ML15033A179

San Onofre Units 2 & 3, Submittal of Annual Corporate Financial Reports for Fiscal Year Ending June 30, 2014

ML15033A179
Person / Time
Site:	San Onofre
Issue date:	01/28/2015
From:	Brabec R C Southern California Edison Co
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
Download: ML15033A179 (277)

Text

.SOUTHERN CALIFORNIA EDISON An EDISON INTERNATIONAL*

Company Richard C. Brabec Principal Manager, Nuclear Regulatory Affairs and Emergency Planning January 28, 2015 10 CFR 50.71 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D. C. 20555-0001

Subject:

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

Dear Sir or Madam:

In accordance with the requirements of 10 CFR Part 50, Section 50.71(b), enclosed are copies of the annual financial reports for the licensees of the San Onofre Nuclear Generation Station, Units 2 and 3, who do not submit a Form 10-Q with the Securities and Exchange Commission or a Form 1 with the Federal Energy Regulatory Commission:

the City of Riverside, California (for the fiscal year ending June 30, 2014); and the City of Anaheim, California (for the fiscal year ending June 30, 2014). Each report includes the appropriate certified financial statement required by Section 50.71(b).There are no new commitments or required actions resulting from this letter.If you have any questions or require additional information, please contact Ms. Andrea Sterdis at (949) 368-9985.Enclosure cc: M. L. Dapas, Regional Administrator, NRC Region IV T. Wengert, NRC Project Manager, SONGS Units 2 and 3 G. G. Warnick, NRC Senior Resident Inspector, San Onofre Units 2 and 3 P.O. Box 128 San Clemente, CA 92672 (949) 368-7418 PAX 87418 Fax: (949) 368-7575 John.Brabec@sce.com

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Enclosure Annual Financial Statements for Fiscal Year 2014 City of Anaheim and City of Riverside Anaheim, California

Anaheim, California Anaheim, California 1111 Iu Itoutory Section CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2014 Page INTRODUCTORY SECTION Letter of Transmittal 1 GFOA Certificate of Achievement for Excellence in Financial Reporting 5 Organization Chart 7 Administrative Personnel 8 FINANCIAL SECTION Independent Auditors' Report 9 Management's Discussion and Analysis (Unaudited) 11 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 23 Statement of Activities 25 Fund Financial Statements Balance Sheet -Governmental Funds 27 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 28 Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit)

-Governmental Funds 29 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 30 Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and Budgetary Basis Actual -General Fund 31 Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and Budgetary Basis Actual -Housing Authority 32 Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -Transportation Improvement Projects 33 Statement of Net Position -Proprietary Funds 34 Statement of Revenues, Expenses and Changes in Net Position -Proprietary Funds 36 Statement of Cash Flows -Proprietary Funds 37 Statement of Fiduciary Net Position (Deficit)

-Fiduciary Funds 39 Statement of Changes in Fiduciary Net Position (Deficit)

-Fiduciary Funds 41 Notes to the Financial Statements 43 Summary of Pension Obligation Funding Progress 77 Combining Individual Fund Statements and Schedules Governmental Funds Combining Balance Sheet -Nonmajor Governmental Funds by Fund Type 79 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds by Fund Type 80 Combining Balance Sheet -Nonmajor Special Revenue Funds 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Special Revenue Funds 82 Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -All Nonmajor Special Revenue Funds 83 (continued)

CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2014 (continued)

Page Combining Balance Sheet -Nonmajor Debt Service Funds 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Debt Service Funds 88 Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -All Debt Service Funds 89 Combining Balance Sheet -Nonmajor Capital Projects Funds 91 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Capital Projects Funds 92 Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Budgetary Basis Actual -All Capital Projects Funds 93 Internal Service Funds Combining Statement of Net Position -Internal Service Funds 97 Combining Statement of Revenues, Expenses and Changes in Net Position -Internal Service Funds 98 Combining Statement of Cash Flows -Internal Service Funds 99 Fiduciary Funds Statement of Changes in Fiduciary Assets and Liabilities

-Agency Fund -Mello-Roos 101 STATISTICAL SECTION (Unaudited)

Net Position by Component

-Last Ten Fiscal Years 104 Changes in Net Position -Last Ten Fiscal Years 105 Governmental Activities Tax Revenues by Source -Last Ten Fiscal Years 107 Fund Balances of Governmental Funds -Last Ten Fiscal Years 108 Changes in Fund Balances of Governmental Funds -Last Ten Fiscal Years 109 General Government Tax Revenues by Source -Last Ten Fiscal Years 110 Assessed Value and Estimated Actual Value of Taxable Property -Last Ten Fiscal Years 111 Properly Tax Rates -Direct and Overlapping Governments

-Last Ten Fiscal Years 112 Principal Property Tax Payers -Current Year and Nine Years Ago 113 Properly Tax Levies and Collections

-Last Ten Fiscal Years 114 Ratios of Outstanding Debt by Type -Last Ten Fiscal Years 115 Ratios of Net General Bonded Debt Outstanding

-Last Ten Fiscal Years 116 Direct and Overlapping Governmental Activities Debt -as of June 30, 2014 117 Legal Debt Margin -Last Ten Fiscal Years 119 Pledged-Revenue Coverage -Last Ten Fiscal Years 120 Demographic and Economic Statistics

-Last Ten Fiscal Years 122 Principal Employers

-Current Year and Nine Years Ago 123 Full-time Equivalent City Government Employees by Function/Program

-Last Ten Fiscal Years 125 Operating Indicators by Function -Last Ten Fiscal Years 126 Capital Assets Statistics by Function -Last Ten Fiscal Years 128 City of Anaheim Map 130 City of Anaheim, California Finance Department December 10, 2014 To the Honorable Mayor and City Council City of Anaheim Anaheim, California In accordance with the Charter of the City of Anaheim (City), we are submitting the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2014. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data, as presented, is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City, as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain maximum understanding of the City's financial activities have been included.The City Charter requires an annual audit of the financial statements of the City by an independent certified public accountant.

Accordingly, this year's audit was completed by KPMG LLP. In addition to meeting the requirements set forth in the City Charter, the audit was also designed to meet the requirements of the Single Audit Act Amendments of 1996 and related OMB Circular A-1 33. The auditors' report on the basic financial statements is included in the financial section of this report. The auditors' reports related specifically to the single audit are presented as a separate document.Management's discussion and analysis (MD&A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the basic financial statements.

MD&A complements this letter of transmittal and should be read in conjunction with it.ECONOMIC CONDmON AND OUTLOOK The City is located in northwestern Orange County, about 28 miles southeast of downtown Los Angeles and 90 miles north of San Diego. The City lies on a coastal plain, which is bordered by the Pacific Ocean to the west and the Santa Ana Mountains to the east. The City is the oldest and most populous city in Orange County. Anaheim is home to the Disneyland Resort, the Anaheim Convention Center, and two major league professional sports teams-the Los Angeles Angels of Anaheim American League Baseball team that utilizes the Angel Stadium of Anaheim, and the Anaheim Ducks National Hockey League team that utilizes the Honda Center.Anaheim and Orange County are home to a wide spectrum of industries-more than 8,000 manufacturing plants are located in the county, most notably defense and aerospace, biomedical, electronics, machinery, and computer product manufacturers.

The City has over 21,000 active business licenses, of which 16,000 are businesses operating within the City's boundaries.

The unemployment rate in Anaheim for June 2014 was 6.7%, which is above the notional average (6.3%) but below the state average (7.3%).The City continues the successes and achievements realized in the current year, and rekindles efforts to grow service levels that were impacted during the recession.

The City's "Big Three" revenue sources, transient occupancy tax, property tax, and sales and use tax, sustained steady growth this year with a modest surplus projected.

As the City moves into fiscal year 2014/15, we are optimistic about continued growth but remain attentive to the economic climate and mindful of managing our enhanced services within the limits of our five-year plan.MAJOR INmTATIVES City management, under the direction of the Mayor and City Council, identifies priorities that will determine the path of the City's future. Initiatives are reevaluated regularly, and new ones added, to ensure that they are consistent with the priorities of our policy body and the community.

Through a commitment to position the City of Anaheim to better fulfill its mission of delivering outstanding municipal services that are responsive to our entire community, the City of Anaheim is continuing its tradition of innovation, ingenuity, and opportunity by focusing on community needs, building neighborhood connections, and governing for results that strengthen communities.

The City's dedication to improvement and modernization has created an environment where residents and businesses are free to choose how best to enjoy all that Anaheim has to offer.I CITY OF ANAHEIM ENSURING A SAFE COMMUNITY:

Anaheim is a proud, multi-cultural community with diverse public safety needs. One of our fundamental tenets is ensuring we remain a safe and prosperous community for families and individuals.

Budget for the fiscal year 2014/15 provides for continued support of the many resources to strengthen community policing and community outreach programs.

A focus for the City is engaging our youth through a variety of pioneering police programs, including Junior Cadets, Anaheim Police Explorers, Gang Reduction and Intervention Partnership (GRIP)and a new Public Safety Career Pathway for junior high school students focused on character building.We continue our investment in additional police officers to further our commitment of ensuring Anaheim remains one of the safest communities of its size. The fiscal year 2014/15 budget supports the strategic allocation of resources, particularly police officers who patrol neighborhoods, suppress gangs, solve crimes and work collaboratively with stakeholders on crime prevention strategies.

To support the fundamentals of community policing, the budget includes continued support for the Chiefs Neighborhood Advisory Council established this year, which serves as a collaborative partnership with Anaheim residents and the Anaheim Police Department to discuss neighborhood safety concerns and crime prevention techniques.

Through the partnerships with our community, the Anaheim Police Department can continue to train police officers on complex socio-economic neighborhood public safety concerns, implement a Psychological Evaluation Response Team to comprehensively respond to calls for service and employ robust crime prevention strategies.

In the area of fire and emergency services, Anaheim Fire & Rescue reached a momentous milestone this year becoming the 13th accredited agency in California, and 196th nationwide, by the Commission on Fire Accreditation International.

Following a rigorous process, this accreditation demonstrates Anaheim Fire & Rescue's commitment to continuous organizational improvement and exceptional fire and emergency services to the residents and visitors of Anaheim.As part of Anaheim Fire & Rescue's Strategic Plan, efforts to replace and repair aging equipment continue.

During the upcoming fiscal year, replacement of another fire engine is planned to ensure the department's delivery of high quality service to our community members is upheld.For fiscal year 2014/15, the City also proceeds with the Quality Rental Housing program, approved by City Council this year, with the goal of identifying and abating substandard rental housing conditions.

Code Enforcement Officers will conduct routine, periodic surveys of rental housing units, in order to help ensure safe homes and residences for our community.

COMMUNITY INFRASTRUCTURE:

The fiscal year 2014/15 adopted budget illustrates our commitment to increasing park space, improving aging resources and creating new opportunities for neighbors to engage in healthy living through outdoor recreation at our radiant parks and community centers.Over the past 24 months, the City has embarked on an innovative community partnership with KABOOM! to deliver a high level of service to our residents.

Through this partnership, five playgrounds at John Marshall Park, Edison Park, Stoddard Park, Schweitzer Park and Modjeska Park have been built by hundreds of local residents, neighbors and volunteers, resulting in a renewed sense of neighborhood pride. These partnerships will continue to take shape in fiscal year 2014/15.This coming fiscal year will also celebrate the opening of more than a dozen new community resources in our thriving neighborhoods from east to west and north to south. The opening of the Miraloma Park and Family Resource Center is scheduled for the begin of year 2015. Visitors to the park will be able to enjoy a perimeter loop trail, skate plaza, picnic facilities and an outdoor classroom area. The park design was completed with input and collaboration from community members. From the selection of building colors to the amenities at the center, the park is being designed based on the feedback from the neighborhood.

In close proximity to Paul Revere Elementary, construction is scheduled to be completed by December 2014 at Paul Revere Park, located near Guinida Lane. The new park will feature amenities for all ages, including a children's playground area, gazebo with picnic tables, exercise equipment and a volleyball court. A mural featured at the park entrance was also designed by artwork from local youth.A new amenity to the City will be the addition of two dog parks, one at La Palma Park and the second next to the Olive Hills Tennis Courts. These parks dedicate space for residents' dogs in need of a place to exercise and socialize in a secure environment.

Recognizing the fabric of our community is comprised of our growing youth, this year new programs were brought forth to help our youth flourish in their educational endeavors.

A new mobile after school recreation program, Fun on Wheels, was implemented, providing fitness, art and homework help to more than 9,000 youth throughout our multifaceted neighborhoods.

In addition, library service hours were extended at several branches to allow for more students to visit the library and utilize the ever important resources.

The positive impact of these programs are apparent and something that the City will continue in fiscal year 2014/15.Parks, open space and safe neighborhoods make Anaheim a great place for children and young adults to connect with one another and develop lasting friendships.

Therefore, it is imperative that Anaheim parks and community resources remain a vital part of our overall community.

2 CITY OF ANAHEIM OUTREACH TO OUR COMMUNITY:

During fiscal year 2013/14, the City introduced a new Anaheim e-newsletter to provide community updates on a monthly basis. The Community Services Department also launched a new bilingual publication, Your Community/Tu Comunidad, to better serve our residents.

A new online resource tool was instituted, called My Community Resource Map, to help residents and visitors locate nearby services and resources from the convenience of a mobile device.In fiscal year 2013/14, the City successfully launched its partnership with Open Gov (see https://anaheim.opengov.com), an online analysis tool that allows the public to view our current and historical budget data, review trends through visual graphs, and drill down to different levels of budget detail. This project is furthering the City's goal of providing transparent public service operations and data that is logical, meaningful and useful to the community.

OpenGov can be used by the public as a tool to review and analyze the City's fiscal year 2014/15 budget.In the coming fiscal year, we will look to enhance Anaheim magazine, which is mailed to every Anaheim residence and business, by offering bilingual features that speak to our Citywide programs and resources.

The City will also embark on improving perhaps our most powerful communication mechanism, www.anaheim.net, with a complete redesign.MAINTAINING A BEAUTIFUL CITY: Anaheim enters fiscal year 2014/15 well-positioned to maintain the City's extensive network of roadways, sidewalks and infrastructure that allows residents and visitors to move seamlessly and efficiently through our City. In the coming year, the Public Works Department plans to improve City roadways by slurry sealing four million square feet of pavement, or the equivalent of 185 neighborhood blocks. Widening projects on Brookhurst Street and Katella Avenue also will be completed, resulting in improved vehicle mobility on those two major thoroughfares.

In fiscal year 2014/15, Anaheim Public Utilities continues with its innovative Underground Conversion program. To date, more than 113 electrical circuit miles of aging overhead poles and wires have been replaced with underground systems that improve reliability and increase neighborhood aesthetics.

Anaheim Public Utilities works in conjunction with the Public Works Department to accelerate undergrounding programs, when possible, as part of street construction/reconstruction efforts to minimize the impact on the surrounding community.

To ensure our beautifully tree-lined streets remain healthy and attractive, the City will undergo a robust pruning plan in the coming year, pruning approximately 20,000 trees. Residents and visitors will also benefit from 200 new trees that will be planted throughout the City this year.As the City embraces green technology, the Anaheim Public Utilities Solar Energy program was enhanced this year to encourage the maximum number of participants and improve services for our utility customers.

Anaheim Public Utilities' largest customer service enhancement effort will be the launch of the new Customer Information System (CIS) that went live in June 2014. The deployment will update the existing system that has been in place for almost two decades. The new, robust CIS will enhance customer functionality, as well as allow Customer Service Representatives the ability to provide customers with real time consumption and billing information.

The new CIS deployment will also increase customer billing option flexibility, allowing customers to remain on the current, bi-monthly billing cycle, or move to a monthly schedule.ENCOURAGING BUSINESS GROWTH: The Business Assistance Program was introduced in fiscal year 2013/14 and will continue to evolve in the coming fiscal year.This program offers personalized assistance for businesses submitting plans for tenant improvements, expansions, or construction of new structures, assigning a single point of contact to answer questions, monitor the progress of projects, and link communications between City staff and clients. To date, more than 200 customers have participated and found it easier to open businesses in Anaheim, and/or expand or evolve their current business as quickly as possible.PREMIERE DESTINATION:

The Anaheim Resort is an iconic area in Anaheim that attracts more than 22 million visitors annually and contributes significant revenue to our General Fund, which in turn allows us to reinvest in our neighborhoods, public safety and aging infrastructure.

Additionally, the improvements in Downtown Anaheim make us well poised to attract new shoppers by offering unique boutiques and one-of-a-kind delectable restaurants.

Perhaps the most exciting milestone this coming year will be the completion of the Anaheim Regional Transportation Intermodal Center (ARTIC). The construction of this awe-inspiring facility will be completed in late 2014, giving residents and visitors access to numerous forms of transportation that will provide convenient options for individuals wishing to experience Anaheim and its surrounding communities.

As the largest on the west coast, the Anaheim Convention Center hosts major conventions on an annual basis that directly benefit the City's General Fund. To ensure Anaheim stays competitive among other convention centers, the venue will break ground on its seventh expansion in fiscal year 2014/15, adding 200,000 square-feet of leasable space that can be used as exhibit, ballroom, or meeting rooms, and increasing the Anaheim Convention Center's available exhibit square footage to more than 1 million square-feet.

The expansion will allow the City to accommodate conventions that were previously too large for our venue, thus further contributing to the City's positive financial outlook.3 CITY OF ANAHEIM FINANCIAL INFORMATION Management of the City is responsible for establishing and maintaining internal control designed to ensure that the assets of the government are protected from loss, theft, or misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with U.S. generally accepted accounting principles.

Internal control is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.

This report consists of management's representations concerning the finances of the City.As a result, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. Management asserts that, to the best of their knowledge and belief, this financial report is complete and reliable in all material respects.BUDGETARY CONTROLS:

The City maintains budgetary controls, the objective of which is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund, special revenue funds, debt service funds, capital projects funds, and all the proprietary funds are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the departmental level. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control.Encumbrances generally are re-appropriated as part of the following year's budget.RELEVANT FINANCIAL POLICIES:

Over the years, through sound fiscal management, the City has positioned itself well to weather economic downtums, create a positive atmosphere for economic development, and allow flexibility in addressing budgetary challenges.

As of June 30, 2014, the City's General Fund has a spendable, unassigned fund balance of $30.4 million, which represents 12% of total expenditures.

Traditionally, the policy has been to maintain General Fund reserves at a minimum of 7 to 10% of expenditures.

Further, the City has a long-standing practice of recognizing and reserving for known and anticipated liabilities.

The City fully funds its compensated absences and self insurance liabilities.

Additionally, the City has established an irrevocable trust for other post-employment benefits (also known as retiree medical) and continues to make the annual required contribution (ARC) to ensure this future obligation is fully funded.LONG-TERM FINANCIAL PLANNING:

On June 17, 2014, the City Council adopted the fiscal year 2015 budget. Additionally, as a companion to approving the budget plan, a five-year Capital Improvement Plan was presented to the City Council. The five-year plan links anticipated expenditures for infrastructure development with community needs and desires, and provides a citywide perspective of recommended projects and proposed funding sources. The Capital Improvement Plan was finalized in June 2014, and totaled $765.2 million for the five-year fiscal period ending June 30, 2019. The five-year Capital Improvement Plan has been submitted and annually updated, in its present form, since 1982, for effective long-range planning purposes.

It is City Management's belief that these two plans give City Council members an expanded opportunity to set policy and provide direction for implementation, resulting in improved management efficiency and improved financial results.AWARD GOVERNMENT FINANCE OFFICERS ASSOCIATION OF THE UNITED STATES AND CANADA (GFOA) CERTIFICATE OF ACHIEVEMENT AWARD: The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Anaheim, Califomia, for its comprehensive annual financial report for the fiscal year ended June 30, 2013. This was the 38th consecutive year that the City has achieved this prestigious award (fiscal years ended June 30, 1976 through 2013). In order to be awarded the Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both U.S. generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to conform to the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate.

ACKNOWLEDGMENTS The preparation of this report on a timely basis is a team effort involving many dedicated people across the entire organization.

I would like to extend a special thanks to the talented finance professionals throughout the City, led by Peggy Au, Financial Accounting Manager. Appreciation is also expressed to Mayor Tom Tait, Mayor ProTem Gail Eastman, and Interim Assistant City Manager Kristine Ridge for their significant contributions as members of the Audit Committee.

In closing, without the leadership and support of the City Council, preparation and results of this report would not have been possible.

Its leadership has made possible the implementation of these important and innovative concepts in fiscal management by the City.Respectfully submitted, Paul S. Emery Interim City Manager Deborah A. Moreno Finance Director 4 CITY OF ANAHEIM Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Anaheim California The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Anaheim, California for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2013. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports.In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards.

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

A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Certificate of Achievement program requirements, and we are submitting it to GFOA.For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2013 Executive Director/CEO 5

(This page left blank intentionally) 6 CITY OF ANAHEIM CtznofAnaei IEectedPolcyMaker CondI Ap. ted Officers Apponted Boards mid Cwnsissioro I 7 CITY OF ANAHEIM Administrative Personnel June 30, 2014 Interim City Manager Interim Assistant City Manager Deputy City Manager Chief of Police City Attorney City Clerk City Treasurer Community Development Director Community Services Director Convention, Sports & Entertainment Executive Director Finance Director Fire Chief Interim Human Resources Director Planning Director Public Utilities General Manager Public Works Director Paul S. Emery Kristine A. Ridge Greg Garcia Raul Quezada Michael R.W. Houston Linda N. Andal Henry W. Stern John E. Woodhead IV Terry D. Lowe Thomas Morton Deborah A. Moreno Randy R. Bruegman Christopher K. Chase Sheri Vander Dussen Dukku Lee Natalie Meeks 8 Financial Section_ý KPMG LLP Suite 700 20 Pacifica Irvine, CA 92618-3391 Independent Auditors' Report The Honorable Mayor and City Council City of Anaheim, California:

Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the City of Anaheim, California (the City), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents.Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

As audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.Opinions In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the City of Anaheim, California, as of June 30, 2014, and the respective changes in financial position, and where applicable, cash flows thereof and the respective budgetary comparison for the General and Housing Authority, and Transportation Improvements Projects Funds for the year then ended, in accordance with U.S. generally accepted accounting principles.

Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the managements discussion and analysis on pages 11 through 22 and the schedules of funding progress on page 77 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 requires supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with managements responses to our inquires, 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.

9 Supplementary and 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 accompanying introductory section, combining individual fund statements and schedules, and the statistical section as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements.

Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining individual fund financial 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 Governmental Auditing Standards, we have also issued our report dated December 10, 2014 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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance.

That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.

M LLCP Irvine, Califomia December 10, 2014 KPMG LUP, h Dolwor Iloild lioility yorloehip, thre U.S. mme~be firr of KPMG Intornofionof Cooporoion (NKPMG Intoroton&J), a Sowi, wntly. 1 10 Management's Discussion and Analysis CITY OF ANAHEIM Management's Discussion and Analysis (Unaudited)

As management of the City of Anaheim (City), we offer readers of the City's basic financial statements this narrative overview and analysis of the financial activities of the City as of and for the fiscal year ended June 30, 2014. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report, and the City's basic financial statements in the financial section of this report. All amounts, unless otherwise indicated, are expressed in thousands of dollars.OVERVIEW OF THE BASIC FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City's basic financial statements.

The City's basic financial statements are comprised of three components:

1) government-wide financial statements, 2) fund financial statements, and 3) notes to financial statements.

This report also contains other supplementary information in addition to the basic financial statements themselves.

COMPONENTS OF THE ANNUAL FINANCIAL REPORT---------------

-Govemment-wide financial statements.

The government-wide financial statements are comprised of the Statement of Net Position and the Statement of Activities.

These two statements are designed to provide readers with a broad overview of the City's finances utilizing the full accrual method of accounting, in a manner similar to a private-sector business.

Under the full accrual method of accounting, transactions are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, assets, liabilities, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (e.g. uncollected revenues and accrued but unpaid interest expense).The Statement of Net Position presents information on all of the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources, including capital assets and long-term liabilities, with the difference reported as net position.

Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City as a whole is improving or deteriorating.

The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. Functional activities are highlighted in this statement, whereby direct and indirect functional costs are shown net of related program revenue. This statement shows the extent to which the various functions depend on general taxes and non-program revenues for support.Management's Discussion and Analysis~..0 A The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities).

The governmental activities of the City include general government, Police, Fire, Community Development, Planning, Public Works, Community Services, Public Utilities (street lighting), Convention, Sports and Entertainment (Visitor and Convention Bureau and the Honda Center), and interest on related long-term debt. The business-type activities of the City include the electric, water and sanitation utilities, golf courses, and convention, sports and entertainment venues (Anaheim Convention Center, Angel Stadium of Anaheim, and The City National Grove of Anaheim) operations.

Notes to the Financial Statements The government-wide financial statements include not only the City itself, but also the Anaheim Housing Authority, Community Center Authority, Anaheim Public Improvement Corporation, and Anaheim Public Financing Authority.

Although these entities are legally separate, they function for all practical purposes as a part of the City, and therefore have been included as blended component units as an integral port of the primary government.

Summary 4 W Detail 11 CITY OF ANAHEIM The government-wide financial statements can be found on pages 23-25 of this report.Fund financial statements.

The fund financial statements focus on current available resources and are organized and operated on the basis of funds, each of which is defined as a fiscal and accounting entity with a self-balancing set of accounts, established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations.

All of the funds of the City can be divided into three categories:

governmental funds, proprietary funds, and fiduciary funds.Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements.

However, unlike the government-wide financial statements, the governmental funds financial statements utilize the modified accrual basis of accounting, which focuses on near-term inflow and outflow of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial requirements.

Because the focus of the governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for the governmental funds with similar information presented for governmental activities in the government-wide financial statements.

By doing so, readers may better understand the long-term impact of the government's near-term financing decisions.

Both the governmental funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains 19 individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and in the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances for the General Fund, the Housing Authority Special Revenue Fund and the Transportation Improvement Projects Capital Project Fund, which are considered to be major funds. Data for the remaining 16 governmental funds are combined into a single, aggregated presentation.

Individual fund data for each of these nonmajor governmental funds is provided in the form of supplementary combining statements on pages 79-82, 87-88, and 91-92 of this report.The City adopts an annually appropriated budget for all governmental and proprietary funds. Budgetary comparison statements for the General Fund and the major special revenue fund (Housing Authority) are required to be presented, a budgetary schedule for the Transportation Improvement Projects major capital project fund is also included for additional information; these schedules are included in the basic financial statements on pages 31-33 of this report. Additionally, budgetary schedules for the other governmental funds have been provided to demonstrate compliance with the budget and can be found as part of other supplementary schedules on pages 83-86, 89-90, and 93-95 of this report.The governmental funds financial statements can be found on pages 27-30 of this report.Proprietary funds. The City maintains two different types of proprietary funds.Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements.

The City uses its enterprise funds to account for its electric, water and sanitation utilities, golf courses, and convention, sports and entertainment venues operations.

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 its general benefits and insurance, motorized equipment, information services, and municipal facilities maintenance functions.

Because these services predominantly benefit governmental rather than business-type functions, they have been included with governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for all of the enterprise funds, which are considered to be major funds of the City. Conversely, all of the internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements.

Individual fund data for the intemal service funds is provided in the form of combining statements elsewhere in this report.The proprietary funds financial statements can be found on pages 34-38 of this report.Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government.

Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs.The City maintains three different types of fiduciary funds. The Investment Trust Fund is used to account for the external portion of the City's investment pool; the Private-Purpose Trust Fund is used to account for the assets and liabilities held in trust for the Successor Agency to the former Redevelopment Agency (Successor Agency); the Agency Fund is used to account for monies collected and disbursed in a custodial capacity for the Mello-Roos districts in the City.12 CITY OF ANAHEIM The fiduciary fund financial statements can be found on page 39-41 of this report.Notes to the financial statements.

The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

The notes to the financial statements can be found on pages 43-75 of this report.Other supplementary information.

In addition to the basic financial statements and accompanying notes, this report also presents combining individual fund statements referred to earlier in connection with nonmajor governmental funds and internal service funds. Also included are the budgetary comparison Schedules of Revenues, Expenditures and Changes in Fund Balances for all nonmajor special revenue funds, all debt service funds, and all capital projects funds. These statements and schedules can be found on pages79-100 of this report.FINANCIAL HIGHUGHTS (Amounts in thousands)

• The Citys total assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at the end of the current fiscal year by $2,231,246.

Of this amount, $108,173 represents unrestricted net position, which may be used to meet the City's ongoing obligations to citizens and creditors.

• The City's governmental activities represent

$1,234,925 (55%) and the business-type activities account for $996,321 (45%) of the City's total net position." The Citys net position increased as a result of the current fiscal year's operations.

The net position of the City's governmental activities increased

$113,106 (10%);business-type activities net position increased

$16,648 (2%)." At the close of the current fiscal year, the City's governmental funds reported a combined fund balance of $254,598, an increase of $5,306 in comparison with the prior fiscal year. Approximately 5% of this amount ($11,389) is available for spending at the City's discretion (unassigned fund balance)." At the end of the current fiscal year, unrestricted fund balance (total of committed, assigned and unassigned fund balance) for the General Fund was $34,467 or 14%of total General Fund expenditures.

Unassigned fund balance was $30,394 or 12%of total General Fund expenditures." The City's total capital assets increased by $140,757 (5%). Capital assets in the City's governmental activities increased by $101,698 (7%) and business-type activities capital assets increased by $39,059 (2%) during the current fiscal year." The Citys total long-term liabilities decreased by $100,410 (5%) during the current fiscal year; of this amount, long-term liabilities in the City's governmental activities decreased by $4,856 (1%), and business-type activities decreased by $95,554 (9%).13 CITY OF ANAHEIM GOVERNMENT-WIDE FINANCIAL ANALYSIS NET POSITION JUNE 30, 2014 AND 2013 Current and other assets Capital assets, net Total assets Deferred outflows of resources Total assets and deferred outflows of resources Other liabilities Long-term liabilities Total liabilities Deferred Inflows of resources Total liabilities and deferred inflows of resources Net position: Net investment in capital assets Restricted Unrestricted Total net position Governmental Activities 2014 2013$ 540,366 $ 522,708 1,494,225 1,392,527 2,034,591 1,915,235 2,177 2,377 2,036,768 1,917,612 66,703 55,797 735,140 739,996 801,843 795,793 801,843 795,793 Business-type Activities 2014 2013$ 563,614 $ 633,328 1,614,417 1,575,358 2,178,031 2,208,686 4,600 5,932 2,182,631 2,214,618 90,516 62,306 1,000,488 1,098,642 1,091,004 1,160,948 95,306 73,997 1,186,310 1,234,945 Total Government 2014 2013$1,103,980

$1,156,036 3,108,642 2,967,885 4,212,622 4,123,921 6,777 8,309 4,219,399 4,132,230 157,219 118,103 1,735,628 1,838,638 1,892,847 1,956,741 95,306 73,997 1,988,153 2,030,738 1,016,259 205,998 12,668$1,234,925 894,625 196,853 30,341$1,121,819 823,505 77,311 95,505$ 996,321 787,459 71,131 121,083$ 979,673 1,839,764 283,309 108,173$2,231,246 1,682,084 267,984 151,424$2,101,492 At the end of fiscal year 2014, the City's net position totaled $2,231,246.

The largest portion of the City's net position $1,839,764 (82%) reflects its investment in capital assets (e.g. land, buildings, utility plant, machinery, equipment, and infrastructure), net of any related outstanding debt that was used to acquire those assets. The City uses these assets to provide services to citizens; consequently, these assets are not available for future spending.

Although the City's investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the City's net position $283,309 (13%) represents resources that are subject to extemal. restrictions on how they may be used. The increase in restricted net position of $15,325 is primarily due to unspent restricted resources of$6,809 from the gain on sale of housing land held for resale and $4,902 restricted for claims and judgments.

The remaining balance of $108,173 (5%) is unrestricted net position that may be used to meet the City's ongoing obligations to citizens and creditors.

The Citys total unrestricted net position decreased by $43,251 primarily due to more unrestricted resources were invested in capital assets that includes the acquisition of land, vehicles, the constructions of a compressed natural gas facility, the Anaheim Convention Center expansion and Electric Utility facilities.

14 CITY OF ANAHEIM CHANGE IN NET POSITION YEAR ENDED JUNE 30, 2014 AND 2013 Governmental Business-type Total Activities Activities Government 2014 2013 2014 2013 2014 2013 REVENUES Program revenues: Charges for services $ 73,675 $ 64,138 $586,591 $604,388 $ 660,266 $ 668,526 Operating grants and contributions 114,584 112,507 452 952 115,036 113,459 Capital grants and contributions 110,295 71,472 8,441 6,698 118,736 78,170 General revenues: Taxes: Property taxes 66,282 64,311 66,282 64,311 Sales and use taxes 67,505 65,445 67,505 65,445 Transient occupancy taxes 110,134 102,936 110,134 102,936 Motor vehicle license fees 331 331 Other taxes 7,780 7,756 7,780 7,756 Unrestricted investment earnings 2,930 1,094 6,986 3,323 9,916 4,417 Other 49 1,857 ___ ___ 49 1,857 Total revenues 553,234 491,847 602,470 615,361 1,155,704 1,107,208 EXPENSES Program activities:

Governmental activities:

General government 15,790 13,275 15,790 13,275 Police 127,037 124,556 127,037 124,556 Fire 59,510 58,508 59,510 58,508 Community Development 80,043 82,769 80,043 82,769 Planning 17,030 16,917 17,030 16,917 Public Works 60,262 44,740 60,262 44,740 Community Services 34,130 28,925 34,130 28,925 Public Utilities 2,514 2,405 2,514 2,405 Convention, Sports and Entertainment 15,586 13,935 15,586 13,935 Interest an long-term debt 35,514 35,880 35,514 35,880 Business-type activities:

Electric Utility 411,246 417,008 411,246 417,008 Water Utility 62,996 57,056 62,996 57,056 Sanitation Utility 53,508 52,813 53,508 52,813 Golf Courses 4,399 4,473 4,399 4,473 Convention, Sports and Entertainment Venues _____ _____46,385 45,001 46,385 45,001 Total expenses 447,416 421,910 578,534 576,351 1,025,950 998,261 Excess before transfers 105,818 69,937 23,936 39,010 129,754 108,947 Transfers in (out) 7,288 12,824 (7,288) (12,824) ____ _____Increase in net position 113,106 82,761 16,648 26,186 129,754 108,947 Effect of implementation GASB Statement No. 65 (1,300) (6,337) (7,637)Net position at beginning of year 1,121,819 1,040,358 979,673 959,824 2,101,492 2,000,182 Net position at end of year $1,234,925

$1,121,819

$996,321 $979,67-3

$2,231,246

$2,101,492 15 CITY OF ANAHEIM REVENUES BY SOURCE -GOVERNMENTAL ACTIVITIES Other taxes 1%Unrestricted investment earnings 1%0th<1%er ,Charges for services 13%Transient occupancy taxes _pn 1 20%Operating grants and Wl contributions

-21%Sales and use tax 12%Property taxes-- Capital grants and 12% contributions 20%" Taxes increased

$10,922 (5%) mainly due to the increase of $7,198 (7%) in transient occupancy taxes (TOT). With a revitalized economy and Disney's expansion of the California Adventure, tourism has shown a dramatic recovery from recession lows in fiscal year 2010. Sales and use tax increased

$2,060 (3%), most notably with stronger performance in construction-related sales and a general improvement across most business sectors. Finally, property taxes increased

$1,971 (3%)." Charges for services increased

$9,537 (15%) primarily due to increases in building permits and fees of $1,342 due to increased activities in construction and the related inspections, increases in residual receipts of $1,108 from housing projects and increases in gain of $6,809 from the sale of housing land held for resale." Operating grants increased

$2,077 (2%) mainly due to increases of $3,030 in gas tax distributions from the State of California, $4,243 in first-time homebuyer assistance loan BEGIN and HOME grants. The increases are partially offset by decreases of $2,034 in Urban Area Security Initiative (UASI) grant reimbursements due to the nature and timing of projects, $1,476 in Narcotic Asset Forfeitures as a result of money and property seizures in drug-related incidents and a $1,553 (2%)decrease in U.S. Department of Housing and Urban Development (HUD) Section 8 rental assistance." Capital grants and contributions increased by $38,823 (54%) primarily due to grant reimbursements for the Anaheim Regional Transportation Intermodal Center (ARTIC) as the project construction was in full swing during the entire fiscal year." Unrestricted investment earnings increased by $1,836 (168%) due to reversal of an investment portfolio unrealized investment loss from the prior fiscal year." Other revenues decreased by $1,808 (97%) primarily due to one-time property tax administration fee refund of $1,916 from the County of Orange in the prior fiscal year.Governmental activities net transfers in decreased

$5,536 (43%) mainly due to a one-time transfer out of $4,864 of restricted resources related to sewer construction to the Sanitation Utility, and $600 related to the Water Transfer settlement to the Water Utility.There were no other significant or unusual changes.Governmental activities.

Governmental activities increased the City's net position by $113,106.

Key elements of this increase are as follows: The most significant revenues of the governmental activities are general taxes (45%), which include transient occupancy taxes (20%), properly taxes (12%), sales and use taxes (1 2%), and other taxes (1%). Program revenues are 54% of the total revenues of the governmental activities, which include operating grants and contributions (21%), capital grants and contributions (20%), and charges for services (13%); unrestricted investment earnings is 1% of the total revenues.Public safety (Police and Fire) expenses are the most significant (42%) of all governmental activities expenses, followed by Community Development (18%), Public Works (13%), Community Services (8%), interest on long-term debt (8%), and various other programs (11%). Included in these amounts is depreciation expense, which is 6%of the total expenses for governmental activities.

Governmental activities revenues showed improvement in all revenue categories.

Revenues increased

$61,387 (12%) as compared to the prior fiscal year due to the following:

16 CITY OF ANAHEIM EXPENSES AND PROGRAM REVENUES -GOVERNMENTAL ACTIVITIES REVENUES BY SOURCE -BUSINESS-TYPE ACTIVITIES Capital grants and contributions 2%nts and Dns Unrestricted investment earnings 1%Operating gran contributio

<1%R Program revenues u Expenses Governmental activities expenses increased

$25,506 (6%) as compared to prior fiscal year due to the following: " The increase in Public Safety expenses of $3,483 (2%) is primarily due to service enhancements in public safety and emergency response services.

Of this amount, salary and benefits costs increased approximately

$3,325 which includes addition of 8 new positions, new firefighters and paramedic training.* The increase in Public Works expenses of $15,522 is due to approximately

$1,740 of infrastructure maintenance, $1,841 of one-time refund of prior years' receipts, and $11,566 of capital asset retirements.

Upon completion of the Gene Autry Way construction, the Gene Autry Way bridge and certain infrastructure assets ($8,968)were retired from the City's capital assets as they will be maintained by another agency; and the loss on retirement of capital assets ($2,598).* Community Services expenses increased

$5,205. The increase is mainly due to the City's on-going service enhancements to neighborhoods that includes additional community center and libraries hours and park tree maintenance.

Of this amount$1,234 was attributable to salary and benefit increases and, $2,684 a one-time refund on prior years receipts.* The increase in Convention, Sports and Entertainment Venues expenses of $1,651 is mainly due to increase in depreciation expense of $940.* The increases in govemment activities expenses were partially offset by the decrease in Community Development expenses of $2,726 mainly due to decrease in Section 8 rental assistance of $3,592 resulting from program attrition of 236 leasing units monthly.Charges for services 97%Business-type activities.

Business-type activities increased the City's net position by $16,648. Key elements of this change are as follows: Charges for services of $586,591 decreased by $17,797 (3%). The decrease in charges for services was primarily due to a decrease from the Electric Utility of $25,907 (6%) offset by an increase in the Water Utility of $5,161 (8%) and Convention, Sports and Entertainment Venues of $2,428 (8%)." The decrease of $25,907 in the Electric Utility charges for services is partly due to a $12,395 (4%) decrease in retail sales revenues.

This decrease is attributable to decreased sales volumes resulting from cooler weather and the Electric Utility's continued investment in conservation and efficiency measures.

Wholesales revenues increased by $16,052 (61%) mainly due to a 65% increase in wholesale sales volumes, resulting from competitive rates in the wholesale market and more surplus energy available from the increased renewable resources purchased and reduced retail sales in the current fiscal year. Surplus natural gas sales decreased by $8,020 (88%) due to less natural gas available for resale in the spot market, and more purchased gas used for the Magnolia power plant resulting in an 96%increase in its power production.

Transmission revenues decreased by $6,942 (17%) due to lower transmission demand and rates set by the California Independent System Operator (CAISO). Finally, the Rate Stabilization Account (RSA) revenues are recognized to meet debt service coverage ratios to maintain bond ratings and decreased by $14,500 (36%) due to decreased purchase power costs and reduced debt service payments in the current fiscal year. Information relating to the RSA can be found in note 1 of the notes to the financial statement." The increase of $5,161 in Water Utility charges for services is mainly due to a$5,037 (8%) increase in water sales as a result of the 1.3% increase in customer demand and a rate increase of $0.165 per hundred cubic feet effective June 1, 2013, in response to increases in wholesale water supply and treatment costs.17 CITY OF ANAHEIM The increase of $2,428 (8%) in Convention, Sports and Entertainment Venues charges for services is mainly attributable to an increase of $1,453 in facility rental and parking revenues due to increased consumer show events; and an increase of$843 in concession fees primarily due to increased concert ticket and special event revenues ($485) from the City National Grove of Anaheim, an increase in technology services revenues ($522) with greater corporate convention business, and offset by a decrease in food and beverage revenues ($164) from the Convention Center.Transfers out of $7,288 decreased by $5,536 (43%) as discussed in the government-wide financial analysis of governmental activities.

EXPENSES AND PROGRAM REVENUES -BUSINESS-TYPE ACTIVITIES

$500$450$350 S$250$200$150 5100 water as a result of increases in customer demand and increased commodity costs charged by the Water Utility's two sources of water supply. The increase of $2,585 in operations, maintenance and administration costs is mainly due to less overhead attributable to capital assets as several major projects were completed during the fiscal year.FINANCIAL ANALYSIS OF THE CITY'S FUNDS Governmental funds. The focus of the Citys governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources.

Such information is useful in assessing the City's financing requirements.

In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.At the end of the current fiscal year, the City's governmental funds reported total ending fund balances of $254,598, an increase of $5,306 in comparison with the prior fiscal year. Of the total fund balance of $254,598, restricted fund balance totaled $218,533 (86%) and indicates the use of resources are constrained by external parties, resource providers, constitutions or enabling legislations.

Unassigned fund balance totaled$11,389 (4%) and is available for spending at the City's discretion.

The remaining fund balance is $24,676 (10%), of which $5,648 is not in spendable form, and $19,028 that was assigned for particular purposes.Governmental revenues totaled $547,578 while expenditures were $552,482.The General Fund is the general operating fund of the City. At June 30, 2014, the General Fund reported a total ending fund balance of $43,015 and consisted of the following:

• $2,099 was nonspendable for inventory, prepaid and other assets and a long-term Interfund receivable

• $4,902 was restricted for claims and judgments* $1,547 was restricted for grant purposes* $4,073 was assigned for encumbrances and subsequent year one-time budgeted service enhancements

• $30,394 was unassigned General Fund total revenues increased

$14,395 (5%) as compared to the prior fiscal year primarily attributable to the following:

• Total taxes increased by $14,904 (6%) due to the improvement in the overall economy. Taxes are the largest revenue sources of the General Fund and they$50 Water Utility Sanitation Golf Courses Convention, Sports &Entertainment Venues-- --y uProgram revenues E Expenses Total expenses of $578,534 increased

$2,183 (less than 1%). The Water Utility increased expenses by $5,940 offset by decrease of $5,762 in the Electric Utility. There were no other programs with significant changes during the year.* The decrease in the Electric Utility expenses is primarily due to a decrease in power costs of $4,829. The Electric Utility applied a combination of strategies to procure lower power costs from renewable resources to comply with Renewable Portfolio Standards (RPS) requirements, long-term commitments with conventional power supplies and internal power generation.

• The increase in Water Utility expenses of $5,940 is primarily due to an increase of$2,577 in the costs of purchased water and the treatment and the pumping of 18 CITY OF ANAHEIM accounted for $251,292 or 86% of the total General Fund revenues.

During fiscal year 2014, transient occupancy taxes (TOT) increased

$7,198 (7%), property taxes increased by $1,984 (3%), sales and use taxes increased

$5,788 (9%) and other taxes decreased by $66 (1%)" Licenses, fees, and permits increased

$797 (4%) due to increased construction activities within the City" Use of money and property increased

$858 (34%) due to the reversal of an unrealized investment loss in the prior fiscal year* Other revenues decreased by $2,118 (77%) due to a one-time property tax administration fee refund ($1,916) from the County of Orange in the prior fiscal year.General Fund expenditures increased by $13,474 (6%) primarily due to increases in the Police department of $4,342 (4%), Fire Department of $1,523 (3%), City Attorney of $1,694 (27%), Community Services of $2,504 (10%), Public Works of $1,491 (11%), and capital outlay of $721 (1127%). Increases in capital outlay were due to acquisitions of fire equipment and structural improvement for the Anaheim Youth Center.The other most significant factors of the increases for these departments are discussed in the government-wide financial analysis of the governmental-activities.

The Housing Authority Fund revenues increased by $6,624 (8%) primarily due to an increase in the gain on the sale of housing land held for resale of $6,809, an increase in residual receipts of $1,409 and offset by a decrease in HUD funding for Section 8 rental assistance of $1,553. Housing Authority expenditures increased by $3,313 (4%)due to land acquisitions for housing projects of $4,488, and $1,794 principal and interest payments for the two housing loans and offset by $3,592 decrease in Section 8 rental assistance as discussed in the government-wide financial analysis of the governmental-activities.

The Transportation Improvement Projects fund increased revenues by $40,969 (87%)grant reimbursements and increased expenditures by $52,546 (131%) primarily due to the ARTIC project that was in full swing of construction during the entire fiscal year.Total nonmajor govemmental funds revenues decreased by $10,625 (12%) primarily due to a decrease in license, fees and permits of $1,759 for one-time developer fees received in the prior fiscal year, and a decrease of $8,921 in intergovernmental revenues mainly due to the timing of construction grant reimbursements for the Gene Autry Way and Katella Avenue projects completed in the prior fiscal year.Total nonmajor governmental funds other financing sources decreased by $29,189 (39%) primarily due to $31,500 in one-time loan proceeds for the acquisition of the ARTIC land in the prior fiscal year. Transfers in increased by $8,629, due to the $4,450 increase in Lease Payment Measurement Revenues (LPMR) set-aside for the Resort debt service (see note 9 for more information regarding LPMR) and a $3,794 transfer in from the General Fund far a neighborhood improvement land acquisition.

Transfers out increased

$7,668 primarily due to a $4,864 transfer to Sanitation Utility Fund for sewer construction from developer impact fees.Total nonmajor governmental funds expenditures decreased by $1 1,429 (8%) primarily due to decrease in capital outlay of $19,949 (33%), which was mainly attributable to the ARTIC land acquisition of $31,150 in the prior fiscal year. Partially offseting this decrease was $39,991 of new construction projects that include the Brookhurst Street widening project, Tustin/La Palma Street improvement, and the Miraloma Park development.

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

$1,91 4(1%) in the current fiscal year. The most significant factors of the change in fund net position are discussed in the government-wide financial analysis of business-type activities.

The Water Utility fund net position increased

$4,447 (2%) in the current fiscal year. The most significant factors of the change in fund net position are discussed in the government-wide financial analysis of business-type activities.

The Sanitation Utility fund net position increased

$8,330 (7%) in the current fiscal year.This increase is primarily due to a transfer in of $4,864 for sewer capital project from developer impact fees. There were no other significant or unusual changes.The Gelf Courses fund net position increased

$29 (less than 1%) in the current fiscal year. There were no significant or unusual changes.The Convention, Sports and Entertainment Venues fund net position increased

$2,694 (less than 1%) in the current fiscal year. The most significant factors of the change in fund net position are discussed in the govemment-wide analysis of business-type activities.

GENERAL FUND BUDGETARY HIGHUGHTS During the year, the original budget was amended to increase appropriations by$2,849 (1%). The increase in appropriations was primarily the result of the carryover of prior year appropriations anT amendments amounting to $2,797 and the reallocation of appropriations from other funds of $52. These amendments were to be funded from savings in other programs of the General Fund during the year.General Fund revenues of $294,379 were greater than budgeted revenues of$287,708 by $6,671 (2%), primarily due to stronger than anticipated performance of transient occupancy taxes, sales taxes and other various revenue sources as the economy continued to improve.General Fund expenditures were less than budgeted.

Of the total appropriations of$257,549, approximately 2%, or $5,921, went unspent. This was primarily due to labor savings as a result of employee turnover and the time between an employee leaving andthe recruitment of a new employee.19 CITY OF ANAHEIM CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS (net of accumulated depreciation)

JUNE 30, 2014 AND 2013 Governmental Activities 2014 2013$ 658,253 $ 648,420 204,680 138,749 169,464 160,157 Land Construction in Progress Buildings, structures and improvements Utili Machinery and equipment Infrastructure Total Business-type Activities 2014 2013$ 58,410 $ 58,410 85,649 84,936 396,643 401,430 1,064,914 1,021,584 8,801 8,998 Total Government 2014 2013$ 716,663 $ 706,830 290,329 223,685 566,107 561,587 1,064,914 1,021,584 40,116 38,138 430,513 416,061 31,315 430,513$1,494,225 29,140 416,061$1,392,527 Capital assets. The City's investment in capital assets for its governmental and business-type activities at June 30, 2014 amounted to $3,108,642 (net of accumulated depreciation).

This investment in capital assets included land, construction in progress, buildings, structures and improvements, utility plant, machinery and equipment, and infrastructure.

The total increase over the prior fiscal year was 5% ($140,757), of which governmental activities increased 7% ($101,698) and business-type activities increased 2% ($39,059).

The increase of capital assets in governmental activities was primarily due to capital asset additions of $148,444 offset by current year depreciation expense of $32,587, capital asset retirements of $12,587 and transfer to business-type activities of $1,572.Major capital asset projects during the current fiscal year include the following: " Additions of $123,527 for construction work in progress which includes construction of the Anaheim Regional Transportation Intermodal Center (ARTIC), the Anaheim Fixed Guideway project, Gene Autry Way, Brookhurst Street improvement, Tustin Avenue improvement , Uncoln Avenue widening, Miraloma Park development and various other public infrastructure construction;

• Land acquisitions totaled $8,323 of which $2,090 was for street widening, $3,062 for housing projects and $3,171 for neighborhood improvements;" Acquisitions of various vehicles and equipment totaling $8,498; and* Completion of $56,718 of construction work in progress that includes the Gene Autry Way ($29,861), Sunkist Street improvement

($1,854), Euclid Street widening ($1,407), right-of-way acquisitions

($4,133), Schweitzer and Anaheim Cove Park developments

($2,086), and various other projects ($17,377).

The increase in business-type activities is primarily due to increases in the following:

• The Electric Utility increase of $27,638 (3%) was mainly due to additions of$66,811 to construction work in progress for the replacement of aging overhead electrical lines with state-of-art underground projects on Lincoln Avenue, West$1,614,417

$1,575,358

$3,108,642

$2,967,885 Street and Westmont Street; the installation of a photovoltaic system (solar panels)at the Convention Center, replacement of aging circuit breakers, and improvements at substations.

The Electric Utility also completed

$46,624 of construction work in progress that includes 2.6 miles of underground conversion on Brookhurst Street and Douglass Road, replacement of 116 high-voltage transformers, 48 high-voltage switches, six 220kV circuit breakers at Lewis Substation, about 50,000 feet of degraded direct buried cable, and replacement of a new customer information system and other projects.

The increase was partially offset by the current year additions to accumulated depreciation of $41,770.The Water Utility increase of $9,502 (3%) was primarily due to additions of$17,937 to construction work in progress for ongoing expansion and refurbishment of water transmission and distribution infrastructure, pumping plant, and source of water supply. The Water Utility completed

$44,314 of construction work in progress that includes the Water Sustainability Campus, the Hidden Canyon Pump Station Expansion, and the Linda Vista Pump Station, the Linda Vista Reservoir and distribution system and other projects.

This increase was partially offset by the current year additions to accumulated depreciation of $10,534." The Sanitation Utility increase of $2,999 (3%) includes addition of $3,898 of construction work in progress for sanitary sewer improvements, and $1,121 in acquisitions of sweepers and vehicles.

The Sanitation Utility also completed

$7,543 of sewer improvements on Lincoln, La Palma and the Phase III sanitary improvement in Central Anaheim. This increase was partially offset by current year additions to accumulated depreciation of $2,445." The Convention, Sports and Entertainment Venues decrease of $628 (less than 1 %)was primarily due to construction work in progress additions of $10,667 for the construction of the Anaheim Convention Center expansion offset by current year additions to accumulated depreciation of $13,497.Additional information on the City's capital assets can be found in note 6 of the notes to the financial statements, on pages 56 of this report.20 CITY OF ANAHEIM LONG-TERM UABILITIES JUNE 30,2014 AND 2013 General obligation bonds Revenue bonds Certificates of participation Capital lease obligations Notes and loans payable Self-insurance Compensated absences Decommissioning provision Total Governmental Activities 2014 2013$ 1,995 $ 2,605 612,762 613,481 8,880 10,020 1,325 1,369 50,757 54,877 40,827 39,422 18,594 18,222$735,140 $739,996 Business-type Activities 2014 2013$ 780,553 $ 863,987 38,000 38,000 Total Government 2014 2013$ 1,995 $ 2,605 1,393,315 1,477,468 46,880 48,020 1,325 1,369 99,028 117,599 40,827 39,422 18,594 18,222 133,664 131,333$1,735,628

$1,836,038 48,271 62,722 133,664 131,333$1,000,488

$1,096,042 Long-term liabilities.

The City's outstanding long-term liabilities, including bonds, certificates of participation, capital leases, notes and loans payable, self-insurance, compensated absences, and the provision for decommissioning costs totaled$1,735,628 at June 30, 2014. Of this total, $735,140 (42%) was in governmental activities and $1,000,488 (58%) was in business-type activities.

The City's governmental activities outstanding long-term liabilities decreased

$4,856 (1%) during the current fiscal year. The decrease is primarily due to principal payments of $25,341, and general insurance and compensate absences liabilities payments of$28,241. Partially offset by these decreases were current year additions of revenue bond accretion of $16,150, capitalized leases and loans of $2,427, and general liability and compensated absence liabilities of $30,018.The City's business-type activities outstanding long-term liabilities decreased

$95,554 (9%). The decrease is primarily due to principal payments of $96,206, which includes$60,205 in full retirement of the 2002-B Electric Revenue Bonds.Additional information on the City's long-term liabilities can be found in notes 7 and 9 of the notes to the financial statements, on pages 57-64 of this report.ECONOMIC FACTORS There remains a focus on public pensions and their sustainability; many assumptions are used to estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations.

One of the most significant factors used in determining the liability and the funding requirements is the rate of return that investments will yield prior to making payments, known as the discount rate. The City's pension plans currently utilize a discount rate of 7.5%, which is used in determining the unfunded pension liability and funding requirements.

If it is determined in the future that an even lesser rate of return is more appropriate, there will be a significant increase in the unfunded liability and the contributions required to meet those obligations.

For example, if it was determined in the future that a more appropriate rate of return was 6.5%, then it is estimated that the City's unfunded liability would increase by 47.0% to $826 million and the City's total annual contribution would increase by approximately

$27 million or 47.5%. However, in the future, if it was determined that a more appropriate rate of return was 8.5%, then it is estimated that the City's unfunded liability would decrease by 39.0% to $340 million and the Citys total annual contribution would decrease by approximately

$21 million or 38.0%. The Citys pension plan has averaged an 8.3% rate of return over the last 20 years.The Governmental Accounting Standards Board also has issued new standards related to the accounting and reporting for pensions that are required to be implemented for the fiscal year beginning July 1, 2014. The City is currently evaluating the potential impacts to the financial statements from implementation of these new standards.

Additional information about the City's retirement plans can be found in note 11 of the notes to the financial statements on pages 67-70 of this report, as well as multi-year trend information as part of the required supplementary information on page 77." Recently, the State of California enacted pension legislation that went into effect in January 2013 and applies mainly to new public employees.

Some of the major changes include mandatory cost sharing by employees, reducing the overall benefit level (e.g. percentage of pay), increasing the retirement age, and placing a cap on the salary used to determine retirement benefits.

The impacts to the City for these changes for future employees have yet to be determined.

21 CITY OF ANAHEIM* For the 2015 fiscal year, the City appropriated

$280,049 in estimated available REQUESTS FOR INFORMATION resources of $308,944 for General Fund spending.

This leaves approximately This financial report is designed to provide a general overview of the City's finances for$28,895 in estimated available reserves, which is 10% of General Fund Thos witancinterest in th overnm ent's finances fth appropriations.

The City's long-standing policy is to maintain General Fund all those with an interest in the government's finances.

Questions concerning any of the reserves of at least 7% to 10% of annual appropriations, information provided in this report or requests for additional information should be addressed to the Office of the Finance Director, City of Anaheim, 200 South Anaheim* The City annually reviews all of its fees as part of the budget adoption process. Boulevard, Suite 643, Anaheim, California, 92805.Developer, construction, and other fees applicable to residents and development doing business in the City are adjusted in June of each year, generally by the average of the Consumer Price Index (CPI). CPI for 12 months was 1% in January 2014. This is consistent with the City's policy of recovering costs without placing an undue financial burden on existing tax and rate payers.* California Senate Bill 1X 2 signed into law in April 2011 mandated that all California utilities are required to reach 25% renewable power in their power portfolios by 2016, and 33% by 2020. The higher renewable power costs will increase future power supply costs. The Electric Utility has a number of strategies to mitigate the potential cost impacts.22

-HBasic Financial Statements CITY OF ANAHEIM Statement of Net Position June 30, 2014 (In thousands)

ASSETS Cash and cash equivalents Investments Accounts receivable, net Accrued interest receivable Internal balances, net Due from other governments Notes receivable, net Inventories Land held for resale, net Prepaid and other assets Restricted cash and cash equivalents Restricted investments Unamortized prepaid bond insurance Bond payment receivable Pipeline receivable Net other ost-emploment benefits (OPEB) asset Due from Successor Agency Capital assets, net: Nondepreciable Depreciable Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding bonds Total deferred outflows of resources UABIUTIES Accounts payable Wages payable Due to other governments Interest payable Line of credit payable Arbitrage rebate liability Deposits Unearned revenues Long-termn liabilities:

Due within one year Due in more than one year Total liabilities DEFERRED INFLOWS OF RESOURCES Regulatory credits Total deferred inflows of resources NET POSmON Net investment in capital assets Restricted for: Debt service Capital projects Community development Streets, roads and transportation improvement projects Other purposes Unrestricted Total net position Governmental Activities

$ 55,997 159,778 23,663 551 17,494 62,307 77,790 1,066 10,895 4,124 40,989 49,637 1,509 11,152 23,414 862,933 631,292 2,034,591 2,177 2,177 43,240 4,523 323 7,229 7,456 3,932 47,260 687,880 801,843 1,016,259 1,032 48,829 101,133 39,180 15,824 12,668$1,234,925 The accompanying notes are an integral part of these financial statements.

Business-type Activities

$ 34,761 95,729 56,545 1,527 (17,494)12,546 94,711 51,420 228,156 1,188 4,505 20 144,059 1,470,358 2,178,031 4,600 4,600 62,004 1,454 9,881 9,100 343 7,489 245 39,934 960,554 1,091,004 95,306 95,306 823,505 16,777 48,515 12,019 95,505$ 996,321 Total$ 90,758 255,507 80,208 2,078 62,307 77,790 13,612 10,895 98,835 92,409 277,793 2,697 4,505 20 11,152 23,414 1,006,992 2,101,650 4,212,622 6,777 6,777 105,244 5,977 323 17,110 9,100 343 14,945 4,177 87,194 1,648,434 1,892,847 95,306 95,306 1,839,764 17,809 97,344 101,133 39,180 27,843 108,173$2,231,246 23 (This page left blank intentionally) 24 CITY OF ANAHEIM Statement of Activities Year Ended June 30, 2014 (In thousands)

Net (Expense)

Revenue and Chances in Net Position Proaram Revenues Indirect Expense Expenses Allocation Operating Charges for Grants and Services Contributions Capital Grants and Contributions Functions/Proarams Governmental activities:

General government Police Fire Community Development Planning Public Works Community Services Public Utilities Convention, Sports and Entertainment Interest on long-term debt Total governmental activities Business-type activities:

Electric Utility Water Utility Sanitation Utility Golf Courses Convention, Sports and Entertainment Venues Total business-type activities Total government Governmental Business-type Activities Activities Total$ 27,408 123,448 58,669 79,732 16,307 60,022 33,667 2,514 15,342 35,514 452,623 408,636 62,172 53,127 4,270 45,122 573,327$1,025,950

$(11,618)

$ 1,779 3,589 9,927 841 10,166 311 17,305 723 7,746 240 13,037 463 3,479 244 10,236 (5,207) 73,675$ 615 11,360 1,163 81,852 1,455 16,967 1,172 114,584$ (13,396)(105,750)$ 955 (47,226)19,114 (7,829)99,624 69,366 4,322 (25,157)(2,514)5,394 44 (35,514)110,295 (148,862)2,610 824 381 129 1,263 5,207$426,051 65,946 57,843 4,667 32,084 586,591$660,266 45 90 317 452$115,036 3,377 3,531 68 1,465 8,441$i 18,736$ 18,182 6,526 4,493 268 (12,519)16,950 (148,862) 16,950$ (13,396)(105,750)(47,226)19,114 (7,829)69,366 (25,157)(2,514)44 (35,514)(148,862)18,182 6,526 4,493 268 (12,519)16,950 (131,912)66,282 67,505 110,134 7,780 9,916 49 261,666 129,754 2,101,492$2,231,246 General revenues: Taxes: Property taxes Sales and use taxes Transient occupancy taxes Other taxes Unrestricted investment earnings Other Transfers Total general revenues and transfers Change in net position Net position at einning of year Net position at end of year 66,282 67,505 110,134 7,780 2,930 49 7,288 261,968 113,106 1,121,819$1,234,925 6,986 (7,288)(302)16,648 979,673$996,321 The accompanying notes are an integral part of these financial statements.

25 (This page left blank intentionally) 26 CITY OF ANAHEIM Balance Sheet Governmental Funds June 30, 2014 (in thousands)

Housina Transportation Improvement ASSETS General Authoori 'projects Cash and cash equivalents

$ 8,708 $ 10,557 Investments 24,846 30,121 Accounts receivable, net 12,547 15 $ 2 Accrued interest receivable 74 93 Notes receivable, net 49,905 Due from other funds 3,331 883 Due from other governments 17,405 159 22,489 Inventories 247 Land held for resale, net 10,895 Prepaid and other assets 239 7 Restricted cash and cash equivalents 2,763 Restricted investments Due from Successor Agency 1,767 8,176 Total assets $69,164 $113,574 $ 22,491 UABIUTIES Accounts payable $ 5,138 $ 716 $ 19,542 Wages payable 3,098 78 20 Deposits 4,832 1,440 Due to other funds 924 6,254 Due to other governments 323 Unearned revenue 1,945 94 Total liabilities 15,937 2,651 25,816 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 8,445 37 5,039 Unavailable resources-long-term notes receivable 49,905 Unavailable resources

-due from Successor Agency 1,767 8,176 Total deferred inflows of resources 10,212 58,118 5,039 FUND BALANCES (Deficit):

Nonspndable:

Interfund receivable 1,613 Inventory 247 Prepaid and other assets 239 7 Restri&ted:

Anaheim Resort maintenance and improvement Capital projects Claims and judgments 4,902 Debt service Development impact projects Grant purposes 1,547 Homebuyer assistance prorams Low and moderate income housing 38,160 Rental assistance 2,974 Streets, roads and transportation improvement projects Assigned: Capital projects Housing projects 11,664 Other purposes 4,073 Unassigne 30,394 -(8,364)Total fund balances (deficit) 43,015 52,805 (8,364)Total liabilities, deferred inflows of resources, and fund balances $69,164 $113,574 $ 22,491 The accompanying notes are an integral part of these financial statements.

Nonmaijr Governmental Funds$ 18,709 53,385 1,264 218 27,859 14,925 22,254 3,542 38,226 49,637 13,471$243,490$ 11,672 312 1,184 9,841 23,009 12,009 27,859 13,471 53,339 3,542 8,491 2,685 73,500 46,144 5,491 3,143 31,496 3,272 19 (10,641)167,142$243,490 Total Governmental Funds$ 37,974 108,352 13,828 385 77,764 19,139 62,307 247 10,895 3,788 40,989 49,637 23,414$448,719$ 37,068 3,508 7,456 17,019 323 2,039 67,413 25,530 77,764 23,414 126,708 1,613 247 3,788 8,491 2,685 4,902 73,500 46,144 7,038 3,143 38,160 2,974 31,496 3,272 11,664 4,092 11,389 254,598$448,719 27 CITY OF ANAHEIM Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2014 (In thousands)

Total fund balances -governmental funds $ 254,598, Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in the operation of governmental funds are not current financial resources and, therefore, are not reported in the funds. These assets consist of: Land $ 658,253 Construction in progress 204,455 Buildings, structures and improvements 284,930 Machinery and equipment 52,761 Infrastructure 798,420 Accumulated depreciation (522,997)Total capital assets, net 1,475,822 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as deferred inflows of resources in the funds. 126,708 Unamortized prepaid bond insurance

($1,509) and deferred charge on refunding bonds ($2,177) are not current financial resources, and, therefore, are not reported in the funds. 3,686 Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position.

56,134 Compensated absences, not otherwise included in the internal service funds, are not due and payable in the current period and, therefore, are not reported in the funds. (400)Long-term liabilities of govemmental funds, including bonds ($614,757), certificates of participation

($8,880), notes and loans payable ($50,757), and accrued interest payable ($7,229) are not due and payable in the current period and, therefore, are not reported in the funds. (681,623)Net position of governmental activities

$1,234,925 The accompanying notes are an integral part of these financial statements.

28 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit)Governmental Funds Year Ended June 30, 2014 (In thousands)

Transportation Nonmajar Total Housinc Improvement Governmental Governmental General Authorifq Projects Funds Funds Revenues: Property taxes $65,565 $ 717 $ 66,282 Sales and use taxes 68,581 68,581 Transient occupancy taxes 110,134 110,134 Other taxes 7,012 7,012 Licenses, fees and permits 18,738 $ 57 2,558 21,353 Intergovernmental revenues 2,693 70,904 $ 87,942 54,216 215,755 Charges for services 14,491 12 18,066 32,569 Fines, forfeits and penalties 2,656 2,656 Use of money and property 3,372 11,032 2,277 16,681 Other 622 3,822 2,111 6,555 Total revenues 293,864 85,827 87,942 79,945 547,578 Expenditures:

Current: City Council 548 548 City Administration 3,377 3,377 City Attorney 8,036 119 8,155 City Clerk 1,073 1,073 Human Resources 1,432 1,432 Finance 4,202 52 4,254 City Treasurer 2,231 2,231 Poaice 112,767 8,195 120,962 Fire 56,596 933 57,529 Community Development 1,254 73,407 8,997 83,658 Planning 14,784 1,302 16,086 Public Works 15,016 1,234 13,487 29,737 Community Services 26,234 4,368 30,602 Public Utilities 2,510 2,510 Convention, Sports and Entertainment 783 9,931 10,714 Capital outlay 785 4,543 91,278 39,991 136,597 Detservice:

Principal retirement 1,741 22,479 24,220 Interest charges 53 18,744 18,797 Total expenditures 251,628 79,744 92,512 128,598 552,482 Excess (deficiency) of revenues over (under) expenditures 42,236 6,083 (4,570) (48,653) (4,904)Other financing sources (uses): Tronsfers in 28,7027 53,479 84,813 Transfers out (66,812) (9,141) (75,953)Issuance of loan payable 1,350 1,350 Total other financing sources (uses) (38,105) 2,627 45,688 10,210 Net change in fund balances 4,131 8,710 (4,570) (2,965) 5,306 Fund balances (deficit) at beginning of year 38,884 44,095 (3,794) 170,107 249,292 Fund balances (deficit) at end of year $ 43,015 $ 52,805 $ (8,364) $167,142 $254,598 The accompanying notes are an integral part of these financial statements.

29 CITY OF ANAHEIM Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2014 (In thousands)

Net change in fund balances -total governmental funds $ 5,306 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlay as expenditures.

However, in the Statement of Activities the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay ($136,597) exceeded depreciation

($28,380) in the current period. 108,217 Transfers of capital assets between governmental funds and proprietary funds do not require the use of financial resources and are not reported as transfers in the funds. (1,572)The net effect of other miscellaneous transactions involving capital assets (i.e., sales, trade-in, retirements and contributions) is to decrease net position.

(5,616)Revenues in the governmental funds provide current financial resources but are not reported as revenues in the Statement of Activities as they have previously been accrued. (1,754)Proceeds from long-term debt provide current financial resources to governmental funds, but the issuance of debt increases long-term liabilities in the Statement of Net Position.

(1,350)Payments of principal on long-term debt use current financial resources in the governmental funds but the repayment reduces long-term liabilities in the Statement of Net Position.

24,220 Certain expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (12,704)Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual Funds. The net expense of the internal service funds is reported with governmental activities.

(1,641)Change in net position of governmental activities

$113,106 The accompanying notes are an integral part of these financial statements.

30 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual -General Fund Year Ended June 30, 2014 (In thousands)

Original Final Budgeted Budgeted Actual Variance with Amounts Amounts Amounts Final Budget Revenues: Property taxes $ 63,228 $ 66,102 $ 65,565 $ (537)Sales and use taxes 65,546 65,546 68,581 3,035 Transient occupancy taxes 105,894 105,894 110,134 4,240 Other taxes 6,900 6,900 7,012 112 Licenses, fees and permits 17,558 17,558 18,738 1,180 Intergovernmental revenues 2,270 2,486 2,693 207 Charges for services 14,932 14,777 14,491 (286)Fines, forfeits and penalties 3,555 3,555 2,656 (899)Use of money and property 2,630 2,615 3,887 1,272 Other 2,261 2,275 622 (1,653)Total revenues 284,774 287,708 294,379 6,671 Expenditures:

City Council 617 617 548 (69)City Administration 4,061 4,061 3,377 (684)City Attorney 6,220 8,045 8,036 (9)City Clerk 1,152 1,154 1,073 (81)Human Resources 1,400 1,432 1,432 Finance 4,530 4,535 4,202 (333)City Treasurer 2,363 2,363 2,231 (132)Police 112,753 112,818 112,818 Fire 57,758 58,305 57,045 (1,260)Community Development 2,110 2,266 1,254 (1,012)Planning 16,060 16,062 14,790 (1,272)Public Works 15,188 15,227 15,019 (208)Community Services 27,059 27,235 26,510 (725)Public Utilities 2,546 2,546 2,510 (36)Convention, Sports and Entertainment 883 883 783 (100)Total expenditures 254,700 257,549 251,628 (5,921)Excess of revenues over expenditures 30,074 30,159 42,751 12,592 Other financing sources (uses): Transfers in 29,235 29,235 29,310 75 Transfers out (60,227) (60,827) (66,812) (5,985)Total other financing uses (30,992) (31,592) (37,502) (5,910)Net change in fhnd balance (918) (1,433) 5,249 6,682 Fund balance at beginning of year 38,884 38,884 38,884 Fund balance at end of year $ 37,966 $ 37,451 44,133 $ 6,682 Adjustment to reconcile to GAAP: Receipt of interfund receivable (515 Receipt of interfund loan (6031 Ending fund balance -GAAP basis $ 43,015 The accompanying notes are an integral part of these financial statements.

31 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual -Housing Authority Year Ended June 30, 2014 (In thousands)

Original Final Budgeted Budgeted Actual Variance with Amounts Amounts Amounts Final Budget Revenues: Licenses, fees and permits $ 38 $ 38 $ 57 $ 19 Intergovernmental revenues 73,063 73,063 70,904 (2,159)Charges for services 12 12 Use of money and property 9,564 9,564 17,525 7,961 Other 1,068 3,8222 Total revenues 83,733 83,733 92,320 8,587 Expenditures:

Community Development 80,442 84,651 80,161 (4,490)Total expenditures 80,442 84,651 80,161 (4,490)Excess (deficiency) of revenues over (under) expenditures 3,291 (918) 12,159 13,077 Other financing sources (uses): Transfers in 2,627 2,627 Transfers out (1,286) (1,286) (603) 683 Total other financing sources (1,286) (1,286) 2,024 3,310 Net change in fund balance 2,005 (2,204) 14,183 16,387 Fund balance at beginning of year 44,095 44,095 44,095 Fund balance at'end of year $46,100 $41,891 58,278 $16,387 Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale (6,493)Purchase of land for resale 417 Disbursement of interfund loan 603 Ending fund balance -GAAP basis $52,805 The accompanying notes are an integral part of these financial statements.

32 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit)Budget and Actual -Transportation Improvement Projects Year Ended June 30, 2014 (In thousands)

Final Budgeted Actual Variance with Amounts Amounts Final Budget Revenues: Intergovernmental revenues $141,356 $87,942 $(53,414)Total revenues 141,356 87,942 (53,414)Expenditures:

Planning 21 21 Public Works 126,705 92,491 (34,214)Total expenditures 126,726 92,512 (34,214)Excess (deficiency) of revenues over (under) expenditures 14,630 (4,570) (19,200)Net change in fund balance 14,630 (4,570) (19,200)Fund balance (deficit) at beginning of year (3,794) (3,794)Fund balance (deficit) at end of year $ 10,836 $ (8,364) $(19,200)The accompanying notes are an integral part of these financial statements.

33 CITY OF ANAHEIM Statement of Net Position Proprietary Funds June 30, 2014 (In thousands)

Business-type Activities

-Enterprise Funds Electric Water Sanitation Utility Utility Utility Convention Sorts and Golf Entertainment Courses Venues Governmental Activities

-Internal Total Service Funds ASSETS Current assets: Cash and cash equivalents Investments Restricted cash and cash equivalents Restricted investments Accounts receivable, net Accrued interest receivable Note receivable Interfund receivable Inventories Bond payment receivable Prepaid and other assets Total current assets Noncurrent assets: Restricted cash and cash equivalents, less current portion Restricted investments, less current portion Unamortized prepaid bond insurance Bond payment receivable, less current portion Pipeline receivable Accounts receivable, less current portion Interfund receivable, less current portion Prepaid and other assets Net other post-employment benefits (OPEB) asset Capital assets: Land Buildin s, structures and improvements Utility plant Machinery and equipment Construction in progress Total Capital assets Less accumulated depreciation Capital assets, net Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding bonds Total deferred outflows of resources$ 10,006 28,549 6,988 16,179 41,205 1,051$ 5,807 16,566 1,399 1,599 7,420 88$ 12,928 33,438 1,269 6,506 126$ 190 542 121 2$ 5,830 16,634 211 1,293 260 2 2,180 22 26,432 11,968 576$ 34,761 95,729 9,867 17,778 56,545 1,527 12,546 2,180 32,6A7 263,580 41,553 210,378 1,188 2,325 20 31,A10 1,215 147,356 34,670 54,267 855 22,846 192,757 1,103 2,093 7,501 1 13,806 84 2,808 10,120 2,325$ 18,023 51,426 6,285 166 26 10 819 336 77,091 3,550 31 11,152 7,837 58,088 225 66,150 (47,747)18,403 33,136 110,227 20 62,064 62,064 35,671 1,223,497 55,001 1,314,169 (459,092)855,077 1,133,847 1,281,203 2,339 429,230 16,162 447,731 (128,721)319,010 328,625 363,295 316 1,949 105,377 16,689 5,888 3,535 115,116 (13,880)101,236 115,126 169,393 1,113 19,751 (11,049)8,702 8,702 9,557 18,135 514,698 25,721 10,951 569,505 (239,113)330,392 345,645 372,077 58,410 636,764 1,652,727 32,722 85,649 2,466,272 (851,855)1,614,417 1,931,945 2,195,525 2,756 118 2,756 118 (continued) 1,726 4,600 1,726 4,600 34 CITY OF ANAHEIM Statement of Net Position Proprietary Funds June 30, 2014 (In thousands) (continued)

Business-type Activities

-Enterprise Funds Electric Water Sanitation utility utility utility Convention S orts and Golf Entrtainment Courses Venues Governmental Activities

-Internal Total Service Funds UABIUTIES Current liabilities (payable from current assets): Accounts payable Wages payable Interest payable Compensated absences Long-term obligations Line of credit payable Unearned revenues Deposits Interfund payable Total current liabilities (payable from current assets)Current liabilities (payable from restricted assets): Accounts payable Wages payable Interest payable Arbitrage rebate liability Long-term obligations Total current liabilities (payable from restricted assets)Total current liabilities Noncurrent liabilities:

Interfund payable, less current portion Long-term obligations, less current portion Provision for decommissioning costs Total noncurrent liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Regulatory credits Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: Debt service Capital projects Other purposes Unrestricted Total net position Adjustment to reflect the consolidation of int Net position of business-type activities

$ 36,093 $ 15,759 $ 3,266 $ 296 $ 3,006 650 212 91 7 367 547 11,439 3,846 52,028 3,566 125 7,223 337 11,916 23,167 75,195 634,097 133,664 767,761 842,956 557 9,100 809 25,880 1,049 6 1,943 2,998 28,878 89,787 89,787 118,665 623 4,537 18 2 851 398 1,269 5,806 43,552 43,552 49,358 3 548 854 13,681 245 2,208 20,054$ 58,420 1,327 547 25,677 9,100 245 7,489 548 103,353 3,584 127 211 9,334 343 14,257 211 27,645 854 20,265 130,998$ 6,172 1,015 13,447 8,679 1,893 31,206 31,206 38,220 38,220 69,426 1,613 59,454 1,613 59,454 2,467 79,719 1,613 826,890 133,664 962,167 1,093,165 89,098 6,208 89,098 6,208 255,497 225,520 60,177 8,702 95,306 95,306 273,609 12,263 1,308 398 16,001 3,028 15,600 12,019 56,125 8,684 43,860$ 351,905 $238,540 $120,035 rnal service fund activities related to enterprise funds.2,808 13,886 (1,612) 3,781 7,090 $294,084 823,505 16,777 48,515 12,019 110,838 1,011,654 (15,333)$ 996,321 17,078 23,723$ 40,801 The accompanying notes are an integral part of these financial statements.

35 CITY OF ANAHEIM Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Year Ended June 30, 2014 (In thousands)

Business-type Activities

-Enterprise Funds Operatin' revenues: Soles o6f light and power Transmission revenues Sales of water Solid waste collection fees Wastewater fees Street cleaning fees Green fees and cart rentals Facilities rental Concession fees Charges for services Other Total operating revenues OFerotinq expenses: ost oe purchased power Fuel and generation of power Cost of purchased water Treatment and pumping of water Maintenance, operations and administration Insurance premiums and claims Compensated absences and other benefits Depreciation and amortization Total operating expenses Operating income (loss)Nonoperating income (expenses):

Intergovernmental revenues Investment income Debt service recovery Interest expense Gain (loss) from disposal of capital assets Total nonoperating expenses Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Change in net position Net position at beginning of year Net position at end of year Electric Utility$386,897 34,912 Water Sanitation Utility Utility Convention Sports and Golf Entrtainment Courses Venues$ 65,182$ 41,041 11,869 3,209$4,328 160 4,242 764 1,724 179 426,051 65,946 57,843 4,667 275,013 23,643 28,769 8,433 43,079 11,942 41,770 383,505 42,546 4,731 (27,340)(22,609)19,937 4,362 297 (22,682)1,914 349,991$351,905 10,534 59,678 6,268 45 988 (3,167)(2,134)4,134 3,531 600 (3,818)4,447 234,093$238,540 49,364 2,445 51,809 6,034 90 570 (1,620)(960)5,074 535 4,864 (2,143)8,330 111,705$120,035 3,816 554 4,370 297 5 (23)(18)279 (250)29 7,061$7,090$ 24,689 5,868 1,527 32,084 27,719 13,497 41,216 (9,132)692 317 (4,840)(200)(4,031)(13,163)1,585 14,272 2,694 291,390$294,084 Total$386,897 34,912 65,182 41,041 11,869 3,209 4,328 24,689 6,028 8,436 586,591 275,013 23,643 28,769 8,433 135,920 68,800 540,578 46,013 135 6,986 317 (36,990)(200)(29,752)16,261 10,013 20,033 (28,893)17,414 (766)$ 16,648 Governmental Activities

-Internal Service Funds$165,353 123 165,476 37,862 9,903 116,705 4,207 168,677 (3,201)574 (85)305 794 (2,407)(2,407)43,208$ 40,801 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.Change in net position of business-type activities The accompanying notes are an integral part of these financial statements.

36 CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2014 (In thousands)

Business-type Activities

-Enterprise Funds Convention Sports and'Electric Water Sanitation Golf Entertainment Utility Utility Utility Courses Venues Total Governmental Activities

-Internal Service Funds Cash flows from operating activities:

Receipts from customers and users Receipts from interfund services provided Payments to suppliers Payments for salaries, wages and other benefits Payments for interfund services used Payments for insurance premiums and claims Other receipts Net cash provided by (used for) operating activities Cash flows from noncapital financing activities:

Proceeds from short-term borrowings from line of credit Payments on short-term borrowings from line of credit Receipt of interfund balances Transfrs~c in Transfers out Operating grant receipts Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities:

Proceeds from sale of capital assets Capital contributions Capital purchases Proceeds from short-term borrowings from line of credit Debt Issuance costs Principal payments on long-term debt Interest payments Debt service recovery Payment of interfund balances of capita purposes Transfers in for capital purposes Transfers out for capita purposes Net cash used for capital and related financing activities Cash flows from investing activities:

Purchase of investment securities Proceeds from sale and maturity of investment securities Interest received Collection of note receivable Net cash provided by (used for) investing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year$ 446,926 2,030 (309,304)(37,615)(8,030)$ 65,840 341 (26,204)(13,441)(4,503)$ 56,947 56 (40,818)(6,553)(3,357)$ 4,327 $ 32,966 $ 607,006 336 2,763 $164,988 (3,170) (5,298) (384,794)

(22,052)(503) (17,415) (75,527) (132,672)(199) (2,793) (18,882) (3,490)(10,506)1,668 223 791 7,460 132,234 (3,509)1,668 94,007 22,033 7,943 7,400 (10,000)(22,682)(25,282)600 (3,521)45 (2,876)7,400 (10,000)14,272 14,872 (28,596)136 14,272 (16,188)(2,143)91 (2,052)68 (4,596)(250)(250)3,138 2,485 (66,491) (17,919)9,100 (80,195) (1,876) (920)(30,542) (4,556) (2,078)5,691 (103) (11,343) (100,452)9,100 (487) (487)(13,215) (96,206)(33) (4,073) (41,282)2,357 2,357 (515) (515)5,161 (32)(651) (26,761) (216,665)125 125 305 (3,799)(1,121)(85)(4,700)(15,025)15,565 528 1,068 (7,016)25,039$ 18,023 297 (173,793)(50,336)76,761 4,742 (31,167)(73,901)113,741$ 39,840 4,864 (32)(12,798) (2,662)(12,846)6,223 934 64 (5,625)734 8,565$ 9,299 (continued)

(19,024)10,121 493 (8,410)(5,181)33,184$ 28,003 (140)164 4 28 (82)272$ 190 (3,267)5,035 657 2,425 (2,604)11,453$ 8,849 (85,613)98,304 6,830 64 19,585 (81,034)167,215$ 86,181 37 CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2014 (In thousands) (continued)

Business-type Activities

-Enterprise Funds Convention, Sports and Electric Water Sanitation Golf Entertainment Utility Utility Utility Courses Venues Governmental Activities

-Internal Total Service Funds$ 46,013 $ (3,201)Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:

Operating income (loss)Adjustment to reconcile operating income (loss)to net cash provided by (used for) operating activities:

Depreciation and amortization Increase in provision for decommissioning costs Changes in assets, liabilities and deferred inflows of resources:

Accounts receivable Inventories Prepaids and other assets Note receivable Accounts payable Wages payable Unearned revenues Compensated absences, (OPEB) and self-insurance liability Deposits Regulatory credits Total adjustments Net cash provided by (used for) operating activities Schedule of noncash investing, capital and noncapitol financing activities:

Capital assets financed through capital leases Capital contributions Increase in fair value of investments Reconciliation of cash and cash equivalents:

Cash and cash equivalents Restricted cash and cash equivalents, current portion Restricted cash and cash equivalents, noncurrent portion Total cash and cash equivalents

$ 42,546 $ 6,268 $ 6,034 S 297$ (9,132)41,770 2,331 2,015 (2,285)(27,005)13,495 250 (245)21,135 51,461$ 94,007 10,534 2 26 (61)5,002 29 59 174 15,765$ 22,033 2,445 805 (1,366)2 23 1,909$ 7,943$ 467 62$ 12,928 1,269 13,806$ 28,003 554 13,497 (4)254 1 (2)68,800 2,331 3,072 (2,258)(27,068)19,220 350 2 (56) 2,145 69 2 494$ 791 626 16,592$ 7,460$ 1,585 15$ 1,224 $ 1,046 156 41 463 21,309 86,221$132,234$ 4,322 275$ 34,761 9,867 41,553$ 86,181 4,207 (3,240)(70)478 15 (1,409)(1,929)103 1,537 (308)$ (3,509)$ 1,077 59$ 18,023$ 18,023$ 1$ 10,006 6,988 22,846$ 39,840$ 5,807 1,399 2,093$ 9,299$ 190 $ 5,830 211 2,808$ 190 $ 8,849 The accompanying notes are on integral part of these financial statements.

38 CITY OF ANAHEIM Statement of Fiduciary Net Position (Deficit)Fiduciary Funds June 30, 2014 (In thousands)

Successor Agency Investment Trust Private Purpose Agency Funds Trust Fund Fund ASSETS Restricted cash and cash equivalents

$ 472 $ 33,388 $3,934 Restricted investments 1,348 5,501 3,256 Accrued interest receivable 7 11 Accounts receivable, net 120 35 Notes receivable, net 1,780 Prepaid and other assets 994 Unamortized prepaid bond insurance 2,355 Land held for resale, net 17,408 Capital assets, net Nondepreciable 15,568 Depreciable 60,967 Total assets 1,827 138,092 $7,225 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding bonds 1,394 Total deferred outflows of resources 1,394 UABIUTIES Accounts payable 3,569 Wages payable 14 Interest payable 6,337 Due to State of California 6,129 Deposits 205 Unearned revenues 6 Due to City of Anaheim 1,767 Due to bond holders $7,225 Long-term liabilities:

Due within one year 5,005 Due in more than one year 232,106 Total liabilities 255,138 $7,225 NET POSITION (Deficit)Held in trust for pool participants 1,827 Held in trust for other purposes (deficit)

(115,652)Total net position (deficit)

$1,827 $ (115,652)The accompanying notes are an integral part of these financial statements.

39 (This page left blIank intentionally) 40 CITY OF ANAHEIM Statement of Changes in Fiduciary Net Position (Deficit)Fiduciary Funds Year Ended June 30, 2014 (In thousands)

Investment Trust Funds ADDITIONS Property taxes Contributions to pooled investments Interest and investment income Rental income Other Total additions DEDUCTIONS Distribution from pool investments Salaries and administration Program expenses Interest expense Depreciation Total deductions

$6,7-71 25 6,796 5,640 Successor Agency Private Purpose Trust Fund$ 16,592 464 2,230 152 19,438 2,356 7,299 12,863 1,695 24,213 (4,775)(110,877)$ (115,652)Change in net position Net position (deficit) held in trust at beginning of year Net position (deficit) held in trust at end of year 5,640 1,156 671$1,827 The accompanying notes are an integral part of these financial statements.

41 (This page left blank intentionally) 42 CITY OF ANAHEIM Notes to Financial Statements (Amounts in thousands)

NOTE 1 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES: The financial reporting entity As defined by U. S. generally accepted accounting principles (GAAP) that are established by the Governmental Accounting Standards Board (GASB), the financial reporting entity consists of the primary government, as well as its component units, which are legally separate organizations for which the elected officials of the primary government are financially accountable.

Financial accountability is defined as 1)appointment of a voting majority of the component unit's board, and either a) the ability to impose will by the primary government, or b) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government; and 2) the component unit is fiscally dependent on and there is a potential for the component unit to provide specific financial benefit to or impose financial burden on the primary government regardless of whether the component unit has a) a separately elected government board, b) a governing board appointed by a higher level of government, or c) a jointly appointed board.The accompanying financial statements present the City of Anaheim (City), the primary government, and its component units. The financial data of the component units are included in the City's reporting entity because of the significance of their operational or financial relationships with the City.The component units described below are each legally separate from the City, but are so intertwined with the City that they are, in substance, the same as the City. They are reported as part of and accountable to the City and blended into the government-wide and fund financial statements.

Anaheim Housing Authority (Housing Authority) is a separate entity primarily funded by the U.S. Department of Housing and Urban Development to administer funds received under the Federal Housing Assistance Payments program. City Council members, in separate session, serve as the governing board of the Housing Authority, and all accounting and administrative functions are performed by the City. The financial activity of the Housing Authority has been blended into the City's Comprehensive Annual Financial Report (CAFR) in the govemment-wide governmental activities and in the fund financial statements as the Housing Authority Special Revenue Fund.Community Center Authority (CCA) a joint powers authority, was created primarily to finance the initial construction of the Anaheim Convention Center. A five-member board appointed by the City Council governs the CCA. The City has entered into a noncancelable long-term lease with the CCA, which provides for lease payments in amounts sufficient to meet the annual debt service requirements on the certificates of participation issued by the CCA to finance the construction of the facility.

The lease is a financing arrangement, which transfers the ownership of the facility to the City at the end of the lease term, and the sole activity of the CCA is to provide financing for the City. As such, the financial data for the CCA has been blended into the City's CAFR in the govermment-wide business-type activities and in the fund financial statements with the City's Convention, Sports and Entertainment Venues Fund, as all activity related to the Anaheim Convention Center is accounted for in this enterprise fund. The capital lease has been eliminated in the financial statements.

For a copy of the CCA's separate financial statements, contact the Finance Director of the City.Anaheim Public Improvement Corporation (APIC) a non-profit corporation, was created primarily to finance several construction projects in the City. City Council members, in separate session, serve as the governing board of APIC. The City has entered into noncancelable long-term leases with APIC, which provide for lease payments in amounts sufficient to meet the annual debt service requirements on the certificates of participation issued by APIC to finance these construction projects.

The leases are financing arrangements, which transfer ownership of the constructed assets to the City at the end of the lease terms. The financial data of APIC has been blended into various governmental and business-type activities and funds of the City as applicable, and the capital leases have been eliminated.

Anaheim Public Financing Authority (Authority), a joint powers authority, was established as a vehicle to reduce local borrowing costs and promote greater use of existing and new financial instruments and mechanisms.

City Council members, in separate session, serve as the gaveming board of the Authority.

Financial activity of the Authority has been blended into the City's CAFR into-various governmental and business-type activities and funds of the City as applicable.

The City is a participant in four joint ventures and jointly-owned properties (see note 12), which are not considered part of the financial reporting entity, as the City does not have significant equity interests in the joint ventures and jointly-owned properties.

Basic financial statements In accordance with GASB Statement No. 34 -Basic Financial Statements and Managements Discussion and Analysis for State and Local Governments, the basic financial statements include both govemment-wide and fund financial statements.

The govermment-wide financial statements (Statement of Net Position and Statement of Activities) report on the City and its component units as a whole, excluding fiduciary activities.

Governmental activities, which normally are supported by taxes and 43 CITY OF ANAHEIM intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. All activities, both governmental and business-type, are reported in the government-wide financial statements using the economic resources measurement focus and the accrual basis of accounting, which includes long-term assets and receivables as well as long-term debt and obligations.

The government-wide financial statements focus more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period.Generally, the effect of interfund activity has been removed from the government-wide financial statements, except for interfund services provided and used. Net interfund activity and balances between governmental activities and business-type activities are shown as internal balances, net, in the government-wide financial statements.

The"doubling up" effect of internal service fund activity has been eliminated from the government-wide financial statements with the expenses shown in the various functions and programs on the Statement of Activities.

Further, certain eliminations are also made to transfers of resources between funds in the fund financial statements so that only the net amount of the transfers are shown in the governmental activities and business-type activities columns.The government-wide Statement of Net Position reports all financial and capital resources of the City (excluding fiduciary funds). It is displayed in a format of assets and deferred outflows of resources less liabilities and deferred inflows of resources equal net position, with the assets and liabilities shown in order of their relative liquidity.

Net positions are required to be displayed in three components:

1) net investment in capital assets 2) restricted, and 3) unrestricted.

Investment in capital assets represents capital assets net of accumulated depreciation which is reduced by outstanding balances of any bonds, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted net position is those with constraints placed on their use by either: 1 ) creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, or 2) law through constitutional provisions or enabling legislation.

All net positions not otherwise classified as restricted, are shown as unrestricted.

Generally, the City would first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net positions are available.

The government-wide Statement of Activities demonstrates the degree to which both direct and indirect expenses of the various functions and programs of the City are offset by program revenues.

Direct expenses are those that are clearly identifiable with a specific function or program. Indirect expenses for administrative overhead are allocated among the functions and programs using a full cost allocation approach and are presented separately to enhance comparability of direct expenses between governments that allocate direct expenses and those that do not. Interest on general long-term debt is not allocated to the various functions.

Program revenues include: 1)charges to customers or users who purchase, use or directly benefit from goods, services or privileges provided by a particular function or program and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or program. Taxes, unrestricted investment income and other revenues not identifiable with particular functions or programs are included as general revenues.

The general revenues support the net costs of the functions and programs not covered by program revenues.Also, part of the basic financial statements are fund financial statements for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements.

The focus of the fund financial statements is on major funds, as defined by GASB Statement No. 34. Although this reporting model sets forth minimum criteria for determination of major funds (a percentage of assets, deferred outflows of resources, liabilities, deferred inflows of resources, revenues, or expenditures/expenses of fund category and of the governmental and enterprise funds combined), it also gives governments the option of displaying other funds as major funds. Other nonmajor funds, as well as the internal service funds, are combined in a single column on the fund financial statements.

The City reports the following major governmental funds: The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.The Housing Authority Special Revenue Fund accounts for the providing of housing assistance to low and moderate-income families in the Anaheim area. Financing is provided primarily from Federal Section 8, U.S. Department of Housing and Urban Development (HUD) receipts.Transportation Improvement Projects Capital Project Fund accounts for transportation improvement projects in the City, primarily in support of the Anaheim Regional Transportation Intermodal Center (ARTIC), which is a transportation gateway and mixed-use activity center funded by grants from Orange County Transportation Authority (OCTA). Financing is provided by Federal, State and local agencies.The City reports the following major enterprise funds: The Electric Utility Fund accounts for the operation of the City's electric utility, a self-supporting activity, which renders services on a user charge basis to residents and businesses located in Anaheim.The Water Utility Fund accounts for the operation of the City's water utility, a self-CITY OF ANAHEIM supporting activity, which renders services on a user charge basis to residents and businesses located in Anaheim.The Sanitation Utility Fund accounts for the operation of the City's solid waste and sanitation program, a self-supporting activity, which provides for the collection and disposal of solid waste, street sweeping, and sanitary sewer cleaning on a user charge basis to residents and businesses located in Anaheim.The Golf Courses Fund accounts for the operation of the Anaheim Municipal

("Dad Miller") Golf Course and the Anaheim Hills Golf Course, a self-supporting activity that renders services on a user charge basis.The Convention, Sports and Entertainment Venues Fund accounts for the operations of the Anaheim Convention Center, Angel Stadium of Anaheim, and The City National Grove of Anaheim. See note 13 for further discussions of the Angel Stadium of Anaheim and The City National Grove of Anaheim.The internal service funds, which provide services to the other funds of the City, are presented in a single column in the proprietary funds financial statements.

Because the principal users of the internal service funds are the City's governmental activities, the assets and liabilities of the internal service funds are consolidated into the governmental activities column of the government-wide Statement of Net Position.

The costs of the internal service fund services are spread to the appropriate function or program on the government-wide Statement of Activities and the revenues and expenses within the internal service funds are eliminated from the government-wide financial statements to avoid any doubling effect of these revenues and expenses.

The City operates four internal service funds: The General Benefits and Insurance Fund is used to account for employee compensated absences, retirement and health benefits, and self-insurance programs.The Motorized Equipment Fund is used to account for motorized equipment used by City departments.

The Information and Communication Services Fund is used to account for data processing and telecommunication services provided to City departments.

The Municipal Facilities Maintenance Fund is used to account for office maintenance services and equipment used by City departments.

Fiduciary Funds account for assets held by the City in a trustee or agency capacity on behalf of others and, therefore, are not available to support City programs.

The Fiduciary Funds are not included in the government-wide financial statements as they are not an asset of the City. The City reports the following fiduciary funds: The Investment Trust Fund is used to account for the external portion of the City's investment pool, which commingles resources of legally separate entities administered by the City in an investment portfolio for the benefit of all participants.

The entities include three Joint Powers Authorities (JPA) governed by local boards.The City separately maintains these entities' money in three individual funds; these funds represent the assets, primarily cash and investment, and the related net position held in trust by the City to disburse these monies on demand.The Private Purpose Trust Fund is used to account for resources legally held in trust for use by the Successor Agency to the Former Anaheim Redevelopment Agency (Successor Agency). The Former Anaheim Redevelopment Agency, a former component unit of the City, dissolved on February 1, 2012 under the State of California Assembly Bill 1 X26.The Agency Fund is used to account for the monies collected and paid on behalf of the Mello-Roos Districts located in the City.Measurement focus and basis of accounting The governmental funds financial statements are prepared on a current financial resources measurement focus and modified accrual basis of accounting.

To conform to the modified accrual basis of accounting, certain modifications must be made to the accrual method. These modifications are outlined below: " Revenue is recorded when it becomes both measurable and available (received within 60 days after year-end).

Revenue considered susceptible to accrual includes:

property taxes, sales and use taxes, transient occupancy taxes, licenses, fees and permits, intergovernmental revenues (including motor vehicle license fees), charges for services, fines, forfeits and penalties, and interest." Expenditures are recorded when the related fund liability is incurred.

Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the following year." Disbursements for the purchase of capitol assets providing future benefits are considered expenditures.

Bond proceeds are reported as other financing source.With this measurement focus, operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. This is the traditional basis of accounting for governmental funds and also is the manner in which these funds are normally budgeted.

This presentation is deemed most appropriate to: 1) demonstrate legal and covenant compliance, 2)demonstrate the sources and uses of liquid resources, and 3) demonstrate how the City's actual revenues and expenditures conform to the annual budget. Since the governmental funds financial statements are presented on a different basis than the 45 CITY OF ANAHEIM governmental activities column of the government-wide financial statements, a reconciliation is provided immediately following each fund statement.

These reconciliations briefly explain the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide financial statements.

The proprietary funds financial statements are prepared on the same basis (economic resources measurement focus and accrual basis of accounting) as the government-wide financial statements.

Therefore, most lines for the total enterprise funds on the proprietary funds financial statements will directly reconcile to the business-type activities column on the government-wide financial statements.

Because the enterprise funds are combined into a single business-type activities column on the government-wide financial statements, certain interfund activities between these funds are eliminated in the consolidation for the government-wide financial statements, but are included in the fund columns in the proprietary funds financial statements.

The net costs of the internal service funds are also partially allocated to the business-type activities column on the government-wide financial statements.

A reconciliation of the total enterprise funds on the fund financial statements to the business-type activities column on the government-wide financial statements is provided on the face of the fund financial statements.

Enterprise funds account for operations where the intent of the City is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges and fees. Under GASB Statement No. 34, enterprise funds are also required for any activity whose principal revenue sources meet any of the following criteria:

1) any activity that has issued debt backed solely by the fees and charges ofthe activity, 2) the cost of providing services for an activity, including capital costs such as depreciation or debt service, must legally be recovered through fees and charges, or it is the policy of the City to establish activity fees or charges to recover the cost of providing services, including capital costs.On the proprietary funds financial statements, operating revenues are those that flow directly from the operations of the activity, i.e. charges to customers or users who purchase or use the goods or services of that activity.

Operating expenses are those that are incurred to provide those goods or services.

Non-operating revenues and expenses are items such as investment income and interest expense that are not a result of the direct operations of the activity.The Electric and Water Utility funds follow the uniform system of accounts prescribed by the Federal Energy Regulatory Commission (Electric Utility) and the California Public Utilities Commission (Water Utility).

The utilities are not subject to the regulations of these commissions The reporting focus for the investment trust fund and the private-purpose trust fund is upon net position and changes in net position and employs accounting principles similar to proprietary funds. The agency fund has no measurement focus but utilizes the accrual basis of accounting for reporting its assets and liabilities.

Cash and investments The City pools available cash from all funds for the purpose of increasing income through investment activities.

Investments in U.S. Treasury obligations and agency securities and medium term corporate notes are carried at fair value based on quoted market prices. Participating guaranteed investment contracts and flexible repurchase agreements are carried at fair value. Money market mutual funds are carried at fair value based on the fund's share price. The City's investment in the State of California Local Agency Investment Fund (LAIF) is carried at fair value based on the value of each participating dollar as provided by LAIF LAIF is authorized by California Government Code (Government Code) Section 16429 under the oversight of the Treasurer of the State of California.

Commercial paper, participating guaranteed investment contracts and negotiable certificates of deposit are carried at amortized cost (which approximates fair value). Interest income, which includes changes in fair value, on investments is allocated to all funds on the basis of daily cash and investment balances.See note 3 for further discussion.

For purposes of the basic financial statements, the City considers cash equivalents to be highly liquid short-term investments that are readily convertible to known amounts of cash and mature within three months of the date they are acquired.

Cash and cash equivalents are included in the City's cash and investments pool and in accounts held by fiscal agents.Notes receivable In the government-wide financial statements, notes receivable of $77,790 includes accrued interest receivable of $14,981, ranging from 3% to 10% interest per annum, and is net of allowances of $14,365 for uncollectible accounts at June 30, 2014.Allowances for uncollectible accounts were estimated based on certain assumptions; therefore, actual results could differ from the estimates.

In the governmental funds financial statements, due to the extended period of time over which notes receivable are to be collected and the contingent nature of certain sources of repayment, the City has recorded deferred inflows of resources equal to the outstanding principal and accrued interest balance of the notes receivable.

Inventories Inventories are stated at average cost. Inventories in the General Fund are recorded as expenditures when used and are reported under the consumption method of accounting.

Prepaid and other assets Certain payments to vendors such as insurance premiums, prepaid rents, and deposits for real property acquisitions reflect costs applicable to future periods and are recorded as prepaid and other assets in both government-wide and fund financial statements.

These costs will be recognized in the period when services are received or when the City receives title to the real property.46 CITY OF ANAHEIM Land held for resale The Housing Authority has recorded parcels of land held for resale in their financial records. The properties held for resale are for the primary purpose of developing low and moderate income housing and are recorded at the lower of cost or estimated net realizable value. At June 30, 2014, land held for resale with an original cost of$23,680 was recorded net of the allowance for decline in value of $12,785 and totaled$10,895, with this amount offset by a restriction of fund balance for low and moderate income housing in the Housing Authority major governmental fund financial statement.

Restricted assets Certain proceeds of the City's bonds, as well as certain resources set aside for their repayment, are classified as restricted on the Statement of Net Position, or Balance Sheet, because they are maintained in separate bank accounts and their use is limited by applicable debt covenants.

Additionally, resources set aside by the Electric Utility for future decommissioning of its former ownership share of the San Onofre Nuclear Generating Station, Units 2 and 3 (SONGS) and the San Juan Generating Station, Unit 4, are classified as restricted on bath the government-wide Statement of Net Position and proprietary funds Statement of Net Position.Capital assets Under GASB Statement No. 34, all capital assets, whether owned by governmental activities or business-type activities are recorded and depreciated in the government-wide financial statements.

No long-term capital assets or depreciation are shown in the governmental funds financial statements.

Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks and other assets that are immovable and of value only to the City), are defined as assets with an initial, individual cost of more than $5 ($50 for infrastructure) and an estimated useful life of greater than one year. Capital assets are recorded at cost or estimated historical cost if purchased or constructed.

Donated capital assets are recorded at the estimated fair value at the date of donation.The costs of normal maintenance and repairs that do not add to the value of the capital asset or materially extend capital assets lives are not capitalized.

Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets.Major outlays for capital assets and improvements are capitalized as the projects are constructed.

Interest incurred during the construction phase of projects is reflected in the capitalized value of the asset constructed for proprietary funds. For the year ended June 30, 2014, business-type activities capitalized net interest costs of $3,655 in the government-wide and fund financial statements.

Total interest expense incurred by the business-type activities (and the enterprise funds on the proprietary funds statements) before capitalization was $40,645.Capital assets are depreciated using the straight-line method over the following estimated useful lives: Buildings, structures and improvements Utility plant Machinery and equipment Infrastructure 5 to 85 years 5 to 75 years 2 to 40 years 25 to 75 years The net book value of capital assets retired or disposed of, related salvage value proceeds and the costs of removal are recorded in accumulated depreciation in the Electric Utility and Water Utility Funds. In all other cases, these amounts are recorded as gains or losses on disposal of capital assets.Capital assets transferred between funds are transferred at their net book value (cost less accumulated depreciation), as of the date of the transfer.Debt issuance costs Debt issuance costs, with the exception of prepaid insurance costs, are recognized as outflow of resources (expense/expenditure) in the period when the debt is issued.Prepaid insurance costs are capitalized and amortized over the lives of the related debt issues on a basis that approximates the effective-interest method.Bond refunding costs Bond refunding costs are deferred and amortized over the life of the new bond or over the life of the old bond, whichever is shorter, on a basis that approximates the effective-interest method. These costs are shown as a deferred outflow of resources on the Statement of Net Position.Accretion Accretion is an adjustment of the difference between the price of a bond or certificate of participation (COP) issued at an original discount and the par value of the bond or COP The accreted value is recognized as it accrues by fiscal year.Deferred outflows of resources Deferred outflows of resources represent consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In the Statement of Net Position, the City reported$2,177 in the governmental activities and $4,600 in the business-type activities of deferred charges on refunding bonds in this category.

A deferred charge on refunding bonds results from the difference in the carrying value of debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.47 CITY OF ANAHEIM Deferred inflows of resources Deferred inflows of resources represent acquisitions of fund balance or net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City reported the following in this category: 1 ) Unavailable revenues (which include revenues, notes and long term receivables) measured under the modified accrual basis of accounting reported in governmental funds. These amounts are deferred and will be recognized as an inflow of resources in the period that the amounts become available.

2) Regulatory credits accumulated from collections of the Electric and Water Utility customers reported in business-type activities.

These amounts provide recovery in current period for costs to be incurred in future periods. (Refer to discussion of Regulatory Credits that follows).Deferred inflows of resources that are included in the fund financial statements and government-wide statements at June 30, 2014 are as follows: unexpected long-term loss of a generating facility, unplanned limits on the ability to transmit energy to the City, or major disasters.

The RSA funded by PCA and EMA collections is billed to customers through standard rates.As of July 1, 2013, PCA rates were $0.0150 per kWh for all domestic retail customers, excluding residential lifeline customers, and $0.0100 per kWh for all commercial, industrial and municipal customers and large time of use (TOU) customers.

At June 30, 2014, the deferred inflows of resources recorded for regulatory credits related to PCA totaled $45,602 for the Electric Utility. During fiscal year 2014 $16,825 was recognized as RSA revenues to mitigate the impact of energy costs and operation costs.As of July 1, 2013, the EMA rate was $0.0150 per kWh for all domestic customers and$0.0100 per kWh for all other customers; including TOU customers.

At June 30, 2014, the deferred inflows of resources recorded for regulatory credits related to EMA totaled$43,496. During fiscal year 2014, $9,675 was recognized as RSA revenues to mitigate the impact of environmental mitigation costs.The Water Utility's rates, rules and regulations provide for a water regulatory credit account to reflect variations in the cost of water to the Water Utility and provide more stable retail water rates to the customers of the City's Water Utility. This rate stabilization account (RSA) provides increased flexibility by allowing the Water Utility to maintain financial performance indicators and goals specified in bond covenants.

The account is funded through expense reimbursements such as water supply cost refunds received from the Metropolitan Water District and Orange County Water District and other miscellaneous credits and revenue. At June 30, 2014 the deferred inflows of resources recorded for regulatory credits totaled $6,208 for the Water Utility. During fiscal year 2014, no PCA revenue was recognized for the Water Utility.Govermental Funds: Taxes Grants Odher revenues Notes and long term receivable Business-type activities:

Regulatory credits General Housing Fund Authority$ 8,206 47 $ 37 192 1,767 58,081$10,212 $58,118 Transportation Improvement Projects Nonmajor Governmental Funds$ 5,039 $12,009 41,330$ 5,039 $53,339 Electric Utility$89,098 Water Utility$ 6,208 Compensated absences Regulatory Credits The Electric Utility's Rates, Rules, and Regulations provide for the Rate Stabilization Account (RSA), which contains two components:

the Power Cost Adjustment (PCA) that was adopted by City Council on April 1, 2001, and the Environmental Mitigation Adjustment (EMA) that was adopted by the City Council on January 13, 2009. The PCA has mitigated variations in the power supply or fuel costs. The EMA will allow the recovery of environmental mitigation costs, such as greenhouse gas emissions costs, the marginal cost differential between renewable power and traditional fossil-fuel-based power. The RSA provides the City with operational and billing flexibility to mitigate material fluctuations in the cost of energy, loss of revenues, or unplanned costs including Compensated absences, vacation and sick pay, for all City employees are generally paid by the General Benefits and Insurance Fund, an internal service fund. The General Benefits and Insurance Fund is reimbursed through payroll charges to all other funds based on estimates of benefits to be earned and used during the fiscal year. It is the policy of the City to pay all accumulated vacation pay when an employee retires or terminates.

Accumulated sick pay in excess of 175 hours0.00203 days <br />0.0486 hours <br />2.893519e-4 weeks <br />6.65875e-5 months <br /> per employee is paid to employees at their then current rate of pay in January each year or upon termination from the City. Employees are paid for all accumulated sick pay when they retire from the City. Vested vacation and sick pay benefits are accrued when incurred in the General Benefits and Insurance Fund and at June 30, 2014, totaled $18,194 and is included in long-term liabilities in the Statement of Net Position.

Also included in long-term liabilities in the Statement of Net Position at June 30, 2014, is compensatory time liability of $400.48 CITY OF ANAHEIM Changes in the City's compensated absences liability in fiscal year 2014 were as follows: Compensated absences liability at beginning of year $18,222 Estimated compensated absences benefits earned 21,327 Compensated absences used (20,955)Compensated absences liability at end of year $18,59A Provision for decommissioning costs Federal regulations require the Electric Utility to provide for the future decommissioning costs of its former ownership share of San Onofre Nuclear Generating Station (SONGS). The Electric Utility has established a provision for decommissioning costs of SONGS and restoration of the beachfront at San Onofre, California where it is located.A separate irrevocable trust account has been established for amounts funded and these amounts are classified as restricted assets in the accompanying statement of net position.

At June 30, 2014, the provision for decommissioning costs totaled $129,264.For the year ended June 30, 2014, the Electric Utility has recorded decommissioning costs incurred for SONG in the amount of $1,891, which is included in the fuel and generation component in operating expenses.On June 7, 2013, Southem California Edison (SCE) announced the permanent retirement of SONGS plant. The Electric Utility will continue to fund the reserve until a new decommissioning study is approved by the Nuclear Regulatory Commission (NRC). The Electric Utility currently has $129,264 in an irrevocable trust for the decommissioning costs.The Electric Utility has a 10.04% ownership interest of the San Juan Generating Station, Unit 4 (SJ). The Electric Utility is providing for the future demolition and reclamation costs of its ownership share of SJ. As of June 30, 2014, the Electric Utility has recorded a provision for decommissioning costs for SJ of $4,400 of which $580 was in irrevocable trust and $3,820 in the City's restricted cash account. The amount was reported as restricted assets in the accompanying statement of net position.

For the year ended June 30, 2014, the Electric Utility has recorded decommissioning costs incurred for SJ of $440 in operating expenses.

Based on the cost projections, the Electric Utility has estimated

$440 in costs per year until 2027 to fund this obligation.

Pension plan Full-time City employees are members of the State of California Public Employees' Retirement System (PERS). The Citys policy is to fund all pension costs accrued; such costs to be funded are determined annually as of July 1 by the System's actuary. See note 11 for further discussion.

Net position restricted by enabling legislation The govemment-wide Statement of Net Position reports $205,998 of governmental activities restricted net position, of which $41,592 is restricted by enabling legislation.

Fund balances In the fund financial statements, governmental funds report the following classifications: " Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. The "not in spendable form" criterion includes items that are not expected to be converted to cash, for example, inventories, prepaid or long term loans and notes receivable" Restricted fund balance includes amounts when constraints placed on the use of the resources are either imposed by external resource providers, constitutional provisions or enabling legislation.

• Committed fund balance includes amounts that can be used only for the specific purposes pursuant to constraints imposed by formal action of the Citys highest level of the decision-making authority.

The City Council is the highest level of decision-making authority that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action by the City Council to remove or revise the limitation." Assigned fund balance includes amounts that the City intends to use for specific purposes but do not meet the criteria to be classified as restricted or committed.

The City Council has by Resolution authorized the City Manager or his designee to establish, modify or rescind an assigned fund balance.* Unassigned fund balance accounts for the residual balance of the City's General Fund and includes all spendable amounts not contained in other classifications.

In other governmental funds, the unassigned classification reports a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned.Generally, the City would first apply restricted resources when expenditures incurred for which both restricted and unrestricted resources are available.

Further, when the components of unrestricted fund balance can be used for the some purpose, committed fund balance is applied first, followed by assigned fund balance. Unassigned fund balance is applied last.49 CITY OF ANAHEIM In all governmental funds, encumbered amounts have been restricted or assigned for specific purposes for which resources have already been allocated.

At June 30, 2014, encumbrances totaled $1,073, $12 and $7,891 in the General Fund, Housing Authority Special Revenue Fund, and other nonmajor governmental funds, respectively.

The accumulated deficit fund balance at June 30, 2014 for the Transportation Improvement Projects major Capital Project Fund of $8,364 and for Streets Construction in nonmajor Capital Project Fund of $7,100 will be eliminated in future years by the receipt of reimbursements for grant expenditures.

Budgetary principles The City is required by its charter to adopt an annual budget on or before June 30 for the ensuing fiscal year. The General, special revenue, debt service, and capital projects governmental fund types and proprietary fund types have legally adopted budgets approved by City Council. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the department level. From the effective date of the budget, the amounts stated herein as proposed expenditures/expenses become appropriations to the various City departments.

Throughout the fiscal year the budget was amended to add supplemental appropriations.

All amendments to the budget which change the total appropriation amount for any department require City Council approval and all increases in appropriations in operating expenditures must be accompanied by an increase in revenue sources of a like amount to maintain a balanced budget. The City Manager has the authority to change individual budget line items within a department as long as the total department's appropriation amount is not changed.The City utilizes an encumbrance system as a management control technique to assist in controlling expenditures.

All appropriations lapse at the end of the fiscal year, except for capital projects which are carried forward until such time as the project is completed or terminated and for encumbered balances that are re-appropriated in the next year.GASB Statement No. 34 allows that budgetary comparison statements for the General Fund and major special revenue funds be presented in the basic financial statements rather than as Required Supplementary Information.

These statements must display original budget, amended budget and actual results.Budgeted revenue amounts represent the original budget modified by City Council authorized adjustments during the year, which were contingent upon new or additional revenue sources. Budgeted expenditure amounts represent original appropriations adjusted for supplemental appropriations during the year. Budgets are generally prepared in conformity with GAAP using the modified accrual basis of accounting, with the exception of capital leases, or other similar instruments, and land held for resale, which are budgeted on a cash basis.Property taxes Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on July 1 and are payable in two installments due on November 1 and February 1 and become delinquent after December 10 and April 10. The County of Orange, California (County) bills and collects the property taxes and remits them to the City in installments during the year. City property tax revenues are recognized when levied in the governmental funds to the extent that they result in current receivables collectable within 60 days after year-end.

See note 9 for discussion of pledged property tax revenues.The County is permitted by State law (Proposition

13) to levy taxes at 1% of full market value (at time of purchase) and can increase the property tax rate no more than 2% per year from the full market value at the time of purchase.

The City receives a share of this basic levy proportionate to what it received in the 1976 and 1978 periods.Entitlements, shared revenues and grants Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized in the fund Financial statements as revenue when the qualifying expenditures have been incurred, all eligibility requirements have been met, and reimbursement is received within the availability period.Revenue recognition for Electric Utility, Water Utility, and Sanitation Utility Funds Revenue is recorded in the period in which services are provided.

Residential and smaller commercial customers are billed bimonthly and all other customers monthly. At June 30, 2014 unbilled but earned service charges recorded in accounts receivable for the Electric Utility, Water Utility, and Sanitation Utility Funds amounted to $22,479,$5,096, and $3,939, respectively.

See note 9 for discussion of pledged revenues.Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. As such, actual results could differ from those estimates.

NOTE 2 -NEW ACCOUNTING PRONOUCEMENTS:

On July 1, 2013, the city adopted the following new accounting pronouncements issued by the GASB: 50 CITY OF ANAHEIM" GASB Statement No. 66, Technical Corrections

-2012: an Amendment of GASB Statement No. 10 and No. 62. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2012.* GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees.

This Statement establishes accounting and financial reporting standards for situations where a state or local government, as a guarantor, agrees to indemnify a third-party obligation holder under specified conditions (i.e., nonexchange financial guarantees).

The issuer of the guaranteed obligation can be a legally separate entity or individual, including a blended or discretely presented component unit. Guidance is provided for situations where a state or local government extends or receives a nonexchange financial guarantee.

The requirements of this Statement are effective for financial statements for reporting periods beginning after June 15, 2013.Implementation of these pronouncements had no material effect on amounts reported in the City's financial statements for the fiscal year ended June 30, 2014.The City is currently reviewing its accounting practices to determine the potential impacts on the financial statements for the following GASB Statements:

• GASB Statement No. 68, Accounting and Financial Reporting for Pension; an amendment of GASB Statement No. 27. This Statement replaces the requirements of Statement No. 27 and No. 50 related to pension plans that are administered through trusts or equivalent arrangements.

The requirements of Statements No. 27 and No. 50 remain applicable for pensions that are not administered as trusts or equivalent arrangements.

The requirements of this Statement are effective for financial statements for fiscal years beginning after June 15, 2014.* GASB Statement No. 69, Government Combinations and Disposals of Government Operations.

This Statement establishes accounting and financial reporting standards for mergers, acquisitions, and transfers of operations (i.e., government combinations).

The Statement also provides guidance on how to determine the gain or loss on a disposal of government operations.

This Statement applies to all state and local governmental entities.

The requirements of this Statement should be applied prospectively and are effective for government combinations and disposals of government operations occurring in financial reporting periods beginning after December 15, 2013.* GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, an amendment of GASB Statement No. 68. This Statement should be applied simultaneously with GASB Statement No. 68.NOTE 3 -DEPOSITS AND INVESTMENTS:

The City maintains a cash and investment pool, which includes the cash balances of all funds, and is invested by the City Treasurer to enhance interest earnings.

The pooled interest earned, net of administrative fees, is reallocated to each fund based on their respective average daily cash balances.The City's pooled investment fund has been reviewed by Standard and Poor's Corporation (S&P) and received a credit rating of AAf/S1 in August 2013.The City's investment policy further limits the permitted investments in Government Code Sections 53600 et al, 16429.1 and 53684 to the following:

obligations of the United States government, federal agencies, and government sponsored enterprises; medium-term corporate notes; certificates of deposit; bankers' acceptances; commercial paper;LAJF; repurchase agreements; reverse repurchase agreements; and money market mutual funds.Deposits and investments are comprised of the following at June 30, 2014: Governmental activities:

General Fund Housing Authority Nonmajor governmental funds Internal service funds Total governmental activities Business-type acvities: Electric Utility Water Utility Sanitation Utility Golf Courses Convention, Sports and Entertainment Venues Total business-type activities Government-wide totals Fiduciary funds Cash and Cash Equivalents

$ 8,708 10,557 18,709 18,023 55,997 10,006 5,807 12,928 190 5,837 90,758 Investments

$ 24,846 30,121 53,385 51,426 28,549 16,566 33,438 542 Restricted Cash and Cash Equivalents

$ 2,763 38,226 40 989 29,834 3,492 15,075 Restricted Investments Total$ 49,637 49,637$ 33,554 43,441 159,957 69440 306,40 208,936 277,325 9,100 34,965 61,441 732 16,634 3,019 95,729 51,420 255,507 92,409 37794$255_507 $130_203 10,120 228,156 277,793 10105$287_898 35,603 716,467 47,89$764_366 Total cash and investments

$90_758 Deposits and investments are comprised of the following at June 30, 2014: Deposits Investments Total deposits and investments

$ 6,191 758,175 At June 30, 2014, deposits of $6,191 with a corresponding bank balance of $16,090 were maintained in various federally regulated financial institutions.

The difference of 51 CITY OF ANAHEIM$9,899 represents deposits in transit, outstanding checks, and other reconciling items.Deposits with bank balances of $758 are insured by the Federal Depository Insurance Corporation.

For deposits with bank balances totaling $15,332 California state statutes require federally regulated financial institutions to secure a city's deposits by pledging collateral consisting of either government securities with a value of 110% of a city's total deposits or by pledging first trust deed mortgage notes having a value of 150% of a city's total deposits.

The collateral is required by regulation to be held by the counterparty's agent in the name of the City.Investments The City Treasurer prepares an investment policy statement annually, which is presented to the Budget, Investment and Technology Commission for review and the City Council for approval.

The approved investment policy Statement is submitted to the California Debt and Investment Advisory Committee in accordance with Government Code.The policy provides the basis for the management of a prudent, conservative investment program. Public funds are invested for the maximum security of principal and to meet daily cash flow needs while providing a return. All investments are made in accordance with the Government Code and, in general, the City Treasurer's policy is more restrictive than Government Code.Investments authorized by the Government Code and the City's investment policy The following table identifies the investment types that are authorized for the City by its investment policy which is more restrictive than Government Code. The table also identifies certain provisions of the City's investment policy that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the Government Code or the City's investment policy. Minimum*Excluding amounts held by bond trustees that are not subject to Government Code restrictions The City's pooled investments comply with the requirements of the investment policy.GAAP requires disclosure of certain investments in any one issuer that exceeds five percent concentration of the total investments.

At June 30, 2014, the following investments represent five percent or more of the City's total pooled investments:

Fair Issuer Investment Type Value %Federal National Mortgage Association U.S. agency securities

$101,816 24%LAIF LAIF 61,290 14%Federal Home Loan Bank U.S. agency securities 44,701 10%Federal Home Loan Mortgage Corporation U.S. agency securities 38,443 9%Federal Farm Credit Bank U.S. agency securities 34,142 8%Investments authorized by debt agreements Investment of debt proceeds held by bond trustees is governed by provisions of the debt agreements, rather than the general provisions of the Government Code or the Citys investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees.

The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.Maximum Authorized Investment Type Maturity U.S. Treasury obligations None U.S. agency securities None Guaranteed investment contracts None Collateralized investment contracts None Flexible repurchase agreements None Money market mutual funds None LAIF None City of Anaheim Treasurer's investment portfolio None Pce None None None None None None None None Investment in One Issuer None None None None None None None None Authorized Investment Tvye U.S. Treasury obligations U.S. agency securities Bankers' acceptances Commercial paper Negotiable certificates of deposit Repurchase agreements Reverse repurchase agreements Medium-term corporate notes Money market mutual funds LAIF Time certificates of deposit (TCD)Maximum Maximum Percentage Maturity of Portfolio*

5 years 100%5 years 100%180 days 40%270 days 25%360 days 25%1 Year 30%90 days 20%5 years 30%N/A 20%$50 million N/A per account 1 year 20%Maximum Investment in One Issuer 100%40%5%5%5%None None 5%10%$50 million per account 5%Ratin9 (S&P/Moody's/Fitch)None None None A-I/P-I/F-1 None None None A None None None Issuer Federal National Mortgage Association Morgan Stanley Federal Home Loan Bank LAIF Dreyfus Treas 521 Federal Home Loan Mortgage Corporation Federal Farm Credit Bank U.S. Bank Money Market Bank of America At June 30, 2014, the following investments represent five percent or more of the City's total investments controlled by band trustees: Investment Type U.S. agency securities Flexible repurchase agreement U.S. agency securities LAIF Money market Mutual Fund U.S. agency securities U.S. agency securities U.S. Bank Money Market Investment guarantee contract Fair Value$61,682 42,000 31,712 31,230 24,471 17,712 17,059 17,037 16,645 19%13%10%9%7%5%5%5%5%52 CITY OF ANAHEIM All guaranteed investment contracts have downgrade language that requires collateral should credit ratings drop below certain levels.Custodial credit risk Custodial credit risk for investments is the risk that the City will not be able to recover the value of investment securities that are in the possession of an outside party. All securities owned by the City with the exception of LAIF and money market mutual funds are deposited in trust for safekeeping with a custodial bank different from the City's primary bank. Securities are not held in broker accounts.

Funds held by LAIF and money market mutual funds are held in the City's name.Custodial credit risk for investments held by bond trustees is the risk that the City will not be able to recover the value of investment securities that are in the possession of an outside party. All securities held by bond trustees are in the name of the bond issue in trust for safekeeping with the bond trustee, which is different from the City's primary bank.Interest rate risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment.

The City Treasurer mitigates this risk by investing in longer-term securities only with funds that are not needed for current cash flow purposes and holding these securities to maturity.

The City Treasurer uses the segmented time distribution method to identify and manage interest rate risk. In accordance with the City investment policy, the City Treasurer monitors the segmented time distribution of its investment portfolio and analysis of cash flow demand.Investments held by bond trustees are typically long-term securities which are not adversely affected by interest rate changes. Guaranteed investment contracts for construction funds are usually limited to three years or less. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity at June 30, 2014: Credit Rating (S&P/Investments M~L4 Investments controlled by City Treasurer:

U.S. agency securities AA+/Aaa Medium-term corporate notes AAA/Aaa Medium-term corporate notes AA+/Aoa Medium-term corporate notes AA+/A1 Medium-term corporate notes AA/Aal Medium-term corporate notes AA/Aa2 Medium-term corporate notes AA-/Aa3 Medium-term corporate notes A+/A1 Medium-term corporate notes A+/A2 Medium-term corporate notes A/A3 Medium-term corporate notes A-/A3 Medium-term corporate notes A-/Baal Commercial paper A-i/P-1 Money market mutual funds AAA/Aaa LAIF Unroted Total investments controned by City Treasurer Investments controlled by bond trustees: U.S. agency securities AA+/Aaa Guaranteed investment contracts Unrated Collateralized investment contracts Unrated Flexible repurchase agreements Unroted Money market mutual funds AAA/Aaa LAN Unrated Total investments controled by bond trustees Total investments Fair Value 6/30/2014$219,102 25,681 5,009 15,388 11,290 3,002 3,017 3,010 6,003 11,127 7,018 5,211 43,379 6,522 61,290 426,049 128,165 34,699 4,880 61,066 72,086 31,230 12 Months or Less 13 25 37 More ta ta ta Than 24 36 60 60 Months Months Months Months$ 33,245 $ 17,756 18,473 5,049 5,064 2,012 3,002 3,017 S 44,934 $123,167 5,005 2,203 5,009 5,275 6,254 3,024 3,010 4,991 1,012 6,106 5,021 7,018 5,211 43,379 6,522 61,20 ___156,603 66,574 66, 136,395 8,308 27,143 10,135 1,211 10,703 72,086 31,230 9,446 83,268 4,022$20,542 3,669 50,363 332,126 122,327 3,489 9,446 87,290 7A,574$758_175 $278_930 $105_063 S 75_923 $223685$ 74574 NOTE 4 -ACCOUNTS RECEIVABLE, DUE FROM OTHER GOVERNMENTS, DUE FROM THE SUCCESSOR AGENCY, INTERFUND RECEIVABLE AND PAYABLE BALANCES, AND CERTAIN INTERFUND TRANSACTIONS:

Accounts receivable Accounts receivable for the City's governmental and business-type activities, including the applicable allowance for uncollectible accounts at June 30, 2014, are as follows: 53 CITY OF ANAHEIM Less: Accounts Allowance for Receivable Uncollectibles Total Governmental activities:

General Fund Housing Authority Transportation Improvement Projects Nonmajor governmental funds Internal service funds Total governmental activities Business-type activities:

Electric Utility Water Utility Sanitation Utility Golf Courses Convention, Sports and Entertainment Venues Total business-type activities Total accounts receivable

$16,373 108 2 1,264 9,835 27,582 41,822 7,508 6,695 121 57,A71$85_053$(3,826) $12,547 (93) 15 2 1,264 9,835 (3,919 23,663 (617)(88)(189)(32)(926)$(A,845)41,205 7,420 6,506 121$80,208 Due from other governments Due from other governments for the City's governmental activities at June 30, 2014, are as follows: " On April 1, 2003 the City and the former Anaheim Redevelopment Agency entered into a Cooperation Agreement whereby the City will assist the Redevelopment Agency with the development of Westgate utilizing

$10,000 of funds from the HUD Section 108 loan program. The amount is due to the City by annual installment through June 2024. At June 30, 2014, the amount due to the City is $7,450." On June 1, 2010, the City and the former Anaheim Redevelopment Agency entered into a Cooperation Agreement whereby the City will assist the Redevelopment Agency with the rehabilitation of the historic Packing House site utilizing

$7,000 of funds from the HUD Section 108 $15,000 loan proceeds.The amount is due to the City by annual installment through June 2031. At June 30, 2014, the amount due to the City is $6,021." In fiscal years 2010 and 2011, the former Anaheim Redevelopment Agency paid a total of $19,163 to the State of California Supplement Educational Revenue Augmentation Fund (SERAF). Of this amount, $8,500 was paid with funds borrowed from Housing Set-Aside property tax increment.

At June 30, 2014, the amount due to the City is $8,176." On February 5, 2013, the City and the Successor Agency entered into a Cooperation Agreement whereby the City will assist the Successor Agency with loaning the proceeds of one-time allocation of the $1,563 from the low-and moderate income housing fund for various Successor Agency projects.

At June 30, 2014, the amount due to the City is $884." On May 14, 2013, the City and the Successor Agency entered into a Cooperation Agreement whereby the City will assist the Successor Agency by providing a loan up to $1,500 for making homebuyer loans. At June 30, 2014, the amount due to the City is $883.Interfund receivable and payable balances Net internal balances between governmental activities and business-type activities of$17,494 are included in the government-wide financial statements at June 30, 2014.Interfund receivables and poyables that are included in the fund financial statements at June 30, 2014, are as follows: Taxes Governmental activities:

General Fund $16,737 Housing Authority Transportation Improvement Projects Nonmajor governmental funds Total due from other governments

$16_737 Grants$ 388 159 22,489 22,254 Other Total$280 $17,405 159 22,489 22,254$280$62,307 Revenues are reported net of estimated uncollectible amounts. Total estimated uncollectible amounts related to revenues of the current period are as follows: General Fund Electric Utility Water Utility Sanitation Total$ 799 786 94 281$1,960 Due from the Successor Agency The amount due from the Successor Agency at June 30, 2014 is $23,414. Due to the extended period of time over which the receivables are to be collected, the City has recorded deferred inflows of resources equal to the amount due.54 CITY OF ANAHEIM Interfund Receivable Interfund Payable Governmental funds General Fund Transportation Improvement Projects Nonmajor governmental funds Enterprise Fund: Golf Courses Total Nonmajor Internal General Housing Governmental Service Fund Authority Funds Funds Total Transfer of capital assets with net book value totaled $1,572 from the governmental activities to Business-type activities:

street light installations to Electric Utility ($985), sewer improvements to Sanitation Utility ($467) and land development to Convention, Sports and Entertainment Venues ($120). These amounts were accounted for as capital contributions in the respective enterprise fund financial statements.

$883$ 41 $ 924$ 6,254 8,671 6,254 The following interfund transfers are reflected in the fund financial statements at June 30, 2014:$1,170 2,161$ý3331 9,841 Transfer In:$833 $14,925 $ 41 $19180 Certain interfund balances at June 30, 2014 are generally short-term loans to relieve temporary cash deficits in various funds. The following interfund balance is expected to be repaidin more than one year: General Fund Of the total interfund receivable in the General Fund, $2,161 is due from the Golf Courses Fund. On September 24, 2002, the City Council approved a loan up to$6,400 froin the General Fund to the Golf Courses Fund for construction of the Anaheim Hills Golf Clubhouse.

The loan is payable in annual amounts of not less than $548 beginning in July 2005 until July 2023 and bears interest at the City's investment yield as of June 30th of each year.Certain interfund transactions The net transfers of $7,288 from the business-type activities to the governmental activities on the government-wide Statement of Activities are primarily comprised of operational subsidies from business-type activities to the General Fundand are offset by debt service subsidies to the Convention, Sports and Entertainment Venues Fund.The City made the following new recurring and one-time transfers during fiscal year ended June 30, 2014: " Transfer of $4,864 of restricted resources related to sewer construction and improvement activities from the Storm Drain Construction nonmajor governmental fund to the Sanitation Utility enterprise fund where the City's sewer construction activities are accounted for. This amount is reported in the restricted net position for capital projects in the Sanitation Utility Fund.* Transfer of $600 from the General Fund to the Water Utility enterprise fund pursuant to a Water Transfer settlement.

See note 14 for additional information regarding the Water Transfer settlement." Transfer of $3,794 of unrestricted resources from the General Fund to the Other Capital Projects nonmajor governmental fund for the neighborhood improvement land acquisition.

Nonmajor General Housing Governmental Transfer Out. Fund Authority Funds General Fund $51,940 Enterprise Funds Convention, Sports and Electric Water Sanitation Entertainment Utility utility utility Venues Total$600 $14,272 $66,812 Nonmajor governmental funds $ 111 Elecric Utility 22,682 Water Utility 3,521 Sanitation Utility 2,143 Golf Courses 250 Total $28,707$2,627$2,627 1,539 $4,864 9,141 22,682$297 3,818 2,143 250$53,479 $297 $600 $4,864 $14,272 $104,846 NOTE 5 -BOND PAYMENT RECEIVABLE:

On August 3, 1995, the Los Angeles Rams Football Company, currently the St. Louis Rams (Rams), exercised its right to terminate its lease under the Fourth Amendment to the Exhibition Agreement between the Rams and the City (Rams Agreement).

Under the Rams Agreement, the Rams became obligated to repay the City for the debt service on the 1979 Anaheim (California)

Stadium Inc. Lease Revenue Bonds in the principal amount of $28,110, which obligation is supported by an irrevocable standby letter of credit with Dresdner Bank AG, will be repaid by August 15, 2015. The 1979 Anaheim (Califomia)

Stadium Inc. Lease Revenue Bonds were subsequently refunded, and are no longer outstanding, by a portion of the Convention, Sports and Entertainment Venues Fund 1993 Refunding Projects Certificates of Participation.

In December 2008, the 1993 Refunding Projects Certificates of Participation were refunded and replaced by the 2008 Lease Revenue Refunding Bonds. At June 30, 2014, the remaining principal payment obligation by the Rams on the debt service is $4,505. During fiscal year 2014, the Rams reimbursed the City $2,357 (representing

$2,040 for principal and$317 for interest) for the current portion of their debt service obligation.

The City accounted for the termination of the lease by recording a bond payment receivable from the Rams and a contribution to the Convention, Sports and Entertainment Venues Enterprise Fund in the amount of the debt obligation assumed by the Rams under the Rams Agreement.

55 CITY OF ANAHEIM NOTE 6 -CAPITAL ASSETS: Capital asset activities for the year ended June 30, 2014, were as follows: Depreciation expense was charged to functions/programs of the City during fiscal year 2014 as follows: Governmental activities:

Nondepreciable assets: Land Construction in progress Total Depreciable assets: Buildings, structures and improvements Machinery and equipment Infrastructure Total Total assets Less accumulated depreciation for: Buildings, structures and improvements Machinery and equipment Infrastructure Total accumulated depreciation Total governmental activities capital assets, net Business-type activities:

Nandepreciable assets: Land Construction in progress Total Depreciable assets: Buildings, structures and improvements Utility plant Machinery and equipment Total Total assets Less accumulated depreciation for: Buildings, structures and improvements Utility plant Machinery and equipment Total accumulated depreciation Total business-type activities capital assets, net Beginning Transfer Ending Balance Additions In (Out) Deletions Balance$ 648,420 $ 8,323 $ 4,133 $ (2,623) $ 658,253 138,749 123,527 (56,7181 (878 204,680 787169 131,850 (52,5851 (3,501) 862,933 274,589 6,743 11,665 (230) 292,767 106,950 8,498 381 (4,980) 110,849 767155 1,353 38,967 (9,055) 798,420 1,148694 16,594 51,013 (14,265 1,202,036 1,93,863 148,444 (1,572) (17,766) 2,064,969 (114,4321 (9,096) 225 (123,303)(77,810) (6,594) 4,870 (79,534)(351,094)

(16,8 84 (367, (543,3361 (32,5871 ___ 5,179 (570,744)$1 392 527 $115_857 $(11572) $112 587) $1 494 225$ 58,410 $ 58,410 84936 $ 99,313 $(98,5551

$ (45 85,649 143,346 99,313 (98,555) (4) 144,059 627,445 1,585 8,203 (469) 636,764 1,564,944 3,710 91,924 (7,851) 1,652,727 31,3A7 1,924 (549) 32,722 2 7,219 100,127 (8,869 2,322,213 2,367,082 106,532 1,572 (8,914) 2,466,272 (226,0151 (14,387) 281 (240,121)(543,360)

(52,304) 7,851 (587,813)(22,3491 (2,109) 537 (23,921)(791,72,1 (68,8007 $1,52 8,669 (851,8551$1 _57,358 $ 7_3 $ 1,572 L_?L25 $1,614,417 Governmental activities:

General government Police Fire Community Development Planning Public Works Community Services Convention, Sports and Entertainment Capital assets held by the City's internal service funds are charged to the various functions based on their usage of the assets Total depreciation expense-governmental activities Business-type activities:

Electric Utility Water Utility Sanitation Utility Golf Courses Convention, Sports and Entertainment Venues Total depreciation expense-business-type activities

$ 264 1,628 524 318 110 17,779 2,886 4,871 4,207$32,587$41,770 10,534 2,445 554 13,497$68,800 Capital leases Included in the capital assets amounts listed above are the following capitalized leased assets: Machinery and .equipment Less accumulated amortization Capitalized leased assets, net Governmental Activities

$ 2,999 (1,395)$_I,64 Fiduciary Fund Successor Agency Capital asset activities for the year ended June 30, 2014 are as follows: 56 CITY OF ANAHEIM Nondepreciable assets: Land.Construction in progress Total Depreciable assets: Buildings, Structures and improvements Machinery and equipment Total Total assets Less accumulated depreciation for: Buildings, Structures and improvements Machinery and equipment Total accumulated depreciation Total capital assets, net Begining Balance$15,568 16,971 32,539 47,074 265 47,339 79,878 (2,117)(128)(2,245)$77,633 Additions Deletions$ 1,701 $(18,672)1,701 (18,672)17,568 17,568 19,269 (1,635)(60)(1,695)$17,574 (18,672)$(18,672)Ending At June 30, 2014, the City was fully funded for self-funded retention for workers'Balance compensation and general liability claim exposures (with retention levels of $750 per occurrence for workers' compensation claims and $1,000 per occurrence for general$15,568 liability claims). Above these retained levels, the City's potential liability is covered through various commercial insurance and intergovemmental risk pooling programs 15,568 (collectively, "Insurance").

Settled claims have not exceeded total Insurance in any of the past three years, nor does management believe that there are any pending claims that 64,642 will exceed total Insurance coverage.265 64,907 The unpaid claims liability included in the General Benefits and Insurance Fund is based 80,475 on the results of actuarial studies and includes amounts for claims incurred-but-not-reported, known-claim development, and allocated loss adjustment expenses.

Claims liabilities are calculated using a discount rate of 3% and consider the effects of inflation, (3,752) multi-year loss development trends, and other economic and social factors. It is the City's (188) practice to obtain full actuarial studies annually for its retained levels for general liability (3,940) and workers' compensation coverages. "Premiums" are charged by the General$76,535 Benefits and Insurance Fund using various allocation methods that include actual costs, trends in claims experience, exposure bases, and number of participants.

Operating leases Housing Authority At June 30, 2014, the Housing Authority earned revenues as the lessor of land, carried at cost of $67,202 in the government-wide financial statements, under ten operating ground leases. These leases to developers are noncancelable.

Terms of the leases range from 55 years to 65 years with lease expiration dates from 2057 to 2076. The total base rent to be collected over the terms of the leases are $73,270 with simple interest accruing on unpaid portions at a rate ranging from 1% to 6%. Minimum lease payments are calculated annually, based on residual receipts, as defined in the lease agreements.

At June 30, 2014, the Housing Authority has recorded notes receivable due from developers related to these transactions of $12,487 and is net of allowances of $4,051 for uncollected accounts in the government-wide financial statements.

In the governmental fund financial statements, this amount is included in the $49,905 notes receivable balance of the Housing Authority.

NOTE 7 -SELF INSURANCE:

The General Benefits and Insurance Fund, an internal service fund, is used to account for self-funded workers' compensation related benefits, self-funded general liability claims, commercial insurance purchases, and altemative risk financing vehicles; as well as benefit-related costs such as employee compensated absences, retirement, and health benefits.

Revenues of the General Benefits and Insurance Fund are derived from cost-allocation charges to City departments using estimates of anticipated risk-transfer costs, new losses, payments on existing claims, and reserve development on known claims for the Insurance portion of the Fund; as well as anticipated benefits earned and insurance costs for benefits coverage for the General Benefits portion of the Fund. In addition, the Fund receives interest income from reserves.Changes in claims liability of the General Benefits and Insurance Fund and that relates to the governmental funds and reported in the governmental activities in the lovernment-wide Statement of Net Position in fiscal years 2014 and 2013 were as llows: Claims liability at beginning of year Current year claims and changes in estimates Claims payments Claims liability at end of year 2014$39,422 8,691 (7,286)2013$39,343 7,064 (6,985)Above the retained limit of $750 per occurrence for workers' compensation losses, the City purchases excess coverage, utilizing both commercial insurance and an intergovernmental risk pooling program (CSAC-EIA), to statutory limits.Above the retained limit of $1,000 per occurrence for liability losses, the City maintains excess coverage for all City operations to $150,000 per occurrence, excluding helicopter operations for which the City purchases

$50,000, per occurrence, of commercial aviation liability insurance (on a first-dollar basis). The first layer of excess liability loss coverage is procured through the Authority for California Cities Excess Liability (ACCEL), a joint powers insurance authority, formed in 1986, pooling catastrophic general, automobile, personal injury, and public officials errors and omissions liability losses among twelve Califomia cities, through both risk-sharing and commercial insurance joint-purchase arrangements.

The City, therefore, continues to maintain some limited excess liability risk sharing exposure, above $1,000 per occurrence, directly with ACCEL. This pooled coverage has exposure (i) from the run-out periods from prior years in which commercial excess insurance was not obtained, and (ii) from an ACCEL retained layer for fiscal year 2014 of $4,000 in excess of$1,000. Each ACCEL member's share of pooled losses is based on a retrospectively-rated risk-sharing formula which includes, but is not limited to, exposure and loss experience factors.57 CITY OF ANAHEIM In order to provide funds to pay claims, ACCEL collects an annual deposit from each member. The deposits are credited with investment income at the rate earned on ACCEL's investments.

At June 30, 2014, ACCEL's cash and investments totaled$52,751, of which $6,983 consists of deposits and interest on deposits provided by the City. The City has no specific equity interest in ACCEL. Deposits provided to ACCEL by the City are expensed when paid by the General Benefits and Insurance Fund.ACCEL is responsible for deciding the risks it will underwrite, the monitoring, and handling of large claims, and arranging excess risk-financing programs.

ACCEL does not have any cdebt outstanding.

For a copy of ACCEL's separate financial statements, contact the Finance Director of the City.Note 8 -SHORT-TERM BORROWING On March 1, 2013, the Public Utility Department entered into a Revolving Credit Agreement with Wells Fargo Bank, National Association for a note amount not to exceed $100,000, of which $86,000 is made available for the Electric Utility and$14,000 for the Water Utility. The note has a three year term at variable interest rate based on the LIBOR Daily Index Rate and a spread. The annual commitment fee is 0. 175% of the total note amount of $100,000.During fiscal year 2014, the Electric Utility made one draw from the taxable note totaling $7,400 and repaid $10,000 for financing the Cap-and Trade program.For the Water Utility, the purpose of this agreement is to provide temporary financing for the costs of acquisition and construction of additions to and improvements of the Utility's water system which qualify for reimbursement under the City Council's Resolution No. 2012-111 "Official Intent to Reimburse Certain Water Utility Fund Expenditures from the Proceeds of Bonds or Other Obligations".

During fiscal year 2014, the Water Utility made three draws totaling $9,100 for such qualiying capital expenditures.

The $9,100 balance is expected to be paid in full during fiscal year 2015 with the issuance of new bond financing.

Beginning Additions/

Reductions/

Balance Proceeds Payments Ending Within Balance One Year Governmental activities:

Bonds payable: General obligation City lease revenue Accretion Unamortized bond premium/discount, net Total COPs: City COPs Total Capitalized lease obligations:

Internal Service Funds Total Notes and loans payable: city Housing Authority Total Claims liabilities (note 7)Compensated absences (note 1)Governmental activities total Business-type activities:

Bonds payable: Electric Utility Water Utility Sanitation Utility Convention, Sports and Entertainment Venues Unamortized bond premium/discount, net Total COPs: Convention, Sports and Entertainment Venues Total Notes and loans payable: Electric Utility Water Utility Convention, Sports and Entertainment Venues Total Decommissioning provision Business-type activities total Governmental-wide total$ 2,605 453,226 162,517 (2,262)616,086 10,020 10,020 1,369 1,369 53,136 1,741 54 877 39,422 18,222 739,996 678,680 84,790 44,415 37,831 18,271 863,987 38,O 38OO 44,000 8,442 10,280 62,722 131,333 1,096,042$1,836038$ 16101 $ 1,995 $ 635 (17,0001 436,226 18,989$16,150 178,667 131 (2,131)16,150 (17,479) 614,757 19624 111,401 8,880 1225 1,077 (1,121) 1,325 628 1,077 (1,121) 1,325 628 1,350 (3,729) 50,757 4,285-(1,741) _1350 (5,470) 50,757 4,285 8,691 (7,286) 40,827 8051 21,32 120,955) 18,594 1344 48,595 (53,451) 735,140 47,260 (71,795) 606,885 (920) 83,870 (920) 43,495 (8,120) 29,711 (1,679) 16,592 (83,434) 780,553 Electric Utility Water Utility Begining Ending Balance Additions Payments Balance$ 2,600 $ 7,400 $(10,000)9,100 $ 9,100$ 2,600 $16,500 $(10,000)

$ 9,100 38,0 38,000 (8,400) 35,600 (956) 7,486 (5,095) 5,185 (14,451) 48,271 (97,885) 1,000,488$51,336) $1,735,628 12,155 960 955 4,996 19,066 3,50 35, 11,200 983 5,185$ 87_ 194 NOTE 9 -LONG-TERM UABIUTIES:

The following is a summary of changes in long-term liabilities reported in the government-wide financial statements for the year ended June 30, 2014.2,331 2,331$ 50926 58 CITY OF ANAHEIM GOVERNMENTAL ACTIVITIES:

BONDS PAYABLE At June 30, 2014, bonds payable consisted of the following:

Range of Date Final Interest Rates Issued Maturity at Issue Date Authorized Out-and standing Issued 6/30/14 City 1993 General Obligation Refunding Bonds 1997 Anaheim Lease Revenue Bonds Accretion 2007 Anaheim Lease Revenue Refunding Bonds 2008 Anaheim Lease Revenue Refunding Bonds Total Unamortized bond refunding costs/premium/discounts, net Total government activities b bonds are paid from lease payment measurement revenues (LPMR) defined as amounts equal to: 1) 3% of the 15% transient occupancy taxes (TOT) (i.e. 20% of the total transient occupancy taxes) for all hotel properties in the City, excluding Disney properties, and 2) 100% of the incremental OT, sales, and proper tax revenues from all Disney properties over the 1995 base, adjusted each year by the CPI change, with a minimum 2% increase annually.

The City is not required to pay any additional sums should the LPMR fall short of the amount required to pay debt service on the bonds. The Walt Disney Com any provided a guarantee to the bond insurer to enable the issuer to obtain municipal bond insurance.

LPMR began on January 1, 2001, with the first payment made to the trustee on July 7, 2001, f6r the LPMR generated during the period January through June 2001.Subsequent to that date, LPMR is collectýd and remitted to the trustee monthly. During the fiscal year ended June 30, 2014, $44,454 was remitted to the trustee.Debt service requirements to maturity for the 1997 Anaheim Lease Revenue Bonds and the 2007 Anaheim Lease Revenue Refunding Bonds to be paid by the Anaheim Resort Improvements Debt Service Fund from future LPMR are as ollows: 11/01/93 10/01/16 4.0%-7.0%

$ 10,055 $ 1,995 2/01/97 3/01/37 4.5%-6.0%6/13/07 3/01/37 3.25%-5.5%

12/10/08 8/01/19 3.0%-5.0%510,427 187,953 178,667 256,320 245,250 5,084 3,023 616,888 (2.131)$614,757 Bonds Payable -City General obligation refunding bonds The 1993 General Obligation Refunding Bonds were issued to finance storm drain improvements and are payable from the levy of ad valorem taxes. Total principal and interest remaining on the bonds is $2,117, payable through October 2016. During the fiscal year endecdJune 30, 2014, total principal and interest paid was $702.Debt service requirements to maturity for the 1993 General Obligation Refunding Bonds to be paid by the General Obligation Bonds Debt Service Fund from future property tax revenues are as follows: Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2037 Total Unamortized bond discount Total bonds Principal$ 18,510 20,630 22,900 11,667 12,031 69,027 83,614 100,173 433,203 (2,157)$943ýA6 Interest$ 15,894 14,751 13,479 26,332 27,086 145,848 164,787 185,901 137,39 731,468$731,468 Total$ 34,404 35,381 36,379 37,999 39,117 214,875 248,401 286,074 232,041 1,164,671 (2,157)Included in interest is $178,667 related to accretion on capital appreciation bonds.Lease revenue refunding bonds -City Debt service requirements to maturity for the City's lease revenue bonds to be paid from unrestricted revenues of the Municipal Facilities Debt Service Fund are as follows: Fiscal Year Ending 6/30 2015 2016 2017 Total Principal$ 635 660 700$ 1 995 Interest$ 67 41 14$122 Total$ 702 701 714$2 117 Lease payment measurement revenues In February 1997, the Anaheim Public Financing Authority sold $510,427 of lease revenue bonds to construct public improvements in The Anaheim Resort. In June 2007, the Authority sold $256,320 of lease revenue bonds to defease $248,335 of the 1997 lease revenue bonds. The bonds are special obligations of the Authority payable solely from lease payments to be made by the City to the Authority for the use and occupancy of the leased premises.

Debt service requirements to maturity for these lease revenue Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020 Total Unamortized bond premium Total bonds Principal$ 479 506 463 501 519 555 3,023 26$3,049 Interest Total$ 131 $ 610 111 617 89 552 66 567 41 560 14 569 452 3,475 26$ 452 $3501 59 CITY OF ANAHEIM CERTIFICATES OF PARTICIPATION At June 30, 2014, certificates of participation consisted of the following:

NOTES AND LOANS PAYABLE At June 30, 2014, notes and loans payable are as follows: Range of Date Final Interest Rates Issued Maturity at Issue Date Authorized and Issued Out-standing 6/30/14 Notes and Loans Payable -City HUD Section 108 auaranteed loans payable City 1993 Arena Land Refinancing 11/01/93 11/01/19 5.9%-7.50%

21,210 $8,880 Total governmental activities COPs $8,880 Certificates of Participation Payable -City Certificates of participation debt service payments are to be paid from unrestricted revenues of the Certificates of Participation Debt Service Fund. COP debt service requirements to maturity are as follows: In May 2003, the City entered into an agreement with HUD, making available

$10,000 to provide financial assistance related to the development of Westgate on a former landfill site located at the northeast corner of Beach Boulevard and Lincoln Avenue. The loan is payable from sales tax revenue generated by Westgate, from the Community Development Block Grant yearly entitlement, and from receipts of the Successor Agency receivable.

The outstanding balance at June 30, 2014 was $7,401. The loan bears interest ranging from 1.74% to 5.97% and is payable over 20 years beginning on February 1, 2005, until August 1, 2023. Loan debt service requirements to maturity are as follows: Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020 Total COPs Principal$ 1,225 1,315 1,415 1,530 1,635 1, 0 Interest$ 537 455 366 270 168 57$1,85 Total$ 1,762 1,770 1,781 1,800 1,803 1,817 Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 Total notes and loans Principal$ 517 561 670 685 730 4,238 Interest$ 402 374 342 305 266 620$2 30 Total$ 919 935 1,012 990 996 4,858$ý971 0 CAPITAL LEASE OBUGATIONS The City has a long-term noncancelable agreement with HP Financial Services to finance the acquisition of the City's server, desktop, and portable computer equipment.

The agreement qualifies as a capital lease for accounting purposes as defined under the Financial Accounting Standards Board (FASB) Statement No. 13, Accounting for Leases, and therefore has been recorded at the present value of future minimum lease payments at the date of inception of the lease. Future minimum lease payments to be made from unrestricted revenues of the Information Services Internal Service Fund under the capital lease are as follows: In March 2010, the City entered into an agreement with HUD, making available$15,000 to fund the acquisitions of the Anaheim Family Justice Center and Miraloma Park site, construction of the Thornton Brady storm drain and the rehabilitation of the historic Packing House site. The loan is payable from the Community Development Block Grant yearly entitlement and from the receipts of the Successor Agency receivable.

The outstanding balance of the loan at June 30, 2014, was $12,830. The loan bears interest ranging from 1.74% to 3.97% and is payable over 20 years beginning on February 1, 2011 through August 1, 2030. Loan debt service requirements to maturity are as follows: Fiscal Year Ending 6/30 2015 2016 2017 2018 Total Less amount representing interest, variable Present value of future minimum lease payments$ 666 496 201 41 1,404 (791 Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2031 Total notes and loans Principal$ 625 640 655 670 690 3,780 4,500 1,270$12,830 Interest$ 462 449 433 415 394 1,594 775 4O$4 562 Total$ 1,087 1,089 1,088 1,085 1,084 5,374 5,275 1,310ý$17,392 60 CITY OF ANAHEIM Helicopter loan payable In January 2009, the City entered into an agreement with Government Capital Corporation to finance the acquisition of a police helicopter.

The amount of the loan totaled $1,799 and bears interest at 5.391% per annum for a term of 12 years. On January 29, 2009, Government Capital Corporation assigned this agreement to Bank of America which subsequently assigned it to Western Alliance Equipment Finance on March 21, 2012. Principal and interest payments of $206 are due annually beginning on December 16, 2009, until December 16, 2020. The outstanding balance at June 30, 2014 was $1,176. Loan debt service requirements to maturity are as follows: Lincoln Avenue construction loan payable In March 2013, the City entered into a cooperative agreement with the County of Orange (County) for the funding and construction of Lincoln Avenue. The project includes widening of Lincoln Avenue from Rio Vista Street to Riverbend Parkway, and construction of the Lincoln Avenue Bridge over the Santa Ana River. Construction costs of the Lincoln Avenue widening within the City boundary is estimated to be $2,250 which will be payable to the County in seven installments starting on July 1, 2013 and on July 1 of each subsequent year at no interest cost. At June 30, 2014, construction of the project within the City boundary is estimated to be 60% completed or $1,350;the City paid $500 on July 1, 2013 with an outstanding loan balance of $850 toward this amount.BUSINESS-TYPE ACTIVITIES:

Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2021 Total notes and loans PrincialE$ 143 150 159 167 176 381 Interest$ 63 56 47 39 30 33$268 Total$ 206 206 206 206 206 414$1,444 BONDS PAYABLE Range of Date Final Interest Rates Issued Maturity at Issue Date Anaheim Regional Transportation Intermodal Center (ARTIC) Land Acquisition Loan pWaable In July 2012, the City entered into an agreement with the Orange County Transportation Authority (OCTA) for the Purchase and Sale of a 13.58 acres real property located at 1750 South Douglass Road in Anaheim. The purchase price for the site is $32,500. The City paid $1,000 at the close of escrow and the remaining$31,500 will be payable to OCTA over 13 years and bears 2% simple interest per annum. Annual principal payments are due on or before July 10th each year commencing 2012. The payment of accrued interest is deferred until equal payments of $1,883 are due and payable on or before July 10, 2024 and July 10, 2025. The loan is payable with Measure M2 Local Fair Share funds. OCTA will retain payments from Anaheim's "Local Fair Share" funds allocated by OCTA under Measure M2 each year until the final payment is made on July 10, 2025. The City may elect to provide alternative funding from other City funds for transportation related purposes, such as gas tax funds. At June 30, 2014, the outstanding balance of the ARTIC loan was$28,500. Loan debt service requirements to maturity are as follows: Electric Utility 1999 Revenue Bonds 9/01/99 10/01/27 3.0%-5.0%2003 Revenue Bonds 4/01/03 10/01/22 3.0%-5.0%2004 Revenue Bonds 6/01/04 10/01/34 2.5%-5.25%

2007 Revenue Bonds 2/01/07 10/01/37 4.0%-5.0%2009 Revenue Bonds 3/10/09 10/01/39 3.0%-5.25%

2011 Revenue Bonds 5/11/11 10/01/36 3.0%-5.375%

2012 Revenue Bonds 9/19/12 10/01/31 3.125%-5.0%

Total Unamortized bond premiums/discount, net Total Electric Utility Authorized and Issued$ 45,000 60,415 131,265 206,035 70,000 90,390 92,130 12,105 48,580 34,525 Out-standing 6/30/14$ 29,930 25,680 108,440 194,965 65,350 90,390 92,130 606,885 14,967 621,852 1,145 48,320 34,405 83,870 374 84,244 Water Utility 2004 Revenue Bonds 2008 Revenue Bonds 2010 Revenue Bonds Total 5/01/04 10/01/16 4.0%-4.5%7/09/08 10/01/38 4.0%-5.0%10/28/10 10/01/40 2.0%-4.75%

Unamortized bond premiums/discount, net Total Water Utility Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025 Total notes and loans Principal$ 2,500 3,000 3,000 3,500 3,500 13,000 Interest Total$2,500 3,000 3,000 3,500 3,500$1,883 14,883 1883 S $32266 Sanitation Utility 2007 Revenue Bonds Unamortized bond premium Total Sanitation Convention, Sports and Entertainment Venues 2002 Revenue Bonds 2008 Anaheim Lease Revenue Refunding Bonds Total 5/23/07 2/01/39 3.9%-5.0%7/02/02 8/01/23 3.0%-5.5%12/10/08 8/01/19 3.0%-5.0%47,710 43,495 1,012 44 507 26,260 1,290 45,847 28,421 29,711 239 29,950$910ý262 $780,553 Unamortized bond premiums/discount, net Total Convention, Sports and Entertainment Venues Total business-type activities bonds 61 CITY OF ANAHEIM Bonds Payable -Electric Utility The City's Electric Utility has pledged future electric revenues, net of certain costs, to repay a total of $991,312 outstanding long-term obligations, principal and interest.Proceeds from bonds provided financing for various capital improvements, primarily distribution assets. The Electric Utility's bonds are payable solely from electric customer net revenues and are payable through 2040. At June 30, 2014, the annual principal and interest payments on the bonds were 46.7% of net revenues.

Principal and interest paid for the current fiscal year and total net revenues were $41,629 (excludes

$60,205 of the 2002 Revenue Bonds early retirement) and $89,047 respectively.

Bond debt service requirements to maturity for the Electric Utility to be paid from revenues are as follows: Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 2040-2041 Total Unamortized bond premium/discounts, net Total bonds Principal$ 960 1,000 1,045 1,090 1,135 9,550 15,195 18,975 23,835 11,085 83,870 374$ý84,244 Interest$ 4,178 4,135 4,092 4,049 4,005 19,078 16,083 11,821 6,360 636 74,437 Total$ 5,138 5,135 5,137 5,139 5,140 28,628 31,278 30,796 30,195 11,721 158,307 374$74,437 $158,681 Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2028 2029-2034 2034-2039 2040 Total Unamortized bond premium/discounts, net Total bonds Principal$ 12,155 12,690 15,115 15,810 16,570 117,380 152,630 160,410 99,695 4,430 606,885 14,96$621,852 Interest$ 28,632 28,078 27,438 26,735 25,978 113,843 80,329 42,536 10,742 116 384,427 Total$ 40,787 40,768 42,553 42,545 42,548 231,223 232,959 202,946 110,437 991,312 Bonds Payable -Sanitation Utility The City's Sanitation Utility has pledged future sanitation system net revenues to pay a total of $74,930 for revenue bonds issued in May 2007. Proceeds from the bonds provided financing for capital improvements to the sanitation sewer collection system.The bonds are payable solely from system net revenues and are payable through February 2039. At June 30, 2014, total principal and interest payments on the bonds were less than 43.0% of net revenues.

Total principal and interest paid and total system net revenues for the current fiscal year were $2,999 and $6,978 respectively.

Bond debt service requirements to maturity for the Sanitation Utility to be paid from revenues are as follows: 14,967$38427 $100,7 Bonds Payable -Water Utility The City's Water Utility has pledged future revenues from the sale of water, net of certain costs, to repay a total of $158,307 for outstanding long-term obligations, principal and interest.

Proceeds from bonds provided financing for various capital improvements, primarily distribution assets. The bonds are payable solely from water net revenues and are payable through 2041. At June 30, 2014, the annual principal and interest payments on the bonds were less than 28.8% of net revenues.

Principal and interest paid for current fiscal year and total net revenues were $5,137 and $17,835 respectively.

Bond debt service requirements to maturity for the Water Utility to be paid from revenues are as follows: Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 Total Unamortized bond premium Total bonds Principal$ 955 1,005 1,045 1,095 1,145 6,565 8,255 10,365 43,495$44,507 Interest$ 2,042 1,994 1,954 1,902 1,853 8,419 6,726 4,626 31,435 Total$ 2,997 2,999 2,999 2,997 2,998 14,984 14,981 14,991 14,984 74,930 1,012$75,42 Bonds Payable -Convention, Sports and Entertainment Venues Bond debt service requirements to maturity for the Convention, Sports and Entertainment Venues to be paid from revenues are as follows: 62 CITY OF ANAHEIM Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 Total Unamortized bond premium/discounts, net Total bonds Principal$ 4,996 4,424 4,662 4,879 5,150 5,6O 29,711 239$29,9O Interest$ 1,280 1,091 887 653 408 Total$ 6,276 5,515 5,549 5,532 5,558 Note Payable -Water Utility At June 30, 2014, note payable is as follows: State of California Revolving Fund note payable 4,488 34,199 In June 2001, the Water Utility executed a note payable to the State of California Revolving Fund at a rate of 2.8% in the amount of $18,063. There are semi-annual 239 payments of principal and interest in the amount of $592 through July 31, 2021. The$ 8 $,438 outstanding balance on this note at June 30, 2014, totaled $7,486.Note debt service requirements to maturity for the Water Utility are as follows: CERTIFICATES OF PARTICIPATION Range of Authorized Out-Date Final Interest Rates and standing Issued Maturity at Issue Date Issued 6/30/14 Convention, Sports and Entertainment Venues 1992 Convention Center Financing Project 1/01/92 8/01/23 3.9%-6.4%

$ 92,777 $38,000 Total Convention, Sports and Entertainment Venues $38,000 Certificates of Participation Payable -Convention, Sports and Entertainment Venues Certificates of participation debt service requirements to maturity for the Convention, Sports and Entertainment Venues Fund to be paid from unrestricted revenues are as follows: Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2022 Total notes and loans Principal$ 982 1,010 1,039 1,068 1,098$ 7,486 Interest$ 202 175 146 117 87 80$ 807 Total$ 1,184 1,185 1,185 1,185 1,185$ 8,293 Note Payable -Convention, Sports and Entertainment Venues Wells Farao Bank lease revenue note In December 2010, the City executed a lease revenue note with Wells Fargo Bank, National Association to provide financing for the capital improvements of the Anaheim Convention Center Grand Plaza. Principal amount of the note is $20,000 and bears a 1.85% interest per annum. The note is payable monthly, commencing in January 2011 and matures in December 2014.Note debt service requirements to maturity to be paid from the unrestricted revenues of the Convention, Sports and Entertainment Venues Fund are as follows: Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 Total COPs Principal$ 3,500 4,500 4,800 5,100 5,400$38,00 Interest$ 2,345 1,895 1,601 1,288 957 1,047 Total$ 5,845 6,395 6,401 6,388 6,357 15,747$47,133 Fiscal Year Ending 6/30 2015 Total note Principal$ 5,185$ 5,185 Interest$ 48$ 48 Total T5,233$ 5,233 NOTES AND LOANS PAYABLE ARBITRAGE Note Payable -Electric Utility On July 13, 2013, the Electric Utility used $44,000 from the proceeds of the Revolving Credit Agreement with Wells Fargo Bank, National Association (see note 8) to retire the outstanding principal balance of $60,205 of the 2002-B Electric Revenue Bonds.During fiscal year 2014, the Electric Utility repaid $8,400 of the tax-exempt note. At June 30, 2014 the outstanding balance of long-term portion of the note was $35,600.The Tax Reform Act of 1986 (Act) substantially revised the treatment to be afforded to earnings on the proceeds of tax-exempt debt, and now requires the City to calculate and remit rebatable arbitrage earnings to the Internal Revenue Service. Certain of the City's debt and interest earned on the proceeds thereof are subject to the requirements of the Act. The City has accrued a liability for estimated rebatable arbitrage earnings and has set aside such earnings as restricted cash. At June 30, 2014, the arbitrage rebate liability for governmental and business-type activities was zero and $343 respectively.

63 CITY OF ANAHEIM COMPUANCE WITH DEBT COVENANTS Date Final Amount Outstanding Issued Maturity Issued 6/30/14 There are various limitations and restrictions contained in the City's bond and certificates of participation indentures.

The City believes they are in compliance with all significant limitations and restrictions.

DEBT ISSUANCES City -Debt Issuance In March 2013, the City entered into a cooperative agreement with the County of Orange (County) for the financing and construction of Lincoln Avenue. The agreement allows the City to finance the construction with no interest costs payable to the County in seven annual installments starting from July 1, 2013 and on July 1 of each subsequent year. The construction costs within the City boundary is $2,250. At June 30, 2014, the construction is estimated to be 60% completed.

The City paid $500 on July 1, 2013 with an outstanding balance of $850.DEBT RETIREMENTS Housing Authority

-Debt retirement In September and December 2013, the Housing Authority repaid the total principal balances and accrued interests of the two loans with the California Housing Finance Agency (CHFA). Total principal and interest paid was $1,794.Electric Utility -Debt Retirement On July 13, 2013, the Electric Utility used $44,000 from the proceeds of the Revolving Credit Agreement with Wells Fargo Bank, National Association, together with funds from the 2002-B Electric Revenue Bonds reserve and debt service cash balances of$10,030 and with funds of $7,053 from the City, to retire the outstanding principal balance of $60,205 and interest balance of $878 on the 2002-B Electric Revenue Bonds.1993 Anaheim Memorial Hospital Association 2003 Anaheim Arena Financing Project Total 10/15/93 05/15/20 $46,690$16,740 12/11/03 06/01/23 A2,600 29,500$89,290 $46,240 Anaheim Housing Authority The Anaheim Housing Authority has entered into conduit debt financings on behalf of various developers to assist with the acquisition, construction, equipping, rehabilitation and refinancing of multifamily residential rental projects within the City of Anaheim. In accordance with the bond documents, neither the City nor the Housing Authority has an obligation for debt service payments and therefore, the debt is not reflected in the accompanying basic financial statements.

Housing Authority revenue bonds related to conduit financings outstanding at June 30, 2014, were as follows: 1985 West Anaheim Royale 1992 Heritage Village 1998 Sage Park Project 2000 Cobblestone Apartments 2000 Park Vista Apartments 2000 Seawinds Apartments 2001 Solara Court Apartments 2008 Be6 Age Manor Apartments 2009 Lincoln Anaheim Apartments Phase B 2012 Anton Monaco Apartments 2012 Crossings at Cherry Orchard Apartments Tranche A 2012 Crossings at Cherry Orchard Apartments Tranche B 2013 Paseo Village Apartments Total Date Issued 12/01/85 07/15/03 11/01/98 07/20/00 07/24/00 07/20/00 11101104 02/01/08 Final Maturity 12/01/35 07/15/33 11/01/28 03/15/33 07/01/33 07/15/33 12/01/34 02/01/44 Amount Issued$ 4,664 8,485 5,500 3,980 27,180 7,000 8,200 22,350 Outstanding 6/30/14$ 969 5,485 5,500 3,580 27,180 6,300 5,400 20,823 8,621 28,416 9,365 2,985$$137594 05/15/09 04/15/39 23,217 12/14/12 01/01/46 35,460 08/23/12 12/01/44 9,365 08/23/12 12/01/29 2,985 02/28/13 09/01/45 19,750$178,136 CONDUIT FINANCINGS city The City has entered into two conduit financings on behalf of a community care provider facility and one faciacilitate the management agreement for the Honda Center (formerly the Arrowhead Pond) of Anaheim. In accordance with applicable agreements, the City has no obligation for debt service payments and therefore, the debt is not reflected in the accompanying basic financial statements.

Bonds payable and certificates of Frticipation related to conduit financings outstanding at June 30, 2014, were as ,allows: FIDUCIARY FUNDS Successor Agency The following is a summary of changes in long-term liabilities for the year ended June 30, 2014: 64 CITY OF ANAHEIM Bonds payable premium/(discount), net Notes and loans payable Due to City of Anaheim Pollution remediation liability Beginning Blance$207,780 3,028 7,133 22,453 2,211$242,605 Additions/

Reductions/

Proceeds Paets$(2,075)(253)(319)(806)$ 5 12,046)$ 5 $15,499)Ending Within Balance One Year$205,705 $2,430 2,775 6,814 358 21,647 2,047 170 170$237111 $5,005 Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2031 Total bonds Principal$ 225 230 240 250 265 1,550 2,080 1,045$ 5,885 Interest$ 354 346 337 326 314 1,341 806 112$ 3,936 Total$ 579 576 577 576 579 2,891 2,886 1,157 Bonds Payable 2007 Tax Allocation Refunding Bonds The Successor Agency will repay a total of $321,098, principal and interest, for the outstanding 2007 tax allocation bonds issued in December 2007 from the semi-annual Redevelopment Property Tax Trust Fund (RPITF) revenue allocations.

Proceeds from the bonds provided financing for public improvements related to the merged project areas, for the supply of low-and moderate-income housing within the City, to repay certain Redevelopment Agency loan obligations and to advance refund the 1992, 1997 and 2000 bonds. The bonds bear interest at rates ranging from 4.25% to 6.50% and are payable through February 2031. During the fiscal year ended June 30, 2014, total principal and interest paid was $12,626.Debt service requirements to maturity for 2007 Tax Allocation bonds are as follows: Notes and Loans Payable Savi Ranch Associates note payable In July 1989, the former Redevelopment Agency executed a note with Savi Ranch Associates, a California general partnership.

The amount of the note totaled $2,707 and bears interest at 9.5% per annum. The note is payable from net property tax increment as defined in the Redevelopment Agency note. If there is insufficient RPTTF revenue to pay for principal and interest at the termination of the River Valley project area plan in November 2031, the note ceases to be an obligation of the Successor Agency. For the fiscal year ended June 30, 2014, total interest paid was $269.Contractual obligations As part of the Redevelopment Agency's economic development program to attract and retain businesses in the City, the former Redevelopment Agency has entered into various contractual obligations to reimburse tenant improvement costs to be paid from property tax increment revenues (thereafter RPITF). At June 30, 2014, the outstanding balance of these obligations totaled $120.Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2031 Total Unamortized bond premium/discounts, net Total bonds Principal$ 2,205 3,280 5,565 7,955 8,340 48,925 80,730 199,820 Interest$ 10,659 10,532 10,350 10,053 9,662 40,940 25,599 Total$ 12,864 13,812 15,915 18,008 18,002 89,865 106,329 2010 Recovery.

Zone Economic Development Bonds The Successor A ency will repay a total of $9,821, principal Recovery Zone ?Ionomics Development Bonds issued in Octo annual RPTTF revenue allocations.

Proceeds from the bonds public improvements related to the merged project areas. Th rates ranging from 1.44% to 6.22% and are payable through the fiscal year ended June 30, 2014, total principal and inter Debt service requirements to maturity for 2010 Recovery Zone as follows: J,483J A6,30 In December 1992, the former Redevelopment Agency has entered into an agreement 121,278 321,098 with California State Teachers Retirement System (CALSTRS), to share in the 2,775 development costs of the Plaza Redevelopment Project. In March 2004, CALSTRS$121,278 $323,873 assigned the agreement to the new owners, Pan Pacific Retail Properties, Inc. (PPRP). In October 2006, Kimco Realty Corporation (KRC) acquired PPRP including the assumption of the assigned plaza project agreement.

The KRC participation note bears 7% simple interest rate, and has a maximum term of 25 years. The Successor Agency's and interest, outstanding obligation to repay the note is entirely contingent on the revenues generated by the ber 2010 from the semi- project. The note will be forgiven at the end of the term whether or not the entire amount provided financing for has been repaid. At June 30, 2014, the outstanding balance of the participation note he bonds bear interest at was $3,987..-ewasry$3,987.nn t'ebruary20u3i.

During est paid was $576.Development bonds are Debt service requirements to maturity for the Successor Agency notes payable and contractual commitments to be paid from future RPTrF revenues are as follows: 65 CITY OF ANAHEIM Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2032 Total notes and loans Principal$ 358 398 442 490 541 1,878 2,7O$ 6,14 Interest$ 550 535 516 495 470 1,835 1,978 1,132 Total$ 908 933 958 985 1,011 3,713 1,978 3,839 Due to the City of Anaheim The Successor Agency will repay a total of $9,710 outstanding long-term obligations, principal and interest, from the semi-annual RPTTF revenue allocations for the $10,000 Cooperation Agreement dated April 1, 2003, between the former Redevelopment Agency and the City, whereby the City assisted the former Agency with the development of the Anaheim Westgate Center (Westgate project) utilizing

$10,000 of funds from the HUD Section 108 loan. This Cooperation Agreement obligation (HUD Section 108 loan) bears interest ranging from 1.74% to 5.97% and is payable semi-annually through August 2023. At June 30, 2014, outstanding principal due to the City for the Westgate project obligation was $7,450. Principal and interest paid for the current fiscal year were $905.The Successor Agency will repay a total of $8,108 outstanding long-term obligations, principal and interest, from the semi-annual RPTIF revenue allocations for the $7,000 Cooperation Agreement dated June 2010 between the former Redevelopment Agency and the City, whereby the City assisted the former Redevelopment Agency with the rehabilitation of the historic Packing House site utilizing proceeds from the HUD Section 108 loan. This Cooperation Agreement obligation (HUD 108 Section loan) bears interest ranging from 1.68% to 3.98% and is payable over 20 years beginning on February 1,2011 through August 1,2030. As of June 2014, the outstanding principal due to the City for the Packing House site project obligation was $6,021. Principal and interest paid for the current fiscal year were $547.The former Redevelopment Agency paid a total of $19,163 to the State of California Supplemental Education Revenue Augmentation Fund (SERAF) in fiscal years 2010 and 2011. Of this amount, $8,500 was borrowed from the housing fund. The Successor Agency will repay this amount from future RPTrF revenue allocations.

At June 30, 2014, the outstanding balance was $8,176.Westgate Pollution Remediation Obligation In June 2003, the former Redevelopment Agency acquired property located at 2951 West Lincoln Avenue as part of a redevelopment project named the Westgate project.Approximately 11 acres of the property were formerly known as the Sparks and Rains Landfills.

The County of Orange was the operator of these landfills until 1960. In November 2008, the County paid the Redevelopment Agency $5,176 in settlement of claims related to the pollution remediation for the Westgate project site prior to the development of a shopping center. The total costs of the pollution remediation work amounted to $12,420 based on actual contract received for the project. At June 30, 2014, the outstanding pollution remediation obligation for the Westgate was $170.Mello-Roos Community Facilities Districts The City issued special tax bonds to finance construction in various Community Facilities Districts.

These bonds were authorized pursuant to the Mello-Roos Community Facilities Act of 1982. The bonds are payable from a special assessment tax and are non-recourse bonds secured by the properties.

Neither the faith and credit nor the taxing power of the City, the State of California or any political subdivision of either of the foregoing is pledged to the payment of the bonds. The bonds are not general or special obligations of the City, nor do they contain any credit enhancements that secondarily pledge existing or future resources of the City, accordingly they are not reflected in the accompanying basic financial statements.

The City is acting as agent only for the property owners in collecting the special assessments and forwarding the collections to the fiscal agent. This activity is recorded in an agency fund in the basic financial statements.

At June 30, 2014, the City has the following outstanding Mello-Roos special tax bonds: In June 1989, the City issued $26,620 in special tax bonds to finance a portion of the cost of acquisition and construction of facilities in East Anaheim Hills. In April 1995,$15,389 of the 1989 bonds was advance refunded through the Anaheim Public Financing Authority and in June 2004, $11,160 of the 1995 bonds was refunded through the Authority.

In December 1999, $7,720 of the 1989 bonds was refunded by the City. At June 30, 2014, the 2004 Anaheim Public Financing Authority bonds outstanding amounted to $1,360, and the 1999 Mello-Roos bonds outstanding amounted to $785.In February 2007, the City issued $9,060 in special tax bonds to finance a portion of the cost of acquisition and construction of facilities in the Platinum Triangle of Anaheim.At June 30, 2014, the 2007 Mello-Roos bonds outstanding amounted to $8,070.In August 2010, the City issued $28,630 in special tax bonds, Series 2010 to finance a portion of the cost of acquisition and construction of facilities in the Platinum Triangle of Anaheim, Community Facility District 08-1 and to fund a reserve fund for the Series 2010 Bonds. At June 30, 2014, the 2010 Mello-Roos bonds outstanding amounted to$27,025.NOTE 10- SEGMENT INFORMATION:

The Sanitation Utility Fund issued revenue bonds to finance sewer system expansion and improvements.

The Sanitation Utility Fund accounts for three activities:

solid waste collection, wastewater, and street cleaning.

However, investors in the revenue bonds rely 66 CITY OF ANAHEIM solely on revenue generated through wastewater activities for repayment.

Summary financial information for wastewater activities is presented below: Condensed Statement of Net Position Assets: Cash and cash equivalents Investments Other current assets Restricted cash and cash equivalents Capital assets, net Total assets Liabilities:

Current liabilities Current liabilities payable from restricted assets Noncurrent liabilities Total liabilities

$ 8,174 19,873 1,456 15,075 97,229 14A1,807 766 1,269 43,552 56,169 398 15,600 24,053$ 96 ,220 Condensed Statement of Cash Flows Net cash provided by (used for): Operating activities Noncapital financing activities Capital and related financing activities Investing activities Net decrease Beginning cash and cash equivalents Ending cash and cash equivalents Reconciliation of cash and cash equivalents Cash and cash equivalents Restricted cash and cash equivalents Total cash and cash equivalents

$ 5,506 (484)(1,641)(7,402)(4,021)27,270$ 23,,249$ 8,174 15,075$ 23,,249 NOTE 11 -RETIREMENT PLANS: Net Position: Net investment in capital assets Restricted for debt services Restricted for capital projects Unrestricted Total net Position Condensed Statement of Revenues, Expenses and Changes in Net Position Wastewater fees (pledged against bonds)Other revenues Depreciation and amortization Other operating expenses Total operating income Nonoperating income (expenses)

Interest income Interest expense Capital contribution Transfers in Transfers out Total nonoperating expense Change in net position Net assets at beginning of year Net assets at end of year$ 11,869 425 (1,973)(5,594)4,727 278 (1,620)535 4,864 (484)3,573 8,300 87,920$ 96,220 Retirement System The City contributes to the California Public Employees' Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries.

PERS acts as a common investment and administrative agent for participating public entities within the State of California.

Benefit provisions and all other requirements are established by State statute and City ordinance.

A copy of PERS' annual financial report may be obtained@www.calpers.ca.gov.

Funding Policy Participants and City are required to contribute at actuarially determined rates applied to the annual covered payroll respective of the employee groups. The City pays a certain percentage of the Participant contribution.

The following table summarizes the required contribution rates by employee and employer effective for fiscal year 2014.The contribution requirements of plan members and the City are established and may be amended by PERS.67 CITY OF ANAHEIM Employ Anaheim Hire CIPERS Employee Group Doe Membership E Miscellaneous Employees ee Rate Employer Rate Total City Ln y Ciy _at Fiscal Year Ending 6/30/12 6/30/13 6/30/14A Annual Pension Cost (APC)$57,560 58,213 59,747 Percentage of APC Contributed 100%100%100%Net Pension Obligation

$0$0$0 Management Before 1/10/2012 After 1/10/2012 but before 1/1/2013 On or After 1/1/2013 Onor After 1/1/2013 AMEA General Before 1/1/2013 AMEA Clerical On or After 1/1/2013 On or After 1/1/2013'I.B.E.W. Before 1/1/2013 Confidential On or After 1/1/2013 On or After 1/1/2013 APA Traninees Before 1/1/2013 On or After 1/1/2013 On or After 1/1/2013 Safety Employees Fire Management Before 1/1/2013 AFA On or After t/1/2013 On or After 1/1/2013 On or After 1/1/2013 Police Management Before 1/1/2013 APMA On or After 1/1/2013 On or After 1/1/2013 APA Before 1/1/2013'On or After 1/1/20131 On or After 1/1/2013 Classic Classic Classic New Classic Classic New Classic Clossic New Classic Classic New 1.000%8.000%8.000%6.750%1.000%1.000%1.000%1.000%1.000%6.750%8.000%8.000%6.750%7.000%0.000%0.000%0.000%7.000%7.000%7.000%7.000%7.000%0.000%0.000%0.000%0.000%2.968% 19.063% 30.031%0.000%0.000%0.000%2.968%2.968%2.968%2.968%2.968%0.000%0.000%0.000%0.000%22.031% 30.031%22.031% 30.031%22.031% 28.781%19.063% 30.031%19.063% 30.031%19.063% 30.031%19.063% 30.031%19.063% 30.031%22.031% 28.781%22.031% 30.031%22.031% 30.031%22.031% 28.781%Funded Status and Funding Progress Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with the past expectations and new estimates are made about the future.The table below displays the funding progress of the three plans and is based upon the most recent actuarial valuation data as of June 30, 2013: Classic Classic Classic New Classic Classic New Classic Classic New 9.000%9.000%9.000%11.250%0.000%0.000%12.750%0.000%0.000%12.750%0.000%0.000%0.000%0.000%9.000%9.000%0.000%9.000%9.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%33.364% 42.364%33.364% 42.364%33.364% 42.364%33.364% 44.614%32.884% 32.884%32.884% 32.884%32.884% 45.634%32.884% 41.884%32.884% 41.884%32.884% 45.634%Plan Miscellaneous Police Safety Fire Safety Total (A)Actuarial Value of Assets (AVA)$786,278 435,595 257,573$ 1,479,446 (8) (C)Unfunded Uability Accrued lULl Uability (B)-(A)$1,101,160

$314,882 586,151 150,556 352,186 94,613$2,039,497

$560,051 (D) (E) (F)UL asO Funded Ratios Annual % of AVA Market Coered Payroll (A)/(B) Value Payroll (C)I/(E)71.4% 71.4% S107,587 292.7%74.3% 74.3% 41,946 358.9%73.1% 73.1% 21,464 440.8%72.5% 72.5% $170,997 327.5%'Definition of a 'New' PERS member' A new hire who is brought in CalPERS membership for the first time on or after January 1, 2013, and who has no prior membership in any California public retirement system.* A new hire who is brought into CalPERS membership for the first time on or after January 1, 2013, and who is not eligible for reciprocity with another California public retirement system.A member who first established CAoPERS membership prior to January 1, 2013, and who is rehired by a different CalPERS employer after a break in service of greater than six months.'Valid until MOU expiration on 1/3/14 at which time the New CaIPERS member employee rate will go to 6.75%'APA employees with Classic CaIPERS membership will contribute 8% by the end of fiscal 2013/2014 Annual Pension Cost For fiscal year 2014, the City's annual pension cost of $59,747 for PERS was equal to the Cit/ys required and actual contributions.

The required contribution was determined as a part of the June 30, 2011 actuarial valuations.

The City's annual pension cost, the percentage of annual pension cost contributed to the plans, and the net pension obligation for the fiscal years ended June 30, 2012, 2013 and 2014 are as follows: The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information, which shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.Effective for periods beginning after June 15, 2014 implementation of GASB Statement No. 68 Accounting and Financial Reporting for Pensions-an amendment of GASB Statement No. 27will be required.

This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures.

This Statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. This Statement will require the City to recognize a liability equal to the net pension liability.

Under this new reporting requirement, the City would record the unfunded liability

($560,051) at June 30, 2013, as shown above, as adjusted by the requirements of this Statement, as a liability on the Statement of Net Position.

The necessary data is not currently available, as such, the exact impact to the Citys financial statements in conforming to this Statement has yet to be determined.

68 CITY OF ANAHEIM Actuarial Methods and Assumptions In the June 30, 2013, actuarial valuations, the entry age normal cost method was used.The actuarial assumptions included: (a) 7.50% investment rate of retum (net of administrative expenses), (b) projected annual salary increases from 3.30% to 14.20%that vary by Age, Service and type of employment, and (c) 2% per year cost-of-living adjustments.

Both (a) and (b) included an inflation component of 2.75%. Market value is tCe asset valuation asset method. The PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis as follows: 1) all new gains or losses are amortized over a fixed 30-year period with a 5 year rampup atthe beginning and 5 year ramp down at the end of the amortization period;2) all changes in liabilities due to plan amendments (other than Golden Handshakes), changes in actuarial assumptions, or changes in actuarial methodology are amortized separately over a 20-year period with a 5-year ramp up at the beginning and 5 year ramp down at the end of the amortization period, 3) changes in unfunded liabilities due to Golden Handshake will be amortized over a period of 5 years.Other Post-employment Benefits In addition to the pension benefits described above, the City provides other post-employment benefits (OPEB) as a single-employer defined benefit healthcare plan. The OPEB provides medical, dental and life insurance benefits to eligible retirees (hired prior to January 1, 1996, Anaheim Police Association employees hired prior to July 6, 2001, and Anaheim Fire Association employees hired prior to November 9, 2001) in accordance with City Personnel Resolutions and various Memoranda of Understanding.

Eligible employees hired after the dates above have access to the City's medical and dental plans but do not receive a defined benefit. There are no separately issued financial statements for the OPEB.Funding Policy The contribution requirements of plan members and the City are established in accordance with City Personnel Resolutions and various Memoranda of Understanding.

The retired plan members receiving benefits make varying contributions toward the cost of these benefits depending on the retiree's Medicare eligibility, year of hire, age and employee group. Retiree contributions for the fiscal year ended June 30, 2014, were 2.80% of total payroll.In June 2008, the City joined the California Employer's Retiree Benefit Trust Program (CERBT) to pre-fund OPEB liabilities.

The CERBT is an agent multiple-employer plan consisting of an aggregation of single-employer plans, with pooled administrative and investment functions that are administered by PERS. A copy of the aggregated CERBT annual financial report may be obtained @www.calpers.ca.gov.

The City contributes an amount not less than the annual required contribution (ARC) of the employer.

The ARC is an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The ARC rate for the fiscal year ended June 30, 2014, was 5.62% of total payroll.Annual OPEB Cost and Net OPEB Asset The City's annual OPEB cost, amount actually contributed to the plan, and changes in the City's net OPEB asset for the fiscal year ended June 30, 2014, are as follows: ARC Interest on net OPEB asset Adjustment to ARC Annual OPEB cost$10,145 (838)703$1o0010$10,145 (10,010)135$11 152 Contributions made Annual OPEB cost Change in OPEB asset Net OPEB asset -beginning of year Net OPEB asset -end of year The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB asset for the fiscal year ended June 30, 2014 are as follows: Fiscal Year Ending 6/30/ 12 6/30/13 6/30/14 Annual OPEB Cost$ 9,530 8,574 10,010 Percentage of Annual OPEB Cost Contributed 101.40%114.60%101.30%OPEB Asset$ 9,765 11,017 11,152 Funded Status and Funding Progress Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with the past expectations and new estimates are made about the future.The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multi-year trend information in subsequent years, that will show whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.69 CITY OF ANAHEIM The table below displays the funding progress of the plan and is based upon the most recent actuarial valuation data: Public entities in Orange County may receive hazardous materials response services from the Hazmat by executing an agreement and paying a fair share contribution.

Audited financial information for the joint powers authority as of and for the year ended June 30, 2014, was as follows: Actuarial Valuation Date 07/01/13 JA)Actuarial Value of Assets (AVA)$74,013 (B) (C)Unfunded Liability Accrued (UL)Liability (B)-(A)$237,202 $163,189 (D) (E) (F)UL as a Funded Ratios Annual % of AVA Covered Payroll (A)/(B) Payroll (C)/(E)31.2% $155,317 105.1%Total assets Total liabilities Members' equity Total revenues Total expenses Change in net position$163 100 63 102 59 43 Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefits costs between the City and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in the actuarial accrued liability and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July 1, 2013, actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumption included a 7.61% investment rate of return, an annual healthcare cost trend rate ranging from 7.25 % -8.00% initially and declining to 5.00%by 2023, payroll growth rate of 3.25% per year, and an inflation factor of 3.00%. The OPEB unfunded actuarial accrued liability is being amortized as a level percentage of payroll over a closed 30-year period. The remaining amortization period as of July 1, 2013, is 23 years.NOTE 12 -JOINT VENTURES AND JOINTLY-OWNED PROPERTIES:

Authority for Orange County -City Hazardous Materials Emergency Response The City participates in joint powers authority (JPA), the Authority for Orange County-City Hazardous Materials Emergency Response (Hazmat), for the purposes of responding to, assessing the nature of, and stabilizing any emergency created by the release or threatened release of hazardous materials.

The following entities are members of Hazmat: City of Anaheim and City of Huntington Beach (provider agencies).

Members of the Board of Directors (Hazmat Board) consist of one voting Board member and an alternate appointed by the governing body from the provider agencies.

Under the Fifth Amendment to the JPA agreement, three representatives from the subscribing agencies are also voting Board Members. The following cities were subscribing agencies:

Brea, Costa Mesa, Fountain Valley, Fullerton, Garden Grove, Newport Beach and Orange.Hazmat does not have any debt outstanding at June 30, 2014.The City has no significant equity interest in Hazmat, and accordingly neither assets nor liabilities of Hazmat have been recorded in the City's basic financial statements.

For a copy of Hazmat's separate financial statements, contact the Finance Director of the City.Metro Cities Fire Authority The City participates in a joint powers authority, Metro Cities Fire Authority (Fire Authority), for the purpose of providing a central communication network and record keeping system to support fire suppression, emergency medical assistance, rescue service, and related services provided by the members of the Fire Authority.

The following entities are members of the Fire Authority:

City of Anaheim, City of Brea, City of Fountain Valley, City of Fullerton, City of Garden Grove, City of Huntington Beach, City of Newport Beach, and the City of Orange. Members of the Board of Directors (the "Board") consist of one voting Board member and an alternate appointed by their governing body.Public entities in Orange County may receive services from the Fire Authority by executing an agreement and paying a fair share contribution.

Audited financial information for the Fire Authority as of and for the year ended June 30, 2014, was as follows: Total assets Total liabilities Members' equity Total revenues Total expenses Change in net position$2,411 526 1,885 5,250 5,231 19 70 CITY OF ANAHEIM The City has no significant equity interest in the Fire Authority, and accordingly neither assets nor liabilities of the Fire Authority have been recorded in the City's basic financial statements.

For a copy of the Fire Authority's separate financial statements, contact the Finance Director of the City.North Net Training Authority The City participates in a joint powers authority, North Net Training Authority (Authority), for the purpose of providing a joint use of a consolidated Training Center and record keeping system for fire training services.The following entities are members of the North Net Training Authority:

City of Anaheim, City of Garden Grove and City of Orange. Members of the Board of Directors (the "Board") consist of one voting Board member and an alternate appointed by their governing body.Public entities in Orange County may receive training services from the Authority by executing a "subscription agreement" and by paying the annual fee and other costs.Audited financial information for the Authority as of and for the year ended June 30, 2014, was as follows: As a former participant in SONGS, the Electric Utility is subject to assessment of retrospective insurance premiums in the event of a nuclear incident at SONGS or any other licensed reactor in the U.S.NOTE 13 -COMMITMENTS AND CONTINGENCIES:

Intermountain Power Agency The Electric Utility has entered into a power purchase contract with the Intermountain Power Agency (IPA) for delivery of electric power. The share of IPA power is equal to 13.225% of the generation output of IPA's two recently uprated coal-fueled generating units located in Delta, Utah (Unit 1 and 2 net output is 900 mega watts each). The City is obligated for the following percentage of electrical facilities at IPA: Generation:

Intermountain Power Project Entitlement 13.225%Expiratio 2027 Total assets Total liabilities Members' equity Total revenues Total expenses Change in net position$1,573 30 1,543 294 388 (94)The contract constitutes an obligation of the Electric Utility to make payments from revenues and requires payment of certain minimum charges. These minimum charges include debt service requirements on the financial obligations used to construct the plant. These requirements are considered a cost of purchased power.Southern California Public Power Authority The Electric Utility is a member of the Southern Califomia Public Power Authority (SCPPA), a joint powers agency. SCPPA provides for the financing and construction of electric generating and transmission projects for participation by some or all of its members. To the extent the Electric Utility participates in projects developed by SCPPA, it is obligated for its proportional share of the cost of the project. The City is obligated for the following percentage of electrical facilities owned by SCPPA: Jointly-owned utility plants The City's Electric Utility owns a 10.04% ownership interest in the coal-fired San Juan Generating Station, Unit 4 (SJ), located near Waterflow, New Mexico. The other participants in SJ and their respective ownership include: Public Service of New Mexico, 45.48%; City of Farmington, New Mexico, 8.48%; County of Los Alamos, New Mexico, 7.20%; and M-S-R Public Power Agency, 28.80%. There are no separate financial statements for this venture, as each participant's interest in the utility plant is included in their respective financial statements.

The City's cumulative share of construction costs included in the utility plant at June 30, 2014, amounted to $84,616.The City sold its 3.16% ownership interest of SONGS to SCE on December 29, 2006.Accordingly, the Electric Utility ceased recording all related operating expenses, except marine mitigation costs and spent fuel storage charges, as of December 29, 2006.Based on the SONGS settlement agreement, the Electric Utility is responsible for the City's share of marine mitigation costs up to $2,300, and SCE is responsible for costs between $2,300 and $7,300. The Electric Utility is responsible for spent fuel storage charges until the federal government takes possession.

Entitlement Transmission:

Southern Transmission System (STS)Mead-Adelanto Project (MAP)Mead-Phoenix Project (MPP)Generation:

Hoover Dam Uprating (Hoover)Magnolia Generating Station (Magnolia)

Canyon Power Project (Canyon)Natural Gas Reserve Projects (Natural Gas): SCPPA Natural Gas Project -Pinedale, Wyoming SCPPA Natural Gas Project -Barnett, Texas 17.6%13.5%24.2%42.6%38.0%100.0%35.7%45.5%Expiration 2027 2030 2030 2018 2037 2040 2033 2033 71 CITY OF ANAHEIM Take or pay commitments As part of the take or pay commitments with IPA and SCPPA, the Electric Utility has agreed to pay its share of current and long-term obligations.

Payment for these obligations will be made from the operating revenues received during the year that the payment is due. A long-term obligation has not been recorded on the accompanying basic financial statements as these commitments do not represent an obligation of the Electric Utility until the year the power is available to be delivered to the Electric Utility.The following schedule details the amount of debt service that is due and payable by the Electric Utility for each project and the final maturity date.offset GHG emissions associated with generating electricity.

CARB will provide a free allocation of GHG allowance to each electric utility to mitigate retail rate impacts. This free allocation of GHG allowance is expected to be sufficient to meet Electric Utility's GHG compliance obligations for retail sales. During fiscal year 2014, an unused portion of retail allowance was sold for $5,740 to reduce renewable energy costs for retail customers.

The compliance obligation for the wholesale sales requires allowance to be obtained through the auction or in the secondary market quarterly.

At June 30, 2014, the value of prepaid Cap and Trade allowance is $21,124, and the value of Cap and Trade obligation is $13,506.Operating Leases In January 2005, the City entered into a long-term noncancelable ground lease with City of Fullerton, for an approximately 1.56 acre site at the Fullerton Municipal Airport for the operation of the Anaheim Police Department Heliport.

The term of the lease is 40 years with two 10-year extensions commencing from January 2005 and ending December 2044. The base rent is adjusted every five years by ten percent (10%). The City constructed a building of approximately 30,000 square feet that includes offices, aircraft maintenance and storage facilities and other infrastructure supporting such facilities on the leased premise. Future minimum lease payments to be made from unrestricted revenues of the General Fund are as follows: Fiscal Year Ending 6/30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 2040-2041 Total Natural IPA STS MAP MPP Hoover MAugnolia Gas Canyon Total$ 37,201 $ 11,732 $ 2,799 $ 1,507 $ 869 $ 6,315 $ 5,729 $ 6,385$ 72,537 30,101 14,579 3,016 1,611 957 8,548 7,091 12,769 78,672 27,584 14,322 2,994 1,606 957 8,550 6,831 19,504 82,348 24,741 14,108 2,971 1,596 957 6,658 6,081 19,505 72,617 29,555 13,955 2,946 1,580 6,659 5,457 19,505 79,657 88,334 70,723 5,108 2,735 33,454 21,385 97,504 319,243 25,456 37,796 14,560 97,517 175,329 39,054 8,274 97,513 144,841 42,318 97,514 139,832 39,009 39009$237-516 $164875 $19834 $10635 $3740 $189352 $ 758 $6725 1208085 In addition to debt service, the City's entitlement requires the payment for fuel costs, operations and maintenance (O&M), administration and general IA&G) and other miscellaneous costs associated with the generation and transmission facilities discussed above. These costs do not have a similar structured payment schedule as debt service;however, prior experience indicates that annual costs are qenerally consistent from year to year. The fiscal'year 2014 expenses for fuel, O&M, A,&G and other costs at these projects were as follows: Natural Fiscal Year IPA STS MAP MPP Hoover Magnolia Gas Canyon Total 2014 $49,586 $6,034 $321 $355 $449 $22,424 $1,134 $6,545 $86,848 Cap-and-Trade Program California Senate Bill (AB) 32 requires that Utilities in California reduce their greenhouse gas (GHG) emissions to 1990 levels by the year 2020. It directed the California Air Resources Board (CARB) to develop regulations of GHG that became effective January 2012. Emission compliance obligations under the Cap-and-Trade regulation began in January 2013.The Cap-and-Trade program (Program) was implemented beginning January 1, 2013.This Program requires Electric Utilities to have GHG allowances on an annual basis to Fiscal Year Ending June 30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 2040-2044 2045 Total minimum future rentals The Honda Center$ 57 59 59 59 59 323 355 391 430 473 48$ý2313 On January 26, 1999, the City entered into a series of lease transactions for the Honda Center. Under these transactions, the City leased the Honda Center to a third party trustee acting for the benefit of an equity investor for a term of approximately 39.2 years. The trustee sublet the facility back to the City for 20 years, which was shorter than the then remaining term of the management agreement between the third-party manager at that time (Manager) and the City in consideration of an advance rental payment for the entire lease term. At the end of the sublease, the City has a purchase option to purchase the trustee's rights under the lease for a fixed amount. The advance 72 CITY OF ANAHEIM rent payments to the City were deposited into a trust fund and invested.

The cash scheduled to be available from this trust fund is sufficient to pay the City's rent payments for the term of the sublease and to exercise the City's purchase option at the end of the sublease.

The excess of the amount of the advance rent payment made by the trustee to the City over the deposit to the trust funds, after the payment of transaction expenses and payment to the Manager for agreeing to pledge its interest as Manager under the management agreement then in effect and agreeing to undertake certain additional obligations to the transaction, was approximately

$4,000. This amount was recognized by the City as unearned revenue and is being amortized over the sublease term. The City has secured its obligations to the other parties to these lease transactions by a pledge of its respective interest in revenues from the facility, subordinate (with certain exceptions) to any interests of the debt holders of the facility.

The City's obligations under these lease transactions are considered to be defeased in substance, and therefore the related liabilities as well as the trust assets have been excluded from the City's financial statements.

The City's and AAM's respective rights under the FMA are subject in certain respects to the effect of the 1999 lease transaction.

Effective December 16, 2003, the City and Anaheim Arena Management LLC (AAM)entered into a Facility Management Agreement (FMA) whereby AAM has the exclusive right and license to manage, maintain and operate all aspects of the Honda Center in accordance with the FMA through June 30, 2023, with an option to extend the term for an additional period not to exceed 10 years. Annual distributions to the City, AAM and the County of Orange are required for their respective share of adjusted net revenues, as defined in the FMA. In the event that cash on hand is insufficient to pay operating expenses, debt service, distributions to the City, the County of Orange, or other amounts payable, AAM shall make or cause an affiliate or third-party lending institution to make loans for such purposes, as defined in the FMA. Such funds will be repaid from gross revenues or adjusted net revenues, if any, as defined in and in accordance with disbursement priorities established in the FMA. At June 30, 2014, the outstanding conduit debt on the Honda Center totaled $29,500. The debt is non-recourse, payable from revenues generated by the facility.

Neither the faith and credit nor the taxing power of the City is pledged to the payment of the debt. The debt is not a general or special obligation of the City, nor does it contain any credit enhancements that secondarily pledge existing or future resources of the City (other than revenues generated by the facility), and accordingly it is not reflected in the accompanying basic financial statements.

Angel Stadium of Anaheim On May 14, 1996, the City and the California Angels, LP (Team), which was then managed by Disney Sports Enterprises, Inc. (subsequently known as Anaheim Sports, Inc.), entered into an agreement to provide far the operation and refurbishment of the Stadium. Pursuant to the agreement, the Team assumed responsibility for the operation of the Stadium on October 1, 1996. The agreement runs for 33 years (subject to a limited Team option to cancel at 20 years and the Team's right to extend the term). In September 2013, the agreement was modified extending the Team's right to terminate the agreement by three years to October 16, 2019. Concurrent with amending the termination right, the City and the Team entered into two Memorandums of Understanding providing a nonbinding framework for negotiations relating to an extension of the Team's tenancy at the stadium and for the potential development of the surrounding stadium area.Under the terms of the agreement, the Team assumed full responsibility for all Stadium operations and maintenance, including capital maintenance.

The Team books all Stadium and parking lot events (except for ten annual City events), pays all expenses, and retains all revenue (subject to the City's rights to share in certain net revenues)except that the City credits the Team up to $500 per year adjusted annually for CPI as a capital reserve contribution, calculated on the basis of property taxes. The City's participation in net revenues includes amounts received by the Team above certain thresholds including paid admissions

($2.00 per paid admission in excess of 2.6 million admissions per year), net income from nongame events (in excess of $2,000 per year adjusted annually for CPI), and parking lot net income (25% in excess of$4,000 per year adjusted annually for CPI). Additionally, as indicated above, the City retained the right to book and retain all revenue from ten parking lot events per year.Major League Baseball consented to the transfer of the Team in fiscal year 2003 to interests controlled by Arte Moreno. No changes in the terms of the agreement with the Team were made in connection with that transfer.The Agreement also provided that the City had the right to develop approximately 42 acres of the parking lot development site. In 1998 a land sale of $1,000 for a 1.25 acre site was approved for the construction of a 1,100-seat theatre called "Tinseltown Studios" (now known as "City National Grove of Anaheim").

In November 2002, the City purchased the facility and the land for $6,700 from its then owner, SMG.Concurrent with the purchase, the City granted to Nederlander-Grove LLC (Nederlander) a license to operate the facility for three years with the right to extend another five years. In May 2009, the management agreement was amended extending the term to December 31, 2015 with the right to extend another five year period. Additionally, under the amended management agreement, effective January 1, 2009, Nedertander no longer receives a management fee of $150 and the City's share in the annual net profits and losses from operations increased from 50% to 60%.Nedertander is responsible for 100% of losses in excess of $400, thereby limiting the City's share of net losses to a maximum of $240 in any given year. The City may elect to terminate the agreement prior to expiration of the term under certain conditions, and pay the unamortized balance of capital assets purchased during the term to Nedertander.

Concurrent with the amendment to the management agreement, the parking license fee agreement was amended, wherein the parking license fees from Nederlander were reduced to $176 and is subject to adjustment annually based on CPI increases.

Nederlander paid the City $191 for the year ended June 30, 2014, for parking and common area maintenance.

73 CITY OF ANAHEIM Muzeo In October 2007, the City and the former Redevelopment Agency entered into a property operating agreement with the Muzeo Foundation to operate and provide programming for the Muzeo, the downtown museum. The property operating agreement is for a term of 30 years and provides for a line of credit for the first 3 years from the City to the Muzeo Foundation in an amount not to exceed $1,000 or 95% of pledges at an annual interest rate of 5%. The property operating agreement was amended on August 1, 2010, to extend the maturity date to June 30, 2015. It also amended the aggregate amount of the line of credit to $500 during fiscal year 2011 and $200 during each fiscal year thereafter with amounts being converted to grants upon achieving fund raising thresholds.

At June 30, 2014, there was no amount due to the City.Litigation A number of claims and suits are pending against the City for alleged damages to persons and/or property and for other alleged liabilities arising out of matters usually incident to the operation of a city such as Anaheim. Although the aggregate amount asserted for such lawsuits and claims is significant, in the opinion of City management, the City has strong defenses against such claims, and thus the ultimate loss, if any, relating to these claims and suits not covered by insurance or reflected in the financial statements, will not materially affect the financial position of the City.Grants Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies.

Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial.

Construction and other significant commitments At June 30, 2014, the City had the following commitments with respect to unfinished capital projects, disposition and development agreements, reimbursement agreements and cooperation agreements:

Capital Projects Anaheim Regional Transportation Intermodal Center Avon Dakota Neighborhood Revitalization Housing Project Brookhurst Street/Katella Avenue-Ball Road Improvement Compressed Natural Gas Facility Convention Center Expansion Betterment VII Electrical Equipment Acquisitions Katella Avenue at Lewis Street/Street College Improvement Katella Avenue Improvement at Interstate 5 Miraloma Park and Community Center Paul Revere Park Smart Grid Project Transformers Acquisitions Tustin Avenue/La Palma Widening and Intersection Improvement Underground District No. 57 Brookhrust Street Phase I Underground District No. 6 West Street Vehicle Acquisitions Velare Street Light Improvement Well No 58 Improvement Remaining Construction Commitment

$25,997 342 2,226 626 154,294 2,111 4,064 2,828 1,566 613 855 1,654 3,118 3,066 4,417 4,154 524 1,432 Expected Completion Date 2014 2015 2014 2014 2017 2014 2014 2015 2014 2014 2014 2015 2014 2015 2015 2014 2014 2014 74 CITY OF ANAHEIM NOTE 14 -SUBSEQUENT EVENTS: On December 9, 2014, the Anaheim City Council certified the official results of the California General Election held on November 4, 2014. Measure N, Anaheim Local On October 8, 2014 the Electric Utility issued 2014-A Revenue Refunding Bonds in a Services Measure, which among other things, was to ratify and amend subdivision (e)principal amount of $109,350 at a premium of $19,921 to refund the outstanding of Charter Section 1221 to clarify the City of Anaheim's (City) authority to transfer up balances of $23,490 on the 2003-A Revenue Bonds and $105,485 on the 2004-A to 4% of the "operating revenue" earned by the Water and Electric Utilities to the City's Revenue Bonds. The true interest cost is 1.89% maturing serially from April 1, 2015 to General Fund instead of the "gross revenue" was not approved by a majority of voters October 1, 2025. Annual debt service requirements, beginning April 1, 2015 range so it did not pass.from $3,279 to $15,223 at rates ranging from 2.0% to 5.0%. This 2014-A Refunding Bonds will reduce the Electric Utility's total debt service payments by $44,999 at the net The Measure N election results coupled with settled litigation require the Water Utility to present value of $32,405. cease making the up to 4% transfer to the City's General Fund and the City to reimburse the Water Utility $3 million plus the transferred funds held by the City for fiscal years On November 14, 2014, the City issued 2014 Series A and B Lease Revenue Bonds in ending June 30, 2013 and 2014, in equal installments of no less than $600 beginning a principal amount of $258,925 and at a premium of $21,266. Proceeds from the January 1, 2014 and by June 30th of each fiscal end for approximately nine years or Bonds are allocated as follows: 1) $247,206 to finance an Anaheim Convention Center sooner depending upon when the funds have been fully reimbursed.

Expansion and other capital projects of the City; to fund a debt service reserve fund; to y costs of issuance; and to pay capitalized interest;

2) $32,985, along with $16,624 frm previous debt service reserve funds ($8,364), debt service funds ($3,072), and from City ($5,188), to refund the outstanding principal balances of the 1992 Convention Center Financing Project COP ($34,500), the 1993 Arena Land Refinancing COP ($7,655), the 2002 Revenue Bonds ($490) and the 2010 Revenue Note ($5,185);

and to fund debt service reserve fund ($974). The true interest cost of the 2014 Bonds is 4.36% maturing serially from May 1, 2016 to May 1, 2046. Debt service requirement begins May 1, 2015 with an average annual debt service of$16,430 and interest rates ranging from 0.4% to 5%. The refunding bonds will reduce the City's debt service payments by $5,910 with a net present value of $2,847.75 (This page left blank intentionally) 76 CITY OF ANAHEIM Summary of Pension Obligation Funding Progress (In thousands)

Employee Retirement System -Schedule of Funding Progress Value of Assets Unfunded Liability Funded Ratios June 30, 2013 Actuarial Valuation Date Miscellaneous Police Safety Fire Safety Total June 30, 2012 Actuarial Valuation Date Miscellaneous Police Safety Fire Safety Total June 30, 2011 Actuarial Valuation Date Miscellaneous Police Safety Fire Safety Total Actuarial Value of Assets (AVA)$ 786,278 435,595 257,573$1,479,446 Market'" Valule of Assets (MVA)$ 786,278 435,595 257,573$1,479,446 Accrued Liability$1,101,160 586,151 352,186$2,039,497 AVA$314,882 150,556 94,613$560,051 MVA$314,882 150,556 94,613$560,051 AVA 71.4%74.3%73.1%72.5%MVA 71.4%74.3%73.1%72.5%Value of Assets Actuarial Market Value of Valule of Assets (AVA) Assets (MVA)$ 854,296 $ 712,497 473,233 395,053 283,211 236,155$1,610,740

$1,343,705 Value of Assets Unfunded Liability Funded Ratios Accrued Liability$1,045,037 565,214 345,725$1,955,976 AVA$190,741 91,981 62,514$345,236 MVA$332,540 170,161 109,570$612,271 AVA 81.7%83.7%81.9%82.3%MVA 68.2%69.9%68.3%68.7%Annual Covered Payroll$107,587 41,946 21,464$170,997 Annual Covered Payroll$105,544 43,205 22,967$171,716 Annual Covered Payroll$110,234 44,567 23,681$178,482 Annual Covered Payroll$155,317 169,331 177,229 UL as a %of Payroll 292.7%358.9%440.8%327. 5%UL as a % of Payroll 180.7%212.9%272.2%201.1%UL as a % of Payroll 164.4%213.3%258.9%189.1%UL as a % of Payroll 105.1%78.8%83.5%Unfunded Liability Funded Ratios Actuarial Value of Assets (AVA)$ 823,258 453,318 274,471$1,551,047 Market Valule of Assets (MVA)$ 729,624 404,096 243,889$1,377,609 Accrued Liability$1,004,444 548,400 335,781$1,888,625 AVA$181,186 95,082 61,310$337,578 MVA$274,820 144,304 91,892$511,016 AVA 82.0%82.7%81.7%82.1%MVA 72.6%73.7%72.6%72.9%Other Post-employmet Benefits -Schedule of Funding Progress Actuarial Valuation Date July 1, 2013 July 1, 2011 July 1,2010 Actuarial Value of Assets (AVA)$ 74,013 67,747 63,920 Accrued Liability$ 237,202 201,108 211,914 Unfunded Liability-AVA$163,189 133,361 147,994 Funded Ratios-AVA 31.2%33.7%30.2%Beginning with the June 30, 2013 valuation Actuarial Value of Assets equals Market Value of Assets per CaIPERS Direct Rate Smoothing Policy.See accompanying independent auditors' report.77 (This page left blank intentionally) 78 Nonmajor Governmental Funds Nonmajor Governmental Funds SPECIAL REVENUE FUNDS are used to account for revenues derived from specific taxes or other earmarked revenue sources (other than for major capital projects) that are restricted by law or administrative action to expenditures for specified purposes.GAS TAX AND ROADS FUND -Established to account for the construction and maintenance of the road network system of the City. Financing is provided primarily by the City's share of Fed-eral, State, and local gasoline taxes. Federal, State, and local regulations require that these gasoline taxes be used to improve and maintain streets, and includes programs intended to improve the air quality of the region.WORKFORCE DEVELOPMENT FUND -Established to account for the City's involvement in Federal, State, and local programs to create jobs and provide the unemployed citizens in the Ana-heim area with job training opportunities.

COMMUNITY DEVELOPMENT BLOCK GRANT FUND -Established to account for financing of the development of viable urban communities through the provision of decent housing, suitable living environments and economic opportunity, principally for persons of low and moderate income. Financing is provided by the Federal Housing and Urban Development (HUD) grants.GRANTS FUND -Established to account for various grants requiring segregated fund accounting.

Financing is provided by Federal, State, and local agencies.ANAHEIM RESORT MAINTENANCE DISTRICT FUND -Established to account for the levy and collection of special assessments to pay the cost of annual maintenance and improvements within the district against those parcels that specifically benefit from the enhanced maintenance and improvements.

ANAHEIM TOURISM IMPROVEMENT DISTRICT FUND -Established to account for the collection of a special assessment supporting marketing, promotion and transit project costs in support of the City's tourism and convention industry.NARCOTIC ASSET FORFEITURE FUND -Established to account for funds received from Federal and State agencies that are derived from monies and property seized by the Police Department in drug related incidents.

These funds are used to supplement existing resources of the City's law enforcement activities.

DEBT SERVICE FUNDS are used to account for the accumulation of resources and the payment of principal and interest on general debt of the City and related entities.GENERAL OBLIGATION BONDS FUND -Established to accumulate resources for the payment of principal and interest on general obligation bonds of the City. Debt service is financed by prop-erty tax revenues.MUNICIPAL FACILITIES FUND -Established to accumulate resources for payment of the principal and interest on the certificates of participation for the Parking Facility Project, Police Facilities Projects, Arena Land Acquisition, and other various acquisitions and capital improvements.

ANAHEIM RESORT IMPROVEMENTS FUND -Established to accumulate resources for payment of the principal and interest on the lease revenue bonds for the Anaheim Resort improvements.

CAPITAL PROJECTS FUNDS are used to account for resources used for the acquisition and construction of capital assets by the City, except for those financed by proprietary funds.STREET CONSTRUCTION:

Established to account for transportation improvement construction in the City's right-of-way.

Financing is provided primarily by Federal, State and local grants, and Measure M2 allocations by the County of Orange.DEVELOPMENT IMPACT PROJECTS FUND -Established to account for infrastructure improvements, primarily in the Platinum Triangle area, which provide development opportunities for high density, mixed use, office, restaurant, and residential projects.

Financing is provided primarily by development impact fees.COMMUNITY SERVICES FACILITIES

-Established to account for the development of new parksites, playgrounds and library facilities.

Federal and State grant programs, in conjunction with fees charged to residential and commercial developers, provide financing.

Much of this revenue is used to support the capital construction of parks and other recreational facilities throughout the City.STORM DRAIN CONSTRUCTION FUND -Established to account for the City's storm drain construction.

Financing is provided by drainage assessment fees charged to residential and commer-cial developers.

OTHER CAPITAL IMPROVEMENTS FUND -Established to account for miscellaneous capital projects as determined by the City Council. Currently, financing is provided by fees from developers for infrastructure improvements, HUD108 loans and subsidies from the General Fund.MELLO-ROOS PROJECTS -Established to account for road, sewer and water improvements in the community facility districts.

Financing is provided by the sale of special tax bonds that are secured by and payable from the proceeds of an annual special assessment on the property within the district.

CITY OF ANAHEIM Combining Balance Sheet Nonma jar Governmental Funds by Fund Type June 30, 2014 (In thousands)

Combining Balance Sheet Nonmajor Governmental Funds by Fund Type June 30, 2014 (In thousands)

ASSETS Cash and cash equivalents Investments Accounts receivable, net Accrued interest receivable Notes receivable, net Due from other funds Due from other governments Prepaid and other assets Restricted cash and cash equivalents Restricted investments Due from Successor Agency Total assets UABIUTIES Accounts payable Wages payable Deposits Due to other funds Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenues Unavailable resources-long-term notes receivable Unavailable resources

-due from Successor Agency Total deferred inflows of resources FUND BALANCES Nonspendable:

Prepaid and other assets Restricted:

Anaheim Resort maintenance and improvement Capital projects Debt service Development impact projects Grant purposes Homebuyer assistance program Streets, roads and transportation improvement projects Assigned: Ca ital projects Other purposes Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances See Nonmaijr Special Revenue Funds$ 9,326 26,607 1,223 99 27,859 9,671 8,074 6,021$ 88,880$ 4,588 281 170 5,039 1,218 27,859 6,021 35,098 Nonmajor Debt Service Funds$ 188 539 24 5 23,118 49,637$73,511$ 11 11 Nonmajor Capital Projects Funds$ 9,195 26,239 41 95 5,254 14,175 3,542 15,108 7,450$ 81,099$ 7,073 31 1,184 9,671 17,959 10,791 7,450 18,241 Total Nonmalor Governmental Funds$ 18,709 53,385 1,264 218 27,859 14,925 22,254 3,542 38,226 49,637 13,471$243,490$ 11,672 312 1,184 9,841 23,009 12,009 27,859 13,471 53,339 3,542 8,491 2,685 73,500 46,144 5,491 3,143 31,496 3,272 19 (10,641)167,142$243,490 3,542 8,491 5,491 3,143 31,496 103 19 73,500 2,685 46,144 3,169 (10,641)44,899$ 81,099 48,743$ 88,880 accompanied Independent auditors' report 73,500$73,511 79 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds by Fund Type Year Ended June 30, 2014 (In thousands)

Nonmajor Nonmajor Total Special Nonmajor Capital Nonmajor Revenue Debt Service Projects Governmental Funds Funds Funds Funds Revenues: Properly taxes $ 717 $ 717 Licenses, fees and permits $ 65 $ 2,493 2,558 Intergovernmental revenues 39,742 5 14,469 54,216 Charges for services 18,031 35 18,066 Use oi money and property 1,137 136 1,004 2,277 Other 1,583 528 2,111 Total revenues 60,558 858 18,529 79,945 Expenditures:

Current: City Attorney 119 119 Finance 19 33 52 Police 8,195 8,195 Fire 933 933 Community Development 8,997 8,997 Planning 1,302 1,302 Public Works 10,884 1 2,602 13,487 Community Services 791 3,577 4,368 Convention, Sports and Entertainment 9,931 9,931 Capital outlay 7,582 32,409 39,991 Debt service: Principal retirement 2,793 18,750 936 22,479 Interest charges 542 17,775 427 18,744 Total expenditures 52,088 36,559 39,951 128,598 Excess (deficiency) of revenues over (under) expenditures 8,470 (35,701) (21,422) (48,653)Other financing sources (uses): Transfers in 1,031 47,576 4,872 53,479 Transfers out (2,394) (6,747) (9,141)Issuance of loan payable 1,350 1,350)Total other financing sources (13) 47,576 (1,875) 45,688 Net change in fund balances 8,457 11,875 (23,297) (2,965)Fund balances at beginning of year 40,286 61,625 68,196 170,107 Fund balances at end of year $ 48,743 $ 73,500 $44,899 $167,142 See accompanied Independent auditors' report 80 CITY OF ANAHEIM Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2014 (In thousands)

ASSETS Cash and cash equivalents Investments Accounts receivable, net Accrued interest receivable Notes receivable, net Due from other funds Due from other governments Due from Successor Agency Total assets UABILITIES Accounts payable Wages payable Due to other funds Total liabilities Gas Tax and Roads$ 3,432 9,792 1.35 9,671 2,009$24,940$ 668 36 704 Workforce Development Community Development Block G;rant Anaheim Resort Maintenance Grants District Anaheim Tourism Improvement District Narcotic Asset Forfeiture Total$ 74 $ 456 $2,292 211 1,300 6,539 6 12 23 5,874 21,985$634$634$419 26 170 615 570$12,750 4,857$28,610 4$8,864$1,968 $1,104 $ 9,326 5,615 3,150 26,607 1,216 1,223 18 11 99 27,859 9,671 8,074 6,021$8,817 $4,265 $88,880$1,556 $ 70 $ 4,588 1 141 281 170 1,557 211 5,039 1,218 27,859 6,021 35,098$ 296 $ 1,213 $ 366 35 35 7 331 1,248 373 DEFERRED INFLOWS OF RESOURCES Unavailable revenues Unavailable resources-long-term notes receivable Unavailable resources

-due from Successor Agency Total deferred inflows of resources 1 5,874 11,896 1,217 21,985 23,202 FUND BALANCES Restricted:

Anaheim Resort maintenance and improvement Grant purposes Homebuyer assistance program Streets, roads and transportation improvement projects 24,236 Assigned: Debt service Capital projects Other purposes Total fund balances 24,236 Total liabilities, deferred inflows of resources, and fund balances $24,940 8,491 523 914 3,143 8,491 4,054 5,491 3,143 31,496 7,260 19 19$634 103 523 4,160 8,491$12,750 $28,610 $8,864 103 19 7,260 4,054 48,743$8,817 $4,265 $88,880 See accompanied Independent auditors' report 81 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds Year Ended June 30, 2014 (In thousands)

Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services Use of money and property Other Total revenues Gas Tax and Roads$ 36 16,628 169 185 9 17,027 Workforce Development

$3,772 3,772 Community Development Block Grant$4,133 326 996 5,455 Anaheim Resort Maintenance Grants District$ 29 11,838 112 455 12,434 Anaheim Tourism Improvement District$13,375 51 13,426 Narcotic Asset Forfeiture Total$4,487 77 11 4,575$ 3,371 386 112 3,869$ 65 39,742 18,031 1,137 1,583 60,558 Expenditures:

Current: City Attorney Finance Police Fire Community Development Planning Public Works Community Services Convention, Sports and Entertainment Capital outlay Debt service: Principal retirement Interest charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Issuance of loan payable Total other financing sources (uses)Net change in fund balances Fund balances at beginning of year Fund balances at end of year 119 19 5,049 933 3,898 3,766 1,333 1,302 788 119 19 3,146 8,195 933 8,997 1,302 10,884 791 9,931 193 7,582 5,931 4,613 4,861 92 3 383 2,101 1,042 11,586 5,441 759 1,350 2,109 7,550 16,686$24,236 3,766 6 615 471 5,011 444 11,984 4,861 450 72 (2,283)(286)9,931 292 1,000 11,334 2,092 (111)(111)1,981 136 71 3,546 2,793 542 52,088 200 323 8,470 1,031 (2,394)1,350 (13)_(2,211) 200 6 13$ 19 444 79$ 523 (1,761)5,921Q (86)8,577$ 8,_A91 323 3,731 9ALQ5 8,457 40,286$48,743 See accompanied independent auditors' report 82 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2014 (In thousands)

Gas Tax and Roads Final Variance Budgeted Actual with Final Amounts Amounts Budget Workforce Development Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services Useot money and property Other Total revenues Expenditures:

City Attorney Finance Police Fire Community Development Planning Public Works Community Services Convention, Sports and Entertainment Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Issuance of loan payable Total other financing sources (uses)Net change in fund balances Fund balances at beginning of year Fund balances at end of year$ 40 14,965 203 8 15,216$ 36 16,628 169 185 9 17,027$ (4)1,663 (34)185 1 1.,811$ 3,145 3,145$3,772 3,772 3,766$ 627 627 (895)(895)4,661 27,986 11,586 (16,400)27,986 11,586 (16,400)(12,770) ,4 1 18,211 4,661 (1,516)3,766 6 66 66 (12,704)16,686$ 3,982 759 1,350 2,109 7,550 16,686$2A,236 1,350 2,043 20,254$ 20,254 693 (1,516)13$(1,503)6 13$ 19 1,522$1,522 (continued) 83 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2014 (In thousands) (continued)

Community Development Block Grant Final Variance Budgeted Actual with Final Amounts Amounts Budget Grants Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services Use ol money and property Other Total revenues Expenditures:

City Attorney Finance Police Fire Community Development Planning Public Works Community Services Convention, Sports and Entertainment Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Issuance of loan payable Total other financing sources (uses)Net change in fund balances Fund balances at beginning of year Fund balances at end of year$ 4,459 $ 4,133 279 543 5,281 120 6,041 1,471 924 8,556 (3,275)79$(3,196)326 996 5,455 119 2,802 1,302 788 5,011 444 444 79$ 523$ (326)47 453 174 (1)(3,239)(169)(136)(3,545)3,719$ 3,719 Final Budgeted Amounts$ 30 15,951 45 16,026 Actual Amounts$ 29 11,838 112 455 12,434 Variance with Final Budget$ (1)(4,113)67 455 (3,592)8,231 2,082 8,405 135 18,853 (2,827)(2,827)5,921$ 3,094 6,925 1,158 3,898 3 11,984 450 72 (2,283)(2,211)(1,761)5,921$ 4,160 (1,306)(924)(4,507)(132)(6,869)3,277 72 (2,283)(2,211)1,066$ 1,066 (continued) 84 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2014 (In thousands) (continued)

Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services Use ol money and property Other Total revenues Expenditures:

City Attorney Finance Police Fire Community Development Planning Public Works Community Services Convention, Sports and Entertainment Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Issuance of loan payable Total other financing sources (uses)Net change in fund balances Fund balances at beginning of year Fund balances at end of year Anaheim Resort Maintenance District Final Variance Budgeted Actual with Final Amounts Amounts Budget$ 4,463 $ 4,487 $ 24 67 77 10 4 11 7 4,534 4,575 41 Anaheim Tourism Improvement District Final Variance Budgeted Actual with Final Amounts Amounts Budget$12,775 $13,375 37 51 12,812 13,426$ 600 14 614 19 19 6,581 4,861 (1,720)6,581 A,861 (1,720)(2,047) (286) 1,1 211 2,505 9,931 12,666 146 (128)(128)18 5,279$ 5,297 190 1,194 9,931 11,334 (111)(111)1,981 7,279$ 7,260 (21)(1,311)(1,332)1,946 17 17 1,963$ 1,963 200 200 (1,847)$ 6,730 200 200 (86)$ 8,491 1,761$ 1,761 (continued) 85 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2014 (In thousands) (continued)

Narcotic Asset Forfeiture Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Licenses, fees and permits Intergovernmental revenues $2,722 $3,371 $ 649 Charges for services Useol money and property 402 386 (16)Other 112 112 Total revenues 3,124 3,869 745 Expenditures:

City Attorney Finance Police 4,015 3,546 (469)Fire Community Development Planning Public Works Community Services Convention, Sports and Entertainment Total expenditures 3,546 (469)Excess (deficiency) of revenues over (under) expenditures (891) 323 1,214 Other financing sources (uses): Transfers in Transfers out Issuance of loan payable Total other financing sources (uses)Net change in fund balances (deficits)

(891) 323 1,214 Fund balances (deficits) at beginning of year 3,731 3,731 Fund balances at end of year $ 2,840 $ 4,054 $1,214 See accompanied Independent auditors' report 86 CITY OF ANAHEIM Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2014 (In thousands)

General Obligation Municipal Anaheim Resort Bonds Facilities Improvements Total ASSETS Cash and cash equivalents

$ 186 $ 2 $ 188 Investments 532 7 539 Accrued interest receivable 2 22 24 Due from other governments 5 5 Restricted cash and cash equivalents 65 $23,053 23,118 Restricted investments 2,266 A7,371 A9,637 Total assets $ 725 $ 2,362 $70424 $73,511 UABIUTIES AND FUND BALANCES Liabilities:

Accounts payable $ 5 $ 6 $ 11 Total liabilities 5 6 11 Fund balances: Restricted for debt service $ 725 $ 2,357 $70,418 $73,500 Total fund balances 725 2,35 70,418 73,500 Total liabilities and fund balances $ 725 $2,362 $70,A24 $73,511 See accompanied Independent auditors' report 87 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds Year Ended June 30, 2014 (In thousands)

General Obligation Municipal Anaheim Resort Bonds Facilities Improvements Total Revenues: Property taxes $ 717 $ 717 Intergovernmental revenues 5 5 Use of money and property 3 $ 131 $ 2 136 Total revenues 725 131 2 858 Expenditures:

Current: Finance 33 33 Public Works 1 1 Debt service: Principal retirement 610 1,600 16,540 18,750 Interest charges 92 766 16,917 17,775 Total expenditures 703 2,366 33,490 36,559 Excess (deficiency) of revenues over (under) expenditures 22 (2,235) (33,488) (35,701)Other financing sources: Transfers in 2_238 45,338 47,576 Total other financing sources 2,238 45,338 47,576 Net change in fund balances 22 3 11,850 11,875 Fund balances at beginning of year 703 2,35A 58,568 61,625 Fund balances at end of year $ 725 $_2,357 $70,418 $ 73.500 See accompanied Independent auditors' report 88 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Debt Service Funds Year Ended June 30, 2014 (In thousands)

General Obligation Bonds Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Property taxes Intergovernmental revenues Use of money and property Total revenues Expenditures:

Finance Public Works Convention, Sports and Entertainment Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources: Transfers in Transfers out Total other financing sources Net change in fund balances Fund balances at beginning of year Fund balances at end of year Municipal Facilities Final Variance Budgeted Actual with Final Amounts Amounts Budget$ 124 $ 131 $ 7 124 131 7$711 8 6 725 703 703 22$717 5 3 725 703 703 22$ 6 (3)(3)1,755 611 2,366 (2,242)2,242 1,755 611 2,366 (2,235)2,238 7 (4)(4)3$ 3 22 703$725 22 3 703$725$2,354 2,354$ 2,354 $ 2,357 (continued) 89 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Debt Service Funds Year Ended June 30, 2014 (In thousands) (continued)

Anaheim Resort Improvements Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Property taxes Intergovernmental revenues Use of money and property $ 2 $ 2 $Total revenues 2 2 Expenditures:

Finance 33,537 33,490 (47)Public Works Convention, Sports and Entertainment Total expenditures 33,537 33,490 (47)Excess (deficiency) of revenues over (under) expenditures (33,535) (33,488) 47 Other financing sources: Transfers in 43,245 45,338 2,093 Transfers out Total other financing sources 43,245 4 2,093 Net change in fund balances 9,710 11,850 2,140 Fund balances at beginning of year 58,568 58,568 Fund balances at end of year 68,278 $70,418 $ 2J140 See accompanied Independent auditors' report 90 CITY OF ANAHEIM Combining Balance Sheet Nonma jar Capital Projects Funds June 30, 201 4 (In thousands)

Streets Construction ASSETS Cash and cash equivalents Investments Accounts receivable, net Accrued interest receivable Due from other funds Due from other governments Prepaid and other assets Restricted cash and cash equivalents Due from the Successor Agency Total assets Development Impact Projects$ 5,049 14,408 49 Community Services Facilities

$1,483 4,231 41 17 Storm Drain Construction

$ 850 2,426 9 Other Capital Mello-Roos Improvements Projects$ 98 $ 1,715 279 4,895 20 5,254 Total$ 9,195 26,239 41 95 5,254 14,175 3,542 15,108 7,450$12,703 3,541 UABIUTIES Accounts payable Wages payable Deposits Due to other funds Total liabilities 1,472 1$ 489 1 490 122 7,A50$13,203 14,986$21,616$ 2,865 17 12,553$ 1,812 7 1,819$ 391 1,184 1,575$ 208 $ 1,308 $ 7,073 1 5 31 1,184 209 1,313 17,959 10,791 7,450 7,450 7,450 18,241 DEFERRED INFLOWS OF RESOURCES Unavailable revenues Unavailable resources-due from Successor Agency Total deferred inflows of resources FUND BALANCES Nonspendable:

Prepaid and other assets Restrited:

Capital projects Development impact projects Assigned: Capital projects Unassigned Total fund balances (deficit)Total liabilities, deferred inflows of resources, and fund balances (deficit)10,791 10,791 3,541 1 2,685 3,542 2,685 20,303 46,144 17,687 (10,641)(7,100)6,444 310 6,755$7,245 1,710 2,859 3,169 (10,641)4 20,303 44,899$13,203 $21,61 $81,099 See accompanied Independent auditors' report 91 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds Year Ended June 30, 2014 (In thousands)

Development Community Storm Streets Impact Services Drain Other Capital Mello-Roos Construction Projects Facilities Construction Improvements Projects Total Revenues: Licenses, fees and permits $ 1,580 $ 911 $ 2 $ 2,493 Intergovernmental revenues $11,162 1,585 1,722 14,469 Charges for services 35 35 Use at money and property 175 222 26 $ 501 $ 80 1,004 Other 2 478 48 528 Total revenues 11,199 40 2,855 28 979 128 18,529 Expenditures:

Current: Public Works 817 45 90 1,641 9 2,602 Community Services 435 431 2,711 3,577 Capital outlay 16,599 4,859 2,489 65 3,841 4,556 32,409 Debt service: Principal retirement 458 478 936 Interest charges 427 427 Total expenditures 17,416 5,797 2,920 155 9,098 A,565 39,951 Deficiency of revenues under expenditures (6,217) (2,457) (65) (127) (8,119) (4,437) (21,422)Other financing sources (uses): Transfers in 328 500 4,044 4,872 Transfers out (1,211) (4,864) (344) (328) (6,747)Total other financing sources (uses) (883) 500 (4,864) 3,700 (328) (1,875)Net change in fund balances (7,100) (1,957) (65) (4,991) (4,419) (4,765) (23,297)Fund balances at beginning of year 19,644 6,820 6,710 9,963 25,068 68,196 Fund balances (deficit) at end of year $(7,100) $_17,687 $6,755 $1,710 $5544 $20,303 $44899 See accompanied Independent auditors' report 92 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual -All Capital Projects Funds Year Ended June 30, 2014 (In thousands)

Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services Use oI money and property Other Total revenues Expenditures:

Community Development Public Works Community Services Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources Net change in fund balances Fund balances at beginning of year Fund balances at end of year Adjustments to reconcile to GAAP: Land acquisition expenditure from prepaid and other assets Ending fund balances -GAAP basis Streets Construction Final Variance Budgeted Actual with Final Amounts Amounts Budget$53,399 $11,162 $(42,237)100 35 (65)2 2 53,499 11,199 (42,300)Development Impact Projects Final Variance Budgeted Actual with Final Amounts Amounts Budget$ 9,325 $ 1,580 1,585 100 175 9,425 3,340 53,103 16,706 (36,397)53,103 16,706 (36,397)6,068 ,5,691 11,759 (2,334)5,103 694 5,797 (2,457)$(7,745)1,585 0 75 (6,085)(965)(4,997)(5,962)(123)500 500 377$ 377 396 (5,507)328_ (1,211)________(883)

(5,903)328 (1,211)(883)(6,786)500 500 396 (6,390)(2,334)(1,957)$ 396$ (6,390) $ (6,786)19,644 19.644$17,310 $17,687 (710)$ (7,100)(continued) 93 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual -All Capital Projects Funds Year Ended June 30, 2014 (In thousands) (continued)

Community Services Facilities Final Variance Budgeted Actual with Final Amounts Amounts Budget$ 911 $ 911$ 5,049 1,722 (3,327)Storm Drain Construction Final Variance Budgeted Actual with Final Amounts Amounts Budget$ 2 $ 2 Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services Use of money and property Other Total revenues Expenditures:

Community Development Public Works Community Services Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses)Net change in fund balances 86 5,135 4,302 4,302 833 222 2,855 2,920 (65)136 (2,280)(1,382)(1,382)(898)26 $ 26 2 28 155 155 (153)155 155 (127)26 26 (4,864)(4,864)(4,838)$(4,838)833 (65)(898)$ (898)(4,864)(4,864)(153) (4,991)6,754 6,701$ 6,548 $ 1,710 Fund balances at beginning of year Fund balances at end of year 6,820 6,820$ 7,653 $ 6,755 94 (continued)

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual -All Capital Projects Funds Year Ended June 30, 2014 (In thousands) (continued)

Other Capital Improvements Final Variance Budgeted Actual with Final Amounts Amounts Budgcet Mello-Roos Projects Final Variance Budgeted Actual with Final Amounts Amounts Budaet Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services Use o money and property $ 427 $ 501 $ 74 $ $ 80 $ 80 Other 478 478 48 48 Total revenues 905 979 74 128 128 Expenditures:

Community Development 905 905 Public Works 2,500 2,318 (182) 25,392 4,565 (20,827)Community Services 5 875 5,875 Total expenditures 9,280 9,098 (182) 25,392 4,565 (20,827)Deficiency of revenues under expenditures (8,375) (8,119) 256 (25,392) (4,437) 20,955 Other financing sources (uses): Transfers in 250 4,044 3,794 Transfers out (344) (344) (328) (328)Total other financing sources (uses) 250 3,700 3,450 (328) (328)Net change in fund balances (8,125) (4,419) 3,706 (25,392) (4,765) 20,627 Fund balances at beginning of year 9,963 9.963 25,068 25,068 Fund balances at end of year $ 1,838 $ 5,544 $ 3,706 $ (324) $20,303 $20,627 See accompanied Independent auditors' report 95 (This page left blank intentionally) 96

" .Internol Service Funds Internal Service Funds INTERNAL SERVICE FUNDS are used to account for the financing of centralized services to City departments on a cost-reimbursement basis (including depreciation).

GENERAL BENEFITS AND INSURANCE FUND -Established to account for employee compensated absences, retirement and health benefits, and self-insurance programs.MOTORIZED EQUIPMENT FUND -Established to account for motorized equipment used by City departments.

INFORMATION AND COMMUNICATION SERVICES FUND -Established to account for data processing and communication services to City departments.

MUNICIPAL FACILITIES MAINTENANCE

-Established to account for City building maintenance services and equipment used by City departments.

CITY OF ANAHEIM Combining Statement of Net Position Internal Service Funds June 30, 2014 (In thousands)

General Information Benefits and Municipal and -Motorized Communication Facilities Insurance Equipment Services Maintenance Total ASSETS Current assets: Cash and cash equivalents

$13,606 $ 1,881 $ 1,476 $1,060 $18,023 Investments 38,821 5,367 4,213 3,025 51,426 Accounts receivable, net 6,283 2 6,285 Accrued interest receivable 134 17 6 9 166 Note receivable 26 26 Interfund receivable 10 10 Inventories 819 819 Prepaid and other assets 336 336 Total current assets 59,216 8,086 5,695 4,094 77,091 Noncurrent assets: Accounts receivable, less current portion 3,550 3,550 Interfund receivable less current portion 31 31 Net other post-emproyment benefits (OPEB) asset 11,152 11,152 Capital assets: Buildings, structures and improvements 3,230 4,607 7,837 Machinery and Equipment 81 35,932 19,760 2,315 58,088 Construction in progress 225 225 Less accumulat dpreciation (81) (28,550) (14,102) (5,014) (47,747)Capital assets, net 10,837 5,658 1,908 18,403 Total noncurrent assets 14,733 10,837 5,658 1,908 33,136 Total assets 73,949 18,923 11,353 6,002 110,227 UABIUTIES Current liabilities:

Accounts payable 2,014 606 3,171 381 6,172 Wages payable 905 54 11 45 1,015 Compensated absences 13,447 13,447 Self-insurance liability 8,051 8,051 Long-term debt 628 628 Unearned revenues 1,893 1,893 Total current liabilities 26,310 660 3,810 426 31,206 Noncurrent liabilities:

Compensated absences, less current portion 4,747 4,747 Self-insurance liability, less current portion 32,776 32,776 Long-term debt, less current portion 697 697 Total noncurrent liabilities 37,523 697 38,220 Total liabilities 63,833 660 4,507 426 69,426 NET POSITION Net investment in capital assets 10,837 4,333 1,908 17,078 Unrestricted 10,116 7,426 2,513 3,668 23,723 Total net position $10,116 $18,263 $ 6,846 $5,576 $40,801 See accompanied Independent auditors' report 97 CITY OF ANAHEIM Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds Year Ended June 30, 2014 (In thousands)

General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Operating revenues: Charges for services $130,363 $11,487 $14,136 $9,367 $165,353 Other 57 7 59 123 Total operating revenues 130,420 11,494 14,136 9,426 165,476 Operating expenses: Salaries and wages 3,652 3,642 692 3,118 11,104 Maintenance and operations 2,384 5,110 13,089 6,175 26,758 Insurance premiums and claims 9,903 9,903 Compensated absences and other benefits 116,705 116,705 Depreciation 1,936 2,050 221 4,207 Total operating expenses 132,644 10,688 15,831 9,514 168,677 Operating income (loss) (2,224) 806 (1,695) (88) (3,201)Nonoperating income (expenses):

Investment income 454 59 28 33 574 Interest expense (85) (85)Gain from disposal of capital assets 305 305 Total nonoperating income 454 364 (57) 33 794 Loss (1,770) 1,170 (1,752) (55) (2,407)Change in net position (1,770) 1,170 (1,752) (55) (2,407)Net position at beginning of year 11,886 17,093 8,598 5,631 43,208 Net position at end of year $ 10,116 $18,263 $ 6,846 $5,576 $ 40,801 See accompanied Independent auditors' report 98 CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2014 (in thousands)

Cash flows from operating activities:

Receipts from interfund services provided Payments to suppliers Payments for salaries and wages to employees Payments for interfund services used Payments for insurance premiums and claims Payments for compensated absences and other benefits Other receipts Net cash provided by (used for) operating activities Cash flows from noncapital financing activities:

Receipt of interfund balances Net cash provided by noncapital financing activities Cash flows from capital and related financing activities:

Proceeds from sale of capital assets Capital purchases Principalpayments on long-term debt Interest payments Net cash used for capital and related financing activities Cash flows from investing activities:

Purchase of investment securities Proceeds from sale and maturity of investment securities Interest received Net cash provided by (used for) investing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year General Benefits and Insurance$129,998 (798)(5,773)(1,503)(10,506)(119,471)102 (7,951)Information and Motorized Communication Equipment Services Municipal Facilities Maintenance Total$11,487 (4,279)(3,627)(373)29 3,237$14,136 (10,817)(687)(971)1,661$9,367 $164,988 (6,158) (22,052)(3,114) (13,201)(643) (3,490)(10,506)(119,471)92 223 (456) (3,509)125 125 305 (9) (3,799)(1,121)(85)(9) (4,700)21 104 21 104 305 (1,672) (2,118)(1,121)_(85)(1,367) (3,324)(10,128)11,750 424 2,046 (5,884)19,490$ 13,606 (3,460)1,625 44 (1,791)183 1,698$ 1,881 (546)1,275 28 757 (906)2,382$ 1,476 (891)915 32 56 (409)1,469$1,060 (15,025)15,565 528 1,068 (7,016)25,039$18,023 (continued) 99 CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2014 (In thousands) (continued)

General Benefits and Insurance Motorized Equipment Information and Municipal Communication Facilities Services Maintenance Total Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:

Operating income (loss)Adjustments to reconcile operating income (loss)to net cash provided by (used for) operating activities:

Depreciation Changes in assets and liabilities:

Accounts receivable Inventories Note receivable Prepaid and other assets Accounts payable Wages payable Unearned revenues Compensated absences Self-insurance liability Other post retirement employment benefits (OPEB) assets Total adjustments Net cash provided by (used for) operating activities

$ (2,224) $ 806 $ (1,695)$ (88) $ (3,201)1,936 2,050 221 4,207 (3,295)15 (278)(1,856)(1,953)103 267 1,405 (135)(5,727)$ (7,951)22 (70)756 (228)15 2,431$ 3,237 1,301 5 (6 33 (3,240)(70)15 478 26) (1,409)4 (1,929)103 267 1,405 (135)368) (308)156) $ (3,509)3,356$ 1,661$ 1,077 3$ (4 Schedule of noncash financing and investing activities:

Capital assets financed through capital leases Increase in fair value of investments

$ 41 $ 11$ 1,077 59$4A See accompanied Independent auditors' report 100 Fiduciary Funds CITY OF ANAHEIM Statement of Changes in Fiduciary Assets and Liabilities Agency Fund -Mello-Roos Year Ended June 30, 2014 (In thousands)

Beginning Ending Balance Additions Deductions Balance ASSETS Restricted cash and cash equivalents

$5,046 $3,892 $(5,004) $3,934 Restricted investments 3,256 3,256 Due from other governments 57 3,801 (3,823) 35 Total assets $8,359 $7,693 $(8,827) $7,225 UABIIrT1ES Due to bond holders $8,359 $3,870 $(5,004) $7,225 See accompanied Independent auditors' report 101 (This page left blank intentionally) 102 11--ýStatistical Section Statistical Section The Statistical Section is included to provide detailed data on the physical, economic, social and political characteristics of the reporting government.

It is intended to provide the user with a broader and more complete understanding of the government and its financial affairs than is possible from the basic financial statements and supplementary information included in the Financial Section.

CITY OF ANAHEIM STATISTICAL INFORMATION (Unaudited)

The Statistical Section is included to provide financial statement users with additional historical perspective, context, and detail for them to use in evaluating the information contained within the financial statements, notes to the financial statements, and required supplementary information with the goal of providing the user a better understanding of the City's economic condition.

Contents Pge Financial trends These schedules contain information to help the reader understand how the City's financial performance and well-being have changed over time.Net Position by Component

-Last Ten Fiscal Years 104 Changes in Net Position -Last Ten Fiscal Years 105 Governmental Activities Tax Revenues by Source -Last Ten Fiscal Years 107 Fund Balances of Governmental Funds -Last Ten Fiscal Years 108 Changes in Fund Balances of Governmental Funds -Last Ten Fiscal Years 109 Revenue capacity These schedules contain information to help the reader assess the City's most significant local revenue sources.General Government Tax Revenues by Source -Last Ten Fiscal Years 110 Assessed Value and Estimated Actual Value of Taxable Property -Last Ten Fiscal Years 111 Property Tax Rates -Direct and Overlapping Governments

-Last Ten Fiscal Years 112 Principal Property Tax Payers -Current Year and Nine Years Ago 113 Property Tax Levies and Collections

-Last Ten Fiscal Years 114 Debt capacity These schedules contain information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future.Ratios of Outstanding Debt by Type -Last Ten Fiscal Years 115 Ratios of Net Genera Bonded Debt Outstanding

-Last Ten Fiscal Years 116 Direct and Overlapping Government Activities Debt -As of June 30. 2014 117 Legal Debt Margin information

-Last Ten Fiscal Years 119 Pledged-Revenue Coverage -Last Ten Fiscal Years 120 Demographic and economic information These sciedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place.Demographic and Economic Statistics

-Last Ten Fiscal Years 122 Principal Employers

-Current and Nine Years Ago 123 Operating information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs.Full-time Equivalent City Government Emloyees by Function/Program

-Last Ten Fiscal Years 125 Operating ndicators by Function -Last en iscal ears 126 Capital Assets Statistics by Function -Last Ten Fiscal Years 128 City of Anaheim Map 130 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.103 CITY OF ANAHEIM Net Position by Component Last Ten Fiscal Years (In thousands)(Accrual basis of accounting)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Governmental Activities Net investment in capital assets $1,016,259

$ 894,625 $ 831,430 $ 832,951 $ 794,164 $ 751,910 $ 731,726 $ 665,828 $ 668,628 $ 613,300 Restricted 205,998 196,853 190,868 182,011 150,750 154,306 87,566 69,949 99,443 87,505 Unrestricted 12,668 30,341 16,760 (124,422)

(121,283)

(92,773) (70,621) (12,765) (40,946) (35,652)Total Governmental Activities 1,234,925 1,121,819 1,039,058 890,540 823,631 813,443 748,671 723,012 727,125 665,153 Business-type Activities Net investment in capital assets 823,505 787,459 780,093 779,224 756,020 747,379 746,450 701,088 656,377 693,240 Restricted 77,311 71,131 61,235 54,626 49,325 45,493 47,406 38,572 36,008 28,855 Unrestricted 95,505 121,083 112,159 115,445 130,812 145,269 165,196 203,967 215,685 229,051 Total Business-type Activities 996,321 979,673 953,487 949,295 936,157 938,141 959,052 943,627 908,070 951,146 Total Government Net investment in capital assets 1,839,764 1,682,084 1,611,523 1,612,175 1,550,184 1,499,289 1,478,176 1,366,916 1,325,005 1,306,540 Restricted 283,309 267,984 252,103 236,637 200,075 199,799 134,972 108,521 135,451 116,360 Unrestricted 108,173 151,424 128,919 (8,977) 9,529 52,496 94,575 191,202 174,739 193,399 Total Government

$2,231,246

$2,101,492

$1,992,545

$1,839,835

$1,759,788

$1,751,584

$1,707,723

$1,666,639

$1,635,195

$1,616,299 Note: Certain reclassifications have been made to prior year data to conform to the current presentation Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 104 CITY OF ANAHEIM Changes in Net Position Last Ten Fiscal Years (In thousands)(Accrual 6asis of accounting)

Program Revenues Governmental activities:

Charges for services General government Police Fire Community Development Planning Public Works Community Services Convention, Sports and Entertainment Total charges for services Operating grants and contributions Capital grants and contributions Governmental activities program revenues Business-type activities:

Charges for services Electric utility Water Utility Sanitation Utility Golf Courses Convention, Sports and Entertainment Total charges for services Operating grants and contributions Capital grants and contributions Business-type activities program revenues Total government program revenues Expenses Governmental activities:

General government Police Fire Community Development Planning Public Works Community Services Public Utilities Convention, Sports and Entertainment Interest on long-term debt Governmental Activities Expenses Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005$ 1,779 $ 1,670 $ 1,872 $ 1,872 $ 1,708 $ 1,890 $ 2,088 $ 1,238 $ 1,385 $ 1,442 9,927 9,859 10,122 10,435 10,127 10,089 10,235 9,715 10,477 9,840 10,166 9,912 9,431 9,518 9,369 9,122 9,850 9,070 8,942 7,909 17,305 9,151 7,281 8,143 7,306 5,459 6,212 6,713 6,122 4,667 7,746 6,404 5,327 6,263 6,453 7,724 9,084 10,778 9,031 6,994 13,037 14,012 11,401 9,837 7,619 7,421 8,619 8,234 11,196 6,544 3,479 3,556 3,386 4,024 4,561 4,833 4,855 4,043 18,421 4,985 10,236 9,574 9,142 4,356 202 200 218 200 200 200 73,675 64,138 57,962 54,448 47,345 46,738 51,161 49,991 65,774 42,581 114,584 112,507 108,620 124,358 121,731 110,200 100,393 98,699 88,076 78,846 110,295 71,472 44,184 70,800 31,828 66,347 30,361 42,997 28,804 20,906 298,554 248,117 210,766 248,886 200,904 223,285 181,915 191,687 182,654 142,333 426,051 451,958 397,931 381,496 377,387 365,526 351,160 310,074 322,845 284,740 65,94.6 60,785 57,748 55,598 56,368 50,807 49,125 49,600 46,926 43,427 57,843 57,230 56,630 56,359 56,023 55,424 54,017 53,215 49,397 46,480 4,667 4,759 4,802 4,711 5,168 5,634 5,947 6,022 5,736 5,394 32,084 29,656 29,389 27,981 30,797 26,987 31,197 32,308 27,357 27,412 58,51 04,388 -546,500 526,145 525,743 50,7 -491,446 451,219 452,261 407,453 452 952 1,101 746 1,990 965 1,194 1,160 2,556 2,473 8,441 6,698 8,954 12,667 5,622 6,620 12,332 4,808 5,749 11,513 595,484 62038 556,555 539,558 533,355 511,963 504,972 457,187 460,566 421,439 894,038 860,155 767,321 788,444 73-4,259 735,248 686,887 648,874 64-3,220 -563,772 15,790 13,275 11,617 10,911 10,917 12,144 12,610 10,951 7,394 8,943 127,037 124,556 117,840 119,504 125,121 121,162 122,883 115,714 98,484 91,713 59,510 58,508 58,027 56,393 58,229 57,768 56,434 50,727 50,957 46,596 80,043 82,769 95,683 105,937 117,621 109,523 105,651 93,089 87,814 83,183 17,030 16,917 15,648 15,627 16,822 17,057 17,199 16,107 14,493 13,206 60,262 44,740 41,228 44,109 39,017 47,226 43,680 44,473 42,029 39,463 34,130 28,925 28,282 30,958 35,372 37,704 39,033 36,827 31,712 28,314 2,514 2,405 2,315 2,218 1,952 1,515 2,128 1,800 1,704 1,557 15,586 13,935 13,584 13,633 9,931 10,069 10,781 10,539 8,652 7,703 35,514 35,880 42,824 47,985 47,610 47,779 45,502 51,639 46,430 47,105 447,416 42_1,91 0 42-7,048 447,275 462,592 461,947 455,901 431,866 389,669 367,783 (continued) 0 105 CITY OF ANAHEIM Changes in Net Position Last Ten Fiscal Years (In thousands)(Accrual basis of accounting) (continued)

Fiscal Year Expenses Business-type activities:

Electric Utility Water Utility Sanitation Golf Courses Convention, Sports and Entertainment Venues Business-type activities expense Total government expenses Net (Expense)/Revenue Governmental activities Business-type activities Total government, net (expense) revenue General Revenues and Other Changes in N Governmental activities:

Taxes: Property taxes Property tax increments Sales tax and use tax Transient occupancy taxes Motor vehicle license fees Other taxes Unrestricted investment earnings Other Gain from disposal of capital assets Transfers Extraordinary gain Governmental activities Business-type activities:

Unrestricted investment earnings Other Transfers Business-type activities Total government 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 411,246 417,008 386,358 372,129 375,173 359,320 353,204 339,928 365,432 274,423 62,996 57,056 58,319 56,608 55,478 49,309 49,219 51,638 47,187 41,469 53,508 52,813 55,939 49,845 50,521 52,702 49,693 49,338 47,163 45,467 4,399 4,473 4,114 4,256 4,436 4,495 4,810 4,365 4,433 4,062 46,385 45,001 45,278 44,662 45,954 45,487 48,292 46,610 47,833 47,220 578,534 576,351 550,008 527,500 531,562 511,313 505,218 491,879 512,048 412,641 1,025,950 998,261 977,056 974,775 994,154 973,260 961,119 923,745 901,717 780,424 (148,862)

(173,793)

(216,282)

(198,389)

(261,688)

(238,662)

(273,986)

(240,179)

(207,015)

(225,450)16,950 35,687 6,547 12,058 1,793 650 (246) (34,692) (51,482) 8,798 (131,912)

(138,106)

(209,735)

(186,331)

(259,895)

(238,012)

(274,232)

(274,871)

(258,497)

(216,652)let Position 66,282 64,311 58,896 59,053 59,689 60,806 59,592 57,937 49,415 43,636 28,678 47,040 47,731 47,115 45,719 40,710 37,341 34,984 67,505 65,445 59,654 54,711 51,214 56,035 62,510 64,878 66,972 60,803 110,134 102,936 90,376 82,605 77,139 80,055 87,183 83,914 75,979 67,141 331 1,783 1,026 1,180 1,532 1,866 2,595 2,113 7,780 7,756 7,272 7,288 7,288 8,041 9,529 10,337 10,817 10,175 2,930 1,094 3,598 3,667 7,012 8,667 15,337 17,597 12,346 8,071 49 1,857 873 614 1,175 394 2,670 1,701 5,078 1,499 7,288 12,824 12,571 8,537 19,602 41,141 15,573 (42,874) 8,444 12,400 102,882 261,968 256,554 364,800 265,298 271,876 303,434 299,645 236,066 268,987 240,822 6,986 3,323 10,216 9,617 15,825 19,580 31,244 27,375 16,850 16,592 418 (7,288) (12,824) (12,571) (8,537) (19,602) (41,141) (15,573) 42,874 (8,444) (12,400)(302) (9,501) (2,355) 1,080 (3,777) (21,561) 15,671 70,249 8,406 4,610 261,666 247,053 362,445 266,378 268,099 281,873 315,316 306,315 277,393 245,432 Change in Net Position Governmental activities 113,106 82,761 148,518 66,909 10,188 64,772 25,659 (4,113) 61,972 15,372 Business-type activities 16,648 26,186 4,192 13,138 (1,984) (20,911) 15,425 35,557 (43,076) 13,408 Total government change in net position $129,754 $108,947 $152,710 $ 80,047" $ 8,204 $ 43,861 $ 41,084 $ 31,444 $ 18,896 $ 28,780 Note: Certain reclassifications hove been made to prior fiscal years' data to conform to the current presentation.

Source: Finance Department, City of Anaheim See accomponied Independent auditors' report 106 CITY OF ANAHEIM Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (In thousands)(Accrual basis of accounting)

Amounts Motor Property Sales Transient Vehicle Fiscal Property1ax and Use Occupancy License Other Year Taxes Increments Taxes Taxes Fees' Taxes Total 2014 $66,282 $67,505 $110,134 $ 7,780 $251,701 2013 64,311 65,445 102,936 $ 331 7,756 240,779 2012 58,896 $ 28,6782 59,654 90,376 3 7,272 244,876 2011 59,053 47,040 54,711 82,605 1,783 7,288 252,480 2010 59,689 47,731 51,214 77,139 1,026 7,288 244,087 2009 60,806 47,115 56,035 80,055 1,180 8,041 253,232 2008 59,592 45,719 62,510 87,183 1,532 9,529 266,065 2007 57,937 40,710 64,878 83,914 1,866 10,337 259,642 2006 49,415 37,341 66,972 75,979 2,595 10,817 243,119 2005 43,636 34,984 60,803 67,141 2,113 10,175 218,852' The decrease in motor vehicle license fees starting from fiscal year 2005 is due to the shifting of revenue from motor vehicle license fees category to the property tax category.

This was part of the State of California 2004 Budget Act.2 The decrease in property tax increments from fiscal year 2012 was due to the dissolution of Redevelopment Agency on February 1, 2012.' Motor Vehicle License Fees allocation was eliminated per the fiscal year 2012 State Budget.Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation.

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 107 CITY OF ANAHEIM Fund Balances of Governmental Funds Last Ten Fiscal Years (In thousands)(Modified accrual basis of accounting)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 General Fynd Nonspendable Restricted Committed Assigned Unassigned Reserv4d Unreserved

-designated Unreserved

-undesignated Total General Fund Housing Authority Fund Nonspendable Restricted Assigned Unassiged ReservýUnreserved

-undesignated Total Housing Authority Fund Transportation Improvement Projects Reserved Restricted Unassigned Nonmajor Governmental Funds Nonspendable Restriced Assigned Unassigned Reserved Unreserved

-designated, reported in: Special revenue funds Debt service funds Capital projects funds Unreserved

-undesignated, reported in: Special revenue funds Capital projects funds Total nonmajor governmental funds Total governmental funds'$ 2,099 $ 2,531 6,449 1,766 788 4,073 4,479 30,394 29,320 43,015 38,884 7 38 41,134 32,234 11,664 11,823$ 3,082 982 320 22,636$ 3,626 582 141 22,139 27,020 26,488 42 29,935 7,778 11,237 9,922$ 4,092 29,490 33,582 1,373 11,603 12,976 3,734$ 4,530 47,729 52,259 1,830 5,669 7,499 11,403$ 5,001 37,347 42,348 830 6,474 7,304$ 8,525 47,409 55,934 162 7,935 8,097$ 9,701 44,978 54,679 3,932 3,932$ 9,892 39,179 49,071 5,682 5,682 52,805 44,095 41,172 17,742 (8,364)(8,364)3,542 170,950 3,291 (10,641)106 (3,900)(3,794)4,619 164,764 8,055 (7,331)1,190 (11,991)(10,801)1 157,743 7,400 (20,457)3,613 (17,387)(13,774)631 238,061 7,761 (16,906)3,734 11,403 126,579 7,349 156 31,899 14,350 (3,376)176,957$227,249 131,357 7,211 4,433 41,544 5,342 (7,037)182,850$254,011 138,402 6,809 1,656 32,809 4,199 (15,551)168,324$217,976 120,885 2,415 2,276 38,430 4,183 (25,687)142,502$206,533 110,289 76,568 9,102 14,974 1,137 1,457 45,495 36,497 14,902 25,955 (22,787) (4,735)158,138 150,716$216,749 $205,469 167,142 170,107 144,687 229,547$254,598 $249,292 $202,078 $260,003' The City implemented Governmental Accounting Standards Board Statement No. 54 (GASB 54) for the Fiscal Year Ended June 30, 2011.Fund balance classifications prior to the implementation of GASB 54 are not available Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 108 CITY OF ANAHEIM Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (in thousands)(Modified accrual basis of accounting)

Revenues Property taxes Property tax increments Sales and use taxes Transient occupancy taxes Other taxes Licenses, fees and permits Intergovernmental revenues Charges for services Fines, orfeits and penalties Use of money and property Other Total revenues Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005$ 66,282 $ 64,311 $ 58,896 $ 59,053 $ 59,689 $ 60,806 $ 59,592 $ 57,937 $ 49,415 $ 43,636 28,678 47,040 47,731 47,115 45,719 40,710 37,341 34,984 68,581 62,793 58,589 55,034 48,210 56,493 64,296 65,695 64,993 59,000 110,134 102,936 90,376 82,605 77,139 80,055 87,183 83,914 75,979 67,141 7,012 7078 6401 6486 6,303 6451 6753 7531 7862 7542 21,353 22,305 17,067 18,772 21,580 21,062 24,705 37,991 40,625 18,749 215,755 186,018 143,348 150,394 141,418 158,729 135,072 112,593 104,705 102,423 32,569 30,883 29,672 24,408 18,351 51 7,874 17,730 16,799 16,216 15,459 2,656 2,907 3515 3,304 3,255 3,409 3,767 3,689 3,464 3454 16,681 8,058 7,1657 10,159 10,236 9,293 16,923 18,208 13,223 9,144 6,555 8,926 6 617 43,645 4,009 10,137 3,755 7,601 18,164 6,143 547,578 496,215 450,816 500,900 437,921 471,424 465,495 452,668 431,987 367,675 Expenditures Tneral government 21,070 18,270 16,502 16,055 15,822 16,953 16,325 15,354 13,667 12,276 Police 120,962 117,702 112,656 114,678 115,379 112,057 115,195 109,467 94,602 86,529 Fire 57,529 56,127 55,886 55,802 55,713 55,966 54,685 48,201 48,383 44,182 Community Development 83,658 86,282 95,352 110,138 126,590 112,406 104,991 94,789 89,098 83,384 Plannin 16,086 15,785 14,408 14,560 15,173 15,489 15,949 14,762 13,907 12,313 Public Works 29,737 25,387 22,861 27,087 19,957 29,321 25,810 26,820 24,646 22,248 Community Services 30602 25268 24,618 27,813 31,311 33,572 35,203 32788 28753 25,724 Public Utilities 2:510 2:398 2,313 2,220 1939 1:507 2:120 1,791 1,704 1,557 Convention Sports and Entertainment 10,714 10,002 9,725 9,917 6,369 6699 7,390 7,399 6,131 5,140 Capital outday 136,597 98,601 55,505 70,918 62,422 52,229 60,906 76,161 77,738 41,301 Deb service: Principal 24,220 18,948 16,294 12,219 12,777 16,085 27,472 18,065 19,032 10,134 Intqrest charges 18,797 19,808 26,927 33,032 33,509 34,830 28,324 41,187 39,037 38,681 Debt issuance costs 227 70 5,182 4,017 Total expenditures 552,482 494,578 453,047 494,666 496,961 487,184 499,552 490,801 456,698 383,469 Revenues over (under) expenditures (4,904) 1,637 (2,231) 6,234 (59,040) (15,760) (34,057) (38,133) (24,711) (15,794)Other financing Sources (Uses)Transfers in 84,813 73,470 131,093 99,571 83,498 121,987 299,410 101,249 95,535 99,166 Transfers out (75,953) (59,393) (119,552)

(86,621) (59,970) (76,304) (288,985) 91,028) (84,325) (88,277)Issuance of refu~ndlina[

bonds 5,084 201,680 M5,134 Payments to refunded bond escrow agent (5,683) (171,222)

(255,325)Premium on long-term debt 94 4641 Discount on long-term debt (199)Issuance of long-term debt 1,350 31,500 13,570 8,000 2,769 175 18,238 22,583 7,289 Capital leases 1,649 2,198 Claims settlement proceeds 750 3,848 Special items 1,250 Extraordinary loss (67,235)Total other financing sources 10,210 45,577 (55,694) 26,520 32,278 51,795 45,500 27,917 35,991 19,428 Net change in fund balances $ 5,306 $ 47,214 $ (57,925) $ 32,754 $(26,762)

$ 36,035 $ 11,443 $(10,216)

$ 11,280 $ 3,634 Debt service as a percentage of non-capital expenditures 10.34% 9.79% 10.87% 10.68% 10.65% 11.71% 12.72% 14.29% 15.32% 14.270/Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 109 CITY OF ANAHEIM General Government Tax Revenues By Source Last Ten Fiscal Years (In thousands)(Modified accrual basis of accounting)

Secured Fiscal Property Year Taxes 2014 $33,976 Property Taxes Unsecured Supplemental Property Property Taxes Taxes Amounts in Dollars Property Tax Increments Secured Unsecured Surplemental Property Sales Transient Property Property Property Taxes and Use Occupancy Residual Taxes Taxes Taxes in-lieu of VLFP Taxes Taxes Other Taxes 2013 2012 2011 2010 2009 2008 2007 2006 2005 33,114 31,770 31,848 32,267 32,496 31,073 29,919 26,537 24,820$ 1,243 1,194 1,289 1,300 1,341 1,351 1,343 1,384 1,171 1,173 806 207 373 385 712 1,326 1,551 1,887 1,824 2,834$21,576'36,824 38,809 37,710 34,772 29,090 27,067 25,380$ 6,884'8,859 8,221 7,986 9,105 8,591 7,954 7,802$ 2182 1,357 701 1,419 1,842 3,029 2,320.1,802 26,363 25,630 25,532 25,696 26,247 25,850 25,083 19,820 15,819$ 832 $2,873$27,358 $68,581 $110,134 $7,012 62,793 58,589 55,034 48,210 56,493 64,296 65,695 64,993 59,000 102,936 90,376 82,605 77,139 80,055 87,183 83,914 75,979 67,141 7,078 6,401 6,486 6,303 6,451 6,753 7,531 7,862 7,542 Total$252,009 237,118 242,940 250,218 239,072 250,920 263,543 255,787 235,590 212,303 Collection of property taxes in-lieu of VLF starting in fiscal year 2005 is due to the shifting of revenue from motor vehicle license fees category to the property tax category.This was part of the State of California 2004 Budget Act.2 Decrease in property tax increments revenues in fiscal year 2012 was due to dissolution of the Redevelopment Agency on February 1, 2012. Property tax increments were received up to January 31, 2012.Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation.

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 110 CITY OF ANAHEIM Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (In thousands)(Modified Accrual Basis of Accounting)

Fiscal Year 2014 2013 2012 2011 2010 City of Anaheim Secured property $30,548,214

$29,608,967

$28,808,849

$28,600,152

$28,775,989 Unsecured property 1,266,403 1,265,519 1,232,825 1,278,062 1,283,263 Total City of Anaheim 31,814,617 30,874,486 30,041,674 29,878,214 30,059,252 Dissolved Anaheim Redevelopment Agency Secured property 3,916,169 4,338,935 3,977,843 3,751,227 3,762,168 Unsecured property 654,982 683,237 656,505 743,403 762,903 Total Anaheim Redevelopment Agency 4,571,151 5,022,172 4,634,348 4,494,630 4,525,071 Total Taxable Assessed Value $36,385,768

$35,896,658

$34,676,022

$34,372,844

$34,584,323 Total Direct Tax Rate 0.11062% 0.11078% 0.11075% 0.11075% 0.11031%Fiscal Year 2009 2008 2007 2006 2005 City of Anaheim Secured property $29,329,062

$28,473,221

$26,507,229

$24,081,039

$22,288,504 Unsecured property 1,226,209 1,198,812 2,442,959 1,117,310 1,162,358 Total City of Anaheim 30,555,271 29,672,033 28,950,188 25,198,349 23,450,862 Anaheim Redevelopment Agency Secured property 3,644,931 3,360,645 2,838,528 2,574,542 2,332,303 Unsecured property 789,618 818,255 813,249 734,299 748,144 Total Anaheim Redevelopment Agency 4,434,549 4,178,900 3,651,777 3,308,841 3,080,447 Total Taxable Assessed Value $34,989,820

$33,850,933

$32,601,965

$28,507,190

$26,531,309 Total Direct Tax Rate 0.11024% 0.11041% 0.11041% 0.11083% 0.11117%Note: In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above.Source: Auditor-Controller, California Municipal Statistics, Inc, County of Orange, HdL Coren & Cone See accompanied Independent auditors' report 111 CITY OF ANAHEIM Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years (Rate per $100 assessed value)Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 City Direct Ratel" City Basic Rated" 0.10851 0.10851 0.10851 0.10851 0.10816 0.10816 0.10816 Anaheim General Obligation Bond Fund 0.00211 0.00227 0.00224 0.00224 0.00215 0.00208 0.00225 0.11062 0.11078 0.11075 0.11075 0.11031 0.11024 0.11041 Overlapping Rates: Anaheim Elementary General Fund 0.29873 0.29873 0.29873 0.29873 0.29778 0.29778 0.29778 Anaheim High General Fund 0.19043 0.19043 0.19043 0.19043 0.18982 0.18982 0.18982 Educational Revenue Augmentation Fund 0.15592 0.15592 0.15592 0.15592 0.15543 0.15543 0.15543 North Orange Co. Community 0.07755 0.07755 0.07755 0.07755 0.07730 0.07730 0.07730 College General Fund Orange County Cemetery District 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 Orange County Department Of Education 0.01579 0.01579 0.01579 0.01579 0.01574 0.01574 0.01574 Orange County Flood Control District General 0.02197 0.02197 0.02197 0.02197 0.02190 0.02190 0.02190 Orange County General Fund 0.06849 0.06849 0.06849 0.06849 0.06827 0.06827 0.06827 Orange County Harbors Beaches & Parks CSA 0.01698 0.01698 0.01698 0.01698 0.01693 0.01693 0.01693 Orange County Sanitation District #2 Operating 0.03227 0.03227 0.03227 0.03227 0.03469 0.03469 0.03469 Orange County Transportation Authority 0.00312 0.00312 0.00312 0.00312 0.00311 0.00311 0.00311 Orange County Vector Control 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 Orange County Water District 0.00831 0.00831 0.00831 0.00831 0.00893 0.00893 0.00893 Orange County Water District Water Reserve 0.00012 0.00012 0.00012 0.00012 0.00013 0.00013 0.00013 Anaheim Elementary School Districts 0.05848 0.05382 0.05371 0.03363 0.03193 0.02248 0.03544 Anaheim High School Districts 0.02620 0.02858 0.02678 0.02745 0.02617 0.02363 0.02516 North Orange County Community College 0.01704 0.01902 0.01742 0.01758 0.01662 0.01493 0.01502 Water District Rate 0.00350 0.00350 0.00370 0.00370 0.00430 0.00430 0.00450 Total Direct and Overlapping Rates 1.10733 1.10719 1.10385 1.08460 1.08117 1.06742 1.08237 0.10816 0.10816 0.10816 0.00225 0.00267 0.00301 0.11041 0.11083 0.11117 0.29778 0.29778 0.29778 0.18982 0.18982 0.18982 0.15543 0.15543 0.15543 0.07730 0.07730 0.07730 0.00057 0.00057 0.00057 0.01574 0.01574 0.01574 0.02190 0.02190 0.02190 0.06827 0.06827 0.06827 0.01693 0.01693 0.01693 0.03469 0.03469 0.03469 0.00311 0.00311 0.00311 0.00124 0.00124 0.00124 0.00893 0.00893 0.00893 0.00013 0.00013 0.00013 0.02240 0.02811 0.02641 0.02355 0.02444 0.02770 0.01444 0.00520 0.00580 0.00470 0.01666 0.01441 1.06734 1.07708 1.07733"' Excludes rates associated with mello-roos districts.

(2) In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1% fixed amount. This 1% is shared by all taxing agencies for which the subject property resides. In 1986, the State Constitution was amended to allow rates over the 1% base rate for voter approved general obligation debt. Valuations of real property are frozen at the value of the property in 1975, with an allowable adjustment up to 2% per year for inflation.

However, property is assessed to its current value when a change of ownership occurs.New construction, including tenant improvements, is assessed at its current value.Source: Auditor-Controller, Orange County See accompanied Independent auditors' report 112 CITY OF ANAHEIM Principal Property Tax Payers Current Year and Nine Years Ago (In thousands)

Fiscal Year Tax Payer Walt Disney World Company HHC HA Investment II Inc.Irvine Company LLC PPC Anaheim Apartments Angeli LLC Mary Susan SaSamia Trust Essex Anavia LP OTR Reef America REIT II Corp.Avalon Anaheim Stadium LP Allstate LiFe Insurance Company Pan Pacific Retail Boeing North America Joan MTR Schlund Lennar Platinum Triangle Fairfield Resorts, Inc.2014 Percentage of Total Taxable Assessed Assessed Rank Value Value 1 13.53% $4,662,929 2 0.57% 195,645 3 0.32% 110,594 4 0.27% 94,341 5 0.26% 88,542 6 0.25% 86,869 7 0.23% 80,318 8 0.22% 76,187 9 0.21% 73,909 10 0.21% 73,557 2005 Percentage of Total Taxable Assessed Assessed Rank Value Value 1 12.87% $3,169,133 6 0.30%73,773 9 3 0.27% 66,763 0.44% 108,431 2 0.45%4 0.36%5 0.34%7 0.29%8 0.29%10 0.24%111,282 87,518 82,683 72,414 70,501 59,102 Total 16.08% $5,542,891 15.85% $3,901,600 Source: Finance Department, City of Anaheim, California Municipal Statistics, Inc.See accompanied independent auditors' report 113 CITY OF ANAHEIM Property Tax Levies and Collections Last Ten Fiscal Years (In thousands)

Collected within the Total Collected within the Total Fiscal Year of the Levy Collections to Date Fiscal Year of the Levy Collections to Date Collections Collections Total in Total Tax in Fiscal Taxes Percentage Subsequent Percentage Increments Percentage Subsequent Percentage Year Levy Amount' of Levy Years Amount of Levy _Levy Amount2 of Levy Years Amount of Levy 2014 $36,293 $35,558 97.97% $ 133 $35,691 98.34%2013 34,813 34,116 98.00% 384 34,500 99.10%2012 33,598 32,560 96.91% 512 33,072 98.43% $49,004 $28,3272 57.81% $28,327 57.81%2011 33,512 32,517 97.03% 558 33,075 98.70% 49,294 45,906 93.13% $ 282 46,188 93.70%2010 33,627 32,490 96.62% 796 33,286 98.99% 49,119 46,584 94.84% 524 47,108 95.91%2009 34,579 33,068 95.63% 1,231 34,299 99.19% 48,432 46,057 95.10% 622 46,679 96.38%2008 34,283 32,798 95.67% 1,237 34,035 99.28% 46,785 44,793 95.74% 552 45,345 96.92%2007 33,897 32,324 95.36% 789 33,113 97.69% 42,472 39,807 93.73% 549 40,356 95.02%2006 30,123 29,187 96.89% 446 29,633 98.37% 38,278 36,692 95.86% 669 37,361 97.60%2005 28,106 27,452 97.67% 341 27,793 98.89% 35,284 33,819 95.85% 321 34,140 96.76%Excludes property taxes in-lieu of vehicle license fees.2 Decrease in property tax collection is due to the dissolution of the Redevelopment Agency on February 1, 2012. Property tax increments were received up to January 31, 2012.Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation.

Source: Auditor-Controller, County of Orange See accompanied Independent auditors' report 114 CITY OF ANAHEIM Ratios of Outstanding Debt by Type Last Ten Fiscal Years (In thousands, except per capita amount)Fiscal Year 2014 2013 2012 2011 2010 Governmental Activities Bonds $ 614,757 $ 616,086 $ 616,444 $ 821,587 $ 810,504 Certificates of participation 8,880 10,020 11,085 12,070 12,990 Notes and loans 50,757 54,877 25,546 34,566 29,094 Capital leases 1,325 1,369 1,694 2,341 2,605 Total governmental activities 675,719 682,352 654,769 870,564 855,193 Business-Type Activities Bonds 780,553 863,987 889,581 908,683 805,925 Certificates of participation 38,000 38,000 38,000 38,000 38,000 Notes and loans 48,271 62,722 24,652 30,519 11,379 Capital leases Total business-type activities 866,824 964,709 952,233 977,202 855,304 Total Government

$1,542,543

$1,647,061

$1,607,002

$1,847,766

$1,710,497 Percentage of Personal Income 18.88% 19.74% 20.95% 24.57% 23.32%Per Capita $ 4,429 $ 4,758 $ 4,674 $ 5,418 $ 5,088 Fiscal Year 2009 2008 2007 2006 2005 Governmental Activities Bonds $ 805,068 $ 793,343 $ 740,107 $ 740,959 $ 739,775 Certificates of participation 13,840 23,333 26,788 30,066 33,174 Notes and loans 24,621 27,538 57,614 43,342 28,669 Capital leases 1,235 2,353 2,484 2,220 1,523 Total governmental activities 844,764 846,567 826,993 816,587 803,141 Business-Type Activities Bonds 829,707 689,791 706,126 513,874 528,130 Certificates of participation 38,000 88,185 96,475 125,087 132,952 Notes and loans 12,299 13,189 14,081 14,976 15,842 Capital leases 267 275 180 Total business-type activities 880,006 791,165 816,949 654,212 677,104 Total Government

$1,724,770

$1,637,732

$1,643,942

$1,470,799

$1,480,245 Percentage of Personal Income 23.96% 21.93% 22.17% 20.01% 21.48%Per Capita $ 5,193 $ 4,953 $ 4,985 $ 4,465 $ 4,466 Note: Per capita amounts are estimates.

Certain reclassifications have been made to prior year data to conform to current presentation.

Sources: California State Department of Finance and Finance Department, City of Anaheim US Census Yearly American Community Survey See accompanied Independent auditors' report 115 CITY OF ANAHEIM Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (In thousands, except per capita amount)Bonds General Obligation Lease Revenue'Tax Allocation Less amounts available in debt service fund Total net obligation bonds outstanding Percentage of Assessed Value of Property Per capita 2014$ 1,995 612,762 614,757 73,500$541,257 1.49%$ 1,554 2013$ 2,605 613,481 616,086 61,625$554,461 1.54%$ 1,602 Fiscal Year 2012$ 3,185 616,444 619,629 53,398$566,231 1.63%$ 1,647 2011$ 3,735 609,683 208,169 821,587 67,363$754,224 2.19%$ 2,212 2010$ 4,255 605,252 200,997 810,504 69,043$741,461 2.14%$ 2,205 Fiscal Year 2009 2008 2007 Bonds 2006 2005 General Obligation Lease Revenue Tax Allocation Less amounts available in debt service fund Total net obligation bonds outstanding Percentage of Assessed Value of Property Per capita$ 4,750 600,064 200,254 805,068 63,560$741,508 2.12%$ 2,233$ 5,220 588,692 199,431 793,343 57,995$735,348 2.17%$ 2,224$ 5,700 582,272 152,135 740,107 39,075$701,032 2.15%$ 2,126$ 6,170 575,125 159,664 740,959 39,232$701,727 2.46%$ 2,130$ 6,625 569,016 164,134 739,775 30,812$708,963 2.67%$ 2,139 Lease revenue total includes accretion payable.Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.

Certain reclassifications have been made to prior year data to conform to the current presentation.

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 116 CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2014 (In thousands) 2013-14 Assessed Valuation DIRECT TAX AND ASSESSMENT DEBT: City of Anaheim DIRECT GENERAL FUND DEBT: City of Anaheim General Fund Obligations TOTAL GROSS DIRECT DEBT Less: City of Anaheim Public Financing Authority (100% self-supporting)

City of Anaheim various revenue funds (100% self-supporting)

TOTAL NET DIRECT DEBT OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District North Orange Joint Community College District Rancha Santiago Community College District Anaheim Union High School District Fullerton Joint Union High School District Garden Grove Unified School District Placentia

-Yorba Unda Unified School District Anaheim School District Magnolia School District Other School Districts City of Anaheim Community Facilities Districts Orange Unified School District Community Facilities Districts TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND DEBT: Orange County General Fund Obligations Orange County Pension Obligations Orange County Board of Education Certificates of Participation Municipal Water District of Orange County Certificate of Participation North Orange County Regional Occupation Program Certificates of Participation Orange Unified School District Certificates of Participation Orange Unified School District Benefit Obligations Placentia-Yorba Linda Unified School District Certificates of Participation Anaheim Union High School District Certificates of Participation Fullerton Joint Union High School District Certificates of Participation Fullerton School District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBUGATION DEBT OVERLAPPING TAX INCREMENT DEBT (Successor Agency): City of Anaheim Tax Allfcation Bonds Orange County Neighborhood Project Tax Allocation Bonds TOTAL OVERLAPPING TAX INCREMENT DEBT TOTAL GROSS OVERLAPPING DEBT TOTAL NET OVERLAPPING DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT$36,385,768 Total Debt 6/30/2014$ 132,275 201,239 285,430 100,324 50,238 244,995 257,071 151,621 17,678 99,833 37,300 7,600 1,585,604 145,476 32,195 15,500 7,775 10,690 33,192 86,665 107,236 36,178 22,225 6,160 503,292% Applicable(1) 1.663%28.238 12.695 68.295 0.255 0.596 19.666 99.221 67.688 Various 100.000 4.098-100.000 8.224%8.224 8.224 0.001 29.095 26.160 26.160 19.666 68.295 0.255 0.173 100.000 0.084 Outstanding

$F 1,995 673,724 675,719 612,762 52,082 10,875 City's Share of Debt 6/30/2014$ 2,200 56,826 36,235 68,516 128 1,460 50,556 150,440 11,966 21,940 37,300 1,529 439,096 11,964 2,648 1,275 3,105 8,683 22,672 21,089 24,708 57 11 96,212 205,705 13 205,718 741,026 741,026 1,416,745 (2)$ 751,901 205,705 15,285 117 (continued)

CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2014 (in thousands)(continued)

(1) Percentage of overlapping agency's assessed valuation located within boundaries of the city.(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non-bonded capital lease obligations.

Ratios to 2013-14 Assessed Valuation:

Direct Debt ($1,995) 0.01%Total Direct and Overlapping Tax and Assessment Debt 1.21%Ratios to Adjusted Assessed Valuation:

Gross Combined Direct Debt ($675,719) 1.86%Net Combined Direct Debt ($10,875) 0.03%Gross Combined Total Debt 3.89%Net Combined Total Debt 2.07%Ratios to Redevelopment Increment Valuation

($4,571,151)

Total Overlapping Tax Increment Debt 4.50%Source: California Municipal Statistics, Inc.Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

See accompanied Independent auditors' report 118 CITY OF ANAHEIM Legal Debt Margin Last Ten Fiscal Years (in thousands)

Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit Legal Debt Margin Assessed value Debt limit (15% of total assessed value)2014$ 4,582,232 (1,995)$ 4,580,237 0.04%2013$ 4,441,345 (2,605)$ 4,438,740 0.06%Fiscal Year 2012$ 4,321,327 (3,185)$ 4,318,142 0.07%2011$ 4,290,023 (3,735)$ 4,286,288 0.09%2010$ 4,316,398 (4,255)$ 4,312,143 0.10%$30,548,214

$29,608,967

$28,808,849

$28,600,152

$28,775,989 4,582,232 4,441,345 Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit Legal Debt Margin Assessed value Debt limit (15% of total assessed value)2009$ 4,399,359 (4,750)$ 4,394,609 0.11%2008$ 4,270,983 (5,220)$ 4,265,763 0.12%4,321,327 Fiscal Year 2007$ 3,976,084 (5,700)$ 3,970,384 0.14%4,290,023 2006$ 3,612,156 (6,170)$ 3,605,986 0.17%2005$ 3,343,276 (6,625)$ 3,336,651 0.20%4,316,398$29,329,062

$28,473,221

$26,507,227

$24,081,039

$22,288,504 4,399,359 4,270,983 3,976,084 3,612,156 3,343,276 Note: Under State Finance Law, the City's outstanding general obligation debt should not exceed 15 percent of total assessed property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds.Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 119 CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (In thousands)

Redevelopment

-Tax Allocation Revenue Bonds 2 Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 Tax Increment Revenue$45,940 46,652 46,101 45,719 40,710 37,341 34,984 31,650 Less Operating Expenses'$ 8,848 21,409 5,300 4,722 2,729 5,196 5,361 3,321 Net Available Revenue$37,092 25,243 40,801 40,997 37,981 32,145 29,623 28,329 Debt Service Principal$ 55 6,000 3,983 2,977 3,014 4,620 Interest$10,862 10,766 10,766 6,275 13,417 11,727 11,700 9,996 Total$10,917 10,766 10,766 12,275 17,400 14,704 14,714 14,616 Coverage 3.3976 2.3447 3.7898 3.3399 2.1828 2.1861 2.0133 1.9382 Operating expenses consist of SERAF contributions and pass through agreements.

2 The Redevelopment Agency dissolved on February 1, 2012.Electric Utility Revenue Bonds Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Electric Revenue$430,782 453,949 407,787 391,218 390,364 378,916 373,842 330,421 336,091 297,443 Less Operating Expenses 3$347,290 349,835 314,231 309,274 309,112 300,269 299,534 265,340 268,274 218,562 Net Available Revenue$ 83,492 104,114 93,556 81,944 81,252 78,647 74,308 65,081 65,817 78,881 Debt Service Principal$11,590 18,995 18,175 17,825 15,995 15,370 14,690 13,765 13,145 15,875 Interest$30,039 33,335 34,104 30,825 31,788 28,798 29,450 24,424 25,132 24,780 Total$41,629 52,330 52,279 48,650 47,783 44,168 44,140 38,189 38,277 40,655 Coverage 2.0056 1.9896 1.7896 1.6844 1.7004 1.7806 1.6835 1.7042 1.7717 1.9403 Operating expenses excludes amortization and depreciation.

Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.

Source: Finance Department, City of Anaheim (continued) 120 CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (In thousands)(continued)

Water Utility Revenue Bonds Less Net Fiscal Water Operating Available Debt Service Year Revenue Expenses 4 Revenue Principal Interest Total Coverage 2014 $66,979 $50,046 $16,933 $ 920 $4,217 $5,137 3.2963 2013 61,849 44,838 17,011 950 4,255 5,205 3.2682 2012 59,330 44,615 14,715 915 4,292 5,207 2.8260 2011 56,935 45,293 11,642 880 3,275 4,155 2.8019 2010 57,787 45,231 12,556 1,490 2,544 4,034 3.1125 2009 53,039 40,123 12,916 1,435 1,967 3,402 3.7966 2008 51,052 41,190 9,862 1,375 325 1,700 5.8012 2007 51,595 43,203 8,392 1,325 379 1,704 4.9249 2006 47,904 39,110 8,794 1,870 450 2,320 3.7905 2005 44,484 33,312 11,172 1,340 485 1,825 6.1216 Operating expenses excludes amortization and depreciation.

Sanitation Revenue Bonds Less Net Debt Service Fiscal Wastewater Operating Available Year Revenue' Expenses 6 Revenue Principal Interest Total Coverage 2014 $12,572 $5,594 $6,978 $920 $2,079 $2,999 2.3268 2013 12,106 5,477 6,629 880 2,118 2,998 2.2111 2012 11,933 4,832 7,101 835 2,161 2,996 2.3702 2011 11,813 4,030 7,783 805 2,193 2,998 2.5961 2010 11,773 5,452 6,321 775 2,224 2,999 2.1077 2009 10,913 5,176 5,737 2,224 2,224 2.5796 2008 10,299 5,167 5,132 1,532 1,532 3.3499 2007 10,113 6,734 3,379' Amounts based on the notes to the basic financial statement, segment reporting.

' Operating expenses excludes amortization and depreciation.

Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 121 CITY OF ANAHEIM Demographic and Economic Statistics Last Ten Fiscal Years Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Population"'3 348,305 346,161 343,793 341,034 336,208 332,120 330,659 329,780 329,373 331,458 Personal Income (thousands of dollars)$8,647,769 8,344,211 7,669,678 7,519,459 7,333,705 7,198,701 7,467,272 7,416,752 7,351,605 6,892,338 Per Capita Personal Income$24,828*1 24,105 22,309 22,049 21,813 21,675 22,583 22,490 22;320 20,794 Median Age")32.4 32.4 32.4 32.4 32.4 32.4 32.4 32.4 32.4 32.4 Education Level in Years of Schooling 12.2 12.2 12.2 12.2 12.2 12.2 12.2 12.2 12.2 12.2 School Enrollment 64,528 64,463 67,760 67,884 68,331 68,890 68,663 69,296 70,793 71,314 Orange County Unemployment Rate 6.20%6.10%7.90%9.20%9.50%9.30%5.30%3.90%3.70%3.90%"I Population and Median Age were updated to reflect Census 2010 counts.121 Per capita income for FY 2014 is estimated.

Data not readily available.

Sources: California State Department of Finance Anaheim City Superintendent of Schools State of California, Employment Development Department State Department of Commerce and Labor State Department of Education US Census Yearly American Community Survey See accompanied Independent auditors' report 122 CITY OF ANAHEIM Principal Employers Current Year and Nine Years Ago Fiscal Year 2014 2005 Employer Disneyland Resort Kaiser Foundation Hopital Hilton Anaheim Anaheim Regional Medical Center Miller's Precision Grinding L-3 Communications Angels Baseball Time Warner Anaheim Marriott Hotel G4S Secure Solutions, Inc West Anaheim Medical Center Boeing North America Alstyle Apparel Arrowhead Pond of Anaheim Long Beach Mortgage Anaheim Sports, Inc Advantage Sales and Marketing Aramark at Angels Stadium DDI Corp First American Real Estate Specialty Restaurant Crop Total Rank 1 2 3 4 5 6 7 8 8 9 10 Employees 23,402 6,070 1,572 1,300 1,200 1,070 1,050 900 900 800 750 Percentage of Total City Employment 14.6%3.8%1.0%0.8%0.8%0.7%0.7%0.6%0.6%0.5%0.5%Rank 1 3 6 4 Employees 22,650 1,500 900 1,185 Percenta e of Total City Employment 14.4%1.0%0.6%0.8%0.4%2.2%1.0%0.6%0.5%O.4%0.4%0.4%0.4%O.4%8 700 2 3,500 3 1,500 5 1,000 7 800 8 700 8 700 8 700 8 700 8 700 39,014 24.4%37,235 23.7%Note: Statistics prior for Fiscal Year 2004 is not readily available.

Source: Inside Prospects Database See accompanied Independent auditors' report 123 (This page left blank intentionally) 124 CITY OF ANAHEIM Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program City Council 7 7 7 7 7 7 7 7 7 7 City Administration 20 20 21 21 24 24 24 22 19 18 City Attorney 31 30 30 30 35 35 35 35 32 32 City Clerk 7 7 6 6 7 7 7 7 7 7 Human Resources 37 38 36 36 40 40 40 40 38 37 Finance 32 32 34 35 40 41 42 42 42 42 City Treasurer 12 12 12 12 12 12 12 12 12 12 Police 549 536 530 554 610 610 604 591 582 570 Fire 262 262 275 277 289 289 290 290 288 285 Community Development 68 78 102 105 106 109 108 114 120 119 Planning 71 69 73 75 93 94 97 96 95 96 Public Works 236 234 235 252 252 252 252 249 247 245 Community Services 87 87 115 123 180 183 184 183 183 179 Public Utilities 353 352 355 377 377 377 367 354 337 335 Convention, Sports and Entertainment 84 83 91 91 91 91 88 88 86 86 Total 1,856 1,847 1,922 2,001 2,163 2,171 2,157 2,130 2,095 2,070 Source: City of Anaheim See accompanied Independent auditors' report 125 CITY OF ANAHEIM Operating Indicators by Function Last Ten Fiscal Years Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program Police Department Number of calls for service 186,042 186,461 189,751 195,587 185,934 191,037 196,241 203,832 173,669 173,669 Number of 911 calls received 145,813 182,856 179,313 165,698 140,529 129,998 125,174 134,938 103,586 92,710 Number of Part I Crimes per 100,000 population 2,883 3,326 3,057 2,886 2,857 2,764 2,899 3,042 3,042 3,250 Number of Arrest 11,846 11,617 11,494 13,345 17,650 15,951 16,212 14,135 Number of Field Reports processed by Records Bureau 38,362 39,066 33,050 35,807 35,256 37,999 40,232 43,000 54,401 62,842 Number of traffic collisions 4,686 4,414 4,044 4,046 4,027 4,251 4,626 4,461 4,837 5,055 Number of Hours of Volunteer service 24,124 23,470 25,309 20,335 18,038 16,201 16,820 15,654 Fire Department Fire responses 885 902 923 983 1,275 1,016 1,082 649 687 519 False alarm responses 1,735 1,424 1,390 1,487 1,467 1,503 1,398 719 678 581 Mutual aid responses 3,001 2,860 2,744 2,707 2,560 2,532 2,662 2,296 2,271 2,530 Medical responses 24,912 24,735 23,061 22,202 24,045 21,553 21,301 16,326 16,679 13,783 Hazardous condition responses 211 207 201 199 207 224 203 263 322 138 Public Works Centerfine miles of arterial highway pavement improved 7.13 5.9 8.7 5.8 9.0 8.1 9.1 8.7 3.5 2.9 Square feet of deteriorated pavement replaced 4,345,480 4,029,806 2,977,482 4,274,463 820,000 780,500 890,500 890,500 920,500 910,250 Square feet of deteriorated pavement slurry sealed 4,422,148 2,850,939 4,208,194 4,167,569 1,975,000 2,532,000 3,483,000 3,483,000 3,522,000 4,175,500 Number of traffic intersections maintained 327 318 318 319 318 318 316 316 308 15 Number of traffic control hubs maintained 19 18 18 18 18 17 16 16 15 1 Square feet of deteriorated sidewalk replaced 96,399 77,590 74,780 62,940 60,000 50,500 50,200 50,200 46,500 48,850 Linear feet of damaged curb/gutter replaced 29,996 25,187 27,661 24,755 11,500 12,500 11,500 11,500 11,500 1,350 Square feet of medians/parkways maintained 5,644,799 5,644,818 5,511,065 5,460,655 5,400,000 5,350,000 5,350,000 5,350,000 5,212,600 5,209,500 Square feet of landscape maintained in the Anaheim Resort 1,542,442 1,430486 1,430,486 1,430,486 1,430,486 1,419,286 1,419,286 1,419,286 1,419,286 1,419,286 Square feet of hardscape maintained in the Anaheim Resort 991,360 858,828 858,828 1,001,743 858,828 858,828 858,828 858,828 858,828 858,828 Number of vehicles maintained 1,144 1,106 1,152 1,162 1,331 1,331 1,351 1,283 1,273 1,273 Number of vehicles per mechanic 58 58 50 47 50 55 59 48 50 50 Square feetof interior space maintained 2,700,000 2,362,992 2,176,265 2,176,265 2,176,265 2,176,265 2,176,265 1,941,287 1,882,400 1,882,400 Square feet of exterior space maintained 37,655,278 37,645,278 39,138,187 39,138,187 39,138,187 39,138,187 39,138,187 35,298,000 35,238,900 35,238,900 Number of facility square feet (interior) per worker 150,000 139,000 120,904 114,540 103,631 103,631 103,631 77,651 75,296 75,500 Number of construction projects 165 120 100 136 130 130 132 167 158 130 Number of permit inspections 486 380 404 355 800 800 802 1,623 1,567 1,659 Parks Number of park acres maintained per fll-time equivalent emplaee 75 75 75 75 12.00 12.00 10.52 10.52 10.52 10.39 Number of sports fields prepared 66 66 66 66 66 66 66 66 66 66 Cost per acre of parks maintained.

$8,438 $8,192 $8,031 $8,333 $9,651 $9,950 $10,699 $10,288 $9,960 $8,791 Cost per sports field maintained.

$4,387 $4,260 $4,133 $4,261 $5,134 $5,134 $4,937 $4,747 $4,596 $4,828 Golf Courses Cost per acre ofgolf course maintained

$9,931 $9,595 $9,010 $9,569 $11,327 $10,674 $10,617 $10,305 $9,625 $9,242 Number of rounds played 117,652 118,879 120,675 116,287 124,404 137,948 153,661 157,649 160,614 156,991 Number of acres maintained 200 200 200 200 200 200 200 200 200 200 126 (continued)

CITY OF ANAHEIM Operating Indicators by Function Last Ten Fiscal Years (continued)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program City Libraries Hours open 16,820 16,243 15,530 15,364 18,944 19,290 20,292 Total circulation of materials, including eBooks 1,397,239 1,520,841 1,635,627 1,700,104 1,655,922 1,721,779 1,658,731 1,630,580 1,540,147 1,422,072 Patron assistance (reference, information, computer) 240,287 291,960 347,085 397,287 530,364 537,807 461,819 350,325 365,142 375,944 Patron visits 1,264,972 1,317,689 1,321,309 1,403,995 1,572,138 1,752,838 1,615,640 1,545,205 1,375,679 1,147,079 Library cardholders 186,891 158,396 157,278 156,444 149,501 138,826 147,638 161,278 139,611 114,700 Programs offered 3,397 3,097 3,235 3,927 3,991 4,777 4,410 3,923 2,740 3,559 Program attendance 111,380 102,728 101,696 124,401 146,357 158,669 152,532 129,661 84,631 79,912 Hours of public internet usage 209,953 237,340 220,930 209,673 246,676 277,097 242,734 192,817 170,254 154,927 Community Services Programs Number of youth program participants 126,429 136,345 129,215 110,013 134,611 146,381 455,725 362,839 362,839 354,505 Number of youth program participants in recreation classes 13,897 10,906 9,213 10,231 10,125 16,332 16,006 13,675 15,200 14,886 Number of adult program sports teams 791 841 845 908 885 875 840 756 812 820 Number of park ranger contacts 263,765 233,308 275,014 232,132 187,000 208,176 161,038 140,000 139,773 88,935 Public Utilities Department Electric Utility: Number of meters 115,474 115,418 115,113 114,662 113,434 112,548 111,784 111,319 110,729 110,635 Megawatt-hours

-soles 4,065,552 3,312,018 2,966,119 2,976,014 3,344,188 3,208,123 2,979,396 3,233,508 3,223,728 3,090,382 Megawatt-hours

-purchased pawer 3,751,220 3,029,766 2,707,466 2,737,174 3,085,358 2,836,962 2,978,800 2,780,318 2,606,275 2,459,836 Megawatt-hours

-owned generation 467,348 410,601 430,323 431,027 410,784 435,835 301,021 696,563 929,787 936,471 Water Utility: Number of meters 63,002 62,917 62,793 62,717 62,607 62,456 62,436 62,372 62,045 61,883 Millions of gallons sold 20,743 20,464 19,672 19,526 20,492 22,238 23,154 24,075 22,887 22,550 Millions of gallons purchased from Metropalitan Water District 5,286 6,878 7,023 7,398 8,054 6,614 4,978 8,049 10,188 9,144 Millions of gallons pumped from water system wells 16,749 14,659 14,100 13,399 14,669 17,034 18,961 16,844 13,580 14,244 Anaheim Convention Center Number of events serviced Number of attendees Percentage of occupancy 221 263 222 200 232 310 339 347 337 310 1,020,000 1,070,000 1,059,000 935,000 944,000 917,000 1,008,000 1,098,000 1,002,000 1,202,000 63.0% 58.0% 62.0% 56.0% 68.0% 56.0% 61.0% 70.0% 58.0% 66.0%Source: Various City Departments See accompanied Independent auditors' report 127 CITY OF ANAHEIM Capital Assets Statistics by Function Last Ten Fiscal Years Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program Police Department Police Facilities Motorized Equipment Police Helicopters Shooting Range Communication/Radio Tower Fixed Wing 10 247 2 1 1 1 10 247 3 1 1 1 11 79 10 242 3 1 74 10 242 3 1 1 11 1 69 10 250 4 11 74 10 266 4 1 1 11 1 74 9 255 3 11 79 8 251 3 1 1 11 1 79 6 248 3 10 1 72 4 3 10 7 72 Fire Department Fire stations Training center Fire trucks, engines, and other vehicles Public Works Streets (center lane miles)Traffic signals Sewers (miles)Storm Drains (miles)11 74 578 578 578 578 588 633 633 633 633 588 340 318 318 318 306 318 314 312 312 309 575.52 575.52 573.63 570.44 569.60 568.30 565.70 561.50 560.00 560.00 151.30 151.30 151.24 151.24 151.24 148.00 148.00 148.00 148.00 148.00 Parks Community parks Mini parks Neighborhood parks Special use parks Golf Courses 11 7 21 7 11 7 21 7 11 7 21 7 11 7 21 7 11 7 21 6 11 7 21 6 11 6 20 6 11 6 20 6 11 6 20 6 11 6 21 6 2 2 2 2 2 2 2 2 2 2 City Libraries Branch libraries Book mobiles Museums/Historic properties 7 7 7 7 7 7 7 6 5 1 1 1 1 2 2 2 2 2 5 5 5 5 5 3 3 3 1 4 (continued) 128 CITY OF ANAHEIM Capital Assets Statistics by Function Last Ten Fiscal Years (continued)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program Public Utilities Department Electric Utility: Transmission, 69 kV, circuit miles Distribution, 12 kV and lower, circuit miles Overhead Underground Water Utility: Active Wells Reservoirs Water Mains (miles)Fire Hydrants 86 87 86 90 80 80 80 77 69 70 420 666 17 14 753 7,832 426 662 18 14 753 7,816 428 656 18 14 753 7,812 440 658 18 14 752 7,802 446 617 18 13 753 7,805 446 625 18 13 750 7,751 453 615 21 13 750 7,749 458 582 19 13 747 7,730 468 564 21 13 746 7,720 800 620 23 13 747 7,848 Anaheim Convention Center Square footage available Number of exhibit halls 1,130,000 1,130,000 5 5 1,130,000 1,130,000 1,130,000 1,130,000 5 5 5 5 1,130,000 1,130,000 1,130,000 1,130,000 5 5 5 5 Source: Various City Departments See accompanied Independent auditors' report 129 CITY OF ANAHE IM Legend* CITY HALL 200 S. ANAHEIM BLVD.A FIRE STATIONS POLICE STATIONS SLIBRARIES CITY FACILITIES

• HEUPORT PARKS 1. HANSEN PARK 1300 S. Knott St.2. REID PARK 3100 W. Orange Ave.3. SCHWEITZER PARK 238 S. Bel Air St.4. MAXWELL PARK 2660 W. Orange Ave.5. PETER MARSHALL PARK 801 N. Magnolia Ave.6. BROOKHURST COMMUNITY PARK 2271 W. Cresent Ave.7. JOHN MARSHALL PARK 2066 Falmouth Ave.8. MODJESKA PARK 1331 S. Nutwood St.9. CLARA BARTON PARK 1926 Clearbrook Ln.10. CHAPARRAL PARK 1770 E. Broadway 11. WILLOW PARK 1625 W. Crone Ave.12. PALM LANE PARK 1595 Petais Rd.13. SAGE PARK 1313 Lido Pl.14. STODDARD PARK 901 S. Ninth St.15. MANZANITA PARK 1260 Riviera St 16. LA PALMA PARK & STADIUM 1151 La Palms Park Way 17. PEARSON PARK 400 N. Harbor Blvd, 18. LITTLE PEOPLES PARK 220 W. Elm St.19. JULIANNA PARK 309 E. Juliana St.20. GEORGE WASHINGTON PARK 250 E. Cypress St.21. COLONY SQUARE 210 E. Lincoln Ave.22. WALNUT GROVE PARK 905 S. Anaheim Blvd.23. CITRUS PARK 104 S. Atchison St 24. PONDEROSA PARK 2100 S. Heaster St.25. LINCOLN PARK 1440 E. Lincoln Ave.26. EDISON PARK 1145 Baxter St.27. BOYSEN PARK 951 State College Blvd.28. JUAREZ PARK 841 S. Sunkist St.29. PIONEER PARK 2565 E. Underhil Ave.30. RIO VISTA PARK 201 N. Park Vista SL 31. OLIVE HILLS PARK 4200 Nohl Ranch Rd.32. RIVERDALE PARK 4545 E. Riverdale Ave.33. PERALTA CANYON PARK 115 N. Pinney Dr.34. PELANCONI PARK 222 S. Avenida Margarita 35. IMPERIAL PARK 450 S. Imperial Hwy.36. EUCALYPTUS PARK 100 N. Quintana Dr.37. OAK PARK 6400 E. Nohl Ranch Rd.38. YORBA REGIONAL PARK 7600 E. La Palma Ave.39. OAK CANYON NATURE CENTER 6700 Walnut Canyon Rd.40. SYCAMORE PARK 8268 Monte Vista Rd.41. CANYON RIM PARK 7305 E. Canyon Rim Rd.42. RONALD REAGAN PARK 945 S.Weir Canyon Rd.43. ROOSEVELT PARK 8160 E.Bauer Rd.44. ROSS PARK 1280 W. Santa Ana St.45. COTTONWOOD PARK 853 W. Cottonwood Cir.46. DEER CANYON PARK Mohler & Santa Ana Rd.47. FOUNDERS PARK 400 N. West St 48. COLONY PARK 501 E. Water St.49. ENERGY FIELD 1625 S. Ninth St.50. MAGNOLIA PARK 1515 Wright Cir.51. FRIENDSHIP PLAZA PARK 200 S. Anaheim Blvd.52. ANAHEIM COVES 962 S. Rio Vista St.130

Anaheim, California Comprehensive Annual Financial Report Year Ended June 30, 2014 Seizing Our Destiny: The Movement for Riverside's Prosperous Future CITY OF RIVERSIDE, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2014 Prepared by the Brent A. Mason, Finance Department Finance Director/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, 2014 TABLE OF CONTENTS INTRODUCTORY SECTION Page L etter of T ransm ittal .........................................................................................................

i GFOA Certificate of Achievement

......................................................................................

v Legislative and C ity O fficials ..............................................................................................

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

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

1 Management's Discussion and Analysis .................................................................................

3 Basic Financial Statements:

Government-wide Financial Statements:

Statem ent of N et Position ........................................................................................

19 Statem ent of A ctivities

...........................................................................................

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 Balances -Budget and Actual -G eneral Fund ..........................................................................................

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

26 Statement of Revenues, Expenses and Changes in Fund 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)

..............................................................

63 Combining and Individual Fund Statements and Schedules:

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

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

67 Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -Nonmajor Governmental Funds ............................................................................

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

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

...... 7 5 CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2014 TABLE OF CONTENTS FINANCIAL SECTION (CONT.)Combining Statement of Cash Flows -Nonmajor Enterprise Funds .......................................

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

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

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

Combining Statement of Changes in Assets and Liabilities

-Agency Fund ...............................

Capital Assets Used in the Operation of Governmental Funds: Schedule by Source ..........................................................................................

STATISTICAL SECTION Table I Net Position by Component

-Last Ten Fiscal Years ..........................................................

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

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

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

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

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

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

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

9 Principal Property Taxpayers

-Current Year and Nine Years Ago .........................................

10 Property Tax Levies and Collections

-Last Ten Fiscal Years ...............................................

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

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

13 Top 10 Electricity Customers

-Current Year and Nine Years Ago .........................................

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

15 Ratios of General Bonded Debt Outstanding

-Last Ten Fiscal Years ......................................

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

17 Legal Debt Margin Information

-Last Ten Fiscal Years .....................................................

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

19 Demographic and Economic Statistics

-Last Ten Calendar Years .........................................

20 Principal Employers

-Current Year and Nine Years Ago ....................................................

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

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

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

76 79 80 81 84 86 88 89 91 92 94 95 96 97 98 99 100 101 102 103 104 105 107 108 109 110 III 112 113 December 8, 2014 To the Honorable Mayor, Members of the City Council and Citizens of the City of Riverside:

It is our pleasure to submit the Comprehensive Annual Financial Report (CAFR) of the City of Riverside (the City) for the fiscal year ended June 30, 2014.This report consists of management's representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed both to protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, internal controls have been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement.

As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.The City's financial statements have been audited by Macias Gini & O'Connell LLP, a firm of certified public accountants.

The independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unmodified opinion on the City's financial statements for the fiscal year ended June 30, 2014. The independent auditor's report is presented as the first component of the financial section of this CAFR.The independent audit of the financial statements of the City was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies.

The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on internal controls and compliance with legal requirements, with emphasis on those involving the administration of federal awards. These reports are available in the City's separately issued Single Audit Report.i Management has provided an overall analysis of the financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors.Profile of the City of Riverside The City of Riverside, incorporated on October I1, 1883, is located in the western portion of Riverside County, about 60 miles east of Los Angeles. The City currently occupies a land area of 81.507 square miles.The City operates under the council-manager form of government, with a seven-member council elected by ward for four-year overlapping terms. The mayor is elected at large for a four-year term and is the presiding officer of the Council, but does not have a vote except in the case of a tie. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, City Attorney and City Clerk. The City Manager is responsible for carrying out the policies and ordinances of the Council, for overseeing the day-to-day operations of the City, and for appointing the heads of various departments.

The Council is elected on a non-partisan basis.The City provides a full range of services which include general government, public safety (police, fire, disaster preparedness and building inspection), construction and maintenance of highways and streets, economic development, culture and recreation, electric, water, airport, refuse, sewer, and senior citizen/handicap transportation.

In addition to general City activities, the Council is financially accountable for the Riverside Housing Authority, Riverside Public Financing Authority, Riverside Municipal Improvements Corporation and the Successor Agency, which was formed to hold the assets of the former Redevelopment Agency;therefore, these entities are included as an integral part of the City's financial statements.

Additional information on these legally separate entities can be found in Note 1 in the notes to the financial statements.

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

Department heads may make transfers of appropriations within a department.

Transfers of appropriations between departments, however, require the approval of the Council.Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on page 23 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 68.Local economy: The City is located in the Inland Empire, which consists of Riverside and San Bernardino Counties (the "MSA").The population of the Inland Empire at approximately

4.2 million

is larger than 24 states. The City leads the Inland Empire in most ii measures of economic power, including population, income, employment, bank deposits, assessed valuation, office space and college enrollment.

The population of the City is 314,034, which places it as the sixth largest in Southern California.

Unemployment in the MSA is currently at 8.4% down from 9.7% for the same period last year with modest improvements in the real estate and home building sectors. The Citywide budget for the fiscal year 2014/2015 remains relatively flat and is balanced.The MSA is projected to grow in future years because land values continue to remain well below those in Los Angeles, Orange and San Diego Counties.

Among the City's challenges is a lack of available space for manufacturing and industrial development within current boundaries.

Goals and Vision: Seizing Our Destiny is Riverside's community-driven campaign that builds on the city's existing strengths to create an even better place to live, work and play for future generations.

The Seizing Our Destiny Campaign was developed by City officials and civic leaders and encompasses a 20-year strategic vision that mobilizes the skills and resources of a broad cross-section of Riverside toward one common goal -a better community for us all. The goal, or Vision, has four primary aspects for Riverside:

• Nurture Intelligent Growth* Catalyst for Innovation

• Location of Choice* Evolve as a Unified City Long-term financial planning.

Annually, the City updates a five (5) year Capital Improvement Program (CIP). Planned capital expenditures during fiscal years 2014/15 -2018/19 total approximately

$505 million. The projects encompass all seven Council wards and enhance the life of all residents.

Funding comes from multiple sources, including existing funds; bond proceeds, user fees, special tax revenues, and regional, state and federal funds. In addition to routine electric, water, sewer and transportation-related projects, the CIP includes improvements to Parks, Recreation and Community Services projects; railroad-related projects; and municipal buildings and facilities, such as library, police and fire facilities.

Financial policies.

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

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

Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting (Program) to the City of Riverside for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2013. This was the twenty-sixth consecutive year that the City has received this prestigious award. The City received this award for publishing an easily readable and efficiently organized CAFR that satisfied both GAAP and applicable legal requirements.

iii This award is valid for a period of one year only. We believe that our current CAFR continues to meet the Program's requirements and we are submitting it to the GFOA again this year.The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department, particularly the leadership of Jason Al-Imam, Controller.

We would like to express our appreciation to all members of the department who assisted and contributed to its preparation.

Credit also must be given to the Mayor and the City Council for their unfailing support for maintaining the highest standards of professionalism in the management of the City's finances.Respectfully submitted,~L~-Brent A. Mason Finance Director/Treasurer Scott C. Barber City Manager iv Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Riverside California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2013 Executive Director/CEO The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Riverside for our Comprehensive Annual Financial Report for the fiscal year ended June 30, 2013.In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards.

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

A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to meet the Certificate of Achievement Program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate.

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

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

Councilmember

-Ward 1 Andy Melendrez

..............................................

Councilmember

-Ward 2 Mike Soubirous

...............................................

Councilmember

-Ward 3 Paul Davis .......................................................

Councilmember

-Ward 4 Chris Mac Arthur .............................................

Councilmember-Ward 5 Jim Perry .........................................................

Councilmember

-Ward 6 Steve Adams ...................................................

Councilmember

-Ward 7 CITY OFFICIALS Scott C. Barber .................................................................

City Manager*Belinda Graham ..................................................

Assistant City Manager Deanna Lorson ...................................................

Assistant City Manager Colleen J. Nicol .......................................................................

City Clerk*Cristina Talley ........................................................

Interim City Attorney*Sergio G. Diaz ...................................................................

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

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

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

Finance Director/Treasurer Michael Moore .........................................................................

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

General Services Director Brenda Diederichs

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

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

Museum & Cultural Affairs Director Adolfo Cruz ...................

Parks, Recreation

& Community Svcs. Director Girish Balachandran

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General Manager -Public Utilities Tom Boyd .......................................

Public Works Director/City Engineer*Appointed by City Council--~1-II--.......-Hil-vi Newport Beach 4675 MacArthur Court, Suite 600 Newport Beach, CA 92660 Certified Public Accountants.

949.221,0025 Sacramento Independent Auditor's Report Walnut Crook To the Honorable Mayor and Members of the City Council Oakland City of Riverside, California LA/Contury City Report on the Financial Statements San Diego We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Riverside, California (the City), as of and for the fiscal year ended June 30, 2014, and the related Seattle notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents.Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2014, and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.www.mgocpa.com Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and pension and other post-employment benefits schedules of funding progress as listed in the table of contents 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 accompanying introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements.

Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.The introductory 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 it.Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 8, 2014 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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance.

That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.

Sglt on/Newport Beach, California December 8, 2014 Management's Discussion and Analysis (Unaudited)

As management of the City of Riverside, we offer this narrative overview and analysis of financial activities for the fiscal year ended June 30, 2014. We encourage readers to consider the information presented here in conjunction with additional information furnished in our letter of transmittal, which can be found on page i of this report. All amounts, unless otherwise indicated, are expressed in thousands of dollars.Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City's basic financial statements, compromised of three components:

1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.

This report also contains certain supplementary information.

Government-wide financial statements.

The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business.The statement of net position presents information on all of the City's assets, liabilities, and deferred inflows and outflows of resources, with the difference reported as net position.

Over time, increases or decreases in the City's net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business type activities).

The governmental activities of the City include general government, public safety, highways and streets, and culture and recreation.

The business type activities of the City include Electric, Water, Sewer, Refuse, Public Parking, Airport and Transportation services.3 The government-wide financial statements include the activities of the City and three blended component units, which consist of the Riverside Housing Authority, Riverside Public Financing Authority and the Riverside Municipal Improvements Corporation.

Although legally separate, these entities function for all practical purposes as departments of the City and therefore have been blended as part of the primary government.

The Successor Agency to the Redevelopment Agency of the City of Riverside (Successor Agency) is included as a fiduciary component unit since it would be misleading to exclude the Successor Agency due to the nature and significance of the relationship between the City and the Successor Agency. The activity of the Successor Agency is reported with the City's fiduciary funds, which is not included in the government-wide statements since the resources of those funds are not available to support the City's own programs.Both the Governmental Activities and the Business Type Activities are presented on the accrual basis of accounting, a basis of accounting that differs from the modified accrual basis of accounting used in presenting governmental fund financial statements.

Note 1 of the Notes to the Basic Financial Statements fully describe these bases of accounting.

Proprietary funds, discussed below, also follow the accrual basis of accounting.

The government-wide financial statements can be found on pages 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 finds are used to account for the same functions reported as governmental activities in the government-wide financial statements.

However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year.It is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements.

Reconciliations to facilitate this comparison are provided for both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances.

The major reconciling items relate to capital assets and debt. In the Governmental Funds, acquisitions of capital assets are treated as "expenditures" because upon purchase of a capital asset, cash used for the acquisition is no longer available for other purposes.

The issuance of debt provides cash, which is now available for specified purposes.

Accordingly, at the end of the fiscal year, the 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.

4 The City maintains thirteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund and Capital Outlay Fund, which are major funds. Data from the other eleven governmental funds are combined into a single, aggregated presentation.

Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and can be found on pages 65-69 in this report.The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided to demonstrate compliance with this budget.The governmental fund financial statements can be found on pages 21-25 of this report.Proprietary funds. The City maintains two different types of proprietary funds, enterprise and internal service funds. Enterprise funds are used to report the same functions presented as business type activities in the government-wide financial statements.

The City uses enterprise funds to account for Electric, Water, Sewer, Refuse, Parking, Airport and Transportation services.

hIternal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions.

The City uses internal service funds to account for self-insured insurance programs, central stores and its fleet of vehicles.

Because these services predominantly benefit governmental rather than business type functions, they have been included within governmental activities in the government-wide financial statements.

Internal service funds are presented as proprietary funds because both enterprise and internal service funds follow the accrual basis of accounting.

Proprietary funds provide the same type of information as the government-wide financial statements (business type activities), only in more detail. The proprietary fund financial statements provide separate information for the Electric, Water and Sewer operations, all of which are considered to be major funds of the City. The four remaining proprietary funds noted above are combined into a single, aggregated presentation.

All internal service funds are also combined into a single, aggregated presentation in the proprietary fund financial statements.

Individual fund data for the non-major proprietary funds and the internal service funds is provided in the form of combining statements and can be found on pages 73-81 in this report.The basic proprietary fund financial statements can be found on pages 26-29 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 84.5 Notes to the financial statements.

The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

The notes to the financial statements begin on page 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.Governmental Activities Business type Activities Total Current and other assets Capital assets, net Total assets 2014$ 391,053 1,359,060 1,750,113 Deferred Outflows of Resources 19,880 Current liabilities Long-term liabilities Total liabilities Deferred Inflows of Resources 65,949 503,073 569,022 49 2013$ 368,905 1,318,614 1,687,519 19,763 71,349 452,721 524,070 1,026 1,083,485 80,712 17,989$ 1,182,186 2014$ 740,238 1,587,102 2,327,340 40,444 154,937 1,159,042 1,313,979 8,756 616,844 68,506 359,699$ 1,045,049 2013$ 814,367 1,454,228 2,268,595 40,453 159,173 1,130,283 1,289,456 10,000 609,691 69,068 330,833$ 1,009,592 60,324 60,216 2014$1,131,291 2,946,162 4,077,453 2013$1,183,272 2,772,842 3,956,114 220,886 1,662,115 1,883,001 8,805 1,723,228 165,093 357,650$2,245,971 230,522 1,583,004 1,813,526 11,026 1,693,176 149,780 348,822$2,191,778 Net position: Net investment in capital assets 1,106,384 Restricted 96,587 Unrestricted (2,049)Total net position $1,200,922 The City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $2,245,971 at June 30, 2014, an increase of $54,193 from June 30, 2013.6 By far the largest portion of the City's net position (77 percent) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment and infrastructure), net of any related debt that is still outstanding used to acquire those assets and net of unspent bond proceeds and cash held in bond reserve accounts.

The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.An additional portion of the City's net position (7 percent) represents resources that are subject to external restrictions on how they may be used. The remaining unrestricted net position may be used to meet the government's ongoing obligations to citizens and creditors.

Of this amount, $359,699 is held by the business type activities and $(2,049) net deficit is held by the governmental activities.

The City's total net position increased by $54,193 during the current fiscal year, which reflects growth in governmental activities of$18,736 as well as an increase of $35,457 in business type activities.

Governmental operating results is discussed on page 9 and business-type operating results is discussed on page 12.On the following page is a condensed summary of activities of the City's governmental and business type operations for the period ended June 30, 2014 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.(Balance of page intentionally left blank)7 (Amount presented in Thousands)

Governmental Activities Business type Activities Revenues: Program Revenues: Charge for services Operating Grants and Contributions Capital Grants and Contributions General Revenues: Sales taxes Property taxes Other taxes and fees Investment income Other Total Revenues Expenses: General government Public safety Highways and streets Culture and recreation Interest on long-term debt Electric Water Sewer Refuse Airport Transportation Public parking Total expenses 2014$ 46,112 14,341 48,433 55,096 51,323 37,327 2,759 5,688 261,079 39.331 149,555 36.564 42,252 17,741 285,443 (24,364)43,100 18,736 1,182,186$ 1,200,922 2013$ 42,193 21.485 32.202 50,222 52.904 37,205 2,786 9,208 248,205 54,808 147,652 35,072 40,077 16,627 294,236 (46,031)42,262 (3,769)1,185,955$ 1,182,186 2014 485,462 2,524 11,486 8,005 7,081 514,558 2013$ 487,540 2,718 11,734 4,744 5,767 512,503 304,416 60,030 40,385 20,831 1.662 4.067 4.610 436,001 78,557 (43,100)35,457 1,009,592$1,045,049 292,175 58,768 43,945 20,581 2,029 3,745 5,051 426,294 86,209 (42,262)(41,259)2,688 1,006,904$ 1,009,592 Total 2014 2013$ 531.574 16,865 59,919 55,096 51,323 37,327 10,764 12,769 775,637 39,331 149,555 36,564 42,252 17,741 304,416 60,030 40,385 20,831 1,662 4,067 4,610 721,444 54,193 54,193 2,191,778$2,245,971

$ 529,733 24,203 43.936 50,222 52,904 37,205 7,530 14,975 760,708 54,808 147,652 35,072 40,077 16,627 292,175 58,768 43,945 20,581 2,029 3,745 5,051 720,530 40,178 (41,259)(1,081)2,192,859$2,191,778 Increase (decrease) in net position before transfers and extraordinary items Transfers, net Extraordinary items: Power Plant Closure Total changes in net position Net position -beginning Net position -ending 8 Governmental activities.

Total net position for governmental activities increased by $18,736 or 2% over prior year. Governmental net position in the prior fiscal year decreased by $3,769. 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

$15 million, which is largely attributable to an increase in grant revenue and sales tax revenue. Overall grants and contributions increased by $9 million or 17% and sales tax revenue increased by $4.9 million or 10%. The increase in grants and contributions was primarily attributable to a $5 million increase in grant revenue associated with the construction of the Streeter grade separation project which began construction in December 2012. The increase in sales tax revenue relates to an increase in general sales and use tax resulting from increased consumer spending.Expenses:* While variances between years exist for the various expense functions, the total net decrease was approximately

$8.8 million or less than 3%. This is primarily related to the $10 million judgment recorded in the prior year related to the water settlement.(Balance of page intentionally left blank)9 Expenses and Program Revenues -Governmental Activities

-Fiscal Year Comparison 2014 vs. 2013 S160,000 S140,000 S120,000$100,000$80,000$60,000$40,000$20,000$0 a 2014 Experses 0 2013 Experses U 2014 Program revenues n 2013 Program revenues General governrnent Public safety H ghways and streets Culture and recreation Interest on long-term debt 10 Revenues by Source -Governmental Activities

-Fiscal Year Comparison 2014 vs. 2013 2014 2013 Investment Income 1,06%Intergovernmental, unrestricted 0.10%Charges for services 17.66%Operating grants &contributions 5.49%Investment income Charges for services 17.00%Capital grants &contributions 18.55%Operating grants &contributions 8.66%Utility users taxes -10.76%--Capital grants &contributions 12.97%Property taxes 19.66%Property taxes 21.31%Sales taxes 21,10%11 Business-type activities.

The net position of business type activities increased by $35,457, accounting for a 3.5% increase in total net position.

The net position of business type activities increased by $2,688 in the prior year. Key elements of this year's activity in relation to the prior year are as follows: The increase primarily related to a one-time non-recurring expense of $41,000 incurred in the prior year as a result of the San Onofre Power Plant closure, which was partially offset by the following:

• Charges for services remained relatively flat along service lines resulting in an overall decrease of $2,078.* Overall expenses increased by $9,707 primarily in Electric due to production and purchased power expense increase of $7,361 related to increased energy prices.Revenues by Source -Business Type Activities

-Fiscal Year Comparison 2014 2013 Operating grants and contributions 0.5%Capital grants and contributions 2.2%'. Investment Income 1.6%Miscellaneous 1.4%Operating grants and contributions 0.5%Charges for services 94,3%Charges for services 95.1%Capital grants and contributions 2.3%Investment Income 0.9%Miscellaneous 1.1%12 Financial Analysis of the City's Funds Governmental funds. The focus of the City's governmentalfiunds is to provide information on near-term inflows, outflows, and balances of spendable resources.

Such information is useful in assessing the City's financing requirements.

In particular, unassignedfund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.The following table summarizes the balance sheet of the City's General, Capital Outlay, and Other Governmental Funds. As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.

Total assets General Fund 2014 2013$ 109,891 $114,204$ 26.,114 $ 30,309 4,917 6,804 Capital Outlay 2014 2013$71,633 $42,321$29.406 $34,353 4,860 6,536 Other Governmental Funds 2014 2013$ 121,524 $ 120,689$ 15,312 $ 15,525 34,522 34,371 Total Governmental Funds 2014 2013$303,048 $277,214$ 70,832 $ 80,187 44,299 47,711 Total liabilities Deferred inflows of resources Unavailable revenue Fund balances Nonspendable Restricted Assigned Unassigned Total fund balance Total liabilities, deferred inflows and fund balances 24,419 2,204 14,505 37,732 78,860 26,421 2,196 10,711 37,763 77,091 1,460 71,963 37,367 1,432 1,441 69,352 70,793 25,879 111,534 14,505 35,999 187,917 27,862 72,980 10,711 37,763 149,316 37,367 1,432$71,633 $42,321 (1,733)71,690$ 109,891 $ 114,204$ 121,524 $ 120,689$303,048 $277,214 13 As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $187,917 an increase of$38,601 compared to the prior year. Additionally, 14% of the fund balance ($25,879) is nonspendable, which comprises the portion of fund balance that cannot be spent due to form. $111,534 or 59% of fund balance is restricted, which represents the portion of fund balance that is subject to externally enforceable limitations by law, enabling legislation or limitations imposed by creditors or grantors.

$14,505 or 8%of fund balance is constrained by the City's intent to utilize fund balance for specific purposes, which is reported within the fund balance classification assigned.

The remainder of the fund balance is unassigned, meaning it is available for spending at the City's discretion.

Of that amount, $36,000 has been set aside for future economic contingencies at June 30, 2014 whereas $34,000 had been set aside in the previous year. The City's governmental funds reported combined total assets of $303,048 at June 30, 2014, an increase of $25,834 compared to the prior year. Liabilities and deferred inflows of resources amounted to $115,131, a decrease of $12,767. This primary reason for the increase in total assets and related fund balances is due to unspent bond proceeds in the Capital Outlay Fund associated with the 2013 Certificates of Participation.

The General Fund is the principal operating fund of the City. At the end of the current fiscal year, total fund balance equaled $78,860 in comparison to $77,091 in the prior year. The portion of fund balance classified as unassigned was $37,732, most of which was set aside for future economic contingencies.

Fund balance for the Capital Outlay Fund increased by $35,935. As mentioned previously, the primary reason for the increase is due to unspent bond proceeds in the Capital Outlay Fund associated with the 2013 Certificates of Participation.

Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.Unrestricted net position of the Electric, Water and Sewer Funds at the end of the year amounted to $258,514, $78,570, and $19,066 respectively.

The unrestricted net position for the Electric, Water and Sewer Funds in the prior year was $241,696, $69,996, and $18,65 1, respectively.

The increase in unrestricted net position for the Electric, Water and Sewer Funds is primarily a result of operating activities as described below.The Electric Fund operating results experienced a decrease in charges for services of $3,896 or 1.2%, primarily from the effects of a decrease in retail load as a result of cooler than normal temperatures.

Retail sales (residential, commercial, industrial, and other sales)represent 85.9% of total revenues.

Retail sales, net of reserve/recovery were $295,214 and $300,238 for years ended June 30, 2014 and 2013, respectively.

Operating expenses increased

$12,400 or 4.6%, which primarily relates to an increase in purchased power and distribution costs.The Water Fund reported strong operating results, with retail sales exceeding the previous year's results. Retail sales (residential, commercial, industrial, and other sales) represent 91.5% of total revenues.

Retail sales, net of reserve/recovery were $62,762 and $61,837 14 for the years ended June 30, 2014 and 2013, respectively.

The increase in sales was primarily due to a 1.7% increase in commercial consumption.

Net position of the Sewer Fund increased by $10,993 and $2,173 for the years ended June 30, 2014 and 2013, respectively.

Operating revenues increased by $2,390 or 5.5% primarily as a result of a rate increase and an increase in capital improvement fee revenue coupled with a reduction in interest expense and overall operating expenses.General Fund Budgetary Highlights Total Revenues Expenditures:

General Government Public Safety Highways & Streets Culture & Recreation Capital Outlay Debt Service Total Expenditures Original Budget$179,955 10,636 136,974 18,369 30,331 156 15,846 212,312 (32,357)32,357 77,091 77,091 Final Budget$197,601 15,422 149,851 20,213 36,165 13,039 46,786 281,476 (83,875)68,306 (15,569)77,091$61,522 Actual Amounts$196,852 10,351 149,450 16,944 34,165 8,589 46,564 266,063 (69.211)70,980 1,769 77,091$78,860 Variance with Final Budget ($749)5,071 401 3,269 2,000 4,450 222 15,413 14,664 2,674 17,338$17,338 Deficiency of Revenue Under Expenditures Other Financing Sources Net Change in Fund Balances Beginning Fund Balance Ending Fund Balance Final budgeted revenues increased from the amount originally budgeted as a result of grant related programs and financing associated with capital projects.

In addition, final budgeted expenditures increased from the amount originally budgeted as a result of grant related appropriations made during the year.Actual amounts differed from the final fund budget as follows: Li Approximately

$3.3 million of grant revenue was budgeted but not actually received during the year since the related grant expenditures had not been incurred, which was offset by property tax revenue and sales tax revenue coming in higher than what was budgeted.15 o Actual expenditures were less than budgeted amounts by approximately

$15 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).Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for governmental and business type activities as of June 30, 2014 amounted to$2,946,162 (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 $173,320 ($40,446 for governmental activities including internal service funds and $132,874 for business type activities).

Major capital improvements during the current fiscal year included:

new infrastructure, consisting primarily of street improvements of $46 million and $104 million in Sewer capital improvements primarily related to the plant expansion project.Construction in progress totaled $293,892 at June 30, 2014. Some of the major projects in process are various Sewer system improvements including phase 1 of the Sewer plant expansion project, the Riverside Transmission Reliability Project (RTRP) and related reliability improvements to the Riverside Public Utility's Sub-Transmission System. Depreciation expense during the fiscal year was$42,278 for governmental activities and $50,526 for business type activities.

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

Governmental Activities Business Type Activities Total Land Intangibles Buildings Improvements other than Buildings Machinery and equipment Infrastructure Construction in progress Total 2014$333,799 125,869 220,184 21,016 625,181 33,011$1,359,060 2013$325,215 130,051 182,249 19,612 622,972 38,515$1,318,614 2014$51,115 21,964 153,917 1,072,578 26,647 260,881$1,5 87,102 2013$42,636 21,890 158,428 1,052,832 29,057 149,385$1,454,228 2014$384,914 21,964 279,786 1,292,762 47,663 625,181 293,892$2,946,162 2013$367,851 21,890 288,479 1,235,081 48,669 622,972 187,900$2,772,842 Additional information on the City's capital assets can be found in note 5 on page 42 of this report.16 Long-term debt. At the end of the current fiscal year, the City had total debt outstanding of $1,662,115 which includes bonded debt of$1,588,315.

City of Riverside's Long-Term Debt Governmental Activities Business Type Activities Total Revenue Bonds General Obligation Bonds Pension Obligation Bonds Certificates of Participation Notes Payable Loans Payable Capital Leases Lease Revenue Bonds Landfill Capping Arbitrage Liability Compensated Absences Judgment Claims liability Net OPEB Obligation Water Acquisition Rights Total 2014$-14,460 115,775 191,446 47,611 13,168 42,344 21,996 6,667 35,167 14,439$503,073 2013$-15,314 122,005 158,697 28,652 8,424 43,762 21,761 10,000 31,569 12,537$452,721 2014$1,094,290 36,030 2,266 6,172 14 7,925 11,403 942$1,159,042 2013$1,031,839 28,137 42,661 2,558 6,457 269 7,638 9,780 944$1,130,283 2014$1,094,290 14,460 115,775 191,446 36,030 47,611 15,434 42,344 6,172 14 29,921 6,667 35,167 25,842 942$1,662,115 2013$1,031,839 15,314 122,005 158,697 28,137 71,313 10,982 43,762 6,457 269 29,399 10,000 31,569 22,317 944$1,583,004 The City's total debt increased by $79,111 or 5.0% during the current fiscal year. The net increase primarily resulted from the issuance of the 2014A Sewer Bonds and 2013 Certificates of Participation as well as normal scheduled principal maturities, debt refundings, and an increase in claims payable.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.

17 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 $631,942 at June 30, 2014, which applies only to general obligation debt. At June 30, 2014, the City had $14,460 of general obligation debt, resulting in available legal debt capacity of $617,482.Additional information on the City's long-term debt can be found in note 6 beginning on page 43 of this report.Economic Factors and Next Year's Budget and Rates LI Unemployment in the City of Riverside is 8.4% as compared to 9.7% for the prior year.LI The required employer contribution rates as a percentage of payroll for the City's retirement program will be changing effective July 1, 2014 as follows: " Miscellaneous Plan -18.314% to 18.994%." Safety Plan- 26.894% to 29.041%.At the time of budget preparation for fiscal year 2015, the economic outlook for the City was considered to be stable. The General Fund Budget for fiscal year 2015 of approximately

$240 million was adopted as balanced.

It represents an increase from the prior year of approximately 8%, largely related to an increase in pension costs and debt service for the Convention Center renovation and expansion project and several capital leases.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 92522.18 City of Riverside Statement of Net Position June 30, 2014 (amounts expressed in thousands)

Assets Cash and investments Receivables, net Inventory Prepaid items Deposits Derivative instruments Internal balances Restricted assets: Cash and cash equivalents Cash and investments at fiscal agent Other Advances to Successor Agency Land and improvements held for resale Regulatory assets Net pension asset Land and other capital assets not being depreciated Capital assets (net of accumulated depreciation)

Total assets Deferred Outflows of Resources Deferred changes in derivative values Deferred charge on refuniting Total deferred outflows of resources Liabilities Accounts payable and other current liabilities Accrued interest payable Unearned revenue Deposits Derivative instruments Decommissioning liability Noncurrent liabilities:

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

Governmental Activities

$ 62,599 113.868 5,819 241 300 49 13,328 43.118 46.025 4.522 101,184 366.010 992.250 1,750.113 14.784 5.096 19,080 20,399 3,519 7,317 9.229 19,485 76.147 426,926 569,022 49 49 Business-type Activities

$ 322,169 62.962 2.530 25,520 854 (13,328)46,506 234.179 1,067 10,236 25.921 21.622 333,488 1,253,614 2.327,340 Total$ 384,768 176,830 8,349 25,761 1.154 49 46,506 277,297 1.067 56.261 4.522 25,921 122,806 700,298 2.245.864 4,077.453 19.277 34.061 21,167 26.263 40,444 60,324 30,429 12,010 2.229 4,779 30,191 75.299 86,427 1.072,615 1,313.979 56,828 15,529 9,546 14,008 49,676 75,299 162,574 1,499,541 1,883,001-49 0,756 0,756 8.756 8,805 1,106,384 616.844 1,723,228 Capital projects 16,943 -16,943 Debt service -51.240 51.240 Economic development 15.328 15,328 Landfill capping 901 901 Public works 17,439 -17,439 Housing 45.417 45,417 Programs and regulatory requirements 16.365 16.365 Nonexpendable 1.460 1,460 Unrestricted (2.049) 359.699 357.650 Total net position 1,200.922

$ 1,045.049

$ 2.245,971 The notes to the financial statements are an integral pare of this statement.

19 City of Riverside Statement of Activities For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Net (Expense)

Revenue and Changes in Net Position Program Revenues Indirect Expenses Expenses Allocation Operating Charges for Grants and Services Contributions Functions/Programs Governmental activities:

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

Electric Water Sewer Refuse Airport Transportation Public parking Total business type activities Total$ 39,331 149,555 36,564 42,252 17,741 285,443 304,416 60,030 40,385 20,831 1.662 4,067 4,610 436,001$ 721,444$ (12,357)6,279 3,369 2,709$13,775 7,444 17,487 7,406$ 4,114 8,444 680 1,103 46,112 14,341 Capital Grants and Contributions

$ 3,893 1,778 39,370 3,392 48,433 4,008 3,534 2,698 296 950 11,486$ 59,919 Governmental Activities

$ (5,192)(138,168)17,604 (33,060)(17,741)(176,557)Business type Activities Total$ (5,192)(138,168)17,604 (33,060)(17,741)(176,557)43,629 12,195 8,475 (154)(266)(180)(228)63,471 (113,086)344,037 68,691 46,162 20,677 1,100 413 4,382 485,462$ 531,574 2,524 2,524$ 16.865$ 43,629 12,195 8,475 (154)(266)(180)(228)63,471 63,471 (176,557)General revenues: Taxes: Sales Property Utility users Franchise Transient occupancy tax Intergovemmental.

unrestricted Investment income Miscellaneous Subtotal Transfers, net Total general revenues and transfers Change in net position Net position -beginning Net position -ending 55,096 51,323 28,092 5,046 4,189 263 2,759 5,425 152,193 43,100 195,293 18,736 1,182,186$ 1,200,922 8,005 7,081 15,086 (43,100)(28,014)35,457 1,009,592$ 1,045,049 55.096 51,323 28,092 5,046 4,189 263 10,764 12,506 167,279 167,279 54,193 2,191,778$ 2,245,971 The notes to the financial statements are an integral part of this statement.

20 City of Riverside Balance Sheet Governmental Funds June 30, 2014 (amounts expressed in thousands)

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

Interest Property taxes Sales tax Utility billed Accounts Intergovernmental Notes Prepaid items Deposits Due from other funds Advances to other funds Advances to Successor Agency Land & improvements held for resale Total assets Other Governmental Total Governmental General Fund Capital Outlay Funds Funds$ 31,017 $ -$ 28,399 $ 59,416 4,564 25.675 12,879 43,118 1 5,027 13,106 1,182 8,014 4,445 84 1,700 44,174 134 2 2,582 33,267 219 5,027 13,106 1,182 9,716 51,201 33,267 241 241 300 300 18,116 18,116 23,226 23,226 652 39,739 40,391 4,522 4,522 109,891 $ 71,633 $ 121,524 $ 303,048 Liabilities Accounts payable Accrued payroll Retainage payable Intergovernmental Unearned revenue Deposits Due to other funds Advances from other funds Total liabilities

$ 7,531 $8,635 10 159 4,961 $134 1,564 5 30 1,396 14,056 8,665 1,540 159 387 6.930 -7,317 9,226 -3 9,229-17,381 602 17,983 166 -11,717 11,883 26.114 29.406 15,312 70.832 4,917 4,860 34.522 44,299 4,917 4,860 34,522 44,299 Deferred Inflows of Resources Unavailable revenue Total deferred inflows of resources Nonspendable:

Inventories, prepaids and noncurrent receivables Advances Permanent fund principal Restricted for.Housing and redevelopment Debt service Transportation and public works Other purposes General government Public safety Highways and streets Culture and recreation Continuing projects Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances The notes to the financial statements are an integral part of this statement.

541 23,878 1,819 385 1,422 834 819 1,460 37,367 26,223 26,177 17,509 2,054 541 23,878 1,460 26,223 27,996 54,876 2,439 1,422 834 819 1,004 1,004 10,426 10,426 37,732 11,7331 35,999 78,860 37.367 71,690 187.917$ 109,891 $ 71,633 $ 121,524 $ 303,048 CITY OF RIVERSIDE RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2014 (amounts expressed in thousands)

Total fund balances -governmental funds $187,917 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. 1,352,707 The net pension asset is not an available resource and, therefore, is not reported in the funds. 99,800 Deferred refunding charges are not available resources and, therefore, are not reported in the funds. 5,096 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds. 44,299 Accrued interest payable for the current portion of interest due on various debt issues has not been reported in the governmental funds. (3,519)Long-term liabilities, as listed below, are not due and payable in the current period and therefore are not reported in the funds.Bonds payable $ (170,015)Certificates of participation payable (190,580)Capital leases payable (13,168)Loan payable (47,611)Bond premiums (3,430)Net OPEB obligation (13,767)Compensated absences (21,437)Judgment payable (6,667)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 Deferred amount related to the hedgeable portion of the derivative instrument 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.Net position of governmental activities

$ (19,436)14,735 (466,675)(4,701)(14,002)$1,200,922 22 City of Riverside Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current: General government Public safety Highways and streets Culture and recreation Capital outlay Debt service: Principal Interest Bond issuance costs Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)Transfers in Transfers out Issuance of long term debt Capital lease financings Sales of capital assets Total other financing sources and uses Net change in fund balances Fund balances -beginning Fund balances -ending General Fund$ 143,748 7,694 12,915 15,734 7,283 4,219 1,857 3,402 196,852 10,351 149,450 16,944 34,165 8,589 40,202 6,259 103 266,063 (69,211)45,695 (13,184)30,940 6,625 904 70,980 1,769 77,091$ 78,860 Other Total Governmental Governmental Capital Outlay Funds Funds$ $ -$ 143,748-1,550 9,244 28,719 17,714 59,348--15,734--7,283 288 1,765 6,272 307 2,151 4,315 1,780 1,775 6,957 31,094 24,955 252,901 3,207 2,271 110 15,443 13,558 151,721 16,944 34,275 72,365 48,333 5,298 45,500-10,528 16,787 738 2 843 49,071 36,859 351,993 (17,977) (11,904) (99,092)12,774 58,469 (2,185) -(15,369)56,097 87,037--6,625 27 931 53,912 12,801 137,693 35,935 897 38,601 1,432 70,793 149,316 37,367 $ 71,690 $ 187,917 The notes to the 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 year ended June 30, 2014 (amounts expressed in thousands)

Net change in fund balances-total governmental funds $38,601 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures.

However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount bv which caoital outlays exceeded deoreciation in the current oeriod. as listed below: Capital asset additions

$ 66,315 Depreciation expense (41,706) 24,609 The net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to increase net position.

12,697 Revenues in the statement of activities that do not meet the "availability" criteria for revenue recognition and therefore are not reported as revenue in the funds. (3,412)The amortization of the net pension asset reported in the statement of activities does not require the use of current financial resources and, therefore, is not reported as an expenditure in the governmental funds. (4,851)i ne issuance OT iong-term aent (e.g., oonus, ieases, notesj proviaes current Tinancial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position.

Also, governmental funds immediately report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities.

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

$ 45,500 Payment of judgment 3,333 Other post-employment benefit liabilities (1,810)Compensated absences (168)Interest 79 Premiums on the issuance of long-term debt (1,211)Issuance of long-term debt (92,451) (46,728)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.

(2,180)Change in net position of governmental activities

$ 18,736 The notes to the financial statements are an integral part of this statement.

24 City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual General Fund For the year ended June 30, 2014 (amounts expressed in thousands)

Budgeted Amounts Actual Original Final Amounts Public safety: Police Fire Actual Variance with Animal regulation Amounts Final Budget Building and zoning inspection Street lighting Budgeted Amounts Original Final 82,023 44,809 3,487 2,152 4,503 136,974 91,303 48,384 3,501 2,152 4,511 149,851 91,208 48,019 3,483 2,195 4,545 149,450 Variance with Final Budget 95 365 18 (43)(34)401 Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Rental and investment income Miscellaneous Total revenues Expenditures General government:

Mayor Council Manager Attorney Clerk Community development Human resources General services Finance Innovation

& technology Subtotal Allocated expenditures Total general government

$ 140,868 7,736 1,195 13,087 5,516 4,401 1,318 5,834$ 140,868 7,736 16,185 15,739 5,516 4,401 1,318 5,838$ 143,748 7,694 12,915 15,734 7,283 4,219 1,857 3,402$2,880 (42)(3,270)(5)Total public safety Highways and streets 18,369 20,213 16,944 3,269 1,767 (182)539 (2,436)Culture and recreation Library Museum & cultural affairs Parks, recreation

& community services Total culture and recreation 6,630 7,990 15,711 30,331 7,461 9,775 18,929 36,165 6,882 9,698 17,585 34,165 579 77 1,344 2,000 179,955 197,601 196,852 (749)Capital outlay 156 13,039 8,589 4,450 888 1,278 7,176 3,917 1,342 9,634 2,942 8,492 8,254 10,451 935 1,278 7,517 4,375 1,485 10,421 3,244 9,713 8,612 11,580 855 1,215 6,912 4,226 1,369 9,200 2,952 7,694 8,236 9,646 80 63 605 149 116 1,221 292 2,019 376 1,934 Debt service: Principal Interest Bond issuance costs Total debt service Total expenditures Deficiency of revenue under expenditures Other financing sources (uses)Transfers in Transfers out Issuance of long term debt Capital lease proceeds Sale of capital assets Total other financing sources 9,319 6,527 15,846 40,259 6,424 103 46,786 40,202 6,259 103 46,564 57 165 222 212,312 281,476 266,063 (32,357) (83,875) (69,211)15,413 54,374 59,160 (43,738) (43,738)52,305 6,855 (41,954) (1,784)42,493 (10,226)90 32,357 45,695 (15,251)30,940 6,625 297 68,306 45,695 (13,184)30,940 6,625 904 70,980 14,664 2,067 607 2,674 10,636 15,422 10,351 5,071 continued The notes to the financial statements are an integral part of this statement.

Net change in fund balances Fund balance, beginning Fund balance, ending (15,569)1,769 17,338 77,091 77,091 77,091 -$ 77,091 $ 61,522 $ 78,860 $ 17,338 25 City of Riverside Statement of Net Position Proprietary Funds June 30, 3014 (amounts expressed in thousands)

Business-type Activities

-Enterprise Funds Other Enterprise Total Enterprise Funds Funds Governmental Activities-Internal Service Funds Assets Current assets: Cash and investments Receivables (net allowances for uncollectibles)

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

Rate stabilization cash and cash equivalents Other restricted cash and cash equivalents Public benefit programs receivable Total current assets Electric Water Sewer Non-current assets: Restricted assets: Cash and investments at fiscal agent Regulatory assets Prepaid items -non-current Other receivables Advances to other funds Advances to Successor Agency Net pension asset Capital assets: Land Intangible assets, non-depreciable Intangible assets, depreciable Accumulated depreciation

-intangible assets, depreciable Buildings Accumulated depreciation

-buildings Improvements other than buildings Accumulated depreciation

-improvements other than buildings Machinery and equipment Accumulated depreciation

-machinery and equipment Construction in progress Total non-current assets Total assets$ 210,929 1,127 17,634 14,731 3,930 385 1,202 22,345 854 914 27,878 939 302,868 176,349 17,451 3,143 5,800 11,450 8,717 10,651 325 (123)23,093 (6,448)857,377 (267,734)31,626 (17,173)51,105 905,609 1,208,477 16,336 12,952 29,288 86,181 $429 4,475 3,347 1,601 241 3,333 17 392 18,794 $53 2,675 1,722 134 706 1,328 15 6,265 $40 1,041 723 1,217 85 322,169 $1,649 25,825 20,523 6,882 1,417 3,333 2,530 22,377 854 1,306 8,367 128 108,511 10,554 943 3,333 4,926 20,484 10,841 385 (228)18,340 (5,058)543,755 (163,605)13,306 (11,203)15,828 462,601 571,112 2,941 8,215 11,156 9,360 34,787 47,276 1,028 7,283 4,436 3,151 2,734 120 (7)191,696 (97,903)100,179 (17,233)11,215 (6,876)193,913 441,012 475,799-9,360 901 37,146-1,067 10,272 456,438 9,152 3,183 44 54 52 5,819 6,499 2,095 234,179 25,921 3,143 3,333 7,283 10,236 21,622 6,224 5,634 1,384 19,180 51,115-21,492 830-(358)35,881 269,010 (5,684) (115,093)28,084 1,529,395 (8,245) (456,817)19,993 76,140 (14,241) (49,493)35 260,881 83,597 1,892,819 93,869 2,349,257 19,277 21,167 40,444 458 1,488 (300)726 (83)10,809 (8,227)1,482 19,595 28,747 Deferred Outflows of Resources Deferred changes in derivative values Deferred charge on refunding Total deferred outflows of resources Continued 26 City of Riverside Statement of Net Position Proprietary Funds June 30, 3014 (amounts expressed in thousands)

Business-type Activities

-Enterprise Funds Other Enterprise Total Enterprise Funds Funds Liabilities Current liabilities:

Accounts payable Accrued payroll Retainage payable Unearned revenue Deposits Due to other funds Capital leases -current Water stock acquisitions

-current Notes payable -current Landfill capping -current Claims and judgments

-current Compensated absences -current Current liabilities payable from restricted assets: Revenue bonds Accrued interest Accounts payable Total current liabilities Electric Water Sewer 11,401 1,292 283 3,844 700 3,613 3,224 465 410 935 150 1,348 1,303 305 731 995 1,032 196 20 2,229 133 906 200 524 16,960 2,258 713 2,229 4,779 133 700 150 1,637 200 6,480 14,920 5,770 2,023 43,846 5,015 1,801 1,356 14,704 57,325 4,439 7,119 72,217 5,240 Non-current liabilities:

Revenue bonds Notes payable Capital leases Advances from other funds Decommissioning liability Derivative instruments Claims and judgments Water stock acquisitions Landfill capping Compensated absences Other postemployment benefits Other payables Total non-current liabilities Total liabilities 593,094 1,566 11,284 75,299 22,108 202,176 9,482 4,855 8,083 792 221,760 3,725 3,106 185 1,734 21,186 2,539 5,972 97 1,474 77,260 12,010 10,498 136,007 1,017,030 34,393 1,566 21,784 75,299 30,191 792 5,972 1,445 11,403 14 1,199,889 1,335,896 Governmental Activities-Internal Service Funds 1,808 100 71 1,306 11,122 267 14,674 3,066 24,045 292 672 28,075 42,749 830 333 5,749 2,446 14 -709,944 228,167 753,790 242,871 230,510 31,268 302,727 36,508 Deferred Inflows of Resources Deferred regulatory charges Total deferred inflows of resources 6,667 2,089 6,667 2,089 8,756 8,756 Net Position Net investment in capital assets Restricted for debt service Restricted for landfill capping Restricted for programs and regulatory requirements Unrestricted Total net position 196,771 15,808 245,731 5,930 12,882 2,499 258,514 78,570$ 483,975 $ 332,730 121,431 29,502 984 19,066$ 170,983 52,911 901 3,549$ 57,361 616,844 51,240 901 16,365 359,699$ 1,045,049 6,353 (20,355)_14,0021 The notes to the 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, 2014 (amounts expressed in thousands)

Business-type Activities

-Enterprise Funds Other Enterprise Funds Total Enterprise Funds Governmental Activities-Internal Service Funds Electric Operating revenues: Charges for services $ 344,037 Operating expenses: Personnel services 37,572 Contractual services 7,394 Maintenance and operation 190,510 General 12,083 Materials and supplies 756 Claims/Insurance 1,342 Depreciation and amortization 27,260 Total operating expenses 276,917 Operating income (loss) 67,120 Non-operating revenues (expenses):

Operating grants Interest income 6,041 Other 3,444 Gain (loss) on retirement of capital assets 293 Capital improvement fees Interest expense and fiscal charges (27,499)Total non-operating revenues (expenses)

(17,721)Income (loss) before capital contributions and transfE 49,399 Cash capital contributions 2,890 Noncash capital contributions 1,118 Transfers in Transfers out (38,704)Change in net position 14,703 Total net position -beginning 469,272 Total net position -ending $ 483,975 The notes to the financial statements are an integral part of this statement.

Water Sewer$ 68,691 $ 46,162 $ 26,572 $ 485,462 $ 21,772 12,847 2,326 9,236 12,871 761 591 12,799 51,431 17,260 1,049 698 (253)(8,599)(7,105)10,155 2,278 1,256 3,333 (6,991)10,031 322,699 332,730 9,916 1,470 7,486 6,119 3,440 499 6,861 35,791 10,371 827 1,691 (11)2,684 (4,583)608 10,979 14 10,993 159,990$ 170,983 8,169 5,545 7,238 4,119 1,373 300 4,013 30,757 (4,185)2,524 88 1,204 536 (945)3,407 (778)1,246 (738)(270)57,631 57,361 68,504 16,735 214,470 35,192 6,330 2,732 50,933 394,896 90,566 2,524 8,005 7,037 565 2,684 (41,626)(20,811)69,755 6,414 2,388 3,333 (46,433)35,457 1,009,592$ 1,045,049 4,164 141 2,176 2,151 222 14,628 572 24,054 (2,282)229 (4)(4)(119)102 (2,180)(2,180)(11,822)(14,002)28 City of Riverside Proprietary Funds Statement of Cash Flows For the fiscat year ended June 30, 2014 (amounts expressed in thousands)

Electric Water Cash flows from operating activities:

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

Transfers in Transfers out Receipts on interfund advances Outflows on interfund advances Advances to other funds Net cash (used) provided by noncapital financing activities Cash flows from capital and related financing activities:

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

Purchase of investments Income from investments Net cash provided by investing activities Net change in cash and cash equivalents

$ 348,296 (34,466)(221,460)3,444 95,814 (38,704)793 (497)(38,408)(36,349)341 2,315 (21,827)(29,400)2,890 (454)(82,484)5,301 5,748 11,049 (14,029)335,085$ 321,056$ 69,567 (12,591)(22,331)698 35,343 3,333 (6,991)364 (214)(3,508)(22,648)2 (4,363)(8,848)2,278 (19)(33,598)1,004 1,004 (759)105,861$ 105,102 Sewer$ 45,787 (10,419)(19,941)3,779 19,206 254 (137)117 (104,392)50,000 (7,841)(10,913)2,684 (103)(70,565)861 861 (50,381)125,811$ 75,430 Other Enterprise Funds$ 27,841 (7,911)(19,701)1,201 1,430 (738)(1,401)(2,139)(1,787)2,642 (878)(944)2,633 1,246 2,912 73 73 2,276 4,890$ 7,166 Total Enterprise Funds$ 491,491 (65,387)(283,433)9,122 151,793 3,333 (46,433)1,411 (2,249)(43,938)(165,176)2,985 52,315 (34,909)(50,105)2,684 2,633 6,414 (576)(183,735)5,301 7,686 12,987 (62,893)571,647 Governmental Activities-Internal Service Funds$ 22,585 (3,863)(14,781)1 3,942 5,366 (6,675)(1,309)(3,716)(104)(3,820)161 161 (1,026)4,209 Cash and cash equivalents, beginning (including

$137,262 for Electric,$32,780 for Water, $113,614 for Sewer and $1,185 for Other Enterprise Funds in restricted accounts.)

Cash and cash equivalents, ending (including

$110,127 for Electric,$18,921 for Water, $56,636 for Sewer and $901 for Other Enterprise Funds in restricted accounts.)

$ 508,754 $ 3,183 Continued 29 City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Continued Governmental Other Total Activities-Enterprise Enterprise Internal Electric Water Sewer Funds Funds Service Funds Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating Income (loss)Other receipts Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation and amortization Amortization of pension costs (Increase)

Decrease in utility billed receivable (Increase)

Decrease in utility unbilled receivable (Increase)

Decrease in accounts receivable (Increase) in intergovernmental receivable (Increase)

Decrease in prepaid items Decrease in inventory (Decrease)

Increase in accounts payable Increase (Decrease) in accrued payroll Increase (Decrease) in retainage payable Increase (Decrease) in other payable Increase in deferred regulatory charges Increase (Decrease) in deposits (Decrease) in decommissioning liabilitity (Decrease) in landfill capping Increase in claims and judgments$ 67,120 $3,444 27,260 504 (681)186 4,869 (5,168)(1,725)400 473 (868)17,260 698 12,799 217 4 129 565 2 3,025 467 177$ 10,371 $1,690 6,861 139 (219)(125)16 (47)22 (941)8 (966)316 2,089 (8)(4,185) $ 90,566 1,201 7,033 4,013 93 1,275 (6)(840)488 (323)(286)50,933 953 (896)190 6,725 (53)(5,166)22 (481)496 (966)860 2,089 642 (868)(286)$ (2,282)1 572 61 (3)872 885 80 159 S ----3,597$ 95,814 $ 35,343 $ 19,206 $ 1,430 $ 151,793 $ 3,942 Net cash provided by operating activities Schedule of noncash financing and investing activities:

Capital Contributions

-capital assets Land purchase with note payable Proceeds of refunding debt$ 1,118 $80,236 1,256 $9,482$$ 2,374 $9,482 80,236 The notes to the financial statements are an integral part of this statement.

30 City of Riverside Statement of Net Positionl(Deficit)

Fiduciary Funds June 30, 2014 (amounts expressed in thousands)

Successor Agency Private-Purpose Trust Fund Assets Cash and investments Cash and investments at fiscal agent Receivables:

Interest Accounts Notes Direct financing lease receivable Deposits Property tax receivables Land & improvements held for resale Capital assets: Land Equipment Accumulated depreciation

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

Held by Successor Agency Total net position/(deficit)

$26,105 25,974 97 22 22,235 20,510 2 15,799 185 6 (6)110,929 1,155 229 4,940 56,261 248,040 5,607 316,232 301 301 (205,604)$ (205,604)Agency Fund$ 5,666 6,740 26 114 12,546 12,546 12,546 The notes to the 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, 2014 (amounts expressed in thousands)

Additions Property tax revenue Rental and investment income Miscellaneous Total additions Successor Agency Private-Purpose Trust Fund$ 26,460 2,624 1,240 30,324 2,613 8,129 13,680 24,422 5,902 (211,506)$ (_205,604L Deductions Professional services and other deductions Redevelopment projects Interest expense Total deductions Change in Net Positioni(Deficit)

Net position/(deficit)

-beginning Net position/(deficit)

-ending The notes to the financial statements are an integral part of this statement 32 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

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

The more significant accounting policies reflected in the financial statements are summarized as follows: A. Reporting Entity These financial statements present the City and its component units, entities for which the City is financially accountable.

Blended component units are legally separate entities, but in substance are part of the City's operations and their data is combined with that of the City's. The City has no component units that meet the criteria for discrete presentation.

All of the City's component units have a June 30 year end.Blended Component Units Riverside Housing Authority (Housing Authority) was established in 2006 by the City. The Housing Authority's primary purpose is to provide safe and sanitary housing accommodations for persons with low or moderate income.The Housing Authority's activity has been combined with that of the primary government because City Council members serve as the Housing Authority's commissioners and because the City is financially accountable and operationally responsible for all matters.Riverside Public Financing Authority (Public Financing Authority) was organized in December 1987 by the City and the Redevelopment Agency.Pursuant to Assembly Bill 1X 26 (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies were dissolved effective February 1, 2012. Subsequently, the City became the Successor Agency to the Redevelopment Agency. The Parking Authority of the City of Riverside was added as an additional member of the Public Financing Authority on August 14, 2012. The Public Financing Authority's activity has been combined with that of the primary government because City Council members serve as the Public Financing Authority's board members and because the Public Financing Authority exclusively provides financing assistance to the primary government.

The City is also financially accountable and operationally responsible for all matters.Riverside Municipal Improvements Corporation (Municipal Improvements Corporation) was created in 1978 and operates under provisions of the Nonprofit Public Benefit Corporation Law of the State of California.

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

The City is financially accountable and operationally responsible for all matters.Fiduciary Component Unit Successor A-qency to the Redevelopment Agency of the City of Riverside (Successor Agency) is a separate legal entity, which was formed to hold the assets and liabilities of the former Redevelopment Agency pursuant to City Council actions taken on March 15, 2011 and January 10, 2012. The activity of the Successor Agency is overseen by an Oversight Board comprised of individuals appointed by various government agencies and the City of Riverside as Successor Agency of the former Redevelopment Agency. The nature and significance of the relationship between the City and the Successor Agency is such that it would be misleading to exclude the Successor Agency from the City's financial statements.

The Successor Agency is presented herein in the City's fiduciary funds as a private-purpose trust fund Complete financial statements are prepared for the Riverside Public Financing Authority and the Successor Agency to the Redevelopment Agency of the City of Riverside, which can be obtained from the City's Finance Department, 3900 Main Street, Riverside, California, 92522 or online at www.riversideca.gov.

B. Government-wide and Fund Financial Statements The government-wide financial statements report information on all of the nonfiduciary activities of the City and its component units. Interfund activity has been removed from these statements except for utility charges, as this would distort the presentation of function costs and program revenues.Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business type activities, which rely to a significant extent on fees and charges for support.The statement of net position presents financial information on all of the City's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position.

Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

33 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues.Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Indirect expenses are allocated to the various functions based on a proportionate utilization of the services rendered.

Such allocations consist of charges for accounting, human resources, information technology and other similar support services.Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements.

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

C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide, proprietary and private-purpose trust fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting.

Agency funds report only assets and liabilities and therefore have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied on the property.

Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met. An allowance for doubtful accounts is maintained for the utility and other miscellaneous receivables.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting.

Revenues are recognized as soon as they are both measurable and available.

Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues are considered to be available if they are generally collected within 60 days after year end, except for revenue associated with neglected property abatement which is eleven (11) months and except for grant revenue, including reimbursement received from Transportation Uniform Mitigation Fees, which is six (6) months and sales tax revenue which is seven (7) months, as described below. Grant revenue is recognized if received within six (6) months of year end to enable the matching of revenue with applicable expenditures.

Expenditures generally are recorded when a liability is incurred under accrual accounting.

However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.In 2004, the State temporarily began to exchange 25% of sales taxes for an equal amount of property taxes to securitize a short-term State bond issue.The State bond issue will remain outstanding for an uncertain number of years, but the bonds are currently estimated to retire in 2016. These in-lieu sales taxes will be paid to the City by the State on a different calendar than sales taxes, which are paid monthly, three months in arrears. The vast majority of the in-lieu amount will be paid during the applicable fiscal year;however, the final payment of the in-lieu sales taxes will not be paid until the January following the end of the applicable fiscal year. Since 2004, the final"true-up" payment has been reported in the fiscal year that the revenue was earned and thus provides consistency in the reporting of sales tax revenue.Property taxes, special assessments, sales taxes, franchise taxes, licenses, charges for services, amounts due from other governments and interest associated with the current fiscal period are all considered to be susceptible to accrual. Other revenue items such as fines and permits are considered to be measurable and available only when the government receives cash, and are therefore not susceptible to accrual.The government reports the following major governmental funds: The General fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.The Capital Outlay fund accounts for the construction and installation of street and highway capital improvements for the City, including improvements funded by the 1/ % sales tax approved by Riverside County in 1988.34 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

The government reports the following major proprietary funds: The Electric fund accounts for the activities of the City's electric distribution operations.

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

The Sewer fund accounts for the activities of the City's sewer systems.Additionally, the government reports the following fund types: Internal service funds account for self-insurance, central stores and central garage on a cost reimbursement basis.Fiduciary funds include private-purpose trust and agency funds. The private-purpose trust fund accounts for assets and activities of the dissolved Redevelopment Agency, which is accounted for in the Successor Agency Trust. The agency fund is used to account for special assessments that service no-commitment debt.The permanent fund is a governmental fund that is used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City's Library programs.

Non-expendable net position on the Statement of Net Position includes $1 million of permanent fund principal which are considered nonexpendable.

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

Internally dedicated resources are reported as general revenues rather than as program revenues.

Likewise, general revenues include all taxes.Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations.

The sewer fund also recognizes as operating revenue the portion of connection fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.D. Cash and Investments The City values its cash and investments in accordance with the provisions of Government Accounting Standards Board (GASB) Statement No. 31,"Accounting and Financial Reporting for Certain Investments and External Investment Pools (GASB 31)," which requires governmental entities to report certain investments at fair value in the statement of net position/balance sheet and recognize the corresponding change in the fair value of investments in the year in which the change occurred.

Fair value is determined using published market prices.Cash accounts of all funds are pooled for investment purposes to enhance safety and liquidity while maximizing interest earnings.

Investments are stated at fair value except for investments in investment contracts which are recorded at contract value. All highly liquid investments (including restricted assets) with a maturity of 90 days or less when purchased are considered cash equivalents.

Cash and investments held on behalf of proprietary funds by the City Treasurer are considered highly liquid and are classified as cash equivalents for the purpose of presentation in the Statement of Cash Flows.E. Restricted Cash and Investments Certain proceeds of long-term indebtedness, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net position because their use is limited by applicable bond covenants.

Restricted cash and investments also include cash set aside for nuclear decommissioning, public benefit programs, regulatory requirements and rate stabilization because their use is legally restricted to a specific purpose.Unspent proceeds received from the City's landfill capping surcharge are also recorded as restricted assets.F. Land and Improvements Held for Resale Land and improvements held for resale were generally acquired for future development projects.

The properties are carried at the lower of cost or net realizable value.35 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

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

H. Prepaid Items Payments to vendors for services benefiting future periods are recorded as prepaid items and expenditures are recognized when items are consumed.I. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (eg., roads, bridges, sidewalks, right of way, and similar items), are reported in the applicable governmental activities and business-type activities of the government-wide financial statements and in the proprietary funds and the fiduciary private-purpose trust fund statements of net position.

The government defines capital assets as assets with an initial, individual cost of more than five thousand dollars and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed.

Costs include: labor; materials; interest during construction; allocated indirect charges such as engineering, construction and transportation equipment, retirement plan contributions and other fringe benefits.

Donated capital assets are recorded at estimated fair market value at the date of donation.

Intangible assets that cost more than one hundred thousand dollars with useful lives of at least three years are capitalized and are recorded at cost.Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed for proprietary funds. For the year ended June 30, 2014, business-type activities capitalized net interest costs of $8,608 in the government-wide and fund financial statements.

Total interest expense incurred by the business-type activities (and the enterprise funds on the proprietary funds statements) before capitalization was $50,234.The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Capital assets other than land are depreciated using the straight-line method. Estimated useful lives used to compute depreciation are as follows: Buildings and Improvements Improvements other than Buildings Intangibles

-Depreciable Machinery and Equipment Infrastructure 30-50 years 20-99 years 3-15 years 3-15 years20-100 years J. Compensated Absences City employees receive 10 to 25 vacation days a year based upon length of service. A maximum of two years' vacation accrual may be accumulated and unused vacation is paid in cash upon separation.

City employees generally receive one day of sick leave for each month of employment with unlimited accumulation.

Upon retirement or death, certain employees or their estates receive a percentage of unused sick leave paid in a lump sum based on longevity.

The General, Electric and Water funds have been primarily used to liquidate such balances.The liability associated with these benefits is reported in the government-wide statements.

Vacation and sick leave of proprietary funds is recorded as an expense and as a liability of those funds as the benefits accrue to employees.

K. Derivative Instruments The City's derivative instruments are accounted for in accordance with Government Accounting Standards Board (GASB) Statement No. 53,"Accounting and Financial Reporting for Derivative Instruments (GASB 53)," which requires the City to report its derivative instruments at fair value.Changes in fair value for effective hedges that are achieved with derivative instruments are reported as deferrals in the statements of net position.The City uses derivative instruments to hedge its exposure to changing interest rates through the use of interest rate swaps. The City had debt that was layered with "synthetic fixed rate" swaps, which was refunded in 2008 and 2011. At the time of the refunding, hedge accounting ceased to be applied. The balance of the deferral account for each swap is included as part of the deferred charge on refunding associated with the new bonds. The swaps were also employed as a hedge against the new debt. Hedge accounting was applied to that portion of the hedging relationship, which was determined to be effective.

The negative fair value of the interest rate swaps related to the new hedging relationship has been recorded and deferred on the statement of net position.

In 2012, the City also entered into an additional interest rate swap agreement, which has a positive fair value and is recorded 36 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) and deferred on the statement of net position.

See Note 10 for further discussion related to the City's interest rate swaps.Various transactions permitted in the Utility's Power Resources Risk Management Policies may be considered derivatives, including energy and/or gas transactions for swaps, options, forward arrangements and congestion revenue rights. The City has determined that all of its contracts including congestion revenue rights fall under the scope of "normal purchases and normal sales" and are exempt from GASB 53.L. Long-Term Obligations Long-Term Debt Long-term debt and other long-term obligations are reported as liabilities in the applicable governmental and business-type activities columns in the government-wide financial statements and in the proprietary funds and fiduciary private-purpose trust fund statements of net position.

Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.In the fund financial statements, government fund types recognize bond issuance costs as expenditures during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuance are reported as other financing uses.Decommissioning Federal regulations require the Electric Utility to provide for the future decommissioning of its ownership share of the nuclear units at San Onofre.The Electric Utility has established trust accounts to accumulate resources for the decommissioning of the nuclear power plant and restoration of the beachfront at San Onofre. Based on the most recent site specific cost estimate as of July 2013, prepared by ABZ Incorporated, the Electric Utility has fully funded the San Onofre Nuclear Generating Station ("SONGS")decommissioning liability.

With the recent retirement of SONGS units 2 and 3, there is much uncertainty as to future unknown costs to decommission SONGS. Although management believes the current cost estimate is the upper bound of decommissioning obligations, the Electric Utility has conservatively decided to continue to set aside $1,581 per year in an internally restricted cash reserve for unexpected costs not contemplated in the current estimates.

Increases to the funds held for the decommission liability are from amounts set aside and investment earnings.

The investment earnings are included in investment income. These earnings, as well as amounts set aside, are reflected as decommissioning expense which is reflected as a component of maintenance and operation expense in the statement of revenues, expenses and changes in net position.

To date, the Electric Utility has set aside$77,897 in cash investments with the trustee and $1,725 in an internally restricted decommissioning reserve as the Electric Utility's estimated share of the decommissioning cost of San Onofre, and these amounts are reflected as restricted assets and unrestricted cash and cash equivalents, respectively, on the Statements of Net Position.

The Electric Utility's decommissioning liability is equivalent to the total funds accumulated less$4,323 paid as decommissioning costs for the fiscal year ended June 30, 2014 and is reflected as a non-current liability.

The plant site easement at San Onofre terminates May 2024. The plant must be decommissioned and the site restored by the time the easement terminates.

M. Claims and Judgments Payable Claims and judgments payable are recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Such claims, including an estimate for claims incurred but not reported at year end, are recorded as liabilities in the self-insurance internal service fund. As of June 30, 2014, the City had an obligation related to a judgment, which is reflected as a liability on the government-wide statements and is more fully described in Note 8.N. Fund Equity In the fund financial statements, governmental fund balance is made up of the following components: " Nonspendable fund balance is the portion of fund balance that cannot be spent due to form. Examples include inventories, prepaid amounts, long-term loans, and notes receivable, unless the proceeds are restricted, committed or assigned.

Also, amounts that must be maintained intact legally or contractually, such as the principal of a permanent fund are reported within the nonspendable category." Restricted fund balance is the portion of fund balance that is subject to externally enforceable limitations by law, enabling legislation or limitations imposed by creditors or grantors.37 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)" Committed fund balance is the portion of fund balance that can only be used for specific purposes due to formal action of the City Council through adoption of a resolution prior to the end of the fiscal year.Once adopted, the limitation imposed by resolution remains in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation.

No amounts have been reported within this category of fund balance." Assigned fund balance reflects the City's intended use of resources.

Intent can be expressed by the City Council or by an official to which the City Council delegates the authority.

On February 22, 2011, the City Council approved a policy whereby the authority to assign fund balance was delegated to the City's chief financial officer, which authorized the assignment of fund balance for specific programs or purposes in accordance with City Council directives.

The City also uses budget and finance policy to authorize the assignment of fund balance, which is done through the adoption of the budget and subsequent budget amendments throughout the year." Unassigned fund balance is the residual classification that includes all spendable amounts in the General Fund not contained in other classifications.

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

0. Net Position Net position represents the difference between assets and deferred outflows less liabilities and deferred inflows. Net position invested in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the related acquisition, construction or improvement of those assets excluding unspent debt proceeds.

Restricted net position represents restricted assets less liabilities and deferred inflows related to those assets. Restricted assets are recorded when there are limitations imposed on their use either through legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.

Restricted resources are used first to fund appropriations.

P. Interfund Transactions Interfund transactions are accounted for as revenues and expenditures or expenses.

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

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

Related receivables and payables are classified as "due from/to other funds" on the accompanying fund level statements.

The noncurrent portion of long-term interfund loans receivable are reported as advances and, for governmental fund types, are equally offset by a fund balance reserve to indicate that the receivable is not in spendable form.Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances".

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

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

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

Accordingly, unavailable revenue is reported only in the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources (revenue) in the period that the amounts become available.

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

Deferred outflows of resources represent outflows of resources (consumption of net position) that apply to future periods and that, therefore will not be recognized as an expense or expenditure until that time.38 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

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

Deferred inflows of resources represent inflows of resources (acquisition of net position) that apply to future periods and that, therefore, are not recognized as an inflow of resources (revenue) until that time.T. Regulatory Assets and Deferred Regulatory Charges In accordance with GASB Statement No. 62, enterprise funds that are used to account for rate-regulated activities are permitted to defer certain expenses and revenues that would otherwise be recognized when incurred, provided that the City is recovering or expects to recover or refund such amounts in rates charged to its customers.

Accordingly, regulatory assets and/or deferred regulatory charges have been recorded in the Electric, Water, Sewer and Refuse funds.U. Property Tax Calendar Under California law, general property taxes are assessed for up to 1% of the property's assessed value. General property taxes are collected by the counties along with other special district taxes and assessments and voter approved debt. General property tax revenues are collected and pooled by the county throughout the fiscal year and then allocated and paid to the county, cities and school districts based on complex formulas prescribed by State statutes.Property taxes are calculated on assessed values as of January 1 for the ensuing fiscal year. On July 1 of the fiscal year the levy is placed and a lien is attached to the property.

Property taxes are due in two installments.

The first installment is due November 1 and is delinquent after December 10.The second installment is due February 1 and is delinquent after April 10.The City generally accrues only those taxes, which are received within sixty days after the year-end.

Under the Teeter plan, the County of Riverside has responsibility for the collection of delinquent taxes and the City receives 100% of the levy.V. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenditures.

Specifically, the City has made certain estimates and assumptions relating to the revenues due and expenditures incurred through fiscal year end, collectability of its receivables, the valuation of property held for resale, the useful lives of capital assets, and the ultimate outcome of claims and judgments.

Actual results may differ from those estimates and assumptions.

2. Legal Compliance

-Budgets Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for all departments within the general, special revenue and capital project funds. Formal budgets are not employed for debt service funds because debt indenture provisions specify payments.

The permanent fund is not budgeted.During the period December through February of each fiscal year, department heads prepare estimates of required appropriations for the following fiscal year. These estimates are compiled into a proposed operating budget that includes a summary of proposed expenditures and financial resources and historical data for the preceding fiscal year. The operating budget is presented by the City Manager to the City Council for review. Public hearings are conducted to obtain citizen comments.

The City Council generally adopts the budget during one of its June meetings.

The City Manager is legally authorized to transfer budgeted amounts between divisions and accounts within the same department.

Transfer of appropriations between departments or funds and increased appropriations must be authorized by the City Council. Expenditures may not legally exceed budgeted appropriations at the departmental level within a fund. All appropriations shall lapse at the end of the fiscal year to the extent they have not been expended or lawfully encumbered, except for appropriations for capital projects which shall continue to their completion.

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

Investments Investments at fiscal agent Cash on hand and deposits with financial institutions Non-negotiable certificates of deposit$ 391,630 305,464 697,094 74,962 1,000$ 773.05E 39 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

The amounts are reflected in the statements of net position of the government-wide and fiduciary fund financial statements:

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

$ 384,768 46,506 277,297 708,571 64,485$ 773.056 The City follows the practice of pooling cash and investments of all funds except for funds required to be held by outside fiscal agents under the provisions of bond indentures, which are administered by outside agencies.Interest income earned on pooled cash and investments is allocated monthly to funds based on the beginning and month-end balances.

Interest income from cash and investments held at fiscal agents is credited directly to the related account. Bank deposits are covered by federal depository insurance for the first $250 or by collateral held in the pledging bank's trust department in the name of the City.Authorized Investments Under provisions of the City's investment policy, and in accordance with California Government Code Section 53601, the City Treasurer may invest or deposit in the following types of investments:

more than 15% of the market value of the portfolio may be invested in one corporation.

The City's investment policy provides two exceptions to the above; one is for investments authorized by debt agreements (described below) and the other for funds reserved in the San Onofre Nuclear Generating Station Decommissioning Account for which the five-year maturity limitation may be extended to the term of the operating license.Investments Authorized by Debt Aqreements Provisions of debt agreements, rather than the general provisions of the California Government Code or the City's investment policy, govern investments of debt proceeds held by bond fiscal agents. Permitted investments are specified in related trust agreements and include the following:

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

Disclosures Relatinq to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.

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

Information about the sensitivity of the fair values of the City's investments (including investments held by fiscal agent) to market interest rate Money Market Funds Securities of the U.S. Government and its sponsored agencies Corporate Medium-Term Notes Local Agency Investment Fund (State Pool)Negotiable Certificates of Deposit Repurchase Agreements Reverse Repurchase Agreements Bankers Acceptances Commercial Paper of "prime" quality Local Agency Bonds Max Maturity N/A 5 Years 5 Years N/A 5 Years 1 Year 90 Days 180 Days 270 Days N/A Max % of Portfolio 20%N/A 30%100%30%N/A 20%40%25%N/A Investments in Corporate Medium Term Notes may be invested in securities rated A or better by Moody's or Standard and Poor's rating services and no 40 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: Remaining Maturity (in Months)12 Months 13 to 24 25 to 60 More than Total or Less Months Months 60 Months Concentration on Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that. stated above. Investments in any one issuer (other than U.S. Treasury securities, money market funds, and external investment pools) that represent 5% or more of total City investments are as follows: Investment Type Money Market Funds Federal Agency Securities U.S. Treasury Notes/Bonds Corp. Medium Term Notes State Investment Pool Negotiable CDs Held by Fiscal Agent Money Market Funds State Investment Pool Investment Contracts Commercial Paper Fed. Agency Securities Corp. Med. Term Notes Total$ 7,398 79,715 138,374 54,569 99,435 12,139 40,607 19,332 150,332 12,877 61,634 20 682$697094$ 7,398 $12,317 99,435 3,967 40,607 19,332 24,173 12,877 1,193-$53,445 23,306 20,480 5,437 25,726 10,323 ,057$26,270 115,068 21,772 2,735 89,672 50,118 18,625 Issuer Deutsche Bank Securities Inc.Custodial Credit Risk Investment Type Investment Contract Reported Amount$82,249 10,761 The City assumes that callable investments will not be called.Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.

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

Presented below is the actual rating as of year-end for each investment type: Ratings as of Year End Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City's investment policy requires that a third party bank trust department hold all securities owned by the City. All trades are settled on a delivery vs. payment basis through the City's safekeeping agent. The City has no deposits with financial institutions; bank balances are swept daily into a money market account.Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California.

The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio).

The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.4. Direct Financing Lease Receivable The former Redevelopment Agency had a direct financing lease arrangement with the State of California (the State) for a twelve-story office building, which was transferred to the Successor Agency. The lease term is for thirty years and the State takes ownership of the facility at the conclusion of that term.Total Investment Type Money Market Funds Federal Agency Securities U.S. Treasury Notes/Bonds Corporate Medium Term Notes State Investment Pool Negotiable CDs Held by Fiscal Agent Money Market Funds State Investment Pool Investment Contracts Commercial Paper Federal Agency Securities Corporate Medium Term Notes Total$ 7,398 79,715 138,374 54,569 99,435 12,139 40,607 19,332 150,332 12,877 61,634 20,682 AAA$ 1,062 79,715 138,374 9,232 61,634 AA A Unrated$ 1,290 $ 5,046 $44,301 10,268--99,435-12,139 29,650 1,725-19,332-150,332 12,877 -8 0 344 -2 _ 41 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30. 2014 (amounts expressed in thousandsl The lease calls for semi-annual payments not less than the debt service owed on the related lease revenue bonds issued by the former Redevelopment Agency for the purchase and renovation of the building.

The future minimum lease payments to be received are as follows: 2015 2016 2017 2018 2019 Thereafter Total Due Less: amount applicable to interest Total direct financing lease receivable

$ 2,507 2,533 2,561 2,598 2,626 16,443 29,268 (8,758)Business type activities:

Capital assets, not depreciated:

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

Buildings Improvements other than buildings Intangibles, depreciable Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Intangibles, depreciable Machinery and equipment Total accumulated depreciation Total capital assets being depreciated, net Business type activities capital assets, net 21,492 149,38$ 10,558 174,847 185,405 Beginning Additions/

Deletions/

Balance Transfers In Transfers Oul$ (2,079)(63,351)(65.430)Ending Balance$51,115 21,492 267,232 1,778 -269,010 1,475,267 58,011 (3,883) 1,529,395 645 185 -830 7452 3,0 179) 7,4 1,817,70 6337 (5,74 1,875,7 (108,804)

(6,289) -(115,093)(422,435)

(38,404) 4,022 (456,817)(247) (111) -(358)(45.469) (5.722) 1,9 (49,493)(576.955)

(50.526) 5,2 (621,.761) 1,240,15 1~2,5 46 1,23,64~I ~ $198-258 Skd,8 5. Capital Assets The following is a summary of changes in the capital assets during the fiscal year ended June 30, 2014.Governmental activities:

Capital assets, not depreciated:

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

Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Beginning Additions/

Deletions/

Balance Transfers In Transfers Out$ 325,215 38,515 363,730 180,337 250,021 79,782 910,700$ 8,628$ (44)(29.160)(29,204)Ending Balance$ 333,799 33,011 366,810 180,654 299,345 82,562 9j34,1 Depreciation expense was charged to various functions as follows: 469 (152)49,324 6,449 (3,669)(331)1,20,840 8048 (4,152) 1,497,74 (50,286) (4,618)119 (54,785)Governmental activities:

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

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

$ 4,490 4,113 22,989$42.2Z8$27,260 12,799 6,861 1,223 612 698 (67,772)(60,170)(287,728)(465,956)(11,389)(4,567)(21,704)(42,278)3,191 (842)(79,161)(61,546)(309,432)(504.924)954,884 38,208 IL318.6-14 42 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

6. Long-Term Obligations Changes in Long-Term Obligations:

Below is a summary of changes in long-term obligations during the fiscal year: Governmental Activities:

The following debt has been issued for the purpose of generating capital resources for use in acquiring or constructing municipal facilities or infrastructure projects.Long-Term Obliqations at June 30, 2014: Beginning Balance$15,314 General Obligation Bonds Pension Obligation Bonds Certificates of Participation Capital Leases Lease Revenue Bonds Loan Payable Compensated Absences Claims Liability Judgment Net OPEB Obligation Total Additions$Reductions

$ 854 Ending Balance$14,460 Due Within One Year$ 900 Revenue Bonds: Principal Outstanding Electric 122,005 30,940 158,697 36,446 8,424 6,625 37,170 115,775 37,990 3,697 191,446 4,210 1,881 13,168 2,635 1,418 42,344 1,330 691 47,611 2,036 43,762 28,652 19,650 21,761 12,480 12,245 21,996 31,569 13,582 9,984 35,167 10,000 -3,333 6,667 12,537 2,566 664 14,43957.937 12,372 11,122 3,333$27,500 2004 Electric Revenue Bonds; Series A fixed rate bonds, due in a final principal installment of $2,645 on October 1, 2014, interest of 5.0%.$141,840 2008 Electric Refunding/Revenue Bonds;Series A and C. The bonds were issued at a variable rate; however the City entered into an agreement to convert to a fixed rate of 3.1% for the Series A bonds and 3.2% for the C bonds. For information on the swap agreements see note 10. Bonds are due in annual installments from $700 to $7,835 through October 1, 2035.$209,740 2008 Electric Revenue Bonds; Series D fixed rate bonds, 3.6% to 5.0%, due in annual installments from $3,460 to $25,345 through October 1, 2038.$34,920 2009 Electric Refunding/Revenue Bonds;Series A fixed rate bonds, 4.0% to 5.0%, due in annual installments from $1,150 to $7,035 through October 1, 2018. The bonds refunded the 1998 series and partially refunded the 2001 series.$ 2,645 112,515 209,740 Business-type activities:

Revenue Bonds Loan Payable Notes Payable Capital Leases Landfill Capping Arbitrage Liability Water Stock Acquisition Rights Compensated Absences Net OPEB Obligation Total Beginning Balance$1,031,839 42,661 28,137 2,558 6,457 269 Additions$134,841 9,482 353 Reductions

$72,390 42,661 1,589 645 285 255 Ending Balance$1,094,290 36,030 2,266 6,172 14 Due Within One Year$77,260 1,637 700 200$140,380 2010 Electric Revenue Bonds; Series A and B fixed rate bonds, 3% to 5.0%, due in annual installments 150 from $95 to $33,725 through October 1, 2040.13,815 140,380 944 2 942 7,638 6,536 6,249 7,925 9,780 2,190 567 11,403 SM12.63 1.5904 6,480$56,450 2011 Electric Revenue Refunding Bonds; Series A. The bonds were issued at a variable rate; however, the City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements see note 10. Bonds are due in annual installments from$725 to $5,175 through October 1, 2035.41,925 43 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 For he yar ededJune30.

014(amounts expressed in thousandsl

$79,080 2013 Electric Revenue Refunding Bonds; Series A fixed rate bonds, 3% to 5.25%, due in annual installments from $795 to $12,685 through October 1, 2043.$50,000 2014 Sewer Revenue Bonds; variable rate financing with Wells Fargo due June 1, 2015. The interest rate is 70% of the LIBOR one-month index plus 50 basis points.Subtotal Add: Unamortized bond premium Subtotal Add: Unamortized bond premium 597,580 10,434$608,014 277,115 1,970$279,085$1.094-290 Water Total Revenue Bonds$58,235 2008 Water Revenue Bonds; Series B fixed rate bonds, 4.0% to 5.0%, due in annual installments from $1,210 to $7,505 through October 1, 2038.$31,895 2009 Water Refunding/Revenue Bonds;Series A fixed rate bonds, 3.0% to 5.0%, due in annual installments from $2,360 to $4,335 through October 1, 2020. The bonds refunded the 1998 series and partially refunded the 2001 series.$67,790 2009 Water Revenue Bonds; Series B fixed rate bonds, 3.3% to 4.1%, due in annual installments from $2,475 to $4,985 through October 1, 2039.$59,000 2011 Water Refunding/Revenue Bonds; Series A. The bonds were issued at a variable rate; however the City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements see note 10. Bonds are due in annual installments from$600 to $3,950 through October 1, 2035.Subtotal Add: Unamortized bond premium Sewer$240,910 2009 Sewer Revenue Bonds; Series A & B fixed rate bonds, 3.65% to 5.0%, due in annual installments from $5,555 to $13,350 through August 1, 2039.Remaining revenue bond debt service payments will be made from revenues of the Electric, Water and Sewer Enterprise funds. Annual debt service requirements to maturity are as follows:$58,235 Electric Utility Fund Water Utility Fund 21,205 67,790 56,525 203,755 3,436$207,191 Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 2040-2041 Premium Total Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 2040 Premium Total Princioa$14,92(15,821 13,32(13,791 14,44~80,571 97,711 120,15~149,04(77,79(1043d Princioa$ 57,32~7,66(8,05~8,41(8,72~32,88 36,56(46,01(58,13~13,35(1,97(J Interest$26,194 $25,519 24,863 24,279 5 23,636 109,462 5 91,628 5 68,298 38,047 4,844 4 $46.77 $_Sewer Utility Fund I Interest 5 $10,435 0 9,811 5 9,418 0 9,063 5 8,747 5 39,244 0 31,749 0 22,306 5 10,180 0 312 0 5 151265 Total 41,114 41,344 38,183 38,074 38,081 190,037 189,343 188,453 187,087 82,634 10,434 Total$ 67,760 17,471 17,473 17,473 17,472 72,129 68,309 68,316 68,315 13,662 1,970 Principal$ 5,015 5,260 5,180 5,415 5,635 31,580 38,055 46,200 56,430 4,985 3,436 Interest$ 8,276 8,046 7,814 7,577 7,352 33,265 26,563 18,174 7,625 103 Total$13,291 13,306 12,994 12,992 12,987 64,845 64,618 64,374 64,055 5,088 3 436$331.9B6$227,115 44 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 f,,n,,. ,n,+* vr , in +h,, A I -l IJU .0 -h!000. --I "I IIU00I 21.General Obligation Bonds: Principal Outstanding Remaining pension obligation bond debt service payments will be made from unrestricted revenues of the General fund. Annual debt service requirements to maturity are as follows:$20,000 Fire Facility Projects, Election of 2003 General Obligation Bond; 3.0% to 5.5%, due in annual installments from $410 to $1,740 through August 1, 2024.Add: Unamortized bond premium Total General Obligation Bonds$14,295 165$14A60 Fiscal Year 2015 2016 2017 2018 2019 2020-2023 Total Principal$ 37,990 7,930 8,880 9,920 11,035 40$020 Interest$ 4,950 4,391 3,971 3,482 2,936 5,891 Total$ 42,940 12,321 12,851 13,402 13,971 45,911$141 .396 Remaining general obligation bond debt service payments will be made from unrestricted revenues of the General fund. Annual debt service requirements to maturity are as follows: Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025 Premium Total Principal$ 900 965 1,040 1,110 1,195 7,345 1,740 165 Interest$ 671 634 592 544 492 1,485 48-$4.466 Total$ 1,571 1,599 1,632 1,654 1,687 8,830 1,788 165$18.926 Principal Outstanding

$66,320 Principal Outstanding Certificates of Participation:

Pension Obligation Bonds:$89,540 California Statewide Community Development Authority (Public Safety) 2004 Taxable Pension Obligation Bond; 2.65% to 5.896%, due in annual installments from $1,125 to $10,715 through June 1, 2023.$30,000 2005 Taxable Pension Obligation Bonds Series A; 3.85% to 4.78%, due in annual installments

$630 to $3,860 through June 1, 2020.$30,940 2014 Taxable Pension Obligation Refunding Bond Anticipation Notes; rate at June 30, 2014 was 0.60%, $30,940 due June 1, 2015.$19,945 2006 Galleria at Tyler Public Improvements Certificates of Participation; 4.0% to 5.0%, due in annual installments from $435 to $1,270 through September 1, 2036.$128,300 2008 Riverside Renaissance Certificates of Participation; issued at a variable rate; however, the City entered into an agreement to convert to a fixed rate of 3.4%. For information on the swap agreement see note 10. Due in annual installments from $2,900 to$7,200 through March 1, 2037.$20,660 2010 Recovery Zone Facility Hotel Project Certificates of Participation; 4.0% to 5.5%, due in annual installments from $415 to $1,410 through March 1,2040.$35,235 2013 Pavement Rehab Certificates of Participation; 4.0% to 5.0%, due in annual installments from $1,285 to $2,855 through June 1, 2034 Subtotal Plus: Unamortized bond premium Total Certificates of Participation

$18,585 116,100 20,660 18,515 35,235 190,580 866$191.445 Total Pension Obligation Bonds$115.775 45 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Remaining certificates of participation debt service payments will be made from unrestricted revenues of the debt service fund. Annual debt service requirements to maturity are as follows: Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 2040 Premium Total Principal$ 4,210 5,730 5,920 6,110 6,310 35,955 43,720 50,650 30,565 1,410 866$191,44 Interest 7,495 7,345 7,137 6,922 6,700 29,521 21,734 12,141 2,943 78 Lease Revenue Bonds -Governmental Activities:

On August 15, 2012, the City issued the Series 2012A Lease Revenue Refunding Bonds in the amount of$41,240. The bonds were issued to refinance the 2003 Certificates of Participation.

Interest on the bonds is payable semi-annually on May 1 and November 1 of each year, commencing May 1, 2013. The rate of interest varies from 2% to 5% per annum depending on maturity date. Principal is payable in annual installments ranging from $1,295 to $2,840 commencing November 1, 2013 and ending November 1, 2033. The refunding transaction resulted in an economic gain of $2,455 and a reduction of $3,034 in future debt service payments.Add: Unamortized bond premium Total Lease Revenue Bonds -Governmental Activities Total 11,705 13,075 13,057 13,032 13,010 65,476 65,454 62,791 33,508 1,488 866 Principal Outstandinq

$39,945 2 399 Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 Premium Total Principal$1,330 1,370 1,420 1,485 1,560 9,080 10,540 13,160 2,399$42.3-44 Interest$ 1,743 1,702 1,653 1,588 1,511 6,271 4,058 1,370$19.896 Principal Outstanding Loans Payable -Governmental Activities:

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

$468 per year over a 10 year period, which includes interest at an annualized rate of 3.05%.On July 19, 2012, the City secured financing in the amount of $41,650 with BBVA Compass Bank for the renovation and expansion of the Riverside Convention Center. In March 2014, the financing arrangement with BBVA was increased to $44,650. The financing consists of an initial 21-month variable rate interest only period during construction that has a swap transaction layered over the remaining 20-year amortization resulting in a "synthetic fixed" rate of 3.24% for 20 of the 22 years. For information on the swap agreement see note 10. At the end of the construction period, principal and interest are due on the first of each month, with equal payments each year of approximately

$2,850.Total Loans Payable -Governmental Activities Total$ 3,073 3,072 3,073 3,073 3,071 15,351 14,598 14,530 22399$62.24Q$ 3,294 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: 44,317 46 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the Year ended-June 30, 2014 For he yar ededJune30.

014(amounts expressed in thousands)

Remaining loans payable debt service payments will be made from unrestricted revenues of the debt service fund. Annual debt service requirements to maturity are as follows: Remaining notes payable debt service payments will be made from unrestricted revenues of the Sewer fund. Annual debt service requirements to maturity are as follows: Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 Total Principal$ 2,036 2,094 2,157 2,222 2,283 11,579 11,921 13$319 Interest$1,467 1,409 1,346 1,281 1,220 5,004 3,261 1,293 Total$ 3,503 3,503 3,503 3,503 3,503 16,583 15,182 14612 Notes Payable -Enterprise Funds: Principal Outstandinq Fiscal Year 2015 2016 2017 2018 2019 2020-2021 Total Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2032 Total Principal$ 731 745 759 774 788 659 Principal$ 906 940 977 1,014 1,054 5,917 7,160 4,124$2_2092 Sewer Fund Interest$ 85 72 58 43 29 20$3O7 Public Parking Fund Interest$ 841 807 770 733 693 2,817 1,574 241_$8476 Total$ 816 817 817 817 817 679 Total$ 1,747 1,747 1,747 1,747 1,747 8,734 8,734 4,365$30_-568 Sewer fund loan from State of California for Cogeneration project, 2.336%, payable in net annual installments of $339, beginning January 29, 2003 through January 29, 2021 Sewer fund loan from State of California for Headworks project, 1.803%, payable in net annual installments of$477, beginning November 6, 1999 through November 6, 2018 Public parking fund loan from City National Bank for Fox Entertainment Plaza project, 3.85%, payable in net annual installments of $1,747, beginning June 16, 2011 through December 16, 2031 In 2014, the Water fund purchased property from Hillwood Enterprises, L.P. (Hillwood).

The property was subsequently leased back to Hillwood, which is to be developed into a logistics center. In consideration of the costs to purchase the property the Water fund will make payments to Hillwood in the form of a credit equal to Hillwood's rental payments to the Water fund for the first 15 years of the lease. Rent will commence the earlier of when Hillwood starts construction of the logistic center or May 20, 2016.Total notes payable -Enterprise Funds$2,191 2,265 Water Fund 22,092 Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2031 Total Principal$-40 483 492 512 2,900 3,522 1,533$9.482 Interest$-156 152 144 136 543 279 26$1.-436 Total$-196 635 636 648 3,443 3,801 1,559$1O91 9,482 47 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Principal Outstanding Contracts

-Enterprise Funds: Water stock acquisition rights payable on demand to various water companies Current Year Refunding:

$941 On July 25, 2013 the City issued $79,080 of 2013A Electric Revenue Refunding Bonds, which refunded previously outstanding debt. The refunding resulted in an increase in debt service payments of $10,962 over the next 30 years and an economic gain of $2,961.Letters of Credit: The City's 2008 Certificates of Participation and 2008 Electric Revenue Bonds (Series A and C) require an additional layer of security between the City and the purchaser of the bonds. The City has entered into the following letters of credit ("LOC") in order to provide liquidity should all or a portion of the debt be optionally tendered to the remarketer without being successfully remarketed:

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

The assets and related obligations under leases in governmental funds are not recorded in the fund statements.

For proprietary funds, the assets and their related liabilities are reported directly in the fund.Amortization applicable to proprietary assets acquired through capital lease arrangements is included with depreciation for financial statement presentation.

The assets acquired through capital leases are as follows: Governmental Business-Type Asset Activities Activities Buildings and improvements

$1,103 $ -Equipment 9,722 4,830 Subtotal 10,825 4,830 Less: Accumulated depreciation (3,315) (1,738)Total The future minimum lease obligations as of June 30, 2014 were as follows: Debt Issue 2008 Certificates of Participation 2008A Electric Revenue Bonds 2008C Electric Revenue Bonds LOC Provider Bank of America, N.A.Barclays Bank, PLC Bank of America, N.A.LOC Expiration Date 2015 2017 2017 Annual Commitment Fee 0.450%0.275%0.390%To the extent that remarketing proceeds are insufficient or not available, tendered amounts will be paid from drawings made under an irrevocable direct-pay letter of credit.Liquidity advances drawn against the LOC that are not repaid will be converted to an installment loan over a 5-year period. The City would be required to pay $63,420 a year for 5 years (assuming a 12 percent interest rate) if $116,100 of 2008 Certificates of Participation and $112,515 of 2008 Electric Revenue Bonds (Series A and C) were "put" and not resold. No amounts have ever 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 case of a failed remarketing.

Years Ending June 30, 2015 2016 2017 2018 2019 Thereafter Copiers Total Minimum lease payments Less: Amount representing interest (rates ranging from 1.2% to 9%)Total capital lease payable Governmental Activities

$2,854 2,854 2,232 2,232 1,927 1,771 20 13,890 Business-type Activities

$ 751 387 322 322 322 309 1 2,414 (722)(148)$2.266 48 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

The following are legally required debt service cash reserves.

These amounts, at a minimum, are held by the City or fiscal agents at June 30, 2014: Governmental longi-term obligations:

Certificates of Participation Total Enterprise funds: Electric Sewer Total$10,281$1O281$14,833 20,142$34-975 The City has a number of debt issuances outstanding that are collateralized by the pledging of certain revenues.

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

Landfill Capping: State and Federal laws and regulations require the City to place a final cover on all active landfills when closed and to perform certain maintenance and monitoring functions at the landfill site for 30 years after closure. To comply with these laws and regulations, the City is funding the costs of closure and"final capping" of the Tequesquite landfill located in the City. This area, comprised of approximately 120 acres, operated as a "Class II Sanitary Landfill" until its closure in 1985. During its operation, the landfill did not accept hazardous waste and no clean up and abatement or cease and desist orders have been issued to the City. The capacity used at June 30, 2014 was 100%. The remaining post closure period is currently 19 years.The estimated costs as determined by an independent consultant and updated by the City's Engineering Department are associated with flood control upgrades, remediation of possible ground water contamination and control of methane gas. All potential costs have been recognized in the financial statements.

However, there is the potential for these estimates to change due to inflation, deflation, technology, or change in laws or regulations.

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

The portion of costs to be recovered through future rates is classified as a regulatory asset and will be amortized over future periods.7. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

Property insurance coverage has a limit of$1,000,000, with a deductible of $100. Earthquake and flood insurance coverage has a limit of $25,000, with a deductible of 5% for earthquake and$100 for flood. Workers' compensation insurance coverage has a limit of$25,000, with a self-insured retention of $3,000 per occurrence.

The City carries commercial insurance in the amount of $20,000 for general and auto liability claims greater than $3,000. There were no claims settled in the last three fiscal years that exceed insurance coverage.

Internal service funds have been established to account for and finance the uninsured risks of loss.All funds of the City participate in the Risk Management program and make payments to the Internal Service Funds based on actuarial estimates of the amounts needed to fund prior and current year claims and incidents that have been incurred but not reported.

Interfund premiums are accounted for as quasi -external transactions and are therefore recorded as revenues of the Internal Service funds in the fund financial statements.

Description of Pledged Revenue Electric revenues Water revenues Sewer revenues Annual Amount of Pledged Revenue (net of expenses, where required)$106,405 36,761 23,168" Annual Debt Service Payments (of all debt secured by this revenue)$49,207 13,110 18,534 Debt Service Coverage Ratio for FYE 6/30/14 2.16 2.80 1.25* Includes $2,425 of cash set-aside in a rate stabilization account in accordance with applicable bond covenants.

There are also a number of limitations and restrictions contained in Assessment Bond indentures.

The City believes they are in compliance with all significant limitations and restrictions.

49 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Changes in the self-insurance fund's claims liability amounts are: Unpaid Claims, June 30, 2012 Incurred claims (including IBNR's)Claim payments and adjustments Unpaid Claims, June 30, 2013 Incurred claims (including IBNR's)Claim payments and adjustments Unpaid Claims, June 30, 2014$27,542 20,897 (16,870)31,569 13,582 (9,984)8. Judgment In April 2013, the City settled a lawsuit challenging its century-old practice of transferring Water Fund monies to the General Fund. Under the settlement agreement, the General Fund agreed to pay $10 million over a three year period beginning in fiscal year 2013/14. In fiscal year 2013/14, the General Fund paid the first installment of $3,333. The remaining obligation is $6,667, which has been reflected as a liability in the government-wide statements.

9. Other Long-Term Obligations Changes in Long-Term Obligations:

Below is a summary of changes in long-term obligations during the fiscal year for the former Redevelopment Agency, which is accounted for in the Successor Agency Trust (a fiduciary fund):$17,025 1999 University Corridor/Sycamore Canyon Merged Project Area, Tax Allocation Bonds, Series A;$6,205 serial bonds, 3.4% to 4.7% due in annual installments from $40 to $570 through Aug. 1, 2014;$4,810 term bonds at 4.75% due Aug. 1, 2021; and$6,010 term bonds at 5.0% due Aug. 1, 2027.$6,055 1999 University Corridor/Sycamore Canyon Merged Project Area, Subordinate Tax Allocation Bonds, Series B; $1,900 serial bonds, 4.5% to 5.5%due in annual installments from $35 to $190 through Sep. 1, 2013; $1,135 term bonds at 5.5% due Sep. 1, 2018; and $3,020 term bonds at 5.625% due Sep. 1, 2027.$20,395 1999 Casa Blanca Project Area, Tax Allocation Bonds, Series A; $8,925 serial bonds, 3.4%to 4.7% due in annual installments from $455 to $780 through Aug. 1, 2014; $2,565 term bonds at 4.75% due Aug. 1, 2017; $4,035 term bonds at 4.75% due Aug. 1, 2021; and $4,870 term bonds at 5% due Aug. 1, 2025.$4,550 Arlington Redevelopment Project, 2004 Tax Allocation Bonds, Series A; $420 term bonds at 3.8%due Aug. 1, 2014; $615 term bonds at 4.6% due Aug.1, 2024; $3,515 term bonds at 4.7% due Aug. 1, 2034.$2,975 Arlington Redevelopment Project Area, 2004 Tax Allocation Bonds; Series B: 5.5% due in annual installments from $85 to $235 through Aug. 1, 2024.$26,255 State of California Department of General Services Project, 2003 Lease Revenue Refunding Bonds, Series A; 2% to 5% due in annual installments from $545 to $2,230 through Oct. 1, 2024.$4,810 State of California Dept. of General Services Project, 2003 Lease Revenue Refunding Bonds, Series B; $310 serial bonds 1.20% to 1.42% through Oct.1, 2004; $620 term bonds at 3.090% due Oct. 1, 2008;$1,110 term bonds at 4.340% due Oct. 1, 2014 and$2,770 term bonds at 5.480% due Oct. 1, 2024.11,390 4,155 12,250 Successor Agency Trust: Beginning Balance* Additions Reductions Due Ending Within Balance One Year 4,175 Redevelopment Agency bonds Notes Payable Total$ 256,222 6,257$$ 8,182 650$248,040 5,607$8,310 733 2,010 Principal Outstanding Redevelopment Agency Bonds: 17,790$13,285 1991 Public Financing Authority Revenue Bonds, Series A, Multiple Project Areas; $1,470 serial revenue bonds 7.15% to 7.6%, due in annual installments from $100 to $145 through Feb. 1, 2003;and $4,175 term bonds, 8.0%, due in annual installments from $155 to $450 through Feb. 1, 2018 (portion not refunded).

$ 85 2,975 50 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

$40,435 Downtown/Airport Merged Project Area, 2003 Tax Allocation and Refunding Bonds; $32,720 serial bonds 2.0% to 5.25% due in annual installments from$1,220 to $1,955 through Aug. 1, 2023; and $7,715 term bonds at 5.0% due in annual installments from$195 to $2,060 through Aug. 2034.$24,115 2005 Housing Set-Aside Tax Allocation Bonds;$17,025 serial bonds 3.0% to 4.625% due in annual installments from $505 to $1,165 through Aug. 1, 2025;$2,425 term bonds at 5.0% due Aug. 1, 2028; and$4,665 term bonds at 4.85% due Aug. 1, 2034.$8,340 Downtown/Airport Merged Project Area and Casa Blanca Project Area 2007 Tax Allocation Bonds, Tax Exempt, Series A, serial bonds 4.0% to 4.25% due in annual installments from $20 to $590,000 through Aug. 1, 2025; $4,980 term bonds at 4.5% due Aug. 1, 2029; $410 term bonds at 4.375% due Aug. 1, 2037.$1,465 California Statewide Communities Development Authority 2005 Taxable Revenue Bonds, Series A (CRA/ERAF Loan Program);

3.87% to 5.01% due in annual installments of $105 to $180 through Aug. 1, 2015.$14,850 Downtown/Airport Merged Project Area and Casa Blanca Project Area 2007 Tax Allocation Bonds, Taxable, Series B, $4,050 term bonds at 5.2% due Aug. 1, 2017; $10,800 term bonds at 5.8% due Aug. 1, 2028.$89,205 University Corridor/Sycamore Canyon Merged Project Area, Arlington Project Area, Hunter Park/Northside Project Area, Magnolia Center Project Area, and La Sierra/Arlanza Project Area 2007 Tax Allocation Bonds, Tax-Exempt, Series C, serial bonds 4.0% to 5.0% due in annual installments from $50 to$3,210 through Aug. 1, 2025; $17,955 term bonds at 4.5% due Aug. 1, 2030; $47,775 term bonds at 5.0%due Aug. 1, 2037.26,780 18,415 8,220$43,875 University Corridor/Sycamore Canyon Merged Project Area, Arlington Project Area, Hunter Park/Northside Project Area, Magnolia Center Project Area, and La Sierra/Arlanza Project Area 2007 Tax Allocation Bonds, Taxable, Series D, $15,740 term bonds at 5.24% due Aug. 1, 2017; $28,135 term bonds at 5.89% due Aug. 1, 2032.Subtotal Add: Unamortized bond premium Total Redevelopment Agency Bonds 34,785 242,840 5,200 1248.040 Remaining debt service will be paid by the Successor Agency Trust from future property tax revenues.

Annual debt service requirements to maturity are as follows: Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2038 Premium Total Principal$ 8,310 8,520 8,905 9,660 10,125 61,015 58,175 45,205 32,925 5,200$248.040 Interest$12,047 11,665 11,256 10,799 10,299 42,744 26,736 13,826 3,110$142.482 Total$ 20,357 20,185 20,161 20,459 20,424 103,759 84,911 59,031 36,035 5,200$390,522 Principal Outstandinq 180 Notes Payable -Successor Agency: 12,520 These notes payable have been issued to promote development and expansion within the City's redevelopment areas.Pepsi Cola Bottling Company of Los Angeles, 10.5%, payable in net annual installments of $341, subject to recording of completion.

$2,987 775 87,110 51 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

HUD Section 108 loan for University Village, 5.36% to 7.66%, payable in semi-annual installments beginning Aug. 1, 1996 of $272 to $425 through Aug. 1, 2015 HUD Section 108 loan for Mission Village Project, 6.15% to 6.72%, payable in semi-annual installments beginning Aug. 1, 1999 of $110 to $420 through Aug. 1, 2018 Total notes payable -Successor Agency Description of Pledged Revenue Property Taxes: Non-Housing Housing Annual Amount of Pledged Revenue (net of expenses, where required)$41,335 8,667 Annual Debt Service Payments (of all debt secured by this revenue)$15,298 2,765 Debt Service Coverage Ratio for FYE 6/30/14 2.70 3.13 1,845 Remaining debt service will be paid by the Successor Agency Trust from future property tax revenues.

Annual debt service requirements to maturity are as follows: Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2038 Total Principal$ 733 771 399 428 462 286 471 777 1Q280 Interest$ 383 357 337 323 306 1,423 1,238 933 430 Total$ 1,116 1,128 736 751 768 1,709 1,709 1,710 1,710* The computations above are based on the total tax increment generated for the year ended June 30, 2014 for each project area that had been pledged as collateral for the Bonds. As discussed above, only a portion of tax increment has been actually remitted to the Successor Agency and reported as revenue in the accompanying financial statements.

Assessment Districts and Community Facilities Districts Bonds (Not obligations of the City)As of June 30, 2014, the City has several series of Assessment District and Community Facility District Bonds outstanding in the amount of $45,350.Bonds were issued for improvements in certain districts and are long-term obligations of the property owners. The City Treasurer acts as an agent for the property owners in collecting the assessments, forwarding the collections to bondholders and initiating foreclosure proceedings, if applicable.

Since the debt does not constitute an obligation of the City, it is not reflected as a long-term obligation of the City and is not reflected in the accompanying basic financial statements.

Conduit Debt Obligations Mortgage Revenue Bonds outstanding of $5,385 and Industrial Development Revenue Bonds of $1,700 are not included in the accompanying financial statements.

These bonds are special obligations of third parties and payable solely from and secured by a pledge of the receipts received from loans and certain other reserve funds and related monies. The bonds are not payable from any other revenues or assets of the City. Neither the faith and credit nor the taxing power of the City, the State of California or any political subdivision thereof is pledged to the payment of the principal and interest on the bonds.As a result of action by the State of California to dissolve all redevelopment agencies in the state, the Successor Agency no longer receives the full amount of tax increment previously pledged by the dissolved redevelopment agency to its bondholders.

In its place is a new revenue stream provided to the Successor Agency that represents only that portion of tax increment that is necessary to pay the enforceable obligations approved by the California Department of Finance.For the current year, debt service payments as a percentage of the pledged gross revenue (or net of certain expenses where so required by the debt agreement) are indicated in the table below. The debt service coverage ratios for the Successor Agency also approximate the relationship of debt service to pledged revenue for the remainder of the term of the commitment.

52 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

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

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

The following is a summary of the derivative activity for the year ended June 30, 2014: during construction, which swaps to a fixed rate for the remaining 20-year 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 basis points. The lease interest rate on the Convention Center has a cap at the lesser of 12% or the highest rate permitted by applicable law whereas the related swap does not have a cap. The swaps have notional amounts equal to the principal amounts stated above. The notional value of the swaps and the principal amounts of the associated debt decline by $975 to $7,200 until the debt is completely retired in fiscal year 2037.The bonds and the related swap agreements for the 2008A Electric Revenue Bonds mature on October 1, 2029, 2008C Electric and 2011A Electric and 2011A Water Revenue/Refunding Bonds mature on October 1, 2035. The 2008 Certificates of Participation mature on March 1, 2037. The loan with BBVA Compass Bank will be paid in full on April 1, 2034.As of June 30, 2014 rates were as follows: Fair Value Notional as of Amount 6/30/14 Change in Fair Value for Fiscal Year 2008 Electric Refunding/

Revenue Bonds Series A Rates 2008 Electric Refunding/

Revenue Bonds Series C Rates Governmental Activities 2008 Renaissance Certificates of Participation 2012 Convention Center Financing Business-Type Activities 2008 Electric Refunding/Revenue Bonds Sedes A 2008 Electric Refunding/Revenue Bonds Series C 2011 Electric Refunding/Revenue Bonds Series A 2011 Water Refunding/Revenue Bonds Series A$116,100 (19,485) (146)41,406 49 (977)68,525 41,975 41,925 56,525 (8,845)(6,646)(6,617)(8,083)800 410 411 (199)Objective:

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

("COP"). Also, in 2012, the City entered into an additional interest rate swap agreement in connection with the Convention Center financing with BBVA Compass Bank.Terms: Per the existing swap agreements, the City pays a counterparty a fixed payment and receives a variable payment computed as 62.68% of the London Interbank Offering Rate ("LIBOR")

one month index plus 12 basis points for the Electric and Water swaps. For the COP swap, the City pays a fixed payment and receives a variable payment computed as 63.00% of the LIBOR one month index plus 7 basis points. The Convention Center financing consists of an initial 21-month variable rate interest only period Interest rate swap: Fixed payment to counterparty Variable payment from counterparty Net interest rate swap payments Variable-rate bond coupon payments Synthetic interest rate on bonds Interest rate swap: Fixed payment to counterparty Variable payment from counterparty Net interest rate swap payments Variable-rate bond coupon payments Synthetic interest rate on bonds (0.42414%)

2.68686%0.35041%2011 Water Refunding/

Revenue Bonds Series A (0.42543%)

2.77857%0.34837%312fi94%2008 Renaissance COPs 3.11100% 3.20400%2011 Electric Refunding/

Revenue Bonds Series A Rates 3.20100%(0.24925%)

2.95175%0.14338%a3.9513%2012 Convention Center Financing Rates Rates Rates 3.20000% 3.36200% 3.24000%(0.24900%)

2.95100%0.16488%__WI5_66%(0.39595%)

2.96605%0.38032%-346&U%(1.59857%)

1.64143%1.59857%3U24010%53 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Fair Value: As of June 30, 2014, in connection with all swap arrangements, the transactions had a combined net negative fair value of <$49,627>.

Because the coupons on the City's variable-rate bonds adjust to changing interest rates, the bonds do not have a corresponding fair value decrease.The fair value was developed by a pricing service using the zero-coupon method. This method calculates the future net settlement payments required by the swap, assuming that the current forward rates implied by the yield curve correctly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement of the swap.Credit risk: The City is exposed to credit risk on one of its derivative instruments that has a positive fair value. The counterparty for this swap is BBVA/Compass Bank. To mitigate credit risk, the City has the ability to offset swap payments due to it from BBVA/Compass pursuant to the swap, against current and future rental payments required to be made by the City to Compass Mortgage Corporation under the lease agreement.

The City is not exposed to credit risk on the remaining swaps because those swaps have a negative fair value. The swap counterparties, Bank of America, N.A., Bank of America Corp. and J.P. Morgan Chase & Co. were rated A, A- and A respectively by Standard & Poor's. To mitigate the potential for credit risk for these swaps, the swap agreements require the fair value of the swap to be collateralized by the counterparty with U.S. Government securities if the counterparties' rating decreases to negotiated trigger points. Collateral would be posted with a third-party custodian.

At June 30, 2014, there is no requirement for collateral posting for any of the outstanding swaps.Basis risk: The city is exposed to basis risk on its pay-fixed interest rate swap and rate cap hedging derivative instruments because the variable-rate payments received by the city on these hedging derivative instruments are based on a rate or index other than interest rates the city pays on its hedged variable-rate debt. If a change occurs that results in the rates' moving to convergence, the expected cost savings may not be realized.Termination risk: The derivative contract uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy.

The Schedule to the Master Agreement includes an "additional termination event." That is, a swap may be terminated by the City if either counterparty's credit quality falls below"BBB-" as issued by Standard and Poor's. The City or the counterparty may terminate a swap if the other party fails to perform under the terms of the contract.

If a swap is terminated, the Variable-rate bond would no longer carry a synthetic interest rate. Also, if at the time of termination a swap has a negative fair value, the City would be liable to the counterparty for a payment equal to the swap's fair value.Swap payments and associated debt: As of June 30, 2014, the debt service requirements of the variable-rate debt and net swap payments assuming current interest rates remain the same, for their term are summarized in the following table. As rates vary, variable-rate bond interest payments and net swap payments will vary.Variable-Rate Bonds Fiscal Year Ending June 30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2039 Total Principal$ 5,842 6,138 5,964 7,217 13,516 86,525 91,151 105,979 49,050$371,.382 Interest$ 1,692 1,654 1,614 1,571 1,514 6,418 4,369 2,050 194$21 .076 Interest Rate Swaps. Net$ 10,540 10,389 10,235 10,058 9,736 41,555 29,403 15,391 1 790$139,0_97 Total$ 18,074 18,181 17,813 18,846 24,766 134,498 124,923 123,420 51,034$531555 11. Economic Contingency A portion of unassigned fund balance within the General Fund is set aside for future economic contingencies.

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

12. Interfund Assets, Liabilities and Transfers Due From/To Other Funds: These balances resulted from expenditures being incurred prior to receipt of the related revenue source.The following table shows amounts receivable/payable between funds within the City at June 30, 2014: 54 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Receivable Fund General Payable Fund Nonmajor Governmental Funds Capital Outlay Fund Nonmajor Enterprise Funds Central Stores *Central Stores *Amount$ 602 17,381 133 18,116 914 392 In addition, the following advances to the former Redevelopment Agency are accounted for in the Private-Purpose Trust Fund of the Successor Agency: Electric Water Total Receivable Fund General Nonmajor Governmental Funds Electric Sewer Self-Insurance Trust *Total Amount$ 652 39,739 5,800 4,436 5,634* Internal service fund Advances To/From Other Funds: These balances consist of advances used to fund capital projects in advance of related financing/assessments and for other long-term borrowing purposes.The following table shows amounts advanced from funds within the City to other funds within the City at June 30, 2014: Transfers In/Out: Transfers are primarily used to (1) move revenues to the fund that statute or budget requires to expend them, and (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due.The following table shows amounts transferred to/from funds within the City as of June 30, 2014: Receivable Fund General Payable Fund Electric Water Sewer Nonmajor Governmental Funds Nonmajor Enterprise Funds Self-Insurance Trust *Central Stores *Central Garage *Self-Insurance Trust *Central Garage *Amount$11,284 4,855 3,106 516 2,087 204 213 961 23,226 452 166 458 1,688 2,764 3,460 7$283$36-733 Transfer In Fund General General Fund Nonmajor Governmental Funds Transfer Out Fund Electric Water Capital Outlay Fund Nonmajor Enterprise Funds Water Total General Fund Amount$38,704 6,991 45.695 9,851 2,185 738 12,774 3 333 Nonmajor Enterprise Funds General Fund Nonmajor Governmental Funds Central Garage *Nonmajor Governmental Funds Nonmajor Governmental Funds 13. Deficit Net Position Deficit net position exists in the Self-Insurance Internal Service Fund ($25,953).

In order to begin funding a portion of the deficit in the internal service fund, self-insurance rates were increased in the current year.However, this was offset by unusually large losses incurred during the year combined with an adjustment for the increase in the amount estimated for claims and judgments.

Management believes that there are sufficient funds on hand to cover current payment obligations and plans to continue to control Sewer Total 55 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) costs and increase rates over the next few years as needed to match expected long-term payment requirements.

Deficit net position exists in the Special Capital Improvement Fund ($1,733).The deficit relates to short-term borrowings, which will be repaid over the next six years as park development fees are expected to increase as the local economy continues to recover Deficit net position also exists in the Successor Agency Private-Purpose Trust Fund ($205,604).

The deficit in the Successor Agency Trust Fund will be reduced over the years as the related debt is paid-off with funds received from the Redevelopment Property Tax Trust Fund (RPTTF), which is administered by the County Auditor-Controller.

14. Litigation The City is a defendant in various lawsuits arising in the normal course of business.

Present lawsuits and other claims against the City are incidental to the ordinary course of operations and are largely covered by the City's self-insurance program. In the opinion of management and the City Attorney, such claims and litigation will not have a materially adverse effect upon the financial position or results of operation of the City.The Water Utility is a plaintiff in a lawsuit against several entities that either owned or leased a property site in the City of Colton and City of Rialto that is contaminated by perchlorate.

The lawsuit was filed March 31, 2009, and no trial date has been set.15. City Employees Retirement Plan (A) Plan Description.

The City of Riverside contributes to the California Public Employees Retirement System (CaIPERS), an agent multiple employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries.

CalPERS acts as a common investment and administrative agent for participating public entities within the State of California.

PERS issues a publicly available financial report that includes financial statements and required supplementary information for the cost sharing plans that are administered by PERS. Benefit provisions and all other requirements are established by state statute and City ordinance.

A copy of CaIPERS' annual financial report may be obtained online at www.calpersca.gov.(B) Funding Policy. For each of the fiscal years shown on the following page, the City has contributed at the actuarially determined rate provided by PERS'actuaries.

Participants are required to contribute 8% (9% for safety employees) of their annual covered salary. The City has a multiple tier retirement plan with benefits varying by plan. The City pays the employees' contribution to CaIPERS for both miscellaneous and safety employees hired on or before specific dates as follows: Safety (Police):* 1st Tier (RPOA, RPOA Supervisory

& RPAA) -The retirement formula is 3% at age 50 for employees hired before February 16, 2012. The City pays the employee share (9%) of contributions on their behalf and for their account.* 2 d Tier (RPOA only) -The retirement formula is 3% at age 50 and new employees hired on or after February 17, 2012 pay their share (9%) of contributions.

• 3 rd Tier (RPOA, RPOA Supervisory

& RPAA) -The retirement formula is 2.7% at age 57 for new members hired on or after January 1, 2013 and the employee must pay the employee share (9%).Classic members (CalPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a different tier.Safety (Fire):* 1 st Tier -The retirement formula is 3% at age 50 for employees hired before June 11, 2011. The City pays the employee share (9%) of contributions on their behalf and for their account.* 2nd Tier -The retirement formula is 3% at age 55 and new employees hired on or after June 11, 2011 pay their share (9%) of contributions.

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

a 1 st Tier -The retirement formula is 2.7% at age 55. The City pays the employee share (8%) of contributions on their behalf and for their account except for general SEIU employees, which contributed 2%in fiscal year 2013/14, with the City paying the remaining 6% of the employee share.* 2nd Tier -The retirement formula is 2.7% at age 55, and: 56 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014+k .4 For the yar ended une 30. 214 loll I.JU tO VAIJ C00CU "I LIILUaOO aU o SEIU and SEIU Refuse employees hired on or after June 7, 2011 pay their share (8%) of contributions.

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

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

Classic members (CalPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a different tier.The contribution requirements of plan members and the City are established and may be amended by CalPERS.(C) Annual Pension Cost. The required contribution was determined as part of the June 30, 2011 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.50% investment rate of return (net of administrative expenses), (b) projected salary increases of 3.30% per year compounded annually, attributable to inflation, and (c) 2.75%expected long term inflation.

The actuarial value of CalPERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments (smoothed market value). All changes in the unfunded actuarial accrued liability due to plan amendments, changes in actuarial assumptions, or changes in actuarial methodology are amortized separately as a level percentage of pay over a closed 20-year period. All gains or losses are tracked and amortized over a rolling 30-year period with the exception of special gains and losses in fiscal years 2008-2009, 2009-2010 and 2010-2011.

Each of these years' gains or losses has been isolated and amortized over fixed and declining 30 year periods (as opposed to the current rolling 30 year amortization).

Three-year trend information for CalPERS: In 2004 and 2005, the City issued pension obligation bonds to fund the unfunded actuarial accrued liability for safety and miscellaneous employees.

The asset related to the net pension asset will be amortized in accordance with the method used by CalPERS for calculating actuarial gains and losses over a 19-year period. A total of $122,806 of net pension assets is included in the Government-wide Statement of Net Position and in the proprietary fund statements.

Determination of Net Pension Asset as of June 30, 2014: Misc Safety Annual required contribution Interest on net pension asset Adjustment to annual required contribution Annual pension cost Less contributions made Decrease in net pension asset Net pension asset, beginning of year Net pension asset, end of year$ 20,151 (3,887)6,097 22,361 (20,151)2,210 (51,825)$17,206 (5,763)9,418 20,861 (17,206)3,655 (76,846)Schedule of funding for CalPERS: Entry Age Normal Actuarial Accrued Liability (AAL)Actuarial Valuation Plan Date Actuarial Value of Assets Unfunded/(Overfunded)

Actuarial Accrued Liability (UAAL)Funded Ratio Annual Covered Payroll UAAL as a % of Covered Payroll 102.1 128.1 Misc. 6/30/11 $998,216 887,857 Safety 6/30/11 $731,074 650,954 16. Other Post-Employment Benefits 110,359 88.9 108,106 80,120 89.0 62,538 Fiscal Year June 30, 2012 2012 2013 2013 2014 2014 Plan Misc Safety Misc Safety Misc Safety Annual Pension Cost (APC)$21,661 18,542 21,907 18,945 22,361 20,861% of APC Contributed 92.8%86.6%91.5%83.9%90.1%82.5%Net Pension Obligation (Asset)$(53,694)(79,890)(51,825)(76,846)(49,615)(73,191)The City provides healthcare benefits to retirees in the form of an implied rate subsidy. Retirees and active employees are insured together as a group, thus creating a lower rate for retirees than if they were insured separately.

Although the retirees are solely responsible for the cost of their health insurance benefits through this plan, the retirees receive the benefit of a lower rate. The difference between these amounts is the implied rate subsidy, which is considered an other post-employment benefit (OPEB)under GASB 45.57 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Retiree coverage terminates either when the retiree becomes covered under another employer health plan, or when the retiree reaches Medicare eligibility age, which is currently age 65. Spousal coverage is available until the retiree becomes covered under another employer health plan, attains Medicare eligibility age, or dies. However, the retiree benefit continues to the surviving spouse if the retiree elects the CalPERS survivor annuity.The contribution requirements are established by the City Council. The City is not required by law or contractual agreement to provide funding other than the pay-as-you-go amount necessary to provide current benefits to eligible retirees and beneficiaries.

The City's annual OPEB cost (expense) is reported based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liability (or funding excess)(UAAL) over a period not to exceed thirty years. The ARC for the year ended June 30, 2014 was $4,913, which consisted of normal cost of $2,553 and UAAL amortization of $2,360. The ARC as a percentage of payroll was 3.2%for the year ended June 30, 2014.As of June 30, 2013, the most recent actuarial valuation date, the OPEB plan was 0.0% funded. The actuarial accrued liability for benefits was $47 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $47 million.Determination of the Net OPEB Obligation as of June 30, 2014: results are compared to past expectations and new estimates are made about the future. The method used by the actuary was the entry age normal cost method. The actuarial assumptions included (a) discount rate of 4.30%, (b) 2.75% inflation, (c) projected salary increases of 3.00% annually and (d)healthcare cost trend rates ranging from 5.0% to 7.0%.Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the city and the plan members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets.Three-year trend information:

Fiscal Year June 30, 2012 2013 2014 Fiscal Year June 30, 2012 2013 2014 Actual ARC Contributions

$5,821 6,011 4,913 Annual OPEB Cost$5,789 6,147 4,756$1,426 1,626 1,232% of OPEB Cost Contributed 25%26%26%Yo of ARC rntributed 25%27%25%Net OPEB Obligqation

$17,796 22,317 25,842 Annual required contribution Interest on net OPEB obligation Amortization of net OPEB obligation Annual benefit pension cost Less contributions made Increase in net OPEB obligation Net OPEB liability, beginning of year Net OPEB liability, end of year$ 4,913 960 (1,116)4,757 (1,232)3,525 225317 M258-42 The table below displays the funding progress of the plan and is based upon the most recent actuarial valuation data: Actuarial Valuation Date 6/30/13 Actuarial Accrued Liability$47,195 Actuarial Value of Assets$ -Unfunded Actuarial Liability (U$L1*$47,195 Funded Ratio 0%Annual Covered Payroll$153,077 UL as a% of Covered Payroll 31%Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual 58 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousandsl

17. Commitments and Contingencies A. Long-Term Electric Utility Commitments Intermountain Power AQency The Electric Utility has entered into a power purchase contract with Intermountain Power Agency (IPA) for the delivery of electric power. The Electric Utility's share of IPA power is equal to 7.6 percent, or approximately 137.1 MW, of the net generation output of IPA's 1,800 MW coal-fueled generating station located in central Utah. The contract expires in 2027 and the debt fully matures in 2024.The contract constitutes an obligation of the Electric Utility to make payments solely from operating revenues.

The power purchase contract requires the Electric Utility to pay certain minimum charges that are based on debt service requirements.

Such payments are considered a cost of production.

Southern California Public Power Authority On November 1, 1980, the City of Riverside joined with the Imperial Irrigation District and the cities of Los Angeles, Anaheim, Vernon, Azusa, Banning, Colton, Burbank, Glendale and Pasadena to create the Southern California Public Power Authority (SCPPA) by a Joint Powers Agreement under the laws of the State of California.

As of July 2001, the City of Cerritos was admitted as a member. The primary purpose of SCPPA is to plan, finance, develop, acquire, construct, operate and maintain projects for the generation and transmission of electric energy for sale to its participants.

SCPPA is governed by a Board of Directors, which consists of one representative for each of the members. During the 2013-14 and 2012-13 fiscal years, the Electric Utility paid approximately

$17,440 and $16,171, respectively, to SCPPA under various take-or-pay contracts.

These payments are reflected as a component of maintenance and operation expense in the financial statements.

The projects and the Electric Utility's proportionate share of SCPPA's obligations, including final maturities and contract expirations are as follows: Terms of Take or Pay Commitments As part of the take-or-pay commitments with IPA and SCPPA, the Electric Utility has agreed to pay its share of current and long-term obligations.

Management intends to pay these obligations from operating revenues received during the year that payment is due. A long-term obligation has not been recorded on the accompanying financial statements for these commitments.

Take-or-pay commitments terminate upon the later of contract expiration or final maturity of outstanding bonds for each project.Outstanding debts associated with the take-or-pay obligations have variable interest rates for the Palo Verde Nuclear Generating Station Project and the remaining projects have fixed interest rates which range from 0.35 percent to 6.13 percent. The schedule below details the amount of principal and interest that is due and payable by the Electric Utility as part of the take-or-pay contract for each project in the fiscal year indicated.

SCPPA Fiscal Year IPA PV STS Hoover MPP MAT Total 2015 2016 2017 2018 2019 Thereafter Total$14,786 22,127 11,650 16,935 18,827 551421$ 669 672 675 679$ 8,310 8,364 8,182 8,020 7,927 54,497$95.300$ 703 701 701 699$ 269 269 262 258 257 443$ 3,087 3,013 2,952 2,910 2,882 4,995$ 27,824 35,146 24,422 29,501 29,893 115356 22f..2._142 Final maturities of outstanding debt associated with take-or-pay obligations and related contract expirations are as follows: Proiect Palo Verde Nuclear Generating Station Southern Transmission System Hoover Dam Uprating Mead -Phoenix Transmission Mead -Adelanto Transmission Final Maturity 2017 2027 2017 2020 2020 Contract Expiration 2030 2027 2017 2030 2030 Proiect Palo Verde Nuclear Generating Station (PV)Southern Transmission System (STS)Hoover Dam Uprating (Hoover)Mead -Phoenix Transmission (MPP)Mead -Adelanto Transmission (MAT)Percent Share 5.4%10.2%31.9%4.0%13.5%Entitlement 12.3MW 244.0MW 30.0MW 18.0MW 118.0MW In addition to debt service, Riverside's entitlements require the payment of fuel costs, operating and maintenance, administrative and general and other miscellaneous costs associated with the generation and transmission 59 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) facilities discussed above. These costs do not have a similar structured payment schedule as debt service and vary each year.The costs incurred for the year ended June 30, 2014 and 2013, are as follows (in thousands):

Calendar year 2013, renewable resources provided 24% of retail sales requirements.

In an effort to increase the share of renewables in the Electric Utility's power portfolio, the Electric Utility entered into power purchase agreements with various entities described below on a "take-and-pay" basis. The contracts in the following table were executed as part of compliance with this standard.Fiscal Year 2014 2013 IPA$24,466$26,445 P__v$2,416$2,528 STS$3,296$2,405 Hoover$104$ 97 MPT$ 50$ 41 MAT$ 312$ 338 Total$30,644$31,854 Long-term renewable power purchase agreements:

These costs are reflected as a component of maintenance and operation expense on the statement of revenues, expenses and changes in net position.B. Other Commitments Supplier Salton Sea Power LLC Wintec WKN Wagner Type Geothermal Wind Wind Power Purchase Agreements:

Maximum Contract 46.0MW 1.3MW 6.0MW 533MW Maximum Contract 1 86.0MW 20.0MW Contract Expiration 5/31/20 12/30/18 12/22/32 Estimated Annual Cost for 2015$ 23,675 211 1,113 The Electric Utility has a firm power purchase agreement with Bonneville Power Administration (BPA) for the purchase of capacity (50 megawatts during the summer months and 13 megawatts during the winter months)beginning April 30, 1996, for 20 years. Effective May 1, 1998, these summer and winter capacity amounts increased to 60 megawatts and 15 megawatts, respectively, for the remainder of the second agreement.

On January 29, 2013, Riverside revised the delivery and return portion of the agreement to allow for a flat 40 MW of delivery during May and June through calendar year 2013, 2014 and 2015. The Agreement with BPA will terminate on May 1, 2016.On April 12, 2011, the California Renewable Energy Resources Act (SB 2 (1X)) was passed by the State Legislative and signed by the Governor.

SB 2 (1X) revised the amount of statewide retail electricity sales from renewable resources in the State Renewable Energy Resources Program to 33% by December 31, 2020 in three stages: average of 20% of retail sales during 2011-2013; 25% of retail sales by December 31, 2016; and 33% of retail sales by December 31, 2020. The Riverside Public Utilities Board and City Council approved the enforcement program required by SB 2 (1X) on November 18, 2011 and December 13, 2011, respectively, and further approved the City's RPS Procurement plan implementing the new RPS mandates on May 3, 2013 and May 14, 2013, respectively.

It is expected that the City will be able to meet the new mandates with new resource procurement actions as outlined in the City's RPS Procurement Plan. For Supplier CalEnergy AP North Lake FTP Solar Summer Solar Antelope Big Sky Ranch First Solar Recurrent Clearwater Dominion Columbia II Cabazon Wind Solar Star Type Geothermal Photovoltaic Expected Delivery 2/11/16 6/30/15 Energy Delivery No Later Than 2/11/16 12/31/15 Contract Term In Years 25 25 Photovoltaic 10.0MW 6/30/16 12/31/16 25 Photovoltaic Photovoltaic Photovoltaic Photovoltaic Wind Photovoltaic 10.0MW 14.0MW 14.9MW 11.1MW 39.0MW 7.3MW 212.3MW 6/30/16 12/31/15 Delayed 12/31/14 1/1/15 9/30/15 12/31/16 6/30/16 12/31/15 12/31/15 12/31/15 12/31/15 25 20 20 20 10 25 1 Contracts are contingent on energy production from specific related generating facilities.

Riverside has no commitment to pay any amounts except for energy produced on a monthly basis from these facilities.

Construction Commitments:

As of June 30, 2014, the Sewer and Electric Utilities had approximately

$86 million and $11 million, respectively, in major construction commitments related to unfinished capital projects.

These construction commitments are expected to be funded primarily with current and future bond proceeds.60 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

C. Jointly-Owned Utility Project -SONGS The City has a 1.79% undivided ownership interest in Units 2 and 3 of SONGS, located south of the City of San Clemente in northern San Diego County; however, on June 7, 2013, Southern California Edison (SCE)announced in a press release its plan to retire Units 2 and 3 of SONGS permanently.

Consequently, the units are no longer a source of supply for the Electric Utility, but remain associated with certain of its costs, including those associated with the units' shutdown and decommissioning.

SONGS was operated and maintained by SCE, under an agreement with the City and San Diego Gas & Electric Company (SDG&E), which expires upon termination of the easement for the plant in 2024. The three-member SONGS Board of Review approved the budget for capital expenditures and operating expenses.

The City and the two other owners each had one representative on that board. The participation agreement provided that each owner was entitled to its proportionate share of benefits of, and paid its proportionate share of costs and liabilities incurred by SCE for, construction, operation and maintenance of the project; each owner's obligation was several, and not joint or collective.

In 2005, the CPUC authorized a project to install four new steam generators in Units 2 and 3 at SONGS and remove and dispose of the predecessor generators.

SCE completed the installation of these steam generators in 2010 and 2011 for Units 2 and 3, respectively.

Replacement of the steam generators was expected to enable plant operations to continue through at least 2022, and perhaps beyond, subject to the approval of the Nuclear Regulatory Commission (NRC).In January 2012, a water leak occurred in one of the heat transfer tubes of Unit 3's steam generators, causing it to be shut down. At that time, Unit 2 was off-line for a planned outage when unexpected wear in areas of tube-to-support structure were found. Units 2 and 3 remained off-line for extensive inspections, testing and analysis of their steam generators.

On June 7, 2013, SCE unilaterally announced its plan to retire Units 2 and 3 permanently.

The current plant site easement for SONGS terminates on May 12, 2024 and would need to be extended in order for the plant to be decommissioned and the site restored.As a result of SCE's decision to permanently retire SONGS Units 2 and 3, SCE has begun the decommissioning phase of the plant. The process of decommissioning a nuclear power plant is governed by NRC regulations.

The regulations categorize the decommissioning activities into three phases: initial activities, major decommissioning and storage activities, and license termination.

Initial activities include providing notice of permanent cessation of operations (accomplished on June 12, 2013) and notice of permanent removal of fuel from the reactor vessels (provided by SCE to the NRC on June 28 and July 22, 2013 for Units 3 and 2, respectively).

Within two years after the announcement of retirement, SCE, as the operating licensee must submit a post-shutdown decommissioning activities report, an irradiated fuel management plan and a site-specific decommissioning cost estimate.

SCE currently estimates that it will provide the other initial activity phase plans and cost estimates to the NRC by the end of 2014.SCE has prepared a draft decommissioning plan, an environmental evaluation and an updated cost estimate to decommission the San Onofre nuclear plant. The draft plan, called a Post-Shutdown Decommissioning Activities Report (PSDAR), spells out the timetable for major decommissioning work expected to begin in early 2016 and indicates adequate funds exist to pay for the work. SCE estimates that it will cost $4.4 billion to safely complete the 20-year decommissioning of San Onofre.There are no separate financial statements for the jointly-owned utility plant since each participant's interests in the utility plant and operating expenses are included in their respective financial statements.

The Electric Utility will continue to set aside approximately

$1,600 per year to fund decommissioning costs. The Electric Utility's portion of current and long-term debt associated with the decommissioning of SONGS is included in the accompanying financial statements.

Replacement Power Costs During the outage, the City has procured replacement power to serve its customers' requirements.

These costs are in addition to the operating and maintenance expenses paid annually during normal operations.

Replacement power costs incurred by the City as a result of the outage (commencing on January 31, 2012 for Unit 3 and March 5, 2012 for Unit 2)were approximately

$13.2 million and are reported as regulatory assets on the Statements of Net Position.Contractual Matters The replacement steam generators for Units 2 and 3 were designed and manufactured by Mitsubishi Heavy Industries (MHI) and were warranted for an initial period of 20 years from acceptance.

MHI was contractually 61 CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) obligated to repair or replace defective items and to pay specified damages for certain repairs. MHI's liability under the purchase agreement is limited to$138 million and excludes consequential damages, defined to include "the cost of replacement power." The limitations are subject to certain exceptions.

There are insurance policies for both property damage and accidental outage issued by Nuclear Electric Insurance Limited (NEIL), and SCE has notified NEIL of claims under the two policies.

The City is a named insured on the SCE insurance policies covering SONGS and will assist SCE in pursuing claims recoveries from NEIL, but there is no assurance that the City will recover all or any of its applicable costs under these arrangements.

To the extent that any third-party recoveries are made, they will reduce cost to the Electric Utility. In fiscal year 2014, the City continued to collect from customers, through its rates, which paid for the City's share of the ongoing operating costs and replacement power related to SONGS.As a result of the decision by SCE to permanently retire Units 2 and 3 of SONGS prior to the expiration of the NRC licenses, the City expects to incur certain costs resulting from the early termination of long-term uranium fuel supply contracts.

On November 12, 2013, Uranium One Inc. served a Demand for Arbitration on SCE, SDG&E and the City, seeking an award of damages in the approximate amount of $12.5 million. Uranium One, Inc.asserts damages from a purchase agreement to deliver certain amounts of uranium concentrates in 2011, 2012 and 2013. On April 25, 2014, Energy Resources of Australia, Ltd. and Rossing Uranium Ltd. served a Demand for Arbitration on SCE, asserting similar claims as Uranium One Inc. and seeking an award of damages in the approximate amount of $19.5 million.No arbitration dates have been set and the City cannot estimate the outcomes of these pending claims at this time.18. Subsequent Events 2014 Subordinate Tax Allocation Refunding Bonds On October 16 2014, the Successor Agency to the Redevelopment Agency of the City of Riverside issued 2014 Subordinate Tax Allocation Refunding Bonds (Series A and B) in the amount of $62,980. The bonds were issued to refund certain obligations of the former Redevelopment Agency of the City of Riverside.

Interest is due semi-annually on March 1 and September 1, commencing March 1, 2015. Principal is due in annual installments from$160 to $4,745 through September 1, 2034. The rate of interest varies from 0.6% to 5% per annum.62

-4 ___

Required Supplementary Information Consists of the following:

• Pension Plan Funding Progress* Other Post-Employment Benefits (OPEB) Funding Progress CITY OF RIVERSIDE REQUIRED SUPPLEMENTARY INFORMATION

-UNAUDITED

SUMMARY

OF PENSION OBLIGATION AND OTHER POST EMPLOYMENT BENFITS FUNDING PROGRESS (THOUSANDS)

Employee Retirement System -Schedule of Funding Progress Value of Assets Unfunded Liability Funded Ratios June 30, 2012 Actuarial Valuation Date Actuarial Value of Assets Market Value of (AVA) Assets (MVA)Annual Covered Payroll UL as a% of Payroll Accrued Liability AVA MVA AVA MVA Miscellaneous Safety Total$ 919,572 673,938$ 1,593,510$ 766,804 561,734$ 1,328,538$ 1,046,200 766,405$ 1,812,605$ 126,628 92,468$ 219,096$ 279,395 204,672$ 484,067 87.9% 73.3% $ 110,037 87.9% 73.3% 63,115$ 173,152 115.1%146.5%Value of Assets Actuarial Value of Assets Market Value of (AVA) Assets (MVA)Unfunded Liability Funded Ratios AVA MVA AVA MVA June 30, 2011 Actuarial Valuation Date Annual Covered Payroll UL as a% of Payroll Miscellaneous Safety Total$ 887,857 650,954$ 1,538,811$ 786,080 575,006$ 1,361,086 Accrued Liability$ 998,216 731,074$ 1,729,290$ 110,359 80,120$ 190,479$ 212,136 156,068$ 368,204 88.9% 78.7% $ 108,106 89.0% 78.7% 62,538$ 170,644 102.1%128.1%Value of Assets Unfunded Liability Funded Ratios June 30, 2010 Actuarial Valuation Date Actuarial Value of Assets Market Value of (AVA) Assets (MVA)Annual Covered Payroll UL as a% of Payroll Accrued Liability AVA MVA AVA MVA Miscellaneous Safety Total$ 846,368 621,107$ 1,467,475$ 660,844 483,776$ 1,144,620$ 952,499 685,213$ 1,637,712$ 106,131 621,107$ 727,238$ 291,656 201,437$ 493,093 88.9% 69.4% $ 106,590 90.6% 70.6% 61,778$ 168,368 99.6%103.8%Other Post-Employment Benefits -Schedule of Funding Progress Actuarial Value of Assets (AVA)Unfunded Funded Liability Ratios Accrued Liability AVA AVA Actuarial Valuation Date Annual Covered Payroll$ 153,077 149,321 132,275 UL as a% of Payroll June 30, 2013 June 30, 2011 June 30, 2009$ 47,195 56,060 54,869$ 47,195 56,060 54,869 31%38%41%63 Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.Urban Areas Security Initiative (UASI) Fund -To account for UASI grants received from the U.S. Department of Homeland Security.Gas Tax Fund -To account for the construction and maintenance of the road network system of the City. Financing is provided by the City's share of state gasoline taxes which state law requires to be used to maintain streets.Air Quality Improvements Fund -To account for qualified air pollution reduction programs funded by the South Coast Air Quality Management District.Housing & Community Development Fund -To account for Federal grants received from the Department of Housing and Urban Development (HUD).The grants are used for the development of a viable urban community by providing decent housing, a suitable living environment, and expanding economic opportunities, principally for persons with low and moderate incomes.National Pollution Discharge Elimination System (NPDES) Storm Drain Fund -To account for storm drain maintenance and inspection required for California storm water permits. Activities are funded by a special assessment district of Riverside County, California.

Housing Fund -To account for the housing activities for persons with low or moderate income.Capital Projects Funds Capital Projects Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds.Special Capital Improvement Fund -To account for the acquisition, construction and installation of capital improvements and a Community Facilities District within the City.Storm Drain Fund -To account for the acquisition, construction and installation of storm drains in the City.Transportation Fund -To account for the construction and installation of street and highway improvements in accordance with Articles 3 and 8 of the Transportation Development Act of 1971 of the State of California.

Debt Service Fund Debt Service Funds are used to account for the accumulation of resources for, and the payment of, long-term debt principal, interest, and related costs.The General Debt Service Fund accounts for the resources accumulated and payments made for principal, interest and related costs on long-term general obligation debt of governmental funds.Permanent Fund Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs.Library Special. Fund -To account for the monies held in trust for the benefit of the Riverside City Public Library System.

City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2014 (amounts expressed in thousands)

Special Revenue Housing &Urban Areas Air Quality Community NPDES Storm Security Initiative Gas Tax Improvements Development Drain Housing Total$ $ 17,867 $ 571 $ 1,194 $ $ 1,383 $ 21,015-163 163 Assets Cash and investments Cash and investments at fiscal agent Receivable (net of allowance for uncollectibles):

Interest Accounts Intergovernmental Notes Advances to Successor Agency Land & improvements held for resale Total assets 86 6 2 8 102 2 545 208 96 1,077 656 -2,582--12,602 -20,665 33,267-20,571 20,571--1,310 -3,212 4,522$ 545 $ 18,161 $ 669 $ 16,191 $ 656 $ 46,002 $ 82,224 Liabilities Accounts payable Accrued payroll Retainage payable Deposits Due to other funds Advance from other funds Total liabilities

$298 $306 $22 $331 $16$110 $14 1,067 30 1,364 3 1,364 3 Deferred Inflows of Resources Unavailable revenue Total deferred inflows of resources Fund Balances (Deficits)

Restricted for: Housing and redevelopment Transportation and public works Total fund balances (deficits)

Total liabilities deferred inflows of resources, and fund balances (deficits) 247 -355 602--516 -458 974 545 1,670 22 863 355 585 4,040--13,913 -20,609 34,522 13,913 20,609 34,522--1,415 -24,808 26,223 16,491 647 -301 -17,439-16,491 647 1,415 301 24,808 43,662$ 545 $ 18,161 $ 669 $ 16,191 $ 656 $ 46,002 $ 82,224 65 City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2014 (amounts expressed in thousands)

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

Interest Accounts Intergovernmental Notes Advances to Successor Agency Land & improvements held for resale Total assets Capital Projects Special Capital Improvement Storm Drain Transportation Total$ 3,053 $ 2,043 $ 70 $ 5,166 2,418 --2,418 Permanent Fund Total Nonmajor General Governmental Debt Service Library Special Funds$ 758 $ 1,460 $ 28,399 10,298 -12,879 15 11 26 6 134 2 2,582 33,267 39,739 4,522$ 121,524$ 5,486 $ 2,054 $ 70 $ 7,610 19,168 30,230 $ 1,460 Liabilities Accounts payable Accrued payroll Retainage payable Deposits Due to other funds Advance from other funds Total liabilities

$326 $-S-$326 $ 171 $-$1,564 30 1,396 3 32 32 6,861 6,861 3,882 7,219 7,219 4,053 602 11,717 15,312 Deferred Inflows of Resources Unavailable revenue Total deferred inflows of resources----34,522----34,522 Fund Balances (Deficits)

Nonspendable:

Permanent fund principal Restricted for: Housing and redevelopment Debt service Transportation and public works Other purposes Unassigned Total fund balances (deficits)

Total liabilities, deferred inflows of resources, and fund balances (deficits) 1,460 1,460-70 70 2,054 -2,054 (1,733) --(1,733)(1,733) 2,054 70 391 26,177 26,177 1,460 26,223 26,177 17,509 2,054 (1,733)71,690$ 5,486 $ 2,054 $ 70 $ 7,610 $ 30,230 $ 1,460 $ 121,524 66 City of Riverside Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Special Revenue Revenues Intergovernmental Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current: General government Public safety Capital outlay Debt service: Interest Bond issuance costs Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)Sales of capital assets Total other financing sources (uses)Net change in fund balances Fund balances -beginning Fund balances -ending Urban Area Security Air Quality Initiative Gas Tax Improvement

$ 2,271 $ 9,418 $ 480 202 5-258 2,271 9,620 743 Housing &Community Development NPDES Storm Drain Housing Total$ 5,429 $ -$ $ 17,598-657 657 33 -96 336 314 -564 1,136 5,776 657 660 19,727 556 423 1,472 2,271 2,451 2,271 12,747 7,479 4,736 532 12 5 17 2 2 5,173 532 1,477 17,488 2,271 7,479 556 2,141 187 603 125 (817) 2,239 2,141 187 14,350 460$ $ 16,491 $ 647 27 27 27 27 603 125 (790) 2,266 812 176 25,598 41,396$ 1,415 $ 301 $ 24,808 $ 43,662 67 City of Riverside Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Capital Projects Permanent Fund Special Capital Improvement Storm Drain Transportation Total Revenues Licenses and permits Intergovernmental Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current: General government Public safety Culture and recreation Capital outlay Debt service: Principal Interest Bond issuance costs Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)Transfers in Sales of capital assets Total other financing sources (uses)Net change in fund balances Fund balances -beginning Fund balances -ending 1,422 $128 $116$ 1,550 116 General Library Debt Service Special$ -$1,108 1,748 14 419 115 3,275 129 30 22 105 1,557 266 736 4 2,517 179 69 3,322 183 1 53 105 1 1,824 740 2,696 69 3,505 Total Nonmajor Governmental Funds 1,550 17,714 1,765 2,151 1,775 24,955 3,207 2,271 110 15,443 5,298 10,528 2 36,859 16 110 5,298 10,442 15,756 110 (1,765) 83 1 (1,681) (12,481) 19 (11,904)12,774 (1,765) 83 32 1,971 (1,733) $ 2,054 1 (1,681)69 2,072$ 70 $ 391 12,774 293 19 25,884 1,441$ 26,177 $ 1,460 12,774 27 12,801 897 70,793$ 71,690 68 City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Special Revenue Urban Area Security Initiative Variance Final to Final Budget Actual Budget Gas Tax Air Quality Improvement Variance Final to Final Budget Actual Budget Final Budget Actual Variance to Final Budget Revenues Intergovernmental Rental and investment income Miscellaneous Total revenues$ 3,171 $2,271 $ (900) $ 6,985--150$9,418 $ 2,433 $202 52 360 $ 480 $ 120 5-233 258 3,171 2,271 (900) 7,135 9,620 2,485 593 743 5 25 150 Expenditures Current: General government Public safety Capital outlay Total expenditures 3,349 2,271 922 556 366 1,078 3,349 2,271 1,078 19,267 19,267 7,479 11,788 7,479 11,788 2,141 14,273 14,350 -$ 16,491 $ 14,273 922 556 366 Net change in fund balances Fund balances (deficit), beginning Fund balances (deficit), ending (178) 178 (12,132)14,350$ (178) $ $ 178 $ 2,218 (329) 187 460 460$ 131 $ 647 516$ 516 (continued) 69 City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Special Revenue Housing & Community Development Variance NPDES Storm Drain Variance Housing Variance Revenues Intergovernmental Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current: General government Capital outlay Debt service: Principal Interest Bond issuance costs Total expenditures Final Budget$ 6,473 28 404 6,905 1,277 16,900 23 15 18,215 (11,310)to Final Final Actual Budget Budget$ 5,429 33 314 5,776 423 4,736 12 2 5,173$ (1,044)5 (90)(1,129)854 12,164 23 3 (2)13,042$604$65 $ 5 $657 53-$-$96 564 604 657 53 660 96 564 660 to Final Final to Final Actual Budget Budget Actual Budget 747 532 215 1,423 1,472 (49)5 747 532 215 1,423 1,477 (5)(54)Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)Sale of capital assets Total other financing sources (uses)Net change in fund balances Fund balances (deficit), beginning Fund balances (deficit), ending 603 11,913 (143) 125 268 (1,423) (817) 606--- --27 27--- --27 27 (11,310)812$ (10,498)603 812$ 1,415 11,913$ 11,913 (143)176$ 33 125 176$ 301 268$ 268 (1,423) (790)25,598 25,598$ 24,175 $ 24,808 633$ 633 (continued) 70 City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Capital Projects Capital Outlay Special Capital Improvement Storm Drain Transportation Revenues Licenses and permits Intergovernmental Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current: General government Capital outlay Debt service: Interest Bond issuance costs Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses)Transfers out Issuance of long-term debt Bond Premium Total other financing sources (uses)Net change in fund balances Fund balances (deficit), beginning Fund balances (deficit), ending Final Budget$84,092 125 170 3,599 87,986 138,244 738 138,982 Variance to Final Final Actual Budget Budget Actual Variance to Final Final Budget Budget Actual Variance to Final Budget Final Budget Actual Variance to Final Budget 1$28,719 288 307 1,780 31,094$(55,373)163 137 (1,819)(56,892)$ 3,120 $ 1,422 30-105 3,120 1,557$ (1,698)30 105 (1,563)$100 3,345 25$128 116 22$ 28 $(3,229)(3)(3,204)11 3,470 266-1 1 48,333 89,911 2,336 4,634 137 7,107 736 2,517 69 3,322 1,600 2,117 4 4,857 4 179 4,678 738 49,071 89,911 68 3,785 4,861 183 4,678 (50,996) (17,977) 33,019 (3,987) (1,765) 2,222 (1,391) 83 1,474 1 1 (1,521)54,886 1,211 54,576 3,580 1,432$ 5,012 (2,185)54,886 1,211 53,912 35,935 1,432$ 37,367 664------

-664-- -----33,683$ 33,683 (3,987)32$ (3,955)(1,765)32$ (1,733)2,222$ 2,222 (1,391) 83 1,971 1,971$ 580 $ 2,054 1,474$ 1,474-1 69 69$ 69 $ 70$ 1 71 Nonmajor Enterprise Funds Enterprise Funds are used to account for the operations that are financed and operated in a manner similar to private business enterprises.

The City's intent is to demonstrate that the cost of services provided to the general public on a continuing basis is financed or recovered through user charges; or the City has decided that the periodic determination of net income is appropriate for accountability purposes.Airport Fund -To account for the operations of the City's airport.Refuse Fund -To account for the operations of the City's solid waste and sanitation program which provides for the collection and disposal of solid waste on a user charge basis to residents and businesses.

Transportation

-To account for the operations of the City's Senior Citizens' and Handicapped Transportation System in accordance with Article 4 of the Transportation Development Act of 1971 (SB325) of the State of California.

Federal Transit Administration Funds are also accounted for in this fund.Public Parking -To account for the operations and construction of the City's public parking facilities.

City of Riverside Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2014 (amounts expressed in thousands)

Assets Current assets: Cash and investments Receivables (net of allowance for uncollectibles)

Interest Utility billed Utility unbilled Accounts Intergovernmental Restricted assets: Other restricted cash and cash equivalents Total current assets Non-current assets: Regulatory assets Net pension asset Capital assets: Land Buildings Accumulated depreciation-buildings Improvements other than buildings Accumulated depreciation-improvements other than buildings Machinery and equipment Accumulated depreciation-machinery and equipment Construction in progress Total non-current assets: Airport Refuse Transportation Public Parking Total$3,444 $23 1,041 723 592 2,477 $12 36 1 344 $5 6,265 40 1,041 723 1,217 85 34 75 555 9_ 901 -901 109 6,724 2,526 913 10,272 6,499 1,164 560 157 6,499 2,095 214 9,988 2,631 (1,245)19,662 (6,510)412 (307)24,845 22 (10)1,691-(98)14,487 3,956 (9,978) (2,948)-35 12,172 3,208 9,192 33,228 (4,429)6,731 (1,637)1,138 (1,008)43,372 19,180 35,881 (5,684)28,084 (8,245)19,993 (14,241)35 83,597 93,869 Continued Total assets 24,954 18,896 5,734 44,285 73 City of Riverside Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2014 (amounts expressed in thousands)

Liabilities Current liabilities:

Accounts payable Accrued payroll Retainage payable Unearned revenue Due to other funds Notes payable -current Landfill capping -current Compensated absences -current Total current liabilities Airport 7 12 Refuse Transportation Public Parking 853 105 24 50 148 29 20 2,229 133 22 174 200 393 1,551 70 2,373 906 39 1,142 Non-current liabilities:

Notes payables Advances from other funds Landfill capping Compensated absences Other postemployment benefits Total non-current liabilities 21,186 608 Total 1,032 196 20 2,229 133 906 200 524 5,240 21,186 2,539 5,972 97 1,474 31,268 36,508 52,911 901 3,549 57,361 213 4 99 316 1,160 5,972 73 824 8,029 558 13 7 375 176 946 21,977 Total liabilities 490 9,580 3,319 23,119 Net Position Net investment in capital assets Restricted for landfill capping Unrestricted Total net position 24,631 (167)$ 24,464 4,509 901 3,906$ 9,316 2,648 21,123 (233) 43 2,415 $ 21,166 74 City of Riverside Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Airport Refuse Operating revenues: Charges for services Operating expenses: Personnel services Contractual services Maintenance and operation General Materials and supplies Insurance Depreciation and amortization Total operating expenses Operating Income (loss)$ 1,100 544 51 225 113 19 28 698 1,678 (578)$ 20,677 4,472 3,960 5,911 3,578 1,114 115 1,630 20,780 (103)Transportation

$ 413 2,106 20 661 382 221 49 612 4,051 (3,638)2,524 30 8 4 (16)2,550 (1,088)950 (138)2,553$ 2,415 Public Parking$ 4,382 1,047 1,514 441 46 19 108 1,073 4,248 134 7 699 524 (886)344 478 (738)(260)21,426$ 21,166 Total$ 26,572 8,169 5,545 7,238 4,119 1,373 300 4,013 30,757 (4,185)2,524 88 1,204 536 (945)3,407 (778)1,246 (738)(270)57,631$ 57,361 Nonoperating revenues (expenses):

Operating grants Interest income Other Gain/loss on retirement of capital assets Interest expense and fiscal charges Total non-operating revenues Income (loss) before capital contributions and transfers Cash capital contributions Transfers out Change in net position Total net position -beginning Total net position -ending 51 84 413 27 (19)(11) (32)100 413 (478) 310 296 (182)24,646$ 24,464 310 9,006$ 9,316 75 City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Airport Refuse Cash flows from operating activities:

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

Transfers out Outflows on interfund advances Net cash (used) by noncapital financing activities Cash flows from capital and related financing activities:

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

Income from investments Net cash provided by investing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning Cash and cash equivalents, ending$ 1,120 (537)(733)83 (329)(329)(25)27 (11)109 296$ 20,785 (4,363)(14,831)413 2,004 (51)(51)9 (32)Public Transportation Parking$ 1,006 4,930 (1,999) (1,012)(1,676) (2,461)6 699 (2,663) 2,156-(738)(25) (996)(25) (1,734)(834) (928)4 2,602 (7) (871)(16) (885)2,524 -950 -2,621 (82)28 3 28 3 (39) 343 2,516 1$ 2,477 $ 344 Totals$ 27,841 (7,911)(19,701)1,201 1,430 (738)(1,401)396 (23)-42 42 1,972 2,373$ 4,345 (1,787)2,642 (878)(944)2,633 1,246 2,912 73 73 2,276 4,890$ 7,166 Continued 76 City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

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

Operating Income (loss)Other receipts Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation and amortization Amortization of pension costs Decrease in accounts receivable (Increase) due from other governments Increase (Decrease) in accounts payable Increase (Decrease) in accrued payroll Increase (Decrease) in other payable (Decrease) in landfill capping Net cash provided (used) by operating activities (578) $ (103)83 413 (3,638)6 134 699$ (4,185)1,201 698 1,630 612 1,073 4,013 9 52 25 7 93 20 108 593 554 1,275 (6) (6)(297) 133 (343) (333) (840)(15) 471 30 2 488 13 (414) 52 26 (323)(286) --(286)(67) $ 2,004 2,663) 2,156 $ 1,430 77 Internal Service Funds Internal Service Funds are used to account for the financing of goods and services provided by one City department to other City departments on a cost-reimbursement basis.Self-Insurance Trust -To account for the operations of the City's self-insured workers' compensation, unemployment and liability programs.Central Stores Fund -To account for the operations of the City's centralized supplies inventory, including receiving and delivery services provided to City departments.

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

City of Riverside Combining Statement of Net Position Internal Service Funds June 30, 2014 (amounts expressed in thousands)

Assets Current assets: Cash and investments Receivables (net of allowance for uncollectibles)

Interest Accounts Intergovernmental Inventory Total current assets Non-current assets: Advances to other funds Advances to Successor Agency Net pension asset Capital assets: Land Buildings Accumulated depreciation-buildings Improvements other than buildings Accumulated depreciation

-improvements other than buildings Machinery and equipment Accumulated depreciation-machinery and equipment Construction in progress Total non-current assets: Self-Insurance Trust Central Stores Central Garage Total$1,118 $-$2,065 $3,183 16 46 1,180 28 54 6 5,444 375 5,444 2,528 44 54 52 5,819 9,152 2,764 5,634 205 3,460 6,224 5,634 1,384 215 964 5 8, 60Y8 9,788 139 (139)215 5,659 458 1,488 (300)726 (83)10,665 (8,088)1,482 10,772 13,300 Total assets Liabilities Current liabilities:

Accounts payable Accrued payroll Retainage payable Due to other funds Claims and judgments

-current Compensated absences -current Total current liabilities 458 1,488 (300)726 (83)10,809 (8,227)1,482 19,595 28,747 1,808 100 71 1,306 11,122 267 14,674 3,066 24,045 292 672 28,075 233 13 212 16 1,363 71 71 1,306 Non-current liabilities:

Advances from other funds Claims and judgments Compensated absences Other postemployment benefits Total non-current liabilities 11,122 15 11,383 204 24,045 17 92 24,358 35,741 45 207 1,579 1,712 213 48 111 372 1,951 2,649 227 469 3,345 Total liabilities 5,057 42,749 Net Position Net investment in capital assets Unrestricted Total net position 5 (25,958) 3,708 (25,953) $ 3,708 79 6,348 1,895 8,243 6,353 2o,3ý55$ (14,002)

City of Riverside Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Operating revenues: Charges for services Operating expenses: Personnel services Contractual services Maintenance and operation General Materials and supplies Claims/Insurance Depreciation and amortization Total operating expenses Operating income (loss)Non-operating revenues (expenses):

Interest income Other Gain (loss) on retirement of capital assets Interest expense and fiscal charges Total non-operating revenue (expenses)

Change in net position Total net position -beginning Total net position -ending Self-Insurance Trust Central Stores Central Garage Totals$ 11,894 $ 1,511 $ 8,367 $ 21,772 511 68 662 2,991 73 4,164 141 4 26 2,146 2,176 1,034 367 750 2,151 1 11 210 222 14,572 9 47 14,628--572 572 16,190 1,075 6,789 24,054 (4,296) 436 1,578 (2,282)153 76 229 1 (5) (4)(4) (4)(72) (6) (41) (119)82 (6) 26 102 (4,214) 430 1,604 (2,180)(21,739) 3,278 6,639 (11,822)(25,953) 3,708 8,243 $ _14,002)80 City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Cash flows from operating activities:

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

Receipts on interfund advances Outflows on interfund advances Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities:

Interest paid on long-term obligation Purchase of capital assets Net cash (used) for capital and related financing activities Cash flows from investing activities:

Income from investments Self-Insurance Trust$ 11,902 (487)(12,059)1 (643)3,692 (1,948)1,744 (72)(5)Central Stores$ 2,322 (631)(460)1,231 (1,225)(1,225)Central Garage Total 8,361 (2,745)(2,262)$ 22,585 (3,863)(14,781)3,354 3,942 1,674 5,366 (3,502) (6,675)(1,828) (1,309)(26) (104)(3,711) (3,716)(3,737) (3,820)67 161 67 161 (6)(6)94 94 Net increase (decrease) in cash and cash equivalents 1,118 (2,144)(1,026)Cash and cash equivalents, beginning Cash and cash equivalents, ending 4,209 4,209 2,065 $ 3,183 Continued 1,118$81 City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

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

Total Operating (loss) income $ (4,296) $ 436 $ 1,578 $Other receipts 1 --(2,282)1 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation and amortization Amortization of pension costs (Increase)

Decrease in account receivable Decrease in inventory Increase (Decrease) in accounts payable Increase in other payable Increase in accrued payroll Increase in claims and judgments Net cash (used) provided by operating activities

--572 572 9 9 43 61 8 (11) (3)-811 61 872 23 (46) 908 885 13 21 125 159 2 -78 80 3,597 -3,597$ (643) $ 1,231 $ 3,354 $ 3,942 82 Agency Fund The City's Agency Fund is used to account for special assessments that service no-commitment debt.

City of Riverside Fiduciary Fund -Agency Fund Combining Statement of Changes in Assets and Liabilities For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Balance Balance July 1, 2013 Additions Deductions June 30, 2014 Assets Cash and investments Cash and investments at fiscal agent Interest receivable Accounts receivable Property taxes receivable Total assets$6,688 6,778$4,908 5,938 212 33 24 124 13,647$ 5,930 5,976 219 24 124 12,273$5,666 6,740 26 114 F -11,172 114 12,546 Liabilities Accounts payable Held for bond holders Total liabilities

$ -$ 82 $ 82 -13,647 11,090 12,191 12,546$ 13,647 $ 11,172 $ 12,273 $ 12,646 84 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS City of Riverside Capital Assets Used in the Operation of Governmental Funds Schedule By Source June 30, 2014 (amounts expressed in thousands)

Governmental funds capital assets: Land Buildings and improvements Improvements other than buildings Machinery and equipment Infrastructure Construction in progress Total governmental funds capital assets Investments in governmental funds capital assets by source: Certificates of participation Gifts Operating revenue General obligation bonds Revenue bonds County contracts and grants State grants Asset forfeiture

-state Asset forfeiture

-federal Housing and community development grants Other federal grants Community facilities bonds Assessment district bonds Capital leases RDA tax increment bonds Capital projects funds Total governmental funds capital assets$ 333,799 180,653 299,345 82,561 934,614 33,011$ 1,863,983$ 122,610 322,300 537,498 4,364 21,229 316 40,506 994 2,870 18,955 35,248 1,026 397 10,825 2,983 741,862$ 1,863,983 86 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 Page Financial Trends 88 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 94 These schedules contain information to help the reader assess the factors affecting the City's ability to generate property and sales taxes.Debt Capacity 103 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 109 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 111 These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs.Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

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

Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position Business-type activities Net investment in capital assets Restricted Unrestricted Total business-type activities net position Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position Fiscal Year 2005 2006 2007 2008 2009 2010 2011 20121 2013 2014$ 515,354 $ 622,336 $ 712,801 $ 850,740 $ 950,496 $ 976,614 $1,019,892

$ 1,076,485

$ 1,083,485

$ 1,106,384 154,957 158,038 107,982 102,677 98,903 108,932 80,820 86,325 80,712 96,587 (46,419) (51,261) (34,245) (31,429) (41,861) (80,947) (90,159) 23,145 17,989 (2,049)$ 623,892 $ 729,113 $ 786,538 $ 921,988 $ 1,007,538

$1,004,599

$ 1,010,553

$ 1,185,955

$1,182,186

$1,200,922

$ 402,377 $ 425,285 $ 520,059 $ 601,999 $ 659,904 $ 660,619 $ 654,974 $ 666,919 $ 609,691 $ 616,844 54,540 71,386 57,613 43,341 38,621 59,863 56,397 54,923 69,068 68,507 229,462 250,041 242,966 225.281 207,405 219,720 256,038 285,062 330,833 359,698$ 686,379 $ 746,712 $ 820,638 $ 870,621 $ 905,930 $ 940,202 $ 967,409 $ 1,006,904

$1,009,592

$ 1,045,049$ 917,731 $ 1,047,621

$ 1,232,860

$ 1,452,739

$ 1,610,400

$1,637,233

$ 1,674,866

$ 1,743,404

$1,693,176

$ 1,723,228 209,497 229,424 165,595 146,018 137,524 168,795 137,217 141,248 149,780 165,094 183,043 198,780 208,721 193,852 165,544 138,773 165,879 308,207 348,822 357,649$ 1,310,271

$ 1,475,825

$ 1,607,176

$ 1,792,609

$ 1,913,468

$1,944,801

$1,977,962

$ 2,192,859

$2,191,778

$2,245,971 1 The increase in total governmental activities net position (and related unrestricted net position) is primarily due to the dissolution of the Redevelopment Agency.88 Table 2 City of Riverside Changes in Net Position Last Ten Fiscal Years (accrual basis of accountina) (in thousands)

Page 1 of 2 Expenses Governmental activities:

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

Electric Water Sewer Refuse Airport Transportation Public parking Total business-type activities expenses Total primary government expenses Program Revenues Governmental activities:

Charges for services: General government Public safety Highways and streets Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business-type activities:

Charges for services: Electric Waler Sewer Refuse Airport Transportation Public parking Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$ 58,460 $ 74,458 $ 105,486 $ 113,897 $ 71,391 $ 85,110 $ 72,606 $ 48,731 $ 54,808 $ 42,664 110,969 120,470 114,312 122,783 142,353 137.338 139,364 148,605 147,652 149,555 20,364 20,757 22,556 26,986 29.700 31,492 32,131 35,342 35,072 36,564 26,353 32,602 28,016 31,659 29,423 44,319 50,017 54,594 40,077 42,252 15,885 16,358 26,378 34,075 34,361 32,049 33,638 25,087 16,627 17,741 232,031 264,645 296,748 329,400 307,228 330,308 327,756 312,359 294,236 288,776 200,030 226.186 232,346 271,412 269,209 256,860 275,922 288,799 292,175 304,416 36,709 39,486 42,108 47,570 53,931 55,402 56,390 56,715 58,768 60,030 26,108 27,299 29,510 31,209 34,853 41,248 42,276 43,702 43.945 40,385 12,841 14,546 16,490 18,430 18,425 20,527 20,046 19,979 20.581 20,831 1,185 1,004 1,201 1,418 1,734 2,206 2,320 2,646 2,029 1,662 2,557 2,917 2,831 3,190 3.194 3,368 3,493 3,667 3,745 4,067 824 2,701 3,762 4,093 5,095 4,024 4.401 4,984 5,051 4,610 280,254 314,139 328,248 377,322 386,441 383,635 404,848 420,492 426,294 436,001$ 512,285 $ 578,784 $ 624.996 $ 706.722 $ 693,669 $ 713,943 $ 732,604 $732,851 $720,530 $724,777$ 25,995 $ 24,683 $ 10,245 $ 23,969 $ 13.691 $ 12,933 $ 14,241 $ 14,662 $ 13,336 $ 13,775 6,982 5,645 12,410 9,924 8,414 8,177 8.075 7,837 7,793 7,444 23,108 25,412 30,563 19,695 14,391 17,847 16,985 16,532 15,825 17,487 7.002 7,716 8,302 4.370 3,168 2,367 3.180 4,622 5,237 7,406 16,140 13,150 12,101 15,024 23,313 32,853 21,127 31,581 21,485 14,341 5,292 18,618 10,557 115.982 69,745 23.395 38,138 54,476 32,202 48,433 84,519 95,424 84,178 188,964 132,722 97.572 101,746 129,710 95.880 108,886 252,322 259,572 278,888 305,299 314,164 309,910 313,703 333,029 347,933 344,037 34.002 37,613 47,080 49,855 54,923 57,534 62,084 65,206 68.489 68.691 21,967 21,510 24.057 22,525 23,247 27,342 32.769 37,747 43,772 46,162 14,492 15,160 15,833 16,289 18,394 18,712 19.134 19,588 20,829 20,677 1,088 1,162 1,263 1,423 1,232 1,315 1,342 1,524 1,396 1,100 200 238 302 313 336 328 344 352 344 413 2,961 2,837 3,431 3,717 4,332 4,876 5,205 4.803 4,777 4,382 2,261 2,704 1,939 3,308 1,929 2,487 2,159 2,738 2,718 2.524 32,317 29,293 40,066 29,215 17,288 6,838 7,337 21.164 11,734 11,486 361.610 370,089 412,859 431.944 435.845 429,342 444.077 486.151 501.992 499.472$ 446,129 $ 465.513 $ 497.037 $ 620.908 $ 568.567 $ 526,914 $ 545.823 $615,861 $597,872 $608,358 (continued) 89 Table 2 City of Riverside Changes In Net Position Last Ten Fiscal Years Fiscal Year 2005 2006 2007 2008 2009 2010 2011 20121 2013' 2014 Net Revenues (Expense)Governmentalactivities

$(147,512)

$(169,221)

$ (212,570)

$(140,436)

$ (174,506)

$ (232,736)

$ (226,010)

$ (182,649)

$(198,356)

$(179,890)

Business-type activities 81.356 55,950 84,611 54,622 49,404 45,707 39,229 65,659 75,698 63,471 Total primary government net expense $ (66,156) $(113,271)

$ (127,959)

$ (85,814) $ (125,102)

$ (187,029)

$ (186,781)

$ (116,990)

$(122,658)

(1116,419)

General Revenues and Other Changes In Net Position Governmental activities:

Taxes Sales $ 53.348 $ 57,522 $ 55,666 $ 50,526 $ 41,882 $ 39,645 $ 44,157 $ 47,701 $ 50,222 $ 55,096 Property 61,553 80,934 106,114 114,176 116,420 104,087 100,802 74,179 52,904 51,323 Utility users 22,133 23,502 25,384 26.267 25,964 25,975 26,691 27,320 28,206 28,092 Franchise 4,481 4,813 5,031 4,972 5,144 4,477 4,937 4,883 4,959 5,046 Transient occupancy 3,828 4,372 3,581 3,795 2,912 2,488 2,731 2,995 3,703 4,189 Intergovernmental, unrestricted 1,795 1,747 1,863 2,074 4,569 1,339 1,285 351 337 263 Unrestricted grants and contributions 15,220 39,653 29,743 -------Investment earnings 7,815 10,150 18,582 25,670 15,941 8,289 7,439 4,440 2,786 2,759 Miscellaneous 5,756 26,173 4,228 9,480 5,137 3,344 9,544 9,273 9,208 5,425 Transfers 14,918 25,576 31,171 32,326 42,087 40,153 34,378 40,679 42,262 46,433 Extraordinary items ------149,617 -Total governmental activities 190,847 274,442 281,363 269,286 260,056 229,797 231,964 361,438 194,587 198,626 Business-type activities:

Investment income 7.548 11,259 16,988 22,756 23,402 21,271 17,548 11,405 4,744 8,005 Miscellaneous 7,362 18,700 3,498 4,931 4,590 7,447 4,808 3,110 5,767 10,414 Special item (3,014) ---------Transfers (14,918) (25,576) (31,171) (32,326) (42,087) (40,153) (34,378) (40,679) (42,262) (46,433)Extraordinary items ---(41,259) -Total business-type activities 13,022) 4,383 (10,685) (4,639) (14,095) (11,435) (12,022) (26,164) (73,010) (28,014)Total primary government 187,825 278,825 270.678 264,647 245,961 218,362 219,942 335,274 121,577 170,612 Change in Net Position Governmental activities

$ 43.335 $ 105,221 $ 68,793 $ 128,850 $ 85,550 $ (2,939) $ 5,954 $ 178,789 $ (3,769) $ 18,736 Business-type activities 78,334 60,333 73,926 49,983 35,309 34,272 27,207 39,495 2,688 35,457 Total primary government

$ 121,669 $ 165,554 $ 142,719 $ 178,833 $ 120,859 $ 31,333 $ 33,161 $ 218,284 $ (1,081) $ 54,193' 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.90 Table 3 City of Riverside Fund Balances of Governmental Funds Last Four Fiscal Years (modified accrual basis of accounting, in thousands)

General fund Nonspendable Restricted Assigned Unassigned Total general fund All other governmental funds Nonspendable Restricted for: Housing and redevelopment Debt service Transportation and public works Other purposes Unassigned Total all other governmental funds 2011 20121,2 2013 2014$ 26,646 $ 25,720 $ 26,421 $ 24,419 82,249 2,803 2,196 2,204 15,589 6,380 10,711 14,505 36,359 39,347 37,763 37,732$ 160,843 $ 74,250 $ 77,091 $ 78,860$ 1,626 $ 1,539 $ 1,441 $ 1,460 96,571 26,911 26,410 26,223 56,526 29,080 25,884 26,177 26,459 31,075 16,487 54,876 5,073 1,401 2,003 2,054---(1,733)$ 186,255 $ 90,006 $ 72,225 $ 109,057 The decrease in fund balance of the General Fund primarily relates to the transfer of land held for resale (in the amount of $76.3 million) to the Redevelopment Agency Capital Projects Fund, which had been transferred to the General Fund during the fiscal year ended June 30, 2011.2 The decrease in fund balance of all other governmental funds relates to the dissolution of the Redevelopment Agency.The City of Riverside implemented GASB 54 in the fiscal year ended June 30, 2011.The City has elected to show four years of data for this schedule.91 Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting) (in thousands)

Page 1 of 2 Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Use of money and property Miscellaneous Total revenues Expenditures:

General government Public safety Highways and streets Culture and recreation Capital outlay Debt Service: Principal Interest Debt issuance costs Payment for advance refunding Total expenditures Excess of revenues over (under) expenditures 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$ 142,056 $ 170,638 $ 191,131 $ 200,438 $ 192,322 $ 177,255 $ 179,318 $ 156,593 $ 139,994 $ 143,748 14,389 16,351 12,984 10,027 7,368 6,899 7,657 9,292 10,173 9,244 42,568 55,178 47,934 79,423 86,873 60,550 61,082 66,618 50,734 59,348 11,299 11,538 11,914 11,325 9,099 9,570 10,720 11,774 12,062 15,734 2,006 2,098 2,778 4,573 6,213 7,512 8,928 6,293 6,234 7,283 6,272 6,247 6,170 5,245 5,431 5,464 6,014 6,276 6,669 6,272 10,915 14,324 22,587 27,970 18,620 11,173 10,173 8,095 3,878 4,315 9,996 8,502 6,164 12,796 7,596 7,082 16,605 10,611 14,933 6,957$ 239,501 $ 284,876 $ 301,662 $ 351,797 $ 333,522 $ 285,505 $ 300,497 $ 275,552 $ 244,677 $ 252,901$ 21,800 $ 25,193 $ 39,093 $ 26,177 $ 25,995 $ 23,835 $ 26,090 $ 18,835 $ 15,713 $ 13,558 117,267 126,007 139,739 151,773 145,802 138,594 140,994 150,878 150,290 151,721 11,695 11,281 19,722 25,209 18,452 14,987 14,587 16,651 16,294 16,944 28,939 31,017 31,039 30,622 26,859 40,373 44,345 57,538 45,356 34,275 64,127 121,978 149,325 171,952 180,394 131,908 105,689 75,482 73,581 72,365 8,599 9,733 12,045 11,257 44,349 48,078 89,264 83,378 45,006 45,500 15,025 19,205 21,330 31,239 33,033 31,267 32,611 24,133 15,116 16,787 1,538 -2,551 697 259 231 174 169 581 843--------3,521 -$ 268,990 $ 344,414 $ 414,844 $ 448,926 $ 475,143 $ 429,273 $ 453,754 $ 427,064 $ 365,458 $ 351,993$ (29,489) $ (59,538) $ (113,182)

$ (97,129) $ (141,621)

$ (143,768)

$ (153,257)

$ (151,512)

$(120,781)

$ (99,092)(continued) 92 Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting)(in thousands)

Page 2 of 2 Other financing sources (uses): Transfers in Transfers out Issuance of long term debt Capital lease financings Sales of capital assets Payments to refunded bond agent Total other financing sources (uses)Special item -pension contribution Extraordinary items: Dissolution of Riverside Redevelopment Agency Transfer of assets and liabilities to Successor Agency Transfer of assets from Successor Agency Assumption of obligation Total extraordinary items Net change in fund balances 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$ 49,944 $ 59,545 $ 84,306 $ 62,841 $ 100,797 $ 88,303 $ 214,631 $ 196,859 $ 56,572 $ 58,469 (35,026) (33,969) (53,135) (30,515) (58,710) (48,150) (180,280)

(156,305)

(14,178) (15,369)85,691 20,969 299,645 164,408 30,425 51,821 104,875 34,940 99,753 87,037-----3,116 2,000 -7,203 6,625 6,230 1,281 541 8,931 (5,798) 529 (1,629) 156 82 931 (9,167) --(148,975)

---

(43,591) -97,672 47,826 331,357 56,690 66,714 95,619 139,597 75,650 105,841 137,693 y: (32,141)(130,174)28,121 (4,927)(106,980)

-$ 36,042 $ (11,712) $ 218,175 $ (40,439) $ (74,907) $ (48,149) $ (13,660) $ (182,842)

$ (14,940) $ 38,601 Debt service as a percentage of noncapital expenditures 15.301% 13.777% 14.011% 16.947% 26.058%(1) (2)23.211% 32.757%(3)32.507%(4)21.039%21.803%(1) Increase in debt service related to the issuance of the 2007 Redevelopment Agency Tax Allocation Bonds and 2008 Riverside Renaissance Certificates of Participation.

(2) Increase relates to $30 million refinancing of 2005B pension bonds that took place in May 2008, which became due in-full in June 2009. The $30 million Pension Bond Anticipation Notes have been paid in-full and immediately re-issued each year in 2009, 2010, 2011,2012, 2013 and 2014.(3) 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.(4) Includes one-time early redemption of $33.3 million of 2011 Redevelopment Tax Allocation Bonds.93 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 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$ 79,786 85,243 94,426 99,981 105,525 107,301 107,792 110,471 118,173 111,880$ 59,998 53,773 55,421 60,768 65,532 65,091 64,039 66,047 66,632 67,063$ 59,157 71,084 83,698 92,697 97,100 97,458 102,067 107,455 110,680 111,260$ 15,249 11,952 9,913 14,805 4,674 1,466 124 50 638 115 6,337 7,139 5,713 5,425 5,684 5,639 5,529 5,614 5,712 5,600$ 20,213 20,043 20,097 19,211 18,673 21,100 22,091 30,735 32,688 32,630$ 12,697 9,183 9,536 12,405 12,250 11,855 12,061 12,657 13,410 15,489$ 253,437 258,417 278,804 305,292 309,438 309,910 313,703 333,029 347,933 344,037 94 Table 6 City of Riverside Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (in thousands)

Fiscal Sales Year Tax Utility Property Users Tax 1 Tax Transient Franchise Occupancy Total Tax Tax Taxes 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 53,348 57,522 55,666 50,526 41,882 39,645 44,157 47,701 50,222 55,096 61,553 80,934 101,469 114,176 116,420 104,087 100,802 74,179 52,904 51,323 22,133 23,502 25,384 26,267 25,964 25,975 26,691 27,320 28,206 28,092 4,481 4,813 5,031 4,972 5,144 4,477 4,937 4,883 4,959 5,046 1,795 4,372 3,581 3,795 2,912 2,488 2,731 2,995 3,703 4,189 143,310 171,143 191,131 199,736 192,322 176,672 179,318 157,078 139,994 143,746 1 Decrease in property taxes in fiscal years 2012 and 2013 relates to the dissolution of the Redevelopment Agency. Upon the dissolution of the Redevelopment Agency on February 1, 2012, property taxes received by the Successor Agency are reported in a private-purpose trust fund and therefore are excluded from the activities of the primary government.

95 Table 7 City of Riverside Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands)

City Dissolved Redevelopment Agency'Fiscal Total Year Taxable Taxable Direct Ended Less: Assessed Less: Assessed Tax June 30 Secured Unsecured Exemptions Value Secured Unsecured Exemptions Value Rate2 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 15,540,982 17,557,341 20,672,126 23,618,776 24,428,633 22,644,262 22,056,793 22,031,328 22,313,665 23,045,134 951,211 1,058,995 1,140,891 1,291,972 1,330,053 1,299,353 1,260,923 1,264,151 1,244,448 1,201,634 (2,751,844)

(4,002,177)

(5,417,388)

(6,960,666)

(7,515,667)

(7,103,040)

(6,920,720)

(6,952,649)

(7,142,401)

(7,394,982) 13,740,349 14,614,159 16,395,629 17,950,082 18,243,019 16,840,575 16,396,996 16,342,830 16,415,712 16,851,786 1,775,655 2,914,600 4,145,700 5,509,441 5,998,768 5,598,484 5,396,219 5,395,632 N/A N/A 158,148 210,025 410,625 553,124 581,943 564,825 544,906 572,153 N/A N/A (33,654)(51,992)(93,261)(138,490)(224,025)(266,257)(268,323)(270,313)N/A N/A 1,900,149 3,072,633 4,463,064 5,924,075 6,356,686 5,897,052 5,672,802 5,697,472 N/A N/A 0.266 0.309 0.304 0.334 0.343 0.349 0.347 0.348 0.348 0.125 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 2013/14, the Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas.Source: Riverside County Auditor-Controller 96 Table 8 City of Riverside Direct and Overlapping Property Tax Rates (Rate per $100 of Assessed Valuation)

Last Ten Fiscal Years 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Basic Levy 1 Unified School Districts Debt Service 2 City of Riverside Debt Service Eastern Municipal Water Improvement District Metropolitan Water Distdct Original Area Riverside City Community College Debt Service Rubidoux Community Service Debt Service Total Direct & Overlapping 3 Tax Rates City's Share of 1% Levy Per Prop 134 General Obligation Debt Rate Redevelopment Rate 5.7 Total Direct Rate 6 1.000 1.000 1.000 1.000 1.000 1.000 0.234 0.220 0.155 0.185 0.291 0.326 0.011 0.009 0.008 0.006 0.007 0.006 0.023 0.010 0.009 0.008 --0.006 0.005 0.005 0.005 0.004 0.004 0.018 0.018 0.018 0.013 0.013 0.012 0.003 -----1.295 1.262 1.195 1.217 1.315 1.348 0.145 0.145 0.145 0.145 0.145 0.145 0.011 0.009 0.009 0.006 0.007 0.006 1.006 1.005 1.005 1.005 1.004 1.004 0.266 0.309 0.304 0.334 0.343 0.349 1.000 1.000 1.000 1.000 0.334 0.363 0.409 0.462 0.0Q6 0.006 0.006 0.007 0.004 0.004 0.004 0.004 0.015 0.017 0.017 0.018 1.359 1.390 1.436 1.491 0.145 0.145 0.145 0.145 0.006 0.006 0.006 0.007 1.004 1.004 --0.347 0.348 0.348 0.125 1 In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of the various intergovernmental overlapping debt, 2 Includes:

Alvord Unified School District, Corona Norco Unified School District, Jurupa Unified School District, Moreno Valley Unified School District, Riverside Unified School District and Val Verde Unified School District.3Ovedapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners.4 City's share of 1% levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city. ERAF general fund tax shifts may not be included in tax ratio figures.5 RDA rate is based on the largest RDA tax rate area (TRA) and includes only rate(s) from indebtedness adopted prior to 1989 per California State statue. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter.

6 Total Direct Rate is the weighted average of all individual direct rates. Beginning in 2013/14, the Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas.7 In accordance with the timeline set forth in Assembly Bill Xl 26 (as modified by the California Supreme Court on December 29, 2011)all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.Source: Riverside County Assessor 2004/05 -2013/14 Tax Rate Table.97 Table 9 City of Riverside Principal Property Taxpayers Current Year and Nine Years Ago (in thousands) 2014 2005 Property Owner Tyler Mall La Sierra University Riverside Healthcare System Rohr Inc Cole ID State Street Bank & Trust Co of Calif Vestar Riverside Plaza Corona Pointe Apartments 7450 Northrop Drive Apartments Canyon Springs Marketplace Corp BRE Properties California State Teachers Retirement Charter Comm Entertainment II Bottling Group Press Enterprise Company Mission Grove Park Apartments Taxable Assessed Value$ 194,241 136,505 110,756 108,703 93,330 91,636 84,860 77,450 73,297 70,030 Percentage of Total Taxable Assessed Rank Value 1 2 3 4 5 6 7 8 9 10 0.8%0.6%0.5%0.5%0.4%0.4%0.4%0.3%0.3%0.3%Taxable Assessed Value$ 141,698 52,395 49,989 101,260 Percentage of Total Taxable Assessed Rank Value 1 6 7 2 0.9%0.3%0.3%0.6%91,589 55,391 54,931 49,168 44,912 44,270 3 4 5 8 9 10 0.6%0.4%0.4%0.3%0.3%0.3%Totals$ 1,040,808 4.5%$ 685,603 4.4%Notes: The amounts shown above include assessed value data for both the City and the Successor Agency.Source: Riverside County Assessor 2013/14 and 2004/05 Combined Tax Rolls 98 Table 10 City of Riverside Property Tax Levies and Collections Last Ten Fiscal Years (in thousands)

Last Ten Fiscal Years (in thousands)

Fiscal Year Ended June 30 Collections Taxes Collected within the in Levied for Fiscal Year of the Levy Subsequent Fiscal Year Amount Percentage of Levy Years Total Collections To Date Amount Percentage of Levy 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 36,825 52,532 69,246 83,996 86,251 77,228 74,608 41,020 43,333 45,138 36,332 51,815 67,046 82,345 84,134 74,491 72,327 40,340 42,447 44,684 98.66%98.64%96.82%98.03%97.55%96.46%96.94%98.34%97.96%98.99%493 36,825 717 52,532 2,200 69,246 1,651 83,996 2,117 86,251 2,737 77,228 2,281 74,608 680 41,020 886 43,333-44,684 100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%98.99%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.99 Table 11 City of Riverside Electricity Sold by Type of Customer Last Ten Fiscal Years (in millions of kilowatt-hours)

Type of Customer: Residential Commercial Industrial Wholesale sales Other Total Total direct rate Monthly Base Rate 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 675 696 748 734 733 701 666 688 726 700 530 474 456 441 433 406 400 413 419 421 707 810 924 960 946 906 912 969 1,003 997 470 287 295 357 137 44 7 2 14 4 50 58 39 34 33 32 31 31 31 30 2,432 2,325 2,462 2,526 2,282 2,089 2,016 2,103 2,193 2,152 3.36 3.36 5.00 11.35 13.06 18.06 18.06 18.06 18.06 18.06 Monthly Base Rate includes a Reliability Charge of $5.00 (small residence 100 amp) implemented in January 2008.increased to $10.00 (small residence 100 amp).In January 2010 the Reliability Charge Source: Riverside Public Utilities, Finance Services 100 Table 12 City of Riverside Electricity Rates Last Ten Fiscal Years (Average Rate in Dollars per Kilowatt-Hour)

Fiscal Year Ended June 30 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Residential 0.11813 0.12222 0.12621 0.13613 0.14389 0.15307 0.16173 0.16068 0. 16274 0.15995 Commercial 0.11321 0.11330 0.12164 0.13781 0.15122 0.16014 0.16001 0.15991 0.15913 0.15936 Industrial 0.08369 0.08798 0.09059 0.09658 0.10271 0.10756 0.11194 0.11088 0.11030 0.11156 Other 0.12768 0.12373 0.14493 0.16099 0.17169 0.17876 0.18089 0.17938 0.18375 0.18513 Source: Riverside Public Utilities, Finance Services 101 Table 13 City of Riverside Top 10 Electricity Customers Current Year and Nine Years Ago 2014 Percent of Electricity Total Electric Charges Revenues 2005 Percent of Electricity Total Electric Charges Revenues Electricity Customer Local University Local Government Local Government Local School District Corporation Corporation Corporation Hospital Corporation Corporation

$10,947,884 8,335,217 7,386,521 4,189,035 3,677,670 3,315,738 2,775,346 2,453,555 2,120,900 2,113,037 3.70%2.82%2.50%1.42%1.24%1.12%0.94%0.83%0.72%0.71%N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A$47,314,903 16.00%N/A N/A Retail Sales Per Financial Statements

$295,803,687 N/A -not available Source: Riverside Public Utilities, Finance Services 102 Table 14 City of Riverside Ratios of Outstanding Debt by Type Last Ten Fiscal Years (in thousands)

General Fiscal Obligation Year Bonds Redevelopment Bonds Revenue Bonds Governmental Activities Pension Assessment Obligation Bonds Bonds 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20,280 19,858 19,331 18,774 18,171 17,533 16,845 16,107 15,314 14,460 144,024 140,195 296,598 292,244 285,743 278,867 305.195 148,280 146,470 144,450 142,170 139,410 136,050 132,095 127,480 122,005 115,775 Certificates of Participation 57,336 55,571 192,874 200,273 198,268 211,212 207,246 207,278 158,697 191,446 Capital Leases 7,431 6,008 4,929 9,391 7,455 6,303 6,670 5,220 8,424 13,168 Notes/Loans Payable 10,645 10,215 9,759 9,040 8,749 9,291 8,849 4,000 28,652 47,611 43,762 42,344 Business-Type Activities Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenue Bonds 419,581 509,577 482,929 720,749 670,512 968,393 1,071,554 1,063,853 1,031,839 1,094,290 Notes/Loans Payable 10,459 9,841 9,211 8,569 7,915 7,249 76,747 73,821 70,798 36,030 Capital Leases 392 317 253 211 2,574 2,151 1,720 1,332 2,558 2,266 Total Primary Government 818,428 898,052 1,160,334 1,401,421 1,342,931 1,637,049 1,826,921 1,499,091 1,482,049 1,557,390 Percentage of Personal Income 1 14.98%15.47%18.67%21.51%20.15%24.83%27.58%22.01%21.41%22.54%Debt Per Capita 1 2.91 3.13 4.01 4.80 4.54 5.44 6.01 4.86 4.75 4.96 1 These ratios are calculated using personal income and population data for the prior calendar year.Source: City of Riverside Notes to Financial Statements and Statistical Table 19.103 Table 15 City of Riverside Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (in thousands, except per capita amount)Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General Obligation Bonds 20,280 19,858 19,331 18,774 18,171 17,533 16,845 16,107 15,314 14,460 Certificates of Pension Bonds Participation 148,280 146,470 144,450 142,170 139,410 136,050 132,095 127,480 122,005 115,775 57,336 55,571 192,874 200,273 198,268 211,212 207,246 207,278 158,697 191,446 Tax Allocation Bonds 144,024 140,195 296,598 292,244 285,743 278,867 305,195 Total 369,920 362,094 653,253 653,461 641,592 643,662 661,381 350,865 296,016 321,681 Percent of Assessed Value 1 2.69%2.48%3.98%3.64%3.52%3.82%4.03%2.15%1.80%1.91%Per Capita 2 1,316 1,264 2,260 2,239 2,167 2,140 2,175 1,137 949 1,024 Notes: General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (which, the City has none.)1 Assessed value has been used because the actual value of taxable property is not readily available in the State of California.

2 These ratios are calculated using population data for the prior calendar year.Source: City of Riverside Notes to Financial Statements and Reserve Cash Reconciliation maintained by City Finance Department.

104 Table 16 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30, 2014 Page 1 of 2 2013-14 Assessed Valuation:

Less Dissolved Redevelopment Agency Incremental Valuation:

Adjusted Assessed Valuation:

$ 22,864,558,235 6,012,772,332

$ 16,851,785,903 Overlapping debt repaid with property taxes 2 Metropolitan Water District Riverside City Community College District Alvord Unified School District Riverside Unified School District Corona-Norco Unified School District Jurupa Unified School District Moreno Valley Unified School District Alvord Unified School District Community District No.2006-1 Riverside Unified School District Community Facilities Districts City of Riverside Community Facilities Districts City of Riverside 1915 Act Bonds Total overlapping debt repaid with property taxes Total Debt$ 1,322,750 227,729,565 227,560,233 139,315,000 260,100,000 46,700,000 36,708,522 7,960,000 89,052,000 15,210,000 26,755,000

% Applicable 1.059%29.816 71.179 87.040 0.001 0.002 11.159 82.333 89.479-100.

100.100.City's Share of Debt 1$ 1,400,792 67,899,847 161,975,098 121,259,776 2,601 934 4,096,304 6,553,707 88,906,388 15,210,000 26,755,000

$ 494,060,447 (continued) 105 Table 16 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30, 2014 Other overlapping debt 2 Page 2 of 2 Riverside County General Fund Obligations Riverside County Pension Obligations Riverside County Board of Education Certificates of Participation Alvord Unified School District Certificates of Participation Corona-Norco Unified School District Certificates of Participation Jurupa Unified School District Certificates of Participation Moreno Valley Unified School District Certificates of Participation Riverside Unified School District General Fund Obligations Total other overlapping debt Less: Riverside County supported obligations

$ 718,909,871 334,515,000 2,700,000 2,027,061 29,000,000 6,450,000 13,279,998 11,880,000 11.053%11.053 11.053 71.179 0.001 0.002 11.159 87.040$ 79,461,108 36,973,943 298,431 1,442,842 290 129 1,481,915 10,340,352 129,999,010 1,116,603 128,882,407 262,192,206 885,135,060 424,804,000

$ 1,309,939,060 Overlapping tax Increment debt Total overlapping debt City direct debt Combined total direct and overlapping debt (1) Debt balances are as of April 1, 2014 (most recent available) for other agency debt, and June 30, 2014 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 2013-14 Assessed Valuation:

Total debt repaid with property taxes ....................................

2.16%City direct debt ($424,804,000)

..........................................

1.86%Combined total direct and overlapping debt ............................

5.73%Ratios to Dissolved Redevelopment Incremental Valuation

($6,012,772,332):

Total overlapping tax Increment debt ...................................

4.36%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 govemments 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.

106 Table 17 City of Riverside Legal Debt Margin Information Last Ten Fiscal Years (in thousands) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Assessed valuation

$13,740,349

$14,614,159

$16,395,629

$17,950,082

$ 18,243,019

$ 16,840,575

$ 16,396,996

$ 16,342,830

$ 16,415,712

$ 16,851,786 Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%Adjusted assessed valuation 3,435,087 3,653,540 4,098,907 4,487,521 4,560,755 4,210,144 4,099,249 4,085,708 4,103,928 4,212,947 Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%Debt limit 515,263 548,031 614,836 673,128 684,113 631,522 614,887 612,856 615,589 631,942 Total net debt applicable to limit: 20,280 19,858 19,331 18,774 18,171 17,533 16,845 16,107 15,314 14,460 Legal debt margin 494,983 528,173 595,505 654,354 665,942 613,989 598,042 596,749 600,275 617,482 Total net debt applicable to the limit as a percentage of debt limit 3.9% 3.6% 3.1% 2.8% 2.7% 2.8% 2.7% 2.6% 2.5% 2.3%The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation.

However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect a the time that the legal debt margin was enacted by the State of California for local governments located within the State, Source: City of Riverside, Statistical Table 7 and Notes to Financial Statements.

107 Table 18 City of Riverside Pledged-Revenue Coverage Business Type Activity Debt Last Ten Fiscal Years (in thousands)

Electric Revenue Bonds Water Revenue Bonds Less: Net Less: Net Fiscal Pledged Operating Available Debt Service Pledged Operating Available Debt Service Year Revenue 1 Expenses 1 Revenue Principal Interest Coverage Revenue 1 Expenses' Revenue Principal Interest Coverage 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 262,350 265,086 289,784 314,733 320,447 320,560 319,177 340,098 348,187 347,541 164,159 184,421 187,700 219,680 202,904 199,040 212,878 221,876 226,997 241,136 98,191 80,665 102,084 95,053 117,543 121,520 106,299 118,222 121,190 106,405 14,555 15,015 18,815 19,460 20,572 21,574 23,029 25,174 18,486 21,632 12,143 15,245 14,200 16,790 24,941 22,572 25,087 27,630 25,941 27,575 3.68 2.67 3.09 2.62 2.58 2.75 2.21 2.24 2.73 216 45,348 66,226 55,699 67,312 60,886 61,985 84,328 73,557 72,700 71,317 26,436 27,028 29,461 33,827 35,639 35,953 35,220 35,309 35,940 37,698 18,912 39,198 26,238 33,485 25,247 26,032 49,108 38,248 36,760 36,761 4,045 3,875 4,300 4,355 4,473 4,533 4,799 4,708 5,395 4,574 2,591 3,790 3,454 4,275 6,728 8,008 9,263 8,872 8,700 8,536 2.85 5.11 3.38 3.88 2.25 2.08 3.49 2.82 2.61 2.80 Sewer Revenue Bonds Less: Net Fiscal Pledged Operating Available Debt Service Year Revenue 1 Expenses' Revenue Principal Interest Coverage 2010 2011 2012 2013 2014 31,470 37,772 42,562 52,944 52,098 26,865 27,575 29,632 29,999 28,930 4,605 10,197 12,930 22,945 23,168 666 692 692 7,465 7,753 151 125 5,471 10,891 10,781 5.64 12.48 2.10 1.25 1.25 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

Amounts have been calculated in accordance with the provisions set forth in the debt covenants.

Total operating expenses exclusive of depreciation.

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

The City of Riverside does not have any pledged revenue related to Govermental Activities.

108 Table 19 City of Riverside Demographic and Economic Statistics Last Ten Calendar Years Calendar Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: Population 281,192 286,572 289,045 291,814 296,038 300,769 304,051 308,511 311,955 314,034 Personal Income 2 (in thousands) 5,462,823 5,806,339 6,214,628 6,514,489 6,665,142 6,592,294 6,623,143 6,811,923 6,923,217 6,909,376 Per Capita Personal Income 2 19,427 20,261 21,501 22,324 22,514 21,918 21,783 22,080 22,193 22,002 Unemployment Rate 3 6.1 5.4 5.1 6.1 8.6 13.7 14.8 13.7 9.7 8.4 1 California State Department of Finance.2 Demographic Estimates for 2004-2009 are based on the last available Census. Projections are developed by incorporating all fo the prior census data released to date. Demographic Data is totaled from Census Block Groups that overlap the City's boundaries.

Demographic Estimates for 2010 and later are per the US Cenus Bureau, most recent American Community Survey.3 State of California Empolyment Development Department.

109 Table 20 City of Riverside Principal Employers Current Year and Nine Years Ago 2014 2005 Percentage of Total City Employment Employees Rank Percentage of Total City Employment Employer Employees Rank County of Riverside University of California Riverside Unified School District Kaiser City of Riverside Riverside Community Hospital Riverside County Office of Education Alvord Unified School District Parkview Community Hospital Riverside Community College District 11,187 7,218 3,461 3,156 2,476 1,880 1,765 1,445 1,350 1,061 1 2 3 4 5 6 7 8 9 10 7.6%4.9%2.4%2.1%1.7%1.3%1.2%1.0%0.9%0.7%N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Total 34,999 23.8%N/A N/A N/A -not available Source: City of Riverside, Finance Department 110 Table 21 City of Riverside Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years Function General government Public safety (sworn and non-sworn personnel Police Fire 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 331.88 377.15 412.22 436.35 439.10 433.40 431.40 440.40 413.90 356.25 I)568.83 589.33 618.33 637.33 591.93 589.93 589.93 599.93 596.75 551.75 221.11 221.73 251.73 254.21 254.21 255.46 255.46 255.46 255.46 255.00 281.35 262.35 286.35 318.35 369.65 349.50 348.11 357.11 362.11 333.48 48.49 59.49 60.29 64.29 58.60 59.00 56.00 56.00 57.00 59.00 300.92 311.45 324.26 339.52 340.71 328.07 328.07 341.22 351.48 269.98 6.00 6.00 7.00 7.00 7.00 7.00 9.50 9.50 9.50 6.00 130.00 133.00 142.00 167.00 167.00 177.65 180.15 181.15 181.15 182.15 305.60 337.60 351.35 404.60 408.10 419.45 448.50 452.50 459.50 462.50 2,194.18 2,298.10 2,453.53 2,628.65 2,636.30 2,619.46 2,647.12 2,693.27 2,686.85 2,476.11 Highways and streets Sanitation Culture and recreation Airport Water Electric Total 1 In fiscal year 2009 the Crossing Guards program (46.40 FTEs) was moved from the Police Department to the Public Works Department (highways and streets).2 In fiscal year 2013/14 the City Council deleted a number of long-term unfunded positions.

Source: City of Riverside, Finance Department 111 Table 22 City of Riverside Operating Indicators by Function Last Ten Fiscal Years Function/Program 20'Police Arrests Fire Number of calls answered Inspections Public works: Street resurfacing (miles)Parks and recreation Number of recreation classes Number of facility rentals Water Number of accounts Annual consumption (ccf) 27,8 Electric Number of accounts Annual consumption (kvh)Sewer: New connections Average daily sewage treatment (millions of gallons)'Amounts expressed in millions N/A -not available Source: City of Riverside, various departments 05 2006 2007 2008 11,280 26,505 17,028 102.45 15,195 27,074 62,492 175,253 103,463 2,432 9,621 38.07 10,093 26,696 19,261 51.26 16,272 27,483 62,985 28,865,030 104,294 2,359 16,717 35.91 9,827 27,458 7,261 73.40 19,079 32,980 63,431 32,110,208 105,226 2,462 15,423 32.50 9,367 27,429 10,812 26.27 22,146 35,076 63,494 30,583,266 106,015 2,526 16,412 32.10 2009 10,150 26,397 7,638 18.90 21,884 36,822 64,062 29,721,236 106,385 2,282 18,765 33.00 2010 2011 8,690 26,484 7,234 20.00 27,762 34,565 64,231 26,687,271 106,335 2,089 16,971 33.29 8,118 27,322 6,505 21.25 37,303 42,638 64,349 25,902,439 106,855 2,016 17,746 30.06 2012 7,736 27,637 10,074 18.43 43,318 43,288 64,367 27,062,142 107,321 2,103 18,166 29.84 2013 2014 8,362 29,988 10,151 16.50 41,364 43,358 64,591 28,186,178 107,525 2,193 17,607 29.57 9,321 30,668 12,476 35.38 45,707 46,432 64,829 28,887,304 108,358 2,152 17,274 28.49 112 Table 23 City of Riverside Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2005 2006 2007 (1) 2008 2009 2010 2011 2012 2013 2014 Function Public Safety Police Stations Substations Helicopters Fire Stations Active apparatus Reserve apparatus Training facilities Highways and streets Streets (miles)Streetlights Signalized intersections Culture and recreation Parks acreage Community centers Playgrounds Swimming pools Softball & baseball diamonds Library branches Museum exhibit-fixed Museum exhibit-special Water Fire hydrants Sewer Sanitary sewers (miles)Electric Miles of overhead distribution system Miles of underground system 2 7 4 13 30 5 1 836.00 28,581 322 2,534.00 11 26 7 35 5 8 1 6,926 3 5 4 13 29 6 1 845.35 28,847 353 2,534.00 11 27 6 33 6 7 7.127 3 4 4 14 30 6 1 852.04 29,028 358 2,773.00 11 38 7 44 6 13 2 7,187 3 4 4 14 30 6 1 864.68 29,312 363 2,773.00 11 38 7 44 6 8 5 7,381 3 5 4 14 30 7 1 866.89 29,675 365 2,773.00 11 41 7 44 7 6 2 7,523 3 4 4 14 30 7 1 867.96 29,757 362 2,773.00 11 41 7 44 7 5 2 7,593 3 4 4 14 26 9 1 868.39 29,868 362 2,811.00 11 41 7 49 8 8 2 7,632 3 4 4 14 27 9 1 868.70 29,933 365 2,811.00 11 41 7 51 8 5 1 7,682 829 515.0 804.0 3 4 4 14 28 11 1 3 4 3 14 28 11 1 868.89 29,949 365 2,891.00 11 43 7 54 8 3 4 871.19 29,968 367 2,911.80 11 44 7 54 8 3 4 765 775 785 794 794 820 823 7,726 829 513.0 810.0 7,754 829 513.0 814.0 531.0 622.0 527.0 663.0 528.0 704.0 523.5 741.6 522.0 769.0 519.0 782.0 517.0 791.0 Source: City of Riverside, various departments (1) Museum Fixed Exhibits -In 2007, the Riverside Municipal Museum remodeled a number of the spaces within the museum allowing the museum the opportunity to debut new exhibitions and to display more permanent collections in addition to partnering with others on exhibits that were available that year.113 City ?fArts &Innovation 3900 Main Street Rivelrsde CA 92522 xplore vrside. corn