ML19036A775

City of Riverside Comprehensive Annual Financial Report - Year Ended June 30, 2018

ML19036A775
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Site:	San Onofre
Issue date:	06/30/2018
From:	City of Riverside, CA
To:	Office of Nuclear Reactor Regulation
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C O 'M ,P R E H E N S I V E ANNUA L FINAN CIAL REPOR T YEAR ENDED JUNE 30, 2018

CITY OF RIVERSIDE, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2018 Prepared by the Finance Department Edward Enriquez, Interim Chief Financial Officer/Treasurer 3900 Main Street, Riverside, California 92522 (951) 826-5660 This report was printed on recycled stock

CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS Page INTRODUCTORY SECTION i

Letter of Transmittal ................. ................. ................. ................. ................. ................. ..............

GFOA Certificate of Achieveme nt.............. ................. ................. ................. ................. ................. viii Legislative and City Officials.... ................. ................. ................. ................. ................. ................. ix ix Organization Chart........ ................. ................. ................. ................. ................. ................. ........

FINANCIAL SECTION 1

Independent Auditors' Report....... ................. ................. ................. ................. ................. ............

3 Management's Discussion and Analysis.... ................. ................. ................. ................. ................. .

Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position..... ................. .. .. . . .. .. . .. . .. . .. . .. . . . .. . . .. . .. .. . .. . . . . . .. . .. .. . . .. . .. . .. . . . .. . .. . .. . . .. 19 Statement of Activities... ................. ................. ................. ................. ................. ............... 20 Fund Financial Statements:

Balance Sheet - Governmental Funds....... ................. ................. ................. ................. ...... 21 Reconciliation of the Balance Sheet of Governmental Funds to Statement of Net Position...... ........ 22 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds....... 23 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities... ................. ................. ................. ..... 24 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual -

General Fund......... ................. ................. ................. ................. . .. . .. . . .. . . . .. . . .. .. . . ... . .. . 25 Statement of Net Position - Proprietary Funds....... ................. ................. ................. ............. 26 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds........ ... 28 Statement of Cash Flows - Proprietary Funds....... ................. ................. ................. ............. 29 Statement of Net Position/(Deficit) Fiduciary Funds....................................................................... 31 Statement of Changes in Net Position/(Deficit) Fiduciary Fund - Private-Purpose Trust.......... ........ 32 Notes to Basic Financial Statements ................. ................. ................. ................. ................. ... 33 Required Supplementary Information (Unaudited )................ ................. ................. ................. .......... 68 Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet - Non major Governmental Funds....... ................. ................. ........... 73 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds....... ................. ................. ................. ................. ................. ..... 75 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual -

Non major Governmental Funds....... ................. ................. ................. ................. ......... 77 Combining Statement of Net Position - Nonmajor Enterprise Funds....... ................. ................. .. 81 Combining Statement of Revenues, Expenses and Changes in Net Position - Nonmajor Enterprise Func;ts... ... ... ... ...... ... ... ...... ... ...... ... ... ... ...... ... ... ...... ... ... ... ...... ............... ... ...... ... ... ....... 83

CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS FINANCIAL SECTION (CONT.)

Combining Statement of Cash Flows - Non major Enterprise Funds ..................... ..................... . 84 Combining Statement of Net Position - Internal Service Funds ..................... ..................... ....... . 87 Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service Funds .................... .................... .................... .................... .................... ................. 88 Combining Statement of Cash Flows - Internal Service Funds ..................... ..................... ....... . 89 Combining Statement of Changes in Assets and Liabilities -Agency Fund ..................... ............ . 92 Balance Sheet - Combining General Fund Schedule ..................... ..................... ................... . 94 Statement of Revenues, Expenditures and Changes in Fund Balances - Combining General Fund Schedule .................... .................... .................... .................... .................... ........... . 95 Balance Sheet- Combining Capital Outlay Fund Schedule ..................... ..................... ...... -:.... . 96 Statement of Revenues, Expenditures and Changes in Fund Balances - Combining Capital Outlay Fund Schedule .................... .................... .................... .................... .................... .... . 97 STATISTICAL SECTION Table 1 Net Position by Component- Last Ten Fiscal Years ..................... ..................... ..................... . 99 2 Changes in Net Position - Last Ten Fiscal Years ..................... ..................... ..................... ..... . 100 3 Fund Balances of Governmental Funds - Last Six Fiscal Years ...................................................... . 102 4 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years ..................... .......... . 103 5 Business-Type Activities Electricity Revenues By Source- Last Ten Fiscal Years ..................... ... . 105 6 Governmental Activities Tax Revenues By Source - Last Ten Fiscal Years ..................... ............. . 106 7 Taxable Sales by Category - Last Ten Calendar Years ..................... ..................... ................ . 107 8 Assessed Value and Estimated Actual Value of Taxable Property- Last Ten Fiscal Years ............. . 108 9 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years ..................... ..................... . 109 10 Principal Property Taxpayers - Current Year and Nine Years Ago ..................... ..................... ... . 110 11 Property Tax Levies and Collections - Last Ten Fiscal Years ..................... ..................... .......... . 111 12 Electricity Sold by Type of Customer- Last Ten Fiscal Years .................... .................... .......... . 112 13 Electricity Rates - Last Ten Fiscal Years ..................... ..................... ..................... ............... . 113 14 Top 10 Electricity Customers - Current Year and Nine Years Ago ..................... ..................... ... . 114 15 Ratios of Outstanding Debt by Type- Last Ten Fiscal Years ..................... ..................... .......... . 115 16 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years ..................... .................... . 116 17 Direct and Overlapping Governmental Activities Debt. ..................... ..................... .................. . 117 18 Legal Debt Margin Information - Last Ten Fiscal Years ..................... ..................... ................. . 119 19 Pledged-Revenue Coverage Business Type Activity Debt- Last Ten Fiscal Years ..................... .. . 120 20 Demographic and Economic Statistics - Last Ten Calendar Years ..................... ..................... . . 121 21 Principal Employers - Current Year and Nine Years Ago ..................... ..................... ............... . 122 22 Full-Time Equivalent City Government Employees by Function - Last Ten Fiscal Years ................ . 123 23 Operating Indicators by Function - Last Ten Fiscal Years ..................... ..................... ............. . 124 24 Capital Asset Statistics by Function - Last Ten Fiscal Years ..................... ..................... ......... . 125

October 31, 2018 To the Honorable Mayor, Members of the City Council and Citizens of the City of Riverside:

for the fiscal year It is our pleasure to submit the Comprehensive Annual Financial Report (CAFR) of the City of Riverside (the City) ended June 30, 2018.

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

accountants. The The City's financial statements have been audited by Macias Gini & O'Connell LLP, a firm of certified public opinion on the City's independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unmodified first component of financial statements for the fiscal year ended June 30, 2018. The independent auditor's report is presented as the the financial section of this CAFR.

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

and Analysis Management has provided an overall analysis of the financial statements in the form of Management's Discussion MD&A and should be read in conjunction with this section. The City's (MD&A). This letter of transmittal is designed to complement the MD&A can be found immediately following the independent auditor's report.

t=>rofile 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 Basic Financial Statements.

The biennial budget serves as the foundation for the City's financial planning and control. Consistent with the City's Charter, the City Manager presents the proposed budget to the City Council for review at least thirty-five calendar days prior to the beginning of the 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 25 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 77.

Local economy: The City is located in Inland Southern California, which consists of Riverside and San Bernardino Counties (the "MSA"). The population of Inland Southern California, at approximately 4.2 million, is larger than 24 states. The City leads the Inland Southern California in most measures of economic power, including population, income, employment, bank deposits, assessed 1

valuation, office space and college enrollment. The population of the City is 325,860 which places it as the 12 h largest in California.

The Inland Empire-consisting of Riverside and San Bernardino Counties-has rebounded strongly from the trough of the Great Recession in terms of employment, income, and population growth. Gains in population have been due in part to the ongoing quest for affordable housing-the Inland Empire is one of the most affordable regions in the state. From July 2017 to July 2018, nonfarm employment in the Inland Empire increased 3.4%, outpacing California as a whole by 1.4 percentage points.

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For a region that was among the hardest hit by the recession and the mortgage market meltdown of the past decade, this is welcome news. The Inland Empire has sustained a faster pace of nonfarm employment growth than the state since April 2012 and the region's unemployment rate will finish the year at around the 4% mark. Nearly every local industry has added jobs over the past year and employee wages are on the rise.

• 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: In February 2015, Council approved the Riverside 2.0 Strategic Plan, which established new City Council Strategic Goals that aligned with the four pillars of "Seizing our Destiny". After more than a year of working towards Riverside 2.0 goals, the plan was re-examined and updated to remove goals that were accomplished, revise existing goals to better reflect priorities, and add goals consistent with new priorities. The new Riverside 2.1 strategic goals reflected seven areas of strategic priority along with five effective government principles. Through various strategic planning workshops the City Council identified the following seven strategic priorities for the City:

• Enhanced Customer Service - Improved quality of life

• Economic Development - Continue to develop an economically vibrant City

• Community Services - Provide appealing, accessible and safe venues

• City Transportation Program - Continue to develop efficient transportation systems and provide affordable options for community mobility

• Improve Housing Diversity and Options

• Improve Teamwork and Communication

• Reduce Taxpayer Liability and Reduce Costs Wherever Possible As a result of the development of the seven strategic priorities, the Riverside 2.1 Strategic Plan was formed to implement the vision.

The purpose of the Riverside 2.1 Strategic Plan is to advance the City of Riverside's mission statement: The City of Riverside is committed to providing high quality municipal services to ensure safe, inclusive, and livable community. Additionally, the Riverside 2.1 Strategic Plan is intended to advance Seizing Our Destiny which 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 iii

Riverside 2.1 also includes five effective government principles that are reinforced through management's actions:

• Accountability

• Transparency

• Responsiveness

• Financial Prudence

• Decisiveness The City provides the City Council with quarterly updates until the goals of the Strategic Plan have been fully implemented which is anticipated to be in several years. Visit the City's Strategic Performance Reports website to view the most current performance measure update.

Long-term financial planning: For the fiscal year (FY) 2018-19 and 2019-20 Budget Cycle, the City's second two-year budget in the context of a five-year financial plan was presented. It is a process designed to bring continued transparency to the City's finances, operations and strategic goals both internally with employees and departments, and externally with the residents and businesses. For the second time, the City's budget included a comprehensive Five-Year Capital Improvement Program (CIP) document as a separate section which serves as a framework for policy decisions on the two-year budget as well as in the future. Among other things; the five-year plan allows the City to illustrate fiscal impacts of budget decisions on the General Fund Reserves through June 30, 2023.

The CIP provides funding for the City's critical and essential infrastructure projects in the amount of $82 million for Fiscal Year (FY) 2018/19 and an additional $73 million for FY 2019/20. Over the course of five years (FY 2018/19 through FY 2022/23), the City anticipates investing a total of $408 million in our essential assets.

The CIP responds to the needs of our residents to ensure the ,streets, public buildings, sewer, water, and electric infrastructure, and parks are well maintained and operated for optimum health and safety, added value, increased efficiency and functionality, enhanced attractiveness and beautification, and compliance to legal mandates. The CIP document places equal emphasis on planning for new projects as well as improving and preserving existing capital 'assets.

1 The City's CIP document includes a list of Unfunded CIP Projects. This is an attempt to identify and quantify the City's true CIP needs

- not only in the short term, but also in the long term. Although the list is comprehensive and reflects a good assessment of the City's needs, it is by no means a complete list as more work needs to be done in the coming years to refine this list, create guidelines to prioritize projects, and prepare a strategic approach to fund and complete these unfunded projects.

Measure Z: Measure Z is a one-cent transaction and use tax, with revenues going directly to the City of Riverside. The collection of an additional one-cent sales tax authorized by voters through Measure Z began on April 1, 2017. After hearing recommended Measure Z spending options from City staff and the Budget Engagement Commission, on May 16, 2017, the City Council approved a five-year Measure Z Spending Plan for 33 initiatives covering public safety, financial discipline/responsibility, critical operating needs, facility capital needs, quality of life, and technology. For the purposes of this Measure Z Five-Year Financial Plan, the tenets of the original spending plan have been carried through two additional years, FY 2020/22 and FY 2022/23. The one-cent increase in sales tax is iv

estimated to generate between $48 million and $52 million annually specifically for the City of Riverside's General Fund, which pays for most services.

General Fund Restructuring: As part of the City's Mid-Cycle Budget Update, staff analyzed all General Fund activity and determined that restructuring of the General Fund for fiscal year 2017-2018 was required in order to provide for greater transparency between true General Fund activity and other financial activity that has historically been in the General Fund. New funds have been established for Civic Entertainment and Special Districts. While the majority of these items are self-supported by specific revenues, certain operations will require a General Fund operating transfer to ensure expenditures are supported by revenues. These changes reduce the size of the General Fund by approximately $19.1 million, from $275.7 million based on projections to $256.6 million.

Also, in order to ensure continued transparency, debt related Pension Obligation Bonds were allocated to the appropriate funds to properly reflect their proportional share of the obligation; the result of which eliminated previously recorded Advances in the General Fund. In addition, debt service related expenditures, previously recorded directly in the General Fund, are now reflected with all other General Fund debt in the Debt Service Fund. The General Fund's proportional share of the debt service expenditures, are now reflected as a transfer to the Debt Service Fund.

Lastly, in an effort to continually improve our financial transparency, staff will continue to review and restructure the General Fund in fiscal year 2018-2019 by creating a separate Grants Fund; by their very nature, grants are self-supporting activities. Additionally, we will allocate any remaining non-General Fund debt to the appropriate funds to properly reflect their proportional share of the obligations.

Financial policies: Fiscal policies establish framework for managing the City's financial resources and safeguarding the City's assets in compliance with relevant regulatory mandates, industry standards, and best practices. Maintaining healthy reserves in the General Fund, and other Funds as well, is a critical component of the City's sound financial management practices.

In February 2018, the City adopted a Long-Term Financial Planning Policy to assist City leaders (elected officials and City management) in making prudent and informed financial decisions regarding economic development, tax policy and labor negotiations. Credit rating agencies encourage long-term financial planning, and generally favor government entities with such plans when assigning bond ratings.

The policy requires the City to adopt long-term financial plans spanning at least five years for all major City funds (e.g., General, Electric, Water, Sewer, etc.) in conjunction with the biennial (two-year) budget. The long-term financial plan should incorporate the following elements as relevant and appropriate:

• An analysis of economic and demographic data at the national, state and local level;

• Past revenue and expenditure trends;

• Forecast assumptions;

• Forecasts of major revenues and expenditures based on known data, documented assumptions, and input from subject matter experts, and various internal and external stakeholders; and

• Compliance with existing City fiscal policies.

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The City's key budgetary themes include financial accuracy, financial responsibility/discipline, maintaining essential services/infrastructure, and ensuring a transparent/participatory budget process. This CIP document builds on the City's recent financial successes, by incorporating best practices offered by the Government Finance Officers Association (GFOA) and the California Society of Municipal Financial Officers (CSMFO). Based on recommendations developed by the City Manager's Office and Finance Department, the City Council adopted two new policies to establish the framework for future capital budgets. The first policy, Multi-Year Capital Planning, establishes guidelines that help the City identlfy and prioritize expected capital needs based on strategic priorities and operational needs, establish project scope and cost, detail estimated amounts of funding from various sources, and project future operating and maintenance costs. The second policy, Prioritization of CIP, establishes an objective process of prioritizing capital improvement projects to ensure consistency with the General Plan, in conjunction with the biennial budget process, or otherwise as capital fun.ding becomes available.

The City's General Fund Reserve Policy, adopted by the City Council on September 6, 2016, requires maintaining the General Fund reserve at 15%. The City Council set an aspiration goal of the General Fund Reserve at 20%; this goal was recently reaffirmed through adoption of the "Responsible Spending Vision Pledge" on October 4, 2016.

Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded. a Certificate of Achievement .for Excellence in Financial Reporting (Program) to the City for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2017. This was the twenty-ninth 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 Generally Accepted Accounting Principles (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 Government Finance Officers Association (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the City for its Popular Annual Financial Report (PAFR) for the fiscal year ended June 30, 2017. This was the first time the City prepared such a report and is humbled by the award. This is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. The Award is for a period of one year only. The City will continue to participate in the program.

Budget Presentation Award: The City received the GFOA's Distinguished Budget Presentation Award for its annual budget document for the fiscal year beginning July 1, 2017. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communication device.

The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Financ:e Department and oversight from the City Manager's Office. We would like to express our appreciation to all members of the department who assisted and contributed to its preparation. Credit also must be given to the Budget Engagement Commission and Mayor and the City Council for their unfailing support for maintaining the highest standards of professionalism in the management of the City's finances.

vi

Respectfully submitted, Edward Enriquez Interim Chief Financial Officer/City Treasurer vii

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting to the City of Riverside for our Comprehensive Certificate of Annual Financial Report for the fiscal year ended June Achievement 30, 2017.

for Excellence in Financial Reporting In order to be awarded a Certificate of Achievement, a Presented to governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial City of Riverside Report, whose contents conform to program standards.

California Such reports must satisfy both generally accepted accounting principles and applicable legal requirements.

For its Comprehensive Annual Financial Report for the Fiscal Year Ended A Certificate of Achievement is valid for a period of one June 30, 2017 year only. We believe our current report continues to meet the Certificate of Achievement Program requirements, and we are submitting it to GFOA to

~p.~ determine its eligibility for another certificate.

Executive Director/CEO

• viii

ORGANIZAT ION CHART LEG IS LA TIVE OFFICIALS Rusty Bailey ................................................................................... Mayor

(' 1 Mike Gardner .................................................. Councilmem ber - Ward 1 Andy Melendrez .............................................. Councilmem ber- Ward 2

\ CITY LEAD ERSH IP /

Mike Soubirous ............................................... Councilmem ber - Ward 3 Chuck Conder ................................................. Councilmem ber - Ward 4 Chris Mac Arthur ............................................. Councilmem ber - Ward 5 Jim Perry ......................................................... Councilmem ber - Ward 6 RustyBaaey Steve Adams ................................................... Councilmem ber - Ward 7 Moye, GaryGeuss. Al Zollnka .Colleen Nicol CITY OFFICIALS (0 (. 8 OlyAltomey Clly Monoger Ot-1Clerk.

Al Zelinka .......................................................................... City Manager*

Rafael Guzman ................................................... Assistant City Manager

• * (9 Lea Deesing ........................................................Assistant City Manager

~-,p General Human lnnovotton &

Communityond Eeonom!c Development Rnonco *** Services RelOUtC&I Tochnology Colleen J. Nicol ....................................................................... City Clerk*

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Ubrory

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Museum&

Cufff.lfal ABab1 (0

f'mla. Rec:reotion a.nd Community Sorvicos E})

Police Publii:Wo,ks e Rlvenldo

~ublic Ufilltios Gary Geuss ........................................................................ City Attorney*

Sergio G. Diaz ...................................................................Chief of Police George Khalil ..................................................... Chief Innovation Officer David Welch ...... Interim Community & Economic Developmen t Director Edward Enriquez ..................... Interim Chief Financial Officerffreas urer Michael Moore ......................................................................... Fire Chief Kris Martinez ......................................................... Public Works Director Stephanie Holloman ..................................... Human Resources Director Erin Christmas ................................................................. Library Director Robyn Peterson ............................... Museum & Cultural Affairs Direct6r Adolfo Cruz ................... Parks, Recreation & Community Svcs. Director Todd Jorgenson ..................... Interim General Manager - Public Utilities Carl Carey ...................................................... General Services Director

• Appointed by City Council ix

Certified Public Accountan ts Independent Auditor's Report Honorable Mayor and Members of the City Council City of Riverside, California

• Report on the Financial Statements pe activities, each major fund, and the aggregate remaining We have audited the accompanying financial statements of the governmental activities, the business-ty June 30, 2018, and the related notes to the financial statements, which fund information of the City of Riverside, California (the City), as of and for the year ended collectively comprise the City's basic financial statements, as listed in the table of contents.

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

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

in the financial statements. The procedures selected depend An audit involves performing procedures to obtain audit evidence about the amounts and disclosures of material misstateme nt of the financial statements, whether due to fraud or error. In making on the auditor's judgment, including the assessment of the risks and fair presentation of the financial statements in order to design those risk assessments, the auditor considers internal control relevant to the entity's preparation not for the purpose of expressing an opinion on the effectiveness of the City's internal control.

audit procedures that are appropriate in the circumstances, but of accounting policies used and the reasonableness of significant Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness overall presentation of the financial statements.

accounting estimates made by management, as well as evaluating the basis for our audit opinions.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a Opinions the respective financial position of the governmental activities, the In our opinion, the financial statements referred to above present fairly, in all material respects, City as of June 30, 2018, and the respective changes in financial business-type activities, each major fund, and the aggregate remaining fund information of the and the respective budgetary comparison for the General Fund for the fiscal year then ended in accordance with position and, where applicable, cash flows thereof accounting principles generally accepted in the United States of America.

Macias Gini & O'Connell LLP 4675 MacArthur Court, Suite 600 www.mgocpa.com Newport Beach, CA 92660

Emphasis of Matter As discussed in Notes 1 to the basic financial statements, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting (or Postemployment Benefit Other Than Pension. Our opinions are not modified with respect to this matter.

Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 -18, pension schedule of changes in net pension liability and related ratios during the measurement period on page 69, pension schedule of plan contributions on page 70, and schedule of changes in total OPEB liability and related ratios on page 71, 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's basic financial statements. The combining and individual fund statements and schedules and other information, such as the introductory and statistical section as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2018 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.

H..ci<AS Gw { C)Ct>Mdl l1iP Newport Beach, California October 31, 2018 2

Management's Discussion and Analysis (Unaudited) ended June 30, 2018.

As management of the City, we offer this narrative overview and analysis of financial activities for the fiscal year in conjunction with additional information furnished in our letter of We encourage readers to consider the information presented here unless otherwise indicated, are expressed in thousands of dollars transmittal, which can be found on page i of this report. All amounts, (0,000).

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

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

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

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

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

which consist of the The government-wide financial statements include the activities of the City and three blended component units, Corporation. Although Riverside Housing Authority, Riverside Public Financing Authority, and the Riverside Municipal Improvements been blended as part of legally separate, these entities function for all practical purposes as departments of the City and therefore have Agency) is also the primary government. The Successor Agency to the Redevelopment Agency of the City of Riverside (Successor nature and significance included as a fiduciary component unit since it would be misleading to exclude the Successor Agency due to the with the City's fiduciary of the relationship between the City and the Successor Agency. The activity of the Successor Agency is reported 3

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 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 19-20 of this report.

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

governmental, proprietary, and fiduciary.

Governmental funds Governmental funds 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 unrestricted 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 fourteen 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 twelve governmental funds are combined into a single, aggregated presentation.

Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and can be found on pages 73-79 in this report.

The City adopted an annual appropriated budget for its General Fund for the Year ended June 30, 2018. A budgetary comparison statement has been provided to demonstrate compliance with this budget.

The governmental fund financial statements can *be found on pages 21-25 of this report.

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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, Civic Entertainment, Refuse, Public Parking, Airport and Transportation services.

Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for self-insured insurance programs, central stores and its fleet of vehicles. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Internal service funds are presented a,s 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 five 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 81-90 in this report.

The basic proprietary fund financial statements can be found on pages 26-30 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 page 31-32 of this report, and the combining statement for the agency fund can be found on page 92.

Notes to Basic 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 Basic Financial Statements begin on page 33 of this report.

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.

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(Amounts presented in Thousands)

Governmental Business type Activities Activities Total 2018 2017 2018 2017 2018 2017 Current and other assets $ 284,312 $ 267,671 $ 698,172 $ 709,575 $ 982,484 $ 977,246 Capital assets, net 1,305,799 1,356,278 1,914,775 1,834,007 3,220,574 3,190,285 Total assets 1,590,111 1,623,949 2,612,947 2,543,582 4,203,058 4,167,531 Deferred Outflows of Resources 139,335 178,732 84,789 103,067 224., 124 281,799 Current liabilities 54,472 64,559 125,417 138,896 179,889 203,455 Long-term liabilities 817,358 828,551 1,462,028 1,418,369 2,279,386 2,246,920 Total liabilities 871,830 893,110 1,587,445 1,557,265 2,459,275 2,450,375 Deferred Inflows of Resources 16,037 64,455 30,204 47,854 46,241 112,309 Net position:

Net investment in capital assets 1,093,896 1,102,409 800,227 702,844 1,894,123 1,805,253 Restricted 112,183 104,853 80,717 93,570 192,900 198,423 Unrestricted (364,500) (362,146) 199,143 245,116 (165,357) (117,030)

Total net position $ 841,579 $ 845,116 $ 1,080,087 $ 1,041,530 $1,921,666 $1,886,646 The City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1,921,666 at June 30, 2018, an increase of $35,020 from June 30, 2017.

By far the largest portion of the City's net position of 99% reflects its investment in capital assets (i.e., land, buildings, machinery, equipment and infrastructure), net of any related debt that is still outstanding used to acquire those assets and net of unspent bond proceeds and cash held in bond reserve accounts. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

An additional portion of the City's net position 10% 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, $199,143 is held by the business-type activities and $(364,500) net deficit is held by the governmental activities.

Unrestricted net position in the amount of $(165,357), a net position decrease of 41 % from prior year, is the change in resources available to fund City programs to citizens and debt obligations to creditors. The negative unrestricted net position is primarily the result of the reporting of the City's net pension liability in accordance with an accounting standard issued by the Government Accounting Standards 6

Board (GASB) that relates to pension activity; Statement No. 68, "Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27."

Governmental activities decreased the City's net position by $(3,537) to $841,579 for the year ended June 30, 2018. The primary result of this decrease is due to a prior period adjustment of ($1,001) related to the reporting of the other-post employment benefits liability in accordance with an accounting standard issued by the GASB that relates to other post-employment benefits; Statement No. 75, "Accounting and Financial Reporting for Postemployment Benefits Other than Pensions."

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, 2018 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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(Amount presented in Thousands)

Gowrnmental Business type Activities Activities Total 2018 2017 2018 2017 2018 2017 Rewnues:

Program Rewnues:

Charge for services $ 38,117 $ 57,340 $ 544,164 $ 517,941 $ 582,281 $ 575,281 Operating Grants and Contributions 22,548 19,374 3,374 3,751 25,922 23,125 Capital Grants and Contributions 18,039 7,617 26,957 24,151 44,996 31,768 General Rewnues:

Sales taxes 120,338 75,883 120,338 75,883 Property taxes 63,515 59,526 63,515 59,526 Other taxes and fees 39,263 39,539 39,263 39,539 lnwstment income 5,187 6,145 3,939 2,650 9,126 8,795 Other 4,450 2,050 12,901 14,662 17,351 16,712 311,457 267,474 591,335 563,155 902,792 830,629 Total Rewnues Expenses:

45,360 45,110 45,360 45,110 General gowmment Public safety 216,772 160,665 216,772 160,665 42,544 38,585 42,544 38,585 Highways and streets 38,362 48,806 38,362 48,806 Culture and recreation 12,414 16,028 12,414 16,028 Interest on long-term debt 333,061 317,335 333,061 317,335 Electric 68,281 62,189 68,281 62,189 Water 54,136 38,305 54,136 38,305 Sewer Civic Entertainment 19,995 19,995 2,179 1,998 2,179 1,998 Airport 22,082 21,953 22,082 21,953 Refuse 4,782 4,221 4,782 4,221 Transportation 6,186 5,448 6,186 5,448 Public parking 355,452 309,194 510,702 451,449 866,154 760,643 Total expenses (43,995) (41,720) 80,633 111,706 36,638 69,986 Increase (decrease) in net position Transfers, net 41,459 45,716 (41,459) (45,716)

(2,536) 3,996 39,174 65,990 36,638 69,986 Total changes in net position 845,116 825,679 1,041,530 975,540 1,886,646 1,801,219 Net position - beginning, as previously stated (1,001) (617) (1,618)

Prior period adjustment 844,115 841,120 1,040,913 975,540 1,885,028 1,816,660 Net position - beginning, as restated

$ 841,579 $ 845,116 $1,080,087 $ 1,041,530 $ 1,921,666 $ 1,886,646 Net position - ending 8

Governmental activities. Total net position for governmental activities decreased by $(2,536) before the prior period adjustment while prior fiscal year increased by $3,996. Key elements of this year's activity*in relation to the prior year are as follows:

Revenues:

• While variances between years exist for the various revenue categories, the total net increase was approximately $44.0 million or 16%, which is largely attributable to a significant increase in sales tax due to Measure Z. As the result of Measure Z, a one cent sales tax initiative that was approved by voters in November 2016, the City experienced a significant increase in sales tax revenue of $44.0 million of which $43.6 million is directly related to the passing and implementation of Measure Z.

• The City experienced decreases in charges for services of $19,223 from prior year, which was largely attributed to the establishment of the Civic Entertainment Fund related activities, which reported charges for services for the year ended June 30, 2018 of $16,393.

Expenses:

• While variances between years exist for the various expense functions, the total net increase was approximately $46.3 million or 13%.

This is primarily related to an increase of approximately $39 million in pension expense related to the annual recording of the City's pension liability; $29.3 million of the pension expense was related to public safety. The increase in Public safety was also a factor due to funding from Measure Z sales tax for additional safety needs. Increases in other expense categories were minimal and in line with anticipated results.

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Program Revenues and Expenses - Governmental Activities - Fiscal Year Comparison 2018 vs. 2017

$250,000

$200,000

$150,000

• 2018 Expenses 2017 Expenses w 2018 Program revenues

$100,000 2017 Program revenues

$50,000

$0 General Public safety Highways and Culture and Interest on long-government streets recreation term debt 10

Revenues by Source - Governmental Activities - Fiscal Year Comparison 2017 vs. 2016 2018 2017 Investment Investment Charges for Services 12.24% Charges for Services 21.44%

7 .24% 2.48%

Franch ise Taxes Capital Grants & Operating 1.80%

Contributions Grants &

Ut ility Users Contributions 5.79%

Taxes Taxes 7.24%

8.83% 10.45%

Capital Grants &

Contributions 2.85%

Property Taxes 20.39% Property Taxes Sa les Taxes 38.64% 22.25%

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Business-type activities . Total net position for business-type activities increased by $39,174 before the prior period adjustment while prior fiscal year increased by $65 ,990. Key elements of this year's activity in relation to the prior year are as follows:

• Charges for services increased by $26 ,223 or 5%. The majority of the increase in charges for services was largely attributed to the establishment of the Civic Entertainment Fund related activities, which reported charges for services for the year ended June 30, 2018 of $16 ,393. The Water Utility and Sewer Utility also had increases of $4,201 and $5 ,346 respectively.

• Overall expenses increased by $59 ,253 or 13%. A large part of the increase in overall expenses is due to the establishment of the Civic Entertainment Fund related activities which reported expenses of $18 ,736. The Electric, Water and Sewer Funds had increased expenses of $16,937, $6 ,320 and $7,479 respectively.

Revenues by Source - Business-Type Activities - Fiscal Year Comparison 2018 Operating Grants 2017

& Contributions Operating Grants

& Co ntributions 0.7%

Capital Grants &

Contributions Ca pita l Grants &

4.6% Contrib utions 4.3%

Charges for Charges for Services Services Income 92.0% Investment 92 .0% 0.7% Income 0.5%

Mi sce ll aneous 2.2% 2.6%

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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 nts. In particular, unassigned fund balance of spendable resources. Such information is useful in assessing the City's financing requireme end of the fiscal year.

may serve as a useful measure of a government's net resources available for spending at the Other Governmental Funds. As noted The following table summarizes the balance sheet of the City's General, Capital Outlay, and legal requirements.

earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related Other Total (Amounts presented in Thousands)

General Fund Capital Outlay Fund Governmental Funds Governmental Funds 2018 2017 2018 2017 2018 2017 2018 2017

$ 125,798 $ 27,688 $ 23,681 $ 103,808 $ 100,635 $ 258,762 $ 250,114 Total assets $ 127,266

$ 1,159 $ 2,559 $ 9,346 $ 10,440 $ 43,462 $ 49,535 Total liabilities $ 32,957 $ 36,536 Deferred inflows of resources 81 3,176 38,769 37,688 43,535 47,056 Unavailable revenue 4,685 6,192 Fund balances 4,855 1,601 6,802 27,769 Nonspendable 1,947 26,168 26,448 17;946 50,838 50,930 80,277 71,527 Restricted 2,991 2,651 53,800 Committed 53,800 23,242 14,968 Assigned 23,242 14,968 (24) 7,644 39,259 Unassigned 7,644

- -89,-624 39,283 17,946 55,693 52,507

- -171,765 153,523 Total fund balance 83,070 26,448 Total liabilities, deferred $ 250, 114

$ 125,798 $ 27,688 $ 23,681 $ 103,808 $ 100,635 $ 258,762 inflows and fund balances $ 127,266 fund balances of $171,765 an increase As of the end of the current fiscal year, the City's governmental funds reported combined ending able, which comprises the portion of fund of $18,242 compared to the prior year. Additionally, 4% of the fund balance $6,802 is nonspend represents the portion of fund balance that balance that cannot be spent due to form. $80,277 or 47% of fund balance is restricted, which by creditors or granters. Committed fund is subject to externally enforceable limitations by law, enabling legislation or limitations imposed is 20% of the 2018-2019 General Fund balance of $53,800 or 31 % of the fund balance was set aside for economic contingencies which the City's intent to utilize fund balance for adopted expenditure budget of $269,000. $23,242 or 14% of fund balance is constrained by r of the fund balance $7,644 or 4% is specific purposes, which is reported within the fund balance classification assigned. The remainde unassigned, meaning it is available for spending at the City's discretion. The City's governme ntal funds reported combined total assets of 13

resources amounted to

$258,762 at June 30, 2018, an increase of $8,648 compared to the prior year. Liabilities and deferred inflows of

$86,997, a decrease of $9,594.

equaled $89,624 in The General Fund is the principal operating fund of the City. At the end of the current fiscal year, total fund balance balance is due to the increased sales tax revenues from comparison to $59,974 in the prior year, as restated. The increase in fund The portion of fund balance classified as unassigned was Measure Z and the cost saving efforts by departments during the current year.

$7,644 and $53,800 classified as committed for future economic contingencies.

Proprietary funds. The City's proprietary funds provide the same type of information found in the governmen t-wide financial statements, but in more detail.

$5,349, and $46,821 Unrestricted net position of the Electric, Water and Sewer Funds at the end of the year amounted to $189,276,

$27,550, and respectively. The unrestricted net position for the Electric, Water and Sewer Funds in the prior year was $207,042, to the payment on bond

$18,614, respectively. The decrease in unrestricted net position of the Electric Fund was primarily attributable the result of the use of defeasance and funding of capital projects. The decrease in unrestricted net position of the Water Fund was for the Sewer Fund is primarily a unrestricted cash and casli equivalents to fund capital projects. The increase in unrestricted net position result of operating activities as described below.

commercial, industrial, Electric Fund operating results experienced a decrease in charges for services of $1,550. Retail sales (residential, and $308,781 for years ended and other sales) represent 84.1 % of total revenues. Retail sales, net of reserve/recovery were $305,969 decrease in consumptio n and a June 30, 2018 and 2017, respectively. The decrease in charges for services was due to a slight by an increase in regulatory decrease in proceeds from the sale of renewable energy credits and settlement recoveries, offset in pension expense, transactions and transmission revenues. Operating expenses increased $16,937 or 5.80%, due to an increase and general operating power supply costs, transmission access charges from the California Independent System Operator (ISO) expenses.

$3,620. Retail sales The Water Fund reported higher operating results, with retail sales higher than the previous year's results by reserve/recovery were (residential, commercial, industrial, and other sales) represent 87.3% of total revenues. Retail sales, net of primarily due to the

$58,216 and $54,596 for the years ended June 30, 2018 and 2017, respectively. The increase in retail sales was of pension accounting lifting of drought restrictions. Overall expenses were higher which primarily relates to pension expense as a result expenses.

standards. In addition, there was an increase in"production costs resulting from higher consumption and general operating respectively. Operating Net position of the Sewer Fund increased by $12,740 and $25,436 for the years ended June 30, 2018 and 2017, result of an annual rate increase of 8.5% and increased consumptio n. Depreciation revenues increased by $5,346 or 8.9% primarily as a expense and fiscal charges increased by $8,352. These changes are due to and amortization expense increased by $5,897 and interest the completion of sewer capital projects and their current year depreciation .

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General Fund Budgetary Highlights Original Final Actual Variance with Budget Budget Amounts Final Budget Total Revenues 226,480 267,833 271,316 $3,483 Expenditures:

General Government 17,209 31,831 15,635 16,196 Public Safety 176,797 191,684 184,608 7,076 Highways & Streets 19,056 21,079 18,643 2,436 Culture & Recreation 44,330 33,071 29,136 3,935 Capital Outlay 227 6,017 2,646 3,371 Debt Service 195 14 (14)

Total Expenditures 257,814 283,682 250,682 33,000 Excess (deficiency) of revenues over (under) expenditures (31,334) (15,849) 20,634 36,483 Other financing sources 34,244 21,271 9,016 (12,255)

Net change in fund balances 2,910 5,422 29,650 24,228 Fund balance - beginning, as previously stated 83,070 83,070 83,070 0 Prior period adjustment (23,096) (23,096) (23,096) 0 Fund balance - ending 62,884 65,396 89,624 $24,228 The primary reason for final budgeted revenues and expenditures increasing from the Original Budget was due to the Measure Z budget adopted during the mid-year budget cycle; therefore Measure Z budget was only included in the Final Budget.

Actual amounts differed from the final fund budget are as follows:

Actual expenditures were less than final budgeted amounts by approximately $33.0 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) as well as the cost saving efforts by City Departments.

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Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for governmental and business-type activities as of June 30, 2018 amounted to

$3,220,574 (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 $30,289 (a decrease of $50,479 for governmental activities and an increase of $80,768 for business-type activities).

Major capital improvements during the current fiscal year included: new infrastructure consisting primarily of roads of $13 million; sewer mains and tertiary treatment plant of $16 million; $23 million in Water Utility upgrades primarily related to system expansion and improvements, and continued pipeline replacement programs; and $42 million in Electric Utility capital improvements primarily related to improvements to the Electric system in the form of substations, transformers, neighborhood streetlights and distribution line extensions and replacements to serve customers.

Construction in progress totaled $171,473 at June 30, 2018 an increase of $46,229 or 36.9%. The increase in construction in progress is primarily related to the Riverside Transmission Reliability Project (RTRP) and related reliability improvements to the Utility's 230 KV Transmission Substation and Switchgear upgrade for Springs Substation. Depreciation expense during the fiscal year was $47,939 for governmental activities and $66,632 for business-type activities.

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

(Amount presented in Thousands)

Gm.ernmental Business Type Activities Activities Total 2018 2017 2018 2017 2018 2017 Land $343,022 $343,918 $94,900 $80,246 $437,922 $424,164 Construction in progress 68,894 44,310 102,579 80,934 171,473 125,244 Buildings 110,802 115,087 466,259 471,137 577,061 586,224 lmprm.ements other than Buildings 146,343 197,482 1,177,665 1,123,191 1,324,008 1,320,673 Machinery and equipment 23,170 22,971 33,888 37,080 57,058 60,051 Intangibles 87 131 39,484 41,419 39,571 41,550 Infrastructure 613,481 632,379 613,481 632,379 Total $1,305,799 $1,356,278 $1,914,775 $1,834,007 $3,220,574 $3,190,285 Additional information on the City's capital assets can be found in note 5 on page 44 of this report.

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Long-term debt. At the end of the current fiscal year, the City had total debt outstanding of $1,614,823 which includes bonded debt of

$1,416,505.

City of Riverside's Long-Term Debt (Amounts presented in Thousands)

Governmental Business Type Activities Activities Total 2018 2017 2018 2017 2018 2017 General Obligation Bonds $10,388 $11,513 $ $ $10,388 $11,513 Pension Obligation Bonds 60,883 92,592 18,324 79,207 92,592 Certificates of Participation 150,800 156,516 150,800 156,516 Lease Revenue Bonds 36,246

• 37,854 36,246 37,854 Revenue Bonds 1,139,864 1,180,345 1,139,864 1,180,345 Loans Payable 1,746 41,325 1,746 41,325 Notes Payable 78,583 35,255 78,583 35,255 Capital Leases 25,647 17,193 6,821 6,209 32,468 23,402 Landfill Capping 4,770 5,390 4,770 5,390 Water Acquisition Rights 938 938 938 938 Compensated Absences 24,985 22,790 8,596 8,279 33,581 31,069 Claims liability 46,232 44,945 46,232 44,945 Total $356,927 $424,728 $1,257,896 $1,236,416 $1,614,823 $1,661,144 The City's total debt decreased by $46,321 or 2.87% during the current fiscal year. The net decrease is primarily related to principal obligation payments on bonded debt.

The City's Water Utility maintains "AAA" 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 $747,624 at June 30, 2018, which applies only to general obligation debt. At June 30, 2018, the City had $10,388 of general obligation debt, resulting in available legal debt capacity of $737,236.

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

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Economic Factors and Next Year's Budget and Rates D Unemployment in the City of Riverside is 4.4% as compared to 5.0% for the prior year.

D The largest impact to the City's long-term financial stability relates to pension costs form CalPERS. Over the next five years, the City's total CalPERS expenditures will increase 45% from $74.5M in FY 2018-19 to approximately $108.3M in FY 2022-23.

The cost increases are mainly due to investment losses by CalPERS during the Great Recession, which impacted all of the California agencies' retirement plans managed by CalPERS. Additional factors causing cost increases, which impact all or many agencies include:

• Retroactive retirement benefit enhancements for City employees between 2001 and 2006.

• Long-term investment returns not meeting expectations (e.g. 8.8% over the last five years, 4.4% over the last 10 years, and 6.6%

over the last 20 years).

• Increased contributions resulting from the CalPERS anticipated return-on-investment rate over the past 15 years, which was decreased from 8.25% to 7%.

• CalPERS expects retirees to live longer.

CalPERS began to collect employer contributions toward the plan's unfunded liability as dollar amounts instead of prior method of a contribution rate combined with the normal cost rate effective July 1, 2017. As a result, the following lists the two required contribution components per plan for FY 2018/19:

• Miscellaneous Plan -12.314%. Unfunded Liability Payment of $18,743

• Safety:Plan - 20.436%. Unfunded Liability Payment of $15,061 At the time of the two-year budget preparation for the fiscal year 2018-19 and 2019-20 budget cycle, the economic outlook for the City was considered to .be stable. However, there are significant challenges in the next five years due to pension costs as outlined above. The City will continue to implement operational efficiencies, where possible, to minimize costs and impact to service levels as CalPERS costs increase.

The General Fund Budget for fiscal year 2018/19 of approximately $269 million was adopted. It represents an increase from the prior year of approximately .75%. Expenditure growth is expected to outpace revenue growth due to the rising costs of PERS.

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.

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City of Riverside Statement of Net Position June 30, 2018 (amounts expressed In thousands)

Governmental Business-type Assets ActMUes ActiVltles Total Cash and investments 166,980 405,930. 572,910 Receivables. net 92,012 55,714 147,726 Inventory 6,284 2,842 9,126 Prepaid items 2,362 33,473 35,835 Deposits 1,586 1,586 Internal balances (4,203) 4,203 Restricted assets:

Cash and cash equivalents 58,928 58,928 Cash and investments at fiscal agent 14,278 121,850 136,128 otlm 990 990 Advances to Successor Agency Trust Fund 3,327 4,227 7,554 Land and improvements held for resale 3,272 3,272 Regulatory assets 8,130 8,130 Derivative instruments 299 299 Land and other capital assets not being depreciated 411,916 218,971 630,887 Capital assets (net of accumulated depreciation) 893,883 1,695,804 2,589,687 Total assets 1,590,111 2,612,947 4,203,058 Deferred Outflows of Resources Changes In derivative values 10,286 12,561 22,847 Charge on refunding 3,894 15,160 19,054 Pension contributions, changes in assumptions and differences in experience 125,155 52,644 177,799 Hi!lwood note payable 4,424 4,424 Total deferred outflows of resources 139,335 84,789 224,124 UablllUes Accounts payable and other current !!abilities 29,066 20,474 49,540 Accrued interest payable 2,416 14,331 16,747 Unearned revenue 455 1,397 1,852 Deposits 8,558 7,789 16,347 Regulatory liability 28 28 Derivative instruments 13,977 20,821 34,798 Decommissioning liability 60,577 60,577 Noncurrent liabilities:

Due within one year 48,894 51,694 100,588 Due in more than one year 308,033 1,206,202 1,514,235 Net OPEB liability 20,579 16,207 36,786 Net pension liability 439,852 187,925 627,777 Total liabilities 871,830 1,587,445 2,459,275 Deferred Inflows of Resources Regulatory charges 17,199 17,199 Changes in derivative values 289 289 Pension contributions, changes in assumptions and differences in experience 15,133 12,161 27,294 OPEB contributions, changes in assumptions and differences in experience 904 555 1,459 Total deferred inflows of resources 16,037 30,204 46,241 Net Pos!Uon Net investment in capital assets 1,093,896 800,227 1,894,123 Restricted for:

Expendable:

Capital projects 30,215 30,215 Debt service 2,720 44,019 46,739 Economic development 18,192 18,192 Landfill capping 1,118 1,118 Public works 17,039 17,039 Housing 42,519 42,519 Programs and regulatory requirements 35,580 35,580 Nonexpendable 1,498 1,498 Unrestricted (364,500) 199,143 (165,357)

Total net position 841,579 1,080,087 1,921,666 The notes to basic financial statements are an integral part of this statement 19

City of Riverside Statement of Activities For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

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

General government $ 45,360 $ (17,652) $ 24,605 $ 6 $ 257 $ (2,840) $ $ (2,840)

Public safety 216,772 9,158 1,880 14,127 4,220 (205,703) (205,703)

Highways and streets 42,544 4,686 5,554 8,054 13,410 {20,212) {20,212)

Culture and recreation 38,362 3,808 6,078 361 152 (35,579) (35,579)

Interest on long-term debt 12,414 (12,414) (12,414)

Total governmental activities 355,452 38,117 22,548 18,039 (276,748) (276,748)

Business type activities:

333,061 364,516 20,182 51,637 51,637 Electric 68,281 66,828 4,181 2,728 2,728 Water Sewer 54,136 65,081 32 10,977 10,977 19,995 16,393 875 (2,727) (2,727)

Civic Entertainment Airport 2,179 1,562 841 224 224 22,082 23,085 1,003 1,003 Refuse 4,782 441 3,374 846 (121) (121)

Transportation 6,186 6,258 72 72 Public parking 510,702 544,164 3,374 26,957 63,793 63,793 Total business type activities

$ 866,154 $ 582,281 $ 25,922 $ 44,996 $ (276,748) $ 63,793 $ (212,955)

Total General revenues:

Taxes:

Sales 120,338 120,338 63,515 63,515 Property 27,498 27,498 Utility users Franchise 4,972 4,972 6,793 6,793 Transient occupancy tax Intergovernmental, unrestricted 172 172 5,187 3,939 9,126 Investment income Miscellaneous 4,278 12,901 17,179 232,753 16,840 249,593 Subtotal Transfers, net 41,459 (41,459) 274,212 (24,619) 249,593 Total general revenues and transfers (2,536) 39,174 36,638 Change in net position 845,116 1,041,530 1,886,646 Net position - beginning, as previously stated (1,001) (617) (1,618)

Prior period adjustment 844,115 1,040,913 1,885,028 Net position - beginning, as restated

$ 841,579 $ 1,080,087 $ 1,921,666 Net position - ending The notes to basic financial statements are an integral part of this statement.

20

City of Riverside Balance Sheet Governmental Funds June 30, 2018 (amounts expressed in thousands)

Other Governmental Total Governmental General Fund Capital Outlay Fund Funds Funds Assets Cash and Investments $ 64,142 $ 16,643 40,411 143,196 Cash and Investments at fiscal agent 16 2 14,256 14,276 Receivables (net of allowance for uncollectibles)

Interest 193 62 154 429 Property taxes 3,676 213 4,069 23,654 23,654 Sales tax Utility billed 1,226 1,226 Accounts 5,642 1,606 66 7,316 Intergovernmental 5,325 7,353 3,763 16,461 Notes 10 36,064 36,094 Prepaid items 1,947 415 2,362 Due from other funds 656 858 Advances to Successor Agency Trust Fund 3,327 3,327 Land & improvements held for resale 175 3,097 3,272 127,266 27,668 103,808 256,762 Total assets Liabilities

$ 7,463 $ 966 2,126 10,575 Accounts payable 16,442 16,447 Accrued payroll Retalnage payable 13 46 516 577 151 6 157 Intergovernmental 330 125 455 Unearned revenue 6,556 6,556 Deposits Due to other funds 633 633 6,060 6,060 Advances from other funds 32,957 1,159 9,346 43,462 Total liabifities Deferred Inflows of Resources 4,665 61 36,769 43,535 Unavailable revenue 4,665 61 36,769 43,535 Total deferred inflows of resources Fund Balances Nonspendable:

1,947 30 1,977 Inventories, prepaids and deposits 3,327 3,327 Advances 1,496 1,496 Permanent fund principal Restricted for:

175 18,627 19,002 Housing and redevelopment 2,037 11,509 13,546 Debt service 26,446 17,051 43,499 Transportation and pubUc works 779 3,451 4,230 Other purposes Committed for:

53,600 53,600 Economic contingency Assigned to:

2,634 2,634 General government 1,959 1,959 Public safety 2,164 2,164 Highways and streets 620 620 Culture and recreation 15,665 15,665 Continuing projects 7,644 7,644 Unassigned 69,624 26,446 55,693 171,765 Total fund balances 127,266 27,686 103,806 $ 256,762 Total fiabilities, deferred inflows of resources, and fund balances The notes to basic financial statements are an integral part of this statement.

21

City of Riverside Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2018 (amounts expressed in thousands)

Total fund balances - governmental funds $ 171,765 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. 1,298,494 Deferred refunding charges are not available resources and, therefore, are not reported in the funds. 3,894 Deferred amounts on pensions related to contributions after the measurement date 122,805 Deferred amounts on pensions related to the net difference between projected and actual earnings on pension plan investments (14,638)

Deferred amounts on OPEB related to the net difference between projected and actual earnings on pension plan investments (868)

Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds. 43,535 Accrued interest payable for the current portion of interest due on various debt issues has not been reported in the governmental funds. (2,416)

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

Bonds $ (105,097)

Certificates of participation (149,705)

Capital leases (25,647)

Loan payable (1,746)

Bond premiums (2,766)

Net OPEB liability (19,629)

Net pension liability (431,488)

Compensated absences (24,553)

(760,631)

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

Net fair value of interest rate swaps $ (13,977)

Deferred amount related to the hedgeable portion of the derivative instrument 10,286 (3,691)

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. (16,670)

Net position of governmental activities $841,579 The notes to basic financial statements are an integral part of this statement.

22

City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the fiscal year ended June 30, 201 a (amounts expressed in thousands)

Other Total Capital Outlay Governmental Governmental General Fund Fund Funds Funds Revenues Taxes $ 223,116 $ $ $ 223,116 Licenses and permits 10,015 2,427 12,442 Intergovernmental 10,513 11,989 19,952 42,454 Charges for services 17,438 17,438 Fines and forfeitures 3,699 18 3,717 Special assessments 402 504 6,207 7,113 Rental and investment income 2,318 112 1,016 3,446 Miscellaneous 3,815 2,883 2,018 8,716 Total revenues 271,316 15,488 31,638 318,442 Expenditures Current:

General government 15,635 5,500 21,135 Public safety 184,608 6,308 190,916 Highways and streets 18,643 564 19,207 Culture and recreation 29,136 246 29,382 Capital outlay 2,646 10,299 20,559 33,504 Debt service:

Principal 21,904 21,904 Interest 12,746 12,746 Bond issuance costs 14 10 24 Total expenditures 250,682 10,299 67,837 328,818 Excess (deficiency) of revenues over (under) expenditures 20,634 5,189 (36,199) (10,376)

Other financing sources (uses)

Transfers in 59,332 6,312 37,130 102,774 Transfers out (50,738) (3,004) (12,279) (66,021)

Issuance of long-term debt 14,500 14,500 Proceeds from the sale of capital assets 422 5 34 461 Total other financing sources (uses) 9,016 3,313 39,385 51,714 Net change in fund balances 29,650 8,502 3,186 41,338 Fund balances - beginning, as previously stated 83,070 17,946 52,507 153,523 Prior period adjustment (23,096) (23,096)

Fund balances - ending $ 89,624 $ 26,448 $ 55,693 $ 171,765 The notes to basic financial statements are an integral part of this statement.

23

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 fiscal year ended June 30, 2018 (amounts expressed in thousands)

Net change in fund balances - total governmental funds $ 41,338 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. In the current year, depreciation exceeded capital asset additions, as listed below:

Capital asset additions $ 40,035 Depreciation expense (46,848) (6,813)

The net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to decrease net position. (1,699)

The net effect of transfering assets and liabilities for the establishment of the Civic Entertainment Fund (294)

Revenues related to prior years that are available in the current fiscal year are reported as revenue in the governmental funds. In contrast, revenues that are earned but unavailable in the current year are deferred in the governmental funds. For government-wide reporting, revenue is recognized when earned, regardless of availability. The amount reflects the timing differences for revenue recognition. (3,521)

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 $ 21,904 Net pension liability (38,869)

Net OPEB liability (1,013)

Compensated absences (2,199)

Interest 849 Issuance of long-term debt (14,500) (33,828)

Internal service funds are used by management to charge the costs of insurance, centralized purchasing and fleet management to individual funds. The net revenue (expense) of certain activities of internal service funds is reported with governmental activities. 2,281 Change in net position of govern!11ental activities $ (2,536)

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

24

City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Variance with Original Budget Final Budget Actual Final Budget Revenues Taxes $ 174,538 $ 219,992 $ 223,116 $ 3,124 Licenses and permits 10,500 10,454 10,015 (439)

Intergovernmental 1,525 10,971 10,513 (458)

Charges for services 26,923 16,440 17,438 998 Fines and forfeitures 1,745 1,414 3,699 2,285 Special assessments 4,494 495 402 (93)

Rental and investment income 4,172 4,208 2,318 (1,890)

Miscellaneous 2,583 3,859 3,815 (44)

Total revenues 226,480 267,833 271,316 3,483 Expenditures Current:

General government 17,209 31,831 15,635 16,196 Public safety 176,797 191,684 184,608 7,076 Highways and streets 19,056 21,079 18,643 2,436 Culture and recreation 44,330 33,071 29,136 3,935 Capital outlay 227 6,017 2,646 3,371 Debt service:

Bond issuance costs 195 14 (14)

Total expenditures 257,814 283,682 250,682 33,000 Excess (deficiency) of revenues over (under) expenditures (31,334) (15,849) 20,634 36,483 Other financing sources (uses)

Transfers in 46,143 83,114 59,332 (23,782)

Transfers out (12,784) (65,461) (50,738) 14,723 Issuance of long-term debt Proceeds from the sale of capital assets 885 3,618 422 (3,196)

Total other financing sources (uses) 34,244 21,271 9,016 (12,255)

Net change in fund balances 2,910 5,422 29,650 24,228 Fund balances - beginning, as previously stated 83,070 83,070 83,070 Prior period adjustment (23,096) (23,096) (23,096)

$ 62,884 $ 65,396 $ 89,624 $ 24,228 Fund balances - ending 25

City of Riverside Statement of Net Position Proprietary Funds June 30, 2018 (amounts expressed In thousands)

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

Cash and investments $ 257,155 $ 47,464 $ 89,376 $ 11,935 $ 405,930 $ 23,784 Receivables (net allowances for uncollectibles)

Interest 1,016 191 296 45 1,548 75 Utility billed 13,903 3,510 3,615 1,100 22,128 Utility unbilled 14,858 3,180 2,407 784 21,229 Accounts 4,011 1,276 153 2,919 8,359 50 Intergovernmental 27 875 1,194 354 2,450 418 Other Inventory 1,097 1,693 52 2,842 6,284 Prepaid items 21,774 238 11 319 22,342 Deposits 1,286 300 1,586 Due from other funds 305 131 436 Restricted assets:

Cash and cash equivalents:

Rate stabilization cash and cash equivalents 1,000 1,000 Other restricted cash and cash equivalents 48,359 8,451 1,118 57,928 Public benefit programs receivable 881 109 990 Total current assets 364,672 65,425 99,745 18,926 548,768 30,611 Non-current assets:

Restricted assets:

Cash and investments at fiscal agent 69,047 2,315 50,488 121,850 Regulatory assets 1,731 1,525 4,874 8,130 Derivative instruments 299 299 Prepaid items - non-current 11,131 11,131 Advances to other funds 3,992 3,992 2,403 Advances to Successor Agency Trust Fund 4,227 4,227 Capital assets:

Land 52,111 20,841 2,768 19,180 94,900 458 Intangible assets, non-depreciable 10,651 10,841 21,492 21,472 4,022 119 25,613 219 Intangible assets, depreciable (6,104) (1,463) (54) (7,621) (132)

Accumulated depreciation - intangible assets, depreciable Buildings 62,375 19,962 496,939 35,925 615,201 4,092 (10,260) (6,622) (123,448) (8,612) (148,942) (718)

Accumulated depreciation - buildings Improvements other than buildings 944,199 624,203 152,190 74,503 1,795,095 1,315 (366,866) (211,105) (23,365) (16,094) (617,430) (470)

Accumulated depreciation - improvements other than buildings Machinery and equipment 44,027 14,803 16,398 22,861 98,089 1.1,265 (24,826) (12,986) (9,179) (17,210) (64,201) (8,977)

Accumulated depreciation - machinery and equipment 54,475 23,969 23,836 299 102,579 253 Construction in progress 867,390 488,780 592,209 116,025 2,064,404 9,708 Total non-current assets 1,232,062 554,205 691,954 134,951 2,613,172 40,319 Total assets Deferred Outflows of Resources Changes in derivative values 10,692 1,869 12,561 Charge on refunding 8,997 6,163 15,160 Pension contributions, changes in assumptions 30,596 10,882 6,866 4,300 52,644 2,350 and differences in experience Hillwood note payable 4,424 4,424 50,285 23,338 6,866 4,300 84,789 2,350 Total deferred outflows of resources Continued 26

City of Riverside Statement of Net Position Proprietary Funds June 30, 2018 (amounts expressed In thousands)

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

Accounts payable 11,618 3,388 1,835 2,184 19,025 1,277 Accrued payroll 201 76 45 33 355 20 Retainage payable 223 433 423 15 1,094 13 Unearned revenue 61 64 1,269 1,397 Deposits 6,397 813 579 7,789 Due to other funds 225 225 436 Capital leases - current 824 211 533 1,568 Water stock acquisitions - current 150 150 Notes payable - current 1,202 788 2,920 4,910 Landfill capping - current 250 250 Claims and judgments - current 9,872 Compensated absences - current 4,547 1,506 1,110 508 7,671 377 current liabilities payable from restricted assets:

Revenue bonds 14,445 5,635 13,515 33,595 Pension obligation bonds 2,018 728 462 342 3,550 145 Decommissioning liability 5,457 5,457 Accrued interest 4,846 1,542 7,943 14,331 Total current liabilities 50,637 15,748 26,124 8,858 101,367 12,140 Non-current liabilities:

Revenue bonds 520,894 178,998 406,377 1,106,269 8,400 3,028 1,924 1,422 14,774 604 Pension obligation bonds Notes payable 20,322 659 52,692 73,673 Capital leases 2,274 1,884 1,095 5,253 335 Advances from other funds 55,120 55,120 Decommissioning liability Regulatory liability 28 28 Derivative instruments 15,228 5,593 20,821 36,360 Claims and judgments Water stock acquisitions 788 788 Landfill capping 4,520 4,520 521 344 41 19 925 55 Compensated absences 8,283 3,410 2,417 2,097 16,207 950 Net OPES liability 108,886 38,880 24,675 15,484 187,925 8,364 Net pension liability 719,606 253,247 436,093 77,357 1,486,303 46,668 Total non-current liabilities 770,243 268,995 462,217 86,215 1,587,670 58,808 Total liabilities Deferred Inflows of Resources Regulatory charges 773 16,426 17,199 289 289 Change in derivative values Pension contributions, changes In assumptions 6,396 2,585 1,915 1,265 12,161 495 and differences in experience OPEB contributions, changes In assumptions 296 112 76 71 555 36 and differences In experience 6,692 3,470 18,417 1,625 30,204 531 Total deferred inflows of resources Net Position 267,230 291,562 148,839 92,596 800,227 7,305 Net Investment in capital assets 16,691 6,186 21,142 44,019 Restricted for debt service 1,118 1,118 Restricted for landfill capping 32,215 1,981 1,384 35,580 Restricted for programs and regulatory requirements 189,276 5,349 46,821 (42,303) 199,143 (23,975)

Unrestricted 505,412 305,078 218,186 51,411 1,080,087 (16,670)

Total net position (deficit)

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

27

City of Riverside Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Business-type Activities

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

Charges for services $ 364,516 $ 66,828 $ 65,081 $ 47,739 $ 544,164 $ 24,773 Operating expenses:

Personnel services 57,626 17,027 11,903 10,198 96,754 5,596 Contractual services 7,333 2,828 1,721 12,969 24,851 656 Maintenance and operation 197,496 9,633 8,567 7,856 223,552 2,740 General 10,958 14,268 4,591 15,396 45,213 3,056 Materials and supplies 1,027 777 3,876 1,412 7,092 265 Claims/Insurance 907 399 855 423 2,584 14,733 Depreciation and amortization 33,585 14,914 13,621 4,916 67,036 1,091 Total operating expenses 308,932 59,846 45,134 53,170 467,082 28,137 Operating income (loss) 55,584 6,982 19,947 (5,431) 77,082 (3,364)

Non-operating revenues (expenses):

Operating grants 3,374 3,374 Interest income 2,567 250 1,071 51 3,939 150 Other 6,829 2,803 21 1,157 10,810 434 Gain (loss) on retirement of capital assets 579 177 (12) (236) 508 97 Capital improvement fees 1,583 1,583 Interest expense and fiscal charges (24,129) (8,435) (9,002) (2,054) (43,620) (36)

Total non-operating revenues (expenses) (14,154) (5,205) (6,339) 2,292 (23,406) 645 Income (loss) before capital contributions and transfers 41,430 1,777 13,608 (3,139) 53,676 (2,719)

Cash capital contributions 3,170 2,975 32 2,562 8,739 Noncash capital contributions 17,012 1,206 18,218 Transfers in 10,436 10,436 5,000 Transfers out (40,073) (6,173) (900) (4,749) (51,895)

Change in net position 21,539 (215) 12,740 5,110 39,174 2,281 Net position (deficit) - beginning 484,201 305,418 205,531 46,380 1,041,530 (18,914)

Prior period adjustment (328) (125) (85) (79) (617) (37)

Net position - beginning 483,873 305,293 205,446 46,301 1,040,913 (18,951)

Net position (deficit) - ending $ 505,412 $ 305,078 $ 218,186 $ 51,411 $ 1,080,087 $ (16,670)

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

28

City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

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

Cash received from customers and users $ 366,925 $ 67,434 $ 64,244 $ 46,963 *$ 545,566 $ 24,921 Cash paid to employees for services (66,007) (23,789) (9,751) (8,923) (108,470) (3,553)

Cash paid to other suppliers of goods or services (204,412) (16,731) (22,001) (37,808) (280,952) (21,788)

Other receipts 6,829 1,566 27 1,582 10,004 434 Net cash provided by operating activities 103,335 28,480 32,519 1,814 166,148 14 Cash flows from noncapital financing activities:

Transfers in 10,142 10,142 5,000 Transfers out (40,073) (6,173) (900) (4,749) (51,895)

Operating grants 3,374 3,374 Receipts (payments) on interfund advances 316 (53) 994 (82) 1,175 969 Payments on pension obligation bonds (1,894) (683) (435) (418) (3,430) (137)

Net cash (used) provided by noncapital financing activities (41,651) (6,909) (341) 8,267 (40,634) 5,832 Cash flows from capital and related financing activities:

Purchase of capital assets (27,460) (27,824) (15,106) (2,978) (73,368) (762)

Proceeds from the sale of capital assets 671 177 92 940 97 Principal payment on bond defeasance (11,005) (11,005)

Principal paid on long-term obligations (14,602) (5,626) (9,945) (2,852) (33,025)

Interest paid on long-term obligations (25,894) (8,320) (18,707) (2,054) (54,975) (36)

Capital improvement fees 1,583 1,583 Capital lease proceeds Contributions 3,154 3,806 32 2,562 9,554 Net cash (used) for capital and related financing activities (75,136) (37,787) (42,143) (5,230) (160,296) (701)

Cash flows from investing activities:

Sale and (purchase) of investments 13,895 (78) (15) 13,802 (32)

Interest from investments 2,442 290 1,071 51 3,854 150 Net cash provided by investing activities 16,337 290 993 36 17,656 118 Ne( change in cash and cash equivalents 2,885 (15,926) (8,972) 4,887 (17,126) 5,263 Cash and cash equivalents, beginning (including $47,133 for Electric,

$10,653 for Water, $87,895 for Sewer and $1,738 for Other 302,629 74,156 149,836 8,166 534,787 18,521 Enterprise Funds in restricted accounts.)

Cash and cash equivalents, ending (including $48,359 for Electric,

$10,766 for Water, $51,488 for Sewer and $1,118 for Other

$ 305,514 $ 58,230 $ 140,864 $ 13,053 $ 517,661 $ 23,784 Enterprise Funds in restricted accounts.)

Continued 29

City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2018 (amounts expressed in thousands) Continued Governmental Other Total Activities-Enterprise Enterprise Internal Electric Water Sewer Funds Funds Service Funds Reconciliation of operating income (loss) to net cash (used) provided by operating activities:

Operating income (loss) $ 55,584 $ 6,982 $ 19,947 $ (5,431) $ 77,082 $ (3,364)

Other nonoperating items 6,829 1,566 21 1,157 9,573 434 Adjustments to reconcile operating income (loss) to net cash (used) provided by operating activities:

Depreciation and amortization 33,585 14,914 13,621 4,916 67,036 1,091 Changes in assets, liabilities and deferred inflows/outflows of resources:

Utility billed receivable 701 96 (565) (62) 170 Utility unbilled receivable 1,553 149 (112) (10) 1,580 Accounts receivable 420 228 262 (1,152) (242) (27)

Intergovernmental receivable (25) 238 (422) 448 239 175 Inventory (168) (52) (220) (284)

Prepaid and deposit items (1,758) (74) 19 (619) (2,432)

Benefit programs receivable 46 (46)

Regulatory assets 71 407 478 Derivative instruments (299) (299)

Accounts payable 307 710 (2,438) 877 (544) (67)

Accrued payroll 201 76 45 33 355 20 Retainage payable 61 240 196 15 512 13 Other payables 93 47 97 37 274 (4)

Deposits payable 401 61 579 1,041 Regulatory liability 28 28 Landfill capping (620) (620)

Claims and judgments 1,287 Change in derivative values 289 289 Net pension liability and related changes in deferreq outflows and inflows of resources 9,056 3,149 1,913 1,182 15,300 694 Net OPES liability and related changes in deferred outflows and inflows of resources 378 144 97 91 710 46 Deferred regulatory charges (65) (65)

Decommissioning liability (4,097), (4,097)

Net cash provided by operating activities $ 103,335 $ 28,480 $ 32,519 $ 1,814 $ 166,148 $ 14 Schedule of noncash financing and investing activities:

Capital contributions $ 17,012 $ 1,206 $ $ $ 18,218 $

Capital assets - transfer from governmental activities 39,487 39,487 (12) (236) (248)

Loss on retirement of capital assets 1,237 1,237 Payment on note payable including interest offset by rent credit 4,100 4,100 Well relocation with note payable (39,193) (39,193)

Note payable and derivative swap - transfer from governmental activities (79) (79)

Decrease in fair value of investments The notes to basic financial statements are an integral part of this statement.

30

City of Riverside Statement of Net Position/(Deficit)

Fiduciary Funds June 30, 2018 (amounts expressed in thousands)

Successor Agency Private-Purpose Agency Trust Fund Fund Assets Cash and investments $ 35,445 $ 3,309 Cash and investments at fiscal agent 12,214 4,688 Receivables:

Interest 110 10 Accounts 143 Notes 2,670 Direct financing lease receivable 15,150 Deposits 2 Property tax receivables 81 Land and improvements held for resale 9,275 Capital assets:

Land 185 Total assets 75,194 8,088 Liabilities Accounts payable 39 Accrued interest 3,860 Advances from other funds 7,554 Bonds payable 207,359 Pension obligation bonds payable 554 Notes payable 4,338 Held for bond holders 8,087 Total liabilities 223,704 8,088 Deferred Inflows of Resources Deferred charge on refunding 1,148 Total deferred inflows of resources 1,148 Net Position/(Deficit)

Held by Successor Agency (149,658)

Total net position/(deficit) $ (149,658) $

The notes to basic financial statements are an integral part of this statement 31

City of Riverside Statement of Changes in Net Position/(Deficit)

Fiduciary Fund - Private-Purpose Trust Fund For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Successor Agency Private-Purpose Trust Fund Additions Property tax revenue $ 24,230 Rental and investment income 641 Miscellaneous 69 Total additions 24,940 Deductions Professional services and other deductions 2,560 Redevelopment projects 1,015 Interest expense 9,497 Total deductions 13,072 Change in Net Position/(Deficit) 11,868 Net position/(deficit) - beginning (161,526)

Net position/(deficit) - ending $ (149,658)

The notes to basic financial statements are an integral part of this statement 32

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

1. Summary of Significant Accounting Policies Municipal Improvements Corporation's primary purpose is to provide financing assistance by obtaining land, property and equipment on behalf of the City.

The City of Riverside (City) was incorporated on October 11, 1883 as a Charter The activity of the Municipal Improvements Corporation has been combined City and operates under a Council-Manager form of Government. The more with that of the primary government because three members of the City significant accounting policies reflected in the financial statements are Council serve as the Municipal Improvements Corporation's directors and summarized as follows: because the Municipal Improvements Corporation exists to serve exclusively the primary government. The City is financially accountable and operationally A. Reporting Entity responsible for all matters.

The financial statements present the City and its component units, entities for Fiduciary Component Unit 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 Successor Agency to the Redevelopment Agency of the City of Riverside data is combined with that of the City's. The City has no component units that (Successor Agency) is a separate legal entity, which was formed to hold the meet the criteria for discrete presentation. All of the City's component units assets and liabilities of the former Redevelopment Agency pursuant to City have a June 30 year end. Council actions taken on March 15, 2011 and January 10, 2012. The activity of the Successor Agency is overseen by an Oversight Board comprised of Blended Component Units individuals appointed by various government agencies and the City of Riverside as Successor Agency of the former Redevelopment Agency. The Riverside Housing Authority (Housing Authority) was established in 2006 by nature and significance of the relationship between the City and the Successor the City. The Housing Authority's primary purpose is to provide safe and Agency is such that it would be misleading to exclude the Successor Agency sanitary housing accommodations for persons with low or moderate income. from the City's financial statements. The Successor Agency is presented The Housing Authority's activity has been combined with that of the primary herein in the City's fiduciary funds as a private-purpose trust fund.

government because City Council members serve as the Housing Authority's commissioners and because the City is financially accountable and Complete financial statements are prepared for the Riverside Public Financing operationally responsible for all matters. 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 Riverside Public Financing Authority (Public Financing Authority) was Main Street, Riverside, California, 92522 or online at www.riversideca.gov.

organized in December 1987 by the City and the Redevelopment Agency.

Pursuant to Assembly Bill 1X 26 (as modified by the California Supreme Court B. Government-wide and Fund Financial Statements on December 29, 2011) all redevelopment agencies were dissolved effective February 1, 2012. Subsequently, the City became the Successor Agency to The government-wide financial statements report information on all of the non-the Redevelopment Agency. The Parking Authority of the City of Riverside fiduciary activities of the City and its component units. lnterfund activity has was added as an additional member of the Public Financing Authority on been removed from these statements except for utility charges, as this would August 14, 2012. The Public Financing Authority's activity has been combined distort the presentation of function costs and program revenues.

with that of the primary government because City Council members serve as Governmental activities, which normally are supported by taxes and the Public Financing Authority's board members and because the Public intergovernmental revenues, are reported separately from business type Financing Authority exclusively provides financing assistance to the primary activities, which rely to a significant extent on fees and charges for support.

government. The City is also financially accountable and operationally responsible for all matters. The statement of net position presents financial information on all of the City's assets, liabilities, and deferred inflows/outflows of resources, with the Riverside Municipal Improvements Corporation (Municipal Improvements difference reported as net position. Over time, increases or decreases in net Corporation) was created in 1978 and operates under provisions of the position may serve as a useful indicator of whether the financial position of the Nonprofit Public Benefit Corporation Law of the State of California. The City is improving or deteriorating.

33

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands}

The statement of activities demonstrates the degree to which the direct Transportation Uniform Mitigation Fees, which is six (6) months. Grant expenses of a given function or segment are offset by program revenues. revenue is recognized if received within six (6) months of year end to enable Direct expenses are those that are clearly identifiable with a specific function the matching of revenue with applicable expenditures. Expenditures generally or segment. Program revenues include 1) charges to customers or applicants are recorded when a liability is incurred under accrual accounting. However, who purchase, use, or directly benefit from goods, services, or privileges debt service expenditures, as well as expenditures related to compensated provided by a given function or segment and 2) grants and contributions that absences and claims and judgments, are recorded only when payment is due.

are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among Property taxes, special assessments, sales taxes, franchise taxes, licenses, program revenues are reported instead as general revenues. Indirect charges for services, amounts due from other governments and interest expenses are allocated to the various functions based on a proportionate associated with the current fiscal period are all considered to be susceptible to utilization of the services rendered. Such allocations consist of charges for accrual. Other revenue items such as fines and permits are considered to be accounting, human resources, information technology and other similar measurable and available only when the government receives cash, and are support services. therefore not susceptible to accrual.

Separate financial statements are provided for governmental funds, The government reports the following major governmental funds:

proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental The General fund is the government's primary operating fund. It accounts funds and major individual enterprise funds are reported as separate columns for all financial resources of the general government, except those required in the fund financial statements. to be accounted for in another fund.

C. Measurement Focus, Basis of Accounting and Financial The Capital Outlay fund accounts for the construction and installation of Statement Presentation street and highway capital improvements for the City, including improvements funded by the % % sales tax approved by Riverside County The government-wide, proprietary and private-purpose trust fund financial in 1988.

statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds report only assets and The government reports the following major proprietary funds:

liabilities and therefore have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, The Electric fund accounts for the activities of the City's electric distribution regardless of the timing of related cash flows. Property taxes are recognized operations.

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 The Water fund accounts for the activities of the City's water distribution have been met. An allowance for doubtful accounts is maintained for the utility operations.

and other miscellaneous receivables.

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

Governmental fund financial statements are reported using the current Additionally, the government reports the following fund types:

financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable Internal service funds account for self-insurance, central stores and central and available. Revenues are considered to be available when they are garage on a cost reimbursement basis.

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 Fiduciary funds include private-purpose trust and agency funds. The generally collected within 60 days after year end, except for revenue private-purpose trust fund accounts for assets and activities of the associated with neglected property abatement which is eleven (11) months dissolved Redevelopment Agency, which is accounted for in the Successor and except for grant revenue, including reimbursement received from 34

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Agency Trust. The agency fund is used to account for special assessments are considered highly liquid and are classified as cash equivalents for the that service no-commitment debt. purpose of presentation in the statement of cash flows.

The permanent fund is a governmental fund that is used to report resources E. Restricted Cash and Investments 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- Certain proceeds of long-term indebtedness, as well as certain resources set expendable net position on the Statement of Net Position includes $1.5 aside for their repayment, are classified as restricted assets on the statement million of permanent fund principal which are considered nonexpendable. of net position because their use is limited by applicable bond covenants.

Restricted cash and investments also include cash set aside for nuclear Amounts reported as program revenues include 1) charges to customers for decommissioning, public benefit programs, regulatory requirements and rate goods, services, or privileges provided, 2) operating grants and contributions, stabilization because their use is legally restricted to a specific purpose.

and 3) capital grants and contributions, including special assessments. Unspent proceeds received from the City's landfill capping surcharge are also Internally dedicated resources are reported as general revenues rather than recorded as restricted assets.

as program revenues. Likewise, general revenues include all taxes.

F. Allowance for Doubtful Accounts Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from Management determines the allowance for doubtful accounts by analyzing providing services and producing and delivering goods in connection with a customer accounts for all balances over 60 days old. The allowance for proprietary fund's principal ongoing operations. The sewer fund also doubtful accounts is then adjusted at fiscal year-end based on the amount recognizes as operating revenue the portion of connection fees intended to equal to the annual uncollectible accounts. Utility customer closed accounts recover the cost of connecting new customers to the system. Operating are written off when deemed uncollectible. Recoveries to utility customer expenses for enterprise funds and internal service funds include the cost of receivables previously written off are recorded when received. For non-utility sales and services, administrative expenses, and depreciation on capital accounts receivables, delinquent notices after 60 days are sent to customers assets. All revenues and expenses not meeting this definition are reported as with outstanding balances. After 120 days, accounts still outstanding are non-operating revenues and expenses. referred to the City's collection agency. As of June 30, 2018, the City had an allowance for doubtful account balance of $6,768.

D. Cash and Investments G. Land and Improvements Held for Resale The City values its cash and investments in accordance with the provisions of Governmental Accounting Standards Board Statement No. 72 (GASS 72), Fair Land and improvements held for resale were generally acquired for future Value Measurement and Application, which requires governmental entities to development projects. The properties are carried at the lower of cost or net use valuation techniques that are appropriate under the circumstances and for realizable value.

which sufficient data are available to measure fair value. The techniques should be consistent with one or more of the following approaches: the market H. Inventory approach, the cost approach or the income approach.

Supplies are valued at cost using the average-cost method. Costs are charged Cash accounts of all funds are pooled for investment purposes to enhance to user departments when consumed rather than when purchased.

safety and liquidity while maximizing interest earnings. Investments are stated at fair value except for investments in investment contracts which are recorded I. Prepaid Items at contract value. All highly liquid investments (including restricted assets) with a maturity of 90 days or less when purchased are considered cash equivalents. Payments to vendors for services benefiting future periods are recorded as Cash and investments held on behalf of proprietary funds by the City Treasurer prepaid items and expenditures are recognized when items are consumed.

35

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

J. Capital Assets employees or their estates receive a percentage of unused sick leave paid in a lump sum based on longevity. The General, Electric and Water funds have Capital assets, which include property, plant, equipment, and infrastructure been primarily used to liquidate such balances.

assets (e.g., roads, bridges, sidewalks, right of way, and similar items), are reported in the applicable governmental activities and business-type activities The liability associated with these benefits is reported in the government-wide of the government-wide financial statements and in the proprietary funds and statements. Vacation and sick leave of proprietary funds is recorded as an the fiduciary private-purpose trust fund statements of net position. The expense and as a liability of those funds as the benefits accrue to employees.

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 L. Derivative Instruments year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Costs include: labor; materials; interest during The City's derivative instruments are accounted for in accordance with construction; allocated indirect charges such as engineering, construction and Government Accounting Standards Board Statement No. 53 (GASB 53),

transportation equipment, retirement plan contributions and other fringe Accounting and Financial Reporting for Derivative Instruments, which requires benefits. Donated capital assets are recorded at estimated fair market value the City to report its derivative instruments at fair value. Changes in fair value at the date of donation. Intangible assets that cost more than one hundred for effective hedges that are achieved with derivative instruments are reported thousand dollars with useful lives of at least three years are capitalized and as deferrals in the statements of net position.

are recorded at cost.

The City uses derivative instruments to hedge its exposure to changing interest Interest incurred during the construction phase is reflected in the capitalized rates through the use of interest rate swaps. The City had debt that was value of the asset constructed for proprietary funds. For the year ended June layered with "synthetic fixed rate" swaps, which was refunded in 2008 and 30, 2018, business-type activities capitalized net interest costs of $12,054 in 2011. The balance of the deferral account for each swap is included as part of the government-wide financial statements. Total interest expense incurred by the deferred charge on refunding associated with the new bonds. The swaps the business-type activities before capitalization was $55,301. 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 The costs of normal maintenance and repairs that do not add to the value of effective. The negative fair value of the interest rate swaps related to the new the asset or materially extend asset lives are not capitalized. Capital assets hedging relationship has been recorded and deferred on the statement of net other than land are depreciated using the straight-line method. Estimated position. See Note 9 for further discussion related to the City's interest rate useful lives used to compute depreciation are as follows: swaps.

Buildings and Improvements 30-50 years Various transactions permitted in the Utility's Power Resources Risk Improvements other than Buildings 20-99 years Management Policies may be considered derivatives, including energy and/or Intangibles - Depreciable 3-15 years gas transactions for swaps, options, forward arrangements and congestion Machinery and Equipment 3-15 years revenue rights. The City has determined that all of its contracts including Infrastructure 20-100 years congestion revenue rights fall under the scope of "normal purchases and normal sales" and are exempt from GASB 53.

K. Compensated Absences M. Long-Term Obligations 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 Long-Term Debt unused vacation is paid in cash upon separation.

Long-term debt and other long-term obligations are reported as liabilities in the City employees generally receive one day of sick leave for each month of applicable governmental and business-type activities columns in the employment with unlimited accumulation. Upon retirement or death, certain government-wide financial statements and in the proprietary funds and 36

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) fiduciary private-purpose trust fund statements of net position. Bond premiums N. Claims and Judgments Payable 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 Claims and judgments payable are recognized when it is probable that a bond premium or discount. 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 In the fund financial statements, government fund types recognize bond end, are recorded as liabilities in the self-insurance internal service fund. As issuance costs as expenditures during the current period. The face amount of June 30, 2018, the City had an obligation related to claims and judgments of debt issued is reported as other financing sources. Premiums received on which is reflected as a liability on the government-wide statements and is more debt issuances are reported as other financing sources while discounts on fully described in Note 7.

debt issuance are reported as other financing uses.

0. Fund Equity Decommissioning In the fund financial statements, governmental fund balance is made up of the Federal regulations require the Electric Utility to provide for the future following components:

decommissioning of its ownership share of the nuclear units at San Onofre.

• Nonspendable fund balance is the portion of fund balance that cannot The Electric Utility has established trust accounts to accumulate resources for be spent due to form. Examples include inventories, prepaid amounts, the decommissioning of the nuclear power plant and restoration of the long-term loans, and notes receivable, unless the proceeds are beachfront at San Onofre. Based on the most recent site specific cost estimate restricted, committed or assigned. Also, amounts that must be as of September 2014, submitted by Southern California Edison (SCE) and maintained intact legally or contractually, such as the principal of a accepted by the Nuclear Regulatory Commission (NRC), the Electric Utility permanent fund are reported within the nonspendable category.

has fully funded the San Onofre Nuclear Generating Station ("SONGS")

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

The Electric Utility has set aside $57, 154 in cash investments with the trustee and $8,245 in an internally designated decommissioning reserve as the

• Committed fund balance is the portion of fund balance that can only be Electric Utility's estimated share of the decommissioning cost of SONGS as of used for specific purposes due to formal action of the City Council June 30, 2018. With the recent retirement of SONGS units 2 and 3, there is through adoption of a resolution prior to the end of the fiscal year. Once much uncertainty as to future unknown costs to decommission SONGS. adopted, the limitation imposed by resolution remains in place until a Although management believes the current cost estimate is the upper bound similar action is taken (the adoption of another resolution) to remove or of decommissioning obligations, the Electric Utility has conservatively decided revise the limitation. The City Council approved the General Fund to continue to set aside $1,581 per year in an unrestricted designated cash Reserve Policy setting a 10% minimum in the Emergency Reserve and reserve for unexpected costs not contemplated in the current estimates. 5% in the Contingency Reserve with an aspirational goal of 15% in the Emergency Reserve. The Emergency Reserve was established for the On February 23, 2016, the City Council adopted a resolution authorizing the purpose of addressing any extremely unusual. and infrequent commencement of SONGS decommissioning effective June 7, 2013. This occurrences, such as a major natural disaster or a major unforeseen resolution allows the Electric Utility to access the decommissioning trust funds settlement. Utilization of the Emergency Reserve requires declaration of to pay for its share of decommissioning costs. As of June 30, 2018, the Electric an emergency by a two-thirds majority of the City Council, and Utility has paid to date $23,512 in decommissioning obligations, all of which specification of the maximum dollar amount to be used. The have been reimbursed by the trust funds. Contingency Reserve was established for the purpose of providing a "bridge" to facilitate a measured and thoughtful reduction in The plant site easement at San Onofre terminates May 2024. The plant must expenditures during times of economic downturn, rather than making be decommissioned and the site restored by the time the easement immediate and drastic budget reductions without the time for proper terminates. evaluation. Utilization of the Contingency Reserve, including 37

City of Riverside Notes to Basic Financial Statements (amounts expressed in thousands)

For the year ended June 30, 2018 specification of the maximum dollar amount to be used, requires the reimbursed fund and accounted for as expenditures or expenses in the approval by a two-thirds majority of the City Council. The reserves fund to which the transaction is applicable.

committed at June 30, 2018 were calculated utilizing fiscal year 2018-2019 adopted General Fund expenditure budget of $269,000. During the year, transactions occur between individual funds for goods provided or services rendered. Related receivables and payables are

• Assigned fund balance reflects the City's intended use of resources. classified as "due from/to other funds" on the accompanying fund level Intent can be expressed by the City Council or by an official to which the statements. The noncurrent portion of long-term interfund loans receivable are City Council delegates the authority. On February 22, 2011, the City reported as advances and, for governmental fund types, are equally offset by Council approved a policy whereby the authority to assign fund balance nonspendable fund balance to indicate that the receivable is not in spendable was delegated to the City's chief financial officer, which authorized the form.

assignment of fund balance for specific programs or purposes in accordance with City Council directives. The City also uses budget and Any residual balances outstanding between the governmental activities and finance policy to authorize the assignment of fund balance, which is business-type activities are reported in the government-wide financial done through the adoption of the budget and subsequent budget statements as "internal balances."

amendments throughout the year.

• Unassigned fund balance is the residual classification that includes all R. Unearned Revenue spendable amounts in the General Fund not contained in other classifications. 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 When expenditures are incurred for purposes for which both restricted and all eligibility requirements. In subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the unrestricted (committed, assigned or unassigned) fund balances are available, the City's policy is to use restricted amounts before unrestricted amounts. resources, revenue is recognized.

Within unrestricted resources, committed resources are used first followed by S. Unavailable Revenue assigned resources, and finally unassigned resources.

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

P. Net Position Accordingly, unavailable revenue is reported only in the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of Net position represents the difference between assets and deferred outflows resources (revenue) in the period that the amounts become available.

less liabilities and deferred inflows. Net position invested in capital assets consists of capital assets, net of accumulated depreciation, reduced by the T. Deferred Outflows and Deferred Inflows of Resources outstanding balances of any borrowings used for the related acquisition, construction or improvement . of those assets excluding unspent debt When applicable, the statement of net position and the balance sheet will proceeds. Restricted net position represents restricted assets less liabilities report a separate section for deferred outflows of resources. Deferred outflows and deferred inflows related to those assets. Restricted assets are recorded of resources represent outflows of resources (consumption of net position) that when there are limitations imposed on their use either through legislation apply to future periods and that, therefore will not be recognized as an expense adopted by the City or through external restrictions imposed by creditors, or expenditure until that time.

granters or laws or regulations of other governments. Restricted resources are used first to fund appropriations. Conversely, deferred inflows of resources represent inflows of resources (acquisition of net position) that apply to future periods and that, therefore, are Q. lnterfund Transactions not recognized as an inflow of resources (revenue) until that time.

lnterfund transactions are accounted for as revenues and expenditures or U. Regulatory Assets and Deferred Regulatory Charges expenses. Transactions, which constitute reimbursements, are eliminated in 38

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

In accordance with GASB Statement No. 62, enterprise funds that are used to For purposes of measuring the net pension liability and deferred account for rate-regulated activities are permitted to defer certain expenses outflows/inflows of resources related to pensions, and pension expense, and revenues that would otherwise be recognized when incurred, provided information about the fiduciary net position of the City of Riverside California that the City is recovering or expects to recover or refund such amounts in Public Employees' Retirement System (CalPERS) plans (Plans) and additions rates charged to its customers. Accordingly, regulatory assets and/or deferred to/deductions from the Plans' fiduciary net position have been determined on regulatory charges have been recorded in the Electric, Sewer and Refuse the same basis as they are reported by CalPERS. For this purpose, benefit funds. payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are V. Property Tax Calendar reported at fair value.

Under California law, general property taxes are assessed for up to 1% of the Y. Other Post Employment Benefit (OPEB) property's assessed value. General property taxes are collected by the counties along with other special district taxes and assessments and voter OPEB refers to the benefits, other than pensions, that the City provides as part approved debt. General property tax revenues are collected and pooled by the of an employee's retirement benefits. The net OPEB liability is defined as the county throughout the fiscal year and then allocated and paid to the county, liability of employers contributing to employees for benefits provided through cities and school districts based on complex formulas prescribed by State a defined benefit OPEB plan that is administered through a trust. In order to statutes. improve the financial reporting of these benefits, the City has implemented GASB 75, which is explained in detail under New Accounting Property taxes are calculated on assessed values as of January 1 for the ensuing fiscal year. On January 1 of the fiscal year the levy is placed and a Pronouncements.

lien is attached to the property. Property taxes are due in two installments.

Z. New Accounting Pronouncements The first installment is due November 1 and is delinquent after December 10.

The second installment is due February 1 and is delinquent after April 10. The Effective July 1, 2017, the accompanying financial statements reflect the City generally accrues only those taxes, which are received within sixty days implementation of Governmental Accounting Standards Board Statement No.

after the year-end. Under the Teeter plan, the County of Riverside has 75 (GASB 75), Accounting and Financial Reporting For Postemployment responsibility for the collection of delinquent taxes and the City receives 100%

Benefits Other Than Pensions. The primary objective of GASB 75 is to improve of the levy.

financial reporting by state and local governments in regards to W. Use of Estimates postemployment benefits other than pensions (OPEB). These improvements provide users of financial statement decision-useful information, supports The preparation of financial statements in conformity with accounting assessments of accountability and interperiod equity, and creates additional principles generally accepted in the United States of America requires transparency. GASS 75 accomplishes this by requiring recognition of the management to make estimates and assumptions that affect the reported entire OPEB liability, a more comprehensive measure of OPEB expense, amounts of assets and liabilities, disclosure of contingent assets and liabilities along with new note disclosures and required supplementary information. The at the date of the financial statements, and the reported amounts of revenue City implemented this Statement which resulted in a restatement of beginning and expenditures. Specifically, the City has made certain estimates and net position by $1,618, recognition of deferred inflow of resources of $1,459, assumptions relating to the revenues due and expenditures incurred through establishment of a net OPEB liability of $36,786, and additional disclosures fiscal year end, collectability of its receivables, the valuation of property held (Note 15).

for resale, the useful lives of capital assets, and the ultimate outcome of claims and judgments. Actual results may differ from those estimates and 2. Legal Compliance - Budgets assumptions.

Budgets are adopted on a basis consistent with accounting principles X. Pensions generally accepted in the United States of America. Annual appropriated budgets are adopted for all departments within the general, special revenue 39

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) and capital project funds. Formal budgets are not employed for debt service Cash and investments $ 572,910 funds because debt indenture provisions specify payments. The permanent Restricted cash and cash equivalents 58,928 fund is not budgeted. Restricted cash and investments at fiscal agent 136,128 Total per statement of net position 767,966 Biannually, during the period December through February, department heads Fiduciary fund cash and investments 38,754 prepare estimates of required appropriations for the following two-year budget Fiduciary fund cash and investments vvith fiscal agent 16,902 cycle. These estimates are compiled into a proposed operating budget that $ 823,622 includes a summary of proposed expenditures and financial resources and historical data for the preceding budget cycle. The operating budget is The City follows the practice of pooling cash and investments of all funds presented by the City Manager to the City Council for review. Public hearings except for funds required to be held by outside fiscal agents under the are conducted to obtain citizen comments. The City Council generally adopts provisions of bond indentures, which are administered by outside agencies.

the budget during one of its June meetings. The City Manager is legally authorized to transfer budgeted amounts between divisions and accounts Interest income earned on pooled cash and investments is allocated monthly within the same department. Transfer of appropriations between departments to funds based on the beginning and month-end balances. Interest income or funds and increased appropriations must be authorized by the City Council. from cash and investments held at fiscal agents is credited directly to the Expenditures may not legally exceed budgeted appropriations at the related account. Bank deposits are covered by federal depository insurance departmental level within a fund. All appropriations shall lapse at the end of for the first $250 or by collateral held in the pledging bank's trust department the fiscal year to the extent they have not been expended or lawfully in the name of the City.

encumbered, except for appropriations for capital projects which shall continue to their completion. Authorized Investments

3. Cash and Investments Under provisions of the City's investment policy, and in accordance with California Government Code Section 53601, the City Treasurer may invest or Cash and investments at fiscal year-end consist of the following: deposit in the following types of investments:

lnwstments $ 630,336 Max Max% of lnwstments at fiscal agent 146,488 Maturity Portfolio 776,824 Local Agency Investment Fund (State Pool) N/A 100%

Cash on hand and deposits with financial institutions 46,798

$ 823,622 Money Market Funds N/A 20%

Mutual Funds N/A 20%

Joint Powers Authority Pools N/A N/A The amounts are reflected in the statements of net position of the government- Corporate Medium Term Notes 5 Years 30%

wide and fiduciary fund financial statements: Municipal Bonds 5 Years 30%

Negotiable Certificates of Deposit 5 Years 30%

Mortgage Pass-Through and Asset-Backed Securities 5 Years 20%

Certificates of Deposit Placement Services 5 Years 30%

Collateralized Time Deposits 5 Years 30%

Federally Insured Time Deposits 5 Years 30%

Supranational Securities 5 Years 15%

Federal Agency Securities 5 Years N/A 40

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

U.S. Treasury Notes/Bonds 5 Years N/A investments are specified in related trust agreements and include the Repurchase Agreements 1 Year N/A following:

Commercial Paper of "prime" quality 270 Days 25%

• Securities of the U.S. Government and its sponsored agencies Bankers' Acceptances 180 Days 10%

• Bankers' Acceptances rated in the single highest classification Reverse Repurchase Agreements 92 Days 20%

• 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 Investments in Corporate Medium Term Notes may be invested in securities rated "A" or better by at least two nationally recognized statistical rating no minimum rating requirement agencies. No more than 5% of the market value of the portfolio may be

• Municipal obligations rated Aaa/AAA or general obligations of invested in any single issuer. states with ratings of at least A2/A or higher by both Moody's and S&P Investments in Negotiable Certificates of Deposit exceeding federal deposit

• Investment Agreements insurance limits shall be issued by institutions which have long-term debt obligations rated "A" (or the equivalent) or better and short-term debt No maximum percentage of the related debt issue or maximum investment in obligations, if any, rated "A1" (or the equivalent) or better by at least two one issuer is specified.

nationally recognized statistical rating agencies. No more than 5% of the market value of the portfolio may be invested in any single issuer of negotiable Disclosures Relating to Fair Value Measurement and Application or non-negotiable certificates of deposit.

The City categorizes its fair value measurements within the fair value hierarchy Investments in Commercial Paper may be invested in securities rated "A 1" (or established by generally accepted accounting principles. The hierarchy is the equivalent) or higher by at least one nationally recognized statistical rating based on the valuation inputs used to measure fair value of assets. Level 1 agency. In addition, debt other than Commercial Paper, if any, issued by are quoted prices in an active market for identical assets; Level 2 inputs are corporations in this category must be rated at least "A" (or the equivalent) or significant other observable inputs; and Level 3 inputs are significant

• better by at least one nationally recognized statistical rating agency. No more unobservable inputs. The levels of valuation inputs are as follows:

than 5% of the market value of the portfolio may be invested in any single issuer. For purposes of this issuer limitation, holdings of Commercial Paper Level 1 - Quoted prices for identical assets or liabilities in an active market shall be combined with holdings of Corporate Medium-Term Notes. No more Level 2 - Observable inputs other than quoted market prices; and than 25% of the total market value of the portfolio may be invested in Level 3 - Unobservable inputs Commercial Paper. No more than 10% of the outstanding Commercial Paper of any single issuer may be purchased. The City has the following recurring fair value measurements as of June 30, 2018:

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 Agreements 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 41

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Remaining Maturity (in Months)

Quoted 12 Months 13 to 24 25 to 60 More than Prices in or Less Months Months 60 Months.

Total Active Significant Money Market Funds $ 148,627 $ 148,627 $ $ $

Markets for Other Significant Federal Agency Securities 7,938 7,938 Identical Observable Unobservable U.S. Treasury Notes/Bonds 301,172 40,693 140,724 119,755 Assets Inputs Inputs (Level Corp. Medium Term Notes 35,839 8,488 14,870 12,481 Total (Level 1) (Level 2) 3)

State Investment Pool 129,366 129,366 Money Market Funds $ 148,627 $ $ 148,627 $

Negotiable Certificates of Deposit 7,394 4,460 984 1,950 Federal Agency Securities 7,938 7,938 301,172 Held by Fiscal Agent U.S. Treasury Notes/Bonds 301,172 Money Market Funds 11,025 11,025 Corp. Medium Term Notes 35,839 35,839 State Investment Pool 39,650 39,650 Negotiable Certificates of Deposits 7,394 7,394 Investment Contracts 10,761 10,761 Held by Fiscal Agent Commercial Paper 662 662 Money Market Funds 11,025 11,025 U.S. Treasury Notes/Bonds 66,050 30,698 8,890 26,462 Commercial Paper 662 662 Federal Agency Securities 1,691 1,332 359 U.S. Treasury Notes/Bonds 66,050 66,050 Corp. Medium Term Notes 16,649 10,303 3,379 2,967 Federal Agency Securities 1,691 1,691 Total $ 776,824 $ 425,304 $ 168,847 $ 171,912 $ 10,761 Corp. Medium Term Notes 16,649 16,649 Total 597,047 $ $ 597,047 $

The City assumes that callable investments will not be called.

Investments not subject to fair value hierarchy: Disclosures Relating to Credit Risk State Investment Pool 169,016 Investment Contracts 10,761 Generally, credit risk is the risk that an issuer of an investment will not fulfill its Total Investments $ 776,824 obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

Disclosures Relating to Interest Rate Risk Presented below is the actual rating as of year-end for each investment type:

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 Ratings as of Year End investment, the greater the sensitivity of its fair value to changes in market Total AM AA A BBB Unrated interest rates. The City's investment policy requires that the interest rate risk Money Market Funds $ 148,627 $ $ 143,510 $ 5,117 $ - $

exposure be managed by purchasing a combination of shorter term and longer Federal Agency Securities 7,938 7,938 301;172 301,172 term investments and by timing cash flows from maturities so that a portion of U.S. Treasury Notes/Bonds 35,839 Corp. Medium Term Notes 35,839 the portfolio is maturing or coming close to maturity evenly over time as State Investment Pool 129,366 129,366 necessary to provide the cash flow and liquidity needed for operations. Negotiable Certificates of Deposits 7,394 7,394 Information about the sensitivity of the fair values of the City's investments Held by Fiscal Agent 7,840 3,185 (including investments held by fiscal agent) to market interest rate fluctuations Money Market Funds 11,025 39,650 State Investment Pool 39,650 is provided by the following table that shows the distribution of the City's Investment Contracts 10,761 10,761 investments by maturity: Commercial Paper 662 662 U.S. Treasury Notes/Bonds 66,050 66,050 Federal Agency Securities 1,691 1,691 Corp. Medium Term Notes 16,649 2,880 2,967 3,379 7,423 Total $ 776,824 $ 387,571 $ 193,077 $ 12,343 $ 7,423 $ 176,410 42

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Concentration on Credit Risk 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 The investment policy of the City contains no limitations on the amount that amounts based upon the City's pro-rata share of the fair value provided by can be invested in any one issuer beyond that stated above. For fiscal year LAIF for the entire LAIF portfolio (in relation to the amortized cost of that ended June 30, 2018, the City did not have any investments in any one issuer portfolio). The balance available for withdrawal is based on the accounting (other than U.S. Treasury securities, money market funds, and external records maintained by LAIF, which are recorded on an amortized cost basis.

investment pools) that represent 5% or more of total City investments.

4. Direct Financing Lease Receivable Custodial Credit Risk The former Redevelopment Agency had a direct financing lease arrangement Custodial credit risk for deposits is the risk that, in the event of the failure of a with the State of California (the State) for a twelve-story office building, which depository financial institution, a government will not be able to recover its was transferred to the Successor Agency. The lease term is for thirty years deposits or will not be able to recover collateral securities that are in the and the State takes ownership of the facility at the conclusion of that term. The possession of an outside party. The custodial credit risk for investments is the lease calls for semi-annual payments not less than the debt service owed on risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to the related lease revenue bonds issued by the former Redevelopment Agency a transaction, a government will not be able to recover the value of its for the purchase and renovation of the building. The future minimum lease investment or collateral securities that are in the possession of another party. payments to be received are as follows:

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. Fiscal Year payment basis through the City's safekeeping a*gent. The City has no deposits 2019 $ 2,625 with financial institutions; bank balances are swept daily into a money market 2020 2,659 account. 2021 2,692 2022 2,724 The pledge to secure deposits is administered by the California Commissioner 2023 2,759 of Business Oversight. Collateral is required for demand deposits at 110% of Thereafter 5,609 all deposits not covered by federal depository insurance (FDIC) if obligations Total Due 19,068 of the United States and its agencies, or obligations of the State or its Less: Amount applicable to interest (3,918) municipalities, school districts, and district corporations are pledged. Collateral $ 15,150 Total direct financing lease receivable of 150% is required if a deposit is secured by first mortgages or first trust deeds upon improved residential real property located in California. All such collateral is considered to be held by the pledging financial institutions' trust departments or agents in the name of the City. Obligations pledged to secure deposits must be delivered to an institution other than the institution in which the deposit is made; however the trust department of the same institution may hold them.

Written custodial agreements are required to provide, among other things, that the collateral securities are held separate from the assets of the custodial institution.

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 43

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

5. Capital Assets Depreciation expense was charged to various functions as follows:

The following is a summary of changes in the capital assets during the fiscal Governmental activities:

year ended June 30, 2018.

Beginning Additons/ Deletions/ Ending General government $ 5,394 Governrrental activities: Balance Transfers In Transfers Out Reclassrrications Balance Public safety 5,667 Capital assets, not depreciated:

Highway and streets, including general infrastructure 25,951 Land $ 343,918 $ 1,091 $ (1,987) $ $ 343,022 Construction in progress 44,310 24.584 68,894 Culture and recreation 10,927 Total capital assets not depreciated 388,228 25.675 (1,987) 411,916 Total depreciation expense - governmental activities $ 47,939 Capital assets being depreciated:

Buildings 183,641 453 184,094 lrrproverrents other than buildings 314,404 2,367 (44,201) 272,570 Business-type activities:

Machinery and equiprrent 89,501 6,352 (2,826) (386) 92,641 Electric $ 33,585 Intangibles, depreciable 219 219 Infrastructure 1,013,776 16,838 (10,772) 1,019,842 Water 14,914 Total capital assets being depreciated 1,601,541 26,010 (13,598) (44,587) 1,569,366 Sewer 13,621 Less accurrulated depreciation for: Entertainment 975 Buildings (68,554) (4,738) (73,292) lrrproverrents other than buildings (116,922) (12,060) 2,755 (126,227)

Airport 693 Machinery and equiprrent (66,530) (5,900) 2,766 193 (69,471) Refuse 1,138 Intangibles, depreciable (88) (44) (132)

Transportation 714 Infrastructure (381,397) (25,197) 233 (406,361)

Total accurrulated depreciation (633,491) (47,939) 2,999 2,948 (675,483) Public Parking 992 Total capital assets being Total depreciation expense - business-type activities $ 66,632 depreciated, net 968,050 (21,929) (10,599) (41,639) 893,883 Governrrental activities capital assets, net $1,356,278 $ 3,746 $ (12,586) $ (41,639) $1,305,799 6. Long-Term Obligations Changes in Long-Term Obligations: Below is a summary of changes in long-Beginning Additons/ Deletions/ Ending Business-type activtties: Balance Transfers h Transfers Out Reclassffications Balance term obligations during the fiscal year:

Capital assets, not depreciated:

Land $ 80,246 $ 14,654 $ $ $ 94,900 Beginning Ending Due Within htangibles, non-depreciable 21,492 21,492 Go\ernmental activities: Balance Additions Reclass Reductions Balance One Year Construction in progress 80,934 69,647 (48,002) 102,579 General obligations bond $ 11,513 $ $ $ (1,125) $ 10,388 $ 1,195 Total capital assets not depreciated 182,672 84,301 (48,002) 218,971 Pension obligation bonds 92,592 (22,210) (9,499) 60,883 10,435 Certificates of participation 156,516 (5,716) 150,800 5,825 Capital assets being depreciated: Lease revenue bonds 37,854 (1,608) 36,246 1,560 Buildings 606,984 8,256 (39) 615,201 41,325 (39,174) (405) 1,746 417 Loan payable Improvements other than buildings 1,695,979 57,003 (2,088) 44,201 1,795,095 Capital leases 17,193 14,500 (2,152) (3,894) 25,647 4,284 Machinery and equipment 96,617 3,550 (2,464) 386 98,089 Compensated absences 22,790 16,167 (13,972) 24,985 15,306 Intangibles, depreciable 24,597 1,016 25,613 Claims liability 44,945 13,690 (12,403) 46,232 9,872 Total capital assets being depreciated 2,424,177 69,825 (4,591) 44,587 2,533,998 $ 424,728 $ 44,357 $ (63,536) $ (48,622) $ 356,927 $ 48,894 Less accumulated depreciation for:

Buildings (135,847) (13,134) 39 (148,942)

Improvements other than buildings (572,788) (43,883) 1,996 (2,755) (617,430)

Machinery and equipment (59,537) (6,664) 2,193 (193) (64,201) htangibles, depreciable (4,670) (2,951) (7,621)

Total accumulated depreciation (772,842) (66,632) 4,228 (2,948) (838,194)

Total capital assets being depreciated, net 1,651,335 3,193 (363) 41,639 1,695,804 Business-type activities capital assets, net $1,834,007 $ 87,494 $ (48,365) $ 41,639 $1,914,775 44

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 Sta.res 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, 2018 (amounts expressed In thousands)

Assets Self.Insurance Trust Central Stores Central Garage Total Current assets:

Cash and investments 16,867 6,917 23,784 Receivables (net of allowance for uncollectibles)

Interest 52 23 75 Accounts 43 7 50 Intergovernmental 51 367 418 Inventory 5,836 448 6,284 Total current assets 17,013 5,836 7,762 30,611 Non-current assets:

Advances to other funds 335 2,068 2,403 Capital assets:

Land 458 458 Intangible assets, depreciable 219 219 Accumulated depreciation- intangible assets, depreciable (132) (132)

Buildings 4,092 4,092 Accumulated depreciation-buildings (718) (718)

Improvements other than buildings 1,315 1,315 Accumulated depreciation - improvements other than buildings (470) (470)

Machinery and equipment 5 139 11,121 11,265 (4) (139) (8,834) {8,977)

Accumulated depreciation-machinery and equipment Construction in progress 253 253 423 9,285 9,708

• Total non-current assets:

17,436 5,836 17,047 40,319 Total assets Deferred Outflows of Resources Pension contributions, changes in assumptions 306 336 1,708 2,350 and differences In experience 306 336 1,708 2,350 Total deferred outflows of resources Llablllties Current liabilities:

766 318 193 1,277 Accounts payable 3 14 20 Accrued payroll 13 13 Retainage payable 436 436 Due to other funds 18 24 103 145 Pension obligation bonds - current 9,872 9,872 Claims and judgments - current Compensated absences - current _ _ _ _ _ _ _4_7_, _ _ _ _ _ _ _7_5 255 377 10,706 856 578 12,140 Total current liabilities Non-current liabilities:

335 335 Advances from other funds 73 102 429 604 Per,sion obligation bonds 36,360 36,360 Claims and judgments 7 11 37 55 Compensated absences 131 154 665 950 Net OPEB liability 1,066 1,193 6,105 8,364 Net pension liability 37,637 1,460 7,571 46,668 Total non-current liabilities 48,343 2,316 B,149 58,808 Total liabilities Deferred Inflows of Resources Pension contributions, changes ln assumptions 17 66 412 495 and differences in experience OPEB contributions, changes in assumptions 25 36 and differences In experience 23 71 437 531 Total deferred inflows of resources Net Position 88 7,217 7,305 Net investment in capital assets

{30,712) 3,785 2,952 {23,975)

Unrestricted (30,624) 3,785 10,169 (16,670)

Total net position 87

City of Riverside Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

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

Charges for services $ 14,052 $ 1,240 $ 9,481 $ 24,773 Operating expenses:

Personnel services 932 807 3,857 5,596 Contractual services 565 2 89 656 Maintenance and operation 3 33 2,704 2,740 General 1,934 369 753 3,056 Materials and supplies. 2 13 250 265 Claims/Insurance 14,647 7 79 14,733 Depreciation and amortization 45 1,046 1,091 Total operating expenses 18,128 1,231 8,778 28,137 Operating income (loss) (4,076) 9 703 (3,364)

Non-operating revenues (expenses):

Interest income 85 65 150 Other 3 431 434 Gain (loss) on retirement of capital assets 26 71 97 Interest expense and fiscal charges (3) (5) (28) (36)

Total non-operating revenue (expenses) 111 (5) 539 645 Income before capital contributions and transfers (3,965) 4 1,242 (2,719)

Transfers in 5,000 5,000 Change in net position 1,035 4 1,242 2,281 Net position - beginning, as previously stated (31,653) 3,787 8,952 (18,914)

Prior period adjustment (6) (6) (25) (37)

Net position - beginning, as ~estated (31,659) 3,781 8,927 (18,951)

Net position - ending $ (30,624) $ 3,785 $ 10,169 $ (16,670) 88

City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

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

Cash received from customers and users $ 14,002 $ 1,240 $ 9,679 $ 24,921 Cash paid to employees for services 486 (693) {3,346) (3,553)

Cash paid to other suppliers of goods or services (17,031) (694) (4,063) (21,788)

Other receipts 3 431 434 Net cash (used) provided by operating activities (2,540) (147) 2,701 14 Cash flows from noncapital financing activities:

Transfers in 5,000 5,000 Receipts on interfund advances 439 175 355 969 Payments on pension obligation bonds (16) (23) (98) (137)

Net cash (used) provided by noncapital financing activities 5,423 152 257 5,832 Cash flows from capital and related financing activities:

Purchase of capital assets (762) (762)

Proceeds from the sale ofcapital assets 26 71 97 Interest paid on long-term obligation (3) (5) (28) (36)

Net cash (used) for capital and related financing activities 23 (5) (719) (701)

Cash flows from investing activities:

Sale and (purchase) of investments (24) (8) (32)

Interest from investments 85 65 150 Net cash provided by investing activities 61 57 118 Net change in cash and cash equivalents 2,967 2,296 5,263 Cash and cash equivalents, beginning 13,900 4,621 18,521

$ 16,867 $ $ 6,917 $ 23,784 Cash and cash equivalents, ending Continued 89

City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands) Continued Self-Insurance Central Central Reconciliation of operating income (loss) to net cash (used) Trust Stores Garage Total provided by operating activities:

Operating income (loss) $ (4,076) $ 9 $ 703 $ (3,364)

Other nonoperating items 3 431 434 Adjustments to reconcile operating income (loss) to net cash (used) provided by operating activities:

Depreciation and amortization 45 1,046 1,091 Changes in assets, liabilities and deferred inflows/outflows of resources:

Accounts receivable (26) (1) (27)

Intergovernmental receivable (24) 199 175 Inventory (166) (118) (284)

Accounts payable 120 (104) (83) (67)

Accrued payroll 3 3 14 20 Retainage payable 13 13 Other payables 16 5 (25) (4)

Claims and judgments 1,287 1,287 Net pension liability and related charges in deferred outflows and inflows of resources 102 99 493 694 Net OPEB liability and related charges in deferred outflows and inflows of resources 10 7 29 46 Net cash (used) provided by operating activities $ (2,540) $ (147) $ 2,701 $ 14 90

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, 2018 (amounts expressed in thousands)

Balance Balance July 1, 2017 Additions Deductions June 30, 2018 Assets Cash and investments $ 3,181 $ 3,992 $ 3,864 $ 3,309 Cash and investments at fiscal agent 5,068 3,756 4,136 4,688 Interest receivable 8 57 55 10 Property taxes receivable 34 81 34 81 Total assets $ 8,291 $ 7,886 $ 8,089 $ 8,088 Liabilities Accounts payable $ $ 64 $ 63 Held for bond holders 8,291 7,822 8,026 8,087 Total liabilities $ 8,291 $ 7,886 $ 8,089 $ 8,088 92

COMBINING GENERAL FUND AND CAPITAL OUTLAY SCHEDULES WITH MEASURE Z FUND ACTIVITY

City of Riverside Balance Sheet Combining General Fund Schedule June 30, 2018 (amounts expressed in thousands)

Assets General Fund Measure Z Fund Total General Fund Cash and investments $ 76,455 $ 7,687 $ 84,142 Cash and investments at fiscal agent 18 18 Receivables (net of allowance for uncollectibles)

Interest 193 193 Property taxes 3,876 3,876 Sales tax 12,475 11,379 23,854 Utility billed 1,226 1,226 Accounts 5,642 5,642 Intergovernmental 5,325 5,325 Notes 10 10 Prepaid items 1,932 15 1,947 Due from other funds 858 858 Land & improvements held for resale 175 175 Total assets $ 108,185 $ 19,081 $ 127,266 Liabilities Accounts payable $ 6,661 $ 802 $ 7,463 Accrued payroll 16,409 33 16,442 Relainage payable 8 5 13 Intergovernmental 151 151 Unearned revenue 330 330 Deposits 8,558 8,558 Total liabilities 32,117 840 32,957 Deferred Inflows of Resources Unavailable revenue 4,685 4,685 Total deferred inflows of resources 4,685 4,685 Fund Balances Nonspendable:

Inventories, prepaids and deposits 1,932 15 1,947 Restricted for:

175 175 Housing and redevelopm~nl 2,037 2,037 Debt service Other purposes 779 779 Committed for:

53,800 53,800 Economic contingency Assigned to:

2,425 209 2,634 General government 1,110 849 1,959 Public safety 1,255 909 2,164 Highways and streets 620 620 Culture and recreation 7,250 8,615 15,865 Continuing projects 7,644 7,644 Unassigned 71,383 18,241 89,624 Total fund balances

$ 108,185 $ 19,081 $ 127,266 Total liabilities, deferred inflows of resources, and fund balances 94

City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances Combining General Fund Schedule For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Total General General Fund Measure Z Fund Fund Revenues Taxes $ 166,914 $ 56,202 $ 223,116 Licenses and permits 10,015 10,015 Intergovernmental 10,513 10,513 Charges for services 17,438 17,438 Fines and forfeitures 3,699 3,699 Special assessments 402 402 Rental and investment income 2,312 6 2,318 Miscellaneous 3,815 3,815 Total revenues 215,108 56,208 271,316 Expenditures Current:

General government 14,181 1,454 15,635 Public safety 166,204 18,404 184,608 Highways and streets 18,528 115 18,643 Culture and recreation 29,136 29,136 Capital outlay 2,646 2,646 Debt service:

Bond issuance costs 14 14 Total expenditures 230,709 19,973 250,682 Excess (deficiency) of revenues over (under) expenditures * (15,601) 36,235 20,634 other financing sources (uses)

Transfers in 48,397 10,935 59,332 Transfers out (39,650) (11,088) (50,738)

Transfers in from Measure Z Fund

• 20,482 20,482 Transfers out to General Fund* (20,482) (20,482)

Proceeds from the sale of capital assets 422 422 Total other financing sources (uses) 29,651 ~20,635) 9,016 Net change in fund balances 14,050 15,600 29,650 Fund balances - beginning 80,429 2,641 83,070 Prior period adjustment (23,096) (23,096)

Fund balances - ending $ 71,383 $ 18,241 $ 89,624

• Per accounting standards, Transfers within the same fund are not reflected in the Statement of Revenues, Expenditures and Changes in Fund Balances; however, they are reflected in this schedule for transparency purposes.

95

City of Riverside Balance Sheet Combining Capital Outlay Fund Schedule June 30, 2018 (amounts expressed in thousands)

MeasureZ Capital Assets Capital Outlay Outlay Total Capital Outlay Cash and investments $ 14,143 $ 4,500 $ 18,643 Cash and investments at fiscal agent 2 2 Receivables (net of allowance for uncollectibles)

Interest 71 11 82 Accounts 1,608 1,608 Intergovernmental 7,353 7,353 Total assets $ 23,177 $ 4,511 $ 27,688 Liabilities Accounts payable $ 953 $ 33 $ 986 Retainage payable 48 48 Unearned revenue 125 125 Total liabilities 1,126 33 1,159 Deferred Inflows of Resources Unavailable revenue 81 81 Total deferred inflows of resources 81 81 Fund Balances Restricted for:

Transportation and public works 21,970 4,478 26,448 Total fund balances 21,970 4,478 26,448

$ 23,177 $ 4,511 $ 27,688 Total liabilities, deferred inflows of resources, and fund balances 96

City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances Combining Capital Outlay Fund Schedule For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Measure Z Capital Total Capital

<:apital Outlay Outlay Outlay Revenues Intergovernmental $ 11,989 $ $ 11,989 Special assessments 504 504 Rental and investment income 112 112 Miscellaneous 2,883 2,883 Total revenues 15,488 15,488 Expenditures Current:

Capital outlay 8,697 1,602 10,299 Total expenditures 8,697 1,602 10,299 Excess (deficiency) of revenues over (under) expenditures 6,791 (1,602) 5,189 Other financing sources (uses)

Transfers in 240 6,072 6,312 Transfers out (3,004) (3,004)-

Proceeds from the sale of capital assets 5 5 Total other financing sources (uses) (2,759) 6,072 3,313 Net change in fund balances 4,032 4,470 8,502 Fund balances - beginning 17,938 8 17,946 Fund balances - ending $ 21,970 $ 4,478 $ 26,448 97

Statistical Section (Unaudited)

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 Financial Trends 99 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 105 These schedules contain informat property and sales taxes.

Debt Capacity 115 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 121 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 124 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 1 City of Riverside Net Position by Component Last Ten Fiscal Years

!accrual basis of accounting) (In thousands)

Fiscal Year 2009 2010 2011 20121 2013 2014 2015 2016 2017 2018 Governmental activities Net investment in capital assets $ 950,496 $ 976,614 $ 1,019,892 $ 1,076,485 $ 1,083,485 $1,106,384 $1,126,220 $ 1,123,910 $1,102,409 $1,093,896 Restricted 98,903 108,932 80,820 86,325 80,712 96,587 105,847 106,488 104,853 112,183 Unrestricted (41;861) (80,947) (90,159) 23,145 17,989 (2,049) (406,388) (389,278) (362,146) (364,500)

Total governmental activities net position $ 1,007,538 $ 1,004,599 $ 1,010,553 $ 1,185,955 $ 1,182,186 $1,200,922 $ 825,679 $ 841,120 $ 845,116 $ 841,579 Business-type activities Net investment in capital assets $ 659,904 $ 660,619 $ 654,974 $ 666,919 $ 609,691 $ 616,844 $ 626,166 $ 654,870 $ 702,844 $ 800,227 Restricted 38,621 59,863 56,397 54,923 69,068 68,507 75,660 85,526 93,570 80,717 Unrestricted 207,405 219,720 256,038 285,062 330,833 359,698 209,469 235,144 245,116 199,143 Total business-type activities net position $ 905,930 $ 940,202 $ 967,409 $ 1,006,904 $ 1,009,592 $1,045,049 $ 911,295 $ 975,540 $1,041,530 $1,080,087 Primary government Net investment in capital assets $ 1,610,400 $ 1,637,233 $ 1,674,866 $ 1,743,404 $ 1,693,176 $1,723,228 $1,752,386 $ 1,778,780 $1,805,253 $1,894,123 Restricted 137,524 168,795 137,217 141,248 149,780 165,094 181,507 192,014 198,423 192,900 Unrestricted 165,544 138,773 165,879 308,207 348,822 357,649 (196,919) (154,134) (117,030) (165,357)

Total primary government net position $ 1,913,468 $ 1,944,801 $ 1,977,962 $ 2,192,859 $ 2,191,778 $2,245,971 $1,736,974 $ 1,816,660 $1,886,646 $1,921,666 1

The increase in total governmental activities net position (and related unrestricted net position) is primarily due to the dissolution of the Redevelopment Agency.

99

Table 2 City of Riverside Changes In Net Position Last Ten Fiscal Years

{accrual basis of accounting) (In thousands) Page 1 of 2 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Expenses Governmental activities:

General government $ 71,391 $ 85,110 $ 72,606 $ 48,731 $ 54,808 $ 39,331 $ 26,587 $ 24,483 $ 44,510 $ 45,360 Public safety 142,353 137,338 139,364 148,605 147,652 149,555 154,123 161,284 160,665 216,772 Highways and streets 29,700 31,492 32,131 35,342 35,072 36,564 36,563 38,836 38,585 42,544 Culture and recreation 29,423 44,319 50,017 54,594 40,077 42,252 45,594 47,762 49,406 38,362 Interest on long-term debt 34,361 32,049 33,638 25,087 16,627 17,741 17,025 16,387 16,028 12,414 Total governmental activities expenses 307,228 330,308 327,756 312,359 294,236 285,443 279,892 288,752 309,194 355,452 Business-type activities:

Electric 269,209 256,860 275,922 288,799 292,175 304,416 309,874 307,925 317,335 333,061 Water 53,931 55,402 56,390 56,715 58,768 60,030 62,792 57,769 62,189 68,281 Sewer 34,853 41,248 42,276 43,702 43,945 40,385 35,593 39,978 38,305 54,136 Entertainment 19,995 Airport 1,734 2,206 2,320 2,646 2,029 1,662 1,809 1,799 1,998 2,179 Refuse 18,425 20,527 20,046 19,979 20,581 20,831 20,007 21,652 21,953 22,082 Transportation 3,194 3,368 3,493 3,667 3,745 4,067 4,385 4,113 4,221 4,782 Public parking 5,095 4,024 4,401 4,984 5,051 4,610 5,604 5,141 5,448 6,186 Total business-type activities expenses 386,441 383,635 404,848 420,492 426,294 436,001 440,064 438,377 451,449 510,702 Total primary government expenses $ 693,669 $ 713,943 $ 732,604 $ 732,851 $ 720,530 $ 721,444 $ 719,956 $727,129 $760,643 $866,154 Program Revenues Governmental activities:

Charges for services:

General government $ .13,691 $ 12,933 $ 14,241 $ 14,662 $ 13,338 $ 13,775 $ 17,600 $ 24,944 $ 27,441 $ 24,605 Public safety 8,414 8,177 8,075 7,837 7,793 7,444 7,256 3,243 1,167 1,880 Highways and streets 14,391 17,847 16,985 16,532 15,825 17,487 13,868 5,709 5,930 5,554 Culture and recreation 3,168 2,367 3,180 4,622 5,237 7,406 16,319 12,458 22,802 6,078 Operating grants and contributions 23,313 32,853 21,127 31,581 21,485 14,341 12,869 16,321 19,374 22,548 Capital grants and contributions 69,745 23,395 38,138 54,476 32,202 48,433 43,904 31,216 7,617 18,039 Total governmental activities program revenues 132,722 97,572 101,746 129,710 95,880 108,886 111,816 93,891 84,331 78,704 Business-type activities:

Charges for services:

Electric 314,164 309,910 313,703 333,029 347,933 344,037 347,621 354,530 366,066 364,516 Water 54,923 57,534 62,084 65,206 68,489 68,691 66,051 57,250 62,627 66,828 Sewer 23,247 27,342 32,769 37,747 43,772 46,162 50,336 52,664 59,735 65,081 16,393 Entertainment Airport 1,232 1,315 1,342 1,524 1,396 1,100 1,260 1,549 1,578 1,562 Refuse 18,394 18,712 19,134 19,588 20,829 20,677 21,360 21,806 22,567 23,085 Transportation 336 328 344 352 344 413 385 377 359 441 Public parking 4,332 4,876 5,205 4,803 4,777 4,382 4,609 4,918 5,009 6,258 Operating grants and contributions 1,929 2,487 2,159 2,738 2,718 2,524 3,869 2,322 3,751 3,374 17,288 6,838 7,337 21,164 11,734 11,486 8,027 18,868 24,151 26,957 Capital grants and contributions 435,845 429,342 444,077 486,151 501,992 499,472 503,518 514,284 545,843 574,495 Total business-type activities program revenues

$ 568,567 $ 526,914 $ 545,823 $ 615,861 $ 597,872 $ 608,358 $ 615,334 $608,175 $630,174 $653,199 Total primary government program revenues (continued}

100

Table 2 City of Riverside Changes in Net Position Last Ten Fiscal Years

!in thousands) Page 2 of 2

!accrual basis of accounting)

Fiscal Year 1 2 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 Net Revenues (Expense)

$(174,506) $ (232,736) $ (226,010) $ (182,649) $ (198,356) $ (176,557) $ (168,076) $ (194,861) $(224,863) $ (276,748)

Governmental activities 49,404 45,707 39,229 65,659 75,698 63,471 63,454 75,907 94,394 63,793 Business-type activities

$(125,102) $ (187,029) $ (186,781) $ (116,990) $ (122,658) $ (113,086) $ (104,622) $ (118,954) $(130,469) $(212,955)

Total primary government net expense General Revenues and Other Changes in Net Position Governmental activities:

Taxes Sales $ 41,882 $ 39,645 $ 44,157 $ 47,701 $ 50,222 $ 55,096 $ 59,437 $ 60,976 $ 75,883 $ 120,338 116,420 104,087 100,802 74,179 52,904 51,323 54,864 55,545 59,526 63,515 Property 25,964 25,975 26,691 27,320 28,206 28,092 28,076 27,828 27,958 27,498 Utility users 5,144 4,477 4,937 4,883 4,959 5,046 5,543 5,730 4,814 4,972 Franchise 2,912 2,488 2,731 2,995 3,703 4,189 5,280 6,093 6,622 6,793 Transient occupancy Intergovernmental, unrestricted 4,569 1,339 1,285 351 337 263 3,153 477 145 172 Unrestricted grants and contributions 15,941 8,289 7,439 4,440 2,786 2,759 3,233 729 6,145 5,187 Investment earnings 5,137 3,344 9,544 9,273 9,208 5,425 12,395 11,708 2,050 4,278 Miscellaneous 42,087 40,153 34,378 40,679 42,262 43,100 42,681 41,216 45,716 41,459 Transfers Extraordinary items 149,617 260,056 229,797 231,964 361,438. 194,587 195,293 214,662 210,302 228,859 274,212 Total governmental activities Business-type activities:

23,402 21,271 17,548 11,405 4,744 8,005 5,319 6,888 2,650 3,939 Investment income 4,590 7,447 4,808 3,110 5,767 7,081 7,652 22,666 14,662 12,901 Miscellaneous (42,087) (40,153) (34,378) (40,679) (42,262) (43,100) (42,681) (41,216) (45,716) (41,459)

Transfers Extraordinary items (41,259 (14,095) (11,435) (12,022) (26,164) (73,010) (28,014) (29,710) (11,662) (28,404) (24,619)

Total business-type activities 245,961 218,362 219,942 335,274 121,577 167,279 184,952 198,640 200,455 249,593 Total primary government Change in Net Position 85,550 $ (2,939) $ 5,954 $ 178,789 $ (3,769) $ 18,736 $ 46,586 $ 15,441 $ 3,996 $ (2,536)

Governmental activities $

35,309 34,272 27,207 39,495 2,688 35,457 33,744 64,245 65,990 39,174 Business-type activities

$ 120,859 $ 31,333 $ 33,161 $ 218,284 $ (1,081) $ 54,193 $ 80,330 $ 79,686 $ 69,986 $ 36,638 Total primary government 1

The increase in total governmental activities net position is primarily due to the dissolution of the Redevelopment Agency.

2 The decrease in total business-type activities net position is primarily due to the power plant closure.

101

Table 3 City of Riverside Fund Balances of Governmental Funds Last Six Fiscal Years (modified accrual basis of accounting, in thousands) 2013 2014 2015 2016 2017 2018 General fund Nonspendable $ 26,421 $ 24,419 $ 23,642 $ 23,094 $ 26,168 $ 1,947 Restricted 2,196 2,204 2,985 3,067 2,651 2,991 Committed 53,800 Assigned 10,711 14,505 13,965 9,922 14,968 23,242 Unassigned 37,763 37,732 39,059 29,495 39,283 7,644 Total general fund $ 77,091 $ 78,860 $ 79,651 $ 65,578 $ 83,070 $ 89,624 All other governmental funds Nonspendable $ 1,441 $ 1,460 $ 1,625 $ 1,619 $ 1,601 $ 4,855 Restricted for:

Housing and redevelopment 26,410 26,223 25,523 24,746 24,098 18,827 Debt service 25,884 26,177 26,203 26,221 6,455 11,509 Transportation and public works 16,487 54,876 36,347 36,876 34,178 43,499 Other purposes 2,003 321 2,326 3,628 4,145 3,451 Unassigned (24 Total all other governmental funds $ 72,225 $ 109,057 $ 92,024 $ 93,090 $ 70,453 $ 82,141 Note: Certain reclassifications have been made to prior year balances to conform with current year's presentation.

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

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

102

Table4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting) (in thousands) Page 1 of 2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenues:

Taxes $ 192,322 $ 177,255 $ 179,318 $ 156,593 $ 139,994 $ 143,7;48 $ 153,200 $ 156,172 $ 174,803 $ 223,116 Licenses and permits 7,368 6,899 7,657 9,292 10,173 9,244 11,168 11,611 14,455 12,442 Intergovernmental 86,873 60,550 61,082 66,618 50,734 59,348 49,892 51,896 31,440 42,454 Charges for services 9,099 9,570 10,720 11,774 12,062 15,734 24,737 26,443 31,384 17,438 Fines and forfeitures 6,213 7,512 8,928 6,293 6,234 7,283 3,957 1,941 1,976 3,717 Special assessments 5,431 5,464 6,014 6,276 6,669 6,272 6,757 7,039 7,578 7,113 Use of money and property 18,620 11,173 10,173 8,095 3,878 4,315 5,112 4,370 4,718 3,446 Miscellaneous 7,596 7,082 16,605 10,611 14,933 6,957 6,939 12,578 7,252 8,716 Total revenues $ 333,522 $ 285,505 $ 300,497 $ 275,552 $ 244,677 $ 252,901 $ 261,762 $ 272,050 $ 273,606 $ 318,442 Expenditures:

General government $ 25,995 $ 23,835 $ 26,090 $ 18,835 $ 15,713 $ 13,558 $ 17,799 $ 19,900 $ 20,650 $ 21,135 Public safety 145,802 138,594 140,994 150,878 150,290 151,721 157,660 164,800 163,712 190,916 Highways and streets 18,452 14,987 14,587 16,651 16,294 16,944 16,594 17,416 17,504 19,207 Culture and recreation 26,859 40,373 44,345 57,538 45,356 34,275 37,527 39,583 40,643 29,382 Capital outlay 180,394 131,908 105,689 75,482 - 73,581 72,365 60,060 53,208 31,000 33,504 Debt Service:

Principal 44,349 48,078 89,264 83,378 45,006 45,500 49,101 51,987 72,700 21,904 Interest 33,033 31,267 32,611 24,133 15,116 16,787 17,048 16,451 16,115 12,746 Debt issuance costs 259 231 174 169 581 843 172 180 29 24 Payment for advance refunding 3,521 Total expenditures $ 475,143 $ 429,273 $ 453,754 $ 427,064 $ 365,458 $ 351,993 $ 355,961 $ 363,525 $ 362,353 $ 328,818 Excess of revenues over (under) expenditures $ (141,621) $ (143,768) $ (153,257) $ (151,512) $ (120,781) $ (99,092) $ (94;199) $ (91,475) $ (88,747) $ (10,376)

(continued) 103

Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting) (in thousands) Page 2 of2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Other financing sources (uses):

Transfers in $100,797 $ 88,303 $ 214,631 $ 196,859 $ 56,572 $ 58,469 $ 61,510 $ 61,384 $ 94,521 $ 102,774 Transfers out (58,710) (48,150) (180,280) (156,305) (14,178) (15,369) (18,829) (20,168) (48,805) (66,021)

Issuance of long term debt 30,425 51,821 104,875 34,940 99,753 87,037 30,940 31,145 31,578 14,500 Capital lease financings 3,116 2,000 7,203 6,625 4,450 5,846 2,109 Sales of capital assets (5,798) 529 (1,629) 156 82 931 (114) 261 4,199 461 Payments to refunded bond agent (43,591)

Total other financing sources (uses) 66,714 95,619 139,597 75,650 105,841 137,693 77,957 78,468 83,602 51,714 Extraordinary items:

Dissolution of Riverside Redevelopment Agency:

Transfer of assets and liabilities to Successor Agency (130,174)

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

Total extraordinary items (106,980 Net change in fund balances $ (74,907) $ (48,149) $ (13,660) $ (182,842) $ (14,940) $ 38,601 $ (16,242) $ (13,007) $ (5,145) $ 41,338 Debt service as a percentage of noncapital expenditures 26.058% 23.211% 32.757% 32.507% 21.039% 21.803% 22.360% 21.714% 26.625% 11.999%

(1) (2) (3)

(1) Increase relates to $30 million refinancing of 20058 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, 2013 and 2014.

(2) 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.

(3) Includes one-time early redemption of $33.3 million of 2011 Redevelopment Tax Allocation Bonds.

104

Table 5 City of Riverside Business-Type Activities Electricity Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (in thousands)

Other Fiscal Residential Commercial Industrial Wholesale Other Transmission Operating Total Year Sales Sales Sales Sales Sales Revenue Revenue Revenues 2009 105,525 65,532 97,100 4,674 5,684 18,673 12,250 309,438 2010 107,301 65,091 97,458 1,466 5,639 21,100 11,855 309,910 2011 107,792 64,039 102,067 124 5,529 22,091 12,061 313,703 2012 110,471 66,047 107,455 50 5,614 30,735 12,657 333,029 2013 118,173 66,632 110,680 638 5,712 32,688 13,410 347,933 2014 111,880 67,063 111,260 115 5,600 32,630 15,489 344,037 2015 114,112 68,572 112,283 60 5,654 30,587 16,353 347,621 2016 116,997 69,759 113,756 3 4,737 32,924 16,354 354,530 2017 117,662 71,456 115,432 9 4,782 35,497 21,228 366,066 2018 115,630 71,128 115,106 2 4,792 37,484 20,374 364,516 105

Table 6 City of Riverside Governmental Activities Tax Revenues By Source Last Ten Fiscal Years '

(accrual basis of accounting) (in thousands)

Utility Transient Fiscal Sales Property Users Franchise Occupancy Total 1

Year Tax Tax2 Tax Tax Tax Taxes 2009 $ 41,882 $ 116,420 $ 25,964 $ 5,144 $ 2,912 $ 192,322 2010 39,645 104,087 25,975 4,477 2,488 176,672 2011 44,157 100,802 26,691 4,937 2,731 179,318 2012 47,701 74,179 27,320 4,883 2,995 157,078 2013 50,222 52,904 28,206 4,959 3,703 139,994 2014 55,096 51,323 28,092 5,046 4,189 143,746 2015 59,437 54,864 28,076 5,543 5,280 153,200 2016 60,976 55,545 27,828 5,730 6,093 156,172 2017 75,883 59,526 27,958 4,814 6,622 174,803 2018 120,338 63,515 27,498 4,972 6,793 223,116 1

Increase in sales tax in fiscal year 2017 is due to Measure Z which was passed by the voters November 2016 and became effective April 1, 2017. Measure Z is a one percent transaction and use tax.

Decrease in property taxes in fiscal years 2012 and 2013 relates to the dissolution of the Redevelopmen t 2

Agency. Upon the dissolution of the Redevelopmen t 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.

106.

Table 7 City of Riverside Taxable Sales by Category Last Ten Calendar Years (in thousands of dollars)

.2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Apparel Stores $ 154,899 $ 152,564 $ 161,802 $ 168,352 $ 175,320 $ 178,349 $ 188,670 $ 203,001 $ 214,852 $ 210,158 General Merchandise 466,096 435,230 432,303 '444,125 450,988 463,355 475,147 477,903 478,538 465,490 Food Stores 172,195 170,151 167,259 169,380 181,719 193,368 209,022 217,902 168,854 169,922 Eating and Drinking Places 383,596 364,291 371,419 395,423 422,153 447,841 483,901 533,317 582,262 609,705 Building Materials 374,161 307,894 292,605 349,398 376,011 454,468 514,993 567,790 636,415 666,907 Auto Dealers and Supplies 949,747 786,012 847,986 965,529 1,118,907 1,280,633 1,461,217 1,548,385 1,608,231 1,588,854 Service Stations 424,252 301,654 350,904 419,497 430,322 418,110 413,128 370,257 338,762 360,830 Other Retail Stores 564,633 487,924 501,071 517,583 535,945 550,157 595,305 633,089 692,375 677,850 All Other Outlets 1,104,611 893,809 977,260 1,072,513 1,008,206 1,154,492 1,312,607 1,461,982 1,474,160 1,481,019 Total $ 4,594,190 $ 3,899,529 $ 4,102,609 $ 4,501,800 $ 4,699,571 $ 5,140,773 $ 5,653,990 $ 6,013,625 $ 6,194,449 $ 6,230,735 Source: State of California Board of Equalization and the Hdl Companies.

of the City's revenue.

Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the sources 107

Table 8 City of Riverside Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands) 1 Ci Dissolved Redevelopment Agency Fiscal Year Taxable Taxable Total Ended Less: Assessed Less: Assessed Direct June 30 Secured Unsecured Exemptions Value Secured Unsecured Exemptions Value Rate2 2009 24,428,633 1,330,053 (7,515,667) 18,243,019 5,998,768 581,943 (224,025) 6,356,686 0.343 2010 22,644,262 1,299,353 (7,103,040) 16,840,575 5,598,484 564,825 (266,257) 5,897,052 0.350 2011 22,056,793 1,260,923 (6,920,720) 1'6,396,996 5,396,219 544,906 (268,323) 5,672,802 0.347 2012 22,031,328 1,264,151 (6,952,649) 16,342,830 5,395,632 572,153 (270,313) 5,697,472 0.348 2013 22,313,665 1,244,448 (7,142,401) 16,415,712 NIA NIA NIA NIA 0.348 2014 23,045,134 1,201,634 (7,394,982) 16,851,786 NIA NIA NIA NIA 0.125 2015 24,482,621 1,329,391 (7,945,000) 17,867,012 NIA NIA NIA NIA 0.124 2016 25,710,122 1,225,375 (8,432,984) 18,502,513 NIA NIA NIA NIA 0.124 2017 26,927,989 1,311,356 (9,029,817) 19,209,528 NIA NIA NIA NIA 0.124 28,373,517 1,354,934 (9,791,810) 19,936,641 NIA NIA NIA NIA 0.124 2018 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.

2 Total Direct Rate is the weighted average of all individual direct rates. Beginning in 2013114, the Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas.

Source: Riverside County Auditor-Controller 108

Table 9 City of Riverside Direct and Overlapping Property Tax Rates (Rate per $100 of Assessed Valuation)

Last Ten Fiscal Years 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/2017 2017/2018 Basic Levy1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2 0.390 0.377 0.487 0.495 0.517 Unified School Districts Debt Service 0.259 0.284 0.301 0.332 0.325 City of Riverside Debt Service 0.007 0.006 0.006 0.006 0.006 0.007 0.006 0.006 0.006 0.006 Metropolitan Water District Original Area 0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.004 Riverside City Community College Debt Service 0.013 0.012 0.015 0.017 0.017 0.018 0.018 0.017 0.016 0.016 3

Total Direct & Overlapping Tax Rates 1.283 1.307 1.325 1.358 1.352 1.418 1.405 1.514 1.521 1.543 City's Share of 1% Levy Per Prop 1 J4 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 General Obligation Debt Rate 0.007 0.006 0.006 0.006 0.006 0.007 0.006 0.006 0.006 0.006 57 1.004 1.004 Redevelopment Rate

• 1.004 1.004 Total Direct Rate* 0.343 0.350 0.347 0.348 0.348 0.125 0.124 0.124 0.124 0.124 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 any voter approved bonds.

~ Includes: Alvord Unified School District, Corona Norco Unified School District, Jurupa Unified School District, Moreno Valley Unified School District, and Riverside 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.

RDA rate is based on the largest RDA tax rate area (TRA) and includes only rate(s) from indebtedness adopted prior to 1989 5

per California State statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1_ 26 eliminated Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter.

Total Direct Rate is the weighted average of all individual direct rates. Beginning in 2013/14, the Direct Rate no longer includes 6

revenue generated from the former redevelopment tax rate areas.

7 In a=rdance with the timeline sefforth 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.

Note: Amounts presented in this table have been restated for prior years to reflect the most current information available.

Source: Riverside County Assessor 2007/08 - 2016/17 Tax Rate Table.

109

Table 10 City of Riverside Principal Property Taxpayers Current Year and Nine Years Ago (in thousands) 2018 2009 Percentage of Percentage of Taxable Total Taxable Taxable Total Taxable Assessed Assessed Assessed Assessed Property Owner Value Rank Value Value Rank Value Riverside Healthcare System $ 273,296 1 1.0% $ 109,056 5 0.4%

Tyler Mall 214,956 2 0.8% 179,147 2 0.7%

Rohr Inc 148,268 3 0.5% 0.0%

La Sierra University 134,779 4 0.5% 133,363 3 0.5%

State Street Bank and Trust Co 129,258 5 0.5% 83,391 7 0.3%

Cole ID 107,100 6 0.4%

Corona Pointe Apartments 102,163 7 0.4%

BRE Properties 98,937 8 0.4% 180,571 1 0.7%

CPT Riverside Plaza LLC 89,829 9 0.3%

Riverside Fair Isle Apartments 87,753 10 0.3% 0.0%

Riverside Colonnade 112,991 4 0.5%

MEF Realty 89,303 6 0.4%

Press Enterprise Company 82,248 8 0.3%

Mission Grove Plaza 80,354 9 0.3%

Riverside Plaza 68,517 10 0.3%

Totals $ 1,386,339 4.9% $1,118,941 4.5%

Notes:

The amounts shown above include assessed value data for both the City and the Successor Agency.

Source: Riverside County Assessor 2017/18 and 2008/09 Combined Tax Rolls 110

Table 11 City of Riverside Property Tax Levies and Collections Last Ten Fiscal Years (in thousands)

Collections Fiscal Year Taxes Collected within the in Ended Levied for Fiscal Year of the Levy Subsequent Total Collections To Date June 30 Fiscal Year Amount Percentage of Levy Years Amount Percentage of Levy 2009 $ 86,251 $ 84,134 97.55% $ 2,117 $ 86,251 100.00%

2010 77,228 74,491 96 ..46% 2,737 77,228 100.00%

2011 74,608 72,327 96.94% 2,281 74,608 100.00%

2012 41,020 40,340 98.34% 680 41,020 100.00%

2013 43,333 42,447 97.96% 886 43,333 100.00%

2014 45,138 44,684 98.99% 454 45,138 100.00%

2015 48,846 48,427 99.14% 419 48,846 100.00%

2016 50,023 49,585 99.12% 49,585 99.12%

2017 53,655 53,252 99.25% 53,252 99.25%

2018 57,567 57,173 99.32% 57,173 99.32%

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.

The City adopted the Teeter plan available with the County of Riverside effective Fiscal year 2014. Under the Teeter plan the County of Riverside has responsibility for the collection of delinquent taxes and the City receives 100% of the levy.

111

Table 12 City of Riverside Electricity Sold by Type of Customer Last Ten Fiscal Years (in millions of kilowatt-hours) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Type of Customer:

Residential 733 701 666 688 726 700 711 726 730 727 Commercial 433 406 400 413 419 421 428

• 438 448 447 Industrial 946 906 912 969 1,003 997 995 983 996 999 Wholesale sales 137 44 7 2 14 4 2 1 Other 33 32 31 31 31 30 31 23 23 22 Total 2,282 2,089 2,016 2,103 2,193 2,152 2,167 2,170 2,198 2,195 Total direct rate 1 18.06 18.06 18.06 18.06 Monthly Base Rate 13.06 18.06 18.06 18.06 18.06 18.06 1

Monthly Base Rate includes a Reliability Charge of $5.00 (small residence 1oo* amp) implemented in January 2008. In January 201 O the Reliability Charge increased to $10.00 (small residence 100 amp).

Source: Riverside Public Utilities, Finance Services 112

Table 13 City of Riverside Electricity Rates Last Ten Fiscal Years (Average Rate in Dollars per Kilowatt-Hour)

Fiscal Year Ended June 30 Residential Commercial Industrial Other 2009 0.14389 0.15122 0.10271 0.17169 2010 0.15307 0.16014 0.10756 0.17876 2011 0.16173 0.16001 0.11194 0.18089 2012 0.16068 0.15991 0.11088 0.17938 2013 0.16274 0.15913 0.11030 0.18375 2014 0.15995 0.15936 0.11156 0.18513 2015 0.16050 0.16022 0.11282 0.18291 2016 0.16119 0.15915 0.11577 0.20908 2017 0.16116 0.15958 0.11586 0.21287 2018 0.15910 0.15902 0.11524 0.21288 Source: Riverside Public Utilities, Finance Services 113

Table 14 City of Riverside Top 10 Electricity Customers Current Year and Nine Years Ago 2018 2009 Percent of Percent of Electricity Total Electric Electricity Total Electric Electricity Customer Charges Rank Revenues Charges Rank Revenues Local University $12,548,112 1 4.09% $7,481,477 2 2.73%

Local Government 8,075,057 2 2.63% 7,805,664 1 2.85%

Local Government 7,864,356 3 2.56% 6,184,476 3 2.26%

Local School District 4,442,089 4 1.45% 4,351,162 4 1.59%

Corporation 3,990,337 5 1.30% 3,251,002 5 1.19%

Corporation 3,695,864 6 1.21% 2,323,394 6 0.85%

Corporation 3,159,703 7 1.03% 1,952,604 7 0.71%

Hospital 2,777,910 8 0.91% 1,762,868 10 0.64%

Hospital 2,716,410 9 0.89% 0.00%

Local University 2,620,281 10 0.85% 0.00%

Corporation 1,943,163 8 0.71%

Corporation 1,768,410 9 0.65%

Hospital 0.00%

$51,890,119 16.92% $38,824,220 14.18%

Retail Sales Per Financial Statements $306,656,506 $ 273,841,491 N/A - not available Source: Riverside Public Utilities, Finance Services 114

Table 15 City of Riverside Ratios of Outstanding Debt by Type Last Ten Fiscal Years (in thousands}

Governmental Activities General Pension Certificates Fiscal Obligation Redevelopment Revenue Obligation of Capital Notes/Loans Year Bonds Bonds Bonds Bonds 2 Participation Leases Pa:£able 2009 18,171 285,743 139,410 198,268 7,455 8,749 2010 17,533 278,867 136,050 211,212 6,303 9,291 2011 16,845 305,195 132,095 207,246 6,670 8,849 2012 16,107 127,480 202,703 5,220 4,000 2013 15,314 43,762 122,005 158,697 8,424 28,652 2014 14,460 42,344 115,775 191,446 13,168 47,611 2015 13,546 40,891 108,725 187,212 14,966 45,574 2016 12,567 39,398 101,000 181,429 12,006 43,482 2017 11,513 37,854 92,592 156,516 17,193 41,325 2018 10,388 36,246 60,883 150,800 25,647 1,746 Business-Type Activities Pension Total Percentage Debt Fiscal Revenue Notes/Loans Capital Obligation Primary of Personal Per 2 1 1 Year Bonds Pa:£able Leases Bonds Government lncome Caeita 2009 670,512 7,915 2,574 1,342,931 20.15% 4.54 2010 968,393 7,249 2,151 1,637,049 24.83% 5.44 2011 1,071,554 76,747 1,720 1,826,921 27.58% 6.01 2012 1,063,853 73,821 1,332 1,494,516 21.94% 4.84 2013 1,031,839 70,798 2,558 1,482,049 21.41% 4.75 2014 1,094,290 36,030 2,266 1,557,390 22.54% 4.96 2015 1,239,634 37,225 1,720 1,689,493 24.64% 5.38 2016 1,208,851 37,793 4,694 1,641,220 23.93% 5.22 2017 1,180,345 35,255 6,209 1,578,802 22.11% 4.83 2018 1,139,864 78,583 6,821 18,324 1,529,302 20.81% 4.69 1

These ratios are calculated using personal income and population data for the prior calendar year.

2 The 2005 and 2017 Taxable Pension Obligation Bonds were divided between Governmental Activities, Business-Type Activities, and the Successor Agency.

Source: City of Riverside Notes to Financial Statements and Statistical Table 20.

115

Table 16 City of Riverside Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (in thousands, except per capita amount)

General Certificates Tax Percent of/

Fiscal Obligation Pension of Allocation Assessed Per 1 2 Year Bonds Bonds Participation Bonds Total Value caeita 2009 18,171 139,410 198,268 285,743 641,592 3.52% 2,167 2010 17,533 136,050 211,212 278,867 643,662 3.82% 2,140 2011 16,845 132,095 207,246 305,195 661,381 4.03% 2,175 2012 16,107 127,480 202,703 346,290 2.12% 1,122 2013 15,314 122,005 158,697 296,016 1.80% 949 2014 14,460 115,775 191,446 321,681 1.91% 1,024 2015 13,546 108,725 187,212 309,483 1.73% 985 2016 12,567 101,000 181,429 294,996 1.65% 909 2017 11,513 92,592 156,516 260,621 1.36% 798 2018 10,388 79,207 150,800 240,395 1.21% 738 Notes:

General bonded debt is debt payable with governmental fund and enterprise fund resources.

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.

116

Table 17 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30, 2018 Page 1 of2 2017-18 Assessed Valuation: $ 28,103,778,537 Less Dissolved Redevelopment Agency Incremental Valuation: 8,167,137,151 Adjusted Assessed Valuation: $ 19,936,641,386 City's Share 1

Total Debt %Applicable of Debt 2

Overlapping debt repaid with property taxes Metropolitan Water District $ 60,600,000 1.034 % $ 626,604 Riverside County Flood Control and Water Conservation District Zone No. 4 16,750,000 2.096 351,080 Riverside City Community College District 256,365,337 28.706 73,592,234 Alvord Unified School District 208,288,867 70.672 147,201,908 Riverside Unified School District 224,730,000 85.973 193,207,123 Corona-Norco Unified School District 433,791,926 0.001 4,338 Jurupa Unified School District 124,587,972 0.002 2,492 Moreno Valley Unified School District 112,668,521 10.378 11,692,739 Alvord Unified School District Community District No.2006-1 7,430,000 82.333 6,117,342 Riverside Unified School District Community Facilities Districts 74,225,000 89.479-100 74,118,738 City of Riverside Community Facilities Districts 13,855,000 100 13,855,000 City of Riverside 1915 Act Bonds 21,950,000 100 21,950,000 Total overlapping debt repaid with property taxes $ 542,719,598 (continued) 117

Table 17 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30, 2018 Page 2 of2 Other overlapping debt2 Riverside County General Fund Obligations $ 812,829,106 10.755 % $ 87,419,770 Riverside County Pension Obligations 266,365,000 10.755 28,647,556 Corona-Norco Unified School District Certificates of Participation 31,262,071 0.001 313 Jurupa Unified School District Certificates of Participation 41,727,209 0.002 835 Moreno Valley Unified School District Certificates of Participation 14,900,000 10.378 1,546,322 Riverside Unified School District General Fund Obligations 17,425,346 85.973 14,981,093 Western Municipal Water District General Fund Obligations 10,197,212 32.707 3,335,202 Total other overlapping debt 135,931,091 Less: Riverside County supported obligations 360,648 135,570,443 Overlapping tax Increment debt 221,947,531 Total overlapping debt 900,237,572 City direct debt 304,034,000 Combined total direct and overlapping debt $ 1,204,271,572 (1) Debt balances are as of June 30, 2018 (most recent available) for other agency debt, and June 30, 2018 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 2017-18 Assessed Valuation:

Total debt repaid with property taxes ................................... . 1.93%

City direct debt ($304,034,000) .................................... .... .. 1.08%

Combined total direct and overlapping debt.. ......................... . 4.29%

Ratios to Dissolved Redevelopment Incremental Valuation ($8.167.137.151):

Total overlapping tax Increment debt... ............................... . 2.72%

Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

Source: California Municipal Statistics, Inc., Riverside County Auditor-Controller and City Finance Department.

118

Table 18 City of Riverside Legal Debt Margin Information Last Ten Fiscal Years (in thousands) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Assessed valuation $18,243,019 $16,840,575 $ 16,396,996 $ 16,342,830 $ 16,415,712 $ 16,851,786 $17,867,012 $18,502,513 $ 19,209,528 $ 19,936,641 Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%

Adjusted assessed valuation 4,560,755 4,210,144 4,099,249 4,085,708 4,103,928 4,212,947 4,466,753 4,625,628 4,802,382 4,984,160 Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

Debt limit 684,113 631,522 614,887 612,856 615,589 631,942 670,013 693,844 720,357 747,624 Total net debt applicable to limit: 18,171 17,533 16,845 16,107 15,314 14,460 13,546 12,567 11,513 10,388 Legal debt margin 665,942 613,989 598,042 596,749 600,275 617,482 656,467 681,277 708,844 737,236 Total net debt applicable to the limit as a percentage of debt limit 2.7% 2.8% 2.7% 2.6% 2.5% 2.3% 2.0% 1.8% 1.6% 1.4%

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 8, Statistical Table 15 and Notes to Financial Statements.

119

Table 19 City of Riverside Pledged-Revenue Coverage Business Type Activity Debt Last Ten Fiscal Years !in thousands)

Electric Revenue Bonds Water Revenue Bonds Less: Net Less: Net Fiscal Pledged Operating Available Debt Service Pledged Operating Available Debt Service 1

Year Revenue' Exeenses 1

Revenue Princieal Interest Coverage Revenue' Exeenses Revenue Princieal Interest Coverage 2008 314,733 219,680 95,053 19,460 16,790 2.62 67,312 33,827 33,485 4,355 4,275 3.88 2009 320,447 202,904 117,543 20,572 24,941 2.58 60,886 35,639 25,247 4,473 6,728 2.25 2010 320,560 199,040 121,520 21,574 22,572 2.75 61,985 35,953 26,032 4,533 8,008 2.08 2011 319,177 212,878 106,299 23,029 25,087 2.21 84,328 35,220 49,108 4,799 9,263 3.49 2012 340,098 221,876 118,222 25,174 27,630 2.24 73,557 35,309 38,248 4,708 8,872 2.82 2013 348,187 226,997 121,190 18,486 25,941 2.73 72,700 35,940 36,760 5,395 8,700 2.61 2014 347,541 241,136 106,405 21,632 27,575 2.16 71,317 37,698 33,619 4,574 8,536 2.56 2015 348,244 250,578 97,666 15,485 26,532 2.32 66,010 36,725 29,285 5,258 8,342 2.15 2016 371,029 249,607 121,422 16,460 25,780 2.87 60,047 35,608 24,439 5,533 8,063 1.80 2017 2018 368,956 368,116 251,998 257,785 116,958 110,331 14,032 15,675 25,553 25,045 2.95 2.71 65,689 71,054 37,956 40,767 . 27,733 30,287 5,486 6,098 8,124 8,049 2.04 2.14 Sewer Revenue Bonds Less: Net Fiscal Pledged Operating Available Debt Service 1

Year Revenue' Exeenses Revenue Princieal Interest Coverage 2010 31,470 26,865 4,605 666 151 5.64 2011 37,772 27,575 10,197 692 125 12.48 2012 42,562 29,632 12,930 692 5,471 2.10 2013 52,944 29,999 22,945 7,465 10,891 1.25 2014 52,098 28,930 23,168 7,753 10,781 1.25 2015 51,288 27,598 23,690 8,056 10,958 1.25 2016 68,412 31,864 36,548 8,405 20,786 1.25 2017 78,337 29,921 48,416 9,010 19,621 1.69 2018 68,735 31,513 37,222 9,184 19,136 1.31 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

1 Amounts have been calculated in accordance with the provisions set forth in the debt covenants. Total operating expenses exclusive of depreciation.

Pledged revenue includes applicable cash set aside in a rate stabilization account in accordance with applicable bond covenants.

• Excludes non-cash pension expense The City of Riverside does not have any pledged revenue related to Govermental Activities.

120

Table 20 City of Riverside Demographic and Economic Statistics Last Ten Calendar Years Per Personal Capita 2

Calendar lncome Personal Unemployment 1 2 3 Year Population (in thousands) Income Rate 2008 296,038 6,665,142 22,514 8.6 2009 300,769 6,592,294 21,918 13.7 2010 304,051 6,623,143 21,783 14.8 2011 308,511 6,811,923 22,080 13.7 2012 311,955 6,923,217 22,193 9.7 2013 314,034 6,909,376 22,002 8.4 2014 314,221 6,857,559 21,824 7.9 2015 324,696 6,953,323 21,414 6.4 2016 326,792 7,139,080 21,845 5.8 2017 325,860 7,349,024 22,552 5.1 Sources:

1 California State Department of Finance.

2 Demographic Estimates for 2005-2009 are based on the last available Census. Projections are developed by incorporating all of 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 Genus Bureau, most recent American Community Survey.

3 State of California Empolyment Development Department.

121

Table 21 City of Riverside Principal Employers Current Year and Nine Years Ago 2018 2009 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment County of Riverside 11,865 1 8.1%

University of California 8,686 2 6.0% 7,127 1

• 4.6%

Riverside Unified School District 4,000 3 2.7% 4,200 2 2.7%

Kaiser 3,484 4 2.4% 3,900 3 2.5%

City of Riverside 2,504 5 1.7% 2,749 4 1.8%

California Baptist University 2,285 6 1.6%

Riverside Community Hospital 2,200 7 1.5% 1,600 8 1.0%

Alvord Unified School District 1,800 8 1.2% 2,000 5 1.3%

UTC Aerospace Systems 1,200 9 0.8%

Parkview Community Hospital 897 10 0.6% 915 9 0.6%

Riverside Community College District 2,000 6 1.3%

Fleetwood Enterprises 1,963 7 1.3%

Riverside Medical Clinic 750 10 0.5%

Total 38,921 26.7% 27,204 17.5%

Source: City of Riverside, Economic Development Department 122

Table 22 City of Riverside Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years 2

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function General government 439.10 433.40 431.40 440.40 413.90 356.25 361.25 394.24 417.55 453.80 Public safety (sworn and non-sworn personnel)

Police 1

591.93 589.93 589.93 599.93 596.75 551.75 553.75 554.75 512.00 558.00 Fire 254.21 255.46 255.46 255.46 255.46 255.00 255.00 251.00 239.00 245.00 Highways and streets 369.65 349.50 348.11 357.11 362.11 333.48 308.00 308.00 272.00 271.00

• Sanitation 58.60 59.00 56.00 56.00 57.00 59.00 57.00 59.00 59.00 59.00 Culture and recreation 340.71 328.07 328.07 341.22 351.48 269.98 274.45 286.75 276.23 276.10 Airport 7.00 7.00 9.50 9.50 9.50 6.00 6.00 6.00 7.00 7.00 Water 167.00 177.65 180.15 181.15 181.15 182.15 181.15 181.15 174.15 158.65 Electric 408.10 419.45 448.50 452.50 459.50 462.50 464.50 466.50 471.75 475.25 Total 2,636.30 2,619.46 2,647.12 2,693.27 2,686.85 2,476.11 2,461.10 2,507.39 2,428.68 2,503.80 In fiscal year 2009 the Crossing Guards program (46.40 FTEs) was moved from the Police Department to the Public Works Department (highways 1

and streets).

2 In fiscal year 2013/14 the City Cbuncil deleted a number of long-term unfunded positions.

Source: City of Riverside, Finance Department 123

Table 23 City of Riverside Operating Indicators by Function Last Ten Fiscal Years 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function/Program Police 10,150 8,690 8,118 7,736 8,362 9,321 10,310 9,242 8,358 8,423 Arrests Fire Number of calls answered 26,397. 26,484 27,322 27,637 29,988 30,668 32,943 35,905 36,150 38,501 Inspections 7,638 7,234 6,505 10,074 10,151 12,476 8,770 6,636 6,482 6,519 Public works:

Street resurfacing (miles) 18.90 20.00 21.25 18.43 16.50 35.38 38.75 39.01 27.09 17.37 Parks and recreation Number of recreation classes 21,884 27,762 37,303 43,318 41,364 45,707 43,007 53,907 53,308 54,025 Number of facility rentals 36,822 34,565 42,638 43,288 43,358 46,432 44,363 47,772 48,097 46,904 Water Number of accounts 64,062 64,231 64,349 64,367 64,591 64,829 65,102 65,094 65,428 65,640 Annual consumption (eel) 29,721,236 26,687,271 25,902,439 27,062,142 28,186,178 28,887,304 26,007,490 22,529,463 25,340,729 27,514,374 Electric 106,385 106,335 106,855 107,321 107,525 108,358 108,388 108,776 109,274 109,619 Number of accounts 2,282 2,089 2,016 2,103 2,193 2,152 2,167 2,170 2,197 2,195 Annual consumption (kwh)

Sewer:

18,765 16,971 17,746 18,166 17,607 17,274 17,553 17,669 17,654 17,551 New connections 33.00 33.29 30.06 29.84 29.57 28.49 27.15 26.35 27.19 26.16 Average daily sewage treatment (millions of gallons) 1 Amounts expressed in millions N/A - not available Source: City of Riverside, various departments 124

Table 24 City of Riverside Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function Public Safety Police Stations 3 3 3 3 3 3 3 3 3 3 Substations 5 4 4 4 4 4 4 4 5 4 Helicopters 4 4 4 4 4 3 3 3 3 2 Airplane 0 0 0 0 0 0 0 0 0 Fire Stations 14 14 14 14 14 14 14 14 14 14 Active apparatus 30 30 26 27 28 28 31 33 32 33 Reserve apparatus 7 7 9 9 11 11 8 9 9 9 Training facilities 1 1 1 1 1 1 1 Highways and streets Streets (miles) 8136.89 867.96 868.39 868.70 868;89 871.19 872.16 872.22 872.01 872.24 Streetlights 29,675 29,757 29,868 29,933 29,949 29,968 29,986 30,427 30,467 30,479 Signalized intersections 365 362 362 365 365 367 386 381 382 384 Culture and recreation Parks acreage 2,773.00 2,773.00 2,811.00 2,811.00 2,891.00 2,911.80 2,926.80 2,983.00 2,983.00 2,988.00 Community centers 11 11 11 11 11 11 11 11 11 11 Playgrounds 41 41 41 41 43 44 44 46 46 46 Swimming pools 7 7 7 7 7 7 7 7 7 7 Softball & baseball diamonds 44 44 44 44 44 44 44 44 44 44 Library branches 7 7 8 8 8 8 8 8 8 8 Museum exhibit-fixed 6 5 8 5 3 3 4 5 5 o' 2 2 2 1 4 4 5 6 6 1' Museum exhibit-special Water Fire hydrants 7,523 7,593 7,632 7,682 7,726 7,754 7,758 7,908 7,952 8,173 Sewer Sanitary sewers (miles) 794 820 823 829 829 829 820 829 827 820 Electric Miles of overhead distribution system 522.0 519.0 517.0 515.0 513.0 513.0 513.0 513.0 513.0 514.0 Miles of underground system 769.0 782.0 791.0 804.0 810.0 814.0 815.0 817.0 826.0 831.0 1

The decrease in total numbers of Museum's exhibits is due to the closure of the Riverside Metropolitan Museum for expansion and ~enovation. The Museum is expected to reopen as early as late 2020.

Source: City of Riverside, various departments 125

City efArts &...Innovation

. 3900 Main Street Riverside, CA 92522 ExploreRiverside.com

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Beginning Ending Due Within Activities, Business-Type Activities, and the Successor Business-type activnies: Balance Additions Reclass Reductions Balance One Year Revenue bonds $1,180,345 $ $ $ (40,481) $1,139,864 $ 33,595 Agency to properly reflect their proportional share.

Pension obligation bonds 21,656 (3,332) 18,324 3,550 llbtes payable 35,255 8,600 39,174 (4,446) 78,583 4,910 $89,540 California Statewide Community Development Capnal leases 6,209 2,152 (1,540) 6,821 1,568 Authority (Public Safety) 2004 Taxable Pension Water stock acquisnion rights 938 938 150 Landfill capping 5,390 Obligation Bond; 2.65% to 5.896%, due in annual (620) 4,770 250 Corrpensated absences 8,279 7,714 (7,397) 8,596 7,671 installments from $1,125 to $10,715 through June 1,

$1,236,416 $ 16,314 $ 62,982 $ (57,816) $1,257,896 $ 51,694 2023. $44,400 Governmental activities: $30,000 2005 Taxable Pension Obligation Bonds Series Principal A; 3.85% to 4.78%, due in annual installments $630 to General Obligation Bonds - Governmental Activities: Outstanding $3,860 through June 1, 2020; $3,122 relates to Governmental Activities. 3,122

$20,000 Fire Facility Projects, Election of 2003 General Obligation Bond; 3.0% to 5.5%, due in $31,960 2017 Taxable Pension Obligation Bonds Series annual installments from $410 to $1,740 through A; 1.25% to 3.125%, due in annual installments from August 1, 2024. $10,280 $2,910 to $3,580 through June 1, 2027; $13,704 relates to Governmental Activities. 13,704 Add: Unamortized bond premium 108 Total General Obligation Bonds $10,388 Subtotal 61,226 Less: Bond Discount (343)

Remaining general obligation bond debt service payments will be made from Total Pension Obligation Bonds - Governmental $60 883 unrestricted revenues of the General fund. Annual debt service requirements Activities to maturity are as follows:

Remaining pension obligation bond debt service payments will be made from Fiscal Year Principal Interest Total unrestricted revenues of the General fund. Annual debt service requirements 2019 $ 1,195 $ 492 $ 1,687 to maturity are as follows:

2020 1,290 436 1,726 2021 1,380 373 1,753 Fiscal Year Principal Interest Total 2022 1,475 1,781 2019 $ 10,435 $ 3,126 $ 13,561 306 2020 10,675 2,591 13,266 2023 1,560 229 1,789 2021 10,280 2,030 12,310 2024-2028 3,380 189 3,569 2022 11,226 1,478 12,704 Premium 108 108 13,114 2023 12,247 867 Total $ 10,388 $ 2,025 $ 12,413 2024-2028 6,867 6,363 504 Discount (343) (343)

Total $ 60,883 $ 10,596 $ 71,479 Principal Pension Obligation Bonds - Governmental Activities: Outstanding In 2018, the 2005 and 2017 Taxable Pension Obligation Bonds were distributed between Governmental 45

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Certificates of Participation - Governmental Activities: Principal Lease Revenue Bonds - Governmental Activities: Principal Outstanding Outstanding

$19,945 2006 Galleria at Tyler Public Improvements On August 15, 2012, the City issued the Series 2012A Lease Revenue Refunding Bonds in the amount of Certificates of Participation; 4.0% to 5.0%, due in

$41,240. The bonds were issued to refinance the 2003 annual installments from $435 to $1,270 through

• September 1, 2036. $16,485 Certificates of Participation. Interest on the bonds is payable semi-annually on May 1 and November 1 of

$128,300 2008 Riverside Renaissance Certificates of each year, commencing May 1, 2013. The rate of Participation; issued at a variable rate; however, the City interest varies from 2% to 5% per annum depending on entered into an agreement to convert to a fixed rate of maturity date. Principal is payable in annual installments 3.4%. For information on the swap agreement see Note ranging from $1,295 to $2,840 commencing November

9. Due in annual installments from $2,900 to $7,200 1, 2013 and ending November 1, 2033. $34,340 through March 1, 2037. 102,000 Add: Unamortized bond premium 1,906

$35,235 2013 Pavement Rehab Certificates of Total Lease Revenue Bonds - Governmental Activities $36 246 Participation; 4.0% to 5.0%, due in annual installments from $1,285 to $2,855 through June 1, 2033.

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:

Subtotal 149,705 Plus: Unamortized bond premium 1,095 Total Certificates of Participation $150 800 Fiscal Year Principal Interest Total 2019 $ 1,560 $ 1,511 $ 3,071 Remaining certificates of participation debt service payments will be made 2020 1,640 1,432 3,072 from unrestricted revenues of the debt service fund. Annual debt service 2021 1,725 1,347 3,072 requirements to maturity are as follows: 2022 1,810 1,259 3,069 2023 1,905 1,166 3,071 Fiscal Year Principal Interest Total 2024-2028 10,230 4,518 14,748 2019 $ 5,825 $ 5,694 $ 11,519 2029-2033 12,630 1,921 14,551 2020 6,120 5,468 11,588 2034-2038 2,840 57 2,897 2021 6,420 5,232 11,652 1,906 Premium 1,906 2022 6,625 4,984 11,609 Total $ 36,246 $ 13,211 =$=====4=9=,4=57:::::::

2023 6,835 4,728 11,563 2024-2028 38,680 19,367 58,047 Principal 2029-2033 47,065 11,178 58,243 Loans Payable - Governmental Activities: Outstanding 2034-2038 32,135 2,601 34,736 Premium 1,095 1,095 Total $ 150,800 $ 59,252 $ 210,052 2012 financing arrangement in the amount of $4,000 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 46

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) 10 year period, which includes interest at an annualized proceeds that funded part of the Steam Generator rate of 3.05%. Replacement Project and other SONGS capital costs.

The partial bond defeasance will reduce debt and Remaining loans payable debt service payments will be made from realized interest savings of $10,233 over the remaining unrestricted revenues of the debt service fund. Annual debt service 20-year life of the bonds. 195,275 requirements to maturity are as follows:

$34,920 2009 Electric Refunding/Revenue Bonds; Fiscal Year Principal Interest Total Series A fixed rate bonds, 4.0% to 5.0%, due in annual 2019 $ 417 $ 50 $ 467 installments from $1,150 to $7,035 through October 1, 2020 430 37 467 2018. The bonds refunded the 1998 series and partially 2021 443 24 467 refunded the 2001 series. 1,275 2022 456 11 467 Total $ 1,746 $ 122 $ 1,868 $140,380 2010 Electric Revenue Bonds; Series A and B fixed rate bonds, 3% to 7.65%, due in annual installments Business-type activities: from $95 to $33,725 through October 1, 2040. 137,940 The following debt has been issued for the purpose of generating capital $56,450 2011 Electric Revenue Refunding Bonds; Series resources for use in acquiring or constructing municipal facilities or A. The bonds were issued at a variable rate; however, the infrastructure projects. City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements see Note Long-Term Obligations at June 30, 2018: 9. Bonds are due in annual installments from $725 to Principal $5,175 through October 1, 2035. 41,925 Revenue Bonds: Outstanding

$79,080 2013 Electric Revenue Refunding Bonds; Series Electric A fixed rate bonds, 3% to 5.25%, due in annual installments from $795 to $12,685 through October 1,

$141,840 2008 Electric Refunding/Revenue Bonds; Series 2043. 39,785 A & C. The bonds were issued at a variable rate; however, the City entered into an agreement to convert to a fixed Subtotal 528,715 rate of 3.1 % and 3.2% for the Series A & C bonds, Add: Unamortized bond premium 6,624 respectively. See Note 9 for information on the swap Subtotal $535,339 agreements. Bonds are due in annual installments from

$700 to $7,835 through October 1, 2035. $112,515

$209,740 2008 Electric Revenue Bonds; Series D fixed $58,235 2008 Water Revenue Bonds; Series B fixed rate rate bonds, 3.6% to 5.0%, due in annual installments bonds, 4.0% to 5.0%, due in annual installments from from $3,460 to $22,540 through October 1, 2038. In May $1,210 to $7,505 through October 1, 2038. $55,415 2018, the Electric Fund defeased $11,005 of the total outstanding $206,280 of 2008 Electric Revenue Bonds, $31,895 2009 Water Refunding/Revenue Bonds; Series Series D with monies received from settlements and cost A fixed rate bonds, 3.0% to 5.0%, due in annual recoveries associated with the early closure of the San installments from $2,360 to $4,335 through October 1, Onofre Nuclear Generation Station Units 2 and 3 2020. The bonds refunded the 1998 series and partially (SONGS). The partial defeasance related to bond refunded the 2001 series. 7,255 47

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 {amounts expressed*in thousands)

$67,790 2009 Water Revenue Bonds; Series B fixed rate Electric Utilit~ Fund Water Utili!Y Fund bonds, 5.1 % to 6.3%, due in annual installments from Fiscal Year Principal Interest Total Principal Interest Total 2019 $ 14,445 $ 23,086 $ 37,531 $ 5,635 $ 7,352 $ 12,987

$2,475 to $4,985 through October 1, 2039. 67,790 2020 14,995 22,516 37,511 5,865 7,120 12,985 2021 15,535 21,955 37,490 6,080 6,889 12,969

$59,000 2011 Water Refunding/Revenue Bonds; Series 2022 16,085 21,371 37,456 6;320 6,658 12,978 A. The bonds were issued at a variable rate; however the 2023 16,675 20,758 37,433 6,535 6,426 12,961 City entered into an agreement to convert to a fixed rate 2024-2028 93,830 92,890 186,720 36,630 28,032 64,662 of 3.2%. For information on the swap agreements see 2029-2033 115,230 70,709 185,939 44,420 20,007 64,427 Note 9. Bonds are due in annual installments from $600 2034-2038 133,885 42,946 176,831 54,120 10,002 64,122 to $3,950 through October 1, 2035. 52,425 2039-2043 105,410 9,385 114,795 17,280 595 17,875 2044-2048 2,625 66 2,691 Premium 6,624 6,624 1,748 1,748 Subtotal 182,885 Total 93,081 277,714

$ 535,339 $ 325,682 $ 861,021 $ 184,633 $ $

Add: Unamortized bond premium 1 748 Subtotal $184,633 Sewer utilitl Fund Fiscal Year Principal Interest Total Sewer 2019 $ 13,515 $ 18,488 $ 32,003 2020 14,075 17,929 32,004

$240,910 2009 Sewer Revenue Bonds; Series A & B 2021 10,820 17,372 28,192 fixed rate bonds, 4% to 7.2%, due in annual installments 2022 11,345 16,844 28,189 from $5,555 to $13,350 through August 1, 2039. $195,665 2023 11,905 16,289 28,194 2024-2028 68,835 72,128 140,963

$200,030 2015 Sewer Revenue Bonds; Series A fixed 2029-2033 87,445 53,517 140,962 rate bonds, 4% to 5%, due in annual installments from 2034-2038 111,180 29,779 140,959

$4,790 to $14,175 through August 1, 2040. 200,030 2039-2043 66,575 4,339 70,914 Premium 24,197 24,197 Subtotal 395,695 Total $ 419,892 $ 246,685 $ 666,577 Add: Unamortized bond premium 24,197 Subtotal $419,892 Principal Total Revenue Bonds $1 139 864 Pension Obligation Bonds - Business Type Activities: Outstanding Remaining revenue bond debt service payments will be made from revenues In 2018, the 2005 and 2017 Taxable Pension Obligation of the Electric, Water and Sewer Enterprise funds. Annual debt service Bonds were distributed between Governmental requirements to maturity are as follows: Activities, Business-Type Activities, and the Successor Agency to properly reflect their proportional share.

$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. $3,400 relates to Business Type Activities. $3,400

$31,960 2017 Taxable Pension Obligation Bonds Series A; 1.25% to 3.125%, due in annual installments from 48

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

$2,910 to $3,580 through June 1, 2027. $14,924 relates Hillwood in a form of a credit with Hillwood's rental to Business Type Activities. payments to the Water fund for the first 15 years of the leases. 21,524 Total Pension Obligation Bonds - Business Type Activities $18,324 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*

Fiscal Year Principal Interest Total Center. In March 2014, the financing arrangement with 2019 $ 3,550 $ 553 $ 4,103 BBVA was increased to $44,650. The financing consists 2020 2,952 432 3,384 of an initial 21-month variable rate interest only period 2021 1,595 331 1,926 during construction that has a swap transaction layered 2022 1,629 297 1,926 over the remaining 20-year amortization resulting in a 2023 1,668 256 1,924 "synthetic fixed" rate of 3.24% for 20 of the 22 years. For 2024-2028 6,930 549 7,479 information on the swap agreement see Note 9. At the Total $ 18,324 $ 2,418 $ 20,742 end of the construction period, principal and interest are due on the first of each month, with equal payments each Principal year of approximately $2,850. 37 356 Notes Payable - Enterprise Funds: Outstanding Total notes payable - Enterprise Funds $78 583 Sewer fund loan from State of California for Cogeneration project, 2.336%, payable in net annual Remaining notes payable debt service payments will be made from installments of $339, beginning January 29, 2003 unrestricted revenues of the Sewer fund. Annual debt service requirements to through January 29, 2021 $ 978 maturity are as follows:

Sewer Fund Sewer fund loan from State of California for Headworks Fiscal Year Principal Interest Total project, 1.803%, payable in net annual installments of 2019 $ 788 $ 28 $ 816

$477, beginning November 6, 1999 through November 2020 326 14 340 6,2018 469 2021 333 7 340 Total $ 1,447 $ 49 $ 1,496 Public parking fund loan for Fox Entertainment Plaza project, 3.85%, payable in net annual installments of Public Parking Fund

$1,747, beginning June 16, 2011 through December 16, Principal Interest Total 18,256 Fiscal Year 2031. 2019 $ 1,054 $ 693 $ 1,747 2020 1,095 652 1,747 Notes payable consists of several agreements with 2021 1,137 609 1,746 Hillwood Enterprises, L.P. (Hillwood) for its development 2022 1,182 565 1,747 of logistic centers located in the City of San Bernardino. 1,746 2023 1,227 519 As part of these agreements, the Water fund purchased 1,842 8,734 2024-2028 6,892 land from Hillwood and subsequently leased it back to 445 6,114 2029-2033 5,669 the entity. In addition, the agreements require Hillwood Total 18,256 $ 5,325 $ 23,581 to relocate wells located on the properties as well as terminate an existing lease. In consideration of the cost of the land purchase, well relocations and lease termination, the Water fund will make payments to 49

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Water Fund Governmental Business-type Fiscal Year Principal Interest Total Asset Activities Activities 1,202 556 $ 1,758 Buildings and improvements $ 1,103 $ 728 2019 $ $

524 1,797 Machinery and equipment 32,493 6,086 2020 1,273 1,838 Subtotal 33,596 6,814 2021 1,348 490 1,883 Less: Accumulated depreciation (10,817) (3,024) 2022 1,428 455 1,511 4.15 1,926 Total $ 22,779 =$======~3!,,;,,7~90~

2023 2024-2028 8,970 1,389 10,359 2029-2033 5,792 212 6,004 The future minimum lease obligations as of June 30, 2018 were as follows:

Total 21,524 $ 4,041 $ 25,565 Governmental Business-type Fiscal Year -$.,....-___A_c_ti_vi_tie_s Activities 2019 4,821 $ 1,700 Convention Center 2020 3,640 1,687 Fiscal Year Principal Interest Total 2021 3,640 1,378 2019 1,866 1,170 3,036 2022 3,640 819 2020 1,935 1,102 3,037 2023 2,808 626 2021 1,987 1,049 3,036 1,039 Thereafter _ _ _ _. ;. :9,_47.. cBc.. .

2022 2,048 989 3,037 28,027 7,249 Total minimum lease payments 2023 2,110 926 3,036 Less: Amount representing interest 2024-2028 11,561 3,621 15,182 (rates ranging from 1.2% to 9%) (2,380) (428) 2029-2033 13,459 1 ,722 15,181 Total capital lease payable $ 25,647 $ 6,821 2034-2038 -~~~-2~,3_9_0_ 76 2,466 Total 37,356 10,655 48,011 Principal Contracts - Enterprise Funds: Outstanding Capital Leases: Water stock acquisition rights payable on demand to various water companies 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 Letters of Credit:

financial statements. The assets and related obligations under leases in The City's 2008 Certificates of Participation and 2008 Electric Revenue Bonds governmental funds are not recorded in the fund statements. For proprietary (Series A and C) require an additional layer of security between the City and funds, the assets and their related liabilities are reported directly in the fund. the purchaser of the bonds. The City has entered into the following letters of Amortization applicable to proprietary assets acquired through capital lease credit ("LOG") in order to provide liquidity should all or a portion of the debt be arrangements is included with depreciation for financial statement optionally tendered to the remarketer without being successfully remarketed:

presentation.

Debt Issue LOC Provider LOC Annual The assets acquired through capital leases are as follows: Expiration Commitment Date Fee 2008 Certificates of Participation Bank of America, N.A. 2021 0.400%

2008A Electric Revenue Bonds Barclays Bank, PLC 2021 0.325%

2008C*Electric Revenue Bonds Barclays Bank, PLC 2021 0.325%

50

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

To the extent that remarketing proceeds are insufficient or not available,

• Excludes non-cash pension expense tendered amounts will be paid from drawings made under an irrevocable ** Includes cash set-aside in a rate stabilization account in accordance with direct-pay letter of credit. applicable bond covenants.

Liquidity advances drawn against the LOC that are not repaid will be converted There are also a number of limitations and restrictions contained in to an installment loan with principal to be paid quarterly not to exceed a 5-year Assessment Bond indentures. The City believes they are in compliance with period. The City would be required to pay annual interest equal to the highest all significant limitations and restrictions.

of 8.0%, the Prime Rate plus 2.50%, the Federal Funds Rate plus 2.50% and 150% of the yield on the 30-year U.S. Treasury Bond. No amounts have ever Landfill Capping:

been drawn against the three letters of credit due to a failed remarketing.

The various indentures allow the City to convert the mode of the debt in the State and Federal laws and regulations require the City to place a final cover case of a failed remarketing. 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 The following are legally required debt service cash reserves. These amounts, with these laws and regulations, the City is funding the costs of closure and at a minimum, are held by the City or fiscal agents at June 30, 2018: "final capping" of the Tequesquite landfill located in the City. This area, comprised of approximately 120 acres, operated as a "Class II Sanitary Governmental long-term obligations: Landfill" until its closure in 1985. During its operation, the landfill did not accept Certificates of participation $ 8,771 hazardous waste and no clean up and abatement or cease and desist orders Total $ 8,771 have been issued to the City. The capacity used at June 30, 2018 was 100%.

The remaining post closure period is currently 12 years.

Enterprise funds:

Electric $ 10,800 The estimated costs as determined by an independent consultant and updated Sewer 16,508 by the City's Engineering Department are associated with flood control Total $ 27,308 upgrades, remediation of possible ground water contamination and control of methane gas. All potential costs have been recognized in the financial The City has a number of debt issuances outstanding that are collateralized statements. However, there is the potential for these estimates to change due by the pledging of certain revenues. The amount and term of the remainder of to inflation, deflation, technology, or change in laws or regulations. The City is these commitments are indicated in the debt service to maturity tables recovering such costs in rates charged to its customers. The portion of costs presented in the accompanying notes. The purposes for which the proceeds to be recovered through future rates is classified as a regulatory asset and will of the related debt issuances were utilized are disclosed in the debt be amortized over future periods.

descriptions in the accompanying notes. For the current year, debt service payments as a percentage of the pledged gross revenue (or net of certain 7. Risk Management expenses where so required by the debt agreement) are indicated in the table below. The debt service coverage ratios also approximate the relationship of The City is exposed to various risks of loss related to torts; theft of, damage debt service to pledged revenue for the remainder of the term of the to, and destruction of assets; errors and omissions; injuries to employees; and commitment. natural disasters. Property insurance coverage has a limit of $1,000,000, with Debt Service a deductible of $100. Earthquake and flood insurance coverage has a limit of Annual Amount of Annual Debt Service Coverage

$25,000, with a deductible of 5% (subject to $100 minimum) for earthquake Pledged Revenue Payments (all of Ratio debt secured by for FY and $100 for flood. Workers' compensation insurance coverage has a limit of Description of (net of expenses, Pledged Revenue where required) this revenue) 06/30/18 $25,000, with a self-insured retention of $3,000 per occurrence. The City Electric revenues $ 110,331 * $ 40,720 $ 2.71 carries commercial general liability insurance coverage in the amount of Water revenues 30,287

• 14,147 2.14 $20,000 per occurrence for general and auto liability claims greater than Sewer revenues 37,221 ** 28,320 1.31 $3,000. There were no claims settled in the last three fiscal years that exceed 51

City of Riverside Notes to Basic Financial Statements (amounts expressed in thousands)

For the year ended June 30, 2018 insurance coverage. Internal service funds have been established to account 2004; $620 term bonds at 3.090% due Oct. 1, 2008; for and finance the uninsured risks of loss. $1,110 term bonds at 4.340% due Oct. 1, 2014 and

$2,770 term bonds at 5.480% due Oct. 1, 2024. 2,090 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 $8,340 Downtown/Airport Merged Project Area and amounts needed to fund prior and current year claims and incidents that have Casa Blanca Project Area 2007 Tax Allocation Bonds, been incurred but not reported. lnterfund premiums are accounted for as quasi Tax Exempt, Series A, serial bonds 4.0% to 4.25% due

- external transactions and are therefore recorded as revenues of the Internal in annual installments from $20 to $590 through Aug. 1, Service funds in the fund financial statements. 2025; $4,980 term bonds at 4.5% due Aug. 1, 2029;

$410 term bonds at 4.375% due Aug .. 1, 2037. 8,120 Changes in the self-insurance fund's claims liability amounts are:

$14,850 Downtown/Airport Merged Project Area and Unpaid claims, June 30, 2016 $ 43,269 Casa Blanca Project Area 2007 Tax Allocation Bonds, Incurred claims (including IBNR's) 10,284 Taxable, Series B, $4,050 term bonds at 5.2% due Aug.

Claim payments and adjustments (8,608) 1, 2017; $10,800 term bonds at 5.8% due Aug. 1, 2028. 10,800 Unpaid claims, June 30, 2017 44,945 Incurred claims (including IBNR's) 13,690 $89,205 University Corridor/Sycamore Canyon Merged Claim payments and adjustments (12,403) Project Area, Arlington Project Area, Hunter Unpaid claims, June 30, 2018 $ 46,232 Park/Northside Project Area, Magnolia Center Project Area, and La Sierra/Arlanza Project Area 2007 Tax

8. Other Long-Term Obligations Allocation Bonds, Tax-Exempt, Series C, serial bonds 4.0% to 5.0% due in annual installments from $50 to Changes in Long-Term Obligations: Below is a summary of changes in long- $3,210 through Aug. 1, 2025; $17,955 term bonds at term obligations during the fiscal year for the former Redevelopment Agency, 4.5% due Aug. 1, 2030; $47,775 term bonds at 5.0% due which is accounted for in the Successor Agency Trust (a fiduciary fund): Aug. 1, 2037. 83,885 Beginning Ending Due Within Reclass Reductions Balance One Year $43,875 University Corridor/Sycamore Canyon Merged Balance Additions

$ (9,788) $ 207,359 $ 9,320 Project Area, Arlington Project Area, Hunter Successor Agency Bonds $ 217,147 $ $

Pension obligation bonds 554 554 Park/Northside Project Area, Magnolia Center Project Notes Payable 4,728 (390) 4,338 448 Area, and La Sierra/Arlanza Project Area 2007 Tax

$ 221,875 $ $ 554 $ (10,178) $ 212,251 $ 9,768 Allocation Bonds, Taxable, Series D, $15,740 term bonds at 5.24% due Aug. 1, 2017; $28,135 term bonds at 5.89% due Aug. 1, 2032. 28,135 Principal Successor Agency Bonds: Outstanding On October 16 2014, the Successor Agency to the Redevelopment Agency of the City of Riverside issued

$26,255 State of California Department of General 2014 Subordinate Tax Allocation Refunding Bonds Services Project, 2003 Lease Revenue Refunding (Series A and B) in the amount of $62,980. The bonds Bonds, Series A; 2% to 5% due in annual installments 12,835 were issued to refund certain obligations of the former from $545 to $2,230 through Oct. 1, 2024.

Redevelopment Agency of the City of Riverside. Interest is due semi-annually on March 1 and September 1,

$4,810 State of California Dept. of General Services commencing March 1, 2015. Principal is due in annual Project, 2003 Lease Revenue Refunding Bonds, Series installments from $160 to $4,745 through September 1, B; $310 serial bonds 1.20% to 1.42% through Oct.1, 52

City of Riverside Notes to Basic Financial Statements For the year ended June 30. 2018 (amounts expressed in thousands)

Principal 2034. The rate of interest varies from 0.6% to 5% per 51,040 Notes Payable - Successor Agency: Outstanding annum.

Subtotal 196,905 Add: Unamortized bond premium 10A54 These notes payable have been issued to promote Total Successor Agency Bonds $207,359 development and expansion within the City's redevelopment areas.

Remaining debt service will be paid by the Successor Agency Trust from future property tax revenues. Annual debt service requirements to maturity are as Pepsi Cola Bottling Company of Los Angeles, 10.5%,

follows: payable in net annual installments of $341, subject to recording of completion. 2,987 Fiscal Year Principal Interest Total 2019 $ 9,320 $ 9,778 $ 19,098 HUD Section 108 loan for Mission Village Project, 6.15%

2020 9,830 9,288 19,118 to 6.72%, payable in semi-annual installments beginning 2021 10,805 8,762 19,567 Aug. 1, 1999 of $110 to $420 through Aug. 1, 2018. 420 2022 11,405 8,197 19,602 2023 11,945 7,600 19,545 85,358 Smith's Food & Drug Centers Inc., 6% payable in 2024-2028 56,525 28,833 15,956 61,516 variable installments, subject to payment of annual 2029-2033 45,560 46,477 Community Facilities District assessment. 931 2034-2038 41,515 4,962 Premium 10,454 10,454 Total Notes Payable - Successor Agency $4,338 Total $ 207,359 $ 93,376 $ 300,735 Remaining debt service will be paid by the Successor Agency Trust from future Principal property tax revenues. Annual debt service requirements to maturity are as Pension Obligation Bonds - Successor Agency: Outstanding follows:

Fiscal Year Principal Interest Total In 2018, the 2005 and 2017 Taxable Pension Obligation 2019 $ 448 $ 320 $ 768 Bonds were distributed between Governmental 2020 31 310 341 Activities, Business-Type Activities, and the Successor 2021 34 307 341 Agency to properly reflect their proportional share. 2022 38 304 342 2023 42 300 342

$30,000 2005 Taxable Pension Obligation Bonds Series 2024-2028 1,217 1,423 2,640 A; 3.85% to 4.78%, due in annual installments $630 to 2029-2033 471 1,238 1,709

$3,860 through June 1, 2020; $133 relates to the 2034-2038 777 933 1,710 Successor Agency. 133 2039-2043 1,280 430 1,710 Total $ 4,338 $ 5,565 =$=====9=,9=0 =3

$31,960 2017 Taxable Pension Obligation Bonds Series A; 1.25% to 3.125%, due in annual installments from As a result of action by the State of California to dissolve all redevelopment

$2,910 to $3,580 through June 1, 2027; $421 relates to agencies in the state, the Successor Agency no longer receives the full amount the Successor Agency. of tax increment previously pledged by the dissolved redevelopment agency to its bondholders. In its place is a new revenue stream provided to the Total Pension Obligation Bonds - Successor Agency 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.

53

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

For the current year, debt service payments as a percentage of the pledged as a hedge against the new debt. Hedge accounting was applied to that gross revenue (or net of certain expenses where. so required by the debt portion of the hedging relationship, which was determined to be effective.

agreement) are indicated in the table below. The debt service coverage ratios Hedge accounting was also applied to the swap associated with the debt for the Successor Agency also approximate the relationship of debt service to issued in 2012, which was also determined to be effective.

pledged revenue for the remainder of the term of the commitment.

The following is a summary of the derivative activity for the year ended June Debt Service 30, 2018:

Annual Amount of Annual Debt Service Coverage Change in Pledged Revenue Payments (all of Ratio Fair Value Fair Value Description of (net of expenses, debt secured by for FY Notional as of for Fiscal Pledged Revenue where required)

• this revenue) 06/30/18 Amount 06/30/18 Year Property Taxes: Governmental activities Non-Housing 56,415 $ 14,307 3.94 2008 Renaissance Certificates of Participation $ 102,000 $ (13,977) $ 5,521 Housing 10,358 2,353 4.40 Business-type activities 2008 Electric Refunding/Revenue Bonds Series A . 68,525 (4,777) 2,888

• The computations above are based on the total tax increment generated for 2008 Electric Refunding/Revenue Bonds Series C 41,975 (5,235) 2,207 the year ended June 30, 2018 for each project area that had been pledged as 2011 Electric Refunding/Revenue Bonds Series A 41,925 (5,216) 2,202 collateral for the Bonds. As discussed above, only a portion of tax increment 2011 Water Refunding/Revenue Bonds Series A 52,425 (5,593) 2,600 has been actually remitted to the Successor Agency and reported as revenue 2012 Convention Center Financing 35,045 299 1,165 in the accompanying financial statements.

Objective: In order to lower borrowing costs as compared to fixed-rate bonds, Assessment Districts and Community Facilities Districts Bonds (Not the City entered into interest rate swap agreements in connection with its obligations of the City): $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 As of June 30, 2018, the City has several series of Assessment District and 2008 Certificates of Participation ("COP"). Also, in 2012, the City entered into Community Facility District Bonds outstanding in the amount of $42,375. an additional interest rate swap agreement in connection with the Convention Bonds were issued for improvements in certain districts and are long-term Center financing with BBVA Compass Bank.

obligations of the property owners. The City Treasurer acts as an agent for the property owners in collecting the assessments, forwarding the collections Terms: Per the existing swap agreements, the City pays a counterparty a fixed to bondholders and initiating foreclosure proceedings, if applicable. Since the payment and receives a variable payment computed as 62.68% of the London debt does not constitute an obligation of the City, it is not reflected as a long- Interbank Offering Rate ("LIBOR") one month index plus 12 basis points for term obligation of the City and is not reflected in the accompanying basic the Electric and Water swaps. For the COP swap, the City pays a fixed financial statements. payment and receives a variable payment computed as 63.00% of the LIBOR one month index plus 7 basis points. The Convention Center financing

9. Derivative Instruments consists of an initial 21-month variable rate interest only period during construction, which swaps to a fixed rate for the remaining 20-year Interest Rate Swaps amortization whereby 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 The City has six cash flow hedging derivative instruments, which are pay-fixed basis points. The lease interest rate on the Convention Center has a cap at swaps. These swaps were employed as a hedge against debt that was the lesser of 12% or the highest rate permitted by applicable law whereas the refunded in 2008 and 2011 and against debt issued in 2012. The balance of related swap does not have a cap. The swaps have notional amounts equal the deferral account for each swap is included as part of the deferred charge to the principal amounts stated above. The notional value of the swaps and on refunding associated with the new bonds. The swaps were also employed 54

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) the principal amounts of the associated debt decline by $975 to $7,200 until was developed by a pricing service using the zero-coupon method. This the debt is completely retired in fiscal year 2037. method calculates the future net settlement payments required by the swap, The bonds and the related swap agreements for the 2008A Electric Revenue assuming that the current forward rates implied by the yield curve correctly Bonds mature on October 1, 2029, 2008C Electric and 2011A Electric and anticipate future spot interest rates. These payments are then discounted 2011A Water Revenue/Refunding Bonds mature on October 1, 2035. The using the spot rates implied by the current yield curve for hypothetical zero-2008 Certificates of Participation mature on March 1, 2037. The loan with coupon bonds due on the date of each future net settlement of the swap.

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

As of June 30, 2018, rates were as follows: Credit risk: The City is not exposed to credit risk on the swaps because those 2008 Electric 2008 Electric 2011 Electric swaps have a negative fair value. The swap counterparties, Bank of America, Refunding/ Refunding/ Refunding/ N.A., Bank of America Corp. and J.P. Morgan Chase & Co. were rated A+,

Revenue Revenue Revenue BBB+ and A- respectively by Standard & Poor's. To mitigate the potential for Bonds Bonds credit risk for these swaps, the swap agreements require the fair value of the Bonds swap to be collateralized by the counterparty with U.S. Government securities Series A Series C Series A if the counterparties' rating decreases to negotiated trigger points. Collateral would be posted with a third-party custodian. At June 30, 2018, there is no Rates Rates Rates requirement for collateral posting for any of the outstanding swaps.

Interest rate swap:

Fixed payment to counterparty 3.11100% 3.20400% 3.20100% Basis risk: The city is exposed to basis risk on its pay-fixed interest rate swap Variable payment from counterparty -0.47498% -0.47558% -0.44435% and rate cap hedging derivative instruments because the variable-rate Net interest rate swap payments 2.63602% 2.72842% 2.75665% payments received by the city on these hedging derivative instruments are Variable rate bond coupon payments 0.39419% 0.39465% 0.36625% based on a rate or index other than interest rates the city pays on its hedged Synthetic interest rate on bonds 3.03021% 3.12307% 3.12290% variable-rate debt. If a change occurs that results in the rates' moving to convergence, the expected cost savings may not be realized.

2011 Water Termination risk: The derivative contract uses the International Swap Dealers Refunding/ 2012 Association Master Agreement, which includes standard termination events, Revenue 2008 Convention such as failure to pay and bankruptcy. The Schedule to the Master Agreement Bonds Renaissance Center includes an "additional termination event." That is, a swap may be terminated Series A COPs Financing 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 Rates Rates Rates if the other party fails to perform under the terms of the contract. If a swap is Interest rate swap: terminated, the variable-rate bond would no longer carry a synthetic interest Fixed payment to counterparty 3.20000% 3.36200% 3.24000% rate. Also, if at the time of termination a swap has a negative fair value, the Variable payment from counterparty -0.41887% -0.43840% -1.90203% City would be liable to the counterparty for a payment equal to the swap's fair Net interest rate swap payments 2.78113% 2.92360% 1.33797% value.

Variable rate bond coupon payments 0.32721% 0.41818% 1.90203%

Synthetic interest rate on bonds 3.10834% 3.34178% 3.24000%

Swap payments and associated debt: As of June 30, 2018, 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 Fair Value: As of June 30, 2018, in connection with all swap arrangements, following table. As rates vary, variable-rate bond interest payments and net the transactions had a combined net negative fair value of ($34,499). Because swap payments will vary.

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 55

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Variable-Rate Bonds Advances To/From Other Funds: These balances consist of advances used Interest Rate to fund capital projects in advance of related financing/assessments and for Fiscal Year Principal Interest Swaps, Net Total other long-term borrowing purposes.

2019 $ 13,516 $ 1,905 $ 9,344 $ 24,765 2020 16,610 1,809 8,917 27,336 The following table shows amounts advanced from funds within the City to 2021 17,262 1,718 8,458 27,438 other funds within the City at June 30, 2018:

2022 17,823 1,621 7,979 27,423 2023 18,310 1,519' 7,488 27,317 Receivable Funds Payable Funds Amount 2024-2028 88,561 6,103 30,579 125,243 Sewer Fund Nonmajor Governmental Funds $ 3,992 2029-2033 102,849 3,308 17,655 123,812 Self-Insurance Trust Fund

• Central Garage Fund* 335 2034-2038 71,290 473 3,468 75,231 Central Garage Fund

• Nonmajor Governmental Funds 2,068 Total $ 346,221 .$ 18,456 $ 93,888 $ 458,565 Total $ 6,395

• Internal service fund

10. Economic Contingency A portion of fund balance has been committed within the General Fund for In addition, the following advances to the former Redevelopment Agency are future economic contingencies. The amount that has been set aside is equal accounted for in the Private-Purpose Trust Fund of the Successor Agency:

to approximately 20% of the 2018-2019 General Fund adopted expenditure Receivable Funds Amount budget. Nonmajor Governmental Funds 3,327 Electric Fund 4,227

11. lnterfund Assets, Liabilities and Transfers Total $ 7,554 Due From/To Other Funds: These balances resulted from expenditures being incurred prior to receipt of the related revenue source.

The following table shows amounts receivable/payable between funds within Transfers In/Out: Transfers are primarily .used to (1) move revenu~s to the fund the City at June 30, 2018: 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 Receivable Funds Payable Funds Amount service fund as debt service payments become due.

General Fund Nonmajor Governmental Funds $ 633 Nonmajor Enterprise Funds 225 The following table $hows ~mounts transferred to/from funds within the City 858 for the year ended June 30, 2018:

Electric Fund Central Stores Fund

• 305 Water Fund Central Stores Fund

• 131 Total $ 1,294

• Internal service fund 56

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Transfers In Funds Transfers Out Funds Amount two fiscal years. The plan calls for cash contributions of $2 500 for the next General Fund Nonmajor Governmental Funds $ 12,186 fiscal year. Implementation of the reserve policy, the cash f~nding approved Electric Fund 40,073 by City Council and the increased rates should provide the fund greater Water Fund 6,173 financial stability for future needs.

Sewer Fund 900 59,332 Deficit net position exists in the Successor Agency Private-Purpose Trust Fund

($149,658). The deficit in the Successor Agency Trust Fund will be reduced Capital Outlay Fund General Fund 6,276 over the years as the related debt is paid-off with funds received from the Nonmajor Governmental Funds 36 Redevelopment Property Tax Trust Fund (RPTIF), which is administered by 6,312 the County Auditor-Controller.

Nonmajor Governmental Funds General Fund 31,041 13. Litigation Capital Outlay Fund 3,004 57 The City is a defendant in various lawsuits arising in the normal course of Nonmajor Governmental Funds 3,028 business. Present lawsuits and other claims against the City are incidental to Nonmajor Enterprise Funds 37,130 !he ordinary course of operations and are largely covered by the City's self-msurance program. In the opinion of management and the City Attorney, such 8,421 claims and litigation will not have a materially adverse effect upon the financial Nonmajor Enterprise Funds General Fund 1,721 position or results of operation of the City.

Nonmajor Enterprise Funds Governmental Activities ** 294 10,436 14. City Employees Retirement Plan General Fund 5,000 (A) Plan Description. The City of Riverside contributes to the California Public Liability Insurance Trust Fund

• Total $118,210 Employees Retirement System (CalPERS), an agent multiple employer public employee defined benefit pension plan. CalPERS provides retirement and

• Internal service fund disability benefits, annual cost-of-living adjustments, and death benefits to plan

• • Transfer of assets, net ($41,639) and liabilities ($41,345) from Governmental Activities rela-members and beneficiaries. CalPERS acts as a common investment and establishment of the Civic Entertainment Fund administrative agent for participating public entities within the State* of California. Benefit provisions and all other requirements are established by

12. Deficit Net Position state statute and City ordinance. A copy of CalPERS' annual financial report may be obtained online at www.calpersca.gov.

Deficit net position exists in the Self-Insurance Internal Service Fund

($30,624). This City adopted a Self-Insurance Reserve Policy that will address (B) Funding Policy. The City has contributed at the actuarially determined rate the _on-going deficit in fund balance, In the past, the City began funding a provided by CalPERS' actuaries. Participants are required to contribute 8% for portion of the deficit in the internal service fund via self-insurance rate miscellaneous employees and 9% for safety employees of their annual increases phased in over several years. However, the increases continue to covered salary. The City has a multiple tier retirement plan with benefits be offset by unusually large losses incurred during the year combined with an varying by plan. The City pays the employees' contributions to CalPERS for adjustment for the increase in the amount estimated for claims and judgments. both miscellaneous and safety employees hired on or before specific dates as Management believes that there are sufficient funds on hand to cover current follows:

payment obligations and plans to continue to control costs and increase rates. Safety (Police):

However, the Self-Insurance Reserve Policy specifically address minimum

• 151 Tier (RPOA, RPOA Supervisory & RPAA Management) - The cash balance requirements in the Self-Insurance Trust Fund in-line with best retirement formula is 3% at age 50 for employees hired on or practices. In conjunction with the new reserve policy, City Council has before February 16, 2012 (RPOA, RPAA Management) or June 8, approved a funding plan to increase the cash reserve balances over the next 57

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) 2012 (RPOA Supervisory). Effective January 1, 2018, employees Management, Professional, Para-professional, were required to pay 1.5% of their pensionable income, with the Supervisory, Confidential, and Executive units, excluding City contributing the other 7.5%. Only in the event that annual the Chief of Police and the Fire Chief), the employees wages increase in excess of 2%, will the following apply: Effective were required to pay 2% of their pensionable income, with January 1, 2019, employees will be required to pay an additional the City contributing the other 6%. Effective January 1, portion of their pensionable income. This portion is a three year 2019, employees will be required to pay an additional increase of 1.5% (2019), 1.5% (2020) and 1.5% (2021). By 2021, portion of their pensionable income. This portion is a three employees will be contributing* 6% of their pensionable income, year increase of 2% (2019), 2% (2020) and 2% (2021 ).

with the City contributing the other 3%. By 2021, employees will be contributing the entire 8% of

• 2nd Tier (RPOA, RPOA Supervisory & RPAA Management) - The their pensionable income.

retirement formula is 3% at age 50 for RPOA and RPAA Management employees hired on or after February 17, 2012 and o The retirement formula is 2.7% at age 55 for SEIU and RPOA Supervisory employees hired on or after June 8, 2012 pay SEIU Refuse employees hired before June 7, 2011.

their share (9%) of contributions. Currently, employees are required to pay 6% of their

• 3rd Tier (RPOA, RPOA Supervisory & RPAA) - The retirement pensionable income with the City contributing the other formula is 2.7% at age 57 for new members hired on or after 2%. Effective January 1, 2019, employees will be required January 1, 2013 and the employee must pay the normal cost to to pay an additional portion of their pensionable income.

CalPERS which is currently at 11.50%. Classic members This portion is a two year increase of 1% (2019) and 1%

(CalPERS members prior to 12/31/12) hired on or after January 1, (2020). By 2020, employees will be contributing the entire 2013 may be placed in a different tier. 8% of their pensionable income.

Safety (Fire): o The retirement formula is 2.7% at age 55 for IBEW and

• 1st Tier - The retirement formula is 3% at age 50 for employees IBEW Supervisory employees hired on or before October hired before June 11, 2011. Effective January 1, 2019, employees 18, 2011. Effective November 1, 2017 employees were will be required to pay a portion of their pensionable income. This required to pay 2% of their total pensionable income with portion is a three year increase of 2.5% (2019), 2.5% (2020) and the City paying the remaining 6%. Effective each 3% (2021 ). By 2021, employees will be contributing 8% of their November 1st, employees will be required to pay an pensionable income. additional portion of their pensionable income. This portion is a three year increase of 2% (2018), 2% (2019)

• 2nd Tier - The retirement formula is 3% at age 55 and new and 2% (2020). By November 2020, employees will be employees hired on or after June 11, 2011 pay tbeir share (9%) of contributing the entire 8% of their pensionable income.

contributions.

• 3rd Tier - The retirement formula is 2.7% at age 57 for new

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

members hired on or after January 1, 2013. A new member, as o Miscellaneous employees, IBEW, and I_BEW Supervisory defined by the Public Employees' Pension Reform Act (PEPRA),

hired on or after October 19, 2011 pay their share (8%) of hired on or after January 1, 2013 pay 50% of the normal cost to contributions.

CalPERS which is/currently 11.50% of compensation.

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

Miscellaneous:

• 1st Tier-

• 3rd Tier- The retirement formula is 2% at age 62 for new members a The retirement formula is 2. 7% at age 55 for employees hired on or after January 1, 2013 and the employee must pay the hired on or before October 18, 2011. Effective January 1, normal cost to CalPERS which is currently at 7%. Classic 2018 for unrepresented employees (Sr. Management, 58

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) members (CalPERS members prior to 12/31/12) hired on or after A summary .of principal assumptions and methods used to determine the net January 1, 2013 may be placed in a different tier. pension liability is shown below.

The contribution requirements of plan members and the City are established Actuarial Assumptions - The total pension liabilities in the June 30, 2016 and may be amended by CalPERS. actuarial. valuations were determined using the following actuarial assumptions:

(C) Benefits Provided - CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan Miscellaneous Safety members, who must be public employees and beneficiaries. Benefits are Valuation Date June 30, 2016 June 30, 2016 based on years of credited service, equal to one year of full time employment. Measurement Date June 30, 2017 June 30, 2017 Members with five years of total service are eligible to retire at age 50 with Actuarial Cost Method Entry-Age Normal Cost Method statutorily reduced benefits. All members are eligible for non-duty disability Actuarial Assumptions benefits after five years of service. The death benefit is one of the following: Discount Rate 7.15% 7.15%

the Basic Death Benefit, the 1959 Survivor Benefit Level Ill, or the Optional Inflation 2.75% 2.75%

Settlement 2W Death Benefit. The cost of living adjustments for each plan are Payroll Growth 3.0% 3.0%

applied .as specified by the Public Employees' Retirement Law. Projected Salary Increase Depending on age, service, and type of employment.

Investment Rate of Return 7.50% (1) . 7.50% (1)

(D) Employees Covered - At June 30, 2017, the following employees were The probabilities of mortality are based on the 2014 CalPERS Mortality covered by the benefit terms of each Plan: Inactive employees or beneficiaries from 1997 to 2011. Pre-retirement Experience Study for the period currently receiving benefits are 2,114 and 766 for the Miscellaneous and mortality rates include 20 years of projected mortality improvement Safety Plans, respectively. Inactive employees entitled to but not yet receiving benefits are 1,325 and 165 for Miscellaneous and Safety Plans, respectively. using Scale BB published by the Society of Actuaries.

Active employees were 1,599 and 556 for Miscellaneous and Safety Plans, respectively. (1) Net of pension plan investment expenses, including inflation (E) Contributions - Section 20814(c) of the California Public Employees' Discount Rate - The discount rate used to measure each plan's total pension Retirement Law requires that the employer contribution rates for all public liability as of June 30, 2017 was 7.15% a reduction from the previous discount employers be determined on an annual basis by the actuary and shall be rate of 7.65%. To determine whether the municipal bond rate should be used effective on the July 1 following notice of a change in the rate. Funding in the calculation of a discount rate for each plan, CalPERS stress tested plans contributions for both Plans are determined annually on an actuarial basis as

• that would most likely result in a discount rate that would be different from the of June 30 by CalPERS. The actuarially determined rate is the estimated actuarially assumed discount rate. Based on the testing, none of the tested amount necessary to finance the costs of benefits earned by employees during plans run out of assets. Therefore, the discount rates used to measure total the year, with an additional amount to finance any unfunded accrued liability. pension liability are adequate and the use of the municipal bond rate The City is required to contribute the difference between the actuarially calculation is not necessary. The long term expected discount rates are determined rate and the contribution rate of employees. applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called "GASB Crossover Testing (F) Net Pension Liability - The City's net pension liability for each Plan is Report" that can be obtained from the CalPERS website.

measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of each of the Plans is measured as of June The long-term expected rate of return on pension plan investments was 30, 2017, using an annual actuarial valuation as of June 30; 2016 rolled determined using a building-block method in which best-estimate ranges of forward to June 30, 2017 using standard update procedures. expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

59

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Miscellaneous Increase (Decrease)

In determining the long-term expected rate qf return, CalPERS took into Total Plan account both short-term and long-term market return expectations as well as Pension Fiduciary Net Pension the expected pension fund cash flows. Using historical returns of all the funds' Liability Net Position Liabilitv/(Asset) 952,062 $ 309,500 asset classes, expected compound returns were calculated over the short- Balance at June 30, 2017 $ 1,261,562 $

Changes in the year:

term (first 10 years) and the long-term (11-60 years) using a building-block Service Cost 24,766 24,766 approach. Using the expected nominal returns for both short-term and long- Interest on Total Pension Liability 92,725 92,725 term, the present value of benefits was calculated for each fund. The expected Changes of Assumptions 79,037 79,037 rate of return was set by calculating the single equivalent expected return that Differences between Expected (26,068) and Actual Experience (26,068) arrived at the same present value of benefits for cash flows as the one Net Plan to Plan Resource Movement 116 (116) calculated using both short-term and long-term returns. The expected rate of Contribution - employer 30,477 (30,477) return was then set equivalent to the single equivalent rate calculated above Contribution - employee 6,115 (6,115)

Net Investment Income 104,771 (104,771) and rounded down to the nearest one quarter of one percent.

Benefit Payments, including Refunds of Employee The table below reflects long-term expected real rate of return by asset class. Contributions (60,108) (60,108)

The rate of return was calculated using the capital market assumptions applied Administrative Expenses (1,406) 1,406 110,352 79,965 30,387 to determine the discount rate and asset allocation. These geometric rates of Net Changes 1,371,914 $

Balance at June 30, 2018 $ 1,032,027 =$====3=39=,8=87=

return are net of administrative expenses.

Safety Increase (Decrease)

Current Target Real Return Real Return Total Plan Asset Class Allocation Years 1 -10 (1) Years 11 + (2) Pension Fiduciary Net Pension Global Equity 47.00% 4.90% 5.38% Liability Net Position Liability//Asset)

Global Fixed Income 19.00% 0.80% 2.27% Balance at June 30, 2017 $ 936,802 $ 695,450 $ 241,352 Inflation Sensitive 6.00% 0.60% 1.39% Changes in the year:

Service Cost 21,373 21,373 Private Equity 12.00% 6.60% 6.63%

Interest on Total Pension Liability 70,337 70,337 Real Estate 11.00% 2.80% 5.21%

Changes of Assumptions 59,768 59,768 Infrastructure and Forestland 3.00% 3.90% 5.36%

Differences between Expected Liquidity 2.00% -0.40% -0.90% (18) (18) and Actual Experience (1) An expected inflation of 2.5% used for this period Net Plan to Plan Resource Movement (119) 119 26,775 (26,775)

(2) An expected inflation of 3.0% used for this period Contribution - employer Contribution - employee 2,449 (2,449)

Net Investment Income 76,844 (76,844)

(G) Changes in the Net Pension Liability Benefit Payments, including Refunds of Employee The changes in the Net Pension Liability for each Plan follows: Contributions (47,009) (47,009)

Administrative Expenses (1,027) 1,027 Net Changes 104,451 57,913 46,538 Balance at June 30, 2018 $ 1,041,253 $ 753,363 $ 287,890 Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

60

City of Riverside Notes to Basic Financial Statements For the.year ended June 30, 2018 (amounts expressed in thousands)

Miscellaneous Current Safety Deferred Outflows Deferred Inflows Discount Rate Discount Rate Discount Rate of Resources of Resources

-1% (6.15%) (7.15%) +1% (8.15%) Pension contributions subsequent to measurement

$ 531,959 $ 339,887 $ 182,557 date, net $ 25,286 $

Plan's Net Pension Liability/(Asset)

Differences between actual and actuarial determined Current contributions Safety 40,812 Discount Rate Changes of assumptions Discount Rate Discount Rate (4,721)

Differences between expected and actual experience

-1% (6.15%) (7.15%) +1% (8.15%)

Net differences between projected and actual Plan's Net Pension Liability/(Asset) $ 433,466 $ 287,890 $ 168,802 earnings on plan investments 10,715 Total $ 76,813 $ (4,721)

Pension Plan Fiduciary Net Position - Detailed information about each pension plan's fiduciary net position is available in the separately issued $55,233 reported as deferred outflows of resources related to contributions CalPERS financial reports. subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2018.

H. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions. The remaining amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension For the year ended June 30, 2018, the City recognized pension expense of expense as follows:

$54,879. At June 30, 2018, the City reported deferred outflows of resources Deferred Outflows/(lnflows) of Resources and deferred inflows of resources related to pensions from the following sources: Fiscal Year Miscellaneous Safety 2018 $ 10,283 $ 7,312 Miscellaneous Deferred Outflows Deferred Inflows 2019 30,838 22,099 of Resources of Resources 2020 14,902 17,531 Pension contributions subsequent to measurement 2021 (7,558) (137) date, net $ 29,948 $

Changes of assumptions 56,380 Differences between expected and actual experience (22,573) 15. Other Post-Employment Benefits (OPEB)

Net differences between projected and actual earnings on plan investments 14,658 Plan description - The City's defined benefit OPEB plan, Retiree Health Plan, Total $ 100,986 $ (22,573) provides continuation of medical (including prescription drugs) and dental coverage benefits to retirees and surviving spouses in the form of an implied rate subsidy. The Retiree Health Benefits plan is a single employer defined benefit OPEB plan administered by the City. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.

Benefits provided - Eligibility for continuation of coverage requires retirement from the City and CalPERS with at least 5 years of City service. The retiree is

• I responsible for 100% of the premium cost for coverage, which is based on the blended experience of both the active and retired employees. The City is not I

required by law or contractual agreement to provide funding other than the pay-as-you-go amount necessary to provide current benefit to eligible retirees 61

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Current healthcare and beneficiaries. Retiree and spousal coverage terminates when the retirees 1% Decrease cost trend rates 1% Increase becomes covered under another employer health plan, or when the retiree Total OPEB liability $ 33,065 $ 36,786 $ 41,136 reaches Medicare eligibility ago, which is currently age 65. However, retiree benefit continues to the surviving spouse if the retiree elects the CalPERS survivor annuity. Sensitivity analysis of total OPEB liability for discount rates Employees covered by benefit terms -At June 30, 2017, the following The following presents the total OPEB liability, calculating using the discount employees were covered by the benefit terms: rate of 3.40%, as well as what the total OPEB liability would be if it were calculated using a discount rate that is 1-percenrtage-point lower (2.40%) or Inactive plan members or beneficiaries currently receiving benefits 304 1-percentage-point higher (4.40%) than the current rate:

Active plan members 2,121 Current discount Total 2,425 rate 1% Increase 1% Decrease Total OPEB liability $ 39,886 $ 36,786 $ 33,967 Significant Actuarial Assumptions Used in Calculating the Total OPEBUability The total OPEB liability was determined by actuarial valuation as of June 30, Change in total OPEB liability 2017 using the following actuarial assumptions:

For fiscal year 2018, the City recognized total OPEB expense of $3,436. The Valuation Date: June 30, 2017 following table shows the change in the total OPEB liability for the year ended Measurement Date: June 30, 2017 June 30, 2018:

Funding Policy: Pay-as-you-go for implicit rate subsidy 2017 Discount Rate: 3.40% per annum. This discount rate is the average, Beginning total OPEB liability $ 36,542 rounded to 5 basis points, of the range of 3-20 year 2,554 Service cost municipal bond rate indices: S&P Municipal Bond 20 Interest 1,090 Year High Grade Rate Index, Bond Buyer 20-Bond GO Index, and Fidelity GO AA 20 Year Bond Index. Changes of assumptions (1,668) 2.75% per annum Benefit of implied subsidy payments (1,732)

Inflation Rate:

Net changes 244 Salary Inflation: 3.0% per annum Ending total OPEB liability $ 36,786 Salary Increases The benefits are not payroll related but the City's cost for each individual's projected City .contribution is allocated over their lifetime as a level-percentage of pay. For cost method purposes the merit increases from the most Deferred outflows/inflows of Resources recent CalPERS pension plan valuation will be used Mortality CalPERS 2014 Experience Study At June 30, 2018, the City reported deferred inflows of resources related to OPEB from the following sources:

Sensitivity an~lysis of total OPEB liability for healthcare cost trend rates Deferred inflows of The following presents the total OPEB liability, calculating using the healthcare resources cost trend rate of 6.00%/HMO and 6.50%/PPO, as well as what the total OPEB Changes of assumptions $ 1,459 liability would be if it were calculated using a discount rate that is 1-percentage- Total $ 1,459 point lower (5.00%/HMO and 5.50%/PPO) or 1-percentage-point higher (7.00%/HMO and 7.50%/PPO) than the current rate:

62

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Amounts reported as deferred inflows of resources related to OPEB will be Contract contemplates a term of fifty years, through June 2077 for the recognized in OPEB expense as follows: Repower Project. The Electric Utility is authorized to participate in the subscription process for up to 5 percent of the Repower Project or Deferred inflows of approximately 60 MW. On January 5, 2017, the Electric Utility executed the Year Ending June 30, resources Renewal Power Sales Contract and all other necessary documents for the first 2018 $ (209) two rounds of the subscription process. The Electric Utility accepted an offer 2019 (209) of 4.167 percent entitlement or 50 MW generation capacity in the IPP Repower 2020 (209) Project based on the 1,200 MW designed capacity, which is within the 2021 (209) maximum participation level approved by the City Council. The Electric Utility's 2022 (209) corresponding Southern Transmission System allocation is 5.278 percent or Thereafter (414) approximately 127 MW. The IPP Repower Project renewal subscription

$ (1,459) process was completed after two rounds on January 17, 2017 and all entitlements in the project were fully subscribed. The Electric Utility's reduced

16. Commitments and Contingencies power would allow it to diversify its energy portfolio in the future. Further, under the Renewal Power Sales Contract, the Electric Utility has the right to exit from lntermountain Power Agency the Repower Project by no later than November 1, 2019, if it is determined that the Repower Project is not cost beneficial to its customers.

The Electric Utility has entered into a power purchase contract with lntermountain Power Agency (IPA) for the delivery of electric power. The The Electric Utility is a me*mber of the Southern California Public Power Electric Utility's share of IPA power is equal to 7.6 percent, or approximately Authority (SCPPA), a joint powers agency. SCPPA provides for the financing 137.1 MW, of the net generation output of IPA's 1,800 MW coal-fueled and construction of electric generating and transmission projects for generating station, known as lntermountain Power Project (IPP), located in participation by some or all of its members. To the extent the Electric Utility central Utah. The contract expires in 2027 and the debt fully matures in 2024. participates in projects developed by SCPPA, it has entered into Power Purchase or Transmission Service Agreements, entitling the Electric Utility to The contract constitutes an obligation of the Electric Utility to make payments the power output or transmission service, as applicable, and the Electric Utility solely from operating revenues. The power purchase contract requires the will be obligated for its proportionate share of the project costs whether or not Electric Utility to pay certain minimum charges that are based on debt service such generation output of transmission service is available.

requirements and other fixed costs. Such payments are considered a cost of production. The projects and the Electric Utility's proportionate share of SCPPA's obligations, including final maturities and contract expirations are as follows:

On September 29, 2006, Senate Bill 1368 (SB 1368) was enacted into law.

Project Percent Share Entitlement Final Maturit~ Contract Exeiration The bill requires electric service providers to limit financial investments in 5.40% 12.3MW 2017 2030 Palo Verde Nuclear Generating Station power plants to those that adhere to greenhouse gas performance standards Southern Transmission System 10.20% 244.0MW 2027 2027 as determined by the Public Utilities Commission. Pursuant to this legislation, Mead-Phoenix Transmission 4.00% 18.0 MW 2020 2030 the Electric Utility is prohibited from renewing its participation in IPP if it Mead-Adelanto Transmission 13.50% 118.0 MW 2020 2030 remains a coal fueled generating resource. On June 16, 2015, the City Council approved the lntermountain Power Project renewal agreements, including the Terms of Take or Pay Commitments Second Amendatory Power Sales Contract and the Renewal Power Sales As part of the take-or-pay commitments with IPA and SCPPA, the Electric Contract, and authorized participation in the IPP renewal subscription process.

Utility has agreed to pay its share of current and long-term obligations.

The Second Amendatory Power Sales Contract became effective March 16, Management intends to pay these obligations from operating revenues 2016. The generation component of IPP under the Renewal Power Sales received during the year that payment is due. A long-term obligation has not Contract (Repower Project) is envisioned to be a natural gas fueled combined been recorded on the accompanying financial statements for these cycle plant with total capacity of 1,200 MW. The Renewal Power Sales 63

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) commitments. Take-or-pay commitments terminate upon the later of contract revenue requirements, including the costs associated with these three expiration or final maturity of outstanding bonds for each project. transmission projects.

The outstanding debts associated with the take-or-pay obligations have fixed Hoover Uprating Project interest rates which range from 1.43 percent to 5. 75 percent. The schedule below details the amount of principal and interest that is due and payable by The Electric Utility's entitlement in the Hoover project through SCPPA will the Electric Utility as part of the take-or-pay contract for each project in the terminate on September 30, 2017. In March 2014, the Electric Utility prepaid fiscal year indicated. its share of outstanding debt incurred by the Bureau of Reclamation in connection with the acquisition and construction of the Hoover Power Project IPA SCPPA TOTAL Visitors Center and Air Slots. The payment of principal and interest on the debt Debt Service is a component of the cost of power and energy payable by Hoover Payment lntermountain Southern Mead-. Mead-(in thousands) Power Transmission Phoenix Adelanto All contractors, which includes SCPPA participants that receive power from the Year Endinn June 30 Proiect Svstem Transmission Transmission Proiects Hoover Power Project under agreements with the Western Area Power 2019 17,345 7,893 257 2,881 28,376 Administration. Because Bureau Debt bears interest at rates that are 6,913 254 2,859 27,258 2020 17,232 15,829 7,926 189 2,136 26,080 substantially higher than current market interest rates, the Electric Utility 2021 2022 10,834 9,448 - - 20,282 elected to prepay the debt in order to realize savings on power costs in the 2023 8,059 7,258 - - 15,317 future. The Electric Utility's share of the debt is recorded on the statements of 2024-2028 840 20,175 - - 21,015 net position as unamortized purchased power to be amortized over the Total $ 70,139 $ 59,613 $ 700 $ 7,876 $ 138,328 remaining term of the project through 2017. As of June 30, 2018, the balance was fully amortized.

In addition to debt service, the Electric Utility's entitlements require the payment of fuel costs, operating and maintenance, administrative and general On August 23, 2016, the City Council approved a 50-year Electric Service and other miscellaneous costs associated with the generation and Contract (ESC) and an Amended and Restated Implementation Agreement transmission facilities discussed above. These costs do not have a similar (IA) with the Western Area Power Administration (Western), Bureau of structured payment schedule as debt service and vary each year. The costs Reclamation for 30 MW of hydroelectric power. The contract with Western will incurred for the year ended June 30, 2018 is as follows (in thousands): be effective October 1, 2017. The ESC extends the Electric Utility's 30 MW entitlement in the Hoover project an additional 50 years. The IA is a Palo Verde supplemental agreement to the ESC that establishes administrative, Southern Hoover Mead- Mead-lntermountain Nuclear Dam Phoenix Adelanto All budgetary and project oversight by creating project committees and process Power Generating Transmission FISCAL YEAR Project Station S:istem U[!rating Transmission Transmission Projects for decision making plant operations.

2018 $ 20,755 $ 3,653 $ 3,529 $ 14 $ 58 $ 302 $28,311 23,000 $ 3,285 $ 2,712 $ 58 $ 64 $ 254 $29,373 2017 $ Nuclear Insurance These costs are included in production and purchased power or transmission The Price-Anderson Act (the Act) requires that all utilities with nuclear expense on the Statements of Revenues, Expenses and Changes in Net generating facilities purchase the maximum private primary nuclear liability Position. insurance available ($450 million) and participate in the industry's secondary financial protection plan. The secondary financial protection program is the The Electric Utility has become a Participating Transmission Owner with the industry's retrospective assessment plan that uses deferred premium charges California Independent System Operator (CAISO) and has turned over the from every licensed reactor owner if claims and/or costs resulting from a operational control of its transmission entitlements including the Southern nuclear incident at any licensed reactor in the United States were to exceed Transmission System, Mead-Phoenix and Mead-Adelanto Transmission the primary nuclear insurance at that plant's site. Effective April 7, 2018, the Projects. In return, users of the California's high voltage transmission grid are Act limits liability from third-party claims to approximately $13.1 billion per charged for, and the Electric Utility receives reimbursement for, transmission incident. Under the industry wide retrospective assessment program provided 64

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) for under the Act, assessments are limited to $127.3 million per reactor for On September 10, 2018, the 100 Percent Clean Energy Act of 2018 (SB 100) each nuclear incident occurring at any nuclear reactor in the United States, was signed. This bill further increases the RPS goals of SBX1-2 and SB 350 with payments under the program limited to $19.0 million per reactor, per year, by maintaining the 33 percent RPS target by December 31, 2020, while per event to be indexed for inflation every five years. Based on the Electric modifying the RPS percentages to be 44 percent by December 31, 2024, 52 Utility's interest in Palo Verde and ownership in SONGS, the Electric Utility percent by December 31, 2027, 60 percent by December 31, 2030, with an would be responsible for a maximum assessment of $5.8 million, limited to end goal of 100 percent of total retail sales of electricity in California generated payments of $0. 9 million per incident, per year. If the public liability limit above from eligible renewable energy resources and zero-carbon resources by is insufficient, federal regulations may impose further revenue-raising December 31, 2045. It is expected that the CEC will have further guidance and measures to pay claims, including a possible additional assessment on all enforcement procedures for POUs. RPU will continue to monitor the outco,me licensed reactor operators. and impacts of any upcoming workshops and regulations in meeting the new requirements.

Renewable Portfolio Standards (RPS)

Long-term renewable PPAs and PSAs in operation (dollars in thousands):

On April 12, 2011, the California Renewable Energy Resources Act (SBX1-2)

Estimated was passed by the State Legislative and signed by the Governor. SBX1-2 Maximum Contract Annual Cost revised the amount of statewide retail electricity sales from renewable 1 For 2019 Supplier Type Contract Expiration resources in the State Renewable Energy Resources Program to 33 percent Salton Sea Power LLC Geothermal 46.0~ 5/31/2020 $ 29,165 by December 31, 2020 in three stages: average of 20 percent of retail sales Wintec Energy, Ltd. Wind 1.3 ~ 12/30/2018 124 during 2011-2013; 25 percent of retail sales by December 31, 2016; and 33 WKNWagner Wind 6.0 ~ 12/22/2032 1,318 20.0~ 8/11/2040 4,623 percent of retail sales by December 31, 2020. The Riverside Public Utilities SunEdison - AP North Lake Photovoltaic 2,314 Dominion - Columbia II Photovoltaic 11.1 ~ 12/22/2034 Board and City Council approved the enforcement program required by SBX1- GlidePath Power Solutions - GPS Cabazon Wind LLC Wind 39.0~ 1/1/2025 4,299 2 on November 18, 2011 and December 13, 2011, respectively, and further Capital Dynamics - Kingbird Solar B, LLC Photovoltaic 14.0 ~ 12/31/2036 2,867 approved the Electric Utility's RPS Procurement plan implementing the new FlP Solar 10.0 ~ 12/31/2041 1,748 RPS mandates on May 3, 2013 and May 14, 2013, respectively. The Electric sPower - Summer Solar Photovoltaic 1,748 sPower - Antelope Big Sky Ranch Photovoltaic 10.0 ~ 12/31/2041 Utility met the 20 percent mandates from 2011-2013 and the 25 percent Photovoltaic 25.0 ~ 12/19/2036 3,826 sPower - Antelope DSR 1 Solar mandate by December 31, 2016. The additional future mandates are Capital Dynamics - Tequesquite Landfill Solar Photovoltaic 7.3 ~ 12/31/2040 1,341 expected to be met with resource procurement actions as outlined in the American Renewable Power-Loyalton Biomass 0.8~ 4/19/2023 615 12,187 Electric Utility's RPS Procurement Plan. For calendar year 2017, renewable CalEnergy - Salton Sea Portfolio Phase 1 Geothermal 20.0 ~ 12/31/2039 Total 210.5~ $ 66,175 resources provided 36 percent of retail sales requirements.

On September 11, 2015, California legislature passed Senate Bill 350 (SB 1 All contracts are contingent on energy delivery from specific related 350) increasing the RPS mandate beyond December 31, 2020 above 33 generating facilities. The Electric Utility has no commitment to pay any percent to 50 percent by December 31, 2030. SB 350 was signed into law by amounts except for energy delivered on a monthly basis from these facilities the Governor on October 7, 2015. The Electric Utility expects to be able to except for any economic curtailments directed by the Electric Utility.

substantially meet the increased RPS mandates imposed by SB 350 with the portfolio of renewable resources outlined below. Long-term renewable PPAs with expected delivery:

Energy Delivery Contract In an effort to increase the share of renewables in the Electric Utility's power Maximum Expected No Later Term portfolio, the Electric Utility entered into power purchase agreements (PPA) Supplier Type Contract 1 Delivery Than In Years 21 and power sales agreements (PSA) with various entities described below in CalEnergy - Salton Sea Portfolio Phase 2 Geothermal 20.0 MW 1/1/2019 1/1/2019 CalEnergy - Salton Sea Portfolio Phase 3 Geothermal 46.0 MW 6/1/2020 6/1/2020 20 general on a "take-and-pay" basis. The contracts in the following tables were Total 66.0 MW executed as part of compliance with this standard.

65

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands) 1 All contracts are contingent on energy delivered from specific related Incremental Sales Tax Revenue can be generated from sales, over the fiscal generating facilities. The Electric Utility has no commitment to pay any 2011-12 base period, reported to the State Board of Equalization at the amounts except for energy delivered on a monthly basis from these facilities business site and from third party vendor transactions occurring using the except for any economic curtailments directed by the Electric Utility. business site as the point of sale. Incremental Property Tax Revenue is generated from the increase in County assessed valuation over the 2012-13 Cap-and-Trade Program base period values, for the parcels designated in the agreement. For parcels acquired after 2012-13 in the project area, the acquisition price will become its Assembly Bill (AB) 32, enacted in 2006, mandated that the California Air base year valuation. The initial 2012-13 base year assessed valuation is Resources Board (GARB) develop regulations for the reduction of greenhouse $114,293 and has been adjusted to $125,043 for the parcels acquired in 2014-gas (GHG) emissions to the 1990 levels by the year 2020. In January 2013, 15. The business is due 100% of the incremental Property tax revenue due to emission compliance obligations developed by GARB began under the Cap- the City from the project area tax rate. It is calculated as 11 % of the value and-Trade Program (Program). This Program requires electric utilities to have determined from taking 1% of the difference of current net assessed valuation GHG allowances on an annual basis to offset GHG emissions associated with over the adjusted base valuation. The cumulative rebate payment as of June generating electricity. To ease the transition and mitigate the rate impacts to 30, 201.8 is $327.

retail customers, GARB will allocate certain amounts of GHG allowances at no cost to electrical distribution utilities. The Electric Utility's free allocation of 18. Prior Period Adjustments GHG allowances is expected to be sufficient to meet the Electric Utility's direct GHG compliance obligations. A prior period adjustment of $23,096 was made to decrease the General Fund's fund balance related to the elimination of advances related to the At times, the Electric Utility may have allocated allowances in excess of its Pension Obligation Bonds. The 2005 and 2017 Taxable Pension Obligation compliance obligations that can be sold into the GARB quarterly auctions. In Bonds were distributed between Governmental Activities, Business-Type fiscal year ended June 30, 2018, the Electric Utility received $8,131 in Activities, and the Successor Agency to properly reflect their proportional proceeds related to the sale of the GHG allowances which are included on the share.

Statements of Revenues, Expenses and Changes in Net Position as operating revenue. The Electric Utility has established a restricted Regulatory The restatement of beginning fund balance of the General Fund is summarized Requirement reserve to comply with regulatory restrictions and governing as follows:

requirements related to the use of the GHG proceeds. The available funds are to be utilized for qualifying projects, consistent with the goals of AB 32 to General Fund benefit the retail ratepayers. The balance in the Regulatory Requirement reserve was $16,093 as of June 30, 2018. Net position at July 1, 2017, as previously stated $ 83,070 Elimination of Advances related to POBs (23,096)

The Electric Utility also purchases GHG allowances which can be used in Net position at July 1, 2017, as restated $ 59,974 future periods for GHG compliance regulations. The balance of purchased GHG allowances was $1,097 as of June 30, 2018 and is recorded as inventory in the statement of net position. Prior period adjustments of $1,001 and $617 were made to decrease the governmental activities' and the business-type activities' net position,

17. Tax Abatements respectively. The adjustment were made to reflect the prior period costs related to the net OPEB liability.

In November 2012, the City entered into a tax sharing agreement with a local business to incentivize an expansion of their facility. Assistance is provided in The restatement of beginning net position of the governmental activities and the form of a rebate of sales and property taxes over fifteen years in an amount business-type activities are summarized as follows:

not to exceed $4,500. The agreement expires on the earlier of: 1) total cumulative tax rebate of $4,500; or 2) fifteen years in fiscal 2027-28.

66

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 (amounts expressed in thousands)

Governmental Activities Non-Major Business-Type activities Net position at July 1, 2017, as previously stated $ 845,116 Net position at July 1, 2017, as previously stated $ 46,380 Net OPEB liability (1,001) Net OPEB liability (79)

Net position at July 1, 2017, as restated $ 844,115 Net position at July 1, 2017, as restated $ 46,301 Internal Service Funds Net position at July 1, 2017, as previously stated $ (81,914)

Net OPEB liability (37)

Net position at July 1, 2017, as restated $ (81,951)

Business-Type Activities Electric Fund Net position at July 1, 2017, as previously stated $ 484,201 Net OPEB liability (328)

Net position at July 1, 2017, as restated $ 483,873 Water Fund Net position at July 1, 2017, as previously stated $ 305,418 Net OPEB liability (125)

Net position at July 1, 2017, as restated $ 305,293 Sewer Fund Net position at July 1, 2017, as previously stated $ 205,531 Net OPEB liability (85)

Net position at July 1, 2017, as restated $ 205,446 67

Required Supplementary Information Consists of the following:

• Schedule of Changes in Net Pension Liability and Related Ratios During the Measurement Period

• Schedule of Plan Contributions

• Other Post-Employment Benefits (OPEB) Schedule of Changes in Total OPEB Liability and Related Ratio

City of Riverside Required Supplementary Information

• Unaudited Schedule of Changes In Net Pension Liability and Related Ratios During the Measurement Period (Thousands)

Last 1O Years*

6/30/2017 6/30/2016 6/30/2015 6/30/2014 Miscellaneous Safett Miscellaneous Safett Miscellaneous Safett Miscellaneous Safett TOTAL PENSION LIABILITY Service Cost $ 24,766 $ 21,373 $ 22,189 $ 18,144 $ 22,228 $ 18,187 $ 23,320 $ 18,818 Interest 92,725 70,337 90,913 67,513 87,436 64,815 84,965 62,249 Changes of Assumptions 79,037 59,768 (21,782) (16,117)

Difference Between Expected and Actual Experience (26,068) (18) (8,417) (4,373) (23,548) (6,835)

Benefit Payments, Including Refunds and Employee Contribution (60,108) (47,009) (57,702) (44,609) (53,853) (42,076) (50,770) (38,981)

Net Change In Total Pension Liability $ 110,352 $ 104,451 $ 46,983 $ 36,675 $ 10,481 $ 17,974 $ 57,515 $ 42,086 Total Pension Liability. Beginning 1,261,562 936,802 1,214,579 900,127 1,204,098 882,153 1,146,583 840,067 Total Pension Liability - Ending (a) $ 1,371,914 $ 1,041,253 $ 1,261,562 $ 936,802 $ 1,214,579 $ 900,127 $ 1,204,098 $ 882,153 PLAN FIDUCIARY NET POSITION Contributions - Employer $ 30,477 $ 26,775 $ 29,426 $ 26,483 $ 25,996 $ 23,384 $ 27,583 $ 23,156 Contributions

• Employee 6,115 2,449 5,187 1,837 4,380 924 2,294 365 Net lnveslment Income 104,771 76,844 4,958 3,478 21,671 15,632 145,843 107,032 Benefit Payments, Including Refunds and Employee Contribution (60,108) (47,009) (57,702) (44,609) (53,853) (42,076) (50,770) (38,981)

Administrative and Other Expenses (1,290) (1,146) (594) (428) (1,056) (816)

Net Change In Fiduciary Net Position $ 79,965 $ 57,913 $ (18,725) $ (13,239) $ {2,862) $ (2,952) $ 124,950 $ 91,572 Plan Fiduciary Net Position

• Beginning 952,062 695,450 970,787 708,689 973,649 711 641 848,699 620,069 Plan Fiduciary Net Position

• Ending (b) 1,032,027 753,363 952,062 695,450 970,787 708,689 973,649 711,641 Plan Net Pension Liability Ending (a)-(b) $ 339,887 $ 287,890 $ 309,500 $ 241,352 $ 243,792 $ 191,438 $ 230,449 $ 170,512 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 75.23% 72.35% 75.47% 74.24% 79.93% 78.73% 80.86% 80.67%

Total

• Employee Payroll $ 116,465 $ 68,459 $ 114,521 $ 64,778 $ 113,850 $ 64,648 $ 113,869 $ 64,715 Net Pension Liability as a Percentage of Total

• Employee Payroll 291.84% 420.53% 270.26% 372.58% 214.13% 296,12% 202.38% 263.48%

• - Historical information is required only for measurement periods where GASB 68 is applicable.

Notes to Schedule:

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2016. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit also know as Golden Handshakes.

Changes of Assumptions: In 2017, the accounting discount rate reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflected an adjustment of the discount rate from 7.5% (net of administrative expenses) to 7.65% (without a reduction for pension plan adminstrative expenses). In 2014, amounts reported were based on the 7.5% discount rate.

69

City of Riverside Required Supplementary Information - Unaudited Schedule of Plan Contributions (Thousands)

Last 10 Years*

2017-18

• 2016-17

• 2015-16

• 2014-15

• Miscellaneous Safetl Miscellaneous Safe!}'. Miscellaneous Safe!}'. Miscellaneous Safe!}'.

$26,955 $23,076 $24,885 $21,886 $21,063 $ 18,452 $ 20,505 $ 17,341 Actuarially Determined Contribution (30,477) (26,775) (29,426) (26,483) (25,997) (23,384) (27,584) (23,156)

Contributions in Relation to the Actuarially Determined Contribution

$ (3,522) $ (3,699) $ (4,541) $ (4,597) $ (4,934) $ (4,932) $ (7,079) $ (5,815)

Contribution Excess

$121,957 $68,251 $116,465 $68,459 $114,521 $64,778 $113,850 $64,648 Total Covered Payroll 22.10% 33.81% 21.37% 31.97% 18.39% 28.48% 18.01% 26.82%

Contributions as a Percentage of Total - Covered Payroll Notes to Schedule The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2016-17 were from the June 30, 2014 public agency valuations.

Actuarial Cost Method Entry Age Normal Amortization Method/Period Level Percent of Payroll Asset Valuation Method Market Value of Asset Inflation 2.75%

Salary increases Varies by Entry Age and Service Payroll Growth 3.00%

Investment rate of return 7 .50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation Retirement ~ge The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period 1997 to 2011.

Mortality The probabilities of mortality are based on the 2014 Cal PERS Experience Study for the period 1997 to 2011.

Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries.

• - Historical information is required only for measurement periods where GASB 68 is applicable.

Other Information:

For changes to prevoius year's information, refer to past GASB 68 reports.

70

City of Riverside Required Supplementary Information - Unaudited Schedule of Changes in Total OPEB Liability and Related Ratio Reporting period June 30, 2018 Measurement period June 30, 2017 Beginning Total OPEB Liability $ 36,542 Service Cost 2,554 Interest 1,090 Changes in Assumptions (1,668)

Benefit of Implied Subsidy Payments {1,732)

Net Changes 244 Ending Total OPEB Liability $ 36,786 Covered - Employee Payroll $ 170,858 Total OPEB Liability as Percentage of Covered Employee Payroll 21.53%

71

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.

Special Districts Fund - To account for Loving Homes, Village at Canyon Crest, Sycamore Highlands, Riverwalk, Riverwalk Parks Projects, and Street Lighting districts.

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, 2018 (amounts expressed in thousands)

Special Revenue Housing &

Urban Areas Air Quality Community NPDES Storm Gas Tax Improvements Development Drain Speclal Districts Housing Total Assets Security Initiative

$ 14,990 $ 1,070 $ 3,239 $ 425 $ 556 $ 12,277 $ 32,559 Cash and investments $

Receivable (net of allowance for uncollectibles):

50 4 13 43 110 Interest 101 101 Property taxes 34 2 36 Accounts 609 399 104 2,161 190 3,463 Intergovernmental 13,645 24,239 36,064 Notes 30 30 Prepaid items 3,327 3,327 Advances to Successor Agency Trust Fund 443 2,654 3,097 Land & improvements held for resale 609 $ 15,473 $ 1,176 $ 19,733 $ 615 $ 659 $ 42,540 $ 60,607 Total assets $

Liabilities 59 $ 284 $ 44 $ 1,539 $ 9 $ 31 $ 19 $ 1,965 Accounts payable $

2 1 2 5 Accrued payroll 511 511 Retainage payable 6 6 lntergorvernmental 550 550 Due to other funds 609 795 44 1,541 10 37 21 3,057 Total liabilities Deferred Inflows of Resources 14,286 24,239 36,527 Unavailable revenue 14,266 24,239 36,527 Total deferred inflows of resources Fund Balances Nonspendable:

30 30 inventories, prepaids and deposits 3,327 3,327 Advances Restricted for.

3,674 14,953 18,627 Housing and redevelopment 14,676 1,134 605 622 17,039 Transportation and public works 14,676 1,134 3,904 605 622 18,260 39,223 Total fund balances Total liabilities deferred inflows of 15,473 $ 1,178 $ 19,733 $ 615 $ 659 $ 42,540 $ 60,807 resources, and fund balances $ 609 $

Continued 73

City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2018 (amounts expressed in thousands)

Permanent Capital Projects Fund Total Nonmajor Special Capital General Governmental Improvement Storm Drain Transportation Total Debt Service Library Special Funds Assets

$ 4,192 $ 1,579 $ $ 5,771 $ 583 $ 1,498 $ 40,411 Cash and investments 1,084 1,084 13,174 14,258 Cash and investments at fiscal agent Receivable (net of allowance for uncolleclibles):

16 5 21 23 154 Interest 112 213 Property taxes 30 66 Accounts 225 95 320 3,783 Intergovernmental 38,084 Notes 385 415 Prepaid items 3,327 Advances to Successor Agency Trust Fund 3,097 Land & improvements held for resale

$ 5,517 $ 1,584 $ 95 $ 7,196 $ 14,307 $ 1,498 $ 103,808 Total assets Liabilities

$ 8 $ 13 $ $ 21 $ 120 $ $ 2,126 Accounts payable 5

Accrued payroll 5 5 516 Retainage payable 6

Intergovernmental 83 83 633 Due to other funds 3,399 3,399 2,661 6,060 Advance from other funds 3,412 13 83 3,508 2,781 9,346 Total liabilifies Deferred Inflows of Resources 225 225 17 38,769 Unavailable revenue 225 225 17 38,769 Total deferred inflows of resources Fund Balances Nonspendable:

30 Inventories, prepaids and deposits 3,327 Advances 1,498 1,498 Permanent fund principal Restricted for:

18,827 Housing and redevelopment 11,509 11,509 Debt service 12 12 17,051 Transportation and public works 1,880 1,571 3,451 3,451 Other purposes 1,880 1,571 12 3,463 11,509 1,498 55,693 Total fund balances Total liabilities, deferred inflows of 5,517 $ 1,584 $ 95 $ 7,196 $ 14,307 $ 1,498 $ 103,808 resources, and fund balances $

74

City of Riverside Combining Statement of Revenues, Expenditures and Changes In Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2018 (amounts expressed In thousands)

Special Revenue Housing &

Urban Area Security Air Quality Community Initiative Gas Tax Improvement Development NPDES Storm Drain Special Districts Housing Total Revenues Licenses and permits

$ 1,751 $ 8,343 $ 418 $ 8,851 $ $ $ $ 19,363 Intergovernmental Charges for services Fines and forfeitures 1,215 3,896 5,111 Special assessments 65 4 88 1 109 267 Rental and investment income 207 262 898 1,367 Miscellaneous 1,751 8,408 629 9,201 1,216 3,896 1,007 26,108 Total revenues Expenditures Current:

479 946 3,183 4,608 General government 1,751 4,557 6,308 Public safety 564 564 Highways and streets 56 56 Culture and recreation 8,451 8,134 1,122 17,707 Capital outlay Debt service:

8 19 27 Principal 4 5 Interest 8,451 479 9,089 1,122 5,177 3,206 29,275 Total expenditures 1,751 Excess (deficiency)

(43) 150 112 94 (1,281) (2,199) (3,167) of revenues over (under) expenditures Other financing sources (uses) 2,076 49 1,903 124 Transfers in (38) (38)

Transfers out 34 34 Proceeds on retirement of capital assets 34 (38) 49 1,903 124 2,072 Total other financing sources (uses)

(9) 112 161 94 622 (2,075) (1,095)

Net change in fund balances 14,687 1,022 3,743 511 20,355 40,318 Fund balances* beginning

$ 14,678 $ 1,134 $ 3,904 $ 605 $ 622 $ 18,280 $ 39,223 Fund balances* ending $

Continued 75

City of Riverside Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Permanent Caeital Projects Fund*

Total Nonmajor Special Capital General Library Governmental Improvement Storm Drain Transportation Total Debt Service Special Funds Revenues Licenses and permits $ 2,287 $ 140 $ $ 2,427 $ $ $ 2,427 Intergovernmental 578 11 589 19,952 Charges for services Fines and forfeitures 18 18 Special assessments 1,096 6,207 Rental and investment income 22 7 29 705 15 1,016 Miscellaneous 86 86 469 96 2,018 Total revenues 2,395 725 11 3,131 2,288 111 31,638 Expenditures Current:

General government 874 874 18 5,500 Public safety 6,308 Highways and streets 564 Culture and recreation 190 246 Capital outlay 2,404 437 11 2,852 20,559 Debt service:

Principal 21,877 21,904 Interest 63 63 12,678 12,746 Bond issuance costs 10 10 Total expenditures 3,341 437 11 3,789 34,583 190 67,837 Excess (deficiency) of revenues over (under) expenditures (946) 288 (658) (32,295) (79) (36,199)

Other financing sources (uses)

Transfers in 19 19 35,035 37,130 Transfers out (55) (55) (12,186) (12,279)

Issuance of long-term debt 14,500 14,500 Proceeds on retirement of capital assets 34 Total other financing sources (uses) (55) 19 (36) 37,349 39,385 Net change in fund balances (1,001) 307 (694) 5,054 (79) 3,186 Fund balances - beginning 2,881 1,264 12 4,157 6,455 1,577 52,507 Fund balances - ending $ 1,880 $ 1,571 $ 12 $ 3,463 $ 11,509 $ 1,498 $ 55,693 76

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Special Revenue Urban Area Security Initiative Gas Tax Air Quality Improvement Variance Variance Variance Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Intergovernmental $ 6,020 $ 1,751 $ (4,269) $ 8,290 $ 8,343 $ 53 $ 394 $ 418 $ 24 Rental and investment income 150 65 (85) 4 4 Miscellaneous 254 207 (47)

Total revenues 6,020 1,751 (4,269) 8,440 8,408 (32) 648 629 (19)

Expenditures Current:

General government 1,071 479 592 Public safety 6,020 1,751 4,269 Capital outlay 22,044 8,451 13,593 Total expenditures 6,020 1,751 4,269 22,044 8,451 13,593 1,071 479 592 Excess (deficiency) of revenues over (under) expenditures (13,604) (43) 13,561 (423) 150 573 Other financing sources (uses)

Transfers in (out) (38) (38)

Proceeds on retirement of capital assets 34 34 Total other financing sources (uses) 34 34 (38) (38)

Net change in fund balances (13,604) (9) 13,595 (461) 112 573 Fund balances (deficit), beginning 14,687 14,687 1,022 1,022

$ $ $ $ 1,083 $ 14,678 $ 13,595 $ 561 $ 1,134 $ 573 Fund balances (deficit), ending (continued) 77

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Special Revenue Housing & Community Development NPDES Storm Drain Special Districts Housing Variance Variance Variance Variance Final to Final Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Intergovernmental $ 8,221 $ 8,851 $ 630 $ $ $ $ $ $ $ $ $

Charges for services Fines and forfeitures Special assessments 1,391 1,215 (176) 4,059 3,896 (163) 57 88 31 109 109 Rental and investment income 262 262 898 898 Miscellaneous 8,540 9,201 661 1,391 1,216 (175) 4,059 3,896 (163) 1,007 1,007 Total revenues Expenditures Current:

2,086 946 1,140 10,375 3,183 7,192 General government Public safety 4,494 4,557 (63)

Highways and streets 1,014 564 450 Culture and recreation 228 56 172 Capital outlay 21,158 8,134 13,024 1,976 1,122 854 Debt service:

8 28 19 (19)

Principal 36 11 1 10 6 4 2 Interest 9,089 14,202 1,976 1,122 854 5,736 5,177 559 10,381 3,206 7,175 Total expenditures 23,291 (14,751) 112 (14,639) (585) 94 (491) (1,677) (1,281) 396 (10,381) (2,199) 8,182 Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) 49 49 1,074 1,903 829 1,099 124 (975)

Transfers in (out)

Issuance of long-term debt Proceeds on retirement of capital assets 49 1,074 1,903 829 1,099 124 (975)

Total other financing sources (uses) 49 (14,590) (585) 94 (491) (603) 622 1,225 (9,282) (2,075) 7,207 Net change in fund balances (14,751) 161 3,743 3,743 511 511 20,355 20,355 Fund balances (deficit), beginning (14,590) $ (74) $ 605 $ (491) $ (603) $ 622 $ 1,225 $ 11,073 $ 18,280 $ 7,207 Fund balances (deficit), ending $ (11,008) $ 3,904 $

(continued) 78

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Capital Projects Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Capital Projects Capital Outlay Special Capital Improvement Storm Drain Transportation Variance . Variance Variance Variance Final to Final Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Licenses and perm its $ $ $ $ 2,600 $ 2,287 $ (313) $ 130 $ 140 $ 10 $ $ $

Intergovernmental 40,078 11,989 (28,089) 250 (250) 12,674 578 (12,096) 38 11 (27)

Special assessments 125 504 379 Rental and investment income 170 112 (58) 22 22 20 7 (13)

Miscellaneous 3,750 2,883 (867) 86 86 Total revenues 44,123 15,488 (28,635) 2,850 2,395 (455) 12,824 725 (12,099) 38 11 (27)

Expenditures Current:

General government 1,100 874 226 Capital outlay 62,443 10,299 52,144 1,271 2,404 (1,133) 13,103 437 12,666 38 11 27 Debt service:

Principal 1,391 1,391 Interest 60 63 (3)

Total expenditures 62,443 10,299 52,144 3,822 3,341 481 13,103 437 12,666 38 11 27 Excess (deficiency) of revenues over (under) expenditures (18,320) 5,189 23,509 (972) (946) 26 (279) 288 567 Other financing sources (uses)

Transfers in (out) 1,283 3,308 2,025 (55) (55) 19 19 Issuance of long-term debt Gain (loss) on retirement of capital assets 5 (5)

Total other financing sources (uses) 1,283 3,313 2,020 (55) (55) 19 19 Net change in fund balances (17,037) 8,502 25,529 (972) (1,001) (29) (279) 307 586 17,946 17,946 2,881 2,881 1,264 1,264 70 12 (58)

Fund balances (deficit), beginning

$ 909 $ 26,448 $ 25,529 $ 1,909 $ 1,880 $ (29) $ 985 $ 1,571 $ 586 $ 70 $ 12 $ (58)

Fund*balances (deficit), ending 79

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.

Civic Entertainment Fund - To account for the operations of the Riverside Fox Theater, Riverside Municipal Auditorium, The Box, and the Riverside Convention Center.

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, 2018 (amounts expressed in thousands)

Civic Assets Entertainment Airport Refuse Transportation Public Parking Total Current assets:

Cash and investments $ 1,020 $ 883 $ 7,428 $ 1,778 $ 826 $ 11,935 Receivables (net of allowance for uncollectibles)

Interest 3 30 7 5 45 Utility billed 1,100 1,100 Utility unbilled 784 784 Accounts 1,170 94 843 24 788 2,919 Intergovernmental 40 294 20 354 Inventory 52 52 Prepaid items 319 319 Deposits 300 300 Restricted assets:

Other restricted cash and cash equivalents 1,118 1,118 Total current assets 2,861 1,020 11,303 2,103 1,639 18,926 Non-current assets:

Regulatory assets 4,874 4,874 Derivative instruments 299 299 Capital assets:

Land 9,988 9,192 19,180 Buildings 22 2,631 43 33,229 35,925 Accumulated depreciation-buildings (1,503) (17) (7,092) (8,612)

Improvements other than buildings 44,201 20,714 2,848 6,740 74,503 Accumulated depreciation-improvements other than buildings (3,662) (8,956) (557) (2,919) (16,094)

Machinery and equipment 425 470 16,080 4,756 1,130 22,861 Accumulated depreciation-machinery and equipment (260) (410) (11,887) (3,527) (1,126) (17,210)

Construction in progress 299 299 Total non-current assets: 41,025 22,934 9,366 3,546 39,154 116,025 Total assets 43,886 23,954 20,669 5,649 40,793 134,951 Deferred Outflows of Resources Change in derivative values Pension contributions, changes in assumptions and differences in experience 310 2,320 1,063 607 4,300 Total deferred outflows of resources 310 2,320 1,063 607 4,300 Continued 81

City of Riverside Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2018 (amounts expressed in thousands)

Civic Liabilities Entertainment Airport Refuse Transportation Public Parking Total Current liabilities:

Accounts payable BBB 5 1,180 12 99 2,184 Accrued payroll 2 19 8 4 33 Retainage payable 15 15 Unearned revenue 16 1 1,252 1,269 Deposits 579 579 Due to other funds 225 225 Pension obligation bonds - current 40 172 82 48 342 Capital leases - current 533 533 Notes payable - current 1,866 1,054 2,920 Landfill capping - current 250 250 Compensaled absences - current 36 321 123 28 508 Total current liabililies 4,107 83 1,958 1,477 1,233 8,858 Non-current liabililies:

Pension obligalion bonds 167 716 340 199 1,422 Notes payables 35,490 17,202 52,692 Capital leases 1,095 1,095 Regulatory liability 28 28 Landfill capping 4,520 4,520 Compensated absences 12 5 19 Net OPEB liability 131 1,147 553 266 2,097 Net pension liability 1,100 8,350 3,827 2,207 15,484 Total non-current liabilities 36,613 1,399 14,745 4,725 19,875 77,357 Total liabilities 40,720 1,482 16,703 6,202 21,108 86,215 Deferred Inflows of Resources Change in derivative values 289 289 Pension contribulions, changes in assumptions and differences in experience 61 668 314 222 1,265 OPEB contributions, changes in assumptions and differences in experience 4 38 22 7 71 Total deferred inflows of resources 289 65 706 336 229 1,625 Net Position Net investment in capital assets 40,726 22,934 4,492 3,546 20,898 92,596 1,118 1,118 Restricted for landfill capping (37,849) (217) (30) (3,372) (835) (42,303)

Unrestricted

$ 2,877 $ 22,717 $ 5,580 $ 174 $ 20,063 $ 51,411 Total net position 82

City of Riverside Combining Statement of Revenues, Expenses and Changes in Net Position Nonmajor Enterprise Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Civic Entertainment Airport Refuse Transportation Public Parking Total Operating revenues:

Charges for services $ 16,393 $ 1,562 $ 23,085 $ 441 $ 6,258 $ 47,739 Operating expenses:

Personnel services 698 5,723 2,677 1,100 10,198 Contractual services 6,476 150 4,352 84 1,907 12,969 Maintenance and operation 365 6,378 526 587 7,856 General 11,123 217 2,778 515 763 15,396 Materials and supplies 17 1,186 201 8 1,412 Insurance 162 32 91 50 88 423 Depreciation and amortization 975 693 1,542 714 992 4,916 Total operating expenses 18,736 2,172 22,050 4,767 5,445 53,170 Operating Income (loss) (2,343) (610) 1,035 (4,326) 813 (5,431)

Nonoperating revenues (expenses):

_Operating grants 3,374 3,374 Interest income 4 3 36 3 5 51 Other 32 1,096 29 1,157 Gain (loss) on retirement of capital assets 6 (245) 3 (236)

Interest expense and fiscal charges (1,259) (7) (32) (15) (741) (2,054)

Total non-operating revenues (1,255) 34 855 3,394 (736) 2,292 Income (loss) before capital contributions and transfers (3,598) (576) 1,890 (932) 77 (3,139)

Cash capital contributions 875 841 846 2,562 Transfers in 8,715 1,721 10,436 Transfers out (3,115) (896) (738) (4,749)

Change in net position 2,877 265 994 (86) 1,060 5,110 22,456 4,629 284 19,011 46,380 Net position - beginning, as previously stated (4) (43) (24) (8) (79)

Prior period adjustment 22,452 4,586 260 19,003 46,301 Net position - beginning, as restated

$ 2,877 $ 22,717 $ 5,580 $ 174 $ 20,063 $ 51,411 Net position - ending 83

City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2018 (amounts exeresse*d in thousands)

Civic Public Entertainment Airport Refuse Transeortation Parking Totals Cash flows from operating activities:

Cash received from customers and users $ ,15,223 $ 1,509 $ 22,943 $ 920 $ 6,368 $ 46,963 Cash paid to employees for services (601) (5,030) (2,349) (943). (8,923)

Cash paid to other suppliers of goods or services (16,949) (792) (15,359) (1,322) (3,386) (37,808)

Other receipts 18 32 1,503 29 1,582 Net cash (used) provided by operating activities (1,708) 148 4,057 (2,722) 2,039 1,814 Cash flows from noncapital financing activities:

Transfers in 8,421 1,721 10,142 Transfers out (3,115) (896) (738) (4,749)

Operating grants 3,374 3,374 Receipts (payments) on interfund advances 225 (307) (82)

Payments on pension obligation bonds (38) (162) (76) (142) (418)

Net cash (used) provided by noncapital financing activities 5,531 (38) (1,058) 3,298 534 8,267 Cash flows from capital and related financing activities:

Purchase of capital assets (586) (884) (1,507) (1) (2,978)

Proceeds from the sale of capital assets 6 83 3 92 Principal paid on long-term obligations (1,837) (1,015) (2,852)

Interest paid on long-term obligations (1,259) (7) (32) (15) (741) (2,054)

Contributions 875 841 846 2,562 Net cash (used) provided for capital and related financing activities (2,807) (44) (1,456) 834 (1,757) (5,230)

Cash flows from investing activities:

(8) (4) (3) (15)

Sale and (purchase) of investments 4 3 36 3 5 51 Interest from investments 4 3 28 (1) 2 36 Net cash (used) provided by investing activities 1,020 69 1,571 1,409 818 4,887 Net change in cash and cash equivalents 814 6,975 369 8 8,166 Cash and cash equivalents, beginning

$ 1,020 $ 883 $ 8,546 $ 1,778 $ 826 $ 13,053 Cash and cash equivalents, ending Continued 84

City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2018 (amounts exeressed in thousands) Continued Civic Public Entertainment Aireort Refuse Transeortation Parking Totals Reconciliation of operating income (loss) to net cash (used) provided by operating activities:

$ (2,343) $ (610) $ 1,035 $ (4,326) $ 813 $ (5,431)

Operating income (loss)

Other nonoperating items 32 1,096 29 1,157 Adjustments to reconcile operating income (loss) to net cash (used) provided by operating activities:

975 693 1,542 714 992 4,916 Depreciation and amortization Changes in assets, liabilities and deferred inflows/outflows of resources:

(62) (62)

Utility billed receivable (10) (10)

Utility unbilled receivable Accounts receivable (1,170) (13) (70) (8) 109 (1,152)

(40) 487 1 448 Intergovernmental receivable (52) (52)

Inventory (619) (619)

Prepaid and deposit items 407 407 Regulatory assets (299) (299)

Derivative instruments 888 . (6) 31 (3) (33) 877 Accounts payable 2 19 8 4 33 Accrued payroll 15 15 Retainage payable 16 (8) (14) 57 (14) 37 Other payables 579 579 Deposits payable 28 28 Regulatory liability (620) (620)

Landfill capping 289 289 Change in derivative values Net pension liability and related charges in deferred outflows and 93 640 292 157 1,182 inflows of resources Net OPEB liability and related charges in deferred outflows and 5 48 28 10 91 inflows of resources

$ (1,708) $ 148 $ 4,057 $ (2,722) $ 2,039 $ 1,814 Net cash (used) provided by operating activities Schedule of noncash financing and investing activities:

$ 39,487 $ $ $ $ $ 39,487 Capital assets - transfer from governmental activities 6 (245) 3 (236)

Gain/(Loss) on retirement of capital assets (39,193) (39,193)

Note payable and derivative swap - transfer from governmental activities 85