total primary government net position

$ 1,188,602

$ 1,310,271

$ 1,475,825

$ 1,607,176

$ 1,792,609

$ 1,913,468

$ 1,9z

' The increase in total governmental activities net position (and related unrestricted net position) is due to the due to the dissolution of the Redevelopment Agency.

76,614 1,019,892

$ 1,076,485

$ 1,083,485 08,932 80,820 86,325 80,712 80,947)

(90,159) 23,145 17,989 04,599 1,010,553

$ 1,185,955

$ 1,182,186 60,619 654,974 666,919 609,691 59,863 56,397 54,923 69,068 19,720 256,038 285,062 330,833 40,202 967,409

$ 1,006,904

$ 1,009,592 37,233 1,674,866

$ 1,743,404

$ 1,693,176 68,795 137,217 141,248 149,780 38,773 165,879 308,207 348,822 44.801 1.977.962

$ 2.192.859

$ 2.191.778 89

Table 2 City of Riverside Changes In Net Position Last Ten Fiscal Years (accrual basis of accounting)

(in thousands)

Page 1 of 2

-Expenses Governmentai activities:

Generai government Public safety Highways and streets Culture and Recreation Interest on long-tern, debt Total governmental activities expenses Business-type activities:

Electric Water Sewer Refuse Airport Transportation Public parking Total business-type activities expenses Total primary government expenses Program Revenues Governmental activities:

Charges for services:

General government Public safety Highways and streets Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business-type activities:

Charges for services:

Electric Water Sewer Refuse Airport Transportation Public parking Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 63,000 58,460 74,458

$ 105,486

$ 113,897 71,391

$ 85,110

$ 72,606

$ 48,731

$ 54,808 102,500 110,969 120,470 114,312 122,783 142,353 137,338 139,364 148,605 147,652 22,017 20,364 20,757 22,556 26,986 29,700 31,492 32,131 35,342 35,072 22,988 26,353 32,602 28,016 31,659 29,423 44,319 50,017 54,594 40,077 10,996 15,885 16,358 26,378 34,075 34,361 32,049 33,638 25,087 16,627 221,501 232,031 264,645 296,748 329,400 307,228 330,308 327,756 312,359 294,236 196,727 200,030 226,186 232,346 271,412 269,209 256,860 275,922 288,7g9 292,175 33,921 36,709 39,486 42,108 47,570 53,931 55,402 56.390 56,715 58,768 23,273 26,108 27,299 29,510 31,209 34,853 41,248 42.276 43,702 43,945 11,510 12.841 14,546 16.490 18,430 18,425 20,527 20,046 19,979 20,581 1,088 1,185 1,004 1,201 1,418 1,734 2,206 2,320 2,646 2,029 2,286 2,557 2,917 2,831 3,190 3,194 3,368 3,493 3,667 3,745 1,389 824 2,701 3,762 4,093 5.095 4,024 4,401 4.984 5,051 270,194 280,254 314,139 328,248 377,322 386,441 383,635 404,848 420,492 426,294

$ 491,695 512,285

$ 578,784

$ 624,996

$ 706,722

$ 693.669

$ 713,943

$732,604

$732,851

$720,530 26,160 25,995 24,683 10,245 23,969 13,691

$ 12,933

$ 14,241

$ 14,662

$ 13,338 6,799 6,982 5,845 12,410 9,924 8.414 8,177 8,075 7.837 7,793 22,286 23,108 25,412 30,563 19,695 14,391 17,847 16,985 16,532 15,825 5,056 7,002 7,716 8,302 4,370 3,168 2,367 3,180 4,622 5,237 12,935 16,140 13,150 12,101 15,024 23,313 32,853 21,127 31,581 21,485 1,136 5,292 18,618 10,557 115,982 69,745 23,395 38,138 54,476 32,202 74,372 84,519 95,424 84,178 188,964 132,722 97,572 101,746 129,710 95,880 233,102 32,382 21,672 13,759 1,051 185 2,760 1,723 26,390 333,024

$ 407,396 252,322 34,002 21,967 14,492 1,088 200 2,961 2,261 32,317 361,610 446,129 259,572 37,613 21,510 15,160 1,162 238 2,837 2,704 29,293 370,089

$ 465.513 278,888 47.080 24,057 15,833 1,263 302 3,431 1,939 40,066 412,859

$ 497.037 305,299 49,855 22,525 16,289 1,423 313 3,717 3,308 29,215 431,.944

$ 620.908 314,164 54,923 23,247 18,394 1,232 336 4,332 1,929 17,288 435,845

$ 568.567 309,910 57,534 27,342 18,712 1,315 328 4,876 2,487 6,838 429,342

$ 526.914 313,703 333,029 347,933 62,084 65,206 68,489 32,769 37,747 43,772 19,134 19,588 20,829 1,342 1,524 1,396 344 352 344 5,205 4,803 4,777 2,159 2,738 2,718 7,337 21,164 11,734 444,077 486,151 501,992

$545,823

$615.861

$597.872 (continued) 90

Table 2 City of Riverside Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting)

(in thousands)

Page 2 of 2 Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 20121 2013' Net Revenues (Expense)

Governmental activities

$ (147,129)

$(147,512)

$ (169,221)

$(212,570)

$ (140,436)

$ (174,506)

(232,736)

$ (226,010)

$(182,649)

$(198,356)

Business-type activities 62,830 81,356 55,950 84,611 54,622 49,404 45,707 39,229 65,659 75,698 Total primary govemnment net expense

$ (84,299)

$ (66,156)

$ (113,271)

$(127,959)

(85,814)

$ (125,102)

(187,029)

$ (186,781)

$(116,990)

$(122.658)

General Revenues and Other Changes in Net Position Governmental activities:

Taxes Sales 46.624 53,348 57,522 55,666 50,526 41,882 39,645 44,157 47,701 50,222 Property 35,911 61,553 80,934 106,114 114,176 116,420 104,087 100.802 74,179 52,904 Utility Users 21,362 22,133 23,502 25,384 26,267 25,964 25,975 26,691 27,320 28,206 Franchise 4,261 4,481 4,813 5,031 4,972 5,144 4,477 4,937 4,883 4,959 Other 3,213 3,828 4,372 3,581 3,795 2,912 2,488 2,731 2,995 3,703 Intergovernmental, unrestricted 12,528 1.795 1,747 1,863 2,074 4,569 1,339 1,285 351 337 Unrestricted grants and contributions 18,710 15,220 39,653 29,743 Investment earnings 1,284 7,815 10,150 18,582 25,670 15,941 8,289 7,439 4,440 2,786 Miscellaneous 5,476 5,756 26,173 4,228 9,480 5,137 3,344 9,544 9,273 9,208 Transfers 10,302 14,918 25,576 31,171 32,326 42,087 40,153 34,378 40,679 42,262 Extraordinary items 149,617 Contributions (2,800)

Total governmental activities 156,871 190,847 274,442 281,363 269,286 260,056 229,797 231,964 361,438 194,587 Business-type activities:

Unrestricted grants and contributions Investment income 5,016 7,548 11,259 16,988 22,756 23,402 21,271 17,548 11,405 4,744 Miscellaneous 4,553 7.362 18,700 3,498 4,931 4,590 7,447 4,808 3,110 5,767 Special item (3,014)

Transfers (10,302)

(14,918)

(25,576)

(31,171)

(32,326)

(42,087)

(40,153)

(34,378)

(40,679)

(42,262)

Extraordinary items (41,259)

Total business-type activities (733)

(3,022) 4,383 (10,685)

(4,639)

(14,095)

(11,435)

(12,022)

(26,164)

(73,010)

Total primary government 156,138 187,825 278,825 270,678 264,647 245,961 218,362 219,942 335,274 121,577 Change in Net Position Governmental activities 9,742 43,335 105,221 68,793 128,850 85,550 (2,939) 5,954

$ 178,789 (3,769)

Business-type activities 62,097 78,334 60,333 73,926 49,983 35,309 34,272 27,207 39,495 2,688 Total primary government 71,839

$ 121,669 165,554

$ 142,719 178,833 120,859 31,333 33,161

$ 218,284 (1,081)

The increase in total governmental activities net position is due to the dissolution of the Redevelopment Agency.

2 The decrease in total business-type activities net position is due to the power plant closure.

91

Table 3 City of Riverside Fund Balances of Governmental Funds Last Three Fiscal Years (modified accrual basis of accounting, in thousands)

General fund Nonspendable Restricted Assigned Unassigned Total general fund All other governmental funds Nonspendable Restricted:

Housing and redevelopment Debt service Transportation and public works Other purposes Total all other governmental funds 2011 20121'2 2013

$ 26,646 25,720

$ 26,421 82,249 2,803 2,196 15,589 6,380 10,711 36,359 39,347 37,763

$ 160,843 74,250

$ 77,091 1,626 1,539 1,441 96,571 26,911 26,410 56,526 29,080 25,884 26,459 31,075 16,487 5,073 1,401 2,003

$ 186,255 90,006 72,225 1 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 three years of data for this schedule.

92

Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (moifid acrul bsisaccuntng)(in thousands)

Page 1 of 2 Revenues:

Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Use of money and property Miscellaneous Total revenues Expenditures:

General govemnment Public safety Highways and streets Culture and recreation Capital outlay Debt Service:

Principal Interest Debt issuance costs Payment for advance refunding Total expenditures Excess of revenues over (under) expenditures 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$ 113,118

$ 142,056

$ 170,638

$ 191,131

$ 200,438

$ 192,322

$ 177,255

$ 179,318

$ 156,593

$ 139,994 11,343 14,389 16,351 12,984 10,027 7,368 6,899 7,657 9,292 10,173 42,609 42,568 55,178 47,934 79,423 86,873 60.550 61,082 66,618 50,734 10,046 11,299 11,538 11,914 11,325 9,099 9,570 10,720 11,774 12,062 2,188 2,006 2,098 2,778 4,573 6,213 7,512 8,928 6,293 6,234 10,259 6,272 6,247 6,170 5,245 5,431 5,464 6.014 6,276 6,669 10,587 10,915 14,324 22,587 27,970 18,620 11,173 10,173 8,095 3,878 7,133 9,996 8,502 6,164 12,796 7,596 7,082 16,605 10,611 14,933

$ 207,283

$ 239,501

$ 284,876

$ 301,662

$ 351,797

$ 333.522

$ 285,505

$ 300,497

$ 275,552

$ 244,677

$ 25,108 21,800 25,193 39,093 26,177 25,995 23,835 26,090

$ 18,835

$ 15.713 107,386 117,267 126,007 139,739 151,773 145,802 138.594 140,994 150,878 150,290 11,990 11,695 11,281 19,722 25,209 18,452 14,987 14,587 16,651 16,294 24.836 28,939 31,017 31,039 30,622 26,859 40,373 44,345 57,538 45,356 50,333 64,127 121,978 149,325 171,952 180,394 131,908 105,689 75,482 73,581 2,422 8,599 9,733 12,045 11,257 44,349 48,078 89,264 83,378 45,006 9,945 15,025 19,205 21,330 31,239 33.033 31,267 32,611 24,133 15,116 950 1,538 2,551 697 259 231 174 169 581 3,521

$ 232,970

$ 268,990 344,414

$ 414,844

$ 448,926 475,143

$ 429,273

$ 453,754

$ 427,064

$ 365,458

$ (25,687)

(29,489)

(59,538)

$ (113,182)

(97,129)

$ (141,621)

$ (143,768)

$ (153,257)

$(151,512)

$(120,781)

(continued) 93

Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (in thnl, nnndn(i Pnno 9 nf 9 modified accrual basis accountin finthousands' Pa e 2 of 2 Other financing sources (uses):

Transfers in Transfers out Sales of general capital assets Advances from other funds Long-term obligation proceeds Capital lease proceeds Premiums (discounts) on bonds issued Payments to refunded bond agent Total other financing sources (uses)

Special item - pension contribution Extraordinary items:

Dissolution of Riverside Redevlopment Agency:

Transfer of assets and liabilities to Successor Agency Transfer of assets from Successor Agency Assumption of obligation Total extraordinary items Net change in fund balances 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$ 41,440

$ 49,944 59,545 84,306 62,841

$ 100,797 88,303 214,631 196,859 56,572 (31,338)

(35,026)

(33,969)

(53,135)

(30,515)

(58,710)

(48,150)

(180,280)

(156,305)

(14,178)

(675) 6,230 1,281 541 8,931 (5,798) 529 (1,629) 156 82 247,594 85,578 20,969 295,190 164,408 30.425 52.360 104,875 34,940 97.180 3,116 2,000 7,203 113 4,455 (539) 2,573 (58,657)

(9,167)

(148.975)

(43.591) 198,364 97,672 47,826 331,357 56,690 66,714 95,619 139,597 75,650 105,841 (88,300)

(32,141)

(130,174) 28,121 (4,927)

(106,980)

$ 84,377

$ 36,042

$ (11.712)

$ 218,175

$ (40,439)

$ (74,907)

$ (48,149)

(13,660)

(182,842)

(14,940)

Debt service as a percentage of noncapital expenditures 7.173%

15.301%

(1) 13.777%

14.011%

16.947%

26.058%

(2)

(3) 23.211%

32.757%

(4) 32.507%

(5) 21.039%

(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, 2012 and 2013.

(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.

94

Table 5 City of Riverside Business-Type Activities Electricity Revenue By Source Last Ten Fiscal Years (accrual basis of accounting)

(in thousands)

Cap and Trade Fiscal Residential Commercial Industrial Wholesale Other Transmission Auction Sales Year Sales Sales Sales

,Sales Sales Revenue Revenue 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 80,872 79,786 85,243 94,426 99,981 105,525.

107,301 107,792 110,471 118,173 57,079 59,998 53,773 55,421 60,768 65,532 65,091 64,039 66,047 66,632

$ 56,117 59,157 71,084 83,698 92,697 97,100 97,458 102,067 107,455 110,680 9,581 15,249 11,952 9,913 14,805 4,674 1,466 124 50 638 6,354 6,337 7,139 5,713 5,425 5,684 5,639 5,529 5,614 5,712 20,917 20,213 20,043 20,097 19,211 18,673 21,100 22,091 30,735 32,688 Other Operating Revenue 2,182 12,697 9,183 9,536 12,405 12,250 11,855 12,061 12,657 13,029 Total Revenues 233,102 253,437 258,417 278,804 305,292 309,438 309,910 313,703 333,029 347,933 381 The City started receiving Cap and Trade Auction Sales Revenue in 2013.

95

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 Year Tax Tax' Tax Tax Other Total Tax Taxes 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 46,624 53,348 57,522 55,666 50,526 41,882 39,645 44,157 47,701 50,222 35,911 61,553 80,934 101,469 114,176 116,420 104,087 100,802 74,179 52,904 21,362 22,133 23,502 25,384 26,267 25,964 25,975 26,691 27,320 28,206 4,261 4,481 4,813 5,031 4,972 5,144 4,477 4,937 4,883 4,959 3,213 1,795 4,372 3,581 3,795 2,912 2,488 2,731 2,995 3,703 111,371 143,310 171,143 191,131 199,736 192,322 176,672 179,318 157,078 139,994 1 Decrease in property taxes in fiscal years 2012 and 2013 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.

96

Table 7 City of Riverside Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands) city Dissolved Redevelopment Agency1 Fiscal Year Ended June 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Secured 14,188,658 15,540,982 17,557,341 20,672,126 23,618,776 24,428,633 22,644,262 22,056,793 22,031,328 22,313,665 Unsecured 845,858 951,211 1,058,995 1,140,891 1,291,972 1,330,053 1,299,353 1,260,923 1,264,151 1,244,448 Less:

Exemptions (2,526,503)

(2,751,844)

(4,002,177)

(5,417,388)

(6,960,666)

(7,515,667)

(7,103,040)

(6,920,720)

(6,952,649)

(7,142,401)

Taxable Assessed Value 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 16,415,712 Taxable Less:

Assessed Secured Unsecured Exemptions Value 1,508,478 1,775,655 2,914,600 4,145,700 5,509,441 5,998,768 5,598,484 5,396,219 5,395,632 N/A 228,775 158,148 210,025 410,625 553,124 581,943 564,825 544,906 572,153 N/A (30,286)

(33,654)

(51,992)

(93,261)

(138,490)

(224,025)

(266,257)

(268,323)

(270,313)

N/A 1,706,967 1,900,149 3,072,633 4,463,064 5,924,075 6,356,686 5,897,052 5,672,802 5,697,472 N/A Total Direct Tax Rate 0.264 0.266 0.309 0.304 0.334 0.343 0.349 0.347 0.348 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 California were dissolved and ceased to operate as a legal entity as of February 1, 2012.

Source: Riverside County Auditor-Controller 97

Table 8 City of Riverside Direct and Overlapping Property Tax Rates (Rate per $100 of Assessed Valuation)

Last Ten Fiscal Years Basic Levy1 Unified School Districts Debt Service2 City of Riverside Debt Service Eastern Municipal Water Improvement District Metropolitan Water District Original Area Riverside City Community College Debt Service Rubidoux Community Service Debt Service Total Direct & Overlapping3 Tax Rates City's Share of 1% Levy Per Prop 134 General Obligation Debt Rate 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 0.210 0.234 0.220 0.155 0.185 0.291 0.326 0.334 0.363 0.409 0.011 0.009 0.008 0.006 0.007 0.006 0.006 0.006 0.006 0.022 0.023 0.010 0.009 0.008 0.006 0.006 0.005 0.005 0.005 0.004 0.004 0.004 0.004 0.004 0.018 0.018 0.018 0.013 0.013 0.012 0.015 0.017 0.017 0.003 0.003 1.241 1.295 1.262 1.195 1.217 1.315 1.348 1.359 1.390 1.436 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.011 0.009 0.009 0.006 0.007 0.006 0.006 0.006 0.006 Redevelopment Rate5 '7 1.006 1.006 1.005 1.005 1.005 1.004 1.004 1.004 1.004 Total Direct Rate6 0.264 0.266 0.309 0.304 0.334 0.343 0.349 0.347 0.348 0.348 1 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. The approval of ABX1 26 eliminated Redevelopment from the State of Califomia for the fiscal year 2012/13 and years thereafter.

6 Total Direct Rate is the weighted average of all individual direct rates.

In accordance with the timeline set forth in Assembly Bill X1 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 - 2012/13 Tax Rate Table.

98

Table 9 City of Riverside Principal Property Taxpayers Current Year and Nine Years Aao (i2touans Curn eradNn er Aao' in thuans 2013 2004 Property Owner Tyler Mall Riverside Healthcare System Rohr Inc La Sierra University Cole ID State Street Bank & Trust Co of Calif JSP Corona Pointe, LLC Vestar Riverside Plaza BRE Properties, Inc.

Canyon Springs Marketplace Corp Charter Communications Lyon Corona Pointe California State Teachers Retirement Bottling Group Press Enterprise Company Mission Grove Park Apartments Taxable Assessed Value 190,480 117,031 112,325 104,729 91,500 89,839 76,159 69,554 69,277 69,000 Percentage of Total Taxable Assessed Rank Value 1

2 3

4 5

6 7

8 9

10 0.8%

0.5%

0.5%

0.5%

0.4%

0.4%

0.3%

0.3%

0.3%

0.3%

Taxable Assessed Value 143,014 95,952 57,502 94,846 60,179 55,800 54,359 48,984 47,004 43,567

$ 701,207 Percentage of Total Taxable Assessed Rank Value 1

2 5

3 1.0%

0.7%

0.4%

0.6%

4 6

7 8

9 10 0.4%

0.4%

0.4%

0.3%

0.3%

0.3%

Totals 989,894 4.4%

4.8%

Notes:

The amounts shown above include assessed value data for both the City and the Successor Agency.

Source: Riverside County Assessor 2012/13 and 2003/04 Combined Tax Rolls 99

Table 10 City of Riverside Property Tax Levies and Collections Last Ten Fiscal Years (in thousands)

Fiscal Year Ended June 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Taxes Collected within the Levied for Fiscal Year of the Levy Fiscal Year Amount Percentage of Levy 31,829 36,825 52,532 69,246 83,996 86,251 77,228 74,608 46,059 47,135 31,429 36,332 51,815 67,046 82,345 84,134 74,491 72,327 45,379 46,578 98.74%

98.66%

98.64%

96.82%

98.03%

97.55%

96.46%

96.94%

98.52%

98.82%

Collections in Subsequent Years 391 476 700 2,174 1,608 2,048 2,607 2,090 360 Total Collections To Date Amount Percentage of Levy 31,820 36,808 52,515 69,220 83,953 86,182 77,098 74,417 45,739 46,578 99.97%

99.95%

99.97%

99.96%

99.95%

99.92%

99.83%

99.74%

99.30%

98.82%

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 and City Finance Department 100

Table 11 City of Riverside Electricity Sold by Type of Customer Last Ten Fiscal Years (in millions of kilowatt-hours)

Type of Customer:

Residential Commercial Industrial Wholesale sales Other Total Total direct rate Monthly Base Rate 1 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 707 675 696 748 734 733 701 666 688 726 522 530 474 456 441 433 406 400 413 419 687 707 810 924 960 946 906 912 969 1,003 354 470 287 295 357 137 44 7

2 14 52 50 58 39 34 33 32 31 31 31 2,322 2,432 2,325 2,462 2,526 2,282 2,089 2,016 2,103 2,193 3.28 3.36 3.36 5.00 11.35 13.06 18.06 18.06 18.06 18.06 Monthly Base Rate includes a Reliability Charge of $5.00 (small residence 100 amp) implemented in January 2008. In January 2010 the Reliability Charge increased to $10.00 (small residence 100 amp).

Source: Riverside Public Utilities, Finance Services 101

Table 12 City of Riverside Electricity Rates Last Ten Fiscal Years (Average Rate in Dollars per Kilowatt-Hour)

Fiscal Year Ended June 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Residential 0.11439 0.11813 0.12222 0.12621 0.13613 0.14389 0.15307 0.16173 0.16068 0.16274 Commercial 0.10936 0.11321 0.11330 0.12164 0.13781 0.15122 0.16014 0.16001 0.15991 0.15913 Industrial 0.08167 0.08369 0.08798 0.09059 0.09658 0.10271 0.10756 0.11194 0.11088 0.11030 Other 0.12271 0.12768 0.12373 0.14493 0.16099 0.17169 0.17876 0.18089 0.17938 0.18375 Source: Riverside Public Utilities, Finance Services 102

Table 13 City of Riverside Top 10 Electricity Customers Current Year and Nine Years Ago 2013 2004 Percent of Electricity Total Electric Charges Revenues Percent of Electricity Total Electric Charges Revenues Electricity Customer Local University Local Government Local Government Local School District Corporation Corporation Hospital Corporation Local School District Shopping Mall

$10,828,940 7,920,390 7,447,872 4,199,138 3,386,525 3,337,147 2,457,850 2,428,008 2,091,371 2,087,427 3.60%

2.63%

2.47%

1.39%

1.12%

1.11%

0.82%

0.81%

0.69%

0.69%

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

$46,184,668 15.33%

N/A N/A Retail Sales Per Financial Statements

$301,196,912 N/A - not available Source: Riverside Public Utilities, Finance Services 103

Table 14 City of Riverside Ratios of Outstanding Debt by Type Last Ten Fiscal Years (in thousands)

General Fiscal Obligation Year Bonds Governmental Activities Pension Assessment Obligation Bonds Bonds Redevelopment Bonds Revenue Bonds 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20,285 20,280 19,858 19,331 18,774 18,171 17,533 16,845 16,107 15,314 131,590 144,024 140,195 296,598 292,244 285,743 278,867 305,195 89,540 148,280 146,470 144,450 142,170 139,410 136,050 132,095 127,480 122,005 Certificates of Participation 58,706 57,336 55,571 192,874 200,273 198,268 211,212 207,246 207,278 158,697 Capital Leases 8,938 7,431 6,008 4,929 9,391 7,455 6,303 6,670 5,220 8,424 Notes/Loans Payable 11,057 10,645 10,215 9,759 9,040 8,749 9,291 8,849 4,000 28,652 43,762 Business-Type Activities Fiscal Revenue Year Bonds Notes/Loans Payable Total Capital Primary Leases Government 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 440,970 419,581 509,577 482,929 720,749 670,512 968,393 1,071,554 1,063,853 1,031,839 11,066 10,459 9,841 9,211 8,569 7,915 7,249 76,747 73,821 70,798 439 392 317 253 211 2,574 2,151 1,720 1,332 2,558 772,591 818,428 898,052 1,160,334 1,401,421 1,342,931 1,637,049 1,826,921 1,499,091 1,482,049 Percentage of Personal Income1 15.02%

14.98%

15.47%

18.67%

21.51%

20.15%

24.83%

27.58%

22.01%

21.41%

Debt Per Capita1 2.79 2.91 3.13 4.01 4.80 4.54 5.44 6.01 4.86 4.75 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.

104

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 Year Bonds Bonds Participation Bonds Total Value 1 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20,285 20,280 19,858 19,331 18,774 18,171 17,533 16,845 16,107 15,314 89,540 148,280 146,470 144,450 142,170 139,410 136,050 132,095 127,480 122,005 58,706 57,336 55,571 192,874 200,273 198,268 211,212 207,246 207,278 158,697 131,590 144,024 140,195 296,598 292,244 285,743 278,867 305,195 300,121 369,920 362,094 653,253 653,461 641,592 643,662 661,381 350,865 296,016 2.40%

2.69%

2.48%

3.98%

3.64%

3.52%

3.82%

4.03%

2.15%

1.80%

Per Capita 2

1,083 1,316 1,264 2,260 2,239 2,167 2,140 2,175 1,137 949 Notes:

General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (which, the City has none.)

1 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.

105

Table 16 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30, 2013 Page 1 of 2 2012-13 Assessed Valuation:

Less Dissolved Redevelopment Agency Incremental Valuation:

Adjusted Assessed Valuation:

$ 22,210,675,685 5,794,963,931

$ 16,415,711,754 Overlapping debt repaid with property taxes 2 Metropolitan Water District Riverside City Community College District Alvord Unified School District Riverside Unified School District Corona-Norco Unified School District Jurupa Unified School District Moreno Valley Unified School District Alvord Unified School District Community District No.2006-1 Riverside Unified School District Community Facilities Districts City of Riverside Community Facilities Districts City of Riverside 1915 Act Bonds Total overlapping debt repaid with property taxes Total Debt 1,650,850 229,362,310 202,965,954 143,310,000 267,300,000 49,050,000 39,508,524 8,155,000 85,685,000 12,235,000 27,865,000

% Applicable 1.074%

30.024 70.989 86.884 0.001 0.002 12.787 79.771 89.192-100.

100.

100.

City's Share of Debt1 1,773,013 68,863,740 144,083,501 124,513,460 2,673 981 5,051,955 6,505,325 85,545,309 12,235,000 27,865,000 476,439,957 (continued) 106

Table 16 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30. 2013 Paae 2 of 2 Other overlapping debt2 Riverside County General Fund Obligations Riverside County Pension Obligations Riverside County Board of Education Certificates of Participation Alvord Unified School District Certificates of Participation Corona-Norco Unified School District Certificates of Participation Jurupa Unified School District Certificates of Participation Moreno Valley Unified School District Certificates of Participation Riverside Unified School District General Fund Obligations Total other overlapping debt Less: Riverside County supported obligations

$ 650,309,993 346,790,000 3,900,000 2,027,061 30,000,000 6,850,000 18,585,000 12,585,000 11.188%

11.188 11.188 70.989 0.001 0.002 12.787 86.884 72,756,682 38,798,865 436,332 1,438,990 300 137 2,376,464 10,934,351 126,742,121 1,304,266 125,437,855 267,653,578 Overlapping tax Increment debt Total overlapping debt 869,531,390 City direct debt 376,854,000

$ 1,246,385,390 Combined total direct and overlapping debt (1) Debt balances are as of April 1, 2013 (most recent available) for other agency debt, and June 30, 2013 for all City of Riverside direct debt.

(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, non-bonded capital lease obligations.

Qualified Zone Academy bonds are included based on principal due at maturity.

Ratios to 2012-13 Assessed Valuation:

Total debt repaid with property taxes....................................

2.15%

City direct debt ($376,854,000)..........................................

1.70%

Combined total direct and overlapping debt............................

5.61%

Ratios to Dissolved Redevelopment Incremental Valuation ($5,794,963,931):

Total overlapping tax Increment debt...................................

4.62%

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 bome 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: Califomia Municipal Statistics, Inc., Riverside County Auditor-Controller and City Finance Department.

107

Table 17 City of Riverside Legal Debt Margin Information Last Ten Fiscal Years (in thousands)

Assessed valuation Conversion percentage Adjusted assessed valuation Debt limit percentage Debt limit Total net debt applicable to limit:

Legal debt margin Total net debt applicable to the limit as a percentage of debt limit 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$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

$ 16,415,712 25%

25%

25%

25%

25%

25%

25%

25%

25%

25%

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 4,103,928 15%

15%

15%

15%

15%

15%

15%

15%

15%

15%

469,050 515,263 548,031 614,836 673,128 684,113 631,522 614,887 612,856 615,589 20,285 20,280 19,858 19,331 18,774 18,171 17,533 16,845 16,107 15,314 448,765 494,983 528,173 595,505 654,354 665,942 613,989 598,042 596,749 600,275 4.3%

3.9%

3.6%

3.1%

2.8%

2.7%

2.8%

2.7%

2.6%

2.5%

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.

108

Table 18 City of Riverside Pledged-Revenue Coverage Business Type Activity Debt Last Ten Fiscal Years LastTenFiscl Yars(in thousands)

. Less:

Fiscal Pledged Operating Year Revenue' Expenses1 Electric Revenue Bonds Net Available Debt Service Revenue Principal Interest Water Revenue Bonds Less:

Net Pledged Operating Available Debt Service Coverage Revenue' Expenses' Revenue Principal Interest Coverage 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 239,842 262,350 265,086 289,784 314,733 320,447 320,560 319,177 340,098 348,187 168,162 164,159 184,421 187,700 219,680 202,904 199,040 212,878 221,876 226,997 71,680 98,191 80,665 102,084 95,053 117,543 121,520 106,299 118,222 121,190 10,780 14,555 15,015 18,815 19,460 20,572 21,574 23,029 25,174 18,486 10,183 12,143 15,245 14,200 16,790 24,941 22,572 25,087 27,630 25,941 3.42 3.68 2.67 3.09 2.62 2.58 2.75 2.21 2.24 2.73 47,093 45,348 66,226 55,699 67,312 60,886 61,985 84,328 73,557 72,700 23,767 26,436 27,028 29,461 33,827 35,639 35,953 35,220 35,309 35,940 23,326 18,912 39,198 26,238 33,485 25,247 26,032 49,108 38,248 36,760 4,010 4,045 3,875 4,300 4,355 4,473 4,533 4,799 4,708 5,395 2,622 2,591 3,790 3,454 4,275 6,728 8,008 9,263 8,872 8,700 3.52 2.85 5.11 3.38 3.88 2.25 2.08 3.49 2.82 2.61 Sewer Revenue Bonds Less:

Fiscal Pledged Operating Year Revenue1 Expenses1 Net Available Debt Service Revenue Principal Interest 2010 2011 2012 2013 31,470 37,772 42,562 52,944 26,865 27,575 29,632 29,999 4,605 10,197 12,930 22,945 666 692 692 7,465 151 125 5,471 10,891 Coverage 5.64 12.48 2.10 1.25 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

Amounts have been calculated in accordance with the provisions set forth in the debt covenants. Total operating expenses exclusive of depreciation.

Pledged revenue includes applicable cash set aside in a rate stabilization account in accordance with applicable bond covenants.

The City of Riverside does not have any pledged revenue related to Govermental Activities.

109

Table 19 City of Riverside Demographic and Economic Statistics Last Ten Calendar Years Calendar Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sources:

Population 1 277,177 281,192 286,572 289,045 291,814 296,038 300,769 304,051 308,511 311,955 Personal Income 2

(in thousands) 5,145,118 5,462,823 5,806,339 6,214,628 6,514,489 6,665,142 6,592,294 6,623,143 6,811,923 6,923,217 Per Capita Personal Income 2 18,563 19,427 20,261 21,501 22,324 22,514 21,918 21,783 22,080 22,193 Unemployment Rate 3 6.6 6.1 5.4 5.1 6.1 8.6 13.7 14.8 13.7 9.7 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.

110

Table 20 City of Riverside Principal Employers Current Year and Nine Years Ago 2013 2004 Percentage of Total City Rank Employment Percentage of Total City Employment Employer Employees Employees Rank County of Riverside Riverside Unified School District University of California Kaiser City of Riverside Riverside Community College District Riverside Community Hospital Riverside County Office of Education Alvord Unified School District Parkview Community Hospital 11,187 5,580 5,497 4,500 2,687 2,087 1,880 1,765 1,445 1,350 1

2 3

4 5

6 7

8 9

10 7.6%

3.8%

3.7%

3.1%

1.8%

1.4%

1.3%

1.2%

1.0%

0.9%

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Total 37,978 25.9%

N/A N/A N/A - not available Source: City of Riverside, Finance Department 111

Table 21 City of Riverside Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Function General government Public safety Police 1 Fire Firefighters and Police Officers Highways and streets Sanitation Culture and recreation Airport Water Electric Total 318.36 331.88 377.15 412.22 436.35 439.10 433.40 431.40 440.40 413.90 567.83 568.83 589.33 618.33 637.33 591.93 589.93 589.93 599.93 596.75 219.65 221.11 221.73 251.73 254.21 254.21 255.46 255.46 255.46 255.46 557.00 557.46 566.46 620.46 632.46 633.46 632.46 632.46 632.46 632.46 285.10 281.35 262.35 286.35 318.35 369.65 349.50 348.11 357.11 362.11 48.49 48.49 59.49 60.29 64.29 58.60 59.00 56.00 56.00 57.00 302.92 300.92 311.45 324.26 339.52 340.71 328.07 328.07 341.22 351.48 6.00 6.00 6.00 7.00 7.00 7.00 7.00 9.50 9.50 9.50 130.00 130.00 133.00 142.00 167.00 167.00 177.65 180.15 181.15 181.15 295.60 305.60 337.60 351.35 404.60 408.10 419.45 448.50 452.50 459.50 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 2,686.85 1 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 112

Table 22 City of Riverside Operating Indicators by Function Last Ten Fiscal Years FunctionlProgram 2(

Police Arrests Fire Number of calls answered Inspections Public works:

Street resurfacing (miles)

Parks and recreation Number of recreation classes Number of facility rentals Water Number of accounts Annual consumption (ccf) 30 Electric Number of accounts Annual consumption (kwh)

Sewer:

New connections Average daily sewage treatment (millions of gallons)

Inspections were not tracked prior to 2003 2 Amounts expressed in millions N/A - not available Source: City of Riverside, various departments 004 11,951 25,876 16,306 62.37 15,135 27,014 61,668

,596,320 100,766 2,322 7,034 35.24 Table 22 City of Riverside Operating Indicators by Function Last Ten Fiscal Years 2005 11,280 26,505 17,028 102.45 15,195 27,074 62,492 27,875,253 103,463 2,432 9,621 38.07 2006 10,093 26,696 19,261 51.26 16,272 27,483 62,985 28,865,030 104,294 2,359 16,717 35.91 2007 2008 9,827 27,458 7,261 73.40 19,079 32,980 63,431 32,110,208 105,226 2,462 15,423 32.50 9,367 27,429 10,812 26.27 22,146 35,076 63,494 30,583,266 106,015 2,526 16,412 32.10 2009 10,150 26,397 7,638 18.90 21,884 36,822 64,062 29,721,236 106,385 2,282 18,765 33.00 2010 8,690 26,484 7,234 20.00 27,762 34,565 64,231 26,687,271 106,335 2,089 16,971 33.29 2011 8,118 27,322 6,505 21.25 37,303 42,638 64,349 25,902,439 106,855 2,016 17,746 30.06 2012 7,736 27,637 10,074 18.43 43,318 43,288 64,367 27,062,142 107,321 2,103 18,166 29.84 2013 8,362 29,988 10,151 16.50 41,364 43,358 64,591 28,186,178 107,525 2,193 17,607 29.57 113

Table 23 City of Riverside Capital Asset Statistics by Function Last Ten Fiscal Years Function Public Safety Police Fiscal Year 2004 2005 (l) 2006 2007(2) 2008 2009 2010 2011 2012 2013 Stations 2

2 3

3 3

3 3

3 3

3 Substations 11 7

5 4

4 5

4 4

4 4

Helicopters 4

4 4

4 4

4 4

4 4

4 Fire Stations 13 13 13 14 14 14 14 14 14 14 Active apparatus 30 30 29 30 30 30 30 26 27 28 Reserve apparatus 5

5 6

6 6

7 7

9 9

11 Training facilities 1

1 1

1 1

1 1

1 1

1 Highways and streets Streets (miles) 829.00 836.00 845.35 852.04 864.68 866.89 867.96 868.39 868.70 868.89 Streetlights 28,401 28,581 26,847 29,028 29,312 29,675 29,757 29,868 29,933 29,949 Signalized intersections 322 322 353 358 363 365 362 362 365 365 Culture and recreation Parks acreage 2,600.00 2,534.00 2,534.00 2,773.00 2,773.00 2,773.00 2,773.00 2,811.00 2,811.00 2,891.00 Community centers 10 11 11 11 11 11 11 11 11 11 Playgrounds 26 26 27 38 38 41 41 41 41 43 Swimming pools 6

7 6

7 7

7 7

7 7

7 Softball & baseball diamonds 34 35 33 44 44 44 44 49 51 54 Library branches 5

5 6

6 6

7 7

8 8

8 Museum exhibit-fixed 11 8

7 13 8

6 5

8 5

3 Museum exhibit-special 4

1 2

5 2

2 2

1 4

Water Fire hydrants 6,763 6,926 7,127 7,187 7,381 7,523 7,593 7,632 7,682 7,726 Sewer Sanitary sewers (miles) 755 765 775 785 794 794 820 823 829 829 Electric Miles of overhead distribution system 539.0 531.0 527.0 528.0 523.5 522.0 519.0 517.0 515.0 513.0 Miles of underground system 608.0 622.0 663.0 704.0 741.6 769.0 782.0 791.0 804.0 810.0 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.

114

City ?fArts & Innovation 3900 Main Street Riverside, CA 92522 ExploreRiverside. corn