ML12030A248

City of Anaheim, Comprehensive Annual Financial Report for Year Ended June 30, 2011

ML12030A248
Person / Time
Site:	San Onofre
Issue date:	12/14/2011
From:	Moreno D, Wingenroth B City of Anaheim, CA, Southern California Edison Co
To:	Office of Nuclear Reactor Regulation
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Download: ML12030A248 (147)

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w k A-~ -S CO.MPREHENSIVEI CITY OF ANAHEIM CALIFORNIA YEAR ENDED JUNE 30, 2011 PREPARED BY DEPARTMENT OF FINANCE CITY OF ANAHEIM CITY COUNCIL GAIL EASTMAN COUNCIL MEMBER HARRY S. SIDHU, P.E.MAYOR PRO TEMI ToM TAIT LORRI GALLOWAY MAYOR COUNCIL MEMBER KRIS MURRAY COUNCIL MEMBER INTRODUCTORY SECTION SIA XE INTRODUCTORY

'--ý ýSECTION CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2011 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 Assets 21 Statement of Activities 23 Fund Financial Statements Balance Sheet -Governmental Funds 25 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 26 Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds 27 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 28 Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -General Fund 29 Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -Housing Authority 30 Statement of Fund Net Assets -Proprietary Funds 31 Statement of Revenues, Expenses and Changes in Fund Net Assets -Proprietary Funds 33 Statement of Cash Flows -Proprietary Funcds 34 Statement of Fiduciary Net Assets 37 Statement of Changes in Fiduciary Net Assets 39 Notes to the Financial Statements 41 Required Supplementary Information (Unaudited) 75 Combining Individual Fund Statements and Schedules Governmental Funds Combining Balance Sheet -Nonmajor Governmental Funds by Fund Type 77 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds by Fund Type 78 Combining Balance Sheet -Nonmajor Special Revenue Funds 79 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits)

-Nonmajor Special Revenue Funds 81 Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

-Budget and Budgetary Basis Actual -All Nonmajor Special Revenue Funds 83 (continued)

CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2011 (continued)

Page Combining Balance Sheet -Nonmajor Debt Service Funds 88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Debt Service Funds 89 Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -All Debt Service Funds 90 Combining Balance Sheet -Nonmajor Capital Projects Funds 92 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits)

-Nonmajor Capital Projects Funds 93 Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

-Budget and Budgetary Basis Actual -All Capital Projects Funds 94 Internal Service Funds Combining Statement of Fund Net Assets -Internal Service Funds 97 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets -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 Assets by Component

-Last Ten Fiscal Years 104 Changes in Net Assets -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 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 Ratios of Outstanding Debt by Type -Last Ten Fiscal Years 115 Ratios of General Bonded Debt Outstanding

-Last Ten Fiscal Years 116 Direct and Overlapping Governmental Activities Debt -as of June 30, 2011 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

-Last Eight Fiscal Years 123 Full-time Equivalent City Government Employees by Function/Program

-Last Ten Fiscal Years 125 Operating Indicators by Function -Last Eight Fiscal Years 126 Capital Assets Statistics by Function -Last Eight Fiscal Years 128 City of Anaheim Map 130 City of Anaheim, California Finance Department December 14, 2011 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, 2011. 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 CAFR is presented in three sections:

Introductory, Financial, and Statistical.

The Introductory Section includes the table of contents, this transmittal letter, certificate of achievement, the City's organization chart, and a list of administrative personnel.

The Financial Section includes the report of the independent auditors, Management's Discussion and Analysis (MD&A), the basic financial statements including the government-wide financial statements comprised of the Statement of Net Assets and the Statement of Activities, and the accompanying notes to the financial statements.

The Financial Section also contains the fund financial statements including the governmental funds financial statements, the proprietary funds financial statements and the fiduciary fund financial statements.

This section also includes the combining individual funds financial statements for the non-major governmental funds and the internal service funds. The Statistical Section contains selected pertinent financial and demographic information, on a multi-year basis. This transmittal letter is designed to complement and should be read in conjunction with the MD&A.In addition to the financial audit, the City is required to undergo an annual Single Audit in conformity with the provisions of the Single Audit Act Amendments of 1996 and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations.

The information related to the Single Audit, including the schedule of expenditures of federal awards, schedule of findings and questioned costs, and auditors' reports on internal control and compliance, is not included with this report and is issued as a separate document.This CAFR includes all funds of the City. The City provides a full range of services, including:

police and fire protection, highways and streets, public improvements, planning and zoning, utilities (electric and water), sanitation and solid waste, stadium, convention center, golf courses, street and park maintenance, recreational and cultural programs for citizen participation, and general administrative services.

In addition to general governmental activities, the City Council is financially accountable for the Anaheim Housing Authority, Anaheim Redevelopment Agency, Community Center Authority, Anaheim Public Improvement Corporation, and Anaheim Public Financing Authority; therefore, these activities are included in the reporting entity.ECONOMIC CONDITION 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 on the west and the Santa Ana Mountains on the east. The City is the oldest and second 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 4,600 manufacturing plants are located in the county, most notably defense and aerospace, biomedical, electronics, machinery, and computer product manufacturers.

The City has over 17,000 active business licenses, of which 15,000 are businesses operating within the City's boundaries.

As the City continues to attract population growth and economic expansion, its municipal services are constantly being improved to serve residential and business needs. This growth in City service demand presents the City with significant challenges; and if the high level of service is to be maintained, the City will need to I CITY OF ANAHEIM continue to explore new methods of obtaining financial resources and more efficient methods to deliver services.

The unemployment rate in the Orange County, California area for June 2011 was 9.2%, which is the same as the national average but remained below the state (11.8%) average.Tourism related spending provides significant discretionary revenue to the City of Anaheim, and the City closely monitors and projects trends related to this market.Revenue from tourism strengthened in fiscal year 2011, and local economic forecasts expect modest growth to continue in fiscal year 2012. The City's revenue from sales and use taxes began its recovery in fiscal year 2011 and is expected to grow modestly in fiscal year 2012.MAJOR INITIATIVES 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 they are consistent with the priorities of our policy body and the community.

Through a commitment to responsible government, superior customer service and economic growth, the City of Anaheim continues its tradition of accomplishment by investing in modern public amenities, welcoming new business development, and breaking ground on infrastructure projects that will inspire civic pride and captivate imaginations.

The City's dedication to improvement and innovation has created an environment where residents and businesses are free to choose how best to enjoy all that Anaheim has to offer.ANAHEIM CONNECTS:

The City of Anaheim strives to make connecting to City government as easy as possible.

In addition to Anaheim Anytime and the City's 3-1-1 hotline providing residents with seamless access to services at any time of day, the City recognizes that the latest trends in technology and social media are changing the way residents and businesses communicate and is adapting the way it interacts and conducts business with its customers.

In our continued commitment to excellence in customer service, we have made accessing Anaheim services instantaneous through the My Anaheim smartphone application.

The application can be used to find events in Anaheim or request any City service. Anaheim's efforts at outreach extend beyond event notification or the submission of service requests.

In the case of an emergency, the City's Anaheim Alert emergency text messaging system will notify residents of fire evacuations, power outages, public safety information, traffic information, road closures and other time sensitive news.Improving our community requires involvement.

Personal connections make strong neighborhoods, and connections with neighbors often lead to a stronger, safer and more vibrant community.

The "Hi Neighbor" program encourages Anaheim residents to meet, know and support each other whether preparing for an emergency, addressing crime, or planning a neighborhood event, "Hi Neighbor" will strengthen the bonds of community and empower Anaheim residents to be more involved in the future of their communities by looking out for the safety and well-being of their neighbors.

BUILDING OUR FUTURE: Through these difficult times, the City remains committed to building our future while effectively and efficiently delivering core services.Providing residents with safe and vibrant neighborhoods is a priority, and the Police and Fire Departments continue to manage the economic environment by making prudent adjustments that make it possible to maintain service levels. The Public Utilities Department has positioned itself to maintain high levels of service to customers through critical infrastructure and new technology investments, including the Canyon Power Project, a state-of-the-art 200 megawatt power generating facility that will provide local power to Anaheim. Public Works ensures that other core infrastructure, such as streets and roads, are well maintained for safe and efficient use by the residents and businesses of Anaheim.As the City has evolved, the diversity of assets has allowed Anaheim to become the world class destination that it is today. With targeted expansion and strategic investment, the City has successfully leveraged its resources to sustain its growth and plan for its future. Although a changing economic environment demands prudent management of the City's resources, the exploration of new opportunities for economic growth continues.

The Anaheim Convention Center, the largest convention center on the west coast, will undergo an impressive expansion that will increase the public meeting space by more than 200,000 square feet. The redesigned transit plaza is substantially complete and construction of the outdoor plaza is scheduled to begin in early 2012. The City continues to develop transportation solutions for the region and will soon begin construction of the Anaheim Regional Transportation Intermodal Center (ARTIC), utilizing various federal, state and local transportation grants. This center will provide a functional link among all transit modes and act as the southern terminus of the California High Speed Rail Project.In spite of economic challenges, the City recognizes that creating and maintaining a vibrant and livable community is a fundamental responsibility.

As a result of an unprecedented Capital Improvement Program, the City has made an incredible investment in the community over the last decade. The investment in improvements from the building of new community centers to improving critical infrastructure has not only enhanced the quality of life for all residents, but has positioned the City well for the future. Understanding the importance of new opportunities for recreation, the City unveiled the Anaheim Coves project at Burris Basin, which offers residents a network of green space and trails and reestablishes the important link between 2 CITY OF ANAHEIM Anaheim and its namesake, the Santa Ana River. In fiscal year 2011/12, the City will open Founder's Park in the Colony District.

This one-acre park will showcase some of the structures and artifacts that are part of Anaheim's beginnings, including the historic Mother Colony House, the Woelke-Stoffel House and the landmark Moreton Bay Fig Tree. In addition to new facilities, the City has dedicated resources to improving existing neighborhoods and revitalizing areas in need.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 downturns, create a positive atmosphere for economic development, and allow flexibility in addressing budgetary challenges.

As of June 30, 2011, the City's General Fund has an spendable, unrestricted fund balance of $22.3 million, which represents 9% 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 14, 2011, the City Council adopted the fiscal year 2012 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 2011, and totaled $726.6 million for the five-year fiscal period ending June 30, 2016. 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.OTHER INFORMATION THE INDEPENDENT AUDIT The City Charter reqluires 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-133. 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.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, California, for its comprehensive annual financial report for the fiscal year ended June 30, 2010. This was the 35th consecutive year that the City has achieved this prestigious award (fiscal years ended June 30, 1976 through 2010). In order to be awarded a 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.

3 CITY OF ANAHEIM A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to conform to the Certificate of Achievement Program's recluirements 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 Tait and Mayor ProTem Harry Sidhu for their significant contributions as members of the Audit Committee.

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

Its leadership has made possible the implementation of these important and innovative concepts in fiscal management by the City.Respectfully submitted, Bob Wingenroth Deborah A. Moreno Acting City Manager Acting Finance Director 4 CITY OF ANAHEIM Certificate of Achievement for Excellence in Financial Reporting Presented to City of Anaheim California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30,2010 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting.

!M President Executive Director 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, 2010. 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.5 (This page left blank intentionally) 6 CITY OF ANAHEIM 2 SMfl il " d'7 CITY OF ANAHEIM Administrative Personnel December 14, 2011 Acting City Manager Deputy City Manager-Administration Chief of Police City Attorney City Clerk City Treasurer Acting Community Development Executive Director Community Services Director Convention, Sports & Entertainment Executive Director Acting Finance Director Fire Chief Human Resources Director Planning Director Public Utilities General Manager Public Works Director Bob Wingenroth Greg Garcia John Welter Cristina L. Talley Linda N. Andal Henry W. Stern John E. Woodhead IV Terry D. Lowe Thomas Morton Deborah A. Moreno Randy R. Bruegman Kristine Ridge Sheri Vander Dussen Marcie L. Edwards Natalie Meeks 8 FINANCIAL SECTION Ir FINANCIAL SECTION LA Mmb-KPMG LLP Suite 700 20 Pacifica Irvine, CA 92618-3391 Independent Auditors' Report The Honorable Mayor and City Council City of Anaheim, California:

We have audited the accompanying financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the City of Anaheim, California (the City) as of and for the year ended lune 30, 2011, which collectively comprise the City's basic financial statements as listed in the table of contents.

These financial statements are the responsibility of the City's management.

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

An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting.

Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our 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 of Anaheim, California as of June 30, 2011, and the respective changes in financial position and where applicable, cash flows thereof and the respective budgetary comparison for the General and Housing Authority Funds for the year then ended in conformity with U.S. generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated December 14, 2011 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 the internal control over financial reporting or on compliance.

That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.As discussed in note 1 to the financial statements, the City adopted Government Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.

Application of this statement is effective as of July 1, 2010.Management's Discussion and Analysis on pages 11 through 19 and the pension plan supplementary information on page 75 are not required parts of the basic financial statements but are supplementary information required by U.S. generally accepted accounting principles.

We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information.

However, we did not audit the information and express no opinion on it.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 statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on them.C LL-P December 14, 2011 KPNAG LLP ., .DA-- Nbifily 1.ý hip. thl, Ll S hr lir,,. w KPMG 0,q-,li- ('KPNIG I.,l- I',. .. S,,i,, Mily 9 (This page left blank intentionally) 10 MANAGEMENT'S DISCUSSION AND ANALYSIS MANAGEMENTS 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, 2011. 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 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 Assets presents information on all of the City's assets and liabilities, including capital assets and long-term liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City as a whole is improving or deteriorating.

The Statement of Activities presents information showing how the City's net assets 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.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 an electric and water utility, sanitation, golf courses, and convention, sports and entertainment venues (Anaheim Convention Center, Angel Stadium of Anaheim, and The Grove of Anaheim) operations.

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

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

The government-wide financial statements can be found on pages 21-23 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, Management's Basic Financial onaysis Statemeants Analysis Summary 4 0 Detail Government-wide financial statements.

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

These two statements are designed to provide readers with a broad overview of the City's finances utilizing the full accrual method of accounting, in a manner similar to a 11 CITY OF ANAHEIM 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 21 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 and Housing Authority Special Revenue Fund, both of which are considered to be major funds. Data for the other 19 governmental funds are combined into a single, aggregated presentation.

Individual fund data for each of these nonmajor governmental funds is provided in the form of supplementary combining statements on pages 77-82, 88-89, and 92-93 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 and are included in the basic financial statenients on pages 29-30 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 83-87, 90-91, and 94-96 of this report.The governmental funds financial statements can be found on pages 25-28 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 and water utility, sanitation, 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 internal service funds is provided in the form of combining statements elsewhere in this report.The proprietary funds financial statements can be found on pages 31-35 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 fiduciary fund financial statements can be found on page 37-39 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 governnment-wide and fund financial statements.

The notes to the financial statements can be found on pages 41-73 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 anrd schedules can be found on pages77-100 of this report.12 CITY OF ANAHEIM FINANCIAL HIGHLIGHTS (Amounts in thousands)" The City's net assets increased as a result of this year's operations.

Net Assets of the City's governmental activities increased

$66,880 (8%) and business-type activities net assets increased

$13,873 (0%)." At the end of the current fiscal year, spendable, unassigned fund balance for the General Fund was $22,139, or 9% of the total General Fund expenditures." The City's total capital assets increased by $72,307 (3%) and were approximately equal between governmental activities and business-type activities during the current fiscal year.* The City's total long-term liabilities increased by $136,734 (7%) during the current fiscal year.GOVERNMENT-WIDE FINANCIAL ANALYSIS NET ASSETS JUNE 30, 2011 AND 2010 Current and other assets Capital assets, net Total assets Other liabilities Long-temi liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted (deficit)Total net assets Governmental Activities 2011 2010$ 527,558 $ 474,725 1,358,080 1,323,901 1,885,638 1,798,626 67,465 58,715 926,247 914,865 993,712 973,580 Business-type Activities 2011 2010$ 636,071 $ 552,271 1,528,979 1,490,851 2,165,050 2,043,122 104,255 121,552 1,104,549 979,197 1,208,804 1,100,749 Total Government 2011 2010$1,163,629

$1,026,996 2,887,059 2,814,752 4,050,688 3,841,748 171,720 180,267 2,030,796 1,894,062 2,202,516 2,074,329 834,337 182,011 (124,422)$ 891,926 795,579 150,750 (121,283)$ 825,046 786,175 54,626 115,445$ 956,246 762,236 49,325 130,812$ 942,373 1,620,512 236,637 (8,977)$1,848,172 1,557,815 200,075 9,529$1,767,419 By far the largest portion of the City's net assets (88%) reflects its investment in capital assets (e.g. land, buildings, utility plant, machinery, equipment, and infrastructure), net of any related outstanding debt, 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 assets (12%) represents resources that are subject to external restriction on how they may be used. The unrestricted net assets deficit of $8,977 consists of business-type net assets of $115,445, which partially offsets the governmental activities unrestricted net deficit of $124,422.

The Anaheim Redevelopment Agency (Redevelopment Agency), a blended component unit of the City, represents

$144,283 of the deficit in unrestricted net assets. The Redevelopment Agency was established for the purpose of promoting economic revitalization and eliminating blight within the designated project area of the City. Often these activities do not result in residual assets, but rather underwrite the cost of a development activity deemed beneficial in meeting the Redevelopment Agency's objectives.

The resulting Statement of Net Assets reflects the debt obligation to be repaid through future tax revenues, without an offsetting asset. While this is a routine function of such an entity, when blended with the City, its deficit of unrestricted net assets causes the governmental activities to report a consolidated deficit position.13 CITY OF ANAHEIM CHANGE IN NET ASSETS YEAR ENDED JUNE 30, 2011 AND 2010 Governmental Business-type Total Activities Activities Government 2011 2010 2011 2010 2011 2010 REVENUES Program revenues: Charges for services $ 54,448 $ 47,345 $526,145 $525,743 $ 580,593 $ 573,088 Operating grants and contributions 124,358 120,900 746 1,990 125,104 122,890 Capital grants and contributions 70,080 31,828 12,667 5,622 82,747 37,450 General revenues: Taxes: Property taxes 106,093 107,420 106,093 107,420 Sales and use taxes 54,711 52,045 54,711 52,045 Transient occupancy taxes 82,605 77,139 82,605 77,139 Motor vehicle license fees 1,783 1,026 1,783 1,026 Other taxes 7,288 7,288 7,288 7,288 Unrestricted investment earnings 3,667 7,012 9,617 15,825 13,284 22,837 Other 614 1,175 614 1,175 Total revenues 505,647 453,178 549,175 549,180 1,054,822 1,002,358 EXPENSES Program activities:

Governmental activities:

General government 10,911 10,917 10,911 10,917 Police 119,504 125,121 119,504 125,121 Fire 56,393 58,229 56,393 58,229 Community Development 105,937 117,621 105,937 117,621 Planning 15,627 16,822 15,627 16,822 Public Works 44,109 39,017 44,109 39,017 Community Services 30,958 35,372 30,958 35,372 Public Utilities 2,218 1,952 2,218 1,952 Convention, Sports and Entertainment 13,633 9,931 13,633 9,931 Interest on long-term debt 48,014 47,694 48,014 47,694 Business-type activities:

Electric Utility 371,689 375,491 371,689 375,491 Water Utility 56,249 55,514 56,249 55,514 Sanitation 49,864 50,540 49,864 50,540 Golf Courses 4,256 4,436 4,256 4,436 Convention, Sports and Entertainment Venues 44,707 46,143 44,707 46,143 Total expenses 447,304 462,676 526,765 532,124 974,069 994,800 Excess (deficiency) before transfers 58,343 (9,498) 22,410 17,056 80,753 7,558 Transfers in (out) 8,537 19,602 (8,537) (19,602)Increase (decrease) in net assets 66,880 10,104 13,873 (2,546) 80,753 7,558 Net assets at beginning of year, as previously reported 825,046 814,942 942,373 944,919 1,767,419 1,759,861 Net assets at end of year $891,926 $825,046 $956,246 $942,373 $1,848,172

$1,767,419 14 CITY OF ANAHEIM REVENUES BY SOURCE -GOVERNMENTAL ACTIVITIES Other taxes 1 %Unresir e icted investment arnings Ot 1% 1 i'Motor vehicle license fees<1%Transient occupancy taxes 16%Charges for services 11%i A contributions 1 25%Sales and use taxes 11%Property taxes 21%\-Capital grants and contributions 14%EXPENSES AND PROGRAM REVENUES -GOVERNMENTAL ACTIVITIES Governmenlal activities.

The most significant revenues of the governmental activities are general taxes (4 9%), which include property taxes (21%), sales and use taxes (H 1%), transient occupancy taxes (I16%), other taxes (I W), and motor vehicle license fees (VLF) (less than 1%). Program revenues are 50% of the total revenues of the governmental activities, which include charges for services (I I%), operating grants and contributions (25%), and capital grants and contributions (144%).Public safety (police and fire) expenses are the most significant (39"%) of all governmental activities expenses, followed by community development (24%), interest on long-term debt (I 1%), public works (1 0%), Community Services (77%) and various other programs (9%). Included in these amounts is depreciation expense, which is 6% of the total expenses for governmental activities.

Governmental activities revenues increased

$52,469 (1 2%) in the current fiscal year.Taxes increased

$7,562 (3%) of which transient occupancy tax (TOT) increased$5,466 (7/,,) due to higher hotel occupancy and increased room rates in an improving tourism and leisure industry; sales and use tax increased by $2,666 (7%)as a result of higher gas prices, increased new car sales and general improvement across most business sectors. Charges for services increased

$7,103 (1 5%) primarily due to special assessments generated from the new Anaheim Tourism Improvement District of $5,539. Operating grants increased by $3,458 (3%) mainly due to an increase in Urban Area Security Initiative (UASI) grant reimbursement.

Capital grants and contributions increased by $38,252 (120%) primarily due to one-time developer contributions of $41,007 for the Platinum Triangle infrastructure developments.

These revenue increases are partially offset by a decrease in unrestricted interest earnings of $3,345 (481%) due to lower unrealized investment gain in the current fiscal year.Governmental activities net transfers in decreased

$11,065 (56%) primarily due to one-time transfers out of capital assets funded by grants and developer fees in the amount of $8,414 from the governmental activities to the business-type activities and partially offset by a one-time reduction of $6,000 to the Convention, Sports and Entertainment Venues in the prior fiscal year. Additional information regarding transfers can be found in note 3 of the notes to the financial statements on page 52-53 of this report.$140.000$120.000 150.000$40,000$0,,,," ide'0~~'0.0'01_1'd" ,0.PO.An --un r E, p-15 CITY OF ANAHEIM REVENUES BY SOURCE -BUSINESS-TYPE ACTIVITIES UnreWsioted invetment earnings Capital grants and-conrihutimns 2%Operatng grats and_ontsibutions

<1%%9Charges on services 9ts%EXPENSES AND PROGRAM REVENUES -BUSINESS-TYPE ACTIVITIES Governmental activities expenses decreased

$15,372 (3%) in the current fiscal year.The decrease in expenses were primarily due to decreases from Community Development of $11,684 (10%), Public Safety of $7,453 (7%), Community Services of $4,414 (12%), partially offset by increases from Public Works of $5,092 (13%) and Convention, Sports and Entertainment Venues of $3,702 (37%)." The decrease in Community Development expenses was mainly due to the reduced Supplemental Education Revenue Augmentation Fund (SERAF)payments to the State of California of $12,619. In fiscal year 2011, the Anaheim Redevelopment Agency was required to contribute

$3,272 compared to the$15,891 payment required in the prior fiscal year.* The decreases in Public Safety and Community Services expenses were primarily due to managed savings due to resource constraints from the continued effects of the economic downturn.* The increase in Public Works expenses was mainly the result of the deferral of certain street maintenance projects in the prior fiscal year due to the uncertainty of gas tax allocations from the State of California.

• The increase in Convention, Sports and Entertainment expenses is primarily due to one-time funding of $2,250 to the Anaheim/Orange County Visitor and Convention Bureau for an opportunity fund to attract and retain business at the Anaheim Convention Center. This funding became available with the formation of the Anaheim Tourism Improvement District (ATID) and the associated special assessments that were approved by the local hotel community to enhance tourism and increase hotel stays.Business-type activities.

Business-type activities increased the City's net assets by$13,873. Key elements of this change are as follows: Charges for services of $526,145 increased

$402 (less than 1%). The increase in charges for services was primarily due to an increase from the Electric Utility of$4,109 (1%) partially offset by a decrease from Convention, Sports and Entertainment Venues of $2,816 (9%).The increase in the Electric Utility charges for services is partly due to increased retail sales revenue of $17,555 (6%). In response to sustained increased power costs, the City Council increased electric billing base rates by 5%. Additionally, surplus natural gas sales increased

$6,600 (2 6 4%) mainly due to unplanned outages at the Magnolia and Combustion Turbine plants, less purchases gas was used for both plants in this fiscal year. Transmission revenues increased

$2,058 (9%) mainly due to the increased statewide transmission demand and rates set by the California Independent System Operator (CAISO). The increase in the Electric$400,000 1-S3S0,OottO

$300.00t-g

$25g,Og -t_s20oo0W I-$150,000$ioogg0o f-$50,000 t-G.If C.- C--tim, Sl-' ,nd EtenxnmetV,-

El-cri, Ufil~ty StaerUility O N~g-an --nan *Operse 16 CITY OF ANAHEIM Utility charges for services is partially offset by decreases in wholesale sales revenues $14,370 (41%) caused by the wholesale volume decline of 32% and wholesale average price drop of 12% in the market; additionally, the Rate Stabilization Account (RSA) revenues that are recognized to meet debt service coverage ratios to maintain bond ratings decreased by $8,700 (28%) with the increases in retail and surplus natural gas sales. Additional information on the RSA can be found in the Regulatory Credits section of note 1 of the notes to the financial statements, on pages 46 of this report.The decrease in Convention, Sports and Entertainment Venues charges for services is primarily due to the continued impacts of the economic downturn that have resulted in decreased facilities rental of $1,989 (8%), from a decrease in the number of larger convention and trade shows and reduced space utilization.

This decrease also impacted food and beverage revenues, resulting in a decrease in concession fees of $943 (0 6%).Transfers out of $8,537 decreased by $1 1,065 (56%) as discussed in the government-wide financial analysis of governmental activities.

Total expenses of $526,765 decreased

$5,359 (1 %). The decrease is primarily due to decreases of $3,802 (1I%) in Electric Utilities and $1,436 (3%) in the Convention, Sports and Entertainment Venues." The decrease in the Electric Utility expenses is partly attributable to the decrease in fuel and generation expenses of $5,060 (1 9%) due to decreases of $3,354 in decommissioning expenses for San Onofre Nuclear Generating Station (SONGS)operations and $1,957 in operation and maintenance expenses for the Combustion Turbine. The decrease in decommissioning expenses is due to less interest income available that is required to be contributed to the decommissioning reserve fund in a trust account. The decrease in operation and maintenance expenses for the Combustion Turbine plant is due to less natural gas expenses as a result of the unplanned outage in this fiscal year. This decrease is partially offset by an increase in purchased power costs of $3,313 (1 %), primarily due to purchased power from the renewal market, as the City Council has committed to increase the amount of renewable energy in the resource mix to 20% by 2015.* The decrease in the Convention, Sports and Entertainment Venues expenses is mainly attributable to managed savings and reduced demand for services caused by the decreased numbers of conventions and trade shows.FINANCIAL ANALYSIS OF THE CITY'S FUNDS Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources.

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

In particular, 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.As of the end of the current fiscal year, the City's governmental funds reported total ending fund balances of $260,003, an increase of $32,754 in comparison with the prior fiscal year. The increase was primarily due to unspent developer contributions

($33,032) for the Platinum Triangle infrastructure developments.

Of the total fund balance of $260,003, restricted fund balance totaled $234,544 and indicates the use of resources are constrained by external parties, resource providers, constitutions or enabling legislations.

Fund balance of $145,990 was restricted for capital projects,$67,363 was restricted for debt service, and $21,191 was restricted for various grant programs.

Assigned fund balance totaled $33,314, of which $15,490 was assigned to debt service, $17,243 was assigned to capital and housing projects, and $581 was assigned for other purposes.

Nonspendable fund balance of $4,299 represents financial resources that are not anticipated to be liquidated in the near-term.

The remaining fund balance deficit of $12,154 is unassigned and includes the unassigned fund balance of the General Fund of $22,193 and the unassigned fund balance deficit of the nonmajor governmental funds of $34,293. The unassigned fund balance deficit of the nonmajor governmental funds will be eliminated in future years by the receipt of various grant revenues.General Fund revenues were $12,896 (6%) greater than the prior fiscal year primarily due to an increase in taxes of $1 1,815 (6%). Due to an improvement in the overall economy, sales and use taxes increased

$6,824 (14%) and transient occupancy taxes increased

$5,466 (7%). Additionally, intergovernmental revenues increased by$1,179 (30%), primarily clue to one-time revenues.

General Fund expenditures decreased

$4,523 (2%) due to managed savings.The Housing Authority Fund revenues increased by $518 (1%). There were no significant or unusual changes in revenue. Housing Authority expenditures increased by $2,366 (3%). This increase in expenditures is primarily due to increased U.S.Housing and Urban Development (HUD) Section 8 rental assistance of $1,600 in order to match rental subsidies to available funding from HUD, which resulted in an average of 65 more families assisted per month, and increased capital outlay for land acquisitions of $1,131 for the development of the Avon Dakota neighborhood revitalization project.Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.17 CITY OF ANAHEIM The Electric Utility's fund net assets increased

$8,147 (3%) in the current fiscal year.The most significant factors of the change in fund net assets are discussed in the government-wide financial analysis of business-type activities.

The Water Utility's fund net assets decreased

$690 (less than 1%) in the current fiscal year. There were no significant or unusual changes.Sanitation's fund net assets increased

$8,156 (8%) in the current fiscal year. There were no significant or unusual changes.The Golf Courses' fund net assets decreased

$181 (30/,) in the fiscal current year.There were no significant or unusual changes.The Convention, Sports and Entertainment Venues fund net assets decreased

$2,164 (less than 1%) in the current fiscal year. The prolonged economic downturn has continued to result in a decrease of fund net assets, as previously discussed in the government-wide financial analysis of business-type activities.

GENERAL FUND BUDGETARY HIGHLIGHTS During the year the original budget was amended to increase appropriations by $505 (less than 1 %). The increase in appropriations was primarily the result of the carryover of prior year appropriations amounting to $276. These and other minor amendments were approved during the year and were to be funded primarily from fund balance.General Fund revenues of $245,328 were greater than budgeted revenues of$238,446 by $6,882 (3%), primarily due to stronger than anticipated performance of sales and use taxes and transient occupancy taxes.General Fund expenditures were less than budgeted.

Of the total appropriations of$250,173, approximately 4%, or $8,934, went unspent. Expenditure reductions were managed to reduce the reliance on reserves, while working toward a structurally balanced budget where ongoing revenues are sufficient to cover ongoing expenditures.

There were no unusual variances.

CAPITAL ASSETS AND DEBT ADMINISTRATION Land Construction in Progress Buildings, structures and improvements Utility plant Machinery and equipment Infrastructure Total CAPITAL ASSETS (net of accumulated depreciation)

JUNE 30, 2011 AND 2010 Governmental Activities 2011 2010$ 616,994 $ 606,985 80,054 55,550 203,740 206,633 Business-type Activities 2011 2010$ 58,369 $ 58,369 58,560 81,286 385,574 387,165 1,013,805 952,003 12,671 12,028$1,528,979

$1,490,851 Tota I Government 2011 2010$ 675,363 $ 665,354 138,614 136,836 589,314 593,798 1,013,805 952,003 45,758 47,919 424,205 418,842$2,887,059

$2,814,752 33,087 424,205$1,358,080 35,891 418,842$1,323,901 Capital assets. The City's investment in capital assets for its governmental and business-type activities at June 30, 2011 amounted to $2,887,059 (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 3%, of which governmental activities increased 3% and business-type activities increased 3%. The increase in governmental activities is primarily due to the addition of renovations of the Central Library, the historic Packing House, developments in Colony Park, Mother Colony Park, the Anaheim Coves recreation area at Burris Basin, the Anaheim Regional Transportation Intermodal Center (ARTIC), the Anaheim Fixed Guideway project, public infrastructure, and right-of-way acquisitions for street-widening projects.

The increase in business-type activities is primarily due to an increase in the Electric Utility of $24,687 (3%), which includes the expansion or improvement of existing substations, transmission and distribution systems, and the replacement of aging overhead electrical lines with underground facilities and upgrading equipment for San Juan and Combustion Turbine plants; an increase in the Water Utility of $9,040 (3%) for expansion and refurbishment of water transmission and distribution infrastructure and wells; and an increase in Sanitation of $11,139 (14%) which includes replacement of automated collection vehicles and sanitary sewer improvements.

Additional information on the City's capital assets can be found in note 5 of the notes to the financial statements, on pages 53-54 of this report.18 CITY OF ANAHEIM LONG-TERM LIABILITIES JUNE 30, 2011 AND 2010 General obligation bonds Revenue bonds Tax allocation bonds Certificates of participation Capital lease obligations Notes and loans payable Self-insurance Compensated absences Pollution remediation obligation Decommissioning provision Total Governmental Activities 2011 2010$ 3,735 $ 4,255 609,683 605,252 208,169 200,997 12,070 12,990 2,341 2,605 34,566 29,094 35,405 37,756 19,558 20,037 720 1,879$926,247 $914,865 Business-type Activities 2011 2010$ 908,683 $805,925 38,000 30,519 38,000 11,379 Total Government 2011 2010$ 3,735 $ 4,255 1,518,366 1,411,177 208,169 200,997 50,070 50,990 2,341 2,605 65,085 40,473 35,405 37,756 19,558 20,037 720 1,879 127,347 123,893$2,030,796

$1,894,062 127,347 123,893$1,104,549

$979,197 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, pollution remediation obligation, and the provision for decommissioning costs totaled $2,030,793 at June 30, 2011. Of this total, $926,244 (46%) was in governmental activities and $1,104,549 (54%) was in business-type activities.

The City's outstanding long-term liabilities increased

$136,731 (7%) in fiscal year 2011. The increase is primarily clue to the business-type activities issuance of debt by the Electric Utility, Water Utility, and Convention, Sports and Entertainment Venues in the amount of $90,390, $34,525 and $20,000, respectively, partially offset by principal payments of $26,351. The Electric Utility and Water Utility issued debt to finance additional distribution system assets to improve overall system reliability, public safety and to provide sufficient capacity for anticipated growth. The Convention, Sports and Entertainment Venues fund issued debt to finance the Grand Plaza that will create a pedestrian plaza at the Anaheim Convention Center with up to 100,000 square feet of outdoor programmable space.Additional information on the City's long-term liabilities can be found in notes 6, 7, and 9 of the notes to the financial statements, on pages 54-64, and 65 of this report.ECONOMIC FACTORS Recently there have been a significant number of articles throughout the nation focusing 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 utilize a discount rate of 7.759/6 in determining the pension liability and funding requirements.

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

The Governmental Accounting Standards Board also has issued an Exposure Draft related to the accounting and reporting for pensions which is expected to be finalized in 2012. The impact of adopting this accounting standard and the possible required changes to the discount rate used by the City will be evaluated once the official accounting standard is issued.Additional information about the City's retirement plans can be found in note 10 of the notes to the financial statements on pages 65-67 of this report." For the 2012 fiscal year, the City appropriated

$236,599 in estimated available resources of $253,546 for General Fund for spending.

This leaves approximately

$16,947 in estimated available reserves, which is 7% of General Fund appropriations.

The City's long-standing policy is to maintain General Fund reserves of at least 7% to 10% of annual appropriations.

• The City annually reviews all of its fees as part of the budget adoption process.Developer, construction, and other fees applicable to residents and developers doing business with the City are adjusted in June of each year, generally by the average of Consumer Price Index (CPI). Although CPI for 12 months was 1.8 in January 2011, in light of the current economic environment, most fees were not increased.

REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances.

Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Office of the Finance Director, City of Anaheim, 200 South Anaheim Boulevard, Suite 643, Anaheim, California, 92805.19 (This page left blank intentionally) 20 BASIC FINANCIAL STATEMENTS BASIC FINANCIAL"STATEMENTS CITY OF ANAHEIM Statement of Net Assets June 30, 2011 (In thousands)

Governmental Business-type Activities Activities Total ASSETS Cash and cash equivalents

$ 86,837 $ 41,824 $ 128,661 Investments 122,045 57,112 179,157 Accounts receivable, net 13,944 56,256 70,200 Accrued interest receivable 920 2,209 3,138 Internal balances, net 15,647 (15,647)Due from other governments 53,641 53,641 Notes receivable, net 65,949 65,949 Inventories 995 10,150 11,145 Land held for resale, net 43,305 43,305 Prepaid and other assets 6,270 63,940 70,210 Restricted cash and cash equivalents 44,408 148,721 193,129 Restricted investments 56,473 252,378 308,851 Unamortized debt issuance costs 7,486 8,566 16,052 Bond payment receivable 10,445 10,445 Pipeline receivable 117 117 Net other post-employment benefits (OPEB) asset 9,629 9,629 Capital assets, net: Nondepreciable 697,048 116,929 813,977 Depreciable 661,032 1,412,050 2,073,082 Total assets 1,885,638 2,165,050 4,050,688 LIABILITIES Accounts payable 31,078 31,376 62,454 Wages payable 8,778 1,964 10,742 Due to other governments 3,624 3,624 Interest payable 13,679 11,582 25,261 Arbitrage rebate liability 534 534 Deposits 6,458 6,147 12,605 Regulatory credits 52,250 52,250 Unearned revenues 3,848 402 4,250 Long-term liabilities:

Due within one year 41,146 32,455 73,601 Due in more than one year 885,101 1,072,094 1,957,195 Total liabilities 993,712 1,208,804 2,202,516 NET ASSETS Invested in capital assets, net of related debt 834,337 786,175 1,620,512 Restricted for: Debt service 1,048 16,055 17,103 Capital projects 65,373 33,737 99,110 Community development 77,085 77,085 Streets, roads and transportation improvement projects 24,160 24,160 Grant purposes 14,345 4,834 19,179 Unrestricted (deficit)

(124,422) 115,445 (8,977)Total net assets $ 891,926 $ 956,246 $1,848,172 The accompanying notes are an integral part of these financial statements.

21 (This page left blank intentionally) 22 CITY OF ANAHEIM Statement of Activities Year Ended June 30, 2011 (In thousands)

Net (Expense)

Revenue and Chanues in Net Assets Program Revenues Indirect Expense Expsenses Allocation Operating Charges for Grants and Services Contributions Capital Grants and Contributions Governmental Business-type Activities Activities Functions/Programs Governmental activities:

General government Police Fire Community Development Planning Puhlic 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 Golf Courses Convention, Sports and Entertainment Venues Total business-type activities Total government

$ 23,527 116,056 56,238 104,849 14,633 43,866 30,304 2,218 13,310 48,014 453,015 368,778 55,330 49,435 4,095 43,416 521,054$974,069$012,616)3,448 155 1,088 994$ 1,872 10,435 9,518 8,143 6,263$ 597 13,305 964 91,148 2,286 243 9,837 14,125 $65,443 654 4,024 1,933 2,249 323 4,356 2,388 (5,7111 54,448 124,358 70,080$ (8,442)(95,764t (45,911)(6,6461 (7,078)45,296 (22,752)(2,2 181 (6,889)(48,0141 (198,418)2,911 919 429 161 1,291 5,711$381,496 55,598 56,359 4,711 27,981 526,145$580,593 92 654 746$125,104 5,975 2,862 839 2,991 12,667$82,747 15,782 2,211 7,426 455 (13,081)12,793 (198,4181 12,793 Total$ (8,442)(95,764)(45,911)(6,646)(7,078)45,296 (22,752)(2,218)(6,889)(48,014)(198,418)15,782 2,211 7,426 455 (13,081)12,793 (185,625)106,093 54,711 82,605 1,783 7,288 13,284 614 266,378 80,753 1,767,419$1,848,172 General revenues: Taxes: Property taxes Sales and use taxes Transient occupancy taxes Motor vehicle license fees Other taxes Unrestricted investment earnings Other Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year Net assets at end of year 106,093 54,711 82,605 1,783 7,288 3,667 614 8,537 265,298 66,880 825,046$891,926 9,617 (8,537)1,080 13,873 942,373$956,246 The accompanying notes are an integral part of these financial statements.

23 (This page left blank intentionally) 24 CITY OF ANAHEIM Balance Sheet Governmental Funds June 30, 2011 (In thousands)

ASSETS Cash and cash equivalents nvestments Accounts receivable, net Accrued interest receivable Notes receivable, net Due from other funds Due from other governments Inventories Land held for resale, net Prepaid and other assets Restricted cash and cash equivalents Restricted investments Total assets LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable Wages payable Deposits Due to other funds Due to other governments Deferred revenues Total liabilities Fund balances: Nonspendable:

Interfund receivable Inventory Prepaid and other assests Restricted:

Capital projects Debt service Development impact projects Grant purposes Homebuyer assistance programs Low and moderate income housing Redevelopment projects Rental assistance Anaheim resort maintenance and improvement Streets, roads and transportation improvement projects Assigned: Debt service Capital projects Housing projects Other purposes Unassigned Total fund balances Total liabilities and fund balances General$ 5,711 8,027 10,378 41 9,908 14,724 245 230$49,264$ 3,625 4,653 3,992 82 2,966 7,458 22,776 3,151 245 230 582 Housing Authorify$ 6,843 9,617 35 77 23,419 21 42 3,098$43,152$ 483 110 66 658 24,093 25,410 42 322 7,456 Nonmajor Governmental Funds$ 38,317 53,853 1,165 436 42,461 34,104 38,896 43,305 5,940 40,917 56,473$355,867$ 20,569 465 2,400 40,313 76,347 140,094 631 490 67,363 62,942 5,233 7,598 27,974 38,713 6,718 9,153 15,490 7,761 (34,293)215,773$355,867 Total Governmental Funds$ 50,871 71,497 11,578 554 65,880 44,012 53,641 245 43,305 6,212 44,015 56,473$448,283$ 24,677 5,228 6,458 40,395 3,624 107,898 188,280 3,151 245 903 490 67,363 62,942 5,815 7,920 27,974 38,713 7,456 6,718 9,153 15,490 7,761 9,482 581 (12,154)260,003$448,283 9,482 141 440 22,139 26,488 17,742$49,264 $43,152 The accompanying notes are an integral part of these financial statements.

25 CITY OF ANAHEIM Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2011 (In thousands)

Total fund balances -governmental funds $ 260,003 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in the operation of governmental funds are not current financial resources and, therefore, are not reported in the funds. These assets consist of: Land $616,994 Construction in progress 80,054 Buildings, structures and improvements 316,720 Machinery and equipment 48,636 Infrastructure 741,736 Accumulated depreciation (465,674)Total capital assets, net 1,338,466 Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. 105,374 Unamortized debt issuance costs are not current financial resources and, therefore, are not reported in the funds. 7,486 Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets. 63,137 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. (238)Long-term liabilities of governmental funds, including bonds, certificates of participation, notes and loans payable ($868,629), and accrued interest payable ($13,673), are riot due and payable in the current period and, therefore, are riot reported in the funds. (882,302)Net assets of governmental activities

$ 891,926 The accompanying notes are an integral part of these financial statements.

26 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended June 30, 2011 (In thousands)

Nonmajor Total Housing Governmental Governmental Revenues:

General Authority Funds Funds Property taxes $ 58,359 $ 47,734 $106,093 Sales and use taxes 55,034 55,034 Transient occupancy taxes 82,605 82,605 Other taxes 6,486 6,486 Licenses, fees and permits 16,831 $ 33 1,908 18,772 Intergovernmental revenues 5,174 75,202 70,018 150,394 Charges for services 14,137 10,271 24,408 Fines, forfeits and penalties 3,304 3,304 Use of money and property 2,696 467 6,996 10,159 Other 702 1,314 622 2,638 Total revenues 245,328 77,016 137,549 459,893 Expenditures:

Current: City Council 276 276 City Administration 2,376 2,376 City Attorney 5,150 120 5,270 City Clerk 820 820 Human Resources 1,004 1,004 Finance 3,770 23 3,793 City Treasurer 2,516 2,516 Police 104,969 9,709 114,678 Fire 55,077 725 55,802 Community Development 384 72,177 37,577 110,138 Planning 13,036 1,524 14,560 Public Works 17,613 9,474 27,087 Community Services 25,862 1,951 27,813 Public Utilities 2,220 2,220 Convention, Sports and Entertainment 5,945 3,972 9,917 Capital outlay 221 1,131 69,566 70,918 Debt ýervice: Principal retirement 68 12,151 12,219 Interest charges 27 33,005 33,032 Debt issuance costs 227 227 Total expenditures 241,239 73,403 180,024 494,666 Excess (deficiencv) of revenues over (under) expenditures 4,089 3,613 (42,475) (34,773)Other financing sources (uses): Transfers in 34,264 1,303 64,004 99,571 Transfers out (45,447) (150) (41,024) (86,621)Issuance of bonds 6,570 6,570 Issuance of loan payable 7,000 7,000 Contribution from property owners 41,007 41,007 Total other financing sources (uses) (11,183) 1,153 77,557 67,527 Net change in fund balances (7,094) 4,766 35,082 32,754 Fund balances at beginning of year 33,582 12,976 180,691 227,249 Fund balances at end of year $ 26,488 $17,742 $215,773 $260,003 The accompanying notes are an integral part of these financial statements.

27 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, 2011 (In thousands)

Net change in fund balances -total governmental funds $32,754 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 ($70,918) exceeded depreciation

($27,941) in the current period. 42,977 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. (8,316)The net effect of other miscellaneous transactions involving capital assets (i.e., sales, trade-ins, retirements and donations) is to increase net assets. 1,622 Revenues in the Statement of Activities do not provide current financial resources and are not reported as revenues in governmental funds. 985 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 Assets. (13,343)Payments of principal on long-term debt use current financial resources in the governmental funds but the repayment reduces long-term liabilities in the Statement of Net Assets. 12,219 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. (7,516)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.

5,498 Change in net assets of governmental activities

$ 66,880 The accompanying notes are an integral part of these financial statements.

28 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -General Fund Year Ended June 30, 2011 (in thousands)

Original Final Budgeted Budgeted Actual Variance with Amounts Amounts Amounts Final Budget Revenues: Property taxes $ 58,542 S 58,542 $ 58,359 $ (183)Sales and use taxes 50,834 50,834 55,034 4,200 Transient occupancy taxes 81,226 81,226 82,605 1,379 Other taxes 6,070 6,070 6,486 416 Licenses, fees and permits 17,773 17,773 16,831 (942)Intergovernmental revenues 3,407 3,468 5,174 1,706 Charges for services 13,780 13,787 14,137 350 Fines, forfeits and penalties 3,209 3,209 3,304 95 Use of money and property 2,781 2,781 2,696 (85)Other 824 756 702 (54)Total revenues 238,446 238,446 245,328 6,882 Expenditures:

City Council 417 417 276 (141)City Administration 2,983 2,983 2,376 (607)City Attorney 4,933 5,162 5,150 (12)City Clerk 970 970 820 (150)Human Resources 1,004 1,004 1,004 Finance 3,937 3,937 3,770 (167)City Treasurer 2,685 2,685 2,516 (169)Police 106,798 106,798 104,992 (1,806)Fire 55,037 55,077 55,077 Community Development 384 384 384 Planning 13,812 13,925 13,036 (889)Public Works 19,185 19,185 17,664 (1,521)Community Services 29,474 29,597 26,009 (3,588)Public Utilities 2,220 2,220 2,220 Convention, Sports and Entertainment 7,129 7,129 5,945 (1,184)Total expenditures 250,968 251,473 241,239 (10,234)Excess (deficiency) of revenues over (under) expenditures (12,522) (13,027) 4,089 17,116 Other financing sources (uses): Transfers in 35,012 35,012 34,264 (748)Transfers out (41,306) (41,476) (45,447) (3,971)Total other financing uses (6,294) (6,464) (t 1,183) (4,719)Net change in fund balance (18,816) (19,491) (7,094) 12,397 Fund balance at beginning of year 33,582 33,582 33,582 Fund balance at end of year $ 14,766 $ 14,091 $ 26,488 $ 12,397 The accompanying notes are an integral part of these financial statements.

29 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -Housing Authority Year Ended June 30, 2011 (In thousands)

Original Final Budgeted Budgeted Actual Variance with Amounts Amounts Amounts Final Budget Revenues: Licenses, fees and permits $ 40 $ 40 $ 33 $ (7)Intergovernmental revenues 74,213 74,213 75,202 989 Use of money and property 251 251 467 216 Other 1,671 1,671 1 (357)Total revenues 76,175 76,175 77,016 841 Expenditures:

Community Development 77,144 77,247 73,403 (3,844)Total expenditures 77,144 77,247 73,403 (3,844)Excess (deficiency) of revenues over (under) expenditures (969) (1,072) 3,613 4,685 Other financing sources (uses): Transfers in 458 1,067 1,303 236 Transfers out (1150) (150)Total other financing sources 458 1,067 1,153 86 Net change in fund balance (511) (5) 4,766 4,771 Fund balance at beginning of year 12,976 12,976 12,976 Fund balance at end of year $1 2,465 $1 2,971 $1 7,742 $4,771 The accompanying notes are an integral part of these financial statements.

30 CITY OF ANAHEIM Statement of Fund Net Assets Proprietary Funds June 30, 2011 (In thousands)

Business-type Activities

-Enterprise Funds Electric Water Utility Utility Convention, Sports and Golf Entertainment Sanitation 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$ 5,433 7,636 12,189 10,652 39,918 1,527$ 9,480 13,323 2,101 938 6,850 162$ 16,161 21,043 1,608 6,979 220$ 300 $ 10,450 422 14,688 1,020 94 9,775 370 2,415 300 5 1,890 33 30,801$ 41,824 57,112 16,918 11,590 56,256 2,209 10,150 1,890 13,117 211,066$ 35,966 50,548 57 2,163 375 69 13 750 58 89,999 12,095 989 99,225 34,213 46,011 816 Noncurrent assets: Restricted cash and cash equivalents, less current portion Restricted investments, less current portion Unamortized debt issuance costs 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 Buildings, 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 56,644 227,178 6,569 24,544 7,121 759 26,253 24,362 6,489 820 8,555 418 131,803 240,788 8,566 8,555 117 50,823 336 203 69 117 50,823________ _______ _____________

________9,629 35,671 2,298 1,097,041 371,020 35,498 1,168,210 (350,483)817,727 1,158,941 1,258,166 13,348 386,666 (103,773)282,893 315,434 349,647 (continued) 316 80,967 8,632 8,046 97,961 (9,162)88,799 115,470 161,481 1,949 16,632 983 19,564 (9,489)10,075 10,075 10,891 18,135 487,396 24,106 1,668 531,305 (201,820)329,485 369,711 400,512 58,369 584,995 1,468,061 33,721 58,560 2,203,706 (674,727)1,528,979 1,969,631 2,180,697 6,938 55,845 62,783 (43,169)19,614 29,851 119,850 31 CITY OF ANAHEIM Statement of Fund Net Assets Proprietary Funds June 30, 2011 (In thousands) (continued)

Business-type Activities

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

-Internal Total Service Funds LIABILITIES Current liabilities (payable from current assets): Accounts payable Wages payable Interest payable Compensated absences Long-term obligations Unearned revenues Deposits Interfund payable Regulatory credits 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 FUND NET ASSETS Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Other purposes Unrestricted Total fund net assets$ 14,800 $ 11,083 $ 3,900 $ 253 $ 421 885 349 162 21 486 374$ 30,457 1,903 374 4,544 3,130 487 764 46,305 5,945 69,664 18,141 386 50 8,245 529 13,631 22,841 92,505 707,016 127,347 834,363 926,868 1,227 5 1,807 3,039 21,180 95,913 95,913 117,093 584 7 548 5,133 829 349 11 900 348 1,608 6,741 829 3,151 46,515 46,515 3,151 53,256 3,980 11,638 16,669 402 402 1,662 6,147 548 52,250 14,983 108,750 184 919 61 836 11,208 534 15,786 1,020 28,508 16,003 137,258$ 6,401 3,550 6 14,729 9,228 1,324 35,238 35,238 33,423 33,423 68,661 17,295 57 33,837$ 51,189 95,303 95,303 111,306 236,297 214,941 61,717 10,075 263,145 3,151 944,747 127,347 1,075,245 1,212,503 786,175 16,055 33,737 4,834 127,393 968,194 13,067 15,644 4,834 61,456$ 331,298 1,123 2,829 13,661$232,554 348 6,436 39,724$1708,225 1,517 8,828 (3,164) 15,716$ 6,911 $ 289,206 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (11,948)Net assets of business-type activities

$ 956,246 The accompanying notes are an integral part of these financial statements.

32 CITY OF ANAHEIM Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2011 (in thousands)

Business-type Activities

-Enterprise Funds Convention, Sports and Golf Entertainment Sanitation Courses Venues Ol)eratin, g revenues: Sales of light and power Transmission revenues Sales of water Solid waste collection fees Wastewater fees Street cleaning fees Green fees anrl cart rentals Facilities rental Concession fees Other Total operating revenues Operating expenses: Cost ot 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 lexpenses):

Intergovernmental revenues Interest income Debt service recovery Interest expense Gain (loss) from disposal of capital assets Total nonoperating income (expenses)

Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Change in fund net assets Fund net assets at heginning of year Fund net assets at end of year Electric Water Utility Utility$353,157 24,590$ 54,871 Governmental Activities

-Internal Total Service Funds$ 40,389 11,577 3,178$4,481 118 1,215 112 56,359 4,7 11 3,749 727 381,496 55,598 239,339 21,921 27,042 6,166 42,707 11,204$ 21,569 5,052 1,360 27,981 37,772 341,739 39,757 2,284 7,438 (30,079)(20,357)19,400 7,349 2,153 (20,755)8,147 8,964 53,376 2,222 45,525 2,424 47,949 8,410 497 92 840 661 3,566 568 4,134 577 (66)(58)(124)453 (272)181 (2,920)(1,583)639 2,365 (3,694)(690)(1,938)(4)(1,189)7,221 4,288 415 (3,768)8,156 25,938 12,742 38,680 (10,699)678 654 (6,115)(48)(4,831)(15,530)4,298 9,068 (2,164)291,370$289,206$353,157 24,590 54,871 40,389 11,577 3,178 4,481 21,569 5,170 7,163 526,145 239,339 21,921 27,042 6,166 128,940 62,470 485,878 40,267 2,873 9,617 654 (41,118)(110)(28,084)12,183 18,300 11,636 (28,489)13,630 243$ 13,873 35,832 9,857 108,952 4,853 159,494 818 996 (135)123 984 1,802 36 4,000 (97)5,741 45,448$ 51,189$160,312 160,312 323,151 233,244 100,069 6,730$331,298 $232,554 $1_08,225

$6,911 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.Change in net assets of business-type activities The accompanying notes are an integral part of these financial statements.

33 CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2011 (In thousands)

Business-type Activities

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

-Internal Total Service Funds Cash flows from operating activities:

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

Receipt of interfund balances Transfers in Transfers out Operating grant receipts Net cash provided by (used in) noncapital financing activities Cash flows from capital and related financing activities:

Proceeds from sale of capital assets Capital contributions Capital purchases Proceeds of borrowing, net of premium Issuance costs Principal payment on long-term debt Interest payments Debt service recovery Payment of interfund balances of capital purposes Transfers in for capital purposes Transfers out for capital purposes Net cash provided by (used in) 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 in) investing activities Increase in cash and cash equivalents Cash and cash equlivalents at beginning of the year Cash and cash equivalents at end of the year$ 377,492 1,047 (278,419)(35,956)(9,193)$55,143 311 (25,963)(12,643)(4,787)$ 55,056 51 (34,364)(6,708)(3,618)$4,595 (2,603)(6041 (244)1,164 112 54,971 12,061 11,581 1,256 (20,755)2,284 (18,471)1,905 (55,333)93,262 (754)(17,825)(30,906)2,146 (7,505)(108,176)101,642 8,173 1,639 30,634 43,632$ 74,266 (2,899)497 (2,402)15 (14,456)35,243 (405)(1,779)(3,601)(3,768)92 (3,676)(8,988)1805)(2,193)(272)(272)(82)(466)(548)(418)187 1 (230)206 94$ 300$ 27,957 S 520,243 1,409 $ 160,256 (6,986) (348,335)

(21,668)(15,870) (71,781) (119,125)(2,984) (20,826) (3,065)110,564)1,276 124 2,117 81,986 5,958 17 9,068 9,068 4,000 (27,694)2,873 q,068 (15,753) 4,017 126 1,920 (2,353) (81,130) (2,999)20,000 148,505 36 (160) (1,319)(6,782) (27,191) (1,480)(5,155) (41,937) (1091 2,433 2,433 (466)2,464 (788)7,983 2,491 (4,426)(4,318) (124,105)

(18,883)6,331 124,244 21,809 793 10,768 1,137 16 2,806 10,923 4,063 21,974 79,647 9,612 13,858 110,898 26,747$ 35,832 $ 190,545 $ 36,359 318 (7 8 8 ) _ _ _ 6 6 8)14,229 111,668)(5,596)7,015 952 16 2,387 26,275 9,850$ 36,125 (continued)

(5,597)9,069 849 4,321 558 43,464$ 44,022 34 CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2011 (In thousands) (continued)

Business-type Activities

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

-Internal Total Service Funds Reconciliation of operating income (loss) to net cash provided by (used in) operating activities:

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

Depreciation and amortization Increase in provision for decommissioning costs Changes in assets and liabilities:

Accounts receivable Inventories Prepaid 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 operating activities Schedule of noncash investing, capital and noncapital financing activities:

Capital assets financed through capital leases Capital contributions Transfers in (out) of capital assets Increase (decrease) 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 xortion Total cash and cash eqluivalents

$ 39,757 $ 2,222 $ 8,410 $ 577 $(10,699)37,772 3,454 (4,138)(67)(17,629)(5,366)7 (194)1,375 15,214$ 54,971$ 5,444 7 (389)$ 5,433 12,189 56,644$ 74,266 8,964 (103)1 192 798 28 (49)8 9,839$12,061$ 2,365 (7)(94)$ 9,480 2,101 24,544$36,125 2,424 568 12,742 (921 (3)818 113 17 2 4 3,171$ 11,581$ 4,288 97 (163)$ 16,161 1,608 26,253$ 44,022 (1)679$1,256 760 (1)(32)181 (50)(152)(632)12,816$ 2,117$ 4,300$ 40,267 62,470 3,454 (3,576)(67)(17,469)(3,456)4 (152)(872)1,383 41,719$ 81,986$ 16,397 97 (752)$ 41,824 16,918 131,803$190,545$ 818 4,853 1,087 (27)5 (69)650 44 242 (1,645)5,140$ 5,958$ 977 (97)424$ 35,966 57 336$ 36,359$ (2)(104)$ 300 $ 10,450 1,020 24,362$ 300 $ 35,832 The accompanying notes are an integral part of these financial statements.

35 (This page left blank intentionally) 36 CITY OF ANAHEIM Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2011 (In thousands)

Investment Agency Trust Funds Funds ASSETS Restricted cash and cash equivalents

$ 521 $5,782 Restricted investment 732 3,386 Accrued interest receivable 9 Due from other governments 56 Total assets $1,262 $9,224 LIABILITIES Due to bond holders $9,224 NET ASSETS Held in trust for pool participants

$1,262 The accompanying notes are an integral part of these financial statements.

37 (This page left blank intentionally) 38 CITY OF ANAHEIM Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2011 (In thousands)

Investment Trust Funds ADDITIONS Contributions to pooled investments

$1,930 Interest and investment income 32 Total additions 1,962 DEDUCTIONS Distribution from pool investments 1,506 Total deductions 1,506 Net increase in net assets 456 Net assets held in trust for pool participants at beginning of year 806 Net assets held in trust for pool participants at end of year $1,262 The accompanying notes are an integral part of these financial statements.

39 (This page left blank intentionally) 40 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 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.

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 government-wide governmental activities and in the fund financial statements as the Housing Authority Special Revenue Fund.Anaheim Redevelopment Agency (Redevelopment Agency) is a separate government entity created to develop and execute plans for improvement, rehabilitation and redevelopment of blighted areas within the City. City Council members, in separate session, serve as the governing board of the Redevelopment Agency, and all accounting and administrative functions are performed by the City. The financial activity of the Redevelopment Agency has been blended into the City's CAFR in the government-wide governmental activities and in the fund financial statements as the Redevelopment Housing Set-Aside Special Revenue Fund, the Redevelopment Agency Debt Service Fund, and the Redevelopment Projects Capital Projects Fund.For a copy of the Redevelopment Agency's separate financial statements, contact the Finance Director of the City.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 government-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 governing 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 three joint ventures and jointly-owned properties (see note 11), 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.

41 CITY OF ANAHEIM New Accounting Pronouncement Oil July 1, 2010, the City adopted the GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.

This Statement establishes new categories for reporting fund balance information by identifying amounts that are considered nonspendable, restricted, committed, assigned and unassigned based on the relative strength of the constraints that control how specific amounts can be spent.This Statement also clarifies the existing definitions of governmental fund types.Basic financial statements In accordance with GASB Statement No. 34 -Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments, the basic financial statements include both government-wide and fund financial statements.

The government-wide financial statements (Statement of Net Assets 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 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 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.

The government-wide Statement of Net Assets reports all financial and capital resources of the City (excluding fiduciary funds). It is displayed in a format of assets less liabilities equal net assets, with the assets and liabilities shown in order of their relative liquidity.

Net assets are required to be displayed in three components:

1)invested in capital assets, net of related debt, 2) restricted, and 3) unrestricted.

Invested in capital assets, net of related debt, 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 assets are 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 assets 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 assets 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, liabilities, 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.

42 CITY OF ANAHEIM 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.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-supporting activity, which renders services on a user charge basis to residents and businesses located in Anaheim.The Sanitation 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 City National Grove of Anaheim. See note 12 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 Assets. 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.

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 clays 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 capital 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 43 CITY OF ANAHEIM governmental funds financial statements are presented on a different basis than the 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 tihe 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 of the 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.Under GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the City has elected for proprietary funds not to apply Financial Accounting Standards Board (FASB) statements issued after November 30, 1989.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.

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 reporting focus is upon net assets and changes in net assets and employs accounting principles similar to proprietary funds. Fiduciary funds are not included in the government-wide financial statements as they are not an asset of the City available to support City programs.

The City currently maintains an Investment Trust Fund 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 two Joint Powers Authorities (JPA) governed by local boards. The City separately maintains these entities' money in two individual funds; these funds represent the assets, primarily cash and investment, and the related liability of the City to disburse these monies on demand. The City also maintains an agency fund to account for the monies collected and paid on behalf of the Mello-Roos Districts located in the City.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 2 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 $65,949 includes accrued interest receivable of $15,532, ranging from 3% to 10% interest per annum, and is net of allowances of $21,266 for uncollectible accounts at June 30, 2011.44 CITY OF ANAHEIM 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 revenue equal to the outstanding principal and accrued interest balance, net of allowance, 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.Land held for resale The Redevelopment Agency has acquired parcels of land as part of their primary purpose to develop or redevelop blighted areas. The Redevelopment Agency records these parcels as land held for resale in their financial records. The properties held for resale are recorded at the lower of cost or estimated net realizable value. At June 30, 2011, land held for resale with a cost of $78,970 was recorded net of the allowance for decline in value of $35,665 and totaled $43,305, with this amount offset by a restriction of fund balance for redevelopment projects in the governmental funds financial statements.

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 Assets, Balance Sheet, or Statement of Fund Net Assets, 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 both the government-wide Statement of Net Assets and proprietary funds Statement of Fund Net Assets.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 market value at the date of donation.The costs of normal maintenance and repairs that do not acdd 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, 2011, business-type activities capitalized net interest costs of $3,086 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 $44,204.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.45 CITY OF ANAHEIM Debt costs Debt issuance costs in the amount of $1 6,052 are included in noncurrent assets at June 30, 2011. Unamortized discounts, consisting of refunding costs of $13,454 reduced by premiums net of discounts of $15,565, are reflected in net long-term obligations.

Both debt issuance costs and premiums net of discounts are amortized over the life of the related bond issue using the effective interest method. Refunding costs are amortized over the life of the new bond or the life of the old bond, whichever is shorter, using the effective interest method.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.Regulatory credits The Electric Utility's Rates, Rules, and Regulations provide for the Rate Stabilization Account (RSA), formerly referred to as Power Cost Adjustment/Rate Stabilization Account, 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 will reflect 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 unbudgeted costs including unexpected long-term loss of a generating facility, unplanned limits on the ability to transmit energy to the City or major disasters.

The RSA funded by PCA and EMA collections are billed to customers through standard rates.Since inception, the Electric Utility has collected

$142,352 in regulatory credits related to PCA. As of August 1, 2010, the PCA rate was changed from $0.000 to$0.005 per kWh for all domestic retail customers, excluding residential lifeline customers, and all commercial, industrial and municipal customers.

At June 30, 2011, the liability recorded for regulatory credits related to PCA totaled $43,767 for the Electric Utility. During fiscal year 2011, $3,885 was recognized as RSA revenues to mitigate the impact of energy costs and operation costs.Since inception, the Electric Utility has collected

$21,152 in regulatory credits related to EMA. As of April 20, 2010, the EMA rate was changed from $0.0050 to$0.0100 per kWh for all domestic customers, and $0.0050 for all other customers.

At June 30, 2011, the liability recorded for regulatory credits related to EMA totaled$2,538. During fiscal year 2011, $18,615 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 stabilization account 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, 2011 the liability recorded for regulatory credits totaled $5,945 for the Water Utility. During fiscal year 2011, no PCA revenue was recognized for the Water Utility.Deferred revenues Deferred revenues arise in governmental funds when revenue does not meet both the"measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise, in both governmental and proprietary funds, when resources are received by the government before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures/expenses (unearned).

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

Deferred revenues in the governmental funds amounted to $107,898 at June 30, 2011 as follows: Availability:

Notes receivable Other revenues Unearned Total Nonmajor General Housing Governmental Fund Authority Funds Total$ $23,419 $42,461 $ 65,880 5,608 33,886 39,494 1,850 674 2,524$ 7,458 $24,093 $76,347 $107,898 46 CITY OF ANAHEIM Compensated absences 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, 2011, totaled $19,320 and is included in long-term liabilities in the Statement of Net Assets.Also included in long-term liabilities in the Statement of Net Assets at June 30, 2011, is compensatory time liability of $238.Changes in the City's compensated absences liability in fiscal year 2011 were as follows: Compensated absences liability at beginning of year Estimated compensated absences benefits earned Compensated absences used Compensated absences liability at end of year Nuclear fuel and decommissioning costs$ 20,037 21,263 (21,742t S 19,558 The California Public Utilities Commission approved a cost estimate by SCE for the decommissioning costs of SONGS. The Electric Utility currently has $124,267 in irrevocable trust for the decommissioning costs with an assumed rate of return of 4%per year. At June 30, 2011, SCE's future cost estimate for the Electric Utility's share of decommissioning costs is $111,421.

Based on an assumed 4% rate of return, it is estimated that the Electric Utility's current reserve of $124,267 will grow to $191,303 by 2022, which exceeds SCE's future cost estimate of $147,170.

Based on these estimates the Electric Utility does not expect that it will need to further fund the provision for decommissioning costs with cash contributions for SONGS.The Electric Utility has a 10.04% ownership interest of the San Juan Generating Station, Unit 4 (SJD. The Electric Utility is providing for the future demolition and reclamation costs of its ownership share of SJ. As of June 30, 2011 the Electric Utility has recorded a provision for decommissioning costs for Si of $3,080. For the year ended June 30, 2011, 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 (System).

The City's 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 10 for further discussion.

Net assets restricted by enabling legislation The government-wide Statement of Net Assets reports $182,011 of governmental activities restricted net assets, of which $38,869 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.

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. The Electric Utility funds the reserve and recognizes this expense over the remaining useful life of the generating plant. A separate irrevocable trust account has been established for prior and future amounts funded and these amounts are classified as restricted assets in the accompanying balance sheets. At June 30, 2011, the provision for decommissioning costs totaled $1 24,267. For the year ended June 30, 2011, the Electric Utility has recorded decommissioning costs incurred for SONGS in the amount of $3,014, which is included in the fuel and generation component in operating expenses.The City sold its ownership share in SONGS to Southern California Edison (SCE) on December 29, 2006. The Electric Utility's decision to divest SONGS was largely based on the need for operating flexibility to provide both peak and base load power, ongoing cost concerns for environmental disposal of nuclear waste and marine mitigation, as well as escalating decommissioning costs. See note 11 for further discussion.

47 CITY OF ANAHEIM" Committed fund balance includes amounts that can be used only for the specific purposes pursuant to constraints imposed by formal action of the City's highest level of the decision-making authority, City Council. The City Council call modify or remove the commitments by taking the same kind of action it previously employed to commit those amounts. At June 30, 2011, the City does not have any committed fund balances." 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 Manager or his designee has the authority 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 if expenditures for a specific purpose exceed amounts that have been restricted, committed or assigned.In all governmental funds, encumbered amounts have been restricted or assigned for specific purposes for which resources have already been allocated.

At June 30, 2011, encumbrances totaled $141, $18, and $18,475 in the General Fund, Housing Authority Special Revenue Fund, and other nonmajor governmental funds, respectively.

Generally, the City would first apply restricted resources when expenditures incurred for which both restricted and unrestricted resources are available.

The accumulated deficit fund balances at June 30, 2011, for Gas Tax and Roads, Workforce Development, and Transportation Improvement Projects included in nonmajor governmental funds in the amount of $1,045, $3 and $1 3,774 respectively, 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 (late 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 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 (other than the Redevelopment Agency Capital Projects Fund), 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.GAS1 Statement No. 34 requires that budgetary comparison statements for the General Fund and major special revenue funds be presented in the basic financial statements.

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 I. Taxes are levied on July I 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 7 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.48 CITY OF ANAHEIM Entitlements, shared revenues and grants Deposits and investments are comprised of the following at June 30, 2011.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 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, 2011 unbilled but earned service charges recorded in accounts receivable for the Electric Utility, Water Utility, and Sanitation Funds amounted to $18,981,$3,954, and $3,573, respectively.

See note 7 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 dlate 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 -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 AAAf in July 2008, which was reaffirmed in June 2010.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; LAIF; repurchase agreements; reverse repurchase agreements; and money market mutual funds.Governmental activities:

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

Electric Utility Water Utility Sanitation Golf Courses Convention, Sports and Entertainment Venues Total business-type activities Government-wide totals Fiduciary funds Cash and Cash Equivalents

$ 5,711 6,843 38,317 35,966 86,837 Restricted Cash and Cash Restricted Investments Equivalents Investments Total$ 8,027 9,617 53,853 50,548 122,045 5,433 7,636 9,480 13,323 16,161 21,043 300 422$ 3,098 40,917 393 44,408 68,833 26,645 27,861 25,382 148,721 193,129 6.303$1 99_43 2$ 56,473 56,473$ 13,738 19,558 189,560 86,9117 309,763 237,830 319,732 8,059 57,507 65,065 722 10,450 41,824 128,661 14,688 57,112 179,157$179,157 252,378 308,851 4,118$312,969 Total cash and investments

$128.661 57,009 500,035 809,798 10,421$820,219$ 8,912 811,307$820,219 Deposits and investments are comprised of the following at June 30, 2011: Deposits Investments Total deposits and investments At June 30, 2011, deposits of $8,912 with a corresponding bank balance of $13,666 were maintained in various federally regulated financial institutions.

The difference of$4,754 represents deposits in transit, outstanding checks, and other reconciling items.Deposits with bank balances of $501 are insured by the Federal Depository Insurance Corporation.

For deposits with bank balances totaling $13,165, 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 1I10% 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.49 CITY OF ANAHEIM 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.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 City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustees.

The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.Maximum Authorized Investment Type Maturity U.S. Treasury obligation 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 Percentage Allowed None None None None None None None None Investment in One Issue(r)None None None None None None None None_Authorized Investment Type U.S. Treasury obligations U.S. agency securities Banker's acceptances Commercial paper Negotiable certificates of deposit Repurchase agreements Reverse repurchase agreements Medium term corporate notes Money market mutual funds LAIF lime certificates of deposit (TCD)Maximum Maturity 5 years 5 years 180 clays 270 days 360 (lays 360 days 90 days 5 years N/A N/A 1 year Maximum Percentage of Porlfolio*

1001%100%40'//25%25'S 30%'20%30%, 20'y$100 million 20%Maximum Investment in One Issuer 30'X 40'%)5%51y" 5%None None S5'l 10%None 5'%, Minimum Rating (S&P, Moody's, Fitch)None None None A-I/P-I/F-i None None None A/A None None None At June 30, 2011, the investments controlled by bond trustees exceeded five percent concentration in the following U.S. agency securities, guaranteed investment contracts, flexible repurchase agreements and money market mutual funds: Federal Home Loan Bank $55,077 (15%), Federal National Mortgage Association

$34,979 (9%/o), Federal Farm Credit Bank $32,609 (9%), Bank of America $16,645 (5%), Credit Agricole $19,365 (5%), Morgan Stanley $29,290 (8%), Dreyfus Treas $16,988 (5%), US Bank money market $32,290 (9%) and Wells Fargo 100% Treasury $19,355 (5%).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.*Excluding amounts held by bond trustees that are not subject to Government Code restrictions At June 30, 2011, the City exceeded five percent concentration in the following U.S.agency securities:

Federal Farm Credit Bank $57,549 (13%), Federal Home Loan Bank $50,787 (11%), and Federal National Mortgage Association

$76,347 (17%).50 CITY OF ANAHEIM Interest rate risk Accounts receivable 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, 2011: Accounts receivable for the City's governmental and business-type activities, including the applicable allowance for uncollectible accounts at June 30, 2011, are as follows: Less: Accounts Allowance for Receivable Uncollectibles Total Governmental activities:

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

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

$13,432 63 1,168 2,366 40,415 6,918 7,197 94 2,445 57,069$74,098$(3,054) $10,378 (28) 35 131 1,165 2,366 (3,085) 13,944 Invcstments Investments controlled by City Treasurer:

U.S. agency securities i Medium temi corporate notes Medium term corpurate notes Medium term corporate notes Medium term corporate notes Commer-ial paper Money mtarket mutual funds I LAIF Total investments controlled by City Treasurer Investments controlled by bond trustees: U.S. Treasury obligations U.S. agency securities Guaranteed investment contracts Collateralized investment contracts Flesible repurchase agreements Money market mutual funds A LAIF Total investments controlled by bond trustees Total investments Credit Rating (S&P/Aoody'sl AA/Aaa AA/Aaa APJAa A/A A-t/P-I A-I/P-t AAAAaa Unrated Exempt sAAAIAaa Unrated Unrated Unrated AAA/Aaa Unrated Fair Value 6/30/2011$203,711 10,963 8,087 30,679 8,396 103,990 11,515 65,057 12 13 Months to or 24 Less Months 25 37 More to to Thai 36 60 60t Months Months Monlths (497)(68)t218)(30)(813)$(3,898)39,918 6,850 6,979 94 2,415 56,256$70,200$ 28,469 5,169 9,283 103,990 11,515 65,057$36,131 $ 48,782 $ 90,329 3,009 7,954 2.918 16,342 5,054 8,396 Due from other governments Due from other governments for the City's governmental activities at June 30, 2011, are as follows: 442,398 223,483 60,869 51,791 106,255 Governmental activities:

General Fund $13,921 Housing Authority Nonmajor governmental funds 49 Total due from other governments

$13,970 Grants$ 491 21 38,847$39,359 Other$312$312 Total$14,724 21 38,896$53,641 270 122,665 56,294 4,879 46,138 110,864 27,799 270 6,561 19,365 7,864 110,864 27,799 10,528 56,154 49,422 10,214 $26,715 1,210 3,669 621 37,653 Revenues are reported net of estimated uncollectible amounts. Total estimated uncollectible amounts related to revenues of the current period are as follows: 368909 172,723 10,528 56,154 61,467 68037$811307 $396,206 $71,397 $107,945 S167,72 $General Fund Electric Utility Water Utility Sanitation Others Total$ 628 653 93 334 11$1,719 NOTE 3 -ACCOUNTS RECEIVABLE, DUE FROM OTHER GOVERNMENTS, INTERFUND RECEIVABLE AND PAYABLE BALANCES, AND CERTAIN INTERFUND TRANSACTIONS:

51 CITY OF ANAHEIM Interfund receivable and payable balances Net internal balances between governmental activities and business-type activities of$15,647 are included in the government-wide financial statements at June 30, 2011.Interfund receivables and payables that are included in the fund financial statements at June 30, 2011, are as follows: Interfund Interfund Receivable Payable Governmental funds: General Fund Nonmajor governmental funds Total governmental funds Enterprise funds: Golf Courses Total enterprise funds Internal service funds Total$ 9,908 34,104 44,012$ 82 40,313 40,395 3,699 3,699 82$44,094 $44,u94 Certain interfund balances at June 30, 2011 are generally short-term loans to relieve temporary cash deficits in various funds. The following interfund balances are expected to be repaid in more than one year: General Fund Of the total interfund receivable in the General Fund, $3,699 is due from the Golf Courses Fund. On September 24, 2002, the City Council approved a loan up to$6,400 from 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.Nonmajor Governmental Funds Of the interfund receivable in the nonmajor governmental funds, $8,490 is due to the Other Capital Improvements Capital Projects Fund from nonmajor governmental funds (Redevelopment Project Capital Projects Fund). The Redevelopment Agency entered into a Cooperation Agreement with the City on April 1, 2003 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 Redevelopment Agency is obligated to pay the City for the repayment of the HUD 108 loan from property tax increment and certain project revenues generated by Westgate.Of the interfund receivable in the nonmajor governmental funds, $1,563 is due to the Redevelopment Project Capital Projects Fund from nonmajor governmental funds (Other Capital Improvements Capital Projects Fund). On March 15, 1999, the Redevelopment Agency entered into a Cooperation Agreement with the City whereby the Redevelopment Agency and the City will share the cost of the West Lincoln Avenue Street improvement project. The Agreement also provides that the Redevelopment Agency will receive transportation fee credits in the amount of its contribution to the project.Of the interfund receivable in the nonmajor governmental funds, $7,000 is clue to Community Development Block Grants Fund from nonmajor governmental funds (Redevelopment Project Capital Projects Fund). The Redevelopment Agency entered into a Cooperation Agreement with the City on June 1, 2010, whereby the City will assist the 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 Redevelopment Agency is obligated to pay the City for the repayment of the HUD 108 loan from property tax increment.

Of the interfund receivable in the nonmajor governmental funds, $8,176 is due to the Redevelopment Agency Housing Set-Aside Special Revenue Fund from nonmajor governemtal funds (Redevelopment Agency Debt Service Fund). In fiscal years 2010 and 2011, the 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.

The Redevelopment Agency will fully repay the amount by June 30, 2016 in accordance with the 2010 State of California budget legislation.

Of the interfund receivable in the nonmajor governmental funds, $981 is due to the Housing Set-Aside Special Revenue Fund from the Redevelopment Project Capital Projects Fund. In fiscal year 2011, two parcels of land held for resale from the Housing Set-Aside Special Revenue Fund were transferred to the Redevelopment Project Capital Projects Fund, as the planned development of the parcels no longer included an affordable housing component.

The payment for the parcels is expected to occur in fiscal year 2013.Certain interfund transactions The net transfers of $8,537 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 Fund offset by debt service subsidies to the Convention, Sports and Entertainment Venues Fund and the transfers of capital assets from governmental activities to business-type activities.

Capital assets with net book value totaled $8,414 were transferred from the Governmental activities to Business-type activities:

underground facilities and light installation to Electric Utilities

($3,658), sanitary sewer improvements to Sanitation

($3,449), and security enhancement improvement to the Convention, Sports and Entertainment

($1,307).

These amounts were accounted for as Capital Contribution in the respective Enterprise Fund financial statements.

Capital asset with net a book value of $98 was transferred from the Convention, Sports and Entertainment Business-type activities to the Governmental activities.

52 CITY OF ANAHEIM The following interfund transfers are reflected in the fund financial statements at June 30, 2011: NOTE 5 -CAPITAL ASSETS: Capital asset activities for the year ended June 30, 2011, were as follows: Transfers In Transfers Out Governmental funds: General Fund Housing Authority Nonmajor governmental funds Total governmental funds Enterprise funds: Electric Utility Water Utility Sanitation Golf Courses Convention, Sports and Entertainment Venues Total enterprise funds Internal service funds Total$ 34,264 1,303 64,004 99,571$ 45,447 150 41,024 86,621 2,153 20,755 3,694 415 3,768 272 9,068 11,636 28,489 4,000 97$115,207 $115,207 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 fo Buildings, structures and improvements Machinery and equipment Infrastructure Total accumulated depreciation Total governmental activities capital assets, net Beginning Balance$ 606,985 55,550 662,535 319,348 104,635 719,910 1,143,893 1,806,428 Transfers Additions In (Out)$ 10,555 54,0t20 64,575 2,846 4,637 964 8,447 73,022$ 137 (28,406)(28,269)3,279 488 20,942 24,709 (3,560)$ (6113)(1,1 o)(1,7931 (1,815)(5,279)(801 (7,174)(8,967)$ 616,t94 80,054 697,048 323,658 104,481 741,736 1,169,875 1,866,923 (119,9181 (71,394)0317,531)(508,843)SI1,35_8 080 Ending Deletions Balance The interfund transfers generally are made for the purpose of debt service payments made from a debt service fund but funded from an operating fund or subsidy transfers.

Except for the transferred capital assets detailed previously, there were no other significant transfers during the fiscal year that were either non-routine in nature or inconsistent with the activities of the fund making the transfer.r: (112,7151 (8,4431 (68,744) (7,8101 1301,0681 (16,5401 1,240 5,160 77 6,477$ (3,5601 $(2,490)NOTE 4 -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 (California)

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, 2011, there remained principal outstanding of $10,445 on the 2008 Lease Revenue Refunding Bonds. During fiscal year 2011, the Rams reimbursed the City $2,434 (representing

$1,780 for principal and $654 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.

Business-type activities:

Nondepreciable assets: Land $Construction in progress Total Depreciable assets: Buildings, structures and improvemnents 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 $(482,527);1,323,901 58,369 81,286 139,655 573,597 1,371,358 30,704 1,975,659 2,115,314 (186,432)(419,355)(18,676)(624,463)

(32,793)$40,229 S 58,369 S 78,56 9 100,973) $ (349) 58,560 78,596 (1 00,q73) (3491) 116,929 9,657 4,150 3,331 95,734 (13,012)(46,736)(2,722)(62,47o$33,264 1,784 102,682 67 104,533 3,560$ 3.560 (43)(10,1291 (381)(10,553)(10,902)23 1 1,835 348 12,206$ 1,304 584.995 1,468,061 33,721 2,086,777 2,203,706 (199,42 .1)(454,256)(21,050)(674,727)$1,528,979 53 CITY OF ANAHEIM Depreciation expense was charged to functions/programs of the City during fiscal year 2011 as follows: Redevelopment Agency At June 30, 2011, the Redevelopment Agency earned revenues as lessor from certain parking structure properties, carried at cost of $9,564, less accumulated depreciation of $8,812, under operating leases. The following is a schedule of minimum future rentals on noncancelable operating leases at June 30, 2011: 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 Golf Courses Convention, Sports and Entertainment Venues Total depreciation expense -business-type activities

$ 266 1,697 578 1,851 110 17,164 2,558 3,716 4,853$32,793$37,772 8,964 2,424 568 12,742$62,470 Fiscal Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2034 Total minimum future rentals$ 272 273 274 277 277 1,404 1,244 1,231 738$5,990 Capital leases Included in the capital assets amounts listed above are the following capitalized leased assets: Machinery and equipment Less accumulated amnrlization Capitalized leased assets, net Governmental Activities

$ 3,865 (1,45n)$2,415 Operating leases Housing Authority At June 30, 2011, the Housing Authority earned revenues as the lessor of land, carried at cost of $46,239 in the government-wide financial statements, under five operating ground leases. These leases to developers are noncancelable.

Two of the leases are for a term of 55 years, expiring in 2055 and 2057. Three of the leases are for a term of 57 years, expiring in 2060, 2063 and 2064. The total base rent amounts to be collected over the terms of the leases are $12,400, $8,700, $7,505, $7,900 and$5,200, respectively, with simple interest accruing on unpaid portions at a rate of 4.0%, 4.5%, 4.0%, 4.0% and 4.0%, respectively.

Minimum lease payments are calculated annually, based on residual receipts, as defined in the lease agreements.

At June 30, 2011, the Housing Authority has recorded notes receivable due from developers related to these transactions of $9,611 and is net of allowances of $1,806 for uncollected accounts in the government-wide financial statements.

NOTE 6 -SELF-INSURANCE:

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

Revenues of the General Benefits and Insurance Fund are derived from charges to City departments using estimates of benefits earned and cost allocation charges established at the beginning of the year and from interest income on reserves.At June 30, 2011, the City was fully funded for self-insured workers' compensation and general liability claims (self-insured retention levels of $750 per occurrence for workers' compensation claims and $1,000 per occurrence for general liability claims). Above these self-insured retention levels, the City's potential liability is covered through various commercial insurance and intergovernmental risk pooling programs (collectively, "Insurance").

Settled claims have not exceeded total insurance coverage in any of the past three years, nor does management believe that there are any pending claims that will exceed total insurance coverage.The unpaid claims liability included in the General Benefits and Insurance Fund is based on the results of actuarial studies and includes amounts for claims incurred but 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, multi-year loss development trends, and other economic and social factors. It is the City's practice to obtain full actuarial studies annually for general liability and workers' compensation coverages.

Premiums are charged by the General Benefits and Insurance Fund using various allocation methods that include actual costs, trends in claims experience, exposure base, and number of participants.

54 CITY OF ANAHEIM 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 government wide Statement of Net Assets in fiscal years 2011 and 2010 were as follows: NOTE 7 -LONG-TERM LIABILITIES:

The following is a summary of changes in long-term liabilities reported in the government-wide financial statements for the year ended June 30, 2011: Current liability at beginning of year Current year claims and changes in estimates Claims payments Claims liability at end of year 2011$37,756 6,293 8,644)$35,405 2010$33,988 10,634 (6,866)$3 7,756 Beginning Additions!

Reductions/

Ending Within Balance Proceeds Payments Balance One Year Above the self-insured retention 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 self-insured retention of $1,000 per occurrence for liability losses, the City maintains excess coverage for all City operations to $100,000 per occurrence, excluding helicopter operations for which the City purchases

$50,000, per occurrence, of commercial liability insurance (on a first-dollar basis). The first layer of 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 California 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 2011 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, exposLtre and loss experience factors.In order to provide funds to pay claims, ACCEL collects a deposit from each member.The deposits are credited with investment income at the rate earned on ACCEL's investments.

At June 30, 2011, ACCEL's cash and investments totaled $38,595, of.which $6,458 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 tile City are expensed when paid by the General Benefits and Insurance Fund.ACCEL is responsible for deciding the risks it will underwrite, monitoring and handling of large claims, and arranging risk-financing programs.

ACCEL does not have any debt outstanding.

For a copy of ACCEL's separate financial statements, contact the Finance Director of the City.Governmental activities:

Bonds payable: General obligation City lease revenue Redevelopment Agency Accretion Motorized Equipment Unamortized bond refunding costs/premiuLm/discou nt, net Total COPs: City COPs Total Capitalized lease obligations:

Internal Service Funds Total Notes and loans payable: City Redevelopment Agency Housing Authority Total Claims liabilities (note 6)Compensated absences (note 1)Pollution Remediation Obligatinn Governmental activities total Business-type activities:

Bonds payable: Electric Utility Water Utility Sanitation Convention, Sports and Entertainment Venues Unamortized bond refunding costs/premium/discount, net Total COPs: Convention, Sports and Entertainment Venues Total Notes and loans payable: Water Utility Convention, Sports and Entertainment Venues Unamortized note discount Total Decommissioning provision Business-type activities total Government-wide total$ 4,255 490,965 201,680 119,419 610 (6,425)810,504 12,990 12,990 2,605 2,605 18,745 8,540 1,809 29,094 37,756 20,037 1,879 914,865 647,365 53,010 46,935 59,287 (672)805,925$ 6,570 13,526 20,096 977 977 7,000 7,000 6,293 21,263 55,629$ (520)(9,196)(551 (2961 1,054 19,0113)(920)(920)(1,241)(1,2411 (816)(644)(68)(1,5281 (8,644)(21,742)(1,159%(144,24 7)$ 3,735 481,769 208,195 132,945 314 (5,371)821,587 12,070 12,070 2,341 2,341 24,929 7,896 1,741 34,566 35,405 19,558 720 926,247 719,930 86,655 46,130 52,505 3,463 908,683 38,000 38,000 10,719 20,000 (200)30,519 127,347 1,104,549$2,030,796

$ 550 13,409 205 314 14,478 985 985 1,083 1,083 1,124 196 1,320 7,831 14,729 720 41,146 18,175 915 835 6,918 26,843 892 4,720 5,612 32,455$73,601 90,390 (17,825i 34,525 (880)(805)(6,782)3,590 545 128,505 (25,747)38,000 38,000 11,618 (239)11,379 123,893 979,197$1,894,062 20,000 20,000 3,454 151,959$207,588 (899)39 (860)(26,607)$(70,854)55 CITY OF ANAHEIM GOVERNMENTAL ACTIVITIES:

BONDS PAYABLE At June 30, 2011, bonds payable consisted of the following:

Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017 Tota I Principal$ 550 580 610 635 660 700$3,735 Interest$145 118 92 67 41 14$477 Total$ 695 698 702 702 701 714 Date Issued City 1993 General Obligation Refunding Bonds 11/01/93 1997 Anaheim Lease Revenue Bonds 2/01/97 Accretion 2007 Anaheim Lease Revenue Refunding Bonds 6/13/07 2008 Anaheim Lease Revenue Refunding Bonds 12/10/08 Total Unamortized bond refunding costs/premium/discounts, net Total City bonds Redevelopment Agency 2007 Tax Allocation Refunding Bonds 12/20/07 2010 Recovery Zone Economic Development Bonds 12/28/10 Unamortized bond refunding costs/premium, net Total Redevelopment Agency bonds Range of Authorized Out-Final Interest Rates and standing Maturity at Issue Date Issued 6/30/11 I ease navment mnasiurement rpvpnuip 3/01/37 4.5%-6.0%3/01/37 3.25/-5.5`/, 8/01/19 3.0%-5.0%2/01/31 4.25%-6.5%

2/01/31 1.44%-6.22%

u0,u5 1 ) ,/. In February 1997, the Anaheim Public Financing Authority sold $510,427 of lease 510,427 221,423 revenue bonds to construct public improvements in The Anaheim Resort. In June 132,945 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 256,320 256,020 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 5,084 4,326 lease revenue bonds are paid from lease payment measurement revenues (LPMR)618,449 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, (5,345) excluding Disney properties, and 2) 100% of the incremental TOT, sales, and 613,104 property 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 201,680 201,680 required to pay debt service on the bonds. The Walt Disney Company provided a guarantee to the bond insurer to enable the issuer to obtain municipal bond 6570 6515 insurance.

UIJI (26)208,169 Motorized Equipment 2008 Anaheim Lease Revenue Refunding Bonds LPMR began on January 1, 2001, with the first payment made to the trustee on July 7, 2001, for the LPMR generated during the period January through June 2001.Subsequent to that date, LPMR is collected and remitted to the trustee monthly.During the fiscal year ended June 30, 2011, $28,368 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 is as follows: 12/10/08 8/01/19 3.0%-5.0', Total governmental activities bonds Bonds Payable -City General oblivation refundine bonds 889 314$991,025 $821,587 The 1 993 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 $4,212, payable through October 2016. During the fiscal year ended June 30, 2011, total principal and interest paid was $690.Debt service requirements to maturity for the 1993 General Obligation Refunding Bonds to be paid by the General Obligation Bonds Debt Service Fund from future property tax revenues are as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2024-2031 2032-2036 2037 Total Unamortized bond discount Total bonds Principal$ 12,995 14,705 16,540 18,510 20,630 72,493 74,915 89,630 108,557 48,468 477,443 (4,963)$472,480 Interest$ 18,636 17,828 16,917 15,894 14,750 123,141 152,849 173,391 194,309 784,847$784,847 Total$ 31,631 32,533 33,457 34,404 35,380 195,634 227,764 263,021 302,866 105,600 1,262,290$1,257,324 56 CITY OF ANAHEIM Included in interest is $132,945 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: 2010 Recovery Zone Economic Development Bonds The City's Redevelopment Agency has pledged future tax increment revenues net of the 30% Housing Set-Aside share, certain pass-through payments, and other senior debt obligations (Redevelopment Agency Savi Ranch Associates note and HUD Section 108 guaranteed loans) to repay a total of $11,550 principal and interest, outstanding Recovery Zone Economic Development Bonds issued in October 2010.Proceeds from the bonds provided financing for public improvements related to the merged project areas. The bonds are payable solely from future tax increment revenues and are payable through February 2031. During the fiscal year ended June 30, 2011, total interest paid and total tax increment revenues were $151 and $26,561 respectively.

Debt service requirements to maturity for the Redevelopment Agency Taxable Recovery Zone Development bonds to be paid by the Redevelopment Agency Debt Service Fund from future tax increment revenue are as follows: fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2020 Total Unamortized bond discount Total bonds Principal$ 414 429 460 479 506 2,038 4,326 (382)$3,944 Interest$ 187 170 151 131 111 209 959$ 959 Total$ 601 599 611 610 617 2,247 5,285 (382)$4,903 Bonds Payable -Redevelopment Agency 2007 Tax Allocation Refunding Bonds The City's Redevelopment Agency has pledged future tax increment revenues net of certain pass-through payments and other senior debt obligations (Redevelopment Agency Savi Ranch Associates note and HUD Section 108 guaranteed loans) to repay a total of $355,257, principal and interest, outstanding tax allocation bonds issued in December 2007. Proceeds from 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 are payable solely from future tax increments revenues and are payable through February 2031. During the fiscal year ended June 30, 2011, total interest paid and total tax increment revenues were $10,766 and $40,530 respectively.

Debt service requirements to maturity for the Redevelopment Agency Tax Allocation bonds to be paid by the Redevelopment Agency Debt Service Fund from future tax increment revenue are as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2027 2027-2031 Total bonds Principal$ 205 210 215 225 230 1,325 1,735 2,370$6,515 Interest$ 371 367 361 354 346 1,563 1,155 518$5,035 Total$ 576 577 576 579 576 2,888 2,890 2,888$11,550 Bonds Payable -Motorized Equipment Debt service requirements to maturity for Motorized Equipment lease revenue bonds to be paid by the Motorized Equipment Internal Service Fund from future revenues are as follows: Fiscal Year Ending 6/30 2012 Total bonds Principal$314$314 Interest$_7$_7 Total$321$321 Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2027 2027-2031 Total Unarnortized bond refunding costs/discount, net Total bonds Principal Interest$ 10,766 10,766$ 1,860 10,766 2,205 10,659 3,280 10,532 39,950 47,990 56,170 35,602 98,215 16,496 201,680 153,577 Total S 10,766 10,766 12,626 12,864 13,812 87,940 91,772 114,711 355,257 CERTIFICATES OF PARTICIPATION At June 30, 2011, certificates of participation consisted of the following:

Range of Date Final Interest Rates Issued Maturity at Issue Date Authorized and Issued Out-standing 6/30/11 city 1993 Arena Land Refinancing 11/01/93 11/01/19 5.9%-7.50%

21,210 $12,070 Total governmental activities COPs $12,070 (26)$201,654 (26)$153,577 $355,231 57 CITY OF ANAHEIM 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: Avenue. The loan is payable from sales tax revenue generated by Westgate, from The Community Development Block Grant yearly entitlement, and from the Redevelopment Agency's property tax increment and project participation revenues generated by Westgate.

The outstanding balance at June 30, 2011 was $8,711. The loan bears interest ranging from 1.74% to 5.97% and is payable over 20 years beginning on February 1, 2005, until August 1, 2023. Loan debt service requirements to maturity is as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2020 Total COPs Principal$ 985 1,065 1,140 1,225 1,315 6,340$12,070 Interest$ 753 686 614 537 455 861$3,906 Total$ 1,738 1,751 1,754 1,762 1,770 7,201 Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2026 Total notes and loans Principal$ 397 435 478 517 561 3,711 2,612$8,711 Interest$ 469 450 427 402 374 1,312 221 Total$ 866 885 905 919 935 5,023 2,833$12,366 CAPITAL LEASE OBLIGATIONS 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 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 frorn 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 Redevelopment Agency's property tax increment.

The outstanding balance of the loan at June 30, 2011, was $14,655. The loan bears interest ranging from 1.74% to 3.97% and is payable over 20 years beginning on February 1, 2011 through August 1, 2030. Loan debt service requirements to maturity are as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 Total Less amount representing interest, variable Present value of future minimum lease payments$ 1,165 916 458 12 2,551 (210)$ 2,341 Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 Total notes and loans Principal$ 605 605 615 625 640 3,455 4,040$14,655 Interest$ 483 478 471 462 449 1,962 1,297 392$5,994 Total$ 1,088 1,083 1,086 1,087 1,089 5,417 5,337 4,462$20,649 NOTES AND LOANS PAYABLE At June 30, 2011, notes and loans payable are as follows: Notes and Loans Payable -City HUD Section 108 guaranteed loans payable 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 5.391'1% per annum for a term of 12 years.Principal and interest payments of $206 are due annually beginning on December 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 58 CITY OF ANAHEIM 16, 2009, until December 16, 2020. The outstanding balance at June 30, 2011 was$1,563. Loan debt service requirements to maturity are as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 Total notes and loans Principal$ 122 129 136 143 151 882$1,563 Interest$ 84 77 70 63 56 149$499 Total$ 206 206 206 206 207 1,031$2,062 interest rate, and has a maximum term of 25 years. The Redevelopment Agency's obligation to repay the note is entirely contingent on the revenues generated by the project. The note will be forgiven at the end of the term whether or not the entire amount has been repaid. At June 30, 2011, the outstanding balance of the participation note was $4,615.The Redevelopment Agency entered into a purchase and sale agreement dated November 24, 2002, with a property owner for the purchase of a future commercial development site located at 1687 West Lincoln Avenue for $900. One half of the purchase price or $450 was paid in cash and the balance of $450 by a promissory note bearing 6% simple interest per annum. The note is payable over 10 years at $3 per month with a balloon payment of $379 on its maturity date of March 1, 2013. The outstanding balance of this note at June 30, 2011 was $394.Debt service requirernents to maturity for the Redevelopment Agency notes payable and contractual commitments to be paid from future revenues are as follows: Notes and Loans Payable -Redevelopment Agency Redevelopment Agency Savi Ranch Associates note payable In July 1989, the 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 property tax increment to pay for principal and interest at the termination of the RiverValley project area plan in November 2031, the note ceases to be an obligation of the Redevelopment Agency. For the fiscal year ended June 30, 2011, total interest paid and tax increment revenues were $259 and $259 respectively.

Redevelopment Agency contractual obligations As part of the Redevelopment Agency's economic development program to attract and retain businesses in the City, the Redevelopment Agency has entered into various contractual obligations.

Generally, the Redevelopment Agency reimburses the business for its tenant improvement costs from property tax increment revenues received by the Redevelopment Agency. At June 30, 2011, the outstanding balance of these obligations totaled $180.California State Teachers Retirement System (CALSTRS) has entered into an agreement, dated December 15, 1992, with the Agency to share in the development costs of the Plaza Redevelopment Project. In March 2004, CALSTRS 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 Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2033 Total notes and loans Principal Interest$ 196 $ 673 657 598 304 571 335 559 369 546 3,328 2,357 1,901 72 2,132 2,635 104$7,896 $944 Tota l$ 869 1,255 875 894 915 5,685 1,901 2,204 2,739$17 337 Notes and Loans Payable -Housing Authority Housing Authority CHFA loan agreements In October 2003 and October 2007, the Housing Authority entered into separate loan agreements with the California Housing Finance Agency (CHFA), to provide funding for down payment assistance to first-time homebuyers.

The 2003 loan is for an amount up to $1,800 and bears 3% simple interest, with principal and accrued interest due in October 2013. At June 30, 2011, the outstanding balance of the 2003 loan was $707.The 2007 note is for an amount up to $1,250 and bears 3.5% interest with principal and accrued interest due in October 2017. At June 30, 2011, the outstanding balance of the 2007 loan was $1,034.59 CITY OF ANAHEIM BUSINESS-TYPE ACTIVITIES:

Bonds Payable -Electric Utility BONDS PAYABLE Range of Authorized Out-Date Final Interest Rates and standing Issued Maturity at Issue Date Issued 6/30/11 Electric Utility 1998 Revenue Bonds 5/01/98 10/01/1999 Revenue Bonds 9/01/99 10/01/2 2002 Revenue Bonds 2/15/02 10/01/2 2003 Revenue Bonds 4/01/03 10/01/12 2004 Revenue Bonds 6/01/04 10/01/3 2007 Revenue Bonds 2/01/07 10/01/3 2009 Revenue Bonds 3/10/09 10/01/3 2011 Revenue Bonds 5/11/11 10/01/3 Total Unarnortizeci b)ond refunding costs/prerniunm,net Total Electric Utility Water Utility 2004 Revenue Bonds 5/01/04 10/01/1 2008 Revenue Bonds 7/09/08 10/01/: 2010 Revenue Bonds 10/28/10 10/01/4 Total Unamortized bond refunding costs/premium,net Total Water Utility The City's Electric Utility has pledged future electric revenues, net of certain costs, to repay a total of $1,226,981 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, 2011, the annual principal and interest payments on the bonds were less than 55.8% of net revenues.Principal and interest paid for the current fiscal year and total net revenues were$48,650 and $87,251 respectively.

Bond debt service requirements to maturity for the Electric Utility to be paid from revenues are as follows: 28 4.75'-5.0%

$27 3.0%,-5.0%, 31 3.3%-5.25%, 22 3.0%-5.0%, 14 2.5"%-5.25%'Y 37 4.0%-5.0'%

19 3.0%-5.25'%

36 3.0"%-5.375`%

65,000 45,000 178,705 60,415 131,265 206,035 70,000 90,390 12,105 48,580 34,525 S 1,770 36,925 168,065 35,240 116,520 202,120 68,900 90,390 719,930 5,261 725,191 3,550 48,580 34,525 86,655 546 87,201 46,130 1,220 47,350 16 4.0%-4.5%18 4.0"%-5.0", 40 2.01-4.75%.

Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2040 Total Unamortized bond refunding costs/premium, net Total bonds Bonds Payable -Water Utility Principal$ 18,175 18,995 19,765 20,745 21,725 123,800 133,085 169,700 140,730 53,210 719,930 5,261$725,191 Interest$ 34,104 33,816 32,944 31,975 30,969 136,984 105,742 68,650 28,527 3,340 507,051 Total$ 52,279 52,811 52,709 52,720 52,694 260,784 238,827 238,350 169,257 56,550 1,226,981 5,261$507,051 $1 232 242 Sanitation 2007 Revenue Bonds Unamortized bond premium Total Sanitation 5/23/07 2/01/39 3.9%-5.0'%

47,710 Convention, Sports and Entertainment Venues 2002 Revenue Bonds 7/02/02 8/01/23 3.0'/.-5.5"X.

2008 Anaheim Lease Revenue Refunding Bonds 12/10/08 8/01/19 3.0%-5.0%Total Unamortized bond refunding costs/premium,net Total Convention, Sports and Entertainment Venues Total business-type activities bonds 26,260 12,800 45,847 39,705 52,505 (3,564)48,941$1,061 837 $908,683 The City's Water Utility has pledged future revenues from the sale of water, net of certain costs, to repay a total of $173,856 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, 2011, the annual principal and interest payments on the bonds were less than 33.2% of net revenues.

Principal and interest paid for current fiscal year and total net revenues were $4,155 and$12,523 respectively.

60 CITY OF ANAHEIM Bond debt service requirements to maturity for the Water Utility to be paid from revenues are as follows: 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: Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2041 Total Unamortized bond refunding costs/premium, net Total bonds Bonds Payable -Sanitation Principal S 915 950 920 960 1,000 5,680 12,830 16,585 20,770 26,045 86,655 546$87,201 Interest$ 4,292 4,255 4,217 4,178 4,135 20,013 18,084 14,510 9,801 3,716 87,201 Total$ 5,207 5,205 5,137 5,138 5,135 25,693 30,914 31,095 30,571 29,761 173,856 Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2020 2021-2024 Total Unamortized bond refunding costs/premium, net Total bonds Principal$ 6,918 7,756 8,120 4,995 4,424 20,122 170 52,505 (3,564)$48,941 Interest$ 2,310 1,962 1,579 1,280 1,091 2,103 14 10,339 Total$ 9,228 9,718 9,699 6,275 5,515 22,225 184 62,844 546$87,201 $74_402 (3,5641$10,339 $59,280 CERTIFICATES OF PARTICIPATION The City has pledged future Sanitation system net revenues to pay a total of $83,923 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, 2011, total principal and interest payments on the bonds were less than 3 8.5% of net revenues.

Total principal and interest paid and total system net revenues for the current fiscal year were $2,998 and $7,783 respectively.

Bond debt service requirements to maturity for Sanitation to be paid from revenues are as follows: Range of Authorized Out-Date Final Interest Rates and standing Issued Maturity at Issue Date Issued 6/30/11 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 $38,000 Certificates of Participation Payable -Convention, Sports and Entertainment Venues Certificates of participation debt service requirements to maturity for the Convention, Sports and Entertainment Venues Fund to be paid from unrestricted revenues are as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2 022-2026 2027-2031 2032-2036 2037-2039 Total Unamortized bond premium Total bonds Principal$ 835 880 920 955 1,005 5,720 7,225 9,020 11,370 8,200 46,130 1,220$47,350 Interest$ 2,160 2,119 2,079 2,042 1,994 9,264 7,762 5,964 3,618 791 37,793 j37,793 Total$ 2,995 2,999 2,999 2,997 2,999 14,984 14,987 14,984 14,988 8,991 83,923 1,220$85,ý143 Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2024 Total COPs Principal Interest$ 2,350 2,350 2,350$ 3,500 2,345 4,500 1,895 27,100 4,685 2,900 206$38,000 $16,181 Total$ 2,350 2,350 2,350 5,845 6,395 31,785 3,106$54,181 61 CITY OF ANAHEIM NOTES PAYABLE ARBITRAGE Note Payable- Water Utility At June 30, 2011, notes payable are as follows: State of California Revolvin2 Fund note payable 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 payments of principal and interest in the amount of $592 through July 31, 2021. The outstanding balance on this note at June 30, 2011, totaled $10,719.Notes debt service requirements to maturity for the Water Utility are as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022 Total Unamortized note discount Total notes and loans Principal$ 892 917 943 969 996 5,418 584 10,719 1200)$10,519 Interest$ 293 268 242 216 189 506 8 1,722 Total$ 1,185 1,185 1,185 1,185 1,t85 5,924 592 12,441 (200)$12_241 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, 2011, the arbitrage rebate liability for governmental and business-type activities was zero and $534 respectively.

DEBT ISSUANCES City -Debt Issuance In July 2010, the City received the remaining

$7,000 of the total $15,000 HUD Section 108 loan. Proceeds of the loan provide financing for the rehabilitation of the historic Packing House site. Total debt service payments over the life of the $7,000 loan until fiscal year 2031 will be $9,873.Redevelopment Agency -Debt Issuance In October 2010, the Redevelopment Agency issued taxable Recovery Zone Economic Development Bonds in the principal amount of $6,570. The proceeds totaled $6,532, of which $5,782 was deposited in an acquisition fund to provide financing for public improvements related to the merged project areas, $657 was deposited in the required reserve fund, and $93 was used to pay the costs of issuance.The total debt service payments over the life of the bonds until fiscal year 2031 will be $11,701.The Redevelopment Agency will receive a cash subsidy payment from the federal government equal to 45% of the interest cost on the Recovery Zone Economic Development Bonds as principal and interest payments are made.Electric Utility -Debt Issuance In May 2011, the Electric Utility issued revenue bonds in the principal amount of$90,390. The proceeds totaled $93,262, of which $85,004 was deposited in construction fund to finance electric distribution system improvements and a customer information system, $7,500 was deposited in the required reserve fund and$758 was deposited in the cost of issuance fund. The total debt service payments over the life of the bonds until fiscal year 2037 will be $170,370.Note Payable -Convention, Sports and Entertainment Venues Wells Faron Rink lenpA revpniip nntp In December 2010, the City executed a lease revenue note with the 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 $20,000 and bears a 1.85% interest per annum. The note is payable monthly, commencing in January 2011 and matures in December 2014.Note debt service requirements to maturity to be paid from the unrestricted revenues of the Convention, Sports and Entertainment Venues Fund are as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 Total note Principal$ 4,720 5,000 5,095 5,185$20,O000 interest$ 326 237 143 48$ 754 Total$ 5,046 5,237 5,238 5,233$20,754 62 CITY OF ANAHEIM Water Utility -Debt Issuance CONDUIT FINANCINGS In October 2010, the Water Utility issued revenue bonds Series 2010-A and 2010-B in an aggregate principal amount of $34,525. The aggregate proceeds totaled$35,243, of which $34,827 was deposited in a project acquisition fund to finance capital improvements to the Water Utility's infrastructure and $416 was deposited in the cost of issuance fund. The total debt service payments over the life of the bonds until fiscal year 2041 will be $75,927.The Series 201 0-A bonds were issued as tax-exempt bonds in the amount of $4,835.The Series-B bonds were issued in the amount of $29,690 as federally taxable Build America Bonds. The Water Utility will receive a cash subsidy payment from the federal government amounting to 35% of the interest cost on the Build America Bonds as principal and interest payments are made.Convention, Sports and Entertainment Venues -Debt Issuance In December 2010, the City issued a revenue note in the principal amount of$20,000. $19,840 of the note proceeds were deposited in a construction fund to finance capital improvements of the Convention Center Grand Plaza and $160 was used to pay the costs of issuance.

The total debt service payment over the life of the note until fiscal year 2015 will be $20,924.Debt Defeased Certain bonds and certificates of participation defeased by the City prior to June 30, 2011, are summarized below: Outstanding 6/30/11 Redevelopment Agency 1986 Tax Allocation Refunding Bonds $38,410 Electric Utility Electric System Certificates of Participation, issue of 1997 $ 725 In each of these refundings, the proceeds of the refunding issues were placed in irrevocable escrow accounts and invested in government securities that, together with interest earnings thereon, will provide amounts sufficient for future payments of interest and principal on the issues refunded.

Refunded debt is not included in the City's accompanying basic financial statements as the City has satisfied its obligation through the in-substance defeasance of these issues.City The City has entered into two conduit financings on behalf of a community care provider facility and one to facilitate 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 participation related to conduit financings outstanding at June 30, 2011, were as follows: 1985 West Anaheim Convalescent Home 1993 Anaheim Memorial Hospital Association 2003 Anaheim Arena Financing Project Total Date Final Amount Outstanding Issued Maturity Issued 6/30/11 12/30/85 12/01/15 $ 3,204 $ 1,419 10/15/93 05/15/20 46,690 23,415 12/11/03 06/01/23 42,600 34,500$92,494 $59,334 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, 2011, were as follows: 1985 West Anaheim Royale 1992 Heritage Village Park 1997 Casa Granada Apartments 1997 Monterey Apartments 1997 Port Trinidad Apartments 1998 Sage Plark Project 2000 Cobblestone Apartments 2000 Park Vista Apartments 2000 Seawinds Apartments 2001 Solara Court Apartments 2008 Bel Age Manor Apartments 2009 Lincoln Anaheim Apartments Phase B Total Date Issued 12/01/85 11/12/92 05/15/97 05/15/97 05/15/97 11/01/98 07/20/00 07/24/00 07/210/00 01/01/01 02/01/08 Final Maturity 12/01/15 11/12/07 05/15/27 05/15/27 05/15/27 11/01/28 03/15/33 07/01/33 07/1 5/33 12/01 /34 02/01/44 Amount Issued$ 4,664 8,485 3,795 4,545 2,140 5,500 3,980 27,180 7,000 8,200 22,350 Outstanding 6/30/11$ 2,074 5,485 3,095 3,645 1,740 5,500 3,580 27,180 6,300 5,744 21,728 05/15/09 04/15/39 23,217 9,352$121,056 $ 95,423 63 CITY OF ANAHEIM 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, 2011, 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 were advance refunded through the Anaheim Public Financing Authority and in June 2004, $11,160 of the 1995 bonds were refunded through the Authority.

In December 1999, $7,720 of the 1989 bonds were refunded by the City. At June 30, 2011, the 2004 Anaheim Public Financing Authority bonds outstanding amounted to $5,075, and the 1999 Mello-Roos bonds outstanding amounted to $2,910.* 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.

At June 30, 2011, the 2007 Mello-Roos bonds outstanding amounted to $8,595.t 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 and to fund a reserve fund for the Series 2010 Bonds. At June 30, 2011, the 2010 Mello-Roos bonds outstanding amounted to $27,925.NOTE 8 -SEGMENT INFORMATION:

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

The Sanitation Fund accounts for three activities:

solid waste collection, wastewater, and street cleaning.

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

Summary financial information for wastewater activities is presented below: Condensed Statement of Net Assets 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 Net Assets: Invested in capital assets, net of related debt Restricted for debt services Restricted for capital projects Unrestricted Total net assets$ 7,059 9,921 1,886 27,861 82,684 129,411 999 1,608 46,515 49,122 55,602 348 6,436 17 8903$ 80,289 Condensed Statement of Revenues, Expenses and Changes in Fund Net Assets Waste water fees (pledged against bonds)Depreciation and amortization Other operating expenses Total operating income Nonoperating income (expenses)

Interest income Other nonoperating income Interest expense Capital contribution Transfers in Transfers out Total nonoperating income expense Change in net assets Net assets at beginning of year Net assets at end of year$ 11,577 (1,623)(4,030)5,924 227 9 (1,938)4,288 318 (397)2,507 8,431 71,858$ 80,289 64 CITY OF ANAHEIM Condensed Statement of Cash Flows Net cash provided by (used in): 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 Funding Policy$ 7,960 (384)(10,228)937 (1,715)36,635$ 34,920$ 7,059 27,861$ 34,920 Participants are required to contribute 8.0% (9.0% for fire and police safety employees) of their annual covered salary. For miscellaneous employees the City pays 7% of the participant contributions and the employee pays 1%. For police safety, the city pays the entire 9% of the participant contributions.

For fire safety employees, the entire 9% is paid by the employees.

In addition, the City is required to contribute at an actuarially determined rate applied to annual covered payroll. The contribution requirements of plan members and the City are established and may be amended by PERS. For fiscal year 2011, PERS contribution rates were as follows: Plan Miscellaneous Police Safety Fire Safety City Contribution Paid by Paid by City Employee 15.917% 0.6349%26.513% 0.000%23.994% 0.000%Employee Contribution Paid by Paid by City Employee 7.000% 1.0001%9.000% 0.000't, 0.000/% 9.000%Tota l 24.551%35.513%32.994%NOTE 9 -WESTGATE POLLUTION REMEDIATION OBLIGATION:

In June 2003, the Redevelopment Agency acquired property located at 2951 West Lincoln Avenue as a 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 agreed to pay 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 is estimated to be $5,541 based on actual contract bids received or average cleanup costs applicable to the project. The Redevelopment Agency anticipates no significant costs increases from the estimates.

At June 30, 2011, the estimated outstanding pollution remediation obligation for the Westgate project was$720.Annual Pension Cost For fiscal year 2011, the City's annual pension cost of $51,913 for PERS was equal to the City's required and actual contributions.

The required contribution was determined as a part of the June 30, 2008 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, 2009, 2010 and 2011 are as follows: Fiscal Year Ending 6/30/09 6/30/10 6/30/11 Annual Pension Cost (APC)$54,200 56,000 51,913 Percentage of APC Contributed 100%1001%1000/, Net Pension Obligation

$0$0$0 NOTE 10 -RETIREMENT PLANS: Funded Status and Fundine Progress 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 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.65 CITY OF ANAHEIM The table below displays the funding progress of the three plans and is based upon the most recent actuarial valuation data: Plan Miscellaneous Police Safety Fire Safety Actuarial Viluation Date 06/30/10 06/30/10 0613[t/10 Actuarial Value of Assets fAVA)$783,241 432,262 263,280 Accrued Liability$968,464 519,062 317,672 Unfunded Liability WUO., (B)-(A)$185,223 86,800 54,392 l:Undotl Ratios AVA Market (A/f(B) Value 80.9% 63.1%83.3% 65.4%82.9% 64.9%Annual COwered Payroll$116,877 45,620 24,746 LiL as a"% of lNyroll (CA(E)158.5%190.3%219.8%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, 2011, were 1.7% 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, 2011, was 6.26% of total payroll.Annual OPEB Cost and Net OPEB Asset 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.Actuarial Methods and Assumptions In the June 30, 2010 actuarial valuations, the entry age actuarial cost method was used. The actuarial assumptions included:

fa) 7.75% investment rate of return (net of administrative expenses), (b) projected annual salary increases that vary by duration of service, and (c) 2% per year cost-of-living adjustments.

Both (a) and (b) included an inflation component of 3%. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a 15-year period (smoothed market value). The PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The average remaining amortization periods were 22 years for the miscellaneous plan and 30 years for safety police and fire plans for years of service unfunded.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 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, 2011, are as follows: ARC Interest on net OPEB asset Adjustment to ARC Annual OPEB cost$10,266 (736.)602$10,132$10,266 (10,132)134 9,495$ 9,629 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, 2011 are as follows: Fiscal Year Ending 6/30/09 6/30/10 6/30/11 Annual OPEB Cost$ 6,998 7,108 10,132 Percentage of Annual OPEB Cost Contributed 102.2%102.2%101.3%, OPEB Asset$9,341 9,495 9,629 66 CITY OF ANAHEIM 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.The table below displays the funding progress of the plan and is based upon the most recent actuarial valuation data: NOTE 11 -JOINT VENTURES AND JOINTLY-OWNED PROPERTIES:

Authority for Orange County -City Hazardous Materials Emergency Response The City participates in a joint powers authority, 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, Orange County Fire Authority, the City of Santa Ana, and the City of Huntington Beach. Members of the Board of Directors (Hazmat Board) consist of one voting Board member and an alternate appointed by the governing body from the City of Anaheim, Orange County Fire Authority, the City of Santa Ana, and the City of Huntington Beach.Distribution of fair share contributions to reimburse the provider agencies are as follows: City of Anaheim, 27.3%; Orange County Fire Authority 27.3%; City of Santa Ana, 27.3%; and City of Huntington Beach, 18.1%.At the direction of the Hazmat Board, revenues are disbursed to the provider agencies at the end of each preceding quarter. Unaudited financial information for the joint powers authority as of and for the year ended June 30, 2011, was as follows: Actuarial Valuation Date 06/30/10 Actuarial Value of Assets (AVA)$63,920 Accrued Liability$211,914 Unfunded Liability (UtL)(Bt-tA)$147,994 AVA 3 0.2%~Annual Covered Payroll$177,229 LIL as a%of Payroll (C0/0 83.5%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, 2010, actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumption included a 7.75% investment rate of return, an annual healthcare cost trend rate ranging from 8.00 % -1 3.00% initially and declining to 5.50% by 2018, 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, 2010, is 27 years.Total assets Total liabilities Members' equity Total revenues Total expenses Revenues over expenses$ 56 42 14 122 168 (46)Hazmat does not have any debt outstanding at June 30, 2011.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 67 CITY OF ANAHEIM 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 Fountain Valley, City of Fullerton, City of Garden Grove, City of Huntington Beach, City of Newport Beach, and the City of Orange.Public entities in Orange County may receive services from the Fire Authority by executing an agreement and paying a fair share contribution.

Unaudited financial information for the Fire Authority as of and for the year ended June 30, 2011, 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 12 -COMMITMENTS AND CONTINGENCIES:

Intermountain Power Agency The Electric Utility has entered into a power purchase contract with tile 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. The City is obligated for the following percentage of electrical facilities at IPA: Total assets Total liabilities Members' equity Total revenues Total expenses Revenues over expenses$2,481 632 1,849 4,712 4,749 (37)Generation Intermountain Power Project Entitlement 13.2%Expiration 2027 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.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, 2011, amounted to $78,973. The City's bonded indebtedness incurred to finance the purchase of the 10.04% ownership interest is also included in the basic financial statements.

The City 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.

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 California 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: Transmission Soutner Transmission System (STS)Mead-Adelanto Project (MAP)Mead-Phoenix Project (MPP)Generation Hoover Dam Uprating (Hoover)Magnolia Generating Station (Magnolia)

Canyon Power Project Natural Gas Reserve Projects: SCPPA Natural Gas Project -Pineclale, Wyoming SCPPA Natural Gas Project -Barnett, Texas Entitlement 17.6%13.59%, 24.2%Entitlement 42.6%38.0%Y 100.00/, 35.7%45.5%Expiration 2027 2030 2030 Expiration 2018 2037 2040 2033 2033 68 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 for these commitments.

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.on April 30, 2041. The Agreement was amended on October 15, 2003 to extend the term of the lease to February 28, 2043. In January 2003, the Redevelopment Agency converted its sublicense to a sublease and is paying $34 in monthly rent through January 2006. The agreement also provides for the rent to increase by 6% every 3 years. Future minimum lease payments to be made from unrestricted revenues of the Redevelopment Agency Capital Project Funds are as follows: Fiscal Year Ending 6/30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2016 2037-21)401 Total IPA$ 41,645 311,874 38,541 39,268 33,374 156,613 25,546 ST5$ 8,096 16,398 14,782 14,819 14,870 711,931 56,885 12,728 MAP$ 3,072 3,0816 3 ,1191 3,06,3 3,060 14,525$ 1,589)1,922 1,925 1,611 1,651 7,7135 Hoover$ 956 958 957 958 957 1,913 Magnolia$ 6,195 8,75q 8,766 8,766 8,768 36,28(36,193 381,268 39.634 26,282$217,920 Natural Gas$ 8,1015 8,0%7,369 7,147 7,094 27,949 18,288 12,536 3,815$1 00,399 Canyon Total$ 12,770 $ 82,428 12,770 90,863 12,770 88,201 12,770 88,402 19,501 8q,275 97,511 413,516 97,510 234,422 97,5181 161,0501 97,512 140,9611 78,014 10 4 ,296$538,646 $1,493,414 Fiscal Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2041 2042-2044 Total$ 464 479 479 492 508 2,658 2,937 3,242 3,558 3,931 1$404_$20,152$373,861 $209,509 S29,897 $16,483 $6,699 In March 2003, the Redevelopment Agency sub-leased a portion of the easement to G.D. Heil, Inc., a developer, for a period of 5 years with an option to extend up to 32 years or a total of 37 years. The initial sub-lease is at $5 per month and increase by 6% every 3 years. The following are the annual future minimum lease revenues under this lease.In addition to debt service, the City's entitlement requires the payment for fuel costs, operations and maintenance (O&M), administration and general (A&G) and other miscellaneous costs associated with the generation and transmission facilities discussed above. These costs do not have a similar structured payment schedule as debt service, however, prior experience indicates that annual costs are generally consistent from year to year. The fiscal year 2011 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 Tnola 2011 $43;270 $5,046 $229 $290 $428 $20,758 $1,143 $71,164 Operating Leases In April 2001, the Redevelopment Agency entered into an agreement with Katella Operating Properties It, LLC to sublicense/sublease an 8.9 acre Southern California Edison easement (easement) located between Anaheim Boulevard and Claudina Way.The Redevelopment Agency gained long term control of the property as part of its overall efforts to redevelop the area for hotel or commercial development.

The term of the sublicense/sublease is for 40 years commencing on May 1, 2001 and ending Fiscal Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2039 Total$ 68 71 71 71 76 392 436 479 525 228$2,417 In January 2003, the Redevelopment Agency entered into a ground lease agreement with Loan Pham, a property owner, for a period of 55 years, which is payable in advance at $71 per year, increasing by 10% every 4 years. Future minimum lease payments to be made from unrestricted revenues of the Redevelopment Agency Capital Project Funds are as follows: 69 CITY OF ANAHEIM Fiscal Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2041 2042-2046 2047-2051 2052-2056 2057 Total$ 86 86 86 95 95 501 561 641 719 806 904 1,033 1,160 244 S7,017 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 June 30 2012 $ 54 2013 54 2014 54 2015 57 2016 59 2017-2021 305 2022-2026 336 2027-2031 369 2032-2036 406 2037-2041 447 2042-2044 334 Total minimum future rentals $2,475 The Honda Center 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 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 deferred 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 art 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, 2011, the outstanding conduit debt on the Honda Center totaled$34,500. 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.

70 CITY OF ANAHEIM Angel Stadium of Anaheim On May 14, 1996, the City and the California Angels, LP I.Team), which was then managed by Disney Sports Enterprises, Inc. (subsequently known as Anaheim Sports, Inc.), entered into an agreement to provide for 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).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 Lip to $500 per year adjusted annually for CPI for a capital reserve, 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, a Pennsylvania partnership, an affiliate of Aramark Entertainment, Inc. 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, Nederlander 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%. Nederlander 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 Nederlander.

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 are subject to adjustment annually based on CPI increases.

Nederlander paid the City $181 for the year ended June 30, 2011, for parking and common area maintenance.

Muzeo In October 2007, the City and 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 lune 30, 2011, there was no amounts 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.

71 CITY OF ANAHEIM Construction and other significant commitments At June 30, 2011, the City had the following commitments with respect to unfinished capital projects, disposition and development agreements, reimbursement agreements, and cooperation agreements:

Remaining Description Commitment Anaheim Boulevard Residential Housing Project $ 2,300 Avon Dakota Neighborhood Revitalization Housing Project 18,651 Anaheim Fixed-Guideway Transit Corridor Study 818 Anaheim Regional Transportation Intermodal Center Professional Services 15,907 Brookhurst Street Right of Way Clearing and Demolition 748 Colony I'ark Phase III Home Buyer Assistance 4,775 Colony Park Phase IV Home Buyer Assistance and Remediation Costs 2,000 Central/East Anaheim Area Sanitary Sewer System Improvement 1,031 Direct Buried Cable Replacement Phase VIII 1,450 Gene Autry Way Highway Construction 14,355 Golf Course Maintenances 1,225 Historic Citrus Picking House Renovation 5,980 Linda Vista Reservoir and Pump Station Replacement 8,357 Santa Ana Canyon Multi-Use Trail 540 Street Rehabilitation Group 11 3,182 Underground District No. 48 Harbor Boulevard 589 Underground District No. 51/56 lincoln/Magnolia 5,180 Underground District No. 53 La Palma Avenue 4,556 Underground District No. 58 Imperial Highway 1,519 Viviere Condominiums Home Buyer Assistance 2,300 Vehicle Acquisitions 2,852 Water Recycling Demonstration Project 5,877 Expected Completion Date 2014 2013 2011 2013 2012 2012 2013 2011 2012 2012 2012 2011 2013 2012 2012 2011 2012 2013 2013 2011 2012 2012 agency may continue in operation if a city or county that includes a redevelopment agency adopts an ordinance agreeing to comply with and participate in the Alternative Voluntary Redevelopment Program, thereby committing itself to comply with the provision of AB 27 and to make annual remittance payments to the County-Auditor Controller.

NOTE 14 -SUBSEQUENT EVENTS: Investment Portfolio Effective August 8, 2011, the City Treasurer's Investment Portfolio has a rating of "AAf" from Standard and Poor's (S&P). This rating action was the result of S&P downgrading the debt issues of the United States Treasury and Federal Agencies from a credit rating of "AAA" to "AA+". The credit rating reflects the investment holdings of the City's Investment Portfolio and not the management of the investment fund.Alternative Voluntary Redevelopment Program The City Council ("City Council")

of the City of Anaheim ("City") elected to comply with and participate in the Alternative Voluntary Redevelopment Program established by AB 27 by the adoption of Ordinance No. 6217 ont July 19, 2011, in order to allow the Anaheim Redevelopment Agency ("Agency")

to continue in operation and perform its functions (the "Ordinance").

By the adoption of the Ordinance and as a condition of the Agency's continued existence and operation, the City is required to make certain annual remittances to the County Auditor-Controller

("County"), beginning with fiscal year 2012, to finance activities within the Redevelopment Project that are related to accomplishing the goals of the Redevelopment Plan for the Redevelopment Project. To that end, the City Council and the Governing Board of the Agency approved the terms of an Agreement to Transfer Tax Increment, whereby the Agency has agreed, on an annual basis, to transfer tax increment to the City in an amount not to exceed the amount of the City's remittance payment to the County.On August 1, 2011, the California Department of Finance informed the City that it will be required to pay to the County the sum of $17,451 for fiscal year 2012. AB 27 provides that the City is to make its remittance payment for each budget year after fiscal Year 2012 pursuant to a formula set forth therein.The validity, passage and applicability of AB 26 and AB 27 is the subject of judicial challenges, including the action brought by the California Redevelopment Association and the League of California Cities in their own capacity and on behalf of their members: California Redevelopment Association, et al v. Ana Matosantos, et al. (The "CRA Action").NOTE 13 -STATE OF CALIFORNIA APPROVED BUDGET IMPACTS TO THE ANAHEIM REDEVELOPMENT AGENCY As part of the State of California fiscal year 2012 approved budget, Assembly Bills Xl 26 ("AB 26") and XI 27 ("AB 27") were approved by the Governor on June 28, 2011, and chaptered by the Secretary of State on June 29, 2011. AB 26 provided for the statewide dissolution of all California redevelopment agencies as of October 1, 2011, and further provided that, thereafter, "successor agencies" will administer the enforceable obligations of all redevelopment agencies and otherwise wind up their affairs, all subject to the review and approval of oversight committees.

Nothwithstanding the provisions of AB 26, AB 27 provided that a redevelopment 72 CITY OF ANAHEIM The California Supreme Court (the "Court") issued an order on August 11, 2011, directing the parties to show cause why the relief sought in the CRA Action should not be granted and established a briefing schedule designed to facilitate oral argument as early as possible and a decision before January 15, 2012. Pending a decision in the CRA Action, the Court's order stayed the effectiveness of AB 27 and certain portion of AB 26 and precluded redevelopment agencies from, among other things, incurring new indebtedness, transferring assets, acquiring real property, entering into new contracts or modifying existing contracts, and prohibited redevelopment agencies from making payments for anything other than "enforceable obligations," notwithstanding the fact the City Council has adopted the Ordinance.

Pending the outcome of the CRA Action, the duties and obligations of the City and the Agency under the Ordinance and the Agency's transfer of funds under the aforementioned Agreement to transfer Tax Increment and the City's remittance payments to the County have been stayed.73 (This page left blank intentionally) 74 CITY OF ANAHEIM Required Supplementary Information (Unaudited)(In thousands)

Miscellaneous Employees Retirement System -Schedule of Funding Progress (A) (B) (C) (D) (E) (F)Unfunded UL as a Actuarial Actuarial Liability Funded Ratios Annual % of Valuation Value of Accrued (UL) AVA Market Covered Payroll Date Assets (AVA) Liability (B) -(A) (A)/(B) Value Payroll (C)/(E)6/30/08 $713,184 $820,145 $106,961 87.0% 88.3% $118,656 90.1%6/30/09 747,033 918,508 171,475 81.3% 59.1% 120,606 142.2%6/30/10 783,241 968,464 185,223 80.9% 63.1% 116,877 158.5%Police Safety Employees Retirement System -Schedule of Funding Progress (A) (B) (C) (D) (E) (F)Unfunded UL as a Actuarial Actuarial Liability Funded Ratios Annual % of Valuation Value of Accrued (UL) AVA Market Covered Payroll Date Assets (AVA) Liability (B) -(A) (A)/(B) Value Payroll (C)/(E)6/30/08 $392,206 $457,588 $65,382 85.7% 87.6% $44,224 147.8%6/30/09 411,137 496,423 85,286 82.8% 60.5% 46,022 185.3%6/30/10 432,262 519,062 86,800 83.3% 65.4% 45,620 190.3%Fire Safety Employees Retirement System -Schedule of Funding Progress (A) (B) (C) (D) (E) (F)Unfunded UL as a Actuarial Actuarial Liability Funded Ratios Annual % of Valuation Value of Accrued (UL) AVA Market Covered Payroll Date Assets (AVA) Liability (B) -(A) (A)/(B) Value Payroll (C)/(E)6/30/08 $242,714 $278,250 $35,536 87.2% 89.3% $23,658 150.2%6/30/09 252,862 308,033 55,171 82.1% 60.0% 26,098 211.4%6/30/10 263,280 317,672 54,392 82.9% 64.9% 24,746 219.8%Other Post-employment Benefits -Schedule of Funding Progress (A) (B) (C) (D) (E) (F)Unfunded UL as a Actuarial Actuarial Liability Funded Ratios Annual % of Valuation Value of Accrued (UL) AVA Covered Payroll Date Assets (AVA) Liability (B) -(A) (A)/(B) Payroll (C)/(E)7/01/06 $ $130,328 $130,328 0.0% $152,602 85.4%7/01/08 63,097 155,728 92,631 40.5% 165,137 56.1%7/01/10 63,920 211,914 147,994 30.2% 177,229 83.5%See accompanying independent auditors' report.75 (This page left blank intentionally) 76 NONMAJOR GOVERNMENTAL FUNDS NONMAJOR GOVERNMENTAL FUNDS NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS are used to account for revenue derived from specific taxes or other earmarked revenue sources (other than for major capital projects) that are restricted by law or administrative action to expenditures for specified purposes.GAS TAX AND ROADS FUND -Established to account for the construction and maintenance of the road network system of the City. Financing is primarily provided by the City's share of Federal, State, and local gasoline taxes. Federal, State, and local regulations require that these gasoline taxes be used to improve and maintain streets, and includes programs intended to improve the air quality of the region.WORKFORCE DEVELOPMENT FUND -Established to account for the City's involvement in Federal, State, and local programs to create jobs and provide the unemployed citizens in the Anaheim area with job training opportunities.

COMMUNITY DEVELOPMENT BLOCK GRANT FUND -Established to account for financing of the development of viable urban communities through the provision of decent housing, suitable living enviroments and economic opportunity, principally for persons of low and moderate income. Financing is provided by the Federal Housing and Urban Development (HUD) grants.SEWER AND STORM DRAIN CONSTRUCTION FUND -Established to account for the construction of the City's waste water collection and disposal system. Financing is provided by fees charged to residential and commercial developers.

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 FUND -Established to account for the collection of a special assessment su pp orting marketing, promotion and transit project costs in support of the City's tourism and convention industry.

e a mned" d b NARCOTIC ASSET FORFEITURE FUND,- Established to account forfunds received from Federal and.Sta ,'age.naniestht areroederivey'fromnonies and -dpr6perty seiz edyby-.ý"-', the Police Department in-drug related incidents.

These funds'are used to'supr lemnent sting re sýourresoi toheity's I ii,,"y iforce'm'ent REDEVELOPMENT HOUSING SET-ASIDE FUND -Estabhshed for the purpose of increasing'and improving thecommuhiy's supply of lowfand moderate incomhousin

.in accordance with the California Co'mmunity Redevelopmient Law. Financing is provided frcrii property tax increment 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: entitnes., GENERAL OBLIGATION BONDS FUND -Established to accumulate resources for the payment of principal and interest on generalobligation bonds of the Cit y.,Debt:-

-service is financed by property tax revenues..

REDEVELOPMENT AGENCY FUND -Established to accumulate resources for payment of principal and interest on Redevelopment Agency tax allocation bonds and notes payable. Debt service is financed by property tax increment.

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.REDEVELOPMENT PROJECTS FUND -Established to account for the acquisition, relocation, demolition, and sale of property for those portions of Anaheim earmarked as in need of redevelopment related activities.

Financing is provided by property tax increment and bond proceeds.TRANSPORTATION IMPROVEMENT PROJECTS FUND -Established to account 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 OCTA. Financing is provided by Federal, State and local agencies.DEVELOPER IMPACT PROIECTS FUND -Established to account for infrastructure improvements, primarily in the Platinum Triangle area, which provides development opportunities for high density, mixed use, office, restaurant, and residential projects.

Financing is primarily provided by developer impact fees.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 which 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 Nonmajor Governmental Funds by Fund Type June 30, 2011 (In thousands)

Nonmajor Nonmajor Nonmajor Total Special Debt Capital Nonmajor Revenue Service Projects Governmental Funds Funds Funds Funds ASSETS Cash and cash equivalents

$ 17,480 $ 5,423 $ 15,414 $ 38,317 Investments 24,569 7,621 21,663 53,853 Accounts receivable, net 926 51 188 1,165 Accrued interest receivable 156 106 174 436 Notes receivable, net 39,671 2,790 42,461 Due from other funds 16,358 17,746 34,104 Due from other governments 23,582 28 15,286 38,896 Land held for resale, net 10,096 33,209 43,305 Prepaid and other assets 4,231 3 1,706 5,940 Restricted cash and cash equivalents 83 27,317 13,517 40,917 Restricted investments 33,791 22,682 56,473 Total assets $137,152 $74,340 $144,375 $355,867 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 7,086 $ 2,610 $ 10,873 $ 20,569 Wages payable 353 112 465 Deposits 1,251 1,149 2,400 Due to other funds 3,482 8,176 28,655 40,313 Deferred revenues 58,923 17,424 76,347 Total liabilities 71,095 10,786 58,213 140,094 Fund balances: Nonspendable:

Prepaid and other assests 17 3 611 631 Restricted:

Capital projects 81 409 490 Debt service 67,363 67,363 Development impact projects 10,325 52,617 62,942 Grant purposes 5,233 5,233 Homebuyer assistance program 7,598 7,598 Low and moderate income housing 27,974 27,974 Redevelopment projects 38,713 38,713 Anaheim resort maintenance and improvement 6,718 6,718 Streets, roads and transportation improvement projects 5,540 3,613 9,153 Assigned: Debt service 7,000 8,490 15,490 Capital projects 833 6,928 7,761 Unassigned (5,262) (3,812) (25,219) (34,293)Total fund balances 66,057 63,554 86,162 215,773 Total liabilities and fund balances $137,152 $74,340 $144,375 $355,867 77 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds by Fund Type Year Ended June 30, 2011 (In thoLIsands)

Nonmajor Nonmajor Total Special Nonmajor Capital Nonmajor Revenue Debt Service Projects Governmental Funds Funds Funds Funds Revenues: Property taxes $14,112 $33,622 $ 47,734 Licenses, fees and permits 1,363 $ 545 1,908 Intergovernmental revenues 66,172 6 3,840 70,018 Charges for services 10,271 10,271 Use of money and property 2,031 654 4,311 6,996 Other 457 165 622 Total revenues 94,406 34,282 8,861 137,549 Expenditures:

Current: City Attorney 120 120 Finance 23 23 Police 9,694 15 9,709 Fire 725 725 Community Development 16,370 8,717 12,490 37,577 Planning 1,524 1,524 Public Works 8,194 1,280 9,474 Community Services 1,519 432 1,951 Convention, Sports and Entertainment 3,972 3,972 Capital outlay 26,319 43,247 69,566 Debt service: Principal retirement 461 11,335 355 12,151 Interest charges 365 32,154 486 33,005 Debt issuance costs 59 168 227 Total expenditures 69,322 52,229 58,473 180,024 Excess (deficiency) of revenues over (under) expenditures 25,084 (17,947) (49,612) (42,475)Other financing sources (uses): Transfers in 7,537 32,593 23,874 64,004 Transfers out (11,420) (20,294) (9,310) (41,024)Issuance of bonds 6,570 6,570 Issuance of loan payable 7,000 7,000 Contribution from property owners 41,007 41,007 Total other financing sources 3,117 12,299 62,141 77,557 Net change in fund balances 28,201 (5,648) 12,529 35,082 Fund balances at beginning of year 37,856 69,202 73,633 180,691 Fund balances at end of year $ 66,057 $ 63,554 $86,162 $215,773 78 CITY OF ANAHEIM Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2011 (In thousands)

Gas Tax Community Community Sewer and and Workforce Development Services Storm Drain Roads Development Block Grant Facilities Construction ASSETS Cash and cash equivalents

$ 2 $ 1 $2,039 $3,097 Investments 3 1 2,866 4,353 Accounts receivable, net $ 1 2 731 191 Accrued interest receivable 1 25 13 Notes receivable, net 6,848 Due from other funds 7,000 26 Due from other governments 19,409 586 568 10 Land held for resale, net Prepaid and other assets 4,214 1 Restricted cash and cash equivalents 83 Total assets $23,628 $587 $14,504 $5,672 $7,680 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 4,084 $338 $ 335 $ 305 $ 165 Wages payable 73 42 76 2 2 Deposits 1,251 Due to other funds 3,108 210 164 Deferred revenues 17,408 6,848 724 $ 191 Total liabilities 24,673 590 7,423 1,031 1,609 Fund balances (deficits):

Nonspendable:

Prepaid and other assests Restricted:

1 Capital projects 81 Development impact projects 4,254 6,071 Grant purposes Homebuyer assistance program Low and moderate income housing Anaheim resort maintenance and improvement Street, roads and transporation improvement projects 4,214 Assigned: Debt services 7,000 Capital projects 386 Unassigned:

(5,259) (3)Total fund balances (deficits)

(1,045) (3) 7,081 4,641 6,071 Total liabilities and fund balances (deficits)

$23,628 $587 $14,504 $5,672 $7,680 (continued) 79 CITY OF ANAHEIM Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2011 (in thousands) (continued)

Anaheim Anaheim Resort Tourism Narcotic Redevelopment Maintenance Improvement Asset Housing Grants District District Forfeiture Set-Aside Total ASSETS Cash and cash equivalents

$ 3,032 $2,944 $ 711 $1,833 $ 3,821 $ 17,480 Investments 4,262 4,138 998 2,577 5,371 24,569 Accounts receivable, net 1 926 Accrued interest receivable 17 33 4 23 40 156 Notes receivable, net 15,015 17,808 39,671 Due from other funds 176 9,156 16,358 Due from other governments 2,988 10 11 23,582 Land held for resale, net 10,096 10,096 Prepaid and other assets 16 4,231 Restricted cash and cash equivalents

_ 83 Total assets $25,490 $7,125 $1,713 $4,433 $46,320 $137,152 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 527 $ 392 $ 387 $ 82 $ 471 $ 7,086 Wages payable 61 15 31 51 353 Deposits 1,251 Due to other funds 3,482 Deferred revenues 15,944 17,808 58,923 Total liabilities 16,532 407 387 113 18,330 71,095 Fund balances (deficits):

Nonspendable:

Prepaid and other assets 16 17 Restricted:

Capital projects 81 Development impact projects 10,325 Grant purposes 913 4,320 5,233 Homebuyer assistance program 7,598 7,598 Low and moderate income housing 27,974 27,974 Anaheim resort maintenance and improvement 6,718 6,718 Street, roads and transportation improvement projects 1,326 5,540 Assigned: Debt service 7,000 Capital projects 447 833 Unassigned (5,262)Total fund balances (deficits) 8,958 6,718 1,326 4,320 27,990 66,057 Total liabilities and fund balances (deficits)

$25,490 $7,125 $1,713 $4,433 $46,320 $137,152 80 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Nonmajor Special Revenue Funds Year Ended June 30, 2011 (In thousands)

Gas Tax Community Community Sewer and and Workforce Development Services Storm Drain Roads Development Block Grant Facilities Construction Revenues: Property taxes Licenses, fees and permits $ 33 $ 760 $ 529 Intergovernmental revenues 29,934 $3,743 $ 5,867 1,017 Charges for services 348 2 Use of money and property 3 29 263 123 Other 8 141 1 Total revenues 30,326 3,743 6,039 2,040 653 Expenditures:

Current: City Attorney 120 Police Fire Community Development 3,753 1,274 Planning 1,524 Public Works 3,779 380 Community Services 1,182 254 Convention, Sports and Entertainment Capital outlay 19,010 1,865 3,246 Debt service: Principal retirement 345 Interest charges 268 Bond issuance costs 59 Total expenditures 22,789 3,753 6,637 3,500 380 Excess (deficiency) of revenues over (under) expenditures 7,537 (10) (598) (1,460) 273 Other financing sources (uses): Transfers in 513 119 427 953 Transfers out (5,548) (500)Issuance of loan payable 7,000 Total other financing sources (uses) (5,035) 6,619 427 953 Net change in fund balances (deficits) 2,502 (10) 6,021 (1,033) 1,226 Fund balances (deficits) at beginning of year (3,547) 7 1,060 5,674 4,845 Fund balances (deficits) at end of year $ (1,045) $ (3) $ 7,081 $4,641 $6,071 (continued) 81 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Nonmajor Special Revenue Funds Year Ended June 30, 2011 (In thousands) (continued)

Anaheim Anaheim Resort Tourism Narcotic Redevelopment Maintenance Improvement Asset Housing Grants District District Forfeiture Set-Aside Total Revenues: Property taxes $14,112 $14,112 Licenses, fees and permits $ 41 1,363 Intergovernmental revenues 22,562 $3,049 66,172 Charges for services 1 $4,381 $5,539 10,271 Use of money and property 88 80 6 68 1,371 2,031 Other 116 191 457 Total revenues 22,808 4,461 5,545 3,117 15,674 94,406 Expenditures:

Current: City Attorney 120 Police 7,315 2,379 9,694 Fire 725 725 Community Development 5,069 6,274 16,370 Planning 1,524 Public Works 4,035 8,194 Community Services 83 1,519 Convention, Sports and Entertainment 3,972 3,972 Capital outlay 1,634 13 551 26,319 Debt service: Principal retirement 116 461 Interest charges 91 6 365 Bond issuance costs 59 Total expenditures 14,826 4,035 3,972 2,599 6,831 69,322 Excess (deficiency) of revenues over (under) expenditures 7,982 426 1,573 518 8,843 25,084 Other financing sources (uses): Transfers in 361 200 4,964 7,537 Transfers out (952) (247) (4,173) (11,420)Issuance of loan payable 7,000 Total other financing sources (uses) (591) 200 (247) 791 3,117 Net change in fund balances (deficits) 7,391 626 1,326 518 9,634 28,201 Fund balances (deficits) at beginning of year 1,567 6,092 3,802 18,356 37,856 Fund balances (deficits) at end of year $ 8,958 $6,718 $1,326 $4,320 $27,990 $66,057 82 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2011 (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: Property taxes Licenses, fees and permits Intergovernmental revenues Charges for services Use of money and property Other Total revenues Expenditures:

Current: City Attorney 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 (deficits)

Fund balances (deficits) at beginning of year Fund balances (deficits) at end of year Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale Transfer of land held for resale to Redevelopment Projects Purchases of land held for resale Transfer of City capital assets to land held for resale Decline in value of land held for resale Repayment of interfund loan Ending fund balances (deficit)

-GAAP basis$ 35 55,140 580 8 8 55,771$ 33 29,934 348 3 8 30,326 163 22,626$ (2)(25,206)(232)(5)(25,445)$5,588 5,588$3,743 3,743 3,753 3,753 (10)$01,845)(1,845)(1,857)5,610 163 55,343 (32,717)55,506 22,789 (32,717)265 7,537 7,272 5,610 (22)(1,857)12 66 (7,200)(7,134)(6,869)(3,547)$010,416)513 (5,548)(5,035)2,502 (3,547)(1,045)447 1,652 2,099 9,371$ 9,371 (22)7$ (15)(10)7 (3)12$ 12$ (1,045)$ (3)(continued) 83 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2011 (In thousands) (continued)

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

Current: City Attorney 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 (deficits)

Fund balances (deficits) at beginning of year Fund balances (deficits) at end of year Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale Transfer of land held for resale to Redevelopment Projects Purchases of land held for resale Transfer of City capital assets to land held for resale Decline in value of land held for resale Repayment of interfund loan Ending fund balances (deficit)

-GAAP basis$ 9,140 40 195 9,375 120 11,682 1,709 222 1,494$ 5,867 2 29 141 6,039$ (3,273)2 (11)(54)(3,336)$ 261 393 191 845$ 760 1,017 263 2,040$ 760 756 (393)72 1,195 120 3,747 1,524 64 1,182 (7,935)(185)(158)(312)3,500 3,500 15,227 6,637 (8,590)(5,852) (598) 5,254 (12,200)7,000 (5,200)(11,052)119 (500)7,000 6,619 6,021 119 11,700 11,819 17,073$17,073 3,500 3,500 (2,655) (1,460)427 427 (2,655) (1,033)427 427 1,622$1,622 1,060 1,060$ (9,992) 7,081 5,674$ 3,019 5,674 4,641$ 7,081$4,641 (continued) 84 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2011 (In thousands) (continued)

Sewer and Storm Drain Construction Final Variance Budgeted Actual with Final Amounts Amounts Budget Grants Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Property taxes Licenses, fees and permits Intergovernmental revenues Charges for services Use of money and property Other Total revenues Expenditures:

Current: City Attorney Police Fi re 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 (deficits)

Fund balances (deficits) at beginning of year Fund balances (deficits) at end of year Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale Transfer of land held for resale to Redevelopment Projects Purchases of land held for resale Transfer of City capital assets to land held for resale Decline in value of land held for resale Repayment of interfund loan Ending fund balances (deficit)

-GAAP basis$ 202 202 780 780 (578)$ 529 123 1 653 380 380 273 953 953 1,226 4,845 6,071$ 327 123 1 451 (400)(400)851 953 953 1,804$1,804 30$44,709 68 55 44,862 21,609 1,213 11,038 548 41$22,562 1 88 116 22,808 8,827 725 5,069 205 11$(22,147)1 20 61 (22,054)(12,782)(488)(5,969)(343)34,408 14,826 (19,582)10,454 7,982 (2,472)(578)4,845$4,267 10,454 1,567$12,021 361 (952)(591)7,391 1,567 8,958 361 (952)(591)(3,063)$ (3,063)$6,071$ 8,958 (continued) 85 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2011 (in thousands) (continued)

Anaheim Resort Maintenance District Final Variance Budgeted Actual with Final Amounts Amounts Budget Tourism Improvement District Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Property taxes Licenses, fees and permits Intergovernmental revenues $ 5,468 $5,539 $ 71 Charges for services $4,487 $4,381 $ (106)Use of money and property 127 80 (47) 6 6 Other 4 (4)Total revenues 4,618 4,461 (157) 5,468 5,545 77 Expenditures:

Current: City Attorney Police Fire Community Development Planning Public Works 4,698 4,035 (663)Community Services Convention, Sport and Entertainment

_ 4,060 3,972 (88)Total expenditures 4,698 4,035 (663) 4,060 3,972 (88)Excess (deficiency) of revenues over (under) expenditures (80) 426 506 1,408 1,573 165 Other financing sources (uses): Transfers in 200 200 Transfers out (247) (247)Issuance of loan payable Total other financing sources (uses) 200 200 -(247) (247)Net change in fund balances (deficits) 120 626 506 1,408 1,326 (82)Fund balances (deficits) at beginning of year 6,092 6,092 Fund balances (deficits) at end of year $6,212 6,718 $ 506 $1,408 1,326 $ (82)Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale Transfer of land held for resale to Redevelopment Projects Purchases of land held for resale Transfer of City capital assets to land held for resale Decline in value of land held for resale Repayment of interfund loan Ending fund balances (deficit)

-GAAP basis $6,718 $1,326 (continued) 86 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual -All Nonmajor Special Revenue Funds Year Ended June 30, 2011 (In thousands) (continued)

Narcotic Asset Forfeiture Final Variance Budgeted Actual with Final Amounts Amounts Budget Redevelopment Housing Set-Aside Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Property taxes Licenses, fees and permits Intergovernmental revenues Charges for services Use of money and property Other Total revenues Expenditures:

Current: City Attorney 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 (deficits) at beginning of year Fund balances (deficits) at end of year Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale Transfer of land held for resale to Redevelopment Projects Purchases of land held for resale Transfer of City capital assets to land held for resale Decline in value of land held for resale Repayment of interfund loan.Ending fund balances (deficit)

-GAAP basis$12,426 $14,112$1,034 440 1,474 2,599$3,049 68 3,117 2,599$ 2,015 (372)1,643$ 1,686 609 (4,427)(2,132)4,775 4,618 21,819 5,384 191 19,687 7,914 7,481 2,599 (1,125)2,599 518 7,914 7,481 13,905 10,461 (2,430)12,206 4,964 (4,173)(433)(433)(1,699)(5,497)(1,743)(7,240)(8,939)$ (8,939)8,031 791 (1,125)3,802$ 2,677 518 3,832$4,320 1,643$1,643 21,936 18,356$40,292 12,997 18,356 31,353 (3,032)(981)313 18 (281)600$27,990$4,320 87 CITY OF ANAHEIM Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2011 (In thousands)

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

$275 $ 5,144 $ 4 $ 5,423 Investments 386 7,230 5 7,621 Accounts receivable, net 51 51 Accrued interest receivable 3 83 20 106 Due from other governments 3 25 28 Prepaid and other assets 3 3 Restricted cash and cash equivalents 10,622 521 $16,174 27,317 Restricted investments 1,874 31,917 33,791 Total assets $667 $_3__5 $2,424 $48,091 $74340 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 2,601 $ 5 $ 4 $ 2,610 Due to other funds 8,176 8,176 Total liabilities 10,777 5 4 10,786 Fund balances: Nonspendable:

Prepaid and other assets 3 3 Restricted:

Debt service 667 16,190 2,419 48,087 67,363 Unassigned (3,812) (3,812)Total fund balances 667 12,381 2,419 48,087 63,554 Total liabilities and fund balances $667 $23 158 $2,424 $48,091 $74,40 88 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds Year Ended June 30, 2011 (In thousands)

General Redevelopment Municipal Anaheim Resort Obligation Bonds Agency Facilities Improvements Total Revenues: Property taxes $694 $32,928 $ 33,622 Intergovernmental revenues 6 6 Use of money and property 6 523 $ 124 $ 1 654 Total revenues 706 33,451 124 1 34,282 Expenditures:

Current: Finance 23 23 Community Development 8,717 8,717 Debt service: Principal retirement 520 699 1,311 8,805 11,335 Interest charges 170 11,688 1,018 19,278 32,154 Total expenditures 690 21,104 2,329 28,106 52,229 Excess (deficiency) of revenues over (under) expenditures 16 12,347 (2,205) (28,105) (17,947)Other financing sources (uses): Transfers in 1,522 2,205 28,866 32,593 Transfers out (20,294) (20,294)Total other financing sources (uses) (18,772) 2,205 28,866 12,299 Net change in fund balances 16 (6,425) 761 (5,648)Fund balances at beginning of year 651 18,806 2,419 47,326 69,202 Fund balances at end of year $667 $12,381 $ 2,419 $48,087 $ 63,554 89 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Debt Service Funds Year Ended June 30, 2011 (in thousands)

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

Finance Community Development Public Works Convention, Sports and Entertainment Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses)Net change in fund balances Fund balances at beginning of year Fund balances at end of year$692 6 8 706 692 692 14$694 6 6 706 690 690 16$ 2 (2)(2)(2)2$28,995 $32,928$ 3,933 446 523 77 29,441 33,451 4,010 21,104 21,104 8,337 1,219 (21,126)(19,907)(11,570)21,104 21,104 12,347 1,522 (20,294)(18,772)(6,425)4,010 303 832 1,135 5,145$ 5,145 14 651$665 16 651$667 2$ 2 18,806 18,806$ 7,236 $ 12,381 (continued) 90 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Debt Service Funds Year Ended June 30, 2011 (In thoLIsands) (continued)

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

Finance Community Development Public Works Convention, Sports and Entertainment Total expenditures Excess (deficiency) of revenues over (under) expenditures Anaheim Resort Improvements Final Variance Budgeted Actual with Final Amounts Amounts Budget$ 29 $ 1 $ (28)29 1 (28)$ 124 124 594 1,735 2,329 (2,205)2,205 2,205 2,419$2,419$ 124 124 594 1,735 2,329 (2,205)2,205 2,205 2,419$2,419$28,115 Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses)Net change in fund balances Fund balances at beginning of year Fund balances at end of year 28,115 (28,086)29,333 29,333 1,247 47,326$ 48,573 28,106 28,106 (28,105)28,866 28,866 761 47,326$ 48,087 (9)(9)(19)(467)(467)(486)$ (486)$91 CITY OF ANAHEIM Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2011 (In thousands)

Transportation Development Redevelopment Improvement Impact Other Capital Mello-Roos Projects Projects Projects Improvements Projects Total ASSETS Cash and cash equivalents

$ 2,911 $ 8,376 $ 764 $ 3,363 $ 15,414 Investments 4,092 11,772 1,073 4,726 21,663 Accounts receivable, net 23 165 188 Accrued interest receivable 35 72 27 40 174 Notes receivable, net 2,790 2,790 Due from other funds 1,936 1,500 14,310 17,746 Due from other governments 180 $14,075 1,031 15,286 Land held for resale, net 33,209 33,209 Prepaid and other assets 611 1,095 1,706 Restricted cash and cash equivalents 7,074 122 6,321 13,517 Restricted investments 3,046 270 19,366 22,682 Total assets $55,907 $15,170 $22,916 $16,566 $33,816 $144,375 LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable $ 3,769 $ 4,937 $ 649 $ 739 $ 779 $ 10,873 Wages payable 62 32 13 5 112 Deposits 1,149 1,149 Due to other funds 16,645 10,448 1,562 28,655 Deferred revenue 2,790 13,527 1,107 17,424 Total liabilities 24,415 28,944 3,331 739 784 58,213 Fund balances (deficits):

Nonspendable:

Prepaid and other assets 611 611 Restricted:

Capital projects 409 409 Development impact projects 19,585 33,032 52,617 Redevelopment projects 38,713 38,713 Streets, roads and transportation improvement projects 3,613 3,613 Assigned: Debt service 8,490 8,490 Capital projects 6,928 6,928 Unassigned (7,832) (17,387) (25,219)Total fund balances (deficit) 31,492 (13,774) 19,585 15,827 33,032 86,162 Total liabilities and fund balances $55,907 $15,170 $22,916 $1_6.566 $33,816 $144 375 92 CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits)

-Nonmajor Capital Projects Funds Year Ended June 30, 2011 (In thousands)

Revenues: Licenses, fees and permits Intergovernmental revenues Use of money and property Other Total revenues Redevelopment Projects$ 419 2,976 136 3,531 Transportation Improvement Projects$ 2,692 2,692 Development Impact Projects$ 545 729 209 29 1,512 Other Capital Improvements

$ 867 867 Mello-Roos Projects$ 259 259 Total$ 545 3,840 4,311 165 8,861 Expenditures:

Police Community Development Public Works Community Services Capital outlay Debt service: Principal retirement Interest charges Debt issuance costs Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Transfers in Transfers out Issuance of bonds Contribution from property owners Total other financing sources Net change in fund balances (deficit)Fund balances at beginning of year Fund balances (deficit) at end of year 15 12,490 11,768 168 24,426 (20,895)18,903 (5,705)6,570 19,768 (1,127)32,619$ 31,492 240 19,961 20,201 (17,509)263 307 6,514 7,099 (5,587)1,566 (447)1,119 (4,468)24,053$19,585 669 125 36 15 12,490 108 1,280 432 4,968 43,247 I 355 486 1,671 (804)3,404 3,404 2,600 13,227$15,827 5,076 (4,817)(3,158)41,007 37,849 33,032$ 33,032 355 486 168 58,473 (49,612)23,874 (9,310)6,570 41,007 62,141 12,529 73$633$ 86,162 (17,508)3,734$(13,774)93 CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits)

Budget and Budgetary Basis Actual -All Capital Projects Funds Year Ended June 30, 2011 (In thousands)

Redevelopment Projects Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Licenses, fees and permits Intergovernmental revenues Use of money and property Other Total revenues Expenditures:

Police Fire Community Development Planning Public Works Community Services Public Utilities Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Transfers in Transfers out Issuance of bonds Contribution from property owners Total other financing sources (uses)Net change in fund balances Transportation Improvement Projects Final Variance Budgeted Actual with Final Amounts Amounts Budget$39,686 $ 2,692 $(36,994)39,686 2,692 (36,994)$ 486 3,659 15008 5,153$ 419 3,969 736 5,124 27,206$ (67)310 (272)(29)(7,764)(36)34,970 36 41 48,195 41 20,124 35,006 27,206 (7,800)36 36 48,272 20,201 (8,586) (17,509)(28,071)(28,071)(8,923)(29,853)27,559 (4,825)6,750 (22,082)18,903 (5,705)6,570 7,771 (8,656)(880)(180)I I 29,484 19,768 (9,716)1 1 (369)Fund balances at beginning of year Fund balances at end of year 32,619$ 32,250 Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale Transfers of land held for resale from Redevelopment Housing Set-aside and the City Payments of interfund payable Use of transportation credit Decline in value of land held for resale Gain on deposition of land held for resale Ending fund balance -GAAP basis (2,314)32,619 30,305 (1,693)1,654 1,230 (201)(503)700$31,492 (1,945)$ (1,945)(8,586) (17,508)3,734 3,734$(4,852) (13,774)(8,922)$ (8,922)$(13,774)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, 2011 (In thousands) (continued)

Development Impact Projects Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Licenses, fees and permits $ 940 $ 545 $ (395)Intergovernmental revenues 729 729 Use of money and property 120 209 89 Other 50 29 (21)Total revenues 1,110 1,512 402 Expenditures:

Police 15 15 Fire 35 (35)Community Development Planning Public Works 5,085 1,604 (3,481)Community Services 15,189 5,480 (9,709)Public Utilities Total expenditures 20,324 7,099 (13,225)Deficiency of revenues under expenditures (19,214) (5,587) 13,627 Other financing sources (uses): Transfers in 1,566 1,566 Transfers Out (447) (447)Issuance of bonds Contribution from property owners Total other financing sources (uses) 1,119 1,119 Net change in fund balances (19,214) (4,468) 14,746 Fund balances at beginning of year 24,053 24,053 _Fund balances at end of year $ 4,839 19,585 $14,746 Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale Transfers of land held for resale from Redevelopment Housing Set-aside and the City Payments of interfund payable Use of transportation credit Decline in value of land held for resale Gain on deposition of land held for resale Ending fund balances -GAAP basis $19,585 (continued)

Other Capital Improvements Final Variance Budgeted Actual with Final Amounts Amounts Budget$ 486 $ 867 $ 381 486 867 381 841 841 669 669 1,351 161 (1,190)2,861 1,671 (1,190)(2,375) (804) 1,571 635 3,404 2,769 635 3,404 2,769 (1,740) 2,600 4,340 13.227 13,227$11,487 15,827 $4,340$15,827 95 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, 2011 (In thousands) (continued)

Mello-Roos Projects Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues: Licenses, fees and permits Intergovernmental revenues Use of money and property Other Total revenues Expenditures:

Police Fire Community Development Planning Public Works Community Services Public Utilities Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Transfers in Transfers Out Issuance of bonds Contribution from property owners Total other financing sources (uses)Net change in fund balances$ 259$ 259 259 259$30,217 5,076 (25,141)30,217 5,076 (25,141)(30,217)(4,817)(25,400)(3,158)(3,158)33,259 41,007 7,748 33,259 37,849 4,590 3,042 33,032 29,990 Fund balances at beginning of year Fund balances at end of year Adjustments to reconcile to GAAP: Proceeds on sale of land held for resale Transfers of land held for resale from Redevelopment Housing Set-aside and the City Payments of interfund payable Use of transportation credit Decline in value of land held for resale Gain on deposition of land held for resale Ending fund balance -GAAP basis$ 3,042 33,032 $ 29,990$ 33,032 96 INTERNAL SERVICE FUNDS INTERNAL SERVICE " FUNDS INTERNAL SERVICE FUNDS INTERNAL SERVICE FUNDS are used to account for the financing of centralized services to City departments on a cost-reimbursement basis (including depreciation).

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

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

MUNICIPAL FACILITIES MAINTENANCE

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

.-,. ..

CITY OF ANAHEIM Combining Statement of Fund Net Assets Internal Service Funds June 30, 2011 (In thousands)

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

$27,828 $ 2,904 $ 3,311 $1,923 $ 35,966 Inventments 39,111 4,082 4,653 2,702 50,548 Restricted cash and cash equivalent 57 57 Accounts receivable, net 2,163 2,163 Accrued interest receivable 284 39 31 21 375 Note receivable 69 69 Interfund receivable 13 13 Inventories 750 750 Prepaid and other assets 58 58 Total current assets 69,526 7,832 7,995 4,646 89,999 Noncurrent assets: Accounts receivable, less current portion 203 203 Interfund receivable, less current portion 69 69 Restricted cash and cash equivalents 336 336 Unamortized debt issuance costs Net other post-employment benefits (OPEB) asset 9,629 9,629 Capital assets: Buildings, structures and improvements 3,230 3,708 6,938 Machinery and Equipment 81 35,157 18,301 2,306 55,845 Less accumulated depreciation (81) (27,668) (11,020) (4,400) (43,169)Capital assets, net 10,719 7,281 1,614 19,614 Total noncurrent assets 9,901 11,055 7,281 1,614 29,851 Total assets 79,427 18,887 15,276 6,260 119,850 LIABILITIES Current liabilities:

Accounts payable 3,393 937 1,680 391 6,401 Wages payable 3,381 81 16 72 3,550 Interest payable 6 6 Compensated absences 14,729 14,729 Self-insurance liability 7,831 7,831 Long-term debt 314 1,083 1,397 Unearned revenues 1,324 1,324 Total current liabilities 30,658 1,338 2,779 463 35,238 Noncurrent liabilities:

Compensated absences, less current portion 4,591 4,591 Self-insurance liability less current portion 27,574 27,574 Long-term debt, less current portion 1,258 1,258 Total noncurrent liabilities 32,165 1,258 33,423 Total liabilities 62,823 1,338 4,037 463 68,661 FUND NET ASSETS Invested in capital assets, net of related debt 10,741 4,940 1,614 17,295 Restricted for debt service 57 57 Unrestricted 16,604 6,751 6,299 4,183 33,837 Total fund net assets $16,604 $17,549 $11,239 $5,797 $51,189 97 CITY OF ANAHEIM Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds Year Ended June 30, 2011 (In thousands)

General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Operating revenues: Charges for services $125,317 $10,495 $15,811 $8,633 $160,256 Other 10 8 4 34 56 Total operating revenues 125,327 10,503 15,815 8,667 160,312 Operating expenses: Salaries and wages 3,603 3,456 602 2,946 10,607 Maintenance and operations 2,006 4,828 12,803 5,588 25,225 Insurance premiums and claims 9,857 9,857 Compensated absences and other benefits 108,952 108,952 Depreciation 2,568 2 121 4,853 Total operating expenses 124,418 10,852 15,569 8,655 159,494 Operating income (loss) 909 (349) 246 12 818 Nonoperating income (expenses):

Interest income 603 92 182 119 996 Interest expense (44) (91) (135)Gain from disposal of capital assets 123 123 Total nonoperating income 603 171 91 119 984 Income (loss) before contribution and transfers 1,512 (178) 337 131 1,802 Capital contributions 36 36 Transfers in 4,000 4,000 Transfers out (97) (97)Change in fund net assets 5,512 (239) 337 131 5,741 Fund net assets at beginning of year 11,092 17,788 10,902 5,666 45,448 Fund net assets at end of year $ 16,604 $17,549 $11,239 $5,797 $ 51,189 98 CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2011 (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 operating activities Cash flows from noncapital financing activities:

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

Proceeds from sale of capital assets Capital purchases Capital contribution Principal payments on long-term debt Interest payments Net cash used in 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 investing activities Increase 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$125,317 (735)(3,560)(1,324)(10,564)(108,562)44 616 17 4,000 4,017 Information and Motorized Communication Equipment Services Municipal Facilities Maintenance Total$10,495 (4,159)(3,452)(207)$15,811 (12,070)(599)(787)38 4 2,715 2,359$ 8,633 $160,256 (4,704) (21,668)(2,952) (10,563)(747) (3,065)(10,564)(108,562)38 124 268 5,958 17 4,000 4,017 126 (368) (2,999)36 (1,480)(109)(368) (4,426)126 (2,265)36 (296)(18)(2,417)(14,904)16,879 893 2,868 7,501 20,327$ 27,828 (1,441)1,759 113 431 729$ 3,297 (366)(1,184)(91)(1,641)(1,818)2,006 73 261 979 2,332$ 3,311 (720)1,165 58 503 403 1,520$1,923 (18,883)21,809 1,137 4,063 9,612$ 36,359.continued) 99 CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2011 (In thousands) (continued)

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

Operating income (loss)Adjustments to reconcile operating income (loss)to net cash provided by (used in) 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 operating activities Schedule of noncash financing and investing activities:

Capital assets financed through capital leases Transfers out of capital assets Increase in fair value of investments Municipal Facilities Maintenance Total$ 12 $ 818 121 4,853$ 909 $ (349) $ 246 2,568 2,164 1,026 57 (27)4 (69)5 105 43 242 (460)(1,051)(134)(293)$ 616 462 4 3,064$ 2,715 (54)3 2,113$ 2,359 137 (6)256$ 268 1,087 (27)(69)5 650 44 242 (460)(1,051)(134)5,140$ 5,958$ 977 (97)424$ 35,966 393$ 36,359 (97)$ 243 $ 23$ 977 100 $ 58 Reconciliation of cash and cash equivalents:

Cash and cash equivalents Restricted cash and cash equivalents Total cash and cash equivalents

$ 27,828$ 27,828$ 2,904 393$ 3,297$ 3,311$ 3,311$1,923$1,923 100 FIDUCIARY FUNDS__ El.!i FIDUCIARY FUNDS CITY OF ANAHEIM Statement of Changes in Fiduciary Assets and Liabilities Agency Fund -Mello-Roos Year Ended June 30, 2011 (In thousands)

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

$3,912 $39,413 $(37,543)

$5,782 Restricted investments 678 2,715 (7) 3,386 Due from other governments 54 5,122 (5,120) 56 Total assets $4,644 $47,250 $(42,670)

$9,224 LIABILITIES Due to bond holders $4,644 $42,123 $(37,543)

$9,224 101 (This page left blank intentionally) 102 STATISTICAL SECTION STATISTICAL SECTION STATISTICAL SECTION The Statistical Section is included to provide detailed data on the physical, economic, social and political characteristics of the reporting government.

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

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... ..* ., ..., .-... .: ...:,,.. , , ! ',:, : .. ... ...:.: t. C 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 Dge Financial trends These schedules contain information to hellp the reader understand how the City's financial performance and well-being have changed over time.Net Assets by Component

-Last Ten Fiscal Years 104 Changes in Net Assets -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 hellp 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 General Bonded Debt Outstanding

-Last Ten Fiscal Years 116 Diredt and Overlapping Government Activities Debt -As of June 30, 2011 117 Legal Debt Margin -Last Ten Fiscal Years 119 Pledged-Revenue Coverage -Last Ten Fiscal Years 120 Demographic and economic information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place.Demographic and Economic Statistics

-Last Ten Fiscal Years 122 Principal Employers

-Last Eight Fiscal Years 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 Employees by Function/Program

-Last Ten Fiscal Years 125 Operating Indicators by Function -Last Eight Fiscal Years 126 Capital Assets Statistics by Function -Last Eight 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 Assets by Component Last Ten Fiscal Years (In thousands)(Accrual basis of accounting)

Fiscal Year 2009 2008 2007 2006 2011 2010 2005 2004 2003 2002 Governmental Activities Invested in capital assets, net of related debt Restricted Unrestricted Total Governmental Activities Business-type Activities Invested in capital assets, net of related debt Restricted Unrestricted Total Business-type Activities Total Government Invested in capital assets, net of related debt Restricted Unrestricted Total Government

$ 834,337 182,011 (124,422)891,926 786,175 54,626 115,445 956,246$ 795,579 150,750 (121,283)825,046 762,236 49,325 130,812 942,373$ 753,409 154,306 (92,773)814,942 754,157 45,493 145,269 944,919 1,507,566 199,799 52,496$1,759,861

$ 733,305 87,566 (70,621)750,250 752,632 47,406 165,196 965,234 1,485,937 134,972 94,575$1,715,484

$ 667,414 69,949 (33,187)704,176 707,119 38,572 203,967 949,658 1,374,533 108,521 170,780$1,653,834

$ 668,628 99,443 (61,368)706,703 660,769 36,008 215,685 912,462 1,329,397 135,451 154,317$1,619,165

$ 613,300 87,505 (56,074)644,731 697,647 28,855 229,051 955,553 1,310,947 116,360 172,977$1,600,284

$ 584,875 111,344 (66,860)629,359 673,244 26,187 242,888 942,319 1,258,119 137,531 176,028$1,571,678

$ 522,073 112,168 (14,286)619,955 666,361 33,188 232,569 932,118 1,188,434 145,356 218,283$1,552,073

$ 516,931 138,241 (25,751)629,421 639,652 30,849 248,968 919,469 1,156,583 169,090 223,217$1,548,890 1,620,512 1,557,815 236,637 200,075 (8,977) 9,529$1,848,172

$1,767,419 Source: Finance Department, City of Anaheim 104 CITY OF ANAHEIM Changes in Net Assets Last Ten Fiscal Years (In thousands)(Accrual basis of accounting)

Fiscal Year 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 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 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002$ 1,872 $ 1,708 $ 1,890 $ 2,088 $ 1,238 $ 1,385 $ 1,442 $ 1,413 $ 1,651 $ 1,462 10,435 10,127 10,089 10,235 9,715 10,477 9,840 7,460 8,369 7,236 9.518 0,369 9,122 9,850 9,070 8,942 7,909 6,879 6,475 6,391 8,143 7,306 5,459 6,212 6,713 6,122 4,667 9,972 6,843 5,753 6,263 6,453 7,724 9,084 10,778 9,031 6,994 3,739 3,869 3,773 9,837 7,619 7,421 8,619 8,234 11,196 6,544 5,501 6,339 7,294 4,024 4,561 4,833 4,855 4,043 18,421 4,985 4,490 3,936 4,629 4,356 202 200 218 200 200 200 200 200 200 54,448 47,345 46,738 51,161 49,991 65,774 42,581 39,654 37,682 36,738 124,358 121,731 110,200 100,393 98,699 88,076 78,846 82,727 76,419 72,927 70,080 31,828 66,347 30,361 42,997 28,804 20,906 11,704 12,809 15,581 248,886 200,904 223,285 181,915 191,687 182,654 142,333 134,085 126,910 125,246 381,496 377,387 365,526 351,160 310,074 322,845 284,740 295,723 272,024 300,474 55,598 56,368 50,807 49,125 49,600 46,926 43,427 44,395 41,801 41,845 56,359 56,023 55,424 54,017 53,215 49,397 46,480 48,085 43,045 41,809 4,711 5,168 5,634 5,947 6,022 5,736 5,394 5,546 5,401 5,739 27,981 30.797 26,987 31,197 32,308 27,357 27,412 28,146 22,509 21,688 526,145 525,743 504,378 491,446 451,219 452,261 407,453 421,895 384,780 411,555 746 1,990 965 1,194 1,160 2,556 2,473 1,471 1,560 3,622 12,667 5,622 6,620 12,332 4,808 5,749 11,513 7,468 5,389 13,113 539,558 533,355 511,963 504,972 457,187 460,566 421,439 430,834 391,729 428,290 788,444 734,259 735,248 686,887 648,874 643,220 563,772 564,919 518,639 553,536 10,911 10,917 12,144 12,610 10,951 7,394 8,943 7,582 9,793 6,780 119,504 125,121 121,162 122,883 115,714 98,484 91,713 77,541 78,313 73,336 56,393 58,229 57,768 56,434 50,727 50,957 46,596 37,610 36,928 38,146 105,937 117,621 109,523 105,651 93,089 87,814 83,183 86,542 89,212 67,389 15,627 16,822 17,057 17,199 16,107 14,493 13,206 12,628 11,118 11,492 44,109 39,017 47,226 43,680 44,473 42,029 39,463 41,672 37,443 53,584 30,958 35,372 37,704 39,033 36,827 31,712 28,314 27,050 27,397 29,209 2,218 1,952 1,515 2,128 1,800 1,704 1,557 1,566 1,811 2,928 13,633 9,931 10,069 10,781 10,539 8,652 7,703 7,536 7,211 8,577 48,014 47,694 47,859 45,509 50,053 46,430 47,105 48,503 47,405 46,098 447,304 462,676 462,027 455,908 430,280 389,669 367,783 348,230 346,631 337,539 (continued) 105 CITY OF ANAHEIM Changes in Net Assets Last Ten Fiscal Years (in thousancis)(Accrual basis of accounting) (continued)

Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Expenses Business-type activities:

Electric Utility 371,689 375,491 358,882 353,502 338,514 365,277 274,622 280,878 264,583 280,358 Water Utility 56,249 55,514 48,976 49,248 51,672 47,225 41,313 42,949 37,065 38,616 Sanitation 49,864 50,540 52,721 49,712 48,946 47,163 45,467 41,431 40,249 38,563 Golf Courses 4,256 4,436 4,495 4,810 4,365 4,433 4,062 4,278 3,699 3,745 Convention, Sports and EntertainmentVenues 44,707 46,143 45,643 47,795 46,743 47,965 47,351 43,406 43,197 40,500 Business-type activities expense 526,765 532,124 510,717 505,067 490,240 512,063 412,815 412,942 388,793 401,782 Total government expenses 974,069 994,800 972,744 960,975 920,520 901,732 780,598 761,172 735,424 739,321 Net (Expense)/Revenue Governmental activities Business-type activities Total government, net (expense) revenue (198,418)

(261,772)

(238,742)

(273,993)

(238,593)

(207,015)

(225,450)

(214,1451 (219,721)

(213,109)12,793 1,231 1,246 (95) (33,053) (51,497) 8,624 17,892 2,936 26,508 (185,625)

(260,541)

(237,496)

(274,088)

(271,6461 (258,512)

(216,826)

(106,253) 1216,785)

(185,785)General Revenues and Other Changes in Net Assets Governmental activities:

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

Unrestricted investment earnings Other Transfers Business-type activities Total government Change in Net Assets Governmental activities Business-type activities Total government change in net assets$106,093 $107,420 $107,9)21

$105,311 $ 98,647 $ 86,756 $ 78,620 $ 57,239 $ 53,809 $ 49,867 54,711 51,214 56,035 62,510 64,878 66,972 60,803 55,716 52,426 52,059 82,605 77,139 80,055 87,183 83,914 75,979 67,141 63,268 56,199 57,780 1,783 1,026 1,180 1,532 1,866 2,595 2,113 21,143 19,360 18,751 7,288 7,288 8,041 9,529 10,337 10,817 10,175 9,561 8,935 8,885 3,667 7,012 8,667 15,337 17,597 12,346 8,071 3,991 12,678 15,035 614 1,175 394 2,670 1,701 5,078 1,499 1,097 361 3,825 2,491 8,537 19,602 41,141 15,573 (42,874" 8,444 12,400 11,534 3,996 3,800 265,298 271,876 303,434 299,645 236,066 268,987 240,822 223,549 210,255 210,011 9,617 15,825 19,580 31,244 27,375 16,850 16,592 6,120 13,658 13,388 418 1,723 51 (8,537) (19,602t (41,141) (15,573) 42,874 18,444) (12,400) (11,5341 13,9961 (3,809)1,080 (3,777) (21,561) 15,671 70,249 8,406 4,610 (3,691) 9,713 9,579 266,378 268,099 281,873 315,316 306,315 277,393 245,432 219,858 219,968 219,590 66,880 10,104 64,692 25,652 (2,527. 61,972 15,372 9,404 19,466) 12,282)13,873 (2,546) (20,315) 15,576 37,196 (43,091) 13,234 14,201 12,649 36,087 80,753 $ 7,558 $ 44,377 $ 41,228 $ 34,669 $ 18,881 $ 28,606 $ 23,605 $ 3,183 $ 33,805 Source: Finance Department, City of Anaheim 106 CITY OF ANAHEIM Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (In thousands)(Accrual basis of accounting)

Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Property Taxes$106,093 107,420 107,921 105,311 98,647 86,756 78,620 57,239 53,809 49,867 Sales and Use Taxes$54,711 51,214 56,035 62,510 64,878 66,972 60,803 55,716 52,426 52,059 Amounts Transient Occupancy Taxes$82,605 77,139 80,055 87,183 83,914 75,979 67,141 63,268 56,199 57,780 Motor Vehicle License Fees'$ 1,783 1,026 1,180 1,532 1,866 2,595 2,113 21,143 19,360 18,751 Other Taxes$ 7,288 7,288 8,041 9,529 10,337 10,817 10,175 9,561 8,935 8,885 Total$252,480 244,087 253,232 266,065 259,642 243,119 218,852 206,927 190,729 187,342' 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.Note: Certain reclassifications have been made to prior fiscal years' data to conform to the fiscal year 2011 presentation.

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

Fiscal Year 201111) 2010 2009 2008 2007 2006 2005 2004 2003 2002 General Fund Nonspendable Restricted Assigned Unassigned Reserved Unreserved

-designated Unreserved

-undesignated Total General Fund Housing Authority Fund Nonspendable Restricted Assigned Unassigned Reserved Unreserved

-undesignated Total Housing Authority Fund Nonmajor Governmental Funds Nonspendable Restricted 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'$ 3,626 582 141 22,139$ 4,092 $ 4,530 $ 5,001 29,490 47,729 37,347 26,488 33,582 52,259 42,348$ 8,525 $ 9,701 $ 9,892 $ 10,225 293 47,409 44,978 39,179 34,458 55,934 54,679 49,071 44,976$ 6,873 $ 2,856 4,872 208 31,268 33,512 43,013 36,576 42 7,778 9,922 1,373 11,603 17,742 12,976 1,830 5,669 7,499 830 6,474 7,304 162 158 7,935 3,932 5,682 5,525 4,894 4,347 8,097 3,932 5,682 5,525 5,052 4,347 631 226,184 23,251 (34,293)130,313 142,760 138,402 120,885 110,289 76,568 91,787 87,547 85,149 7,349 156 31,899 215,773$260,003 14,350 (3,376)180,691$227,249 7,211 4,433 41,544 5,342 (7,037)194,253$254,011 6,809 1,656 32,809 4,199 (15,551)168,324$217,976 2,415 2,276 38,430 4,183 (25,687)142,502$206,533 9,102 1,137 45,495 14,902 (22,787)158,138$216,749 14,974 1,457 36,497 25,955 (4,735)150,716$205,469 24,538 36,501 65,313 27,016 151,334$201,835 29,688 153,736$201,801 18,913 182,680$223,603 7,993 13,305 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 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 Sales and use taxes Transient occupancy taxes Other taxes Licenses, fees and permits intergovernmental revenues Charges for services Fines, forfeits and penalties Use of money and property Other Total revenues Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002$106,093 $107,420 $107,921 $105,311 $ *98,647 $ 86,756 $ 78,620 $ 57,239 $ 53,809 $ 49,867 55,034 48,210 56,493 64,296 65,695 64,993 59,000 54,559 53,241 51,552 82,605 77,139 80,055 87,183 83,914 75,979 67,141 63,268 56,199 57,780 6,486 6,303 6,451 6,753 7,531 7,862 7,542 7,095 6,570 6,460 18,772 21,580 21,062 24,705 37,991 40,625 18,749 15,578 15,731 15,806 150,394 141,418 158,729 135,072 712,593 104,705 102,423 109,523 108,798 105,250 24,408 18,351 17,874 17,730 16,799 16,216 15,459 18,565 17,911 17,450 3,304 3,255 3,409 3,767 3,689 3,464 3,454 2,812 2,673 2,769 10,159 10,236 9,293 16,923 18,208 13,203 9,144 8,408 12,354 13,878 2,638 4,009 10,137 3,755 7,601 18,164 6,143 3,490 3,436 4,654 459,893 437,921 471,424 465,495 452,668 431,967 367,675 340,537 330,722 325,466 Expenditures General government 16,055 15,822 16,953 16,325 15,354 13,667 12,276 11,370 12,823 12,403 Police 114,678 115,379 112,057 115,195 109,467 94,602 86,529 74,356 74,518 68,274 Fire 55,802 55,713 55,966 54,685 48,201 48,383 44,182 36,277 35,684 34,651 Community Development 110,138 126,590 112,406 104,991 94,789 89,098 83,384 87,778 91,984 72,919 Planning 14,560 15,173 15,489 15,949 14,762 13,907 12,313 11,904 10,285 10,463 Public Works 27,087 19,957 29,321 25,810 26,820 24,646 22,248 25,224 21,425 37,377 Community Services 27,813 31,311 33,572 35,203 32,788 28,753 25,724 25,203 25,938 26,011 Public Utilties 2,220 1,939 1,507 2,120 1,791 1,704 1,557 1,566 1,811 2,651 Convention, Sports and Entertainment 9,917 6,369 6,699 7,390 7,399 6,131 5,140 5,353 4,677 6,003 Capital outlay 70,918 62,422 52,229 60,906 76,161 77,738 41,301 32,195 40,881 35,310 Debt service: Principal 12,219 12,777 16,085 27,472 18,065 19,032 10,134 9,391 8,020 7,797 Interest charges 33,032 33,509 34,830 28,324 41,187 39,037 38,681 38,630 38,330 38,081 Debt issuance costs 227 70 5,182 4,017 Total expenditures 494,666 496,961 487,184 499,552 490,801 456,698 383,469 359,247 366,376 351,940 Revenues over (under) expenditures (34,773) (59,040) (15,760) (34,057) (38,133) (24,731) (15,794) (18,710) (35,654) (26,474)Other Financing Sources (Uses)Transfers in 99,571 83,498 121,987 299,410 101,249 95,535 99,166 73,939 67,407 66,480 Transfers out (86,621) (59,970) (76,304) (288,985)

(91,028) (84,325) (88,277) (62,970) (63,759) (56,470)Issuance of refunding bonds 5,084 201,680 253,134 Payments to refundedl bond escrow agent (5,683) (171,222)

(255,325)Premium on long-term debt 94 4,641 Discount on long-term debt (199)Issuance of long-term debt 13,570 8,000 2,769 175 18,238 22,583 7,289 7,775 4,450 Issuance of refunding bonds Contribution from property owners 41,007 Special items 1,250 Proceeds from the sale of capital assets 20 5,754 Capital leases 1,649 2,198 Claims settlement proceeds 750 3,848 Total other financing sources 67,527 32,278 51,795 45,500 27,917 36,011 19,428 18,744 13,852 10,010 Net change in fund balances $ 32,754 $ (26,762) $ 36,035 $ 11,443 $ (10,216) $ 11,280 $ 3,634 $ 34 $ (21,802) $ (16,464)Debt service as a percentage of non-capital expenditures 10.68% 10.65% 11.71% 12.72% 14.29% 15.32% 14.27% 14.68% 14.24% 14.49%Source: Finance Department, City of Anaheim 109 CITY OF ANAHEIM General Government Tax Revenues By Source Last Ten Fiscal Years (In thousands)(Modified accrual basis of accounting)

Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Secured Property Taxes$68,830 71,076 70,133 65,853 59,042 49,570 46,181 46,523 44,689 41,272 Unsecured Property Taxes$10,079 9,562 9,410 10,448 9,945 9,409 9,244 8,591 7,358 6,778 Supplemental Property Taxes$1,939 1,382 2,678 4,170 4,580 4,207 3,626 2,125 1,762 1,817 Amounts in Dollars Property Taxes in-lieu of VLF1$25,245 25,400 25,700 24,840 25,080 23,570 19,569 Sales and Use Taxes$55,034 48,210 56,493 64,296 65,695 64,993 59,000 54,559 53,241 51,552 Transient Occupancy Taxes$82,605 77,139 80,055 87,183 83,914 75,979 67,141 63,268 56,199 57,780 Other Taxes$6,486 6,303 6,451 6,753 7,531 7,862 7,542 7,095 6,570 6,460 Total$250,218 239,072 250,920 263,543 255,787 235,590 212,303 182,161 169,819 165,659' 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.Note: Certain reclassifications have been made to prior fiscal years' data to conform to the fiscal year 2011 presentation.

Source: Finance Department, City of Anaheim 110 CITY OF ANAHEIM Assessed Value of Taxable Property Last Ten Fiscal Years (In thousands)(Modified accrual basis of accounting)

Fiscal Year 2011 2010 2009 2008 2007 City of Anaheim Secured property $28,600,152

$28,775,989

$29,329,062

$28,473,221

$26,507,229 Unsecured property 1,278,062 1,283,263 1,226,209 1,198,812 2,442,959 Total City of Anaheim 29,878,214 30,059,252 30,555,271 29,672,033 28,950,188 Anaheim Redevelopment Agency Secured property 3,751,227 3,762,168 3,644,931 3,360,645 2,838,528 Unsecured property 743,403 762,903 789,618 818,255 813,249 Total Anaheim Redevelopment Agency 4,494,630 4,525,071 4,434,549 4,178,900 3,651,777 Total Taxable Assessed Value $34,372,844

$34,584,323

$34,989,820

$33,850,933

$32,601,965 Total Direct Tax Rate 0.11075% 0.11031% 0.11024% 0.11041% 0.11041%Fiscal Year 2006 2005 2004 2003 2002 City of Anaheim Secured property $24,081,039

$22,288,504

$20,826,232

$20,145,764

$18,389,042 Unsecured property 1,117,310 1,162,358 1,287,967 2,641,697 1,086,486 Total City of Anaheim 25,198,349 23,450,862 22,114,199 22,787,4.61 19,475,528 Anaheim Redevelopment Agency Secured property 2,574,542 2,332,303 2,177,936 2,057,045 1,877,074 Unsecured property 734,299 748,144 731,733 564,089 536,872 Total Anaheim Redevelopment Agency 3,308,841 3,080,447 2,909,669 2,621,134 2,413,946 Total Taxable Assessed Value $28,507,190

$26,531,309

$25,023,868

$25,408,595

$21,889,474 Total Direct Tax Rate 0.11083% 0.11117% 0.11161% 0.11103% 0.11168%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 111 CITY OF ANAHEIM Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years (Rate per $100 assessed value)Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 City Direct City Basic Rate" 2 0.10851 Anaheim General Obligation Bond Fund 0.00224 0.11075 Overlapping Rates: Anaheim Elementary General Fund 0.29873 Anaheim High General Fund 0.19043 Educational Revenue Augmentation Fund 0.15592 North Orange Co. Community 0.07755 College General Fund Orange County Cemetery District 0.00057 Orange County Department Of Education 0.01579 Orange County Flood Control District General 0.02197 Orange County General Fund 0.06849 Orange County Harbors Beaches & Rarks CSA 0.01698 Orange County Sanitation District #2 Operating 0.03227 Orange County Transportation Authority 0.00312 Orange County Vector Control 0.00124 Orange County Water District 0.00831 Orange County Water District Water Reserve 0.00012 Anaheim Elementary School Districts 0.03363 Anaheim High School Districts 0.02745 North Orange County Community College 0.01758 Water District Rate 0.00370 Total Direct and Overlapping Rates 1.08460 0.10816 0.00215 0.11031 0.29778 0.18982 0.15543 0.07730 0.00057 0.01574 0.02190 0.06827 0.01693 0.03469 0.00311 0.00124 0.00893 0.00013 0.03193 0.02617 0.01662 0.00430 1.08117 0.10816 0.10816 0.10816 0.00208 0.00225 0.00225 0.11024 0.11041 0.11041 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 0.03496 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 0.02248 0.03544 0.02240 0.02363 0.02516 0.02355 0.01493 0.01502 0.01444 0.00430 0.00450 0.00470 1.06742 1.08237 1.06734 0.10816 0.00267 0.11083 0.29778 0.18982 0.15543 0.07730 0.00057 0.01574 0.02190 0.06827 0.01693 0.03469 0.00311 0.00124 0.00893 0.00013 0.02811 0.02444 0.00520 0.01666 1.07708 0.10816 0.00301 0.11117 0.29778 0.18982 0.15543 0.07730 0.00057 0.01574 0.02190 0.06827 0.01693 0.03469 0.00311 0.00124 0.00893 0.00013 0.02641 0.02770 0.00580 0.01441 1.07733 0.10816 0.00345 0.11161 0.29778 0.18982 0.15543 0.07730 0.00057 0.01574 0.02190 0.06827 0.01693 0.03469 0.00311 0.00124 0.00893 0.00013 0.02495 0.02370 0.00610 0.01597 1.07417 2003 0.10816 0.00287 0.11103 0.29778 0.18982 0.15543 0.07730 0.00057 0.01574 0.02190 0.06827 0.01693 0.03469 0.00311 0.00124 0.00893 0.00013 0.02846 0.02567 0.00670 0.01573 1.07943 2002 0.10816 0.00352 0.11168 0.29778 0.18982 0.15543 0.07730 0.00057 0.01574 0.02190 0.06827 0.01693 0.03469 0.00311 0.00124 0.00893 0.00013 0.00770 1.01122"I Excludes rates associated with Mello-Roos Districts.

12, 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 10% 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 112 CITY OF ANAHEIM Principal Property Tax Payers Current Year and Nine Years Ago (In thousands)

Fiscal Year Tax Payer Walt Disney World Company Makar Anaheim LLC Kilroy Realty LP Anaheim GW II LLC Lennar Platinum Triangle PPC Anaheim Apartments Angeli LLC Worldmark Club Joan MTR Schlund Avalon Anaheim Stadium Boeing North America James P. Crawford Reef America REIT II OTR Fairfield Resorts, Inc.PC and RS Chao Family LTD 2011 Taxable Assessed Rank Value 1 $3,840,600 2 129,692 3 126,099 4 125,571 5 123,998 6 107,780 7 84,468 8 81,407 9 79,032 10 76,509 2002 Taxable Assessed Rank Value 1 $2,267,576 8 57,437 3 69,609 4 68,385 2 143,228 5 65,388 6 61,241 7 58,182 9 53,612 10 49,746$2,894,404 Total$4,775,156 Source: Finance Department, City of Anaheim, California Municipal Statistics, Inc.113 CITY OF ANAHEIM Property Tax Levies and Collections Last Ten Fiscal Years (In thousands)

Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Note: Source: Total Secured Tax Levy$69,915 70,988 70,592 66,592 60,386 53,935 49,816 46,547 46,390 40,972 Collected within the Fiscal Year of the Levy Percentage Amount of Levy$67,247 96.18%69,087 97.32%68,426 96.93%64,801 97.31%58,292 96.53%52,920 98.12%49,197 98.76%45,731 98.25%43,995 94.84%40,313 98.39%Delinquent Tax Collections

$ 485 1,583 1,742 1,536 920 553 543 775 621 654 Total Collections as of 6/30 Percentage Amount of Levy$67,732 96.88%/70,670 99.55%70,168 99.40%66,337 99.62%59,212 98.06%53,473 99.14%49,740 99.850%46,506 99.91%44,616 96.18%40,967 99.99%Certain reclassifications have been made to prior fiscal years' data to conform to the fiscal year 2011 presentation.

Auditor-Controller, County of Orange 114 CITY OF ANAHEIM Ratios of Outstanding Debt by Type Last Ten Fiscal Years (In thousands, except per capita amount)Fiscal Year 2011 2010 2009 2008 2007 Governmental Activities Bonds $ 821,587 $ 810,504 $ 805,068 $ 793,343 $ 740,107 Certificates of participation 12,070 12,990 13,840 23,333 26,788 Notes and loans 34,566 29,094 24,621 27,538 57,614 Capital leases 2,341 2,605 1,235 2,353 2,484 Total governmental activities 870,564 855,193 844,764 846,567 826,993 Business-Type Activities Bonds 908,683 805,925 829,707 689,791 706,126 Certificates of participation 38,000 38,000 38,000 88,185 96,475 Notes and loans 30,519 11,379 12,299 13,189 14,081 Capital leases 267 Total business-type activities 977,202 855,304 880,006 791,165 816,949 Total Government

$1,847,766

$1,710,497

$1,724,770

$1,637,732

$1,643,942 Percentage of Personal Income 24.12% 23.32% 23.96% 21.93% 22.17%Per Capita $ 5,418 $ 5,088 $ 5,193 $ 4,953 $ 4,985 Fiscal Year 2006 2005 2004 2003 2002 Governmental Activities Bonds $ 740,959 $ 739,775 $ 737,538 $ 734,079 $ 729,955 Certificates of participation 30,066 33,174 36,107 38,941 41,679 Notes and loans 43,342 28,669 22,747 17,152 13,403 Capital leases 2,220 1,523 2,001 269 362 Total governmental activities 816,587 803,141 798,393 790,441 785,399 Business-Type Activities Bonds 513,874 528,130 543,780 429,957 416,961 Certificates of participation 125,087 132,952 140,355 144,564 176,409 Notes and loans 14,976 15,842 16,678 17,485 18,264 Capital leases 275 180 349 509 660 Total business-type activities 654,212 677,104 701,162 592,515 612,294 Total Government

$1,470,799

$1,480,245

$1,499,555

$1,382,956

$1,397,693 Percentage of Personal Income 20.01% 21.48% 21.60% 20.11% 20.76%Per Capita $ 4,465 $ 4,466 $ 4,507 $ 4,174 $ 4,228 Note: Per capita amounts are estimates.

Sources: California State Department of Finance and Finance Department, City of Anaheim US Census Yearly American Community Survey 115 CITY OF ANAHEIM Ratios of 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 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$ 4,750 600,064 200,254 805,068 63,560$741,508 2.12%$ 2,233 2008$ 5,220 588,692 199,431 793,343 57,995$735,348 2.17%$ 2,224 2007$ 5,700 582,272 152,135 740,107 39,075$701,032 2.15%$ 2,126 Fiscal Year 2006 2005 2004 2003 2002 Bonds General Obligation Lease Revenue Tax Allocation

$ 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$ 7,060 562,118 168,360 737,538 44,132$693,406 2.77%$ 2,084$ 7,460 554,361 172,258 734,079 41,461$692,618 2.73%$ 2,090$ 7,850 546,152 175,953 729,955 44,916$685,039 3.13%$ 2,072 Less amounts available in debt service fund Total net obligation bonds outstanding Percentage of Assessed Value of Property Per capita 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 116 CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2011 (In thousands) 2010-1 I Assessed Valuation Redevelopment Incremental Valuation Adjusted 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)

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

-Yorba Linda 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 Yorba Linda County Water District Certificates 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 Centralia School District Certificates of Participation Fullerton School District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT TOTAL GROSS OVERLAPPING DEBT TOTAL NET OVERLAPPING DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT$34,372,844 4,494,630$29 ý878 214 Total Debt 6/30/11$ 227,670 214,514 309,908 113,874 56,768 273,148 13,481 18,422 211,094 44,505 11,130 1,494,514 316,898 54,683 19,000 9,200 11,340 49,350 91,365 108,661 38,975 22,255 990 6,670 729,387% Applicable(I) 1.671%28.642 15.303 72.098 0.348 11.277 99.820 54.340 Various 100.000 9.786-100.000 7.998%7.998 7.998 0.958 29.577 30.512 30.512 11.277 72.098 0.348 11.832.204 Outstanding

$ 3,735 584,657 588,392 572,587 15,805 City's Share of Debt 6/30/11$ 3,804 61,441 47,425 82,101 198 30,803 130,246 10,011 15,063 44,505 5,293 430,890 25,346 4,373 1,520 88 3,354 15,058 27,877 12,254 28,100 77 117 14 118,178 549,068 549,068 1,137,460 (2)$ 564,873 (continue(])

117 CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2011 (In thousands)(continued)

(1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non-bonded capital lease obligations.

(2) Percentage of overlapping agency's assessed valuation located within boundaries of the city.Ratios to 2010-11 Assessed Valuation:

Direct Debt ($3,735) 0.010/Total Direct and Overlapping Tax and Assessment Debt 1.26%Ratios to Adjusted Assessed Valuation:

Gross Combined Direct Debt ($588,392) 1.97%Net Combined Direct Debt ($15,805, 0.05%Gross Combined Total Debt 3.81%Net Combined Total Debt 1.89%State School Building Aid Repayable as of 6/30/11: $0 Source: California Municipal Statistics, Inc.Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

118 CITY OF ANAHEIM Legal Debt Margin Last Ten Fiscal Years (In thousands)

Fiscal Year 2011 2010 2009 2008 2007 Debt limit $ 4,290,023

$ 4,316,398

$ 4,399,359

$ 4,270,983

$ 3,976,084 Total net debt applicable to limit (3,735) (4,255) (4,750) (5,220) (5,700)Legal debt margin $ 4,286,288

$ 4,312,143

$ 4,394,609

$ 4,265,763

$ 3,970,384 Total net debt applicable to the limit as a percentage of debt limit 0.09% 0.10% 0. 1% 0.12% 0.14%Legal Debt Margin Assessed value $28,600,152

$28,775,989

$29,329,062

$28,473,221

$26,507,227 Debt limit (15% of total assessed value) 4,290,023 4,316,398 4,399,359 4,270,983 3,976,084 Fiscal Year 2006 2005 2004 2003 2002 Debt limit $ 3,612,156

$ 3,343,276

$ 3,123,935

$ 3,418,119

$ 2,882,716 Total net debt applicable to limit (6,170) (6,625) (7,060) (7,460) (7,850)Legal debt margin $ 3,605,986

$ 3,336,651

$ 3,116,875

$ 3,410,659

$ 2,874,866 Total net debt applicable to the limit as a percentage of debt limit 0.17% 0.20% 0.23% 0.22% 0.27%Legal Debt Margin Assessed value $24,081,039

$22,288,504

$20,826,232

$22,787,461

$19,218,106 Debt limit (15% of total assessed value) 3,612,156 3,343,276 3,123,935 3,418,119 2,882,716 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 119 CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (in thousands)

Redevelopment

-Tax Allocation Revenue Bonds Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Tax Increment Revenue$45,940 46,652 46,101 45,719 40,710 37,341 34,984 31,650 27,762 27,394 Less Operating Expenses'$ 8,848 21,409 5,300 4,722 2,729 5,196 5,361 3,321 2,628 1,275 Net Available Revenue$37,092 25,243 40,801 40,997 37,981 32,145 29,623 28,329 25,134 26,119 Principal$ 55 6,000 3,983 2,977 3,014 4,620 4,370 4,130 Debt Service Interest$10,862 10,766 10,766 6,275 13,417 11,727 11,700 9,996 10,251 10,488 Total$10,917 10,766 10,766 12,275 17,400 14,704 14,714 14,616 14,621 14,618 Coverage 3.3976 2.3447 3.7898 3.3399 2.1828 2.1861 2.0133 1.9382 1.7190 1.7868 Operating expenses consist of SERAF contributions and pass through agreements.

Electric Utility Revenue Bonds Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Electric Revenue$391,218 390,364 378,916 373,842 330,421 336,091 297,443 295,988 280,471 308,329 Less Operating Expenses 2$309,274 309,112 300,269 299,534 265,340 268,274 218,562 232,050 216,841 238,124 Net Available Revenue$81,944 81,252 78,647 74,308 65,081 67,817 78,881 63,938 63,630 70,205 Principal$17,825 15,995 15,370 14,690 13,765 13,145 15,875 14,840 14,716 14,764 Debt Service Interest$30,825 31,788 28,798 29,450 24,424 25,132 24,780 20,102 19,179 16,861 Total$48,650 47,783 44,168 44,140 38,189 38,277 40,655 34,942 33,895 31,625 Coverage 1.6844 1.7004 1.7806 1.6835 1.7042 1.7717 1.9403 1.8298 1.8773 2.2199 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 Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Water Revenue$56,935 57,787 53,039 51,052 51,595 47,904 44,484 44,659 43,669 43,944 Less Operating Expenses'$45,293 45,231 40,123 41,190 43,203 39,110 33,312 35,602 29,775 31,103 Net Available Revenue$11,642 12,556 12,916 9,862 8,392 8,794 11,172 9,057 13,894 12,841 Debt Service Principal$ 880 1,490 1,435 1,375 1,325 1,870 1,340 1,625 1,540 1,465 Interest$3,275 2,544 1,967 325 379 450 485 819 906 990 Total$4,155 4,034 3,402 1,700 1,704 2,320 1,825 2,444 2,446 2,455 Coverage 2.8019 3.1125 3.7966 5.8012 4.9249 3.7905 6.1216 3.7058 5.6803 5.2305 Operating expenses excludes amortization and depreciation.

Sanitation Revenue Bonds Fiscal Year 2011 2010 2009 2008 2007 Wastewater Revenue'$11,813 11,773 10,913 10,299 10,113 Less Operating Expenses,$4,030 5,452 5,176 5,167 6,734 Net Available Revenue$7,783 6,321 5,737 5,132 3,379 Debt Service Principal$805 775 Interest$2,193 2,224 2,224 1,532 Total$2,998 2,999 2,224 1,532 Coverage 2.5961 2.1077 2.5796 3.3499 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 121 CITY OF ANAHEIM Demographic and Economic Statistics Last Ten Fiscal Years Personal Per Education Orange Income Capita Level in County Fiscal (thousands Personal Median Years of School Unemployment Year Population' of dollars) Income Age', Schooling Enrollment Rate 2011 341,034 $7,662,144

$22,467'", 32.4 12.2 97,884 9.20%2010 336,208 7,333,705 21,813 32.4 12.2 68,331 9.500%2009 332,120 7,198,701 21,675 32.4 12.2 68,890 9.30%2008 330,659 7,467,272 22,583 32.4 12.2 68,663 5.30%2007 329,780 7,416,752 22,490 32.4 12.2 69,296 3.90%2006 329,373 7,351,605 22,320 32.4 12.2 70,793 3.70%2005 331,458 6,892,338 20,794 32.4 12.2 71,314 3.90%2004 332,727 6,943,347 20,868 32.4 12.2 71,637 3.60%2003 331,350 6,878,163 20,758 32.4 12.2 71,488 4.00%2002 330,619 6,732,395 20,363 32.4 12.2 70,651 4.00%Population and Median age were updated to reflect Census 2010 counts.Per capita income for fiscal year 2011 is estimated, as data is 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 122 CITY OF ANAHEIM Principal Employers Last Eight Fiscal Years Employer Walt Disney Resort Kaiser Foundation Hospital Northgate Gonzalez Supermarkets Anaheim Memorial Hospital Medical Center Honda Center Hilton Anaheim Western Medical Center Times Warner Cable West Anaheim Medical Center Anaheim Marriott Hotel Alstyle Apparel Long Beach Mortgage Boeing North America Opal Concepts Anaheim Sports Incorporated Aramark at Angels Stadium of Anaheim SBC Communications Airport Bus AT&T 2011 Percentage of Total City Rank Employees Employment 1 22,710 13.1%2 3,660 2.1Y 3 1,900 1.1%4 1,200 0.7%5 950 0.6%/, 6 905 0.5%7 800 0.5%8 800 0.5%9 796 0.5%10 730 0.4%Fiscal Year 2010 Rank Employees 1 22,660 2 3,660 3 1,900 4 1,185 6 1,000 7 920 2009 Rank 1 2 4 5 7 8 Employees 20,050 3,660 2,000 1,185 1,000 920 8 774 9 730 10 700 9 774 10 750 3 2.000 6 1,000 5 1,000 Note: Statistics prior to fiscal year 2004 are not readily available.

Sources: California Employment Development Department Inside Prospects Database (continued) 123 CITY OF ANAHEIM Principal Employers Last Eight Fiscal Years (continued)

Fiscal Year 2008 2007 2006 2005 2004 Employer Walt Disney Resort Kaiser Foundation Hospital Northgate Gonzalez Supermarkets Anaheim Memorial Hospital Medical Center Honda Center Hilton Anaheim Western Medical Center Times Warner Cable West Anaheim Medical Center Anaheim Marriott Hotel Alstyle Apparel Long Beach Mortgage Boeing North America Opal Concepts Anaheim Sports Incorporated Aramark at Angels Stadium of Anaheim SBC Communications Airport Bus AT&T Rank Employees Rank Employees Rank Employees Rank Employees Rank Employees 1 20,050 1 22,470 1 23,105 1 21,350 1 22,650 2 3,660 2 3,880 2 3,660 2 2,580 4 1,500 4 2,000 3 2,070 5 1,000 5 1,185 4 1,212 7 979 5 1,185 6 1,185 6 1,000 6 1,000 6 1,000 7 920 7 950 8 6 960 7 1,000 10 774 10 774 10 774 8 9 750 5 1,000 4 1,600 7 8 800 8 800 9 8,000 774 875 8 1,000 3 3,500 4 1,750 2 3,500 3 2,000 3 2,000 9 600 5 1,200 10 350 10 700 9 700 9 775 3i 2,650 Note: Statistics prior to fiscal year 2004 are not readily available.

Sources: California Employment Development Department Inside Prospects Database 124 CITY OF ANAHEIM Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Function/Program City Council City Administration City Attorney City Clerk Human Resources Finance City Treasurer Police Fire Community Development Planning Public Works Community Services Public Utilities Convention, Sports and Entertainment Total 7 7 7 7 7 21 30 6 36 35 12 554 277 105 75 252 123 377 91 2,001 24 35 7 40 40 12 610 289 106 93 252 180 377 91 2,163 24 35 7 40 41 12 610 289 109 94 252 183 377 91 2,171 24 35 7 40 42 12 604 290 108 97 252 184 367 88 2,157 22 35 7 40 42 12 591 290 114 96 249 183 354 88 2,130 7 19 32 7 38 42 12 582 288 120 95 247 183 337 86 2,095 7 18 32 7 37 42 12 570 285 119 96 245 179 335 86 2,070 7 17 32 7 37 44 12 568 285 112 96 245 188 331 86 2,067 7 18 33 6 38 44 12 593 288 111 97 245 192 330 86 2,100 7 20 33 6 38 46 12 592 288 110 91 246 195 330 85 2,099 Source: City of Anaheim 125 CITY OF ANAHEIM Operating Indicators by Function Last Eight Fiscal Years Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 Function/Program Police Department Number of calls for service Number of 911 calls received Number ol Part I Crimes per 100,000 population Number of Arrest Number of Field Reports processed by Records Bureau Number of traffic collisions Number of Hours of Volunteer service 195,587 185,934 191,037 196,241 203,832 173,669 173,669 174,906 165,698 140,529 129,998 125,174 134.938 103,586 92,710 89,723 2,886 2,857 2,764 2,899 3,042 3,042 3,250 3,598 13,345 17,650 15,951 16,212 14,135 35,807 35,256 37,999 40,232 43,000 54,401 62,842 64,382 4,046 4,027 4,251 4,626 4,461 4,837 5,055 4,808 20,335 18,038 16,201 16,820 15,654 Fire Department Fire responses False alarm responses Mutual aid responses Medical responses Hazardous condition responses ispills, leaks, bomb removal, power line rlown, etc.)983 1,275 1,016 1,487 1,467 1,503 2,707 2,560 2,532 22,202 24,045 21,553 199 207 224 1,082 1,398 2,662 21,301 203 649 687 719 678 2,296 2,271 16,326 16,679 263 322 519 590 581 579 2,530 2,441 13,783 14.130 138 134 Public Works Centerline miles of arterial highwvay pavement improved Square feet of deteriorated pavement replaced Square feet of deteriorated pavement slurry sealed Number of traffic intersections maintained Number of traffic control hubs maintained Square feet of deteriorated sidewalk replaced Linear feet of damaged curb/gutter replaced SCluare feet of medians/parkways maintained Square feet of landscape maintained in the Anaheim Resort Square feet of hardscape maintained in the Anaheim Resort Number of vehicles maintained Number of vehicles per mechanic Square feet of interior space maintainerl Square feet of exterior space maintained Number of facility square feet (interior) per worker Number of construction projects Number of permit inspections Parks Number of park acres maintained per full-time equivalent employee Number of sports fielrs prepared Cost per acre of parks maintained.

Cost per sports field maintained.

5.8 9 8.1 9.1 8.7 3.5 2.9 5.6 4,274,463 820,000 780,500 890,500 890,500 920,500 910,250 887,156 4,167,569 1,975,000 2,532,000 3,483,000 3,483,000 3,522,000 4,175,500 2,704,599 319 318 318 316 316 308 15 298 18 18 17 16 16 15 1 15 62,940 60,000 50,500 50,200 50,200 46,500 48,850 56,725 24,755 11,500 12,500 11,500 11,500 11,500 1,350 2,230 5,460,655 5.400,000 5,350,000 5,350,000 5,350,000 5,212,600 5,209,500 5,132,700 1,430,486 1,430,486 1,419,286 1,419,286 1,419,286 1,419,286 1,419,286 1,419,286 1,001,743 858,828 858,828 858,828 858,828 858,828 858,828 858,828 1,162 1,331 1,331 1,351 1,283 1,273 1,273 1,283 47 50 55 59 48 50 50 54 2,176,265 2,176,265 2,176,265 2,176,265 1,941,287 1,882,400 1,882,400 1,903,000 39,138,187 39,138,187 39,138,187 39,138,187 35,298,000 35,238,900 35,238,900 35,283,600 114,540 103,631 103,631 103,631 77,651 75,296 75,500 75,500 136 130 130 132 167 158 130 192 355 800 800 802 1,623 1,567 1,659 1,717 75 66$8,333$4,261 12 12.00 10.52 10.52 10.52 10.39 10.39 66 66 66 66 66 66 69$9,651 $9,950 $10,699 $10,288 $9,960 $8,791 $9,144$5,134 $5,134 $4,937 $4,747 $4,596 $4,828 $4,377 (continued) 126 CITY OF ANAHEIM Operating Indicators by Function Last Eight Fiscal Years (continued)

Fiscal Year Function/Program City Libraries Computer assistance Total circulation

-books Reference questions answered Information assistance Patrons (patron visits)Library cardholders Programs offered Program attendance Public internet sessions 2011 2010 2009 2008 2007 2006 2005 2004 115,475 150,318 156,716 95,068 37,725 1,700,104 1,655,922 1,489,849 1,648,398 1,536,044 1,363,327 1,422,072 1,689,744 115,766 102,557 98,026 80,564 87,318 67,663 93,964 151,379 164,698 247,221 255,644 184,301 294,940 318,089 375,944 450,052 1,403,995 1,572,138 1,752,838 1,615,640 1,373,002 1,176,441 1,147,079 1,267,487 156,444 149,501 138,826 147,638 161,278 139,611 114,700 100,690 3,927 3,991 4,777 4,410 3,923 2,740 3,559 3,572 124,401 146,357 158,669 152,532 129,661 84,631 79,912 99,330 279,564 328,901 369,463 323,645 257,089 227,005 206,569 201,739 110,013 134,611 146,381 455,725 362,839 362,839 354,505 346,171 10,231 10,125 16,332 16,006 13,675 15,200 14,886 14,886 908 885 875 840 756 812 820 639 232,132 187,000 208,176 161,038 140,000 139,773 88,935 132,633 114,662 113,434 112,548 111,784 111,319 110,729 110,635 110,592 2,976,014 3,344,188 3,208,123 2,979,396 3,233,508 3,223,728 3,090,382 3,282,236 2,737,174 3,085,358 2,836,962 2,978,800 2,780,318 2,606,275 2,459,836 2,603,955 431,027 410,784 435,835 301,021 696,563 929,787 936,471 974,395 Community Services Programs Number of youth program participants Number of youth program participants in recreation classes Number of adult program Sports teams Number of park ranger contacts Public Utilities Department Electric Utility: Number of meters Megawatt-hours

-sales Megawatt-hours

-purchased power Megawatt-hours

-owned generation Water Utility: Number of meters Millions of gallons sold Millions of gallons purchased from Metropolitan Water District Millions of gallons pumped from water system wells 62,717 62,532 62,456 62,445 19,526 20,492 22,238 23,154 7,398 8,054 6,614 4,978 13,399 14,669 17,034 18,961 62,372 62,045 62,205 61,704 24,075 22,887 22,550 23,881 8,049 10,188 9,144 8,169 16,844 13,580 14,244 16,784 Anaheim Convention Center Number of events serviced Number of attendees Percentage of occupancy 200 232 310 339 347 337 310 262 935,000 944,000 917,000 1,008,359 1,098,000 1,002,000 1,202,000 992,000 56.0 9% 68.0% 56.0% 61.0% 70.0% 58.0% 66.0% 71.0%Note: Statistics prior to fiscal year 2004 are not readily available.

Source: Various City Departments 127 CITY OF ANAHEIM Capital Assets Statistics by Function Last Eight Fiscal Years Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 Function/Program Police Department Police Facilities 10 10 10 9 8 6 4 4 Motorized Equipment 242 250 266 255 251 248 Police Helicopters 3 4 4 3 3 3 3 3 Shooting Range 1 1 1 1 1 1 1 Communication/Radio Tower 1 1 1 1 1 1 1 1 Fire Department Fire stations 11 11 11 11 11 10 10 10 Training center I 1 1 I I 1 1 1 Fire trucks, engines, and other vehicles 69 74 74 79 79 72 72 71 Public Works Streets (center lane miles) 578 588.2 633.2 633.2 633.2 633.2 588.2 588.2 Traffic signals 318 306 318 314 312 312 309 308 Sewers (miles) 570.44 569.6 568.3 565.7 561.5 560 560 560 Storm Drains (miles) 151.24 151.24 148 148 148 148 148 148 Park Community parks 11 11 11 11 11 11 11 11 Mini parks 7 7 7 6 6 6 6 6 Neighborhood parks 21 21 21 20 20 20 21 21 Special use parks 6 6 6 6 6 6 6 6 City Libraries Branch libraries 7 7 7 7 6 5 4 5 Book mobiles 1 2 2 2 2 2 1 1 (continued) 128 CITY OF ANAHEIM Capital Assets Statistics by Function Last Eight Fiscal Years (continued)

Fiscal Year 2011 2010 2009 2008 2007 2006 2005 2004 Function/Program Public Utilities Department Electric Utility: Transmission, 69kV, circuit miles Distribution, 12 kV and lower, circuit miles Overhead Underground 90 80 80 80 77 69 70 70 440 658 446 617 Water Utility: Active wells Reservoirs Water Mains (miles)Fire Hydrants 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 7,848 791 612 26 13 749 7,818 18 18 14 13 752 753 7,802 7,805 1,130,000 1,130,000 5 5 Anaheim Convention Center Square footage available Number of exhibit halls 1,130,00 1,130,00 1,130,00 1,130,00 5 5 5 5 1,130,00 1,130,00 5 5 Note: Statistics prior to fiscal year 2004 are not readily available.

Source: Various City Departments 129 CITY OF ANAHEIM Legend" CITY HALL 200 S. ANAHEIM BLVD.A FIRE STATIONS* POLICE STATIONS LIBRARIES CITY FACILITIES HELIPORT 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. Nulwood 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 Palais Rd.13. SAGE PARK 1313 Lido PI.14. STODDARD PARK 901 S. Ninth St.15. MANZANITA PARK 1260 Riviera St.16. LA PALMA PARK & STADIUM 1151 La Palma 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. Haster 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. Underhill Ave.30. RIO VISTA PARK 201 N. Parkvista St.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 PAR 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.130