ML15033A179

Submittal of Annual Corporate Financial Reports for Fiscal Year Ending June 30, 2014

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

Text

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

Subject:

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

Dear Sir or Madam:

In accordance with the requirements of 10 CFR Part 50, Section 50.71(b), enclosed are copies of the annual financial reports for the licensees of the San Onofre Nuclear Generation Station, Units 2 and 3, who do not submit a Form 10-Q with the Securities and Exchange Commission or a Form 1 with the Federal Energy Regulatory Commission: the City of Riverside, California (for the fiscal year ending June 30, 2014); and the City of Anaheim, California (for the fiscal year ending June 30, 2014). Each report includes the appropriate certified financial statement required by Section 50.71(b).

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

If you have any questions or require additional information, please contact Ms. Andrea Sterdis at (949) 368-9985.

Enclosure cc: M. L. Dapas, Regional Administrator, NRC Region IV T. Wengert, NRC Project Manager, SONGS Units 2 and 3 G. G. Warnick, NRC Senior Resident Inspector, San Onofre Units 2 and 3 P.O. Box 128

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San Clemente, CA 92672 (949) 368-7418 PAX 87418 Fax: (949) 368-7575 John.Brabec@sce.com

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

Anaheim, California

Anaheim, California Anaheim, California 1111Iu Itoutory Section

CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2014 Page INTRODUCTORY SECTION Letter of Transmittal 1 GFOA Certificate of Achievement for Excellence in Financial Reporting 5 Organization Chart 7 Administrative Personnel 8 FINANCIAL SECTION Independent Auditors' Report 9 Management's Discussion and Analysis (Unaudited) 11 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 23 Statement of Activities 25 Fund Financial Statements Balance Sheet - Governmental Funds 27 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 28 Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) - Governmental Funds 29 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 30 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Budgetary Basis Actual - General Fund 31 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Budgetary Basis Actual - Housing Authority 32 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Transportation Improvement Projects 33 Statement of Net Position - Proprietary Funds 34 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 36 Statement of Cash Flows - Proprietary Funds 37 Statement of Fiduciary Net Position (Deficit) - Fiduciary Funds 39 Statement of Changes in Fiduciary Net Position (Deficit) - Fiduciary Funds 41 Notes to the Financial Statements 43 Summary of Pension Obligation Funding Progress 77 Combining Individual Fund Statements and Schedules Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds by Fund Type 79 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds by Fund Type 80 Combining Balance Sheet - Nonmajor Special Revenue Funds 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 82 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Nonmajor Special Revenue Funds 83 (continued)

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

Page Combining Balance Sheet - Nonmajor Debt Service Funds 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 88 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Debt Service Funds 89 Combining Balance Sheet - Nonmajor Capital Projects Funds 91 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects Funds 92 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Budgetary Basis Actual - All Capital Projects Funds 93 Internal Service Funds Combining Statement of Net Position - Internal Service Funds 97 Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service Funds 98 Combining Statement of Cash Flows - Internal Service Funds 99 Fiduciary Funds Statement of Changes in Fiduciary Assets and Liabilities - Agency Fund - Mello-Roos 101 STATISTICAL SECTION (Unaudited)

Net Position by Component - Last Ten Fiscal Years 104 Changes in Net Position - Last Ten Fiscal Years 105 Governmental Activities Tax Revenues by Source - Last Ten Fiscal Years 107 Fund Balances of Governmental Funds - Last Ten Fiscal Years 108 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 109 General Government Tax Revenues by Source - Last Ten Fiscal Years 110 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 111 Properly Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years 112 Principal Property Tax Payers - Current Year and Nine Years Ago 113 Properly Tax Levies and Collections - Last Ten Fiscal Years 114 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 115 Ratios of Net General Bonded Debt Outstanding - Last Ten Fiscal Years 116 Direct and Overlapping Governmental Activities Debt - as of June 30, 2014 117 Legal Debt Margin - Last Ten Fiscal Years 119 Pledged-Revenue Coverage - Last Ten Fiscal Years 120 Demographic and Economic Statistics - Last Ten Fiscal Years 122 Principal Employers - Current Year and Nine Years Ago 123 Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years 125 Operating Indicators by Function - Last Ten Fiscal Years 126 Capital Assets Statistics by Function - Last Ten Fiscal Years 128 City of Anaheim Map 130

ECONOMIC CONDmON AND OUTLOOK City of Anaheim, California Finance Department The City is located in northwestern Orange County, about 28 miles southeast of downtown Los Angeles and 90 miles north of San Diego. The City lies on a coastal plain, which is bordered by the Pacific Ocean to the west and the Santa Ana Mountains to the east. The City is the oldest and most populous city in Orange County. Anaheim is home to the Disneyland Resort, the Anaheim Convention Center, and two major league professional sports teams-the Los Angeles Angels of Anaheim American League Baseball team that utilizes the Angel Stadium of Anaheim, and the Anaheim December 10, 2014 Ducks National Hockey League team that utilizes the Honda Center.

Anaheim and Orange County are home to a wide spectrum of industries-more than To the Honorable Mayor and City Council 8,000 manufacturing plants are located in the county, most notably defense and City of Anaheim aerospace, biomedical, electronics, machinery, and computer product manufacturers.

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

In accordance with the Charter of the City of Anaheim (City), we are submitting the The unemployment rate in Anaheim for June 2014 was 6.7%, which is above the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, notional average (6.3%) but below the state average (7.3%).

2014. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the The City continues the successes and achievements realized in the current year, and data, as presented, is accurate in all material aspects; that it is presented in a manner rekindles efforts to grow service levels that were impacted during the recession. The designed to fairly set forth the financial position and results of operations of the City, as City's "Big Three" revenue sources, transient occupancy tax, property tax, and sales and measured by the financial activity of its various funds; and that all disclosures necessary use tax, sustained steady growth this year with a modest surplus projected. As the City to enable the reader to gain maximum understanding of the City's financial activities moves into fiscal year 2014/15, we are optimistic about continued growth but remain have been included. attentive to the economic climate and mindful of managing our enhanced services within the limits of our five-year plan.

The City Charter requires an annual audit of the financial statements of the City by an independent certified public accountant. Accordingly, this year's audit was completed MAJOR INmTATIVES 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 City management, under the direction of the Mayor and City Council, identifies of 1996 and related OMB Circular A-1 33. The auditors' report on the basic financial priorities that will determine the path of the City's future. Initiatives are reevaluated statements is included in the financial section of this report. The auditors' reports related regularly, and new ones added, to ensure that they are consistent with the priorities of specifically to the single audit are presented as a separate document. our policy body and the community. Through a commitment to position the City of Anaheim to better fulfill its mission of delivering outstanding municipal services that are Management's discussion and analysis (MD&A) immediately follows the independent responsive to our entire community, the City of Anaheim is continuing its tradition of auditors' report and provides a narrative introduction, overview, and analysis of the innovation, ingenuity, and opportunity by focusing on community needs, building basic financial statements. MD&A complements this letter of transmittal and should be neighborhood connections, and governing for results that strengthen communities. The read in conjunction with it. City's dedication to improvement and modernization has created an environment where residents and businesses are free to choose how best to enjoy all that Anaheim has to offer.

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CITY OF ANAHEIM ENSURING A SAFE COMMUNITY: Anaheim is a proud, multi-cultural community with COMMUNITY INFRASTRUCTURE: The fiscal year 2014/15 adopted budget illustrates diverse public safety needs. One of our fundamental tenets isensuring we remain a safe our commitment to increasing park space, improving aging resources and creating new and prosperous community for families and individuals. Budget for the fiscal year opportunities for neighbors to engage in healthy living through outdoor recreation at 2014/15 provides for continued support of the many resources to strengthen our radiant parks and community centers.

community policing and community outreach programs. A focus for the City is engaging our youth through a variety of pioneering police programs, including Junior Over the past 24 months, the City has embarked on an innovative community Cadets, Anaheim Police Explorers, Gang Reduction and Intervention Partnership (GRIP) partnership with KABOOM! to deliver a high level of service to our residents. Through and a new Public Safety Career Pathway for junior high school students focused on this partnership, five playgrounds at John Marshall Park, Edison Park, Stoddard Park, character building. Schweitzer Park and Modjeska Park have been built by hundreds of local residents, neighbors and volunteers, resulting in a renewed sense of neighborhood pride. These We continue our investment in additional police officers to further our commitment of partnerships will continue to take shape in fiscal year 2014/15.

ensuring Anaheim remains one of the safest communities of its size. The fiscal year 2014/15 budget supports the strategic allocation of resources, particularly police This coming fiscal year will also celebrate the opening of more than a dozen new officers who patrol neighborhoods, suppress gangs, solve crimes and work community resources in our thriving neighborhoods from east to west and north to collaboratively with stakeholders on crime prevention strategies. south. The opening of the Miraloma Park and Family Resource Center is scheduled for the begin of year 2015. Visitors to the park will be able to enjoy a perimeter loop trail, To support the fundamentals of community policing, the budget includes continued skate plaza, picnic facilities and an outdoor classroom area. The park design was support for the Chiefs Neighborhood Advisory Council established this year, which completed with input and collaboration from community members. From the selection serves as a collaborative partnership with Anaheim residents and the Anaheim Police of building colors to the amenities at the center, the park is being designed based on Department to discuss neighborhood safety concerns and crime prevention techniques. the feedback from the neighborhood.

Through the partnerships with our community, the Anaheim Police Department can continue to train police officers on complex socio-economic neighborhood public safety In close proximity to Paul Revere Elementary, construction is scheduled to be completed concerns, implement a Psychological Evaluation Response Team to comprehensively by December 2014 at Paul Revere Park, located near Guinida Lane. The new park will respond to calls for service and employ robust crime prevention strategies. feature amenities for all ages, including a children's playground area, gazebo with picnic tables, exercise equipment and a volleyball court. A mural featured at the park In the area of fire and emergency services, Anaheim Fire & Rescue reached a entrance was also designed by artwork from local youth.

momentous milestone this year becoming the 13th accredited agency in California, and 196th nationwide, by the Commission on Fire Accreditation International. Following a A new amenity to the City will be the addition of two dog parks, one at La Palma Park rigorous process, this accreditation demonstrates Anaheim Fire &Rescue's commitment and the second next to the Olive Hills Tennis Courts. These parks dedicate space for to continuous organizational improvement and exceptional fire and emergency services residents' dogs in need of a place to exercise and socialize in a secure environment.

to the residents and visitors of Anaheim.

Recognizing the fabric of our community is comprised of our growing youth, this year As part of Anaheim Fire & Rescue's Strategic Plan, efforts to replace and repair aging new programs were brought forth to help our youth flourish in their educational equipment continue. During the upcoming fiscal year, replacement of another fire endeavors. A new mobile after school recreation program, Fun on Wheels, was engine is planned to ensure the department's delivery of high quality service to our implemented, providing fitness, art and homework help to more than 9,000 youth community members is upheld. throughout our multifaceted neighborhoods. In addition, library service hours were extended at several branches to allow for more students to visit the library and utilize For fiscal year 2014/15, the City also proceeds with the Quality Rental Housing the ever important resources. The positive impact of these programs are apparent and program, approved by City Council this year, with the goal of identifying and abating something that the City will continue in fiscal year 2014/15.

substandard rental housing conditions. Code Enforcement Officers will conduct routine, periodic surveys of rental housing units, in order to help ensure safe homes and Parks, open space and safe neighborhoods make Anaheim a great place for children residences for our community. and young adults to connect with one another and develop lasting friendships.

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

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CITY OF ANAHEIM OUTREACH TO OUR COMMUNITY: During fiscal year 2013/14, the City introduced As the City embraces green technology, the Anaheim Public Utilities Solar Energy a new Anaheim e-newsletter to provide community updates on a monthly basis. The program was enhanced this year to encourage the maximum number of participants Community Services Department also launched a new bilingual publication, Your and improve services for our utility customers. Anaheim Public Utilities' largest customer Community/Tu Comunidad, to better serve our residents. A new online resource tool service enhancement effort will be the launch of the new Customer Information System was instituted, called My Community Resource Map, to help residents and visitors locate (CIS) that went live in June 2014. The deployment will update the existing system that nearby services and resources from the convenience of a mobile device. has been in place for almost two decades. The new, robust CIS will enhance customer functionality, as well as allow Customer Service Representatives the ability to provide In fiscal year 2013/14, the City successfully launched its partnership with Open Gov customers with real time consumption and billing information. The new CIS deployment (see https://anaheim.opengov.com), an online analysis tool that allows the public to will also increase customer billing option flexibility, allowing customers to remain on the view our current and historical budget data, review trends through visual graphs, and current, bi-monthly billing cycle, or move to a monthly schedule.

drill down to different levels of budget detail. This project is furthering the City's goal of providing transparent public service operations and data that islogical, meaningful and ENCOURAGING BUSINESS GROWTH: The Business Assistance Program was useful to the community. OpenGov can be used by the public as a tool to review and introduced in fiscal year 2013/14 and will continue to evolve in the coming fiscal year.

analyze the City's fiscal year 2014/15 budget. This program offers personalized assistance for businesses submitting plans for tenant improvements, expansions, or construction of new structures, assigning a single point In the coming fiscal year, we will look to enhance Anaheim magazine, which is mailed of contact to answer questions, monitor the progress of projects, and link to every Anaheim residence and business, by offering bilingual features that speak to communications between City staff and clients. To date, more than 200 customers have our Citywide programs and resources. The City will also embark on improving perhaps participated and found it easier to open businesses in Anaheim, and/or expand or our most powerful communication mechanism, www.anaheim.net, with a complete evolve their current business as quickly as possible.

redesign.

PREMIERE DESTINATION: The Anaheim Resort is an iconic area in Anaheim that MAINTAINING A BEAUTIFUL CITY: Anaheim enters fiscal year 2014/15 well- attracts more than 22 million visitors annually and contributes significant revenue to our positioned to maintain the City's extensive network of roadways, sidewalks and General Fund, which in turn allows us to reinvest in our neighborhoods, public safety infrastructure that allows residents and visitors to move seamlessly and efficiently and aging infrastructure. Additionally, the improvements in Downtown Anaheim make through our City. In the coming year, the Public Works Department plans to improve us well poised to attract new shoppers by offering unique boutiques and one-of-a-kind City roadways by slurry sealing four million square feet of pavement, or the equivalent delectable restaurants.

of 185 neighborhood blocks. Widening projects on Brookhurst Street and Katella Avenue also will be completed, resulting in improved vehicle mobility on those two Perhaps the most exciting milestone this coming year will be the completion of the major thoroughfares. Anaheim Regional Transportation Intermodal Center (ARTIC). The construction of this awe-inspiring facility will be completed in late 2014, giving residents and visitors access In fiscal year 2014/15, Anaheim Public Utilities continues with its innovative to numerous forms of transportation that will provide convenient options for individuals Underground Conversion program. To date, more than 113 electrical circuit miles of wishing to experience Anaheim and its surrounding communities.

aging overhead poles and wires have been replaced with underground systems that improve reliability and increase neighborhood aesthetics. Anaheim Public Utilities As the largest on the west coast, the Anaheim Convention Center hosts major works in conjunction with the Public Works Department to accelerate undergrounding conventions on an annual basis that directly benefit the City's General Fund. To ensure programs, when possible, as part of street construction/reconstruction efforts to Anaheim stays competitive among other convention centers, the venue will break minimize the impact on the surrounding community. ground on its seventh expansion in fiscal year 2014/15, adding 200,000 square-feet of leasable space that can be used as exhibit, ballroom, or meeting rooms, and To ensure our beautifully tree-lined streets remain healthy and attractive, the City will increasing the Anaheim Convention Center's available exhibit square footage to more undergo a robust pruning plan in the coming year, pruning approximately 20,000 than 1 million square-feet. The expansion will allow the City to accommodate trees. Residents and visitors will also benefit from 200 new trees that will be planted conventions that were previously too large for our venue, thus further contributing to the throughout the City this year. City's positive financial outlook.

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CITY OF ANAHEIM FINANCIAL INFORMATION year plan links anticipated expenditures for infrastructure development with community needs and desires, and provides a citywide perspective of recommended projects and Management of the City is responsible for establishing and maintaining internal control proposed funding sources. The Capital Improvement Plan was finalized in June 2014, designed to ensure that the assets of the government are protected from loss, theft, or and totaled $765.2 million for the five-year fiscal period ending June 30, 2019. The misuse, and to ensure that adequate accounting data are compiled to allow for the five-year Capital Improvement Plan has been submitted and annually updated, in its preparation of financial statements in conformity with U.S. generally accepted present form, since 1982, for effective long-range planning purposes. It is City accounting principles. Internal control is designed to provide reasonable, but not Management's belief that these two plans give City Council members an expanded absolute, assurance that these objectives are met. The concept of reasonable assurance opportunity to set policy and provide direction for implementation, resulting in improved recognizes that: (1) the cost of a control should not exceed the benefits likely to be management efficiency and improved financial results.

derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. AWARD This report consists of management's representations concerning the finances of the City. GOVERNMENT FINANCE OFFICERS ASSOCIATION OF THE UNITED STATES AND As a result, management assumes full responsibility for the completeness and reliability CANADA (GFOA) CERTIFICATE OF ACHIEVEMENT AWARD: The GFOA awarded a of all of the information presented in this report. Management asserts that, to the best Certificate of Achievement for Excellence in Financial Reporting to the City of Anaheim, of their knowledge and belief, this financial report is complete and reliable in all Califomia, for its comprehensive annual financial report for the fiscal year ended June material respects. 30, 2013. This was the 38th consecutive year that the City has achieved this prestigious award (fiscal years ended June 30, 1976 through 2013). In order to be awarded the BUDGETARY CONTROLS: The City maintains budgetary controls, the objective of which Certificate of Achievement, a government must publish an easily readable and is to ensure compliance with legal provisions embodied in the annual appropriated efficiently organized comprehensive annual financial report. This report must satisfy budget approved by the City Council. Activities of the General Fund, special revenue both U.S. generally accepted accounting principles and applicable legal requirements.

funds, debt service funds, capital projects funds, and all the proprietary funds are A Certificate of Achievement is valid for a period of one year only. We believe our included in the annual appropriated budget. The level of budgetary control (that is, the current comprehensive annual financial report continues to conform to the Certificate of level at which expenditures cannot legally exceed the appropriated amount) is Achievement Program's requirements and we are submitting it to GFOA to determine established at the departmental level. The City also maintains an encumbrance its eligibility for another certificate.

accounting system as one technique of accomplishing budgetary control.

Encumbrances generally are re-appropriated as part of the following year's budget. ACKNOWLEDGMENTS RELEVANT FINANCIAL POLICIES: Over the years, through sound fiscal management, The preparation of this report on a timely basis is a team effort involving many the City has positioned itself well to weather economic downtums, create a positive dedicated people across the entire organization. I would like to extend a special thanks atmosphere for economic development, and allow flexibility in addressing budgetary to the talented finance professionals throughout the City, led by Peggy Au, Financial challenges. As of June 30, 2014, the City's General Fund has a spendable, unassigned Accounting Manager. Appreciation is also expressed to Mayor Tom Tait, Mayor ProTem fund balance of $30.4 million, which represents 12% of total expenditures. Gail Eastman, and Interim Assistant City Manager Kristine Ridge for their significant Traditionally, the policy has been to maintain General Fund reserves at a minimum of contributions as members of the Audit Committee. In closing, without the leadership and 7 to 10% of expenditures. 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 Further, the City has a long-standing practice of recognizing and reserving for known innovative concepts in fiscal management by the City.

and anticipated liabilities. The City fully funds its compensated absences and self insurance liabilities. Additionally, the City has established an irrevocable trust for other Respectfully submitted, post-employment benefits (also known as retiree medical) and continues to make the annual required contribution (ARC) to ensure this future obligation is fully funded.

LONG-TERM FINANCIAL PLANNING: On June 17, 2014, the City Council adopted the fiscal year 2015 budget. Additionally, as a companion to approving the budget Paul S. Emery Deborah A. Moreno plan, a five-year Capital Improvement Plan was presented to the City Council. The five- Interim City Manager Finance Director 4

CITY OF ANAHEIM The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Anaheim, California for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2013. The Certificate Government Finance Officers Association of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports.

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

A Certificate of Achievement is valid for a period of one year Presented to only. We believe our current report continues to conform to City of Anaheim Certificate of Achievement program requirements, and we are submitting it to GFOA.

California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2013 Executive Director/CEO 5

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CITY OF ANAHEIM Administrative Personnel June 30, 2014 Interim City Manager Paul S. Emery Interim Assistant City Manager Kristine A. Ridge Deputy City Manager Greg Garcia Chief of Police Raul Quezada City Attorney Michael R.W. Houston City Clerk Linda N. Andal City Treasurer Henry W. Stern Community Development Director John E. Woodhead IV Community Services Director Terry D. Lowe Convention, Sports & Entertainment Executive Director Thomas Morton Finance Director Deborah A. Moreno Fire Chief Randy R. Bruegman Interim Human Resources Director Christopher K. Chase Planning Director Sheri Vander Dussen Public Utilities General Manager Dukku Lee Public Works Director Natalie Meeks 8

Financial Section_ý KPMG LLP Suite 700 20 Pacifica Irvine, CA 92618-3391 Independent Auditors' Report The Honorable Mayor and City Council opinion. An audit also includes evaluating the appropriateness of accounting polices City of Anaheim, California: use and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Report on the Financial Statements We believe that the audit evidence we have obtained is sufficient and appropriate to We have audited the accompanying financial statements of the governmental activities, provide a basis for our audit opinions.

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 Opinions June 30, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the Management's Responsibility for the FinancialStatements business type activities, each major fund, and the aggregate remaining fund information of the City of Anaheim, California, as of June 30, 2014, and the respective Management is responsible for the preparation and fair presentation of these financial changes in financial position, and where applicable, cash flows thereof and the statements in accordance with U.S. generally accepted accounting principles; this respective budgetary comparison for the General and Housing Authority, and includes the design, implementation, and maintenance of internal control relevant to the Transportation Improvements Projects Funds for the year then ended, in accordance preparation and fair presentation of financial statements that are free from material with U.S. generally accepted accounting principles.

misstatement, whether due to fraud or error.

Other Matters Auditors' Responsibility Required Supplementary Information Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally U.S. generally accepted accounting principles require that the managements discussion accepted in the United States of America and the standards applicable to financial and analysis on pages 11 through 22 and the schedules of funding progress on page audits contained in Government Auditing Standards, issued by the Comptroller 77 be presented to supplement the basic financial statements. Such information, General of the United States. Those standards require that we plan and perform the although not a part of the basic financial statements, is required by the Governmental audit to obtain reasonable assurance about whether the financial statements are free Accounting Standards Board who considers it to be an essential part of financial from material misstatement. reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the As audit involves performing procedures to obtain audit evidence about the amounts requires supplementary information in accordance with auditing standards generally and disclosures in the financial statements. The procedures selected depend on the accepted in the United States of America, which consisted of inquires of management auditors' judgment, including the assessment of the risks of material misstatement of the about the methods of preparing the information and comparing the information for financial statements, whether due to fraud or error. In making those risk assessments, consistency with managements responses to our inquires, the basic financial the auditor considers internal control relevant to the entity's preparation and fair statements, and other knowledge we obtained during our audit of the basic financial presentation of the financial statements in order to design audit procedures that are statements. We do not express an opinion or provide any assurance on the information appropriate in the circumstances, but not for the purpose of expressing an opinion on because the limited procedures do not provide us with sufficient evidence to express an the effectiveness of the entity's internal control. Accordingly, we express no such opinion or provide any assurance.

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Supplementary and Other Information Other Reporting Required by Government Auditing Standards Our audit was conducted for the purpose of forming opinions on the financial In accordance with GovernmentalAuditing Standards,we have also issued our report statements that collectively comprise the City's basic financial statements. The dated December 10, 2014 on our consideration of the City's internal control over accompanying introductory section, combining individual fund statements and financial reporting and on our tests of its compliance with certain provisions of laws, schedules, and the statistical section as listed in the table of contents are presented for regulations, contracts, and grant agreements and other matters. The purpose of that purposes of additional analysis and are not a required part of the basic financial report is to describe the scope of our testing of internal control over financial reporting statements. and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an The combining individual fund financial statements and schedules are the responsibility audit performed in accordance with GovernmentAuditing Standards in considering the of management and were derived from and relate directly to the underlying accounting City's internal control over financial reporting and compliance.

and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, M LLCP and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining individual fund financial statements and schedules are fairly stated in all material respects in relation to Irvine, Califomia the basic financial statements as a whole. December 10, 2014 The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

KPMGLUP, h Dolwor Iloild lioility yorloehip, threU.S. mme~befirr of KPMGIntornofionof Cooporoion(NKPMG Intoroton&J),a Sowi,wntly. 110

Management's Discussion and Analysis

CITY OF ANAHEIM Govemment-wide financial statements. The government-wide financial Management's Discussion and Analysis statements are comprised of the Statement of Net Position and the Statement of Activities. These two statements are designed to provide readers with a broad overview (Unaudited) of the City's finances utilizing the full accrual method of accounting, in a manner similar to a private-sector business. Under the full accrual method of accounting, transactions As management of the City of Anaheim (City), we offer readers of the City's basic are reported as soon as the underlying event giving rise to the change occurs, financial statements this narrative overview and analysis of the financial activities of the regardless of the timing of related cash flows. Thus, assets, liabilities, revenues and City as of and for the fiscal year ended June 30, 2014. We encourage readers to expenses are reported in these statements for some items that will only result in cash consider the information presented here in conjunction with additional information that flows in future fiscal periods (e.g. uncollected revenues and accrued but unpaid interest we have furnished in our letter of transmittal, which can be found in the introductory expense).

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 The Statement of Net Position presents information on all of the City's assets, deferred dollars. outflows of resources, liabilities and deferred inflows of resources, including capital assets and long-term liabilities, with the difference reported as net position. Over time, OVERVIEW OF THE BASIC FINANCIAL STATEMENTS increases or decreases in net position may serve as a useful indicator of whether the financial position of the City as a whole is improving or deteriorating.

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 The Statement of Activities presents information showing how the City's net position components: 1) government-wide financial statements, 2) fund financial statements, and changed during the most recent fiscal year. Functional activities are highlighted in this

3) notes to financial statements. This report also contains other supplementary statement, whereby direct and indirect functional costs are shown net of related information in addition to the basic financial statements themselves.

program revenue. This statement shows the extent to which the various functions depend COMPONENTS OF on general taxes and non-program revenues for support.

THE ANNUAL FINANCIAL REPORT 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 A

their costs through user fees and charges (business-type activities). The governmental Management's activities of the City include general government, Police, Fire, Community Development, Discussion and Planning, Public Works, Community Services, Public Utilities (street lighting),

Analysis Convention, Sports and Entertainment (Visitor and Convention Bureau and the Honda

~..0 Center), and interest on related long-term debt. The business-type activities of the City include the electric, water and sanitation utilities, golf courses, and convention, sports and entertainment venues (Anaheim Convention Center, Angel Stadium of Anaheim, and The City National Grove of Anaheim) operations.

Notes to the Financial The government-wide financial statements include not only the City itself, but also the Statements Anaheim Housing Authority, Community Center Authority, Anaheim Public Improvement Corporation, and Anaheim Public Financing Authority. Although these entities are legally separate, they function for all practical purposes as a part of the City, Summary 4 WDetail and therefore have been included as blended component units as an integral port of the primary government.

11

CITY OF ANAHEIM The government-wide financial statements can be found on pages 23-25 of this report. for additional information; these schedules are included in the basic financial statements on pages 31-33 of this report. Additionally, budgetary schedules for the other Fund financial statements. The fund financial statements focus on current governmental funds have been provided to demonstrate compliance with the budget available resources and are organized and operated on the basis of funds, each of and can be found as part of other supplementary schedules on pages 83-86, 89-90, which is defined as a fiscal and accounting entity with a self-balancing set of accounts, and 93-95 of this report.

established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. All of the The governmental funds financial statements can be found on pages 27-30 of this funds of the City can be divided into three categories: governmental funds, proprietary report.

funds, and fiduciary funds.

Proprietary funds. The City maintains two different types of proprietary funds.

Governmental funds. Governmental funds are used to account for essentially the Enterprise funds are used to report the same functions presented as business-type same functions reported as governmental activities in the government-wide financial activities in the government-wide financial statements. The City uses its enterprise funds statements. However, unlike the government-wide financial statements, the to account for its electric, water and sanitation utilities, golf courses, and convention, governmental funds financial statements utilize the modified accrual basis of sports and entertainment venues operations. Internal service funds are an accounting accounting, which focuses on near-term inflow and outflow of spendable resources, as device used to accumulate and allocate costs internally among the City's various well as on balances of spendable resources available at the end of the fiscal year. Such functions. The City uses internal service funds to account for its general benefits and information may be useful in evaluating a government's near-term financial insurance, motorized equipment, information services, and municipal facilities requirements. maintenance functions. Because these services predominantly benefit governmental rather than business-type functions, they have been included with governmental Because the focus of the governmental funds is narrower than that of the government- activities in the government-wide financial statements.

wide financial statements, it is useful to compare the information presented for the governmental funds with similar information presented for governmental activities in the Proprietary funds provide the same type of information as the government-wide government-wide financial statements. By doing so, readers may better understand the financial statements, only in more detail. The proprietary funds financial statements long-term impact of the government's near-term financing decisions. Both the provide separate information for all of the enterprise funds, which are considered to be governmental funds Balance Sheet and the governmental funds Statement of Revenues, major funds of the City. Conversely, all of the internal service funds are combined into Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this a single, aggregated presentation in the proprietary funds financial statements.

comparison between governmental funds and governmental activities. Individual fund data for the intemal service funds is provided in the form of combining statements elsewhere in this report.

The City maintains 19 individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and in the governmental funds The proprietary funds financial statements can be found on pages 34-38 of this report.

Statement of Revenues, Expenditures and Changes in Fund Balances for the General Fund, the Housing Authority Special Revenue Fund and the Transportation Improvement Fiduciary funds. Fiduciary funds are used to account for resources held for the Projects Capital Project Fund, which are considered to be major funds. Data for the benefit of parties outside the government. Fiduciary funds are not reflected in the remaining 16 governmental funds are combined into a single, aggregated government-wide financial statements because the resources of those funds are not presentation. Individual fund data for each of these nonmajor governmental funds is available to support the City's own programs.

provided in the form of supplementary combining statements on pages 79-82, 87-88, and 91-92 of this report. The City maintains three different types of fiduciary funds. The Investment Trust Fund is used to account for the external portion of the City's investment pool; the Private-Purpose The City adopts an annually appropriated budget for all governmental and proprietary Trust Fund is used to account for the assets and liabilities held in trust for the Successor funds. Budgetary comparison statements for the General Fund and the major special Agency to the former Redevelopment Agency (Successor Agency); the Agency Fund is revenue fund (Housing Authority) are required to be presented, a budgetary schedule used to account for monies collected and disbursed in a custodial capacity for the Mello-for the Transportation Improvement Projects major capital project fund is also included Roos districts in the City.

12

CITY OF ANAHEIM The fiduciary fund financial statements can be found on page 39-41 of this report. " The Citys net position increased as a result of the current fiscal year's operations.

The net position of the City's governmental activities increased $113,106 (10%);

Notes to the financial statements. The notes provide additional information business-type activities net position increased $16,648 (2%).

that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages " At the close of the current fiscal year, the City's governmental funds reported a 43-75 of this report. combined fund balance of $254,598, an increase of $5,306 in comparison with the prior fiscal year. Approximately 5% of this amount ($11,389) is available for Other supplementary information. In addition to the basic financial statements spending at the City's discretion (unassigned fund balance).

and accompanying notes, this report also presents combining individual fund statements referred to earlier in connection with nonmajor governmental funds and " At the end of the current fiscal year, unrestricted fund balance (total of committed, internal service funds. Also included are the budgetary comparison Schedules of assigned and unassigned fund balance) for the General Fund was $34,467 or 14%

Revenues, Expenditures and Changes in Fund Balances for all nonmajor special of total General Fund expenditures. Unassigned fund balance was $30,394 or 12%

revenue funds, all debt service funds, and all capital projects funds. These statements of total General Fund expenditures.

and schedules can be found on pages79-100 of this report.

" The City's total capital assets increased by $140,757 (5%). Capital assets in the FINANCIAL HIGHUGHTS (Amounts in thousands) City's governmental activities increased by $101,698 (7%) and business-type activities capital assets increased by $39,059 (2%) during the current fiscal year.

• The Citys total assets and deferred outflows of resources exceeded its liabilities and

" The Citys total long-term liabilities decreased by $100,410 (5%) during the current deferred inflows of resources at the end of the current fiscal year by $2,231,246.

fiscal year; of this amount, long-term liabilities in the City's governmental activities Of this amount, $108,173 represents unrestricted net position, which may be used decreased by $4,856 (1%), and business-type activities decreased by $95,554 to meet the City's ongoing obligations to citizens and creditors.

(9%).

• The City's governmental activities represent $1,234,925 (55%) and the business-type activities account for $996,321 (45%) of the City's total net position.

13

CITY OF ANAHEIM GOVERNMENT-WIDE FINANCIAL ANALYSIS NET POSITION JUNE 30, 2014 AND 2013 Governmental Business-type Total Activities Activities Government 2014 2013 2014 2013 2014 2013 Current and other assets $ 540,366 $ 522,708 $ 563,614 $ 633,328 $1,103,980 $1,156,036 Capital assets, net 1,494,225 1,392,527 1,614,417 1,575,358 3,108,642 2,967,885 Total assets 2,034,591 1,915,235 2,178,031 2,208,686 4,212,622 4,123,921 Deferred outflows of resources 2,177 2,377 4,600 5,932 6,777 8,309 Total assets and deferred outflows of resources 2,036,768 1,917,612 2,182,631 2,214,618 4,219,399 4,132,230 Other liabilities 66,703 55,797 90,516 62,306 157,219 118,103 Long-term liabilities 735,140 739,996 1,000,488 1,098,642 1,735,628 1,838,638 Total liabilities 801,843 795,793 1,091,004 1,160,948 1,892,847 1,956,741 Deferred Inflows of resources 95,306 73,997 95,306 73,997 Total liabilities and deferred inflows of resources 801,843 795,793 1,186,310 1,234,945 1,988,153 2,030,738 Net position:

Net investment in capital assets 1,016,259 894,625 823,505 787,459 1,839,764 1,682,084 Restricted 205,998 196,853 77,311 71,131 283,309 267,984 Unrestricted 12,668 30,341 95,505 121,083 108,173 151,424 Total net position $1,234,925 $1,121,819 $ 996,321 $ 979,673 $2,231,246 $2,101,492 At the end of fiscal year 2014, the City's net position totaled $2,231,246. The largest $6,809 from the gain on sale of housing land held for resale and $4,902 restricted for portion of the City's net position $1,839,764 (82%) reflects its investment in capital claims and judgments.

assets (e.g. land, buildings, utility plant, machinery, equipment, and infrastructure), net of any related outstanding debt that was used to acquire those assets. The City uses The remaining balance of $108,173 (5%) is unrestricted net position that may be used these assets to provide services to citizens; consequently, these assets are not available to meet the City's ongoing obligations to citizens and creditors. The Citys total for future spending. Although the City's investment in capital assets is reported net of unrestricted net position decreased by $43,251 primarily due to more unrestricted related debt, it should be noted that the resources needed to repay this debt must be resources were invested in capital assets that includes the acquisition of land, vehicles, provided from other sources, since the capital assets themselves cannot be used to the constructions of a compressed natural gas facility, the Anaheim Convention Center liquidate these liabilities. expansion and Electric Utility facilities.

An additional portion of the City's net position $283,309 (13%) represents resources that are subject to extemal. restrictions on how they may be used. The increase in restricted net position of $15,325 is primarily due to unspent restricted resources of 14

CITY OF ANAHEIM CHANGE IN NET POSITION YEAR ENDED JUNE 30, 2014 AND 2013 Governmental Business-type Total Activities Activities Government 2014 2013 2014 2013 2014 2013 REVENUES Program revenues:

Charges for services $ 73,675 $ 64,138 $586,591 $604,388 $ 660,266 $ 668,526 Operating grants and contributions 114,584 112,507 452 952 115,036 113,459 Capital grants and contributions 110,295 71,472 8,441 6,698 118,736 78,170 General revenues:

Taxes:

Property taxes 66,282 64,311 66,282 64,311 Sales and use taxes 67,505 65,445 67,505 65,445 Transient occupancy taxes 110,134 102,936 110,134 102,936 Motor vehicle license fees 331 331 Other taxes 7,780 7,756 7,780 7,756 Unrestricted investment earnings 2,930 1,094 6,986 3,323 9,916 4,417 Other 49 1,857 ___ ___ 49 1,857 Total revenues 553,234 491,847 602,470 615,361 1,155,704 1,107,208 EXPENSES Program activities:

Governmental activities:

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

Electric Utility 411,246 417,008 411,246 417,008 Water Utility 62,996 57,056 62,996 57,056 Sanitation Utility 53,508 52,813 53,508 52,813 Golf Courses 4,399 4,473 4,399 4,473 Convention, Sports and Entertainment Venues _____ _____46,385 45,001 46,385 45,001 Total expenses 447,416 421,910 578,534 576,351 1,025,950 998,261 Excess before transfers 105,818 69,937 23,936 39,010 129,754 108,947 Transfers in (out) 7,288 12,824 (7,288) (12,824) ____ _____

Increase in net position 113,106 82,761 16,648 26,186 129,754 108,947 Effect of implementation GASB Statement No. 65 (1,300) (6,337) (7,637)

Net position at beginning of year 1,121,819 1,040,358 979,673 959,824 2,101,492 2,000,182 Net position at end of year $1,234,925 $1,121,819 $996,321 $979,67-3 $2,231,246 $2,101,492 15

CITY OF ANAHEIM REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES " Taxes increased $10,922 (5%) mainly due to the increase of $7,198 (7%) in transient occupancy taxes (TOT). With a revitalized economy and Disney's Unrestricted investment expansion of the California Adventure, tourism has shown a dramatic recovery earnings 1%

0th er from recession lows in fiscal year 2010. Sales and use tax increased $2,060 (3%),

<1% most notably with stronger performance in construction-related sales and a general Other taxes ,Charges for services 1%

13%

improvement across most business sectors. Finally, property taxes increased $1,971 (3%).

Transient occupancy taxes _pn 1 20% Operating grants and " Charges for services increased $9,537 (15%) primarily due to increases in building Wl contributions

-21% permits and fees of $1,342 due to increased activities in construction and the related inspections, increases in residual receipts of $1,108 from housing projects and increases in gain of $6,809 from the sale of housing land held for resale.

Sales and use tax " Operating grants increased $2,077 (2%) mainly due to increases of $3,030 in gas 12%

tax distributions from the State of California, $4,243 in first-time homebuyer assistance loan BEGIN and HOME grants. The increases are partially offset by Property taxes-- Capital grants and decreases of $2,034 in Urban Area Security Initiative (UASI) grant reimbursements 12% contributions 20%

due to the nature and timing of projects, $1,476 in Narcotic Asset Forfeitures as a result of money and property seizures in drug-related incidents and a $1,553 (2%)

Governmental activities. Governmental activities increased the City's net position decrease in U.S. Department of Housing and Urban Development (HUD) Section 8 by $113,106. Key elements of this increase are as follows: rental assistance.

The most significant revenues of the governmental activities are general taxes (45%), " Capital grants and contributions increased by $38,823 (54%) primarily due to which include transient occupancy taxes (20%), properly taxes (12%), sales and use grant reimbursements for the Anaheim Regional Transportation Intermodal Center taxes (12%), and other taxes (1%). Program revenues are 54% of the total revenues of (ARTIC) as the project construction was in full swing during the entire fiscal year.

the governmental activities, which include operating grants and contributions (21%),

capital grants and contributions (20%), and charges for services (13%); unrestricted " Unrestricted investment earnings increased by $1,836 (168%) due to reversal of an investment earnings is 1%of the total revenues. investment portfolio unrealized investment loss from the prior fiscal year.

Public safety (Police and Fire) expenses are the most significant (42%) of all " Other revenues decreased by $1,808 (97%) primarily due to one-time property tax governmental activities expenses, followed by Community Development (18%), Public administration fee refund of $1,916 from the County of Orange in the prior fiscal Works (13%), Community Services (8%), interest on long-term debt (8%), and various year.

other programs (11%). Included in these amounts is depreciation expense, which is 6%

of the total expenses for governmental activities. Governmental activities net transfers in decreased $5,536 (43%) mainly due to a one-time transfer out of $4,864 of restricted resources related to sewer construction to the Governmental activities revenues showed improvement in all revenue categories.

Sanitation Utility, and $600 related to the Water Transfer settlement to the Water Utility.

Revenues increased $61,387 (12%) as compared to the prior fiscal year due to the following: There were no other significant or unusual changes.

16

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

Operating grannts and contributio Dns

<1%

Charges for services 97%

Business-type activities. Business-type activities increased the City's net position by $16,648. Key elements of this change are as follows:

R Program revenues u Expenses Charges for services of $586,591 decreased by $17,797 (3%). The decrease in Governmental activities expenses increased $25,506 (6%) as compared to prior fiscal charges for services was primarily due to a decrease from the Electric Utility of $25,907 year due to the following: (6%) offset by an increase in the Water Utility of $5,161 (8%) and Convention, Sports and Entertainment Venues of $2,428 (8%).

" The increase in Public Safety expenses of $3,483 (2%) is primarily due to service enhancements in public safety and emergency response services. Of this amount, " The decrease of $25,907 in the Electric Utility charges for services is partly due to salary and benefits costs increased approximately $3,325 which includes addition a $12,395 (4%) decrease in retail sales revenues. This decrease is attributable to of 8 new positions, new firefighters and paramedic training. decreased sales volumes resulting from cooler weather and the Electric Utility's

• The increase in Public Works expenses of $15,522 is due to approximately $1,740 continued investment in conservation and efficiency measures. Wholesales revenues increased by $16,052 (61%) mainly due to a 65% increase in wholesale of infrastructure maintenance, $1,841 of one-time refund of prior years' receipts, sales volumes, resulting from competitive rates in the wholesale market and more and $11,566 of capital asset retirements. Upon completion of the Gene Autry Way surplus energy available from the increased renewable resources purchased and construction, the Gene Autry Way bridge and certain infrastructure assets ($8,968) reduced retail sales in the current fiscal year. Surplus natural gas sales decreased were retired from the City's capital assets as they will be maintained by another agency; and the loss on retirement of capital assets ($2,598). by $8,020 (88%) due to less natural gas available for resale in the spot market, and more purchased gas used for the Magnolia power plant resulting in an 96%

• Community Services expenses increased $5,205. The increase is mainly due to the increase in its power production. Transmission revenues decreased by $6,942 City's on-going service enhancements to neighborhoods that includes additional (17%) due to lower transmission demand and rates set by the California community center and libraries hours and park tree maintenance. Of this amount Independent System Operator (CAISO). Finally, the Rate Stabilization Account

$1,234 was attributable to salary and benefit increases and, $2,684 a one-time (RSA) revenues are recognized to meet debt service coverage ratios to maintain refund on prior years receipts. bond ratings and decreased by $14,500 (36%) due to decreased purchase power costs and reduced debt service payments in the current fiscal year. Information

• The increase in Convention, Sports and Entertainment Venues expenses of $1,651 relating to the RSA can be found in note 1 of the notes to the financial statement.

is mainly due to increase in depreciation expense of $940.

" The increase of $5,161 in Water Utility charges for services is mainly due to a

• The increases in govemment activities expenses were partially offset by the decrease $5,037 (8%) increase in water sales as a result of the 1.3% increase in customer in Community Development expenses of $2,726 mainly due to decrease in Section demand and a rate increase of $0.165 per hundred cubic feet effective June 1, 8 rental assistance of $3,592 resulting from program attrition of 236 leasing units 2013, in response to increases in wholesale water supply and treatment costs.

monthly. 17

CITY OF ANAHEIM The increase of $2,428 (8%) in Convention, Sports and Entertainment Venues water as a result of increases in customer demand and increased commodity costs charges for services is mainly attributable to an increase of $1,453 in facility rental charged by the Water Utility's two sources of water supply. The increase of $2,585 and parking revenues due to increased consumer show events; and an increase of in operations, maintenance and administration costs is mainly due to less overhead

$843 in concession fees primarily due to increased concert ticket and special event attributable to capital assets as several major projects were completed during the revenues ($485) from the City National Grove of Anaheim, an increase in fiscal year.

technology services revenues ($522) with greater corporate convention business, and offset by a decrease in food and beverage revenues ($164) from the FINANCIAL ANALYSIS OF THE CITY'S FUNDS Convention Center.

Governmental funds. The focus of the Citys governmental funds is to provide Transfers out of $7,288 decreased by $5,536 (43%) as discussed in the government- information on near-term inflows, outflows, and balances of spendable resources. Such wide financial analysis of governmental activities. 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 EXPENSES AND PROGRAM REVENUES - BUSINESS-TYPE ACTIVITIES resources available for spending at the end of the fiscal year.

$500 At the end of the current fiscal year, the City's governmental funds reported total ending fund balances of $254,598, an increase of $5,306 in comparison with the prior fiscal

$450 year. Of the total fund balance of $254,598, restricted fund balance totaled $218,533 (86%) and indicates the use of resources are constrained by external parties, resource providers, constitutions or enabling legislations. Unassigned fund balance totaled

$350 $11,389 (4%) and is available for spending at the City's discretion. The remaining fund balance is $24,676 (10%), of which $5,648 is not in spendable form, and $19,028 that was assigned for particular purposes.

S$250 Governmental revenues totaled $547,578 while expenditures were $552,482.

$200 The General Fund is the general operating fund of the City. At June 30, 2014, the

$150 General Fund reported a total ending fund balance of $43,015 and consisted of the following:

5100

$50

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

-- -- y Water Utility Sanitation Golf Courses Convention, Sports &

uProgram revenues Expenses E Entertainment Venues * $4,902 was restricted for claims and judgments Total expenses of $578,534 increased $2,183 (less than 1%). The Water Utility * $1,547 was restricted for grant purposes increased expenses by $5,940 offset by decrease of $5,762 in the Electric Utility. There were no other programs with significant changes during the year. * $4,073 was assigned for encumbrances and subsequent year one-time budgeted service enhancements

• The decrease in the Electric Utility expenses is primarily due to a decrease in power costs of $4,829. The Electric Utility applied a combination of strategies to procure * $30,394 was unassigned lower power costs from renewable resources to comply with Renewable Portfolio Standards (RPS) requirements, long-term commitments with conventional power General Fund total revenues increased $14,395 (5%) as compared to the prior fiscal supplies and internal power generation. year primarily attributable to the following:

• The increase in Water Utility expenses of $5,940 is primarily due to an increase of

• Total taxes increased by $14,904 (6%) due to the improvement in the overall

$2,577 in the costs of purchased water and the treatment and the pumping of economy. Taxes are the largest revenue sources of the General Fund and they 18

CITY OF ANAHEIM accounted for $251,292 or 86% of the total General Fund revenues. During fiscal from the General Fund far a neighborhood improvement land acquisition. Transfers out year 2014, transient occupancy taxes (TOT) increased $7,198 (7%), property taxes increased $7,668 primarily due to a $4,864 transfer to Sanitation Utility Fund for sewer increased by $1,984 (3%), sales and use taxes increased $5,788 (9%) and other construction from developer impact fees.

taxes decreased by $66 (1%)

Total nonmajor governmental funds expenditures decreased by $1 1,429 (8%) primarily

" Licenses, fees, and permits increased $797 (4%) due to increased construction due to decrease in capital outlay of $19,949 (33%), which was mainly attributable to activities within the City the ARTIC land acquisition of $31,150 in the prior fiscal year. Partially offseting this decrease was $39,991 of new construction projects that include the Brookhurst Street

" Use of money and property increased $858 (34%) due to the reversal of an widening project, Tustin/La Palma Street improvement, and the Miraloma Park unrealized investment loss in the prior fiscal year development.

• Other revenues decreased by $2,118 (77%) due to a one-time property tax Proprietary funds. The City's proprietary funds provide the same type of administration fee refund ($1,916) from the County of Orange in the prior fiscal information found in the government-wide financial statements, but in more detail.

year.

The Electric Utility fund net position increased $1,91 4(1%) in the current fiscal year. The General Fund expenditures increased by $13,474 (6%) primarily due to increases in most significant factors of the change in fund net position are discussed in the the Police department of $4,342 (4%), Fire Department of $1,523 (3%), City Attorney government-wide financial analysis of business-type activities.

of $1,694 (27%), Community Services of $2,504 (10%), Public Works of $1,491 (11%), and capital outlay of $721 (1127%). Increases in capital outlay were due to The Water Utility fund net position increased $4,447 (2%) in the current fiscal year. The most significant factors of the change in fund net position are discussed in the acquisitions of fire equipment and structural improvement for the Anaheim Youth Center. government-wide financial analysis of business-type activities.

The other most significant factors of the increases for these departments are discussed in the government-wide financial analysis of the governmental-activities. The Sanitation Utility fund net position increased $8,330 (7%) in the current fiscal year.

This increase is primarily due to a transfer in of $4,864 for sewer capital project from The Housing Authority Fund revenues increased by $6,624 (8%) primarily due to an developer impact fees. There were no other significant or unusual changes.

increase in the gain on the sale of housing land held for resale of $6,809, an increase in residual receipts of $1,409 and offset by a decrease in HUD funding for Section 8 The Gelf Courses fund net position increased $29 (less than 1%) in the current fiscal rental assistance of $1,553. Housing Authority expenditures increased by $3,313 (4%) year. There were no significant or unusual changes.

due to land acquisitions for housing projects of $4,488, and $1,794 principal and interest payments for the two housing loans and offset by $3,592 decrease in Section The Convention, Sports and Entertainment Venues fund net position increased $2,694 (less than 1%) in the current fiscal year. The most significant factors of the change in 8 rental assistance as discussed in the government-wide financial analysis of the fund net position are discussed in the govemment-wide analysis of business-type governmental-activities. activities.

The Transportation Improvement Projects fund increased revenues by $40,969 (87%) GENERAL FUND BUDGETARY HIGHUGHTS grant reimbursements and increased expenditures by $52,546 (131%) primarily due to the ARTIC project that was in full swing of construction during the entire fiscal year. During the year, the original budget was amended to increase appropriations by

$2,849 (1%). The increase in appropriations was primarily the result of the carryover Total nonmajor govemmental funds revenues decreased by $10,625 (12%) primarily of prior year appropriations anT amendments amounting to $2,797 and the due to a decrease in license, fees and permits of $1,759 for one-time developer fees reallocation of appropriations from other funds of $52. These amendments were to be funded from savings in other programs of the General Fund during the year.

received in the prior fiscal year, and a decrease of $8,921 in intergovernmental revenues mainly due to the timing of construction grant reimbursements for the Gene General Fund revenues of $294,379 were greater than budgeted revenues of Autry Way and Katella Avenue projects completed in the prior fiscal year. $287,708 by $6,671 (2%), primarily due to stronger than anticipated performance of transient occupancy taxes, sales taxes and other various revenue sources as the Total nonmajor governmental funds other financing sources decreased by $29,189 economy continued to improve.

(39%) primarily due to $31,500 in one-time loan proceeds for the acquisition of the ARTIC land in the prior fiscal year. Transfers in increased by $8,629, due to the $4,450 General Fund expenditures were less than budgeted. Of the total appropriations of increase in Lease Payment Measurement Revenues (LPMR) set-aside for the Resort debt $257,549, approximately 2%, or $5,921, went unspent. This was primarily due to service (see note 9 for more information regarding LPMR) and a $3,794 transfer in labor savings as a result of employee turnover and the time between an employee leaving andthe recruitment of a new employee. 19

CITY OF ANAHEIM CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS (net of accumulated depreciation)

JUNE 30, 2014 AND 2013 Governmental Business-type Total Activities Activities Government 2014 2013 2014 2013 2014 2013 Land $ 658,253 $ 648,420 $ 58,410 $ 58,410 $ 716,663 $ 706,830 Construction inProgress 204,680 138,749 85,649 84,936 290,329 223,685 Buildings, structures and improvements 169,464 160,157 396,643 401,430 566,107 561,587 Utili pa*nt 1,064,914 1,021,584 1,064,914 1,021,584 Machinery and equipment 31,315 29,140 8,801 8,998 40,116 38,138 Infrastructure 430,513 416,061 430,513 416,061 Total $1,494,225 $1,392,527 $1,614,417 $1,575,358 $3,108,642 $2,967,885 Capital assets. The City's investment in capital assets for its governmental and Street and Westmont Street; the installation of a photovoltaic system (solar panels) business-type activities at June 30, 2014 amounted to $3,108,642 (net of accumulated at the Convention Center, replacement of aging circuit breakers, and improvements depreciation). This investment in capital assets included land, construction in progress, at substations. The Electric Utility also completed $46,624 of construction work in buildings, structures and improvements, utility plant, machinery and equipment, and progress that includes 2.6 miles of underground conversion on Brookhurst Street infrastructure. The total increase over the prior fiscal year was 5% ($140,757), of which and Douglass Road, replacement of 116 high-voltage transformers, 48 high-governmental activities increased 7% ($101,698) and business-type activities increased voltage switches, six 220kV circuit breakers at Lewis Substation, about 50,000 feet 2% ($39,059). of degraded direct buried cable, and replacement of a new customer information system and other projects. The increase was partially offset by the current year The increase of capital assets in governmental activities was primarily due to capital additions to accumulated depreciation of $41,770.

asset additions of $148,444 offset by current year depreciation expense of $32,587, capital asset retirements of $12,587 and transfer to business-type activities of $1,572. The Water Utility increase of $9,502 (3%) was primarily due to additions of Major capital asset projects during the current fiscal year include the following: $17,937 to construction work in progress for ongoing expansion and refurbishment of water transmission and distribution infrastructure, pumping plant,

" Additions of $123,527 for construction work in progress which includes and source of water supply. The Water Utility completed $44,314 of construction construction of the Anaheim Regional Transportation Intermodal Center (ARTIC), the work in progress that includes the Water Sustainability Campus, the Hidden Anaheim Fixed Guideway project, Gene Autry Way, Brookhurst Street Canyon Pump Station Expansion, and the Linda Vista Pump Station, the Linda Vista improvement, Tustin Avenue improvement , Uncoln Avenue widening, Miraloma Reservoir and distribution system and other projects. This increase was partially Park development and various other public infrastructure construction; offset by the current year additions to accumulated depreciation of $10,534.

• Land acquisitions totaled $8,323 of which $2,090 was for street widening, $3,062 " The Sanitation Utility increase of $2,999 (3%) includes addition of $3,898 of for housing projects and $3,171 for neighborhood improvements; construction work in progress for sanitary sewer improvements, and $1,121 in

" Acquisitions of various vehicles and equipment totaling $8,498; and acquisitions of sweepers and vehicles. The Sanitation Utility also completed $7,543 of sewer improvements on Lincoln, La Palma and the Phase IIIsanitary improvement

• Completion of $56,718 of construction work in progress that includes the Gene in Central Anaheim. This increase was partially offset by current year additions to Autry Way ($29,861), Sunkist Street improvement ($1,854), Euclid Street widening accumulated depreciation of $2,445.

($1,407), right-of-way acquisitions ($4,133), Schweitzer and Anaheim Cove Park

" The Convention, Sports and Entertainment Venues decrease of $628 (less than 1%)

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

was primarily due to construction work in progress additions of $10,667 for the The increase in business-type activities is primarily due to increases in the following: construction of the Anaheim Convention Center expansion offset by current year additions to accumulated depreciation of $13,497.

• The Electric Utility increase of $27,638 (3%) was mainly due to additions of

$66,811 to construction work in progress for the replacement of aging overhead Additional information on the City's capital assets can be found in note 6 of the notes electrical lines with state-of-art underground projects on Lincoln Avenue, West to the financial statements, on pages 56 of this report. 20

CITY OF ANAHEIM LONG-TERM UABILITIES JUNE 30,2014 AND 2013 Governmental Business-type Total Activities Activities Government 2014 2013 2014 2013 2014 2013 General obligation bonds $ 1,995 $ 2,605 $ 1,995 $ 2,605 Revenue bonds 612,762 613,481 $ 780,553 $ 863,987 1,393,315 1,477,468 Certificates of participation 8,880 10,020 38,000 38,000 46,880 48,020 Capital lease obligations 1,325 1,369 1,325 1,369 Notes and loans payable 50,757 54,877 48,271 62,722 99,028 117,599 Self-insurance 40,827 39,422 40,827 39,422 Compensated absences 18,594 18,222 18,594 18,222 Decommissioning provision 133,664 131,333 133,664 131,333 Total $735,140 $739,996 $1,000,488 $1,096,042 $1,735,628 $1,836,038 Long-term liabilities. The City's outstanding long-term liabilities, including bonds, as the discount rate. The City's pension plans currently utilize a discount rate of certificates of participation, capital leases, notes and loans payable, self-insurance, 7.5%, which is used in determining the unfunded pension liability and funding compensated absences, and the provision for decommissioning costs totaled requirements. If it is determined in the future that an even lesser rate of return is

$1,735,628 at June 30, 2014. Of this total, $735,140 (42%) was in governmental more appropriate, there will be a significant increase in the unfunded liability activities and $1,000,488 (58%) was in business-type activities. and the contributions required to meet those obligations. For example, if it was determined in the future that a more appropriate rate of return was 6.5%, then The City's governmental activities outstanding long-term liabilities decreased $4,856 it is estimated that the City's unfunded liability would increase by 47.0% to $826 (1%) during the current fiscal year. The decrease is primarily due to principal payments million and the City's total annual contribution would increase by approximately of $25,341, and general insurance and compensate absences liabilities payments of $27 million or 47.5%. However, in the future, if it was determined that a more

$28,241. Partially offset by these decreases were current year additions of revenue appropriate rate of return was 8.5%, then it is estimated that the City's unfunded bond accretion of $16,150, capitalized leases and loans of $2,427, and general liability would decrease by 39.0% to $340 million and the Citys total annual liability and compensated absence liabilities of $30,018. contribution would decrease by approximately $21 million or 38.0%. The Citys pension plan has averaged an 8.3% rate of return over the last 20 years.

The City's business-type activities outstanding long-term liabilities decreased $95,554 (9%). The decrease is primarily due to principal payments of $96,206, which includes The Governmental Accounting Standards Board also has issued new standards

$60,205 in full retirement of the 2002-B Electric Revenue Bonds. related to the accounting and reporting for pensions that are required to be implemented for the fiscal year beginning July 1, 2014. The City is currently Additional information on the City's long-term liabilities can be found in notes 7 and 9 evaluating the potential impacts to the financial statements from implementation of the notes to the financial statements, on pages 57-64 of this report. of these new standards. Additional information about the City's retirement plans can be found in note 11 of the notes to the financial statements on pages 67-70 ECONOMIC FACTORS of this report, as well as multi-year trend information as part of the required supplementary information on page 77.

There remains a focus on public pensions and their sustainability; many assumptions are used to estimate the ultimate liability of pensions and the " Recently, the State of California enacted pension legislation that went into effect contributions that will be required to meet those obligations. One of the most in January 2013 and applies mainly to new public employees. Some of the significant factors used in determining the liability and the funding requirements major changes include mandatory cost sharing by employees, reducing the is the rate of return that investments will yield prior to making payments, known overall benefit level (e.g. percentage of pay), increasing the retirement age, and placing a cap on the salary used to determine retirement benefits. The impacts to the City for these changes for future employees have yet to be determined.

21

CITY OF ANAHEIM

• For the 2015 fiscal year, the City appropriated $280,049 in estimated available REQUESTS FOR INFORMATION resources of $308,944 for General Fund spending. This leaves approximately This financial report is designed to provide a general overview of the City's finances for

$28,895 in estimated available reserves, which is 10% of General Fund Thos witancinterest in th overnm ent's finances fth appropriations. The City's long-standing policy is to maintain General Fund all those with an interest in the government's finances. Questions concerning any of the reserves of at least 7% to 10% of annual appropriations, information provided in this report or requests for additional information should be addressed to the Office of the Finance Director, City of Anaheim, 200 South Anaheim

• The City annually reviews all of its fees as part of the budget adoption process. Boulevard, Suite 643, Anaheim, California, 92805.

Developer, construction, and other fees applicable to residents and development doing business in the City are adjusted in June of each year, generally by the average of the Consumer Price Index (CPI). CPI for 12 months was 1%inJanuary 2014. This is consistent with the City's policy of recovering costs without placing an undue financial burden on existing tax and rate payers.

• California Senate Bill 1X 2 signed into law in April 2011 mandated that all California utilities are required to reach 25% renewable power in their power portfolios by 2016, and 33% by 2020. The higher renewable power costs will increase future power supply costs. The Electric Utility has a number of strategies to mitigate the potential cost impacts.

22

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

Governmental Business-type Activities Activities Total ASSETS Cash and cash equivalents $ 55,997 $ 34,761 $ 90,758 Investments 159,778 95,729 255,507 Accounts receivable, net 23,663 56,545 80,208 Accrued interest receivable 551 1,527 2,078 Internal balances, net 17,494 (17,494)

Due from other governments 62,307 62,307 Notes receivable, net 77,790 77,790 Inventories 1,066 12,546 13,612 Land held for resale, net 10,895 10,895 Prepaid and other assets 4,124 94,711 98,835 Restricted cash and cash equivalents 40,989 51,420 92,409 Restricted investments 49,637 228,156 277,793 Unamortized prepaid bond insurance 1,509 1,188 2,697 Bond payment receivable 4,505 4,505 Pipeline receivable 20 20 Net other ost-emploment benefits (OPEB) asset 11,152 11,152 Due from Successor Agency 23,414 23,414 Capital assets, net:

Nondepreciable 862,933 144,059 1,006,992 Depreciable 631,292 1,470,358 2,101,650 Total assets 2,034,591 2,178,031 4,212,622 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding bonds 2,177 4,600 6,777 Total deferred outflows of resources 2,177 4,600 6,777 UABIUTIES Accounts payable 43,240 62,004 105,244 Wages payable 4,523 1,454 5,977 Due to other governments 323 323 Interest payable 7,229 9,881 17,110 Line of credit payable 9,100 9,100 Arbitrage rebate liability 343 343 Deposits 7,456 7,489 14,945 Unearned revenues 3,932 245 4,177 Long-termn liabilities:

Due within one year 47,260 39,934 87,194 Due in more than one year 687,880 960,554 1,648,434 Total liabilities 801,843 1,091,004 1,892,847 DEFERRED INFLOWS OF RESOURCES Regulatory credits 95,306 95,306 Total deferred inflows of resources 95,306 95,306 NET POSmON Net investment in capital assets 1,016,259 823,505 1,839,764 Restricted for:

Debt service 1,032 16,777 17,809 Capital projects 48,829 48,515 97,344 Community development 101,133 101,133 Streets, roads and transportation improvement projects 39,180 39,180 Other purposes 15,824 12,019 27,843 Unrestricted 12,668 95,505 108,173 Total net position $1,234,925 $ 996,321 $2,231,246 23 The accompanying notes are an integral part of these financial statements.

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CITY OF ANAHEIM Statement of Activities Year Ended June 30, 2014 (Inthousands)

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

General government $ 27,408 $(11,618) $ 1,779 $ 615 $ (13,396) $ (13,396)

Police 123,448 3,589 9,927 11,360 (105,750) (105,750)

Fire 58,669 841 10,166 1,163 $ 955 (47,226) (47,226)

Community Development 79,732 311 17,305 81,852 19,114 19,114 Planning 16,307 723 7,746 1,455 (7,829) (7,829)

Public Works 60,022 240 13,037 16,967 99,624 69,366 69,366 Community Services 33,667 463 3,479 1,172 4,322 (25,157) (25,157)

Public Utilities 2,514 (2,514) (2,514)

Convention, Sports and Entertainment 15,342 244 10,236 5,394 44 44 Interest on long-term debt 35,514 (35,514) (35,514)

Total governmental activities 452,623 (5,207) 73,675 114,584 110,295 (148,862) (148,862)

Business-type activities:

Electric Utility 408,636 2,610 426,051 3,377 $ 18,182 18,182 Water Utility 62,172 824 65,946 45 3,531 6,526 6,526 Sanitation Utility 53,127 381 57,843 90 68 4,493 4,493 Golf Courses 4,270 129 4,667 268 268 Convention, Sports and Entertainment Venues 45,122 1,263 32,084 317 1,465 (12,519) (12,519)

Total business-type activities 573,327 5,207 586,591 452 8,441 16,950 16,950 Total government $1,025,950 $ $660,266 $115,036 $i 18,736 (148,862) 16,950 (131,912)

General revenues:

Taxes:

Property taxes 66,282 66,282 Sales and use taxes 67,505 67,505 Transient occupancy taxes 110,134 110,134 Other taxes 7,780 7,780 Unrestricted investment earnings 2,930 6,986 9,916 Other 49 49 Transfers 7,288 (7,288)

Total general revenues and transfers 261,968 (302) 261,666 Change in net position 113,106 16,648 129,754 Net position at einning of year 1,121,819 979,673 2,101,492 Net position at end of year $1,234,925 $996,321 $2,231,246 The accompanying notes are an integral part of these financial statements. 25

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CITY OF ANAHEIM Balance Sheet Governmental Funds June 30, 2014 (inthousands)

Transportation Nonmaijr Total Housina Improvement Governmental Governmental ASSETS General Authoori 'projects Funds Funds Cash and cash equivalents $ 8,708 $ 10,557 $ 18,709 $ 37,974 Investments 24,846 30,121 53,385 108,352 Accounts receivable, net 12,547 15 $ 2 1,264 13,828 Accrued interest receivable 74 93 218 385 Notes receivable, net 49,905 27,859 77,764 Due from other funds 3,331 883 14,925 19,139 Due from other governments 17,405 159 22,489 22,254 62,307 Inventories 247 247 Land held for resale, net 10,895 10,895 Prepaid and other assets 239 7 3,542 3,788 Restricted cash and cash equivalents 2,763 38,226 40,989 Restricted investments 49,637 49,637 Due from Successor Agency 1,767 8,176 13,471 23,414 Total assets $69,164 $113,574 $ 22,491 $243,490 $448,719 UABIUTIES Accounts payable $ 5,138 $ 716 $ 19,542 $ 11,672 $ 37,068 Wages payable 3,098 78 20 312 3,508 Deposits 4,832 1,440 1,184 7,456 Due to other funds 924 6,254 9,841 17,019 Due to other governments 323 323 Unearned revenue 1,945 94 2,039 Total liabilities 15,937 2,651 25,816 23,009 67,413 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 8,445 37 5,039 12,009 25,530 Unavailable resources- long-term notes receivable 49,905 27,859 77,764 Unavailable resources - due from Successor Agency 1,767 8,176 13,471 23,414 Total deferred inflows of resources 10,212 58,118 5,039 53,339 126,708 FUND BALANCES (Deficit):

Nonspndable:

Interfund receivable 1,613 1,613 Inventory 247 247 Prepaid and other assets 239 7 3,542 3,788 Restri&ted:

Anaheim Resort maintenance and improvement 8,491 8,491 Capital projects 2,685 2,685 Claims and judgments 4,902 4,902 Debt service 73,500 73,500 Development impact projects 46,144 46,144 Grant purposes 1,547 5,491 7,038 Homebuyer assistance prorams 3,143 3,143 Low and moderate income housing 38,160 38,160 Rental assistance 2,974 2,974 Streets, roads and transportation improvement projects 31,496 31,496 Assigned:

Capital projects 3,272 3,272 Housing projects 11,664 11,664 Other purposes 4,073 19 4,092 Unassigne 30,394 -(8,364) (10,641) 11,389 Total fund balances (deficit) 43,015 52,805 (8,364) 167,142 254,598

$243,490 $448,719 27 Total liabilities, deferred inflows of resources, and fund balances $69,164 $113,574 $ 22,491 The accompanying notes are an integral part of these financial statements.

CITY OF ANAHEIM Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2014 (Inthousands)

Total fund balances - governmental funds $ 254,598, Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets used in the operation of governmental funds are not current financial resources and, therefore, are not reported in the funds. These assets consist of:

Land $ 658,253 Construction in progress 204,455 Buildings, structures and improvements 284,930 Machinery and equipment 52,761 Infrastructure 798,420 Accumulated depreciation (522,997)

Total capital assets, net 1,475,822 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as deferred inflows of resources in the funds. 126,708 Unamortized prepaid bond insurance ($1,509) and deferred charge on refunding bonds

($2,177) are not current financial resources, and, therefore, are not reported in the funds. 3,686 Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position. 56,134 Compensated absences, not otherwise included in the internal service funds, are not due and payable in the current period and, therefore, are not reported in the funds. (400)

Long-term liabilities of govemmental funds, including bonds ($614,757), certificates of participation ($8,880), notes and loans payable ($50,757), and accrued interest payable

($7,229) are not due and payable in the current period and, therefore, are not reported in the funds. (681,623)

Net position of governmental activities $1,234,925 The accompanying notes are an integral part of these financial statements. 28

CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit)

Governmental Funds Year Ended June 30, 2014 (Inthousands)

Transportation Nonmajar Total Housinc Improvement Governmental Governmental General Authorifq Projects Funds Funds Revenues:

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

Current:

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

Principal retirement 1,741 22,479 24,220 Interest charges 53 18,744 18,797 Total expenditures 251,628 79,744 92,512 128,598 552,482 Excess (deficiency) of revenues over (under) expenditures 42,236 6,083 (4,570) (48,653) (4,904)

Other financing sources (uses):

Tronsfers in 28,7027 53,479 84,813 Transfers out (66,812) (9,141) (75,953)

Issuance of loan payable 1,350 1,350 Total other financing sources (uses) (38,105) 2,627 45,688 10,210 Net change in fund balances 4,131 8,710 (4,570) (2,965) 5,306 Fund balances (deficit) at beginning of year 38,884 44,095 (3,794) 170,107 249,292 Fund balances (deficit) at end of year $ 43,015 $ 52,805 $ (8,364) $167,142 $254,598 The accompanying notes are an integral part of these financial statements. 29

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

Net change in fund balances - total governmental funds $ 5,306 Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlay as expenditures. However, in the Statement of Activities the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay

($136,597) exceeded depreciation ($28,380) in the current period. 108,217 Transfers of capital assets between governmental funds and proprietary funds do not require the use of financial resources and are not reported as transfers in the funds. (1,572)

The net effect of other miscellaneous transactions involving capital assets (i.e., sales, trade-in, retirements and contributions) is to decrease net position. (5,616)

Revenues in the governmental funds provide current financial resources but are not reported as revenues in the Statement of Activities as they have previously been accrued. (1,754)

Proceeds from long-term debt provide current financial resources to governmental funds, but the issuance of debt increases long-term liabilities in the Statement of Net Position. (1,350)

Payments of principal on long-term debt use current financial resources in the governmental funds but the repayment reduces long-term liabilities in the Statement of Net Position. 24,220 Certain expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (12,704)

Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual Funds. The net expense of the internal service funds is reported with governmental activities. (1,641)

Change in net position of governmental activities $113,106 The accompanying notes are an integral part of these financial statements. 30

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

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

Property taxes $ 63,228 $ 66,102 $ 65,565 $ (537)

Sales and use taxes 65,546 65,546 68,581 3,035 Transient occupancy taxes 105,894 105,894 110,134 4,240 Other taxes 6,900 6,900 7,012 112 Licenses, fees and permits 17,558 17,558 18,738 1,180 Intergovernmental revenues 2,270 2,486 2,693 207 Charges for services 14,932 14,777 14,491 (286)

Fines, forfeits and penalties 3,555 3,555 2,656 (899)

Use of money and property 2,630 2,615 3,887 1,272 Other 2,261 2,275 622 (1,653)

Total revenues 284,774 287,708 294,379 6,671 Expenditures:

City Council 617 617 548 (69)

City Administration 4,061 4,061 3,377 (684)

City Attorney 6,220 8,045 8,036 (9)

City Clerk 1,152 1,154 1,073 (81)

Human Resources 1,400 1,432 1,432 Finance 4,530 4,535 4,202 (333)

City Treasurer 2,363 2,363 2,231 (132)

Police 112,753 112,818 112,818 Fire 57,758 58,305 57,045 (1,260)

Community Development 2,110 2,266 1,254 (1,012)

Planning 16,060 16,062 14,790 (1,272)

Public Works 15,188 15,227 15,019 (208)

Community Services 27,059 27,235 26,510 (725)

Public Utilities 2,546 2,546 2,510 (36)

Convention, Sports and Entertainment 883 883 783 (100)

Total expenditures 254,700 257,549 251,628 (5,921)

Excess of revenues over expenditures 30,074 30,159 42,751 12,592 Other financing sources (uses):

Transfers in 29,235 29,235 29,310 75 Transfers out (60,227) (60,827) (66,812) (5,985)

Total other financing uses (30,992) (31,592) (37,502) (5,910)

Net change in fhnd balance (918) (1,433) 5,249 6,682 Fund balance at beginning of year 38,884 38,884 38,884 Fund balance at end of year $ 37,966 $ 37,451 44,133 $ 6,682 Adjustment to reconcile to GAAP:

Receipt of interfund receivable (515 Receipt of interfund loan (6031 Ending fund balance - GAAP basis $ 43,015 The accompanying notes are an integral part of these financial statements. 31

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

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

Licenses, fees and permits $ 38 $ 38 $ 57 $ 19 Intergovernmental revenues 73,063 73,063 70,904 (2,159)

Charges for services 12 12 Use of money and property 9,564 9,564 17,525 7,961 Other 1,068 3,8222 Total revenues 83,733 83,733 92,320 8,587 Expenditures:

Community Development 80,442 84,651 80,161 (4,490)

Total expenditures 80,442 84,651 80,161 (4,490)

Excess (deficiency) of revenues over (under) expenditures 3,291 (918) 12,159 13,077 Other financing sources (uses):

Transfers in 2,627 2,627 Transfers out (1,286) (1,286) (603) 683 Total other financing sources (1,286) (1,286) 2,024 3,310 Net change in fund balance 2,005 (2,204) 14,183 16,387 Fund balance at beginning of year 44,095 44,095 44,095 Fund balance at'end of year $46,100 $41,891 58,278 $16,387 Adjustments to reconcile to GAAP:

Proceeds on sale of land held for resale (6,493)

Purchase of land for resale 417 Disbursement of interfund loan 603 Ending fund balance - GAAP basis $52,805 The accompanying notes are an integral part of these financial statements. 32

CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit)

Budget and Actual - Transportation Improvement Projects Year Ended June 30, 2014 (Inthousands)

Final Budgeted Actual Variance with Amounts Amounts Final Budget Revenues:

Intergovernmental revenues $141,356 $87,942 $(53,414)

Total revenues 141,356 87,942 (53,414)

Expenditures:

Planning 21 21 Public Works 126,705 92,491 (34,214)

Total expenditures 126,726 92,512 (34,214)

Excess (deficiency) of revenues over (under) expenditures 14,630 (4,570) (19,200)

Net change in fund balance 14,630 (4,570) (19,200)

Fund balance (deficit) at beginning of year (3,794) (3,794)

Fund balance (deficit) at end of year $ 10,836 $ (8,364) $(19,200)

The accompanying notes are an integral part of these financial statements. 33

CITY OF ANAHEIM Statement of Net Position Proprietary Funds June 30, 2014 (Inthousands)

Business-type Activities - Enterprise Funds Convention Governmental Sorts and Activities -

Electric Water Sanitation Golf Entertainment Internal Utility Utility Utility Courses Venues Total Service Funds ASSETS Current assets:

Cash and cash equivalents $ 10,006 $ 5,807 $ 12,928 $ 190 $ 5,830 $ 34,761 $ 18,023 Investments 28,549 16,566 33,438 542 16,634 95,729 51,426 Restricted cash and cash equivalents 6,988 1,399 1,269 211 9,867 Restricted investments 16,179 1,599 17,778 Accounts receivable, net 41,205 7,420 6,506 121 1,293 56,545 6,285 Accrued interest receivable 1,051 88 126 2 260 1,527 166 Note receivable 26 Interfund receivable 12,546 10 Inventories 11,968 576 2 819 Bond payment receivable 2,180 2,180 Prepaid and other assets 22 32,6A7 31,A10 1,215 336 Total current assets 147,356 34,670 54,267 855 26,432 263,580 77,091 Noncurrent assets:

Restricted cash and cash equivalents, less current portion 22,846 2,093 13,806 2,808 41,553 Restricted investments, less current portion 192,757 7,501 10,120 210,378 Unamortized prepaid bond insurance 1,103 1 84 1,188 Bond payment receivable, less current portion 2,325 2,325 Pipeline receivable 20 20 Accounts receivable, less current portion 3,550 Interfund receivable, less current portion 31 Prepaid and other assets 62,064 62,064 Net other post-employment benefits (OPEB) asset 11,152 Capital assets:

Land 35,671 2,339 316 1,949 18,135 58,410 Buildin s, structures and improvements 105,377 16,689 514,698 636,764 7,837 Utility plant 1,223,497 429,230 1,652,727 Machinery and equipment 5,888 1,113 25,721 32,722 58,088 Construction in progress 55,001 16,162 3,535 10,951 85,649 225 Total Capital assets 1,314,169 447,731 115,116 19,751 569,505 2,466,272 66,150 Less accumulated depreciation (459,092) (128,721) (13,880) (11,049) (239,113) (851,855) (47,747)

Capital assets, net 319,010 101,236 8,702 330,392 1,614,417 18,403 855,077 Total noncurrent assets 1,133,847 328,625 115,126 8,702 345,645 1,931,945 33,136 Total assets 1,281,203 363,295 169,393 9,557 372,077 2,195,525 110,227 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding bonds 2,756 118 1,726 4,600 Total deferred outflows of resources 2,756 118 1,726 4,600 34 (continued)

CITY OF ANAHEIM Statement of Net Position Proprietary Funds June 30, 2014 (Inthousands) (continued)

Business-type Activities - Enterprise Funds Convention Governmental S orts and Activities -

Electric Water Sanitation Golf Entrtainment Internal utility utility utility Courses Venues Total Service Funds UABIUTIES Current liabilities (payable from current assets):

Accounts payable $ 36,093 $ 15,759 $ 3,266 $ 296 $ 3,006 $ 58,420 $ 6,172 Wages payable 650 212 91 7 367 1,327 1,015 Interest payable 547 547 Compensated absences 13,447 Long-term obligations 11,439 557 13,681 25,677 8,679 Line of credit payable 9,100 9,100 Unearned revenues 245 245 1,893 Deposits 3,846 809 623 3 2,208 7,489 Interfund payable 548 548 Total current liabilities (payable from current assets) 52,028 25,880 4,537 854 20,054 103,353 31,206 Current liabilities (payable from restricted assets):

Accounts payable 3,566 18 3,584 Wages payable 125 2 127 Interest payable 7,223 1,049 851 211 9,334 Arbitrage rebate liability 337 6 343 Long-term obligations 11,916 1,943 398 14,257 Total current liabilities (payable from restricted assets) 23,167 2,998 1,269 211 27,645 Total current liabilities 75,195 28,878 5,806 854 20,265 130,998 31,206 Noncurrent liabilities:

Interfund payable, less current portion 1,613 1,613 Long-term obligations, less current portion 634,097 89,787 43,552 59,454 826,890 38,220 Provision for decommissioning costs 133,664 133,664 Total noncurrent liabilities 767,761 89,787 43,552 1,613 59,454 962,167 38,220 Total liabilities 842,956 118,665 49,358 2,467 79,719 1,093,165 69,426 DEFERRED INFLOWS OF RESOURCES Regulatory credits 89,098 6,208 95,306 Total deferred inflows of resources 89,098 6,208 95,306 NET POSITION 255,497 225,520 60,177 8,702 Net investment in capital assets 273,609 823,505 17,078 Restricted for:

Debt service 12,263 1,308 398 2,808 16,777 Capital projects 16,001 3,028 15,600 13,886 48,515 Other purposes 12,019 (1,612) 3,781 12,019 Unrestricted 56,125 8,684 43,860 110,838 23,723 Total net position $ 351,905 $238,540 $120,035 7,090 $294,084 1,011,654 $ 40,801 Adjustment to reflect the consolidation of int rnal service fund activities related to enterprise funds. (15,333)

Net position of business-type activities $ 996,321 The accompanying notes are an integral part of these financial statements. 35

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

Business-type Activities - Enterprise Funds Convention Sports and Governmental Activities -

Electric Water Sanitation Golf Entrtainment Internal Utility Utility Utility Courses Venues Total Service Funds Operatin' revenues:

Soles o6flight and power $386,897 $386,897 Transmission revenues 34,912 34,912 Sales of water $ 65,182 65,182 Solid waste collection fees $ 41,041 41,041 Wastewater fees 11,869 11,869 Street cleaning fees 3,209 3,209 Green fees and cart rentals $4,328 4,328 Facilities rental $ 24,689 24,689 Concession fees 160 5,868 6,028 Charges for services $165,353 Other 4,242 764 1,724 179 1,527 8,436 123 Total operating revenues 426,051 65,946 57,843 4,667 32,084 586,591 165,476 OFerotinq expenses: power ost oepurchased 275,013 275,013 Fuel and generation of power 23,643 23,643 Cost of purchased water 28,769 28,769 Treatment and pumping of water 8,433 8,433 Maintenance, operations and administration 43,079 11,942 49,364 3,816 27,719 135,920 37,862 Insurance premiums and claims 9,903 Compensated absences and other benefits 116,705 Depreciation and amortization 41,770 10,534 2,445 554 13,497 68,800 4,207 Total operating expenses 383,505 59,678 51,809 4,370 41,216 540,578 168,677 Operating income (loss) 42,546 6,268 6,034 297 (9,132) 46,013 (3,201)

Nonoperating income (expenses): 45 90 Intergovernmental revenues 135 Investment income 4,731 988 570 5 692 6,986 574 Debt service recovery 317 317 Interest expense (27,340) (3,167) (1,620) (23) (4,840) (36,990) (85)

Gain (loss) from disposal of capital assets (200) (200) 305 Total nonoperating expenses (22,609) (2,134) (960) (18) (4,031) (29,752) 794 Income (loss) before contributions and transfers 19,937 4,134 5,074 279 (13,163) 16,261 (2,407)

Capital contributions 4,362 3,531 535 1,585 10,013 Transfers in 297 600 4,864 14,272 20,033 Transfers out (22,682) (3,818) (2,143) (250) (28,893)

Change in net position 1,914 4,447 8,330 29 2,694 17,414 (2,407)

Net position at beginning of year 349,991 234,093 111,705 7,061 291,390 43,208 Net position at end of year $351,905 $238,540 $120,035 $7,090 $294,084 $ 40,801 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (766)

Change in net position of business-type activities $ 16,648 The accompanying notes are an integral part of these financial statements. 36

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

Business-type Activities - Enterprise Funds Convention Governmental Sports and' Activities -

Electric Water Sanitation Golf Entertainment Internal Utility Utility Utility Courses Venues Total Service Funds Cash flows from operating activities:

Receipts from customers and users $ 446,926 $ 65,840 $ 56,947 $ 4,327 $ 32,966 $ 607,006 Receipts from interfund services provided 2,030 341 56 336 2,763 $164,988 Payments to suppliers (309,304) (26,204) (40,818) (3,170) (5,298) (384,794) (22,052)

Payments for salaries, wages and other benefits (37,615) (13,441) (6,553) (503) (17,415) (75,527) (132,672)

Payments for interfund services used (8,030) (4,503) (3,357) (199) (2,793) (18,882) (3,490)

Payments for insurance premiums and claims (10,506)

Other receipts 1,668 1,668 223 Net cash provided by (used for) operating activities 94,007 22,033 7,943 791 7,460 132,234 (3,509)

Cash flows from noncapital financing activities:

Proceeds from short-term borrowings from line of credit 7,400 7,400 Payments on short-term borrowings from line of credit (10,000) (10,000)

Receipt of interfund balances 125 Transfrs~c in 600 14,272 14,872 Transfers out (22,682) (3,521) (2,143) (250) (28,596)

Operating grant receipts 45 91 136 Net cash provided by (used for) noncapital financing activities (25,282) (2,876) (2,052) (250) 14,272 (16,188) 125 Cash flows from capital and related financing activities:

Proceeds from sale of capital assets 305 Capital contributions 3,138 2,485 68 5,691 Capital purchases (66,491) (17,919) (4,596) (103) (11,343) (100,452) (3,799)

Proceeds from short-term borrowings from line of credit 9,100 9,100 Debt Issuance costs (487) (487)

Principal payments on long-term debt (80,195) (1,876) (920) (13,215) (96,206) (1,121)

Interest payments (30,542) (4,556) (2,078) (33) (4,073) (41,282) (85)

Debt service recovery 2,357 2,357 Payment of interfund balances of capita purposes (515) (515)

Transfers in for capital purposes 297 4,864 5,161 Transfers out for capita purposes (32) (32)

Net cash used for capital and related financing activities (173,793) (12,798) (2,662) (651) (26,761) (216,665) (4,700)

Cash flows from investing activities:

Purchase of investment securities (50,336) (12,846) (19,024) (140) (3,267) (85,613) (15,025)

Proceeds from sale and maturity of investment securities 76,761 6,223 10,121 164 5,035 98,304 15,565 Interest received 4,742 934 493 4 657 6,830 528 Collection of note receivable 64 64 Net cash provided by (used for) investing activities (31,167) (5,625) (8,410) 28 2,425 19,585 1,068 Increase (decrease) in cash and cash equivalents (73,901) 734 (5,181) (82) (2,604) (81,034) (7,016)

Cash and cash equivalents at beginning of the year 113,741 8,565 33,184 272 11,453 167,215 25,039 Cash and cash equivalents at end of the year $ 39,840 $ 9,299 $ 28,003 $ 190 $ 8,849 $ 86,181 $ 18,023 (continued) 37

CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2014 (Inthousands) (continued)

Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities -

Electric Water Sanitation Golf Entertainment Internal Utility Utility Utility Courses Venues Total Service Funds Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:

Operating income (loss) $ 42,546 $ 6,268 $ 6,034 S 297 $ (9,132) $ 46,013 $ (3,201)

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

Depreciation and amortization 41,770 10,534 2,445 554 13,497 68,800 4,207 Increase in provision for decommissioning costs 2,331 2,331 Changes in assets, liabilities and deferred inflows of resources:

Accounts receivable 2,015 2 805 (4) 254 3,072 (3,240)

Inventories (2,285) 26 1 (2,258) (70)

Prepaids and other assets (27,005) (61) (2) (27,068) 478 Note receivable 15 Accounts payable 13,495 5,002 (1,366) (56) 2,145 19,220 (1,409)

Wages payable 250 29 2 69 350 (1,929)

Unearned revenues 2 2 103 Compensated absences, (OPEB) and self-insurance liability 1,537 Deposits (245) 59 23 626 463 Regulatory credits 21,135 174 21,309 Total adjustments 51,461 15,765 1,909 494 16,592 86,221 (308)

Net cash provided by (used for) operating activities $ 94,007 $ 22,033 $ 7,943 $ 791 $ 7,460 $132,234 $ (3,509)

Schedule of noncash investing, capital and noncapitol financing activities:

Capital assets financed through capital leases $ 1,077 Capital contributions $ 1,224 $ 1,046 $ 467 $ 1,585 $ 4,322 Increase in fair value of investments 156 41 62 $ 1 15 275 59 Reconciliation of cash and cash equivalents:

Cash and cash equivalents $ 10,006 $ 5,807 $ 12,928 $ 190 $ 5,830 $ 34,761 $ 18,023 Restricted cash and cash equivalents, current portion 6,988 1,399 1,269 211 9,867 Restricted cash and cash equivalents, noncurrent portion 22,846 2,093 13,806 2,808 41,553 Total cash and cash equivalents $ 39,840 $ 9,299 $ 28,003 $ 190 $ 8,849 $ 86,181 $ 18,023 The accompanying notes are on integral part of these financial statements. 38

CITY OF ANAHEIM Statement of Fiduciary Net Position (Deficit)

Fiduciary Funds June 30, 2014 (Inthousands)

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

Due within one year 5,005 Due in more than one year 232,106 Total liabilities 255,138 $7,225 NET POSITION (Deficit)

Held in trust for pool participants 1,827 Held in trust for other purposes (deficit) (115,652)

Total net position (deficit) $1,827 $ (115,652)

The accompanying notes are an integral part of these financial statements. 39

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CITY OF ANAHEIM Statement of Changes in Fiduciary Net Position (Deficit)

Fiduciary Funds Year Ended June 30, 2014 (In thousands)

Successor Agency Investment Trust Private Purpose Funds Trust Fund ADDITIONS Property taxes $ 16,592 Contributions to pooled investments $6,7-71 Interest and investment income 25 464 Rental income 2,230 Other 152 Total additions 6,796 19,438 DEDUCTIONS Distribution from pool investments 5,640 Salaries and administration 2,356 Program expenses 7,299 Interest expense 12,863 Depreciation 1,695 Total deductions 5,640 24,213 Change in net position 1,156 (4,775)

Net position (deficit) held in trust at beginning of year 671 (110,877)

Net position (deficit) held in trust at end of year $1,827 $ (115,652)

The accompanying notes are an integral part of these financial statements. 41

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CITY OF ANAHEIM noncancelable long-term lease with the CCA, which provides for lease payments in Notes to Financial Statements amounts sufficient to meet the annual debt service requirements on the certificates of (Amounts in thousands) 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 NOTE 1 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES:

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 financial reporting entity the govermment-wide business-type activities and in the fund financial statements with the City's Convention, Sports and Entertainment Venues Fund, as all activity related to As defined by U. S. generally accepted accounting principles (GAAP) that are the Anaheim Convention Center is accounted for in this enterprise fund. The capital established by the Governmental Accounting Standards Board (GASB), the financial lease has been eliminated in the financial statements. For a copy of the CCA's separate reporting entity consists of the primary government, as well as its component units, financial statements, contact the Finance Director of the City.

which are legally separate organizations for which the elected officials of the primary government are financially accountable. Financial accountability is defined as 1) Anaheim Public Improvement Corporation (APIC) a non-profit corporation, was appointment of a voting majority of the component unit's board, and either a) the ability created primarily to finance several construction projects in the City. City Council to impose will by the primary government, or b) the possibility that the component unit members, in separate session, serve as the governing board of APIC. The City has will provide a financial benefit to or impose a financial burden on the primary entered into noncancelable long-term leases with APIC, which provide for lease government; and 2) the component unit is fiscally dependent on and there is a potential payments in amounts sufficient to meet the annual debt service requirements on the for the component unit to provide specific financial benefit to or impose financial burden certificates of participation issued by APIC to finance these construction projects. The on the primary government regardless of whether the component unit has a) a leases are financing arrangements, which transfer ownership of the constructed assets separately elected government board, b) a governing board appointed by a higher to the City at the end of the lease terms. The financial data of APIC has been blended level of government, or c) a jointly appointed board. into various governmental and business-type activities and funds of the City as applicable, and the capital leases have been eliminated.

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 Anaheim Public Financing Authority (Authority), a joint powers authority, was included in the City's reporting entity because of the significance of their operational or established as a vehicle to reduce local borrowing costs and promote greater use of financial relationships with the City. existing and new financial instruments and mechanisms. City Council members, in separate session, serve as the gaveming board of the Authority. Financial activity of the The component units described below are each legally separate from the City, but are Authority has been blended into the City's CAFR into-various governmental and so intertwined with the City that they are, in substance, the same as the City. They are business-type activities and funds of the City as applicable.

reported as part of and accountable to the City and blended into the government-wide and fund financial statements.

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

by the U.S. Department of Housing and Urban Development to administer funds received under the Federal Housing Assistance Payments program. City Council Basic financial statements 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 In accordance with GASB Statement No. 34 - Basic Financial Statements and activity of the Housing Authority has been blended into the City's Comprehensive Managements Discussion and Analysis for State and Local Governments, the basic Annual Financial Report (CAFR) in the govemment-wide governmental activities and in financial statements include both govemment-wide and fund financial statements.

the fund financial statements as the Housing Authority Special Revenue Fund.

The govermment-wide financial statements (Statement of Net Position and Statement of Community Center Authority (CCA) a joint powers authority, was created primarily to Activities) report on the City and its component units as a whole, excluding fiduciary finance the initial construction of the Anaheim Convention Center. A five-member board activities. Governmental activities, which normally are supported by taxes and appointed by the City Council governs the CCA. The City has entered into a 43

CITY OF ANAHEIM intergovernmental revenues, are reported separately from business-type activities, charges to customers or users who purchase, use or directly benefit from goods, services which rely to a significant extent on fees and charges for support. All activities, both or privileges provided by a particular function or program and 2) grants and governmental and business-type, are reported in the government-wide financial contributions that are restricted to meeting the operational or capital requirements of a statements using the economic resources measurement focus and the accrual basis of particular function or program. Taxes, unrestricted investment income and other accounting, which includes long-term assets and receivables as well as long-term debt revenues not identifiable with particular functions or programs are included as general and obligations. The government-wide financial statements focus more on the revenues. The general revenues support the net costs of the functions and programs not sustainability of the City as an entity and the change in aggregate financial position covered by program revenues.

resulting from the activities of the fiscal period.

Also, part of the basic financial statements are fund financial statements for Generally, the effect of interfund activity has been removed from the government-wide governmental funds, proprietary funds and fiduciary funds, even though the latter are financial statements, except for interfund services provided and used. Net interfund excluded from the government-wide financial statements. The focus of the fund financial activity and balances between governmental activities and business-type activities are statements is on major funds, as defined by GASB Statement No. 34. Although this shown as internal balances, net, in the government-wide financial statements. The reporting model sets forth minimum criteria for determination of major funds (a "doubling up" effect of internal service fund activity has been eliminated from the percentage of assets, deferred outflows of resources, liabilities, deferred inflows of government-wide financial statements with the expenses shown in the various functions resources, revenues, or expenditures/expenses of fund category and of the and programs on the Statement of Activities. 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 Further, certain eliminations are also made to transfers of resources between funds in service funds, are combined in a single column on the fund financial statements.

the fund financial statements so that only the net amount of the transfers are shown in the governmental activities and business-type activities columns. The City reports the following major governmental funds:

The government-wide Statement of Net Position reports all financial and capital The General Fund is the City's primary operating fund. It accounts for all financial resources of the City (excluding fiduciary funds). It is displayed in a format of assets and resources of the general government, except those required to be accounted for in deferred outflows of resources less liabilities and deferred inflows of resources equal net another fund.

position, with the assets and liabilities shown in order of their relative liquidity. Net positions are required to be displayed in three components: 1) net investment in capital The Housing Authority Special Revenue Fund accounts for the providing of housing assets 2) restricted, and 3) unrestricted. Investment in capital assets represents capital assistance to low and moderate-income families in the Anaheim area. Financing is assets net of accumulated depreciation which is reduced by outstanding balances of provided primarily from Federal Section 8, U.S. Department of Housing and Urban any bonds, notes or other borrowings that are attributable to the acquisition, Development (HUD) receipts.

construction, or improvement of those assets. Restricted net position is those with constraints placed on their use by either: 1) creditors (such as through debt covenants), Transportation Improvement Projects Capital Project Fund accounts for grantors, contributors, or laws or regulations of other governments, or 2) law through transportation improvement projects in the City, primarily in support of the Anaheim constitutional provisions or enabling legislation. All net positions not otherwise classified Regional Transportation Intermodal Center (ARTIC), which is a transportation as restricted, are shown as unrestricted. Generally, the City would first apply restricted gateway and mixed-use activity center funded by grants from Orange County resources when an expense is incurred for purposes for which both restricted and Transportation Authority (OCTA). Financing is provided by Federal, State and local unrestricted net positions are available. agencies.

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 The City reports the following major enterprise funds:

by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Indirect expenses for administrative overhead are The Electric Utility Fund accounts for the operation of the City's electric utility, a self-allocated among the functions and programs using a full cost allocation approach and supporting activity, which renders services on a user charge basis to residents and are presented separately to enhance comparability of direct expenses between businesses located in Anaheim.

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) The Water Utility Fund accounts for the operation of the City's water utility, a self-

CITY OF ANAHEIM supporting activity, which renders services on a user charge basis to residents and The Investment Trust Fund is used to account for the external portion of the City's businesses located in Anaheim. investment pool, which commingles resources of legally separate entities administered by the City in an investment portfolio for the benefit of all participants.

The Sanitation Utility Fund accounts for the operation of the City's solid waste and The entities include three Joint Powers Authorities (JPA) governed by local boards.

sanitation program, a self-supporting activity, which provides for the collection and The City separately maintains these entities' money in three individual funds; these disposal of solid waste, street sweeping, and sanitary sewer cleaning on a user funds represent the assets, primarily cash and investment, and the related net charge basis to residents and businesses located in Anaheim. position held in trust by the City to disburse these monies on demand.

The Golf Courses Fund accounts for the operation of the Anaheim Municipal ("Dad The Private Purpose Trust Fund is used to account for resources legally held in trust Miller") Golf Course and the Anaheim Hills Golf Course, a self-supporting activity for use by the Successor Agency to the Former Anaheim Redevelopment Agency that renders services on a user charge basis. (Successor Agency). The Former Anaheim Redevelopment Agency, a former component unit of the City, dissolved on February 1, 2012 under the State of The Convention, Sports and Entertainment Venues Fund accounts for the operations California Assembly Bill 1X26.

of the Anaheim Convention Center, Angel Stadium of Anaheim, and The City National Grove of Anaheim. See note 13 for further discussions of the Angel The Agency Fund is used to account for the monies collected and paid on behalf of Stadium of Anaheim and The City National Grove of Anaheim. the Mello-Roos Districts located in the City.

The internal service funds, which provide services to the other funds of the City, are Measurement focus and basis of accounting 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 The governmental funds financial statements are prepared on a current financial assets and liabilities of the internal service funds are consolidated into the governmental resources measurement focus and modified accrual basis of accounting. To conform to activities column of the government-wide Statement of Net Position. The costs of the the modified accrual basis of accounting, certain modifications must be made to the internal service fund services are spread to the appropriate function or program on the accrual method. These modifications are outlined below:

government-wide Statement of Activities and the revenues and expenses within the internal service funds are eliminated from the government-wide financial statements to " Revenue is recorded when it becomes both measurable and available (received avoid any doubling effect of these revenues and expenses. The City operates four within 60 days after year-end). Revenue considered susceptible to accrual internal service funds: includes: property taxes, sales and use taxes, transient occupancy taxes, licenses, fees and permits, intergovernmental revenues (including motor vehicle The General Benefits and Insurance Fund is used to account for employee license fees), charges for services, fines, forfeits and penalties, and interest.

compensated absences, retirement and health benefits, and self-insurance programs. " 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 The Motorized Equipment Fund is used to account for motorized equipment used by or when amounts have been accumulated in the debt service fund for payments City departments. to be made early in the following year.

The Information and Communication Services Fund is used to account for data " Disbursements for the purchase of capitol assets providing future benefits are processing and telecommunication services provided to City departments. considered expenditures. Bond proceeds are reported as other financing source.

The Municipal Facilities Maintenance Fund is used to account for office maintenance With this measurement focus, operating statements present increases (revenues and services and equipment used by City departments. other financing sources) and decreases (expenditures and other financing uses) in net current assets. This is the traditional basis of accounting for governmental funds and Fiduciary Funds account for assets held by the City in a trustee or agency capacity on also is the manner in which these funds are normally budgeted. This presentation is behalf of others and, therefore, are not available to support City programs. The deemed most appropriate to: 1) demonstrate legal and covenant compliance, 2)

Fiduciary Funds are not included in the government-wide financial statements as they demonstrate the sources and uses of liquid resources, and 3) demonstrate how the City's are not an asset of the City. The City reports the following fiduciary funds: actual revenues and expenditures conform to the annual budget. Since the governmental funds financial statements are presented on a different basis than the 45

CITY OF ANAHEIM governmental activities column of the government-wide financial statements, a Cash and investments reconciliation is provided immediately following each fund statement. These reconciliations briefly explain the adjustments necessary to transform the fund financial The City pools available cash from all funds for the purpose of increasing income statements into the governmental activities column of the government-wide financial through investment activities. Investments in U.S. Treasury obligations and agency statements. securities and medium term corporate notes are carried at fair value based on quoted market prices. Participating guaranteed investment contracts and flexible repurchase The proprietary funds financial statements are prepared on the same basis (economic agreements are carried at fair value. Money market mutual funds are carried at fair resources measurement focus and accrual basis of accounting) as the government-wide value based on the fund's share price. The City's investment in the State of California financial statements. Therefore, most lines for the total enterprise funds on the Local Agency Investment Fund (LAIF) is carried at fair value based on the value of each proprietary funds financial statements will directly reconcile to the business-type participating dollar as provided by LAIF LAIF is authorized by California Government activities column on the government-wide financial statements. Because the enterprise Code (Government Code) Section 16429 under the oversight of the Treasurer of the funds are combined into a single business-type activities column on the government- State of California. Commercial paper, participating guaranteed investment contracts wide financial statements, certain interfund activities between these funds are eliminated and negotiable certificates of deposit are carried at amortized cost (which in the consolidation for the government-wide financial statements, but are included in approximates fair value). Interest income, which includes changes in fair value, on the fund columns in the proprietary funds financial statements. The net costs of the investments is allocated to all funds on the basis of daily cash and investment balances.

internal service funds are also partially allocated to the business-type activities column See note 3 for further discussion.

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 For purposes of the basic financial statements, the City considers cash equivalents to be government-wide financial statements is provided on the face of the fund financial highly liquid short-term investments that are readily convertible to known amounts of statements. 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 Enterprise funds account for operations where the intent of the City is that the costs of by fiscal agents.

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, Notes receivable 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 In the government-wide financial statements, notes receivable of $77,790 includes fees and charges ofthe activity, 2) the cost of providing services for an activity, including accrued interest receivable of $14,981, ranging from 3% to 10% interest per annum, capital costs such as depreciation or debt service, must legally be recovered through and is net of allowances of $14,365 for uncollectible accounts at June 30, 2014.

Allowances for uncollectible accounts were estimated based on certain assumptions; fees and charges, or it is the policy of the City to establish activity fees or charges to therefore, actual results could differ from the estimates.

recover the cost of providing services, including capital costs.

On the proprietary funds financial statements, operating revenues are those that flow In the governmental funds financial statements, due to the extended period of time over directly from the operations of the activity, i.e. charges to customers or users who which notes receivable are to be collected and the contingent nature of certain sources purchase or use the goods or services of that activity. Operating expenses are those that of repayment, the City has recorded deferred inflows of resources equal to the are incurred to provide those goods or services. Non-operating revenues and expenses outstanding principal and accrued interest balance of the notes receivable.

are items such as investment income and interest expense that are not a result of the direct operations of the activity. Inventories Inventories are stated at average cost. Inventories in the General Fund are recorded as The Electric and Water Utility funds follow the uniform system of accounts prescribed by expenditures when used and are reported under the consumption method of 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 accounting.

commissions Prepaid and other assets The reporting focus for the investment trust fund and the private-purpose trust fund is Certain payments to vendors such as insurance premiums, prepaid rents, and deposits upon net position and changes in net position and employs accounting principles for real property acquisitions reflect costs applicable to future periods and are recorded similar to proprietary funds. The agency fund has no measurement focus but utilizes the as prepaid and other assets in both government-wide and fund financial statements.

accrual basis of accounting for reporting its assets and liabilities.

These costs will be recognized in the period when services are received or when the City 46 receives title to the real property.

CITY OF ANAHEIM Land held for resale Capital assets are depreciated using the straight-line method over the following estimated useful lives:

The Housing Authority has recorded parcels of land held for resale in their financial records. The properties held for resale are for the primary purpose of developing low Buildings, structures and improvements 5 to 85 years and moderate income housing and are recorded at the lower of cost or estimated net Utility plant 5 to 75 years realizable value. At June 30, 2014, land held for resale with an original cost of Machinery and equipment 2 to 40 years

$23,680 was recorded net of the allowance for decline in value of $12,785 and totaled Infrastructure 25 to 75 years

$10,895, with this amount offset by a restriction of fund balance for low and moderate income housing in the Housing Authority major governmental fund financial statement.

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 Restricted assets Electric Utility and Water Utility Funds. In all other cases, these amounts are recorded Certain proceeds of the City's bonds, as well as certain resources set aside for their as gains or losses on disposal of capital assets.

repayment, are classified as restricted on the Statement of Net Position, or Balance Capital assets transferred between funds are transferred at their net book value (cost Sheet, because they are maintained in separate bank accounts and their use is limited less accumulated depreciation), as of the date of the transfer.

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 Debt issuance costs Generating Station, Units 2 and 3 (SONGS) and the San Juan Generating Station, Unit 4, are classified as restricted on bath the government-wide Statement of Net Position and Debt issuance costs, with the exception of prepaid insurance costs, are recognized as proprietary funds Statement of Net Position. outflow of resources (expense/expenditure) in the period when the debt is issued.

Prepaid insurance costs are capitalized and amortized over the lives of the related debt Capital assets issues on a basis that approximates the effective-interest method.

Under GASB Statement No. 34, all capital assets, whether owned by governmental activities or business-type activities are recorded and depreciated in the government-Bond refunding costs wide financial statements. No long-term capital assets or depreciation are shown in the Bond refunding costs are deferred and amortized over the life of the new bond or over governmental funds financial statements. the life of the old bond, whichever is shorter, on a basis that approximates the effective-interest method. These costs are shown as a deferred outflow of resources on the Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks Statement of Net Position.

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 Accretion 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 Accretion is an adjustment of the difference between the price of a bond or certificate estimated fair value at the date of donation. of participation (COP) issued at an original discount and the par value of the bond or The costs of normal maintenance and repairs that do not add to the value of the capital COP The accreted value is recognized as it accrues by fiscal year.

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 Deferred outflows of resources assets.

Deferred outflows of resources represent consumption of net position that applies to a Major outlays for capital assets and improvements are capitalized as the projects are future period(s) and so will not be recognized as an outflow of resources constructed. Interest incurred during the construction phase of projects is reflected in the (expense/expenditure) until then. In the Statement of Net Position, the City reported capitalized value of the asset constructed for proprietary funds. For the year ended June $2,177 in the governmental activities and $4,600 in the business-type activities of 30, 2014, business-type activities capitalized net interest costs of $3,655 in the deferred charges on refunding bonds in this category. A deferred charge on refunding government-wide and fund financial statements. Total interest expense incurred by the bonds results from the difference in the carrying value of debt and its reacquisition business-type activities (and the enterprise funds on the proprietary funds statements) price. This amount is deferred and amortized over the shorter of the life of the refunded before capitalization was $40,645. or refunding debt.

47

CITY OF ANAHEIM Deferred inflows of resources 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 Deferred inflows of resources represent acquisitions of fund balance or net position that collections is billed to customers through standard rates.

applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City reported the following in this category: As of July 1, 2013, PCA rates were $0.0150 per kWh for all domestic retail customers, excluding residential lifeline customers, and $0.0100 per kWh for all commercial,

1) Unavailable revenues (which include revenues, notes and long term receivables) industrial and municipal customers and large time of use (TOU) customers. At June 30, measured under the modified accrual basis of accounting reported in 2014, the deferred inflows of resources recorded for regulatory credits related to PCA governmental funds. These amounts are deferred and will be recognized as an totaled $45,602 for the Electric Utility. During fiscal year 2014 $16,825 was inflow of resources in the period that the amounts become available. recognized as RSA revenues to mitigate the impact of energy costs and operation costs.

2) Regulatory credits accumulated from collections of the Electric and Water Utility As of July 1, 2013, the EMA rate was $0.0150 per kWh for all domestic customers and customers reported in business-type activities. These amounts provide recovery $0.0100 per kWh for all other customers; including TOU customers. At June 30, 2014, in current period for costs to be incurred in future periods. (Refer to discussion the deferred inflows of resources recorded for regulatory credits related to EMA totaled of Regulatory Credits that follows). $43,496. During fiscal year 2014, $9,675 was recognized as RSA revenues to mitigate the impact of environmental mitigation costs.

Deferred inflows of resources that are included in the fund financial statements and government-wide statements at June 30, 2014 are as follows: 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 Transportation Nonmajor stable retail water rates to the customers of the City's Water Utility. This rate stabilization General Housing Improvement Governmental account (RSA) provides increased flexibility by allowing the Water Utility to maintain Govermental Funds: Fund Authority Projects Funds financial performance indicators and goals specified in bond covenants. The account Taxes $ 8,206 is funded through expense reimbursements such as water supply cost refunds received Grants 47 $ 37 $ 5,039 $12,009 from the Metropolitan Water District and Orange County Water District and other Odher revenues 192 miscellaneous credits and revenue. At June 30, 2014 the deferred inflows of resources Notes and long term receivable 1,767 58,081 41,330 recorded for regulatory credits totaled $6,208 for the Water Utility. During fiscal year

$10,212 $58,118 $ 5,039 $53,339 2014, no PCA revenue was recognized for the Water Utility.

Electric Water Compensated absences Business-type activities: Utility Utility Compensated absences, vacation and sick pay, for all City employees are generally Regulatory credits $89,098 $ 6,208 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 Regulatory Credits 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 The Electric Utility's Rates, Rules, and Regulations provide for the Rate Stabilization 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 Account (RSA), which contains two components: the Power Cost Adjustment (PCA) that employees at their then current rate of pay in January each year or upon termination was adopted by City Council on April 1, 2001, and the Environmental Mitigation from the City. Employees are paid for all accumulated sick pay when they retire from Adjustment (EMA) that was adopted by the City Council on January 13, 2009. The the City. Vested vacation and sick pay benefits are accrued when incurred in the PCA has mitigated variations in the power supply or fuel costs. The EMA will allow the General Benefits and Insurance Fund and at June 30, 2014, totaled $18,194 and is recovery of environmental mitigation costs, such as greenhouse gas emissions costs, the included in long-term liabilities in the Statement of Net Position. Also included in long-marginal cost differential between renewable power and traditional fossil-fuel-based term liabilities in the Statement of Net Position at June 30, 2014, is compensatory time power. The RSA provides the City with operational and billing flexibility to mitigate liability of $400.

material fluctuations in the cost of energy, loss of revenues, or unplanned costs including 48

CITY OF ANAHEIM Changes in the City's compensated absences liability in fiscal year 2014 were as Net position restricted by enabling legislation follows:

The govemment-wide Statement of Net Position reports $205,998 of governmental Compensated absences liability at beginning of year $18,222 activities restricted net position, of which $41,592 is restricted by enabling legislation.

Estimated compensated absences benefits earned 21,327 Compensated absences used (20,955)

Compensated absences liability at end of year $18,59A Fund balances In the fund financial statements, governmental funds report the following classifications:

Provision for decommissioning costs

" Nonspendable fund balance includes amounts that cannot be spent because Federal regulations require the Electric Utility to provide for the future decommissioning they are either (a) not in spendable form or (b) legally or contractually required costs of its former ownership share of San Onofre Nuclear Generating Station to be maintained intact. The "not in spendable form" criterion includes items that (SONGS). The Electric Utility has established a provision for decommissioning costs of are not expected to be converted to cash, for example, inventories, prepaid or SONGS and restoration of the beachfront at San Onofre, California where it is located.

long term loans and notes receivable A separate irrevocable trust account has been established for amounts funded and these amounts are classified as restricted assets in the accompanying statement of net

" Restricted fund balance includes amounts when constraints placed on the use of position. At June 30, 2014, the provision for decommissioning costs totaled $129,264.

the resources are either imposed by external resource providers, constitutional For the year ended June 30, 2014, the Electric Utility has recorded decommissioning provisions or enabling legislation.

costs incurred for SONG in the amount of $1,891, which is included in the fuel and generation component in operating expenses.

• Committed fund balance includes amounts that can be used only for the specific purposes pursuant to constraints imposed by formal action of the Citys highest On June 7, 2013, Southem California Edison (SCE) announced the permanent retirement level of the decision-making authority. The City Council is the highest level of of SONGS plant. The Electric Utility will continue to fund the reserve until a new decision-making authority that can, by adoption of an ordinance prior to the end decommissioning study is approved by the Nuclear Regulatory Commission (NRC). The of the fiscal year, commit fund balance. Once adopted, the limitation imposed Electric Utility currently has $129,264 in an irrevocable trust for the decommissioning by the ordinance remains in place until a similar action by the City Council to costs.

remove or revise the limitation.

The Electric Utility has a 10.04% ownership interest of the San Juan Generating Station,

" Assigned fund balance includes amounts that the City intends to use for specific Unit 4 (SJ). The Electric Utility is providing for the future demolition and reclamation purposes but do not meet the criteria to be classified as restricted or committed.

costs of its ownership share of SJ. As of June 30, 2014, the Electric Utility has recorded The City Council has by Resolution authorized the City Manager or his designee a provision for decommissioning costs for SJ of $4,400 of which $580 was in to establish, modify or rescind an assigned fund balance.

irrevocable trust and $3,820 in the City's restricted cash account. The amount was reported as restricted assets in the accompanying statement of net position. For the year

• Unassigned fund balance accounts for the residual balance of the City's General ended June 30, 2014, the Electric Utility has recorded decommissioning costs incurred Fund and includes all spendable amounts not contained in other classifications.

for SJ of $440 in operating expenses. Based on the cost projections, the Electric Utility In other governmental funds, the unassigned classification reports a deficit has estimated $440 in costs per year until 2027 to fund this obligation.

balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned.

Pension plan Full-time City employees are members of the State of California Public Employees' Generally, the City would first apply restricted resources when expenditures incurred for which both restricted and unrestricted resources are available. Further, when the Retirement System (PERS). The Citys policy is to fund all pension costs accrued; such components of unrestricted fund balance can be used for the some purpose, committed costs to be funded are determined annually as of July 1 by the System's actuary. See note 11 for further discussion. fund balance is applied first, followed by assigned fund balance. Unassigned fund balance is applied last.

49

CITY OF ANAHEIM In all governmental funds, encumbered amounts have been restricted or assigned for Property taxes specific purposes for which resources have already been allocated. At June 30, 2014, encumbrances totaled $1,073, $12 and $7,891 in the General Fund, Housing Property taxes attach as an enforceable lien on property as of January 1. Taxes are Authority Special Revenue Fund, and other nonmajor governmental funds, respectively. levied on July 1 and are payable in two installments due on November 1 and February 1 and become delinquent after December 10 and April 10. The County of Orange, The accumulated deficit fund balance at June 30, 2014 for the Transportation California (County) bills and collects the property taxes and remits them to the City in Improvement Projects major Capital Project Fund of $8,364 and for Streets Construction installments during the year. City property tax revenues are recognized when levied in in nonmajor Capital Project Fund of $7,100 will be eliminated in future years by the the governmental funds to the extent that they result in current receivables collectable receipt of reimbursements for grant expenditures. within 60 days after year-end. See note 9 for discussion of pledged property tax revenues.

Budgetary principles The County is permitted by State law (Proposition 13) to levy taxes at 1%of full market The City is required by its charter to adopt an annual budget on or before June 30 for value (at time of purchase) and can increase the property tax rate no more than 2% per the ensuing fiscal year. The General, special revenue, debt service, and capital projects year from the full market value at the time of purchase. The City receives a share of this governmental fund types and proprietary fund types have legally adopted budgets basic levy proportionate to what it received in the 1976 and 1978 periods.

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 Entitlements, shared revenues and grants department level. From the effective date of the budget, the amounts stated herein as proposed expenditures/expenses become appropriations to the various City Entitlements and shared revenues are recorded at the time of receipt or earlier if the departments. Throughout the fiscal year the budget was amended to add supplemental susceptible to accrual criteria are met. Expenditure-driven grants are recognized in the appropriations. All amendments to the budget which change the total appropriation fund Financial statements as revenue when the qualifying expenditures have been amount for any department require City Council approval and all increases in incurred, all eligibility requirements have been met, and reimbursement is received appropriations in operating expenditures must be accompanied by an increase in within the availability period.

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 Revenue recognition for Electric Utility, Water Utility, and Sanitation total department's appropriation amount is not changed. Utility Funds The City utilizes an encumbrance system as a management control technique to assist Revenue is recorded in the period in which services are provided. Residential and in controlling expenditures. All appropriations lapse at the end of the fiscal year, except smaller commercial customers are billed bimonthly and all other customers monthly. At for capital projects which are carried forward until such time as the project is completed June 30, 2014 unbilled but earned service charges recorded in accounts receivable for or terminated and for encumbered balances that are re-appropriated in the next year. the Electric Utility, Water Utility, and Sanitation Utility Funds amounted to $22,479,

$5,096, and $3,939, respectively. See note 9 for discussion of pledged revenues.

GASB Statement No. 34 allows that budgetary comparison statements for the General Fund and major special revenue funds be presented in the basic financial statements Use of estimates rather than as Required Supplementary Information. These statements must display The preparation of financial statements in conformity with GAAP requires management original budget, amended budget and actual results.

to make estimates and assumptions that affect the reported amounts of certain assets Budgeted revenue amounts represent the original budget modified by City Council and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses authorized adjustments during the year, which were contingent upon new or additional during the reporting period. As such, actual results could differ from those estimates.

revenue sources. Budgeted expenditure amounts represent original appropriations adjusted for supplemental appropriations during the year. Budgets are generally NOTE 2 - NEW ACCOUNTING PRONOUCEMENTS:

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, On July 1, 2013, the city adopted the following new accounting pronouncements issued which are budgeted on a cash basis. by the GASB:

50

CITY OF ANAHEIM

" GASB Statement No. 66, Technical Corrections - 2012: an Amendment of NOTE 3 - DEPOSITS AND INVESTMENTS:

GASB Statement No. 10 and No. 62. The requirements of this Statement are effective for financial statements for periods beginning after December 15, The City maintains a cash and investment pool, which includes the cash balances of all 2012. 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

• GASB Statement No. 70, Accounting and FinancialReporting for Nonexchange respective average daily cash balances.

Financial Guarantees. This Statement establishes accounting and financial reporting standards for situations where a state or local government, as a The City's pooled investment fund has been reviewed by Standard and Poor's guarantor, agrees to indemnify a third-party obligation holder under specified Corporation (S&P) and received a credit rating of AAf/S1 in August 2013.

conditions (i.e., nonexchange financial guarantees). The issuer of the guaranteed obligation can be a legally separate entity or individual, including The City's investment policy further limits the permitted investments in Government Code a blended or discretely presented component unit. Guidance is provided for Sections 53600 et al, 16429.1 and 53684 to the following: obligations of the United situations where a state or local government extends or receives a nonexchange States government, federal agencies, and government sponsored enterprises; medium-financial guarantee. The requirements of this Statement are effective for term corporate notes; certificates of deposit; bankers' acceptances; commercial paper; financial statements for reporting periods beginning after June 15, 2013. LAJF; repurchase agreements; reverse repurchase agreements; and money market mutual funds.

Implementation of these pronouncements had no material effect on amounts reported in the City's financial statements for the fiscal year ended June 30, 2014. Deposits and investments are comprised of the following at June 30, 2014:

Restricted The City iscurrently reviewing its accounting practices to determine the potential impacts Cash and Cash and on the financial statements for the following GASB Statements: Cash Cash Restricted Equivalents Investments Equivalents Investments Total

• GASB Statement No. 68, Accounting and FinancialReporting for Pension; an Governmental activities:

amendment of GASB Statement No. 27. This Statement replaces the General Fund $ 8,708 $ 24,846 $ 33,554 requirements of Statement No. 27 and No. 50 related to pension plans that are Housing Authority 10,557 30,121 $ 2,763 43,441 administered through trusts or equivalent arrangements. The requirements of Nonmajor governmental funds 18,709 53,385 38,226 $ 49,637 159,957 Internal service funds 51,426 18,023 69440 Statements No. 27 and No. 50 remain applicable for pensions that are not Total governmental activities 40 989 49,637 306,40 55,997 administered as trusts or equivalent arrangements. The requirements of this Business-type acvities:

Statement are effective for financial statements for fiscal years beginning after Electric Utility 10,006 28,549 29,834 208,936 277,325 June 15, 2014. Water Utility 5,807 16,566 3,492 9,100 34,965 Sanitation Utility 12,928 33,438 15,075 61,441 Golf Courses 190 542 732

• GASB Statement No. 69, Government Combinations and Disposals of Convention, Sports and Government Operations. This Statement establishes accounting and financial Entertainment Venues 5,837 16,634 3,019 10,120 35,603 reporting standards for mergers, acquisitions, and transfers of operations (i.e., Total business-type activities 95,729 51,420 228,156 government combinations). The Statement also provides guidance on how to Government-wide totals 90,758 255,507 92,409 277,793 716,467 determine the gain or loss on a disposal of government operations. This Fiduciary funds 37794 10105 47,89 Total cash and investments $287_898 $764_366 Statement applies to all state and local governmental entities. The requirements $90_758 $255_507 $130_203 of this Statement should be applied prospectively and are effective for government combinations and disposals of government operations occurring in Deposits and investments are comprised of the following at June 30, 2014:

financial reporting periods beginning after December 15, 2013.

Deposits $ 6,191

• GASB Statement No. 71, Pension Transitionfor ContributionsMade Subsequent Investments 758,175 to the Measurement Date, an amendment of GASB Statement No. 68. This Total deposits and investments Statement should be applied simultaneously with GASB Statement No. 68.

At June 30, 2014, deposits of $6,191 with a corresponding bank balance of $16,090 were maintained in various federally regulated financial institutions. The difference of 51

CITY OF ANAHEIM

$9,899 represents deposits in transit, outstanding checks, and other reconciling items. *Excluding amounts held by bond trustees that are not subject to Government Code Deposits with bank balances of $758 are insured by the Federal Depository Insurance restrictions Corporation. For deposits with bank balances totaling $15,332 California state statutes require federally regulated financial institutions to secure a city's deposits by pledging The City's pooled investments comply with the requirements of the investment policy.

collateral consisting of either government securities with a value of 110% of a city's total GAAP requires disclosure of certain investments in any one issuer that exceeds five deposits or by pledging first trust deed mortgage notes having a value of 150% of a percent concentration of the total investments. At June 30, 2014, the following city's total deposits. The collateral is required by regulation to be held by the investments represent five percent or more of the City's total pooled investments:

counterparty's agent in the name of the City. Fair Issuer Investment Type Value  %

Investments Federal National Mortgage Association U.S. agency securities $101,816 24%

LAIF LAIF 61,290 14%

Federal Home Loan Bank U.S. agency securities 44,701 10%

The City Treasurer prepares an investment policy statement annually, which is presented Federal Home Loan Mortgage Corporation U.S. agency securities 38,443 9%

to the Budget, Investment and Technology Commission for review and the City Council Federal Farm Credit Bank U.S. agency securities 34,142 8%

for approval. The approved investment policy Statement is submitted to the California Debt and Investment Advisory Committee in accordance with Government Code. Investments authorized by debt agreements The policy provides the basis for the management of a prudent, conservative investment Investment of debt proceeds held by bond trustees isgoverned by provisions of the debt program. Public funds are invested for the maximum security of principal and to meet agreements, rather than the general provisions of the Government Code or the Citys daily cash flow needs while providing a return. All investments are made in accordance investment policy. The table below identifies the investment types that are authorized for with the Government Code and, in general, the City Treasurer's policy is more restrictive investments held by bond trustees. The table also identifies certain provisions of these than Government Code. debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Investments authorized by the Government Code and the City's Authorized Investment Type Maximum Maturity Pce Investment in One Issuer investment policy U.S. Treasury obligations None None None None U.S. agency securities None None None The following table identifies the investment types that are authorized for the City by its Guaranteed investment contracts None None None investment policy which is more restrictive than Government Code. The table also Collateralized investment contracts None None None identifies certain provisions of the City's investment policy that address interest rate risk, Flexible repurchase agreements None None None credit risk, and concentration of credit risk. This table does not address investments of Money market mutual funds None None None debt proceeds held by bond trustees that are governed by the provisions of debt LAIF None None None City of Anaheim Treasurer's investment portfolio None None agreements of the City, rather than the general provisions of the Government Code or the City's investment policy. Minimum At June 30, 2014, the following investments represent five percent or more of the City's Maximum Ratin9 total investments controlled by band trustees:

Maximum Investment (S&P/

Maximum Percentage Moody's in One

/Fitch) Fair Authorized Investment Tvye Maturity of Portfolio* Issuer Issuer Investment Type Value U.S. Treasury obligations 5 years 100% 100% None U.S. agency securities 5 years 100% 40% None Federal National Mortgage Association U.S. agency securities $61,682 19%

Bankers' acceptances 180 days 40% 5% None Morgan Stanley Flexible repurchase agreement 42,000 13%

Commercial paper 270 days 25% 5% A-I/P-I/F-1 Federal Home Loan Bank U.S. agency securities 31,712 10%

Negotiable certificates of deposit 360 days 25% 5% None LAIF LAIF 31,230 9%

Repurchase agreements 1 Year 30% None None Dreyfus Treas 521 Money market Mutual Fund 24,471 7%

Reverse repurchase agreements 90 days 20% None None Federal Home Loan Mortgage Corporation U.S. agency securities 17,712 5%

Medium-term corporate notes 5 years 30% 5% A Federal Farm Credit Bank U.S. agency securities 17,059 5%

Money market mutual funds N/A 20% 10% None U.S. Bank Money Market U.S. Bank Money Market 17,037 5%

$50 million $50 million Investment guarantee contract Bank of America 16,645 5%

LAIF N/A per account per account None Time certificates of deposit (TCD) 1 year 20% 5% None 52

CITY OF ANAHEIM All guaranteed investment contracts have downgrade language that requires collateral Credit 12 13 25 37 More should credit ratings drop below certain levels. Rating Fair Months ta ta ta Than (S&P/ Value or 24 36 60 60 Investments M~L4 6/30/2014 Less Months Months Months Months Custodial credit risk Investments controlled by City Treasurer:

U.S. agency securities AA+/Aaa $219,102 $ 33,245 $ 17,756 S 44,934 $123,167 Custodial credit risk for investments is the risk that the City will not be able to recover Medium-term corporate notes AAA/Aaa 25,681 18,473 5,005 2,203 the value of investment securities that are in the possession of an outside party. All Medium-term corporate notes AA+/Aoa 5,009 5,009 securities owned by the City with the exception of LAIF and money market mutual funds Medium-term corporate notes AA+/A1 15,388 5,049 5,064 5,275 Medium-term corporate notes AA/Aal 11,290 2,012 6,254 3,024 are deposited in trust for safekeeping with a custodial bank different from the City's Medium-term corporate notes AA/Aa2 3,002 3,002 primary bank. Securities are not held in broker accounts. Funds held by LAIF and Medium-term corporate notes AA-/Aa3 3,017 3,017 money market mutual funds are held in the City's name. Medium-term corporate notes A+/A1 3,010 3,010 Medium-term corporate notes A+/A2 6,003 1,012 4,991 Custodial credit risk for investments held by bond trustees is the risk that the City will not Medium-term corporate notes A/A3 11,127 6,106 5,021 Medium-term corporate notes A-/A3 7,018 7,018 be able to recover the value of investment securities that are in the possession of an Medium-term corporate notes A-/Baal 5,211 5,211 outside party. All securities held by bond trustees are in the name of the bond issue in Commercial paper A-i/P-1 43,379 43,379 trust for safekeeping with the bond trustee, which is different from the City's primary Money market mutual funds AAA/Aaa 6,522 6,522 bank. LAIF Unroted 61,290 61,20 ___

Totalinvestments controned Interest rate risk by City Treasurer 426,049 156,603 66,574 66, 136,395 Investments controlled by bond trustees:

U.S.agency securities AA+/Aaa 128,165 8,308 27,143 9,446 83,268 Interest rate risk isthe risk that changes in interest rates will adversely affect the fair value Guaranteed investment contracts Unrated 34,699 10,135 4,022 $20,542 of an investment. The City Treasurer mitigates this risk by investing in longer-term Collateralized investment contracts Unrated 4,880 1,211 3,669 securities only with funds that are not needed for current cash flow purposes and Flexible repurchase agreements Unroted 61,066 10,703 50,363 holding these securities to maturity. The City Treasurer uses the segmented time Money market mutual funds AAA/Aaa 72,086 72,086 LAN Unrated 31,230 31,230 distribution method to identify and manage interest rate risk. In accordance with the City Totalinvestments controled investment policy, the City Treasurer monitors the segmented time distribution of its by bond trustees 332,126 122,327 3,489 9,446 87,290 7A,574 investment portfolio and analysis of cash flow demand. Totalinvestments $758_175 $278_930 $105_063 S 75_923 $223685$ 74574 Investments held by bond trustees are typically long-term securities which are not adversely affected by interest rate changes. Guaranteed investment contracts for NOTE 4 - ACCOUNTS RECEIVABLE, DUE FROM OTHER GOVERNMENTS, construction funds are usually limited to three years or less. Information about the DUE FROM THE SUCCESSOR AGENCY, INTERFUND RECEIVABLE AND sensitivity of the fair values of the City's investments (including investments held by bond PAYABLE BALANCES, AND CERTAIN INTERFUND TRANSACTIONS:

trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity at June 30, 2014:

Accounts receivable Accounts receivable for the City's governmental and business-type activities, including the applicable allowance for uncollectible accounts at June 30, 2014, are as follows:

53

CITY OF ANAHEIM Less: " On April 1, 2003 the City and the former Anaheim Redevelopment Agency Accounts Allowance for entered into a Cooperation Agreement whereby the City will assist the Receivable Uncollectibles Total Redevelopment Agency with the development of Westgate utilizing $10,000 of Governmental activities:

General Fund $16,373 $(3,826) $12,547 funds from the HUD Section 108 loan program. The amount is due to the City Housing Authority 108 (93) 15 by annual installment through June 2024. At June 30, 2014, the amount due Transportation Improvement Projects 2 2 to the City is $7,450.

Nonmajor governmental funds 1,264 1,264 Internal service funds 9,835 9,835 27,582 (3,919 23,663 " On June 1, 2010, the City and the former Anaheim Redevelopment Agency Total governmental activities entered into a Cooperation Agreement whereby the City will assist the Business-type activities:

Electric Utility 41,822 (617) 41,205 Redevelopment Agency with the rehabilitation of the historic Packing House site Water Utility 7,508 (88) 7,420 utilizing $7,000 of funds from the HUD Section 108 $15,000 loan proceeds.

Sanitation Utility 6,695 (189) 6,506 The amount is due to the City by annual installment through June 2031. At June Golf Courses 121 121 30, 2014, the amount due to the City is $6,021.

Convention, Sports and Entertainment Venues (32)

Total business-type activities 57,A71 (926)

Total accounts receivable $85_053 $(A,845) $80,208 " In fiscal years 2010 and 2011, the former Anaheim Redevelopment Agency paid a total of $19,163 to the State of California Supplement Educational Revenue Augmentation Fund (SERAF). Of this amount, $8,500 was paid with Due from other governments funds borrowed from Housing Set-Aside property tax increment. At June 30, 2014, the amount due to the City is $8,176.

Due from other governments for the City's governmental activities at June 30, 2014, are as follows:

" On February 5, 2013, the City and the Successor Agency entered into a Taxes Grants Other Total Cooperation Agreement whereby the City will assist the Successor Agency with Governmental activities: loaning the proceeds of one-time allocation of the $1,563 from the low-and General Fund $16,737 $ 388 $280 $17,405 moderate income housing fund for various Successor Agency projects. At June Housing Authority 159 159 30, 2014, the amount due to the City is $884.

Transportation Improvement Projects 22,489 22,489 Nonmajor governmental funds 22,254 22,254 Total due from " On May 14, 2013, the City and the Successor Agency entered into a other governments $16_737 $280 $62,307 Cooperation Agreement whereby the City will assist the Successor Agency by providing a loan up to $1,500 for making homebuyer loans. At June 30, 2014, the amount due to the City is $883.

Revenues are reported net of estimated uncollectible amounts. Total estimated uncollectible amounts related to revenues of the current period are as follows:

Interfund receivable and payable balances General Fund $ 799 Electric Utility 786 Net internal balances between governmental activities and business-type activities of Water Utility 94 $17,494 are included in the government-wide financial statements at June 30, 2014.

Sanitation 281 Total $1,960 Interfund receivables and poyables that are included in the fund financial statements at June 30, 2014, are as follows:

Due from the Successor Agency The amount due from the Successor Agency at June 30, 2014 is $23,414. Due to the extended period of time over which the receivables are to be collected, the City has recorded deferred inflows of resources equal to the amount due.

54

CITY OF ANAHEIM Interfund Receivable Transfer of capital assets with net book value totaled $1,572 from the Nonmajor Internal governmental activities to Business-type activities: street light installations to General Housing Governmental Service Electric Utility ($985), sewer improvements to Sanitation Utility ($467) and land Fund Authority Funds Funds Total development to Convention, Sports and Entertainment Venues ($120). These Interfund Payable amounts were accounted for as capital contributions in the respective enterprise Governmental funds fund financial statements.

General Fund $883 $ 41 $ 924 Transportation Improvement Projects $ 6,254 6,254 The following interfund transfers are reflected in the fund financial statements at June Nonmajor governmental 30, 2014:

funds $1,170 8,671 9,841 Transfer In:

Enterprise Fund: Enterprise Funds Golf Courses 2,161 Total $ý3331 $833 $14,925 $ 41 $19180 Convention, Nonmajor Sports and General Housing Governmental Electric Water Sanitation Entertainment Certain interfund balances at June 30, 2014 are generally short-term loans to relieve Transfer Out. Fund Authority Funds Utility utility utility Venues Total temporary cash deficits in various funds. The following interfund balance is expected to $14,272 $66,812 General Fund $51,940 $600 be repaidin more than one year:

Nonmajor governmental funds $ 111 $2,627 1,539 $4,864 9,141 General Fund Elecric Utility 22,682 22,682 Water Utility 3,521 $297 3,818 Of the total interfund receivable in the General Fund, $2,161 is due from the Golf Sanitation Utility 2,143 2,143 Courses Fund. On September 24, 2002, the City Council approved a loan up to Golf Courses 250 250

$6,400 froin the General Fund to the Golf Courses Fund for construction of the Anaheim Hills Golf Clubhouse. The loan is payable in annual amounts of not less Total $28,707 $2,627 $53,479 $297 $600 $4,864 $14,272 $104,846 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.

NOTE 5 - BOND PAYMENT RECEIVABLE:

Certain interfund transactions On August 3, 1995, the Los Angeles Rams Football Company, currently the St. Louis The net transfers of $7,288 from the business-type activities to the governmental Rams (Rams), exercised its right to terminate its lease under the Fourth Amendment to activities on the government-wide Statement of Activities are primarily comprised of the Exhibition Agreement between the Rams and the City (Rams Agreement). Under the operational subsidies from business-type activities to the General Fundand are offset Rams Agreement, the Rams became obligated to repay the City for the debt service on by debt service subsidies to the Convention, Sports and Entertainment Venues Fund. the 1979 Anaheim (California) Stadium Inc. Lease Revenue Bonds in the principal The City made the following new recurring and one-time transfers during fiscal year amount of $28,110, which obligation is supported by an irrevocable standby letter of ended June 30, 2014: credit with Dresdner Bank AG, will be repaid by August 15, 2015. The 1979 Anaheim (Califomia) Stadium Inc. Lease Revenue Bonds were subsequently refunded, and are no

" Transfer of $4,864 of restricted resources related to sewer construction and longer outstanding, by a portion of the Convention, Sports and Entertainment Venues improvement activities from the Storm Drain Construction nonmajor Fund 1993 Refunding Projects Certificates of Participation. In December 2008, the governmental fund to the Sanitation Utility enterprise fund where the City's sewer 1993 Refunding Projects Certificates of Participation were refunded and replaced by construction activities are accounted for. This amount is reported in the restricted the 2008 Lease Revenue Refunding Bonds. At June 30, 2014, the remaining principal payment obligation by the Rams on the debt service is $4,505. During fiscal year net position for capital projects in the Sanitation Utility Fund.

2014, the Rams reimbursed the City $2,357 (representing $2,040 for principal and

• Transfer of $600 from the General Fund to the Water Utility enterprise fund $317 for interest) for the current portion of their debt service obligation. The City pursuant to a Water Transfer settlement. See note 14 for additional information accounted for the termination of the lease by recording a bond payment receivable regarding the Water Transfer settlement. 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

" Transfer of $3,794 of unrestricted resources from the General Fund to the Other Rams Agreement.

Capital Projects nonmajor governmental fund for the neighborhood improvement land acquisition.

55

CITY OF ANAHEIM NOTE 6 - CAPITAL ASSETS: Depreciation expense was charged to functions/programs of the City during fiscal year 2014 as follows:

Capital asset activities for the year ended June 30, 2014, were as follows:

Governmental activities:

General government $ 264 Beginning Transfer Ending Police 1,628 Balance Additions In(Out) Deletions Balance Fire 524 Governmental activities:

Nondepreciable assets: Community Development 318 Land $ 648,420 $ 8,323 $ 4,133 $ (2,623) $ 658,253 Planning 110 Construction in progress 138,749 123,527 (56,7181 (878 204,680 Public Works 17,779 Total 787169 131,850 (52,5851 (3,501) 862,933 Community Services 2,886 Depreciable assets: Convention, Sports and Entertainment 4,871 Buildings, structures 274,589 6,743 11,665 (230) 292,767 Capital assets held by the City's internal service funds and improvements Machinery and equipment 106,950 8,498 381 (4,980) 110,849 are charged to the various functions based on their Infrastructure 767155 1,353 38,967 (9,055) 798,420 usage of the assets 4,207 Total 1,148694 16,594 51,013 (14,265 1,202,036 Total depreciation expense-governmental activities $32,587 Totalassets 1,93,863 148,444 (1,572) (17,766) 2,064,969 Less accumulated depreciation for: Business-type activities:

Buildings, structures Electric Utility $41,770 and improvements (114,4321 (9,096) 225 (123,303) Water Utility 10,534 Machinery and equipment (77,810) (6,594) 4,870 (79,534) Sanitation Utility 2,445 Infrastructure (351,094) (16,8 84 (367, Golf Courses 554 Total accumulated Convention, Sports and Entertainment Venues 13,497 depreciation (543,3361 (32,5871 ___ 5,179 (570,744)

$68,800 Total governmental activities Total depreciation expense-business-type activities capital assets, net $1 392 527 $115_857 $(11572) $112 587) $1 494 225 Business-type activities:

Nandepreciable assets:

Capital leases Land $ 58,410 $ 58,410 Construction in progress 84936 $ 99,313 $(98,5551 $ (45 85,649 Included in the capital assets amounts listed above are the following capitalized leased Total 143,346 99,313 (98,555) (4) 144,059 assets:

Depreciable assets: Governmental Buildings, structures Activities and improvements 627,445 1,585 8,203 (469) 636,764 Machinery and .equipment $ 2,999 Utility plant 1,564,944 3,710 91,924 (7,851) 1,652,727 Less accumulated amortization (1,395)

Machinery and equipment Total 2 31,3A7 1,924 7,219 100,127 (549)

(8,869 32,722 2,322,213 Capitalized leased assets, net $_I,64 Totalassets 2,367,082 106,532 1,572 (8,914) 2,466,272 Less accumulated depreciation for: Fiduciary Fund Buildings, structures and improvements (226,0151 (14,387) 281 (240,121) Successor Agency Utility plant (543,360) (52,304) 7,851 (587,813)

Machinery and equipment (22,3491 (2,109) 537 (23,921)

Capital asset activities for the year ended June 30, 2014 are as follows:

Total accumulated depreciation (791,72,1 (68,8007 $1,52 8,669 (851,8551 Total business-type activities capital assets, net $1 _57,358$ 7_3 $ 1,572 L_?L25 $1,614,417 56

CITY OF ANAHEIM Begining Ending At June 30, 2014, the City was fully funded for self-funded retention for workers' Balance Additions Deletions Balance compensation and general liability claim exposures (with retention levels of $750 per Nondepreciable assets: occurrence for workers' compensation claims and $1,000 per occurrence for general Land. $15,568 $15,568 liability claims). Above these retained levels, the City's potential liability is covered Construction inprogress 16,971 $ 1,701 $(18,672) through various commercial insurance and intergovemmental risk pooling programs Total 32,539 1,701 (18,672) 15,568 (collectively, "Insurance"). Settled claims have not exceeded total Insurance in any of the Depreciable assets: past three years, nor does management believe that there are any pending claims that Buildings, Structures and improvements 47,074 17,568 64,642 will exceed total Insurance coverage.

Machinery and equipment 265 265 Total 47,339 17,568 64,907 The unpaid claims liability included in the General Benefits and Insurance Fund is based Total assets 79,878 19,269 (18,672) 80,475 on the results of actuarial studies and includes amounts for claims incurred-but-not-reported, known-claim development, and allocated loss adjustment expenses. Claims Less accumulated depreciation for: liabilities are calculated using a discount rate of 3% and consider the effects of inflation, Buildings, Structures and improvements (2,117) (1,635) (3,752) multi-year loss development trends, and other economic and social factors. It is the City's Machinery and equipment (128) (60) (188) practice to obtain full actuarial studies annually for its retained levels for general liability Total accumulated depreciation (2,245) (1,695) (3,940) and workers' compensation coverages. "Premiums" are charged by the General Total capital assets, net $77,633 $17,574 $(18,672) $76,535 Benefits and Insurance Fund using various allocation methods that include actual costs, trends in claims experience, exposure bases, and number of participants.

Operating leases 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 Housing Authority lovernment-wide Statement of Net Position in fiscal years 2014 and 2013 were as llows:

At June 30, 2014, the Housing Authority earned revenues as the lessor of land, carried 2014 2013 at cost of $67,202 in the government-wide financial statements, under ten operating Claims liability at beginning of year $39,422 $39,343 ground leases. These leases to developers are noncancelable. Terms of the leases range Current year claims and changes in estimates 8,691 7,064 from 55 years to 65 years with lease expiration dates from 2057 to 2076. The total Claims payments (7,286) (6,985) base rent to be collected over the terms of the leases are $73,270 with simple interest Claims liability at end of year accruing on unpaid portions at a rate ranging from 1% to 6%. Minimum lease payments are calculated annually, based on residual receipts, as defined in the lease Above the retained limit of $750 per occurrence for workers' compensation losses, the agreements. At June 30, 2014, the Housing Authority has recorded notes receivable City purchases excess coverage, utilizing both commercial insurance and an due from developers related to these transactions of $12,487 and is net of allowances intergovernmental risk pooling program (CSAC-EIA), to statutory limits.

of $4,051 for uncollected accounts in the government-wide financial statements. In the governmental fund financial statements, this amount is included in the $49,905 notes Above the retained limit of $1,000 per occurrence for liability losses, the City receivable balance of the Housing Authority. maintains excess coverage for all City operations to $150,000 per occurrence, excluding helicopter operations for which the City purchases $50,000, per occurrence, NOTE 7 - SELF INSURANCE: of commercial aviation liability insurance (on a first-dollar basis). The first layer of excess liability loss coverage is procured through the Authority for California Cities The General Benefits and Insurance Fund, an internal service fund, is used to account Excess Liability (ACCEL), a joint powers insurance authority, formed in 1986, pooling for self-funded workers' compensation related benefits, self-funded general liability catastrophic general, automobile, personal injury, and public officials errors and claims, commercial insurance purchases, and altemative risk financing vehicles; as well omissions liability losses among twelve Califomia cities, through both risk-sharing and as benefit-related costs such as employee compensated absences, retirement, and commercial insurance joint-purchase arrangements. The City, therefore, continues to health benefits. Revenues of the General Benefits and Insurance Fund are derived from maintain some limited excess liability risk sharing exposure, above $1,000 per cost-allocation charges to City departments using estimates of anticipated risk-transfer occurrence, directly with ACCEL. This pooled coverage has exposure (i) from the run-costs, new losses, payments on existing claims, and reserve development on known out periods from prior years in which commercial excess insurance was not obtained, claims for the Insurance portion of the Fund; as well as anticipated benefits earned and and (ii) from an ACCEL retained layer for fiscal year 2014 of $4,000 in excess of insurance costs for benefits coverage for the General Benefits portion of the Fund. In $1,000. Each ACCEL member's share of pooled losses is based on a retrospectively-addition, the Fund receives interest income from reserves. rated risk-sharing formula which includes, but is not limited to, exposure and loss experience factors. 57

CITY OF ANAHEIM In order to provide funds to pay claims, ACCEL collects an annual deposit from each Beginning Additions/ Reductions/ Ending Within Balance Proceeds Payments Balance One Year member. The deposits are credited with investment income at the rate earned on Governmental activities:

ACCEL's investments. At June 30, 2014, ACCEL's cash and investments totaled Bonds payable:

$52,751, of which $6,983 consists of deposits and interest on deposits provided by the General obligation $ 2,605 $ 16101 $ 1,995 $ 635 City. The City has no specific equity interest in ACCEL. Deposits provided to ACCEL by City lease revenue 453,226 (17,0001 436,226 18,989 the City are expensed when paid by the General Benefits and Insurance Fund. Accretion 162,517 $16,150 178,667 Unamortized bond ACCEL is responsible for deciding the risks it will underwrite, the monitoring, and premium/discount, net (2,262) 131 (2,131)

Total 616,086 16,150 (17,479) 614,757 19624 handling of large claims, and arranging excess risk-financing programs. ACCEL does not have any cdebt outstanding. For a copy of ACCEL's separate financial statements, COPs:

City COPs 10,020 contact the Finance Director of the City. 111,401 8,880 1225 Total 10,020 Note 8 - SHORT-TERM BORROWING Capitalized lease obligations:

Internal Service Funds 1,077 (1,121) 1,325 628 1,369 Total 1,369 1,077 (1,121) 1,325 628 On March 1, 2013, the Public Utility Department entered into a Revolving Credit Agreement with Wells Fargo Bank, National Association for a note amount not to Notes and loans payable:

city 53,136 1,350 (3,729) 50,757 4,285 exceed $100,000, of which $86,000 is made available for the Electric Utility and Housing Authority 1,741 - (1,741) _

$14,000 for the Water Utility. The note has a three year term at variable interest rate Total 54 877 1350 (5,470) 50,757 4,285 based on the LIBOR Daily Index Rate and a spread. The annual commitment fee is Claims liabilities (note 7) 39,422 8,691 (7,286) 40,827 8051

0. 175% of the total note amount of $100,000. Compensated absences (note 1) 18,222 21,32 120,955) 18,594 1344 Governmental activities total 739,996 48,595 (53,451) 735,140 47,260 During fiscal year 2014, the Electric Utility made one draw from the taxable note Business-type activities:

totaling $7,400 and repaid $10,000 for financing the Cap-and Trade program. Bonds payable:

Electric Utility 678,680 (71,795) 606,885 12,155 For the Water Utility, the purpose of this agreement is to provide temporary financing Water Utility 84,790 (920) 83,870 960 for the costs of acquisition and construction of additions to and improvements of the Sanitation Utility 44,415 (920) 43,495 955 Utility's water system which qualify for reimbursement under the City Council's Convention, Sports and Entertainment Venues 37,831 (8,120) 29,711 4,996 Resolution No. 2012-111 "Official Intent to Reimburse Certain Water Utility Fund Unamortized bond Expenditures from the Proceeds of Bonds or Other Obligations". During fiscal year 18,271 premium/discount, net (1,679) 16,592 2014, the Water Utility made three draws totaling $9,100 for such qualiying capital Total 863,987 (83,434) 780,553 19,066 expenditures. The $9,100 balance is expected to be paid in full during fiscal year 2015 COPs:

with the issuance of new bond financing. Convention, Sports and Entertainment Venues 38,O 38,0 3,50 Begining Ending Total 38OO 38,000 35, Balance Additions Payments Balance Notes and loans payable:

Electric Utility $ 2,600 $ 7,400 $(10,000) Electric Utility 44,000 (8,400) 35,600 11,200 Water Utility 9,100 $ 9,100 Water Utility 8,442 (956) 7,486 983 Convention, Sports and

$ 2,600 $16,500 $(10,000) $ 9,100 10,280 Entertainment Venues (5,095) 5,185 5,185 Total 62,722 (14,451) 48,271 Decommissioning provision 131,333 2,331 NOTE 9 - LONG-TERM UABIUTIES: Business-type activities total 1,096,042 2,331 (97,885) 1,000,488 Governmental-wide total $1,836038 $ 50926 $51,336) $1,735,628 $87_ 194 The following is a summary of changes in long-term liabilities reported in the government-wide financial statements for the year ended June 30, 2014.

58

CITY OF ANAHEIM GOVERNMENTAL ACTIVITIES: bonds are paid from lease payment measurement revenues (LPMR) defined as amounts equal to: 1) 3% of the 15% transient occupancy taxes (TOT) (i.e. 20% of the total BONDS PAYABLE transient occupancy taxes) for all hotel properties in the City, excluding Disney properties, and 2) 100% of the incremental OT, sales, and proper tax revenues from At June 30, 2014, bonds payable consisted of the following: 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 Range of Authorized Out- should the LPMR fall short of the amount required to pay debt service on the bonds. The Date Final Interest Rates and standing Walt Disney Com any provided a guarantee to the bond insurer to enable the issuer to Issued Maturity at Issue Date Issued 6/30/14 obtain municipal bond insurance.

City 1993 General Obligation LPMR began on January 1, 2001, with the first payment made to the trustee on July 7, Refunding Bonds 11/01/93 10/01/16 4.0%-7.0% $ 10,055 $ 1,995 2001, f6r the LPMR generated during the period January through June 2001.

1997 Anaheim Lease Subsequent to that date, LPMR is collectýd and remitted to the trustee monthly. During Revenue Bonds 2/01/97 3/01/37 4.5%-6.0% 510,427 187,953 the fiscal year ended June 30, 2014, $44,454 was remitted to the trustee.

Accretion 178,667 2007 Anaheim Lease Debt service requirements to maturity for the 1997 Anaheim Lease Revenue Bonds and Revenue Refunding Bonds 6/13/07 3/01/37 3.25%-5.5% 256,320 245,250 2008 Anaheim Lease the 2007 Anaheim Lease Revenue Refunding Bonds to be paid by the Anaheim Resort Revenue Refunding Bonds 12/10/08 8/01/19 3.0%-5.0% 5,084 3,023 Improvements Debt Service Fund from future LPMR are as ollows:

Total 616,888 Unamortized bond refunding Fiscal Year Ending 6/30 Principal Interest Total costs/premium/discounts, net (2.131) 2015 $ 18,510 $ 15,894 $ 34,404 Total government activities b $614,757 2016 20,630 14,751 35,381 2017 22,900 13,479 36,379 2018 11,667 26,332 37,999 Bonds Payable - City 2019 12,031 27,086 39,117 2020-2024 69,027 145,848 214,875 General obligation refunding bonds 2025-2029 83,614 164,787 248,401 2030-2034 100,173 185,901 286,074 The 1993 General Obligation Refunding Bonds were issued to finance storm drain 2035-2037 137,39 232,041 improvements and are payable from the levy of ad valorem taxes. Total principal and Total 433,203 731,468 1,164,671 interest remaining on the bonds is $2,117, payable through October 2016. During the Unamortized bond discount (2,157) (2,157)

Total bonds $943ýA6 $731,468 fiscal year endecdJune 30, 2014, total principal and interest paid was $702.

Debt service requirements to maturity for the 1993 General Obligation Refunding Included in interest is $178,667 related to accretion on capital appreciation bonds.

Bonds to be paid by the General Obligation Bonds Debt Service Fund from future property tax revenues are as follows: Lease revenue refunding bonds - City Fiscal Year Ending 6/30 Principal Interest Total Debt service requirements to maturity for the City's lease revenue bonds to be paid from 2015 $ 635 $ 67 $ 702 unrestricted revenues of the Municipal Facilities Debt Service Fund are as follows:

2016 660 41 701 2017 700 14 714 Fiscal Year Ending 6/30 Principal Interest Total Total $1 995 $122 $2117 2015 $ 479 $ 131 $ 610 2016 506 111 617 Lease payment measurement revenues 2017 463 89 552 2018 501 66 567 In February 1997, the Anaheim Public Financing Authority sold $510,427 of lease 2019 519 41 560 revenue bonds to construct public improvements in The Anaheim Resort. In June 2007, 2020 555 14 569 the Authority sold $256,320 of lease revenue bonds to defease $248,335 of the 1997 Total 3,023 452 3,475 lease revenue bonds. The bonds are special obligations of the Authority payable solely Unamortized bond premium 26 26 from lease payments to be made by the City to the Authority for the use and occupancy Total bonds $3,049 $ 452 $3501 of the leased premises. Debt service requirements to maturity for these lease revenue 59

CITY OF ANAHEIM CERTIFICATES OF PARTICIPATION NOTES AND LOANS PAYABLE At June 30, 2014, certificates of participation consisted of the following: At June 30, 2014, notes and loans payable are as follows:

Range of Authorized Out- Notes and Loans Payable - City Date Final Interest Rates and standing Issued Maturity at Issue Date Issued 6/30/14 City HUD Section 108 auaranteed loans payable 1993 Arena Land Refinancing 11/01/93 11/01/19 5.9%-7.50% 21,210 $8,880 Total governmental InMay 2003, the City entered into an agreement with HUD, making available $10,000 activities COPs $8,880 to provide financial assistance related to the development of Westgate on a former landfill site located at the northeast corner of Beach Boulevard and Lincoln Avenue. The Certificates of Participation Payable - City loan is payable from sales tax revenue generated by Westgate, from the Community Development Block Grant yearly entitlement, and from receipts of the Successor Agency Certificates of participation debt service payments are to be paid from unrestricted receivable. The outstanding balance at June 30, 2014 was $7,401. The loan bears revenues of the Certificates of Participation Debt Service Fund. COP debt service interest ranging from 1.74% to 5.97% and is payable over 20 years beginning on requirements to maturity are as follows: February 1, 2005, until August 1, 2023. Loan debt service requirements to maturity are as follows:

Fiscal Year Ending 6/30 Principal Interest Total 2015 $ 1,225 $ 537 $ 1,762 Fiscal Year Ending 6/30 Interest Total 2016 1,315 455 1,770 Principal 2017 1,415 366 1,781 2015 $ 517 $ 402 $ 919 2018 1,530 270 1,800 2016 561 374 935 2019 1,635 168 1,803 2017 670 342 1,012 2020 1, 0 57 1,817 2018 685 305 990 Total COPs 2019 730 266 996

$1,85 2020-2024 4,238 620 4,858 Total notes and loans $2 30 $ý971 0 CAPITAL LEASE OBUGATIONS The City has a long-term noncancelable agreement with HP Financial Services to In March 2010, the City entered into an agreement with HUD, making available finance the acquisition of the City's server, desktop, and portable computer equipment. $15,000 to fund the acquisitions of the Anaheim Family Justice Center and Miraloma The agreement qualifies as a capital lease for accounting purposes as defined under Park site, construction of the Thornton Brady storm drain and the rehabilitation of the the Financial Accounting Standards Board (FASB) Statement No. 13, Accounting for historic Packing House site. The loan is payable from the Community Development Block Leases, and therefore has been recorded at the present value of future minimum lease Grant yearly entitlement and from the receipts of the Successor Agency receivable. The payments at the date of inception of the lease. Future minimum lease payments to be outstanding balance of the loan at June 30, 2014, was $12,830. The loan bears made from unrestricted revenues of the Information Services Internal Service Fund under interest ranging from 1.74% to 3.97% and is payable over 20 years beginning on the capital lease are as follows: February 1, 2011 through August 1, 2030. Loan debt service requirements to maturity are as follows:

Fiscal Year Ending 6/30 2015 $ 666 Fiscal Year Ending 6/30 Principal Interest Total 2016 496 2015 $ 625 $ 462 $ 1,087 2017 201 2016 640 449 1,089 2018 41 2017 655 433 1,088 Total 1,404 2018 670 415 1,085 Less amount representing interest, variable (791 2019 690 394 1,084 Present value of future minimum lease payments 2020-2024 3,780 1,594 5,374 2025-2029 4,500 775 5,275 2030-2031 1,270 4O 1,310 Total notes and loans $12,830 $4 562

ý$17,392 60

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

Fiscal Year Ending 6/30 PrincialE 2015 $ 143 $ 63 $ 206 BUSINESS-TYPE ACTIVITIES:

2016 150 56 206 2017 159 47 206 BONDS PAYABLE Range of Authorized Out-2018 167 39 206 30 206 Date Final Interest Rates and standing 2019 176 2020-2021 381 33 414 Issued Maturity at Issue Date Issued 6/30/14 Total notes and loans $268 $1,444 Electric Utility 1999 Revenue Bonds 9/01/99 10/01/27 3.0%-5.0% $ 45,000 $ 29,930 Anaheim Regional Transportation Intermodal Center (ARTIC) Land Acquisition Loan 2003 Revenue Bonds 4/01/03 10/01/22 3.0%-5.0% 60,415 25,680 pWaable 2004 Revenue Bonds 6/01/04 10/01/34 2.5%-5.25% 131,265 108,440 2007 Revenue Bonds 2/01/07 10/01/37 4.0%-5.0% 206,035 194,965 2009 Revenue Bonds 3/10/09 10/01/39 3.0%-5.25% 70,000 65,350 In July 2012, the City entered into an agreement with the Orange County 2011 Revenue Bonds 5/11/11 10/01/36 3.0%-5.375% 90,390 90,390 Transportation Authority (OCTA) for the Purchase and Sale of a 13.58 acres real 9/19/12 10/01/31 3.125%-5.0% 92,130 92,130 2012 Revenue Bonds property located at 1750 South Douglass Road in Anaheim. The purchase price for the Total 606,885 site is $32,500. The City paid $1,000 at the close of escrow and the remaining Unamortized bond premiums/discount, net 14,967

$31,500 will be payable to OCTA over 13 years and bears 2% simple interest per Total Electric Utility 621,852 annum. Annual principal payments are due on or before July 10th each year Water Utility commencing 2012. The payment of accrued interest is deferred until equal payments 2004 Revenue Bonds 5/01/04 10/01/16 4.0%-4.5% 12,105 1,145 of $1,883 are due and payable on or before July 10, 2024 and July 10, 2025. The 2008 Revenue Bonds 7/09/08 10/01/38 4.0%-5.0% 48,580 48,320 loan is payable with Measure M2 Local Fair Share funds. OCTA will retain payments 2010 Revenue Bonds 10/28/10 10/01/40 2.0%-4.75% 34,525 34,405 from Anaheim's "Local Fair Share" funds allocated by OCTA under Measure M2 each Total 83,870 year until the final payment is made on July 10, 2025. The City may elect to provide Unamortized bond premiums/discount, net 374 Total Water Utility 84,244 alternative funding from other City funds for transportation related purposes, such as gas tax funds. At June 30, 2014, the outstanding balance of the ARTIC loan was Sanitation Utility

$28,500. Loan debt service requirements to maturity are as follows: 2007 Revenue Bonds 5/23/07 2/01/39 3.9%-5.0% 47,710 43,495 Unamortized bond premium 1,012 Fiscal Year Ending 6/30 Principal Interest Total Total Sanitation 44 507 2015 $ 2,500 $2,500 Convention, Sports and 2016 3,000 3,000 Entertainment Venues 2017 3,000 3,000 3,500 2002 Revenue Bonds 7/02/02 8/01/23 3.0%-5.5% 26,260 1,290 2018 3,500 2019 3,500 3,500 2008 Anaheim Lease Revenue 2020-2024 13,000 $1,883 14,883 Refunding Bonds 12/10/08 8/01/19 3.0%-5.0% 45,847 28,421 2025 1883 Total 29,711 Total notes and loans S $32266 Unamortized bond premiums/discount, net 239 Total Convention, Sports and Entertainment Venues 29,950 Total business-type activities bonds $910ý262 $780,553 61

CITY OF ANAHEIM Bonds Payable - Electric Utility Fiscal Year Ending 6/30 Principal Interest Total 2015 $ 960 $ 4,178 $ 5,138 2016 1,000 4,135 5,135 The City's Electric Utility has pledged future electric revenues, net of certain costs, to 1,045 4,092 5,137 2017 repay a total of $991,312 outstanding long-term obligations, principal and interest. 2018 1,090 4,049 5,139 Proceeds from bonds provided financing for various capital improvements, primarily 2019 1,135 4,005 5,140 distribution assets. The Electric Utility's bonds are payable solely from electric customer 2020-2024 9,550 19,078 28,628 net revenues and are payable through 2040. At June 30, 2014, the annual principal 2025-2029 15,195 16,083 31,278 2030-2034 18,975 11,821 30,796 and interest payments on the bonds were 46.7% of net revenues. Principal and interest 2035-2039 23,835 6,360 30,195 paid for the current fiscal year and total net revenues were $41,629 (excludes $60,205 2040-2041 11,085 636 11,721 of the 2002 Revenue Bonds early retirement) and $89,047 respectively. Total 83,870 74,437 158,307 Unamortized bond Bond debt service requirements to maturity for the Electric Utility to be paid from premium/discounts, net 374 374 Total bonds $ý84,244 $74,437 $158,681 revenues are as follows:

Fiscal Year Ending 6/30 Principal Interest Total Bonds Payable - Sanitation Utility 2015 $ 12,155 $ 28,632 $ 40,787 2016 12,690 28,078 40,768 The City's Sanitation Utility has pledged future sanitation system net revenues to pay a 2017 15,115 27,438 42,553 2018 15,810 26,735 42,545 total of $74,930 for revenue bonds issued in May 2007. Proceeds from the bonds 2019 16,570 25,978 42,548 provided financing for capital improvements to the sanitation sewer collection system.

2020-2024 117,380 113,843 231,223 The bonds are payable solely from system net revenues and are payable through 2025-2028 152,630 80,329 232,959 February 2039. At June 30, 2014, total principal and interest payments on the bonds 2029-2034 160,410 42,536 202,946 were less than 43.0% of net revenues. Total principal and interest paid and total system 2034-2039 99,695 10,742 110,437 2040 4,430 116 net revenues for the current fiscal year were $2,999 and $6,978 respectively.

Total 606,885 384,427 991,312 Unamortized bond Bond debt service requirements to maturity for the Sanitation Utility to be paid from premium/discounts, net 14,96

$621,852 14,967 revenues are as follows:

Total bonds $38427 $100,7 Fiscal Year Ending 6/30 Principal Interest Total 2015 $ 955 $ 2,042 $ 2,997 2016 1,005 1,994 2,999 Bonds Payable - Water Utility 1,045 1,954 2,999 2017 2018 1,095 1,902 2,997 The City's Water Utility has pledged future revenues from the sale of water, net of certain 2019 1,145 1,853 2,998 costs, to repay a total of $158,307 for outstanding long-term obligations, principal and 2020-2024 6,565 8,419 14,984 interest. Proceeds from bonds provided financing for various capital improvements, 2025-2029 8,255 6,726 14,981 2030-2034 10,365 4,626 14,991 primarily distribution assets. The bonds are payable solely from water net revenues and 2035-2039 14,984 are payable through 2041. At June 30, 2014, the annual principal and interest Total 43,495 31,435 74,930 payments on the bonds were less than 28.8% of net revenues. Principal and interest Unamortized bond premium 1,012 paid for current fiscal year and total net revenues were $5,137 and $17,835 Total bonds $44,507 $75,42 respectively.

Bonds Payable - Convention, Sports and Entertainment Venues Bond debt service requirements to maturity for the Water Utility to be paid from revenues are as follows: Bond debt service requirements to maturity for the Convention, Sports and Entertainment Venues to be paid from revenues are as follows:

62

CITY OF ANAHEIM Fiscal Year Ending 6/30 Principal Interest Total Note Payable - Water Utility 2015 $ 4,996 $ 1,280 $ 6,276 2016 4,424 1,091 5,515 At June 30, 2014, note payable is as follows:

2017 4,662 887 5,549 2018 4,879 653 5,532 State of California Revolving Fund note payable 2019 5,150 408 5,558 2020-2024 5,6O 4,488 34,199 In June 2001, the Water Utility executed a note payable to the State of California Total 29,711 Revolving Fund at a rate of 2.8% in the amount of $18,063. There are semi-annual Unamortized bond premium/discounts, net 239 239 payments of principal and interest in the amount of $592 through July 31, 2021. The Total bonds $29,9O $ 8 $,438 outstanding balance on this note at June 30, 2014, totaled $7,486.

Note debt service requirements to maturity for the Water Utility are as follows:

Fiscal Year Ending 6/30 Principal Interest Total CERTIFICATES OF PARTICIPATION 2015 $ 982 $ 202 $ 1,184 Range of Authorized Out- 2016 1,010 175 1,185 Date Final Interest Rates and standing 2017 1,039 146 1,185 Issued Maturity at Issue Date Issued 6/30/14 2018 1,068 117 1,185 Convention, Sports and Entertainment Venues 2019 1,098 87 1,185 2020-2022 80 1992 Convention Center Total notes and loans $ 7,486 $ 807 $ 8,293 Financing Project 1/01/92 8/01/23 3.9%-6.4% $ 92,777 $38,000 Total Convention, Sports and Entertainment Venues $38,000 Note Payable - Convention, Sports and Entertainment Venues Certificates of Participation Payable - Convention, Sports and Wells Farao Bank lease revenue note Entertainment Venues In December 2010, the City executed a lease revenue note with Wells Fargo Bank, Certificates of participation debt service requirements to maturity for the Convention, National Association to provide financing for the capital improvements of the Anaheim Sports and Entertainment Venues Fund to be paid from unrestricted revenues are as Convention Center Grand Plaza. Principal amount of the note is $20,000 and bears a follows: 1.85% interest per annum. The note is payable monthly, commencing in January 2011 and matures in December 2014.

Fiscal Year Ending 6/30 Principal Interest Total 2015 $ 3,500 $ 2,345 $ 5,845 Note debt service requirements to maturity to be paid from the unrestricted revenues of 2016 4,500 1,895 6,395 2017 4,800 1,601 6,401 the Convention, Sports and Entertainment Venues Fund are as follows:

2018 5,100 1,288 6,388 2019 5,400 957 6,357 Fiscal Year Ending 6/30 Principal Interest Total 2020-2024 $38,00 1,047 15,747 2015 $ 5,185 $ 48 T5,233 Total COPs $47,133 Total note $ 5,185 $ 48 $ 5,233 NOTES AND LOANS PAYABLE ARBITRAGE Note Payable - Electric Utility 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 On July 13, 2013, the Electric Utility used $44,000 from the proceeds of the Revolving and remit rebatable arbitrage earnings to the Internal Revenue Service. Certain of the Credit Agreement with Wells Fargo Bank, National Association (see note 8) to retire the City's debt and interest earned on the proceeds thereof are subject to the requirements outstanding principal balance of $60,205 of the 2002-B Electric Revenue Bonds. of the Act. The City has accrued a liability for estimated rebatable arbitrage earnings During fiscal year 2014, the Electric Utility repaid $8,400 of the tax-exempt note. At and has set aside such earnings as restricted cash. At June 30, 2014, the arbitrage June 30, 2014 the outstanding balance of long-term portion of the note was $35,600. rebate liability for governmental and business-type activities was zero and $343 respectively. 63

CITY OF ANAHEIM COMPUANCE WITH DEBT COVENANTS Date Final Amount Outstanding Issued Maturity Issued 6/30/14 There are various limitations and restrictions contained in the City's bond and certificates 1993 Anaheim Memorial of participation indentures. The City believes they are in compliance with all significant Hospital Association 10/15/93 05/15/20 $46,690 $16,740 2003 Anaheim Arena limitations and restrictions. Financing Project 12/11/03 06/01/23 A2,600 29,500 Total $89,290 $46,240 DEBT ISSUANCES City - Debt Issuance Anaheim Housing Authority The Anaheim Housing Authority has entered into conduit debt financings on behalf of In March 2013, the City entered into a cooperative agreement with the County of various developers to assist with the acquisition, construction, equipping, rehabilitation Orange (County) for the financing and construction of Lincoln Avenue. The agreement and refinancing of multifamily residential rental projects within the City of Anaheim. In allows the City to finance the construction with no interest costs payable to the County accordance with the bond documents, neither the City nor the Housing Authority has an in seven annual installments starting from July 1, 2013 and on July 1 of each obligation for debt service payments and therefore, the debt is not reflected in the subsequent year. The construction costs within the City boundary is $2,250. At June accompanying basic financial statements. Housing Authority revenue bonds related to 30, 2014, the construction is estimated to be 60% completed. The City paid $500 on conduit financings outstanding at June 30, 2014, were as follows:

July 1, 2013 with an outstanding balance of $850.

Date Final Amount Outstanding DEBT RETIREMENTS Issued Maturity Issued 6/30/14 1985 West Anaheim Royale 12/01/85 12/01/35 $ 4,664 $ 969 Housing Authority - Debt retirement 1992 Heritage Village 07/15/03 07/15/33 8,485 5,485 1998 Sage Park Project 11/01/98 11/01/28 5,500 5,500 2000 Cobblestone Apartments 07/20/00 03/15/33 3,980 3,580 In September and December 2013, the Housing Authority repaid the total principal 2000 Park Vista Apartments 07/24/00 07/01/33 27,180 27,180 balances and accrued interests of the two loans with the California Housing Finance 7,000 2000 Seawinds Apartments 07/20/00 07/15/33 6,300 Agency (CHFA). Total principal and interest paid was $1,794. 2001 Solara CourtApartments 11101104 12/01/34 8,200 5,400 2008 Be6Age Manor Apartments 02/01/08 02/01/44 22,350 20,823 Electric Utility - Debt Retirement 2009 Lincoln Anaheim Apartments Phase B 05/15/09 04/15/39 23,217 8,621 On July 13, 2013, the Electric Utility used $44,000 from the proceeds of the Revolving 2012 Anton Monaco Apartments 12/14/12 01/01/46 35,460 28,416 2012 Crossings at Cherry Orchard Credit Agreement with Wells Fargo Bank, National Association, together with funds 9,365 Apartments Tranche A 08/23/12 12/01/44 9,365 from the 2002-B Electric Revenue Bonds reserve and debt service cash balances of 2012 Crossings at Cherry Orchard

$10,030 and with funds of $7,053 from the City, to retire the outstanding principal Apartments Tranche B 08/23/12 12/01/29 2,985 2,985 balance of $60,205 and interest balance of $878 on the 2002-B Electric Revenue 2013 Paseo Village Apartments 02/28/13 09/01/45 19,750 Bonds. Total $178,136 $$137594 CONDUIT FINANCINGS FIDUCIARY FUNDS city Successor Agency The following is a summary of changes in long-term liabilities for the year ended June The City has entered into two conduit financings on behalf of a community care provider 30, 2014:

facility and one faciacilitate the management agreement for the Honda Center (formerly the Arrowhead Pond) of Anaheim. In accordance with applicable agreements, the City has no obligation for debt service payments and therefore, the debt is not reflected in the accompanying basic financial statements. Bonds payable and certificates of June 30, 2014, were as

,allows:

Frticipation related to conduit financings outstanding at 64

CITY OF ANAHEIM Beginning Blance Additions/ Reductions/ Ending Within Fiscal Year Ending 6/30 Principal Interest Total Proceeds Paets Balance One Year 2015 $ 225 $ 354 $ 579 Bonds payable $207,780 $(2,075) $205,705 $2,430 2016 230 346 576 premium/(discount), net 3,028 (253) 2,775 2017 240 337 577 Notes and loans payable 7,133 (319) 6,814 358 2018 250 326 576 Due to City of Anaheim 22,453 (806) 21,647 2,047 Pollution remediation liability 2,211 $ 5 12,046) 170 170 2019 265 314 579 2020-2024 1,550 1,341 2,891

$242,605 $ 5 $15,499) $237111 $5,005 2025-2029 2,080 806 2,886 2030-2031 1,045 112 1,157 Bonds Payable Total bonds $ 5,885 $ 3,936 2007 Tax Allocation Refunding Bonds Notes and Loans Payable The Successor Agency will repay a total of $321,098, principal and interest, for the outstanding 2007 tax allocation bonds issued in December 2007 from the semi-annual Savi Ranch Associates note payable Redevelopment Property Tax Trust Fund (RPITF) revenue allocations. Proceeds from the bonds provided financing for public improvements related to the merged project areas, In July 1989, the former Redevelopment Agency executed a note with Savi Ranch for the supply of low-and moderate-income housing within the City, to repay certain Associates, a California general partnership. The amount of the note totaled $2,707 Redevelopment Agency loan obligations and to advance refund the 1992, 1997 and and bears interest at 9.5% per annum. The note is payable from net property tax 2000 bonds. The bonds bear interest at rates ranging from 4.25% to 6.50% and are increment as defined in the Redevelopment Agency note. If there is insufficient RPTTF payable through February 2031. During the fiscal year ended June 30, 2014, total revenue to pay for principal and interest at the termination of the River Valley project principal and interest paid was $12,626. area plan in November 2031, the note ceases to be an obligation of the Successor Agency. For the fiscal year ended June 30, 2014, total interest paid was $269.

Debt service requirements to maturity for 2007 Tax Allocation bonds are as follows:

Contractual obligations Fiscal Year Ending 6/30 Principal Interest Total 2015 $ 2,205 $ 10,659 $ 12,864 As part of the Redevelopment Agency's economic development program to attract and 2016 3,280 10,532 13,812 retain businesses inthe City, the former Redevelopment Agency has entered into various 2017 5,565 10,350 15,915 2018 7,955 10,053 18,008 contractual obligations to reimburse tenant improvement costs to be paid from property 2019 8,340 9,662 18,002 tax increment revenues (thereafter RPITF). At June 30, 2014, the outstanding balance 2020-2024 48,925 40,940 89,865 of these obligations totaled $120.

2025-2029 80,730 25,599 106,329 2030-2031 J,483J A6,30 In December 1992, the former Redevelopment Agency has entered into an agreement Total 199,820 121,278 321,098 with California State Teachers Retirement System (CALSTRS), to share in the Unamortized bond premium/discounts, net 2,775 development costs of the Plaza Redevelopment Project. In March 2004, CALSTRS Total bonds $121,278 $323,873 assigned the agreement to the new owners, Pan Pacific Retail Properties, Inc. (PPRP). In October 2006, Kimco Realty Corporation (KRC) acquired PPRP including the 2010 Recovery. Zone Economic Development Bonds assumption of the assigned plaza project agreement. The KRC participation note bears 7% simple interest rate, and has a maximum term of 25 years. The Successor Agency's The Successor A ency will repay a total of $9,821, principal and interest, outstanding obligation to repay the note is entirely contingent on the revenues generated by the Recovery Zone ?Ionomics Development Bonds issued in Octo ber 2010 from the semi- project. The note will be forgiven at the end of the term whether or not the entire amount annual RPTTF revenue allocations. Proceeds from the bonds provided financing for has been repaid. At June 30, 2014, the outstanding balance of the participation note public improvements related to the merged project areas. Thhe ewasry$3,987.nn bonds bear interest.-at was $3,987.

rates ranging from 1.44% to 6.22% and are payable through t'ebruary20u3i. During the fiscal year ended June 30, 2014, total principal and inter est paid was $576.

Debt service requirements to maturity for the Successor Agency notes payable and Debt service requirements to maturity for 2010 Recovery Zone Development bonds are as follows: contractual commitments to be paid from future RPTrF revenues are as follows:

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CITY OF ANAHEIM Fiscal Year Ending 6/30 Principal Interest Total claims related to the pollution remediation for the Westgate project site prior to the 2015 $ 358 $ 550 $ 908 development of a shopping center. The total costs of the pollution remediation work 2016 398 535 933 amounted to $12,420 based on actual contract received for the project. At June 30, 2017 442 516 958 2018 490 495 985 2014, the outstanding pollution remediation obligation for the Westgate was $170.

2019 541 470 1,011 2020-2024 1,878 1,835 3,713 Mello-Roos Community Facilities Districts 2025-2029 1,978 1,978 2030-2032 2,7O 3,839 The City issued special tax bonds to finance construction invarious Community Facilities Total notes and loans 1,132 Districts. These bonds were authorized pursuant to the Mello-Roos Community Facilities

$ 6,14 Act of 1982. The bonds are payable from a special assessment tax and are non-Due to the City of Anaheim 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 The Successor Agency will repay a total of $9,710 outstanding long-term obligations, foregoing is pledged to the payment of the bonds. The bonds are not general or special principal and interest, from the semi-annual RPTTF revenue allocations for the $10,000 obligations of the City, nor do they contain any credit enhancements that secondarily Cooperation Agreement dated April 1, 2003, between the former Redevelopment pledge existing or future resources of the City, accordingly they are not reflected in the Agency and the City, whereby the City assisted the former Agency with the development accompanying basic financial statements. The City is acting as agent only for the of the Anaheim Westgate Center (Westgate project) utilizing $10,000 of funds from the property owners in collecting the special assessments and forwarding the collections to HUD Section 108 loan. This Cooperation Agreement obligation (HUD Section 108 the fiscal agent. This activity is recorded in an agency fund in the basic financial loan) bears interest ranging from 1.74% to 5.97% and is payable semi-annually statements.

through August 2023. At June 30, 2014, outstanding principal due to the City for the Westgate project obligation was $7,450. Principal and interest paid for the current At June 30, 2014, the City has the following outstanding Mello-Roos special tax bonds:

fiscal year were $905. InJune 1989, the City issued $26,620 in special tax bonds to finance a portion of the The Successor Agency will repay a total of $8,108 outstanding long-term obligations, cost of acquisition and construction of facilities in East Anaheim Hills. In April 1995, principal and interest, from the semi-annual RPTIF revenue allocations for the $7,000 $15,389 of the 1989 bonds was advance refunded through the Anaheim Public Cooperation Agreement dated June 2010 between the former Redevelopment Agency Financing Authority and in June 2004, $11,160 of the 1995 bonds was refunded and the City, whereby the City assisted the former Redevelopment Agency with the through the Authority. In December 1999, $7,720 of the 1989 bonds was refunded by rehabilitation of the historic Packing House site utilizing proceeds from the HUD Section the City. At June 30, 2014, the 2004 Anaheim Public Financing Authority bonds 108 loan. This Cooperation Agreement obligation (HUD 108 Section loan) bears outstanding amounted to $1,360, and the 1999 Mello-Roos bonds outstanding interest ranging from 1.68% to 3.98% and is payable over 20 years beginning on amounted to $785.

February 1,2011 through August 1,2030. As of June 2014, the outstanding principal In February 2007, the City issued $9,060 in special tax bonds to finance a portion of due to the City for the Packing House site project obligation was $6,021. Principal and the cost of acquisition and construction of facilities in the Platinum Triangle of Anaheim.

interest paid for the current fiscal year were $547. At June 30, 2014, the 2007 Mello-Roos bonds outstanding amounted to $8,070.

The former Redevelopment Agency paid a total of $19,163 to the State of California Supplemental Education Revenue Augmentation Fund (SERAF) in fiscal years 2010 and In August 2010, the City issued $28,630 in special tax bonds, Series 2010 to finance 2011. Of this amount, $8,500 was borrowed from the housing fund. The Successor a portion of the cost of acquisition and construction of facilities in the Platinum Triangle Agency will repay this amount from future RPTrF revenue allocations. At June 30, of Anaheim, Community Facility District 08-1 and to fund a reserve fund for the Series 2014, the outstanding balance was $8,176. 2010 Bonds. At June 30, 2014, the 2010 Mello-Roos bonds outstanding amounted to

$27,025.

Westgate Pollution Remediation Obligation In June 2003, the former Redevelopment Agency acquired property located at 2951 NOTE 10- SEGMENT INFORMATION:

West Lincoln Avenue as part of a redevelopment project named the Westgate project.

Approximately 11 acres of the property were formerly known as the Sparks and Rains The Sanitation Utility Fund issued revenue bonds to finance sewer system expansion and Landfills. The County of Orange was the operator of these landfills until 1960. In improvements. The Sanitation Utility Fund accounts for three activities: solid waste November 2008, the County paid the Redevelopment Agency $5,176 in settlement of collection, wastewater, and street cleaning. However, investors inthe revenue bonds rely 66

CITY OF ANAHEIM solely on revenue generated through wastewater activities for repayment. Summary Condensed Statement of Cash Flows financial information for wastewater activities is presented below:

Net cash provided by (used for):

Condensed Statement of Net Position Operating activities $ 5,506 Noncapital financing activities (484)

Assets: Capital and related financing activities (1,641)

Cash and cash equivalents $ 8,174 Investing activities (7,402)

Investments 19,873 Net decrease (4,021)

Other current assets 1,456 Beginning cash and cash equivalents 27,270 Restricted cash and cash equivalents 15,075 Ending cash and cash equivalents $ 23,,249 Capital assets, net 97,229 Total assets 14A1,807 Reconciliation of cash and cash equivalents Liabilities:

Current liabilities 766 Cash and cash equivalents $ 8,174 Current liabilities payable from restricted assets 1,269 Restricted cash and cash equivalents 15,075 Noncurrent liabilities 43,552 $ 23,,249 Total cash and cash equivalents Total liabilities A5*,45587 NOTE 11 - RETIREMENT PLANS:

Net Position:

Net investment in capital assets 56,169 Retirement System Restricted for debt services 398 Restricted for capital projects 15,600 The City contributes to the California Public Employees' Retirement System (PERS), an Unrestricted 24,053 agent multiple-employer public employee defined benefit pension plan. PERS provides

$ 96 ,220 Total net Position retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and Condensed Statement of Revenues, Expenses and Changes in Net administrative agent for participating public entities within the State of California.

Position Benefit provisions and all other requirements are established by State statute and City ordinance. A copy of PERS' annual financial report may be obtained Wastewater fees (pledged against bonds) $ 11,869 @www.calpers.ca.gov.

Other revenues 425 Depreciation and amortization (1,973) Funding Policy Other operating expenses (5,594)

Total operating income 4,727 Participants and City are required to contribute at actuarially determined rates applied Nonoperating income (expenses) to the annual covered payroll respective of the employee groups. The City pays a Interest income 278 certain percentage of the Participant contribution. The following table summarizes the Interest expense (1,620) required contribution rates by employee and employer effective for fiscal year 2014.

Capital contribution 535 The contribution requirements of plan members and the City are established and may Transfers in 4,864 be amended by PERS.

Transfers out (484)

Total nonoperating expense 3,573 Change in net position 8,300 Net assets at beginning of year 87,920 Net assets at end of year $ 96,220 67

CITY OF ANAHEIM Employ ee Rate Employer Rate Fiscal Year Annual Percentage of Net Pension Anaheim Hire CIPERS Total Ending Pension Cost (APC) APC Contributed Obligation Employee Group Doe Membership E City y CiyLn _at Miscellaneous Employees 6/30/12 $57,560 100% $0 Management Before 1/10/2012 Classic 1.000% 7.000% 2.968% 19.063% 30.031% 6/30/13 58,213 100% $0 After 1/10/2012 but 6/30/14A 59,747 100% $0 before 1/1/2013 Classic 8.000% 0.000% 0.000% 22.031% 30.031%

On or After 1/1/2013 Classic 8.000% 0.000% 0.000% 22.031% 30.031% Funded Status and Funding Progress Onor After 1/1/2013 New 6.750% 0.000% 0.000% 22.031% 28.781%

AMEAGeneral Before 1/1/2013 Classic 1.000% 7.000% 2.968% 19.063% 30.031%

Classic Actuarial valuation of an ongoing plan involves estimates of the value of reported AMEAClerical On or After 1/1/2013 1.000% 7.000% 2.968% 19.063% 30.031%

On or After 1/1/2013' New 1.000% 7.000% 2.968% 19.063% 30.031% amounts and assumptions about the probability of occurrence of events far into the I.B.E.W. Before1/1/2013 Classic 1.000% 7.000% 2.968% 19.063% 30.031% future. Amounts determined regarding the funded status of the plan and the annual Confidential On or After 1/1/2013 Clossic 1.000% 7.000% 2.968% 19.063% 30.031% required contributions of the employer are subject to continual revision as actual results On or After 1/1/2013 New 6.750% 0.000% 0.000% 22.031% 28.781% are compared with the past expectations and new estimates are made about the future.

APA Traninees Before1/1/2013 Classic 8.000% 0.000% 0.000% 22.031% 30.031%

On or After 1/1/2013 Classic 8.000% 0.000% 0.000% 22.031% 30.031% The table below displays the funding progress of the three plans and is based upon the On or After 1/1/2013 New 6.750% 0.000% 0.000% 22.031% 28.781% most recent actuarial valuation data as of June 30, 2013:

Safety Employees FireManagement Before1/1/2013 Classic 9.000% 0.000% 0.000% 33.364% 42.364% (A) (D) (E) (F)

(8) (C)

AFA On or After t/1/2013 Classic 9.000% 0.000% 0.000% 33.364% 42.364% Actuarial Unfunded ULasO On or After 1/1/2013 Classic 9.000% 0.000% 0.000% 33.364% 42.364% Value of Uability Funded Ratios Annual %of On or After 1/1/2013 New 11.250% 0.000% 0.000% 33.364% 44.614% Assets Accrued lULl AVA Market Coered Payroll Police Management Before 1/1/2013 Classic 0.000% 9.000% 0.000% 32.884% 32.884% Plan (AVA) Uability (B)-(A) (A)/(B) Value Payroll (C)I/(E)

APMA On or After 1/1/2013 Classic 0.000% 9.000% 0.000% 32.884% 32.884% Miscellaneous $786,278 $1,101,160 $314,882 71.4% 71.4% S107,587 292.7%

On or After 1/1/2013 New 12.750% 0.000% 0.000% 32.884% 45.634%

Police Safety 435,595 586,151 150,556 74.3% 74.3% 41,946 358.9%

APA Before 1/1/2013' Classic 0.000% 9.000% 0.000% 32.884% 41.884% FireSafety 257,573 352,186 94,613 73.1% 73.1% 21,464 440.8%

On or After 1/1/20131 Classic 0.000% 9.000% 0.000% 32.884% 41.884%

On or After 1/1/2013 New 12.750% 0.000% 0.000% 32.884% 45.634% Total $ 1,479,446 $2,039,497 $560,051 72.5% 72.5% $170,997 327.5%

'Definition of a 'New' PERS member The schedule of funding progress, presented as required supplementary information

' A new hire who is brought in CalPERS membership for the first time on or after January 1, 2013, and following the notes to the financial statements, presents multi-year trend information, who has no prior membership in any California public retirement system. which shows whether the actuarial value of plan assets is increasing or decreasing over

• A new hire who is brought into CalPERS membership for the first time on or after January 1, 2013, time relative to the actuarial accrued liability for benefits.

and who is not eligible for reciprocity with another California public retirement system.

A member who first established CAoPERS membership prior to January 1, 2013, and who is rehired by Effective for periods beginning after June 15, 2014 implementation of GASB Statement a different CalPERS employer after a break in service of greater than six months. No. 68 Accounting and FinancialReporting for Pensions-an amendment of GASB

'Valid until MOU expiration on 1/3/14 at which time the New CaIPERS member employee rate will go to 6.75%

Statement No. 27will be required. This Statement establishes standards for measuring

'APA employees with Classic CaIPERS membership will contribute 8% by the end of fiscal 2013/2014 and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. This Statement identifies the methods and Annual Pension Cost assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of For fiscal year 2014, the City's annual pension cost of $59,747 for PERS was equal to employee service. This Statement will require the City to recognize a liability equal to the Cit/ys required and actual contributions. The required contribution was determined the net pension liability. Under this new reporting requirement, the City would record as a part of the June 30, 2011 actuarial valuations. the unfunded liability ($560,051) at June 30, 2013, as shown above, as adjusted by the requirements of this Statement, as a liability on the Statement of Net Position. The The City's annual pension cost, the percentage of annual pension cost contributed to the necessary data isnot currently available, as such, the exact impact to the Citys financial plans, and the net pension obligation for the fiscal years ended June 30, 2012, 2013 statements in conforming to this Statement has yet to be determined.

and 2014 are as follows:

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CITY OF ANAHEIM Actuarial Methods and Assumptions 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 In the June 30, 2013, actuarial valuations, the entry age normal cost method was used. parameters of GASB Statement No. 45. The ARC represents a level of funding that, if The actuarial assumptions included: (a) 7.50% investment rate of retum (net of paid on an ongoing basis, is projected to cover normal costs each year and amortize administrative expenses), (b) projected annual salary increases from 3.30% to 14.20% any unfunded actuarial liabilities over a period not to exceed thirty years. The ARC rate that vary by Age, Service and type of employment, and (c) 2% per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 2.75%. Market value for the fiscal year ended June 30, 2014, was 5.62% of total payroll.

is tCe asset valuation asset method. The PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis as follows: Annual OPEB Cost and Net OPEB Asset

1) all new gains or losses are amortized over a fixed 30-year period with a 5 year rampup atthe beginning and 5 year ramp down at the end of the amortization period; The City's annual OPEB cost, amount actually contributed to the plan, and changes in

2) all changes in liabilities due to plan amendments (other than Golden Handshakes),

the City's net OPEB asset for the fiscal year ended June 30, 2014, are as follows:

changes in actuarial assumptions, or changes in actuarial methodology are amortized separately over a 20-year period with a 5-year ramp up at the beginning and 5 year ARC $10,145 ramp down at the end of the amortization period, 3) changes in unfunded liabilities Interest on net OPEB asset (838) due to Golden Handshake will be amortized over a period of 5 years.

Adjustment to ARC 703

$1o0010 Other Post-employment Benefits Annual OPEB cost In addition to the pension benefits described above, the City provides other post- Contributions made $10,145 employment benefits (OPEB) as a single-employer defined benefit healthcare plan. The Annual OPEB cost (10,010)

OPEB provides medical, dental and life insurance benefits to eligible retirees (hired Change in OPEB asset 135 prior to January 1, 1996, Anaheim Police Association employees hired prior to July 6, Net OPEB asset - beginning of year 2001, and Anaheim Fire Association employees hired prior to November 9, 2001) in $11 152 Net OPEB asset - end of year 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 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the dental plans but do not receive a defined benefit. There are no separately issued plan, and the net OPEB asset for the fiscal year ended June 30, 2014 are as follows:

financial statements for the OPEB.

Fiscal Year Annual Percentage of Annual OPEB Funding Policy Ending OPEB Cost OPEB Cost Contributed Asset 6/30/ 12 $ 9,530 101.40% $ 9,765 The contribution requirements of plan members and the City are established in 6/30/13 8,574 114.60% 11,017 accordance with City Personnel Resolutions and various Memoranda of Understanding. 6/30/14 10,010 101.30% 11,152 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 Funded Status and Funding Progress employee group. Retiree contributions for the fiscal year ended June 30, 2014, were 2.80% of total payroll. 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 In June 2008, the City joined the California Employer's Retiree Benefit Trust Program future. Amounts determined regarding the funded status of the plan and the annual (CERBT) to pre-fund OPEB liabilities. The CERBT is an agent multiple-employer plan required contributions of the employer are subject to continual revision as actual results consisting of an aggregation of single-employer plans, with pooled administrative and are compared with the past expectations and new estimates are made about the future.

investment functions that are administered by PERS. A copy of the aggregated CERBT The schedule of funding progress, presented as required supplementary information annual financial report may be obtained @www.calpers.ca.gov. 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.

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CITY OF ANAHEIM The table below displays the funding progress of the plan and is based upon the most Public entities in Orange County may receive hazardous materials response services recent actuarial valuation data: from the Hazmat by executing an agreement and paying a fair share contribution.

Audited financial information for the joint powers authority as of and for the year JA) (B) (C) (D) (E) (F) ended June 30, 2014, was as follows:

Actuarial Unfunded ULas a Actuarial Value of Liability Funded Ratios Annual %of Valuation Assets Accrued (UL) AVA Covered Payroll Total assets $163 Date (AVA) Liability (B)-(A) (A)/(B) Payroll (C)/(E) Total liabilities 100 07/01/13 $74,013 $237,202 $163,189 31.2% $155,317 105.1% Members' equity 63 Total revenues 102 Actuarial Methods and Assumptions Total expenses 59 Change in net position 43 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 Hazmat does not have any debt outstanding at June 30, 2014.

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 The City has no significant equity interest in Hazmat, and accordingly neither assets nor methods and assumptions used include techniques that are designed to reduce short- liabilities of Hazmat have been recorded in the City's basic financial statements. For a term volatility in the actuarial accrued liability and the actuarial value of assets, copy of Hazmat's separate financial statements, contact the Finance Director of the City.

consistent with the long-term perspective of the calculations.

Metro Cities Fire Authority In the July 1, 2013, actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumption included a 7.61% investment rate of return, an annual The City participates in a joint powers authority, Metro Cities Fire Authority (Fire healthcare cost trend rate ranging from 7.25 %- 8.00% initially and declining to 5.00% Authority), for the purpose of providing a central communication network and record by 2023, payroll growth rate of 3.25% per year, and an inflation factor of 3.00%. The keeping system to support fire suppression, emergency medical assistance, rescue OPEB unfunded actuarial accrued liability is being amortized as a level percentage of service, and related services provided by the members of the Fire Authority.

payroll over a closed 30-year period. The remaining amortization period as of July 1, 2013, is 23 years. The following entities are members of the Fire Authority: City of Anaheim, City of Brea, City of Fountain Valley, City of Fullerton, City of Garden Grove, City of Huntington NOTE 12 - JOINT VENTURES AND JOINTLY-OWNED PROPERTIES: Beach, City of Newport Beach, and the City of Orange. Members of the Board of Directors (the "Board") consist of one voting Board member and an alternate appointed Authority for Orange County - City Hazardous Materials Emergency by their governing body.

Response

Public entities in Orange County may receive services from the Fire Authority by executing an agreement and paying a fair share contribution. Audited financial The City participates in joint powers authority (JPA), the Authority for Orange County- information for the Fire Authority as of and for the year ended June 30, 2014, was as City Hazardous Materials Emergency Response (Hazmat), for the purposes of follows:

responding to, assessing the nature of, and stabilizing any emergency created by the release or threatened release of hazardous materials. Total assets $2,411 Total liabilities 526 The following entities are members of Hazmat: City of Anaheim and City of Huntington Members' equity 1,885 Beach (provider agencies). Members of the Board of Directors (Hazmat Board) consist Total revenues 5,250 of one voting Board member and an alternate appointed by the governing body from Total expenses 5,231 the provider agencies. Under the Fifth Amendment to the JPA agreement, three Change in net position 19 representatives from the subscribing agencies are also voting Board Members. The following cities were subscribing agencies: Brea, Costa Mesa, Fountain Valley, Fullerton, Garden Grove, Newport Beach and Orange.

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CITY OF ANAHEIM The City has no significant equity interest in the Fire Authority, and accordingly neither As a former participant in SONGS, the Electric Utility is subject to assessment of assets nor liabilities of the Fire Authority have been recorded in the City's basic financial retrospective insurance premiums in the event of a nuclear incident at SONGS or any statements. For a copy of the Fire Authority's separate financial statements, contact the other licensed reactor in the U.S.

Finance Director of the City.

NOTE 13 - COMMITMENTS AND CONTINGENCIES:

North Net Training Authority Intermountain Power Agency The City participates in a joint powers authority, North Net Training Authority (Authority), for the purpose of providing a joint use of a consolidated Training Center The Electric Utility has entered into a power purchase contract with the Intermountain and record keeping system for fire training services. 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 The following entities are members of the North Net Training Authority: City of units located in Delta, Utah (Unit 1 and 2 net output is 900 mega watts each). The City Anaheim, City of Garden Grove and City of Orange. Members of the Board of is obligated for the following percentage of electrical facilities at IPA:

Directors (the "Board") consist of one voting Board member and an alternate appointed Entitlement Expiratio by their governing body.

Generation:

Intermountain Power Project 13.225% 2027 Public entities in Orange County may receive training services from the Authority by executing a "subscription agreement" and by paying the annual fee and other costs.

The contract constitutes an obligation of the Electric Utility to make payments from Audited financial information for the Authority as of and for the year ended June 30, revenues and requires payment of certain minimum charges. These minimum charges 2014, was as follows:

include debt service requirements on the financial obligations used to construct the Total assets plant. These requirements are considered a cost of purchased power.

$1,573 Total liabilities 30 Southern California Public Power Authority Members' equity 1,543 Total revenues 294 The Electric Utility is a member of the Southern Califomia Public Power Authority Total expenses 388 (SCPPA), a joint powers agency. SCPPA provides for the financing and construction of Change in net position (94) 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, Jointly-owned utility plants 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:

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 Entitlement Expiration participants in SJ and their respective ownership include: Public Service of New Mexico, Transmission:

45.48%; City of Farmington, New Mexico, 8.48%; County of Los Alamos, New Mexico, 17.6% 2027 Southern Transmission System (STS) 7.20%; and M-S-R Public Power Agency, 28.80%. There are no separate financial 13.5% 2030 Mead-Adelanto Project (MAP) statements for this venture, as each participant's interest in the utility plant is included in 24.2% 2030 Mead-Phoenix Project (MPP) their respective financial statements. The City's cumulative share of construction costs Generation:

included in the utility plant at June 30, 2014, amounted to $84,616. Hoover Dam Uprating (Hoover) 42.6% 2018 Magnolia Generating Station (Magnolia) 38.0% 2037 The City sold its 3.16% ownership interest of SONGS to SCE on December 29, 2006.

Canyon Power Project (Canyon) 100.0% 2040 Accordingly, the Electric Utility ceased recording all related operating expenses, except Natural Gas Reserve Projects (Natural Gas):

marine mitigation costs and spent fuel storage charges, as of December 29, 2006.

SCPPA Natural Gas Project - Pinedale, Wyoming 35.7% 2033 Based on the SONGS settlement agreement, the Electric Utility is responsible for the SCPPA Natural Gas Project - Barnett, Texas 45.5% 2033 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. 71

CITY OF ANAHEIM Take or pay commitments offset GHG emissions associated with generating electricity. CARB will provide a free allocation of GHG allowance to each electric utility to mitigate retail rate impacts. This As part of the take or pay commitments with IPA and SCPPA, the Electric Utility has free allocation of GHG allowance is expected to be sufficient to meet Electric Utility's agreed to pay its share of current and long-term obligations. Payment for these GHG compliance obligations for retail sales. During fiscal year 2014, an unused obligations will be made from the operating revenues received during the year that the portion of retail allowance was sold for $5,740 to reduce renewable energy costs for payment is due. A long-term obligation has not been recorded on the accompanying retail customers. The compliance obligation for the wholesale sales requires allowance basic financial statements as these commitments do not represent an obligation of the to be obtained through the auction or in the secondary market quarterly. At June 30, Electric Utility until the year the power is available to be delivered to the Electric Utility. 2014, the value of prepaid Cap and Trade allowance is $21,124, and the value of Cap The following schedule details the amount of debt service that is due and payable by and Trade obligation is $13,506.

the Electric Utility for each project and the final maturity date.

Operating Leases Fiscal Year Natural In January 2005, the City entered into a long-term noncancelable ground lease with Ending 6/30 IPA STS MAP MPP Hoover MAugnolia Gas Canyon Total 2015 $ 37,201 $ 11,732 $ 2,799 $ 1,507 $ 869 $ 6,315 $ 5,729 $ 6,385$ 72,537 City of Fullerton, for an approximately 1.56 acre site at the Fullerton Municipal Airport 2016 30,101 14,579 3,016 1,611 957 8,548 7,091 12,769 78,672 for the operation of the Anaheim Police Department Heliport. The term of the lease is 2017 27,584 14,322 2,994 1,606 957 8,550 6,831 19,504 82,348 40 years with two 10-year extensions commencing from January 2005 and ending 2018 24,741 14,108 2,971 1,596 957 6,658 6,081 19,505 72,617 December 2044. The base rent is adjusted every five years by ten percent (10%). The 2019 29,555 13,955 2,946 1,580 6,659 5,457 19,505 79,657 City constructed a building of approximately 30,000 square feet that includes offices, 2020-2024 88,334 70,723 5,108 2,735 33,454 21,385 97,504 319,243 2025-2029 25,456 37,796 14,560 97,517 175,329 aircraft maintenance and storage facilities and other infrastructure supporting such 2030-2034 39,054 8,274 97,513 144,841 facilities on the leased premise. Future minimum lease payments to be made from 2035-2039 42,318 97,514 139,832 unrestricted revenues of the General Fund are as follows:

2040-2041 39,009 39009 Total $237-516 $164875 $19834 $10635 $3740 $189352 $ 758 $6725 1208085 Fiscal Year Ending June 30 2015 $ 57 In addition to debt service, the City's entitlement requires the payment for fuel costs, 2016 59 operations and maintenance (O&M), administration and general IA&G) and other 2017 59 miscellaneous costs associated with the generation and transmission facilities discussed 2018 59 above. These costs do not have a similar structured payment schedule as debt service; 2019 59 however, prior experience indicates that annual costs are qenerally consistent from year 2020-2024 323 to year. The fiscal'year 2014 expenses for fuel, O&M, A,&G and other costs at these 2025-2029 355 projects were as follows: 2030-2034 391 2035-2039 430 Natural 2040-2044 473 Fiscal Year IPA STS MAP MPP Hoover Magnolia Gas Canyon Total 2045 48 2014 $49,586 $6,034 $321 $355 $449 $22,424 $1,134 $6,545 $86,848 Total minimum future rentals $ý2313 Cap-and-Trade Program The Honda Center California Senate Bill (AB) 32 requires that Utilities in California reduce their On January 26, 1999, the City entered into a series of lease transactions for the Honda greenhouse gas (GHG) emissions to 1990 levels by the year 2020. It directed the Center. Under these transactions, the City leased the Honda Center to a third party California Air Resources Board (CARB) to develop regulations of GHG that became trustee acting for the benefit of an equity investor for a term of approximately 39.2 effective January 2012. Emission compliance obligations under the Cap-and-Trade years. The trustee sublet the facility back to the City for 20 years, which was shorter regulation began in January 2013. 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 The Cap-and-Trade program (Program) was implemented beginning January 1, 2013. payment for the entire lease term. At the end of the sublease, the City has a purchase This Program requires Electric Utilities to have GHG allowances on an annual basis to option to purchase the trustee's rights under the lease for a fixed amount. The advance 72

CITY OF ANAHEIM rent payments to the City were deposited into a trust fund and invested. The cash September 2013, the agreement was modified extending the Team's right to terminate scheduled to be available from this trust fund is sufficient to pay the City's rent payments the agreement by three years to October 16, 2019. Concurrent with amending the for the term of the sublease and to exercise the City's purchase option at the end of the termination right, the City and the Team entered into two Memorandums of sublease. The excess of the amount of the advance rent payment made by the trustee Understanding providing a nonbinding framework for negotiations relating to an to the City over the deposit to the trust funds, after the payment of transaction expenses extension of the Team's tenancy at the stadium and for the potential development of the and payment to the Manager for agreeing to pledge its interest as Manager under the surrounding stadium area.

management agreement then in effect and agreeing to undertake certain additional obligations to the transaction, was approximately $4,000. This amount was recognized Under the terms of the agreement, the Team assumed full responsibility for all Stadium by the City as unearned revenue and is being amortized over the sublease term. The operations and maintenance, including capital maintenance. The Team books all City has secured its obligations to the other parties to these lease transactions by a Stadium and parking lot events (except for ten annual City events), pays all expenses, pledge of its respective interest in revenues from the facility, subordinate (with certain and retains all revenue (subject to the City's rights to share in certain net revenues) exceptions) to any interests of the debt holders of the facility. The City's obligations except that the City credits the Team up to $500 per year adjusted annually for CPI as under these lease transactions are considered to be defeased in substance, and a capital reserve contribution, calculated on the basis of property taxes. The City's therefore the related liabilities as well as the trust assets have been excluded from the participation in net revenues includes amounts received by the Team above certain City's financial statements. The City's and AAM's respective rights under the FMA are thresholds including paid admissions ($2.00 per paid admission in excess of 2.6 subject in certain respects to the effect of the 1999 lease transaction. million admissions per year), net income from nongame events (in excess of $2,000 per year adjusted annually for CPI), and parking lot net income (25% in excess of Effective December 16, 2003, the City and Anaheim Arena Management LLC (AAM) $4,000 per year adjusted annually for CPI). Additionally, as indicated above, the City entered into a Facility Management Agreement (FMA) whereby AAM has the exclusive retained the right to book and retain all revenue from ten parking lot events per year.

right and license to manage, maintain and operate all aspects of the Honda Center in Major League Baseball consented to the transfer of the Team in fiscal year 2003 to accordance with the FMA through June 30, 2023, with an option to extend the term interests controlled by Arte Moreno. No changes in the terms of the agreement with the for an additional period not to exceed 10 years. Annual distributions to the City, AAM Team were made in connection with that transfer.

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 The Agreement also provided that the City had the right to develop approximately 42 operating expenses, debt service, distributions to the City, the County of Orange, or acres of the parking lot development site. In 1998 a land sale of $1,000 for a 1.25 other amounts payable, AAM shall make or cause an affiliate or third-party lending acre site was approved for the construction of a 1,100-seat theatre called "Tinseltown institution to make loans for such purposes, as defined in the FMA. Such funds will be Studios" (now known as "City National Grove of Anaheim"). In November 2002, the repaid from gross revenues or adjusted net revenues, if any, as defined in and in City purchased the facility and the land for $6,700 from its then owner, SMG.

accordance with disbursement priorities established in the FMA. At June 30, 2014, the Concurrent with the purchase, the City granted to Nederlander-Grove LLC outstanding conduit debt on the Honda Center totaled $29,500. The debt is non- (Nederlander) a license to operate the facility for three years with the right to extend recourse, payable from revenues generated by the facility. Neither the faith and credit another five years. In May 2009, the management agreement was amended nor the taxing power of the City is pledged to the payment of the debt. The debt is not extending the term to December 31, 2015 with the right to extend another five year a general or special obligation of the City, nor does it contain any credit enhancements period. Additionally, under the amended management agreement, effective January that secondarily pledge existing or future resources of the City (other than revenues 1, 2009, Nedertander no longer receives a management fee of $150 and the City's generated by the facility), and accordingly it is not reflected in the accompanying basic share in the annual net profits and losses from operations increased from 50% to 60%.

financial statements. Nedertander is responsible for 100% of losses in excess of $400, thereby limiting the City's share of net losses to a maximum of $240 in any given year. The City may elect Angel Stadium of Anaheim 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 On May 14, 1996, the City and the California Angels, LP (Team), which was then Nedertander. Concurrent with the amendment to the management agreement, the managed by Disney Sports Enterprises, Inc. (subsequently known as Anaheim Sports, parking license fee agreement was amended, wherein the parking license fees from Inc.), entered into an agreement to provide far the operation and refurbishment of the Nederlander were reduced to $176 and is subject to adjustment annually based on CPI Stadium. Pursuant to the agreement, the Team assumed responsibility for the operation increases. Nederlander paid the City $191 for the year ended June 30, 2014, for of the Stadium on October 1, 1996. The agreement runs for 33 years (subject to a parking and common area maintenance.

limited Team option to cancel at 20 years and the Team's right to extend the term). In 73

CITY OF ANAHEIM Muzeo Construction and other significant commitments In October 2007, the City and the former Redevelopment Agency entered into a At June 30, 2014, the City had the following commitments with respect to unfinished property operating agreement with the Muzeo Foundation to operate and provide capital projects, disposition and development agreements, reimbursement agreements programming for the Muzeo, the downtown museum. The property operating and cooperation agreements:

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 Remaining Expected pledges at an annual interest rate of 5%. The property operating agreement was Construction Completion amended on August 1, 2010, to extend the maturity date to June 30, 2015. It also Capital Projects Commitment Date amended the aggregate amount of the line of credit to $500 during fiscal year 2011 Anaheim Regional Transportation Intermodal Center $25,997 2014 and $200 during each fiscal year thereafter with amounts being converted to grants Avon Dakota Neighborhood Revitalization Housing Project 342 2015 upon achieving fund raising thresholds. At June 30, 2014, there was no amount due Brookhurst Street/Katella Avenue-Ball Road Improvement 2,226 2014 to the City. Compressed Natural Gas Facility 626 2014 Convention Center Expansion Betterment VII 154,294 2017 Litigation Electrical Equipment Acquisitions 2,111 2014 Katella Avenue at Lewis Street/Street College Improvement 4,064 2014 A number of claims and suits are pending against the City for alleged damages to Katella Avenue Improvement at Interstate 5 2,828 2015 persons and/or property and for other alleged liabilities arising out of matters usually Miraloma Park and Community Center 1,566 2014 incident to the operation of a city such as Anaheim. Although the aggregate amount Paul Revere Park 613 2014 asserted for such lawsuits and claims is significant, in the opinion of City management, Smart Grid Project 855 2014 the City has strong defenses against such claims, and thus the ultimate loss, if any, Transformers Acquisitions 1,654 2015 relating to these claims and suits not covered by insurance or reflected in the financial Tustin Avenue/La Palma Widening and Intersection Improvement 3,118 2014 statements, will not materially affect the financial position of the City. Underground District No. 57 Brookhrust Street Phase I 3,066 2015 Underground District No. 6 West Street 4,417 2015 Grants Vehicle Acquisitions 4,154 2014 Velare Street Light Improvement 524 2014 Amounts received or receivable from grant agencies are subject to audit and Well No 58 Improvement 1,432 2014 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.

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CITY OF ANAHEIM NOTE 14 - SUBSEQUENT EVENTS: On December 9, 2014, the Anaheim City Council certified the official results of the California General Election held on November 4, 2014. Measure N, Anaheim Local On October 8, 2014 the Electric Utility issued 2014-A Revenue Refunding Bonds in a Services Measure, which among other things, was to ratify and amend subdivision (e) principal amount of $109,350 at a premium of $19,921 to refund the outstanding of Charter Section 1221 to clarify the City of Anaheim's (City) authority to transfer up balances of $23,490 on the 2003-A Revenue Bonds and $105,485 on the 2004-A to 4% of the "operating revenue" earned by the Water and Electric Utilities to the City's Revenue Bonds. The true interest cost is 1.89% maturing serially from April 1, 2015 to General Fund instead of the "gross revenue" was not approved by a majority of voters October 1, 2025. Annual debt service requirements, beginning April 1, 2015 range so it did not pass.

from $3,279 to $15,223 at rates ranging from 2.0% to 5.0%. This 2014-A Refunding Bonds will reduce the Electric Utility's total debt service payments by $44,999 at the net The Measure N election results coupled with settled litigation require the Water Utility to present value of $32,405. cease making the up to 4% transfer to the City's General Fund and the City to reimburse the Water Utility $3 million plus the transferred funds held by the City for fiscal years On November 14, 2014, the City issued 2014 Series A and B Lease Revenue Bonds in ending June 30, 2013 and 2014, in equal installments of no less than $600 beginning a principal amount of $258,925 and at a premium of $21,266. Proceeds from the January 1, 2014 and by June 30th of each fiscal end for approximately nine years or Bonds are allocated as follows: 1) $247,206 to finance an Anaheim Convention Center sooner depending upon when the funds have been fully reimbursed.

Expansion and other capital projects of the City; to fund a debt service reserve fund; to y costs of issuance; and to pay capitalized interest; 2) $32,985, along with $16,624 frm previous debt service reserve funds ($8,364), debt service funds ($3,072), and from City ($5,188), to refund the outstanding principal balances of the 1992 Convention Center Financing Project COP ($34,500), the 1993 Arena Land Refinancing COP ($7,655), the 2002 Revenue Bonds ($490) and the 2010 Revenue Note ($5,185); and to fund debt service reserve fund ($974). The true interest cost of the 2014 Bonds is 4.36% maturing serially from May 1, 2016 to May 1, 2046. Debt service requirement begins May 1, 2015 with an average annual debt service of

$16,430 and interest rates ranging from 0.4% to 5%. The refunding bonds will reduce the City's debt service payments by $5,910 with a net present value of $2,847.

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CITY OF ANAHEIM Summary of Pension Obligation Funding Progress (In thousands)

Employee Retirement System - Schedule of Funding Progress Value of Assets Unfunded Liability Funded Ratios June 30, 2013 Actuarial Market'" Annual UL as Actuarial Value of Valule of Accrued Covered a %of Valuation Date Assets (AVA) Assets (MVA) Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 786,278 $ 786,278 $1,101,160 $314,882 $314,882 71.4% 71.4% $107,587 292.7%

Police Safety 435,595 435,595 586,151 150,556 150,556 74.3% 74.3% 41,946 358.9%

Fire Safety 257,573 257,573 352,186 94,613 94,613 73.1% 73.1% 21,464 440.8%

Total $1,479,446 $1,479,446 $2,039,497 $560,051 $560,051 72.5% 72.5% $170,997 327. 5%

Value of Assets Unfunded Liability Funded Ratios June 30, 2012 Actuarial Market Annual UL as Actuarial Value of Valule of Accrued Covered a % of Valuation Date Assets (AVA) Assets (MVA) Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 854,296 $ 712,497 $1,045,037 $190,741 $332,540 81.7% 68.2% $105,544 180.7%

Police Safety 473,233 395,053 565,214 91,981 170,161 83.7% 69.9% 43,205 212.9%

Fire Safety 283,211 236,155 345,725 62,514 109,570 81.9% 68.3% 22,967 272.2%

Total $1,610,740 $1,343,705 $1,955,976 $345,236 $612,271 82.3% 68.7% $171,716 201.1%

Value of Assets Unfunded Liability Funded Ratios June 30, 2011 Actuarial Market Annual UL as Actuarial Value of Valule of Accrued Covered a % of Valuation Date Assets (AVA) Assets (MVA) Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 823,258 $ 729,624 $1,004,444 $181,186 $274,820 82.0% 72.6% $110,234 164.4%

Police Safety 453,318 404,096 548,400 95,082 144,304 82.7% 73.7% 44,567 213.3%

Fire Safety 274,471 243,889 335,781 61,310 91,892 81.7% 72.6% 23,681 258.9%

Total $1,551,047 $1,377,609 $1,888,625 $337,578 $511,016 82.1% 72.9% $178,482 189.1%

Other Post-employmet Benefits - Schedule of Funding Progress Actuarial Unfunded Funded Annual UL as Actuarial Value of Accrued Liability- Ratios- Covered a % of Valuation Date Assets (AVA) Liability AVA AVA Payroll Payroll July 1, 2013 $ 74,013 $ 237,202 $163,189 31.2% $155,317 105.1%

July 1, 2011 67,747 201,108 133,361 33.7% 169,331 78.8%

July 1,2010 63,920 211,914 147,994 30.2% 177,229 83.5%

Beginning with the June 30, 2013 valuation Actuarial Value of Assets equals Market Value of Assets per CaIPERS Direct Rate Smoothing Policy.

77 See accompanying independent auditors' report.

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Nonmajor Governmental Funds Nonmajor Governmental Funds SPECIAL REVENUE FUNDS are used to account for revenues derived from specific taxes or other earmarked revenue sources (other than for major capital projects) that are restricted by law or administrative action to expenditures for specified purposes.

GAS TAX AND ROADS FUND - Established to account for the construction and maintenance of the road network system of the City. Financing is provided primarily by the City's share of Fed-eral, State, and local gasoline taxes. Federal, State, and local regulations require that these gasoline taxes be used to improve and maintain streets, and includes programs intended to improve the air quality of the region.

WORKFORCE DEVELOPMENT FUND - Established to account for the City's involvement in Federal, State, and local programs to create jobs and provide the unemployed citizens in the Ana-heim area with job training opportunities.

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

GRANTS FUND - Established to account for various grants requiring segregated fund accounting. Financing is provided by Federal, State, and local agencies.

ANAHEIM RESORT MAINTENANCE DISTRICT FUND - Established to account for the levy and collection of special assessments to pay the cost of annual maintenance and improvements within the district against those parcels that specifically benefit from the enhanced maintenance and improvements.

ANAHEIM TOURISM IMPROVEMENT DISTRICT FUND - Established to account for the collection of a special assessment supporting marketing, promotion and transit project costs in support of the City's tourism and convention industry.

NARCOTIC ASSET FORFEITURE FUND - Established to account for funds received from Federal and State agencies that are derived from monies and property seized by the Police Department in drug related incidents. These funds are used to supplement existing resources of the City's law enforcement activities.

DEBT SERVICE FUNDS are used to account for the accumulation of resources and the payment of principal and interest on general debt of the City and related entities.

GENERAL OBLIGATION BONDS FUND - Established to accumulate resources for the payment of principal and interest on general obligation bonds of the City. Debt service is financed by prop-erty tax revenues.

MUNICIPAL FACILITIES FUND - Established to accumulate resources for payment of the principal and interest on the certificates of participation for the Parking Facility Project, Police Facilities Projects, Arena Land Acquisition, and other various acquisitions and capital improvements.

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

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

STREET CONSTRUCTION: Established to account for transportation improvement construction in the City's right-of-way. Financing is provided primarily by Federal, State and local grants, and Measure M2 allocations by the County of Orange.

DEVELOPMENT IMPACT PROJECTS FUND - Established to account for infrastructure improvements, primarily in the Platinum Triangle area, which provide development opportunities for high density, mixed use, office, restaurant, and residential projects. Financing is provided primarily by development impact fees.

COMMUNITY SERVICES FACILITIES - Established to account for the development of new parksites, playgrounds and library facilities. Federal and State grant programs, in conjunction with fees charged to residential and commercial developers, provide financing. Much of this revenue is used to support the capital construction of parks and other recreational facilities throughout the City.

STORM DRAIN CONSTRUCTION FUND - Established to account for the City's storm drain construction. Financing is provided by drainage assessment fees charged to residential and commer-cial developers.

OTHER CAPITAL IMPROVEMENTS FUND - Established to account for miscellaneous capital projects as determined by the City Council. Currently, financing is provided by fees from developers for infrastructure improvements, HUD108 loans and subsidies from the General Fund.

MELLO-ROOS PROJECTS - Established to account for road, sewer and water improvements in the community facility districts. Financing is provided by the sale of special tax bonds that are secured by and payable from the proceeds of an annual special assessment on the property within the district.

CITY OF ANAHEIM Combining Balance Sheet Nonma jar Governmental Funds by Fund Type June 30, 2014 (Inthousands) 2014 Sheet Funds by Fund Nonmaijr (Inthousands) Type June Combining Nonmajor 30, Balance Governmental Special Nonmajor Debt Nonmajor Capital Total Nonmalor Revenue Service Projects Governmental Funds Funds Funds Funds ASSETS Cash and cash equivalents $ 9,326 $ 188 $ 9,195 $ 18,709 Investments 26,607 539 26,239 53,385 Accounts receivable, net 1,223 41 1,264 Accrued interest receivable 99 24 95 218 Notes receivable, net 27,859 27,859 Due from other funds 9,671 5,254 14,925 Due from other governments 8,074 5 14,175 22,254 Prepaid and other assets 3,542 3,542 Restricted cash and cash equivalents 23,118 15,108 38,226 Restricted investments 49,637 49,637 Due from Successor Agency 6,021 7,450 13,471 Total assets $ 88,880 $73,511 $ 81,099 $243,490 UABIUTIES Accounts payable $ 4,588 $ 11 $ 7,073 $ 11,672 Wages payable 281 31 312 Deposits 1,184 1,184 Due to other funds 170 9,671 9,841 Total liabilities 5,039 11 17,959 23,009 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 1,218 10,791 12,009 Unavailable resources- long-term notes receivable 27,859 27,859 Unavailable resources - due from Successor Agency 6,021 7,450 13,471 Total deferred inflows of resources 35,098 18,241 53,339 FUND BALANCES Nonspendable:

Prepaid and other assets 3,542 3,542 Restricted:

Anaheim Resort maintenance and improvement 8,491 8,491 Capital projects 2,685 2,685 Debt service 73,500 73,500 Development impact projects 46,144 46,144 Grant purposes 5,491 5,491 Homebuyer assistance program 3,143 3,143 Streets, roads and transportation improvement projects 31,496 31,496 Assigned:

Ca ital projects 103 3,169 3,272 Other purposes 19 19 Unassigned (10,641) (10,641)

Total fund balances 48,743 73,500 44,899 167,142

$ 88,880 $73,511 $ 81,099 $243,490 79 Total liabilities, deferred inflows of resources, and fund balances See accompanied Independent auditors' report

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds by Fund Type Year Ended June 30, 2014 (Inthousands)

Nonmajor Nonmajor Total Special Nonmajor Capital Nonmajor Revenue Debt Service Projects Governmental Funds Funds Funds Funds Revenues:

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

Current:

City Attorney 119 119 Finance 19 33 52 Police 8,195 8,195 Fire 933 933 Community Development 8,997 8,997 Planning 1,302 1,302 Public Works 10,884 1 2,602 13,487 Community Services 791 3,577 4,368 Convention, Sports and Entertainment 9,931 9,931 Capital outlay 7,582 32,409 39,991 Debt service:

Principal retirement 2,793 18,750 936 22,479 Interest charges 542 17,775 427 18,744 Total expenditures 52,088 36,559 39,951 128,598 Excess (deficiency) of revenues over (under) expenditures 8,470 (35,701) (21,422) (48,653)

Other financing sources (uses):

Transfers in 1,031 47,576 4,872 53,479 Transfers out (2,394) (6,747) (9,141)

Issuance of loan payable 1,350 1,350)

Total other financing sources (13) 47,576 (1,875) 45,688 Net change in fund balances 8,457 11,875 (23,297) (2,965)

Fund balances at beginning of year 40,286 61,625 68,196 170,107 Fund balances at end of year $ 48,743 $ 73,500 $44,899 $167,142 See accompanied Independent auditors' report 80

CITY OF ANAHEIM Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2014 (Inthousands)

Anaheim Anaheim Gas Tax Community Resort Tourism Narcotic and Workforce Development Maintenance Improvement Asset Roads Development Block G;rant Grants District District Forfeiture Total ASSETS Cash and cash equivalents $ 3,432 $ 74 $ 456 $2,292 $1,968 $1,104 $ 9,326 Investments 9,792 211 1,300 6,539 5,615 3,150 26,607 Accounts receivable, net 1 6 1,216 1,223 Accrued interest receivable .35 12 23 18 11 99 Notes receivable, net 5,874 21,985 27,859 Due from other funds 9,671 9,671 Due from other governments 2,009 $634 570 4,857 4 8,074 Due from Successor Agency 6,021 Total assets $24,940 $634 $12,750 $28,610 $8,864 $8,817 $4,265 $88,880 UABILITIES Accounts payable $ 668 $419 $ 296 $ 1,213 $ 366 $1,556 $ 70 $ 4,588 Wages payable 36 26 35 35 7 1 141 281 Due to other funds 170 170 Total liabilities 704 615 331 1,248 373 1,557 211 5,039 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 1 1,217 1,218 Unavailable resources-long-term notes receivable 5,874 21,985 27,859 Unavailable resources - due from Successor Agency 6,021 Total deferred inflows of resources 11,896 23,202 35,098 FUND BALANCES Restricted:

Anaheim Resort maintenance and improvement 8,491 8,491 Grant purposes 523 914 4,054 5,491 Homebuyer assistance program 3,143 3,143 Streets, roads and transportation improvement projects 24,236 7,260 31,496 Assigned:

Debt service Capital projects 103 103 Other purposes 19 19 Total fund balances 24,236 19 523 4,160 8,491 7,260 4,054 48,743 Total liabilities, deferred inflows of resources, and fund balances $24,940 $634 $12,750 $28,610 $8,864 $8,817 $4,265 $88,880 See accompanied Independent auditors' report 81

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds Year Ended June 30, 2014 (Inthousands)

Anaheim Anaheim Gas Tax Community Resort Tourism Narcotic and Workforce Development Maintenance Improvement Asset Roads Development Block Grant Grants District District Forfeiture Total Revenues:

Licenses, fees and permits $ 36 $ 29 $ 65 Intergovernmental revenues 16,628 $3,772 $4,133 11,838 $13,375 $ 3,371 39,742 Charges for services 169 $4,487 18,031 Use of money and property 185 326 112 77 51 386 1,137 Other 9 996 455 11 112 1,583 Total revenues 17,027 3,772 5,455 12,434 4,575 13,426 3,869 60,558 Expenditures:

Current:

City Attorney 119 119 Finance 19 19 Police 5,049 3,146 8,195 Fire 933 933 Community Development 3,766 1,333 3,898 8,997 Planning 1,302 1,302 Public Works 5,931 4,861 92 10,884 Community Services 788 3 791 Convention, Sports and Entertainment 9,931 9,931 Capital outlay 4,613 383 2,101 292 193 7,582 Debt service:

Principal retirement 1,042 615 1,000 136 2,793 Interest charges 471 71 542 Total expenditures 11,586 3,766 5,011 11,984 4,861 11,334 3,546 52,088 Excess (deficiency) of revenues over (under) expenditures 5,441 6 444 450 (286) 2,092 323 8,470 Other financing sources (uses):

Transfers in 759 72 200 1,031 Transfers out (2,283) (111) (2,394)

Issuance of loan payable 1,350 1,350 Total other financing sources (uses) 2,109 _(2,211) 200 (111) (13)

Net change in fund balances 7,550 6 444 (1,761) (86) 1,981 323 8,457 Fund balances at beginning of year 16,686 13 79 8,577 3,731 40,286 Fund balances at end of year $24,236 $ 19 $ 523 5,921Q $ 8,_A91 9ALQ5

$48,743 See accompanied independent auditors' report 82

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2014 (Inthousands)

Gas Tax and Roads Workforce Development Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Licenses, fees and permits $ 40 $ 36 $ (4)

Intergovernmental revenues 14,965 16,628 1,663 $ 3,145 $3,772 $ 627 Charges for services 203 169 (34)

Useot money and property 185 185 Other 8 9 1 Total revenues 15,216 17,027 1.,811 3,145 3,772 627 Expenditures:

City Attorney Finance Police Fire Community Development 4,661 3,766 (895)

Planning Public Works 27,986 11,586 (16,400)

Community Services Convention, Sports and Entertainment Total expenditures 27,986 11,586 (16,400) 4,661 3,766 (895)

Excess (deficiency) of revenues over (under) expenditures (12,770) ,4 1 18,211 (1,516) 6 Other financing sources (uses):

Transfers in 66 759 693 Transfers out Issuance of loan payable 1,350 1,350 Total other financing sources (uses) 66 2,109 2,043 Net change in fund balances (12,704) 7,550 20,254 (1,516) 6 1,522 Fund balances at beginning of year 16,686 16,686 13 13 Fund balances at end of year $ 3,982 $2A,236 $ 20,254 $(1,503) $ 19 $1,522 (continued) 83

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

Community Development Block Grant Grants Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Licenses, fees and permits $ 30 $ 29 $ (1)

Intergovernmental revenues $ 4,459 $ 4,133 $ (326) 15,951 11,838 (4,113)

Charges for services Use ol money and property 279 326 47 45 112 67 Other 543 996 453 455 455 Total revenues 5,281 5,455 174 16,026 12,434 (3,592)

Expenditures:

City Attorney 120 119 (1)

Finance Police 8,231 6,925 (1,306)

Fire 6,041 2,802 (3,239) 2,082 1,158 (924)

Community Development 8,405 3,898 (4,507)

Planning 1,471 1,302 (169)

Public Works Community Services 924 788 (136) 135 3 (132)

Convention, Sports and Entertainment 8,556 5,011 18,853 11,984 (6,869)

Total expenditures (3,545)

Excess (deficiency) of revenues over (under) expenditures (2,827) 450 3,277 444 Other financing sources (uses):

Transfers in 72 72 Transfers out (2,283) (2,283)

Issuance of loan payable Total other financing sources (uses) (3,275) 3,719 (2,211) (2,211)

Net change in fund balances 444 (2,827) (1,761) 1,066 Fund balances at beginning of year 79 79 $ 3,719 5,921 5,921 Fund balances at end of year $(3,196) $ 523 $ 3,094 $ 4,160 $ 1,066 (continued) 84

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

Anaheim Resort Maintenance District Anaheim Tourism Improvement District Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Licenses, fees and permits Intergovernmental revenues Charges for services $ 4,463 $ 4,487 $ 24 $12,775 $13,375 $ 600 Use ol money and property 67 77 10 37 51 14 Other 4 11 7 Total revenues 4,534 4,575 41 12,812 13,426 614 Expenditures:

City Attorney Finance 19 19 Police Fire Community Development Planning 211 190 (21)

Public Works 6,581 4,861 (1,720) 2,505 1,194 (1,311)

Community Services Convention, Sports and Entertainment 9,931 9,931 Total expenditures 6,581 A,861 (1,720) 12,666 11,334 (1,332)

Excess (deficiency) of revenues over (under) expenditures (2,047) (286) 1,1 146 1,946 Other financing sources (uses):

Transfers in 200 200 (111)

Transfers out (128) 17 Issuance of loan payable (111)

Total other financing sources (uses) 200 200 (128) 17 Net change in fund balances (1,847) (86) 1,761 18 1,981 1,963 Fund balances at beginning of year 5,279 7,279 Fund balances at end of year $ 5,297 $ 7,260

$ 6,730 $ 8,491 $ 1,761 $ 1,963 (continued) 85

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2014 (Inthousands) (continued)

Narcotic Asset Forfeiture Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues:

Licenses, fees and permits Intergovernmental revenues $2,722 $3,371 $ 649 Charges for services Useol money and property 402 386 (16)

Other 112 112 Total revenues 3,124 3,869 745 Expenditures:

City Attorney Finance Police 4,015 3,546 (469)

Fire Community Development Planning Public Works Community Services Convention, Sports and Entertainment Total expenditures 3,546 (469)

Excess (deficiency) of revenues over (under) expenditures (891) 323 1,214 Other financing sources (uses):

Transfers in Transfers out Issuance of loan payable Total other financing sources (uses)

Net change in fund balances (deficits) (891) 323 1,214 Fund balances (deficits) at beginning of year 3,731 3,731 Fund balances at end of year $ 2,840 $ 4,054 $1,214 See accompanied Independent auditors' report 86

CITY OF ANAHEIM Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2014 (In thousands)

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

Accounts payable $ 5 $ 6 $ 11 Total liabilities 5 6 11 Fund balances:

Restricted for debt service $ 725 $ 2,357 $70,418 $73,500 Total fund balances 725 2,35 70,418 73,500 Total liabilities and fund balances $ 725 $2,362 $70,A24 $73,511 See accompanied Independent auditors' report 87

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds Year Ended June 30, 2014 (Inthousands)

General Obligation Municipal Anaheim Resort Bonds Facilities Improvements Total Revenues:

Property taxes $ 717 $ 717 Intergovernmental revenues 5 5 Use of money and property 3 $ 131 $ 2 136 Total revenues 725 131 2 858 Expenditures:

Current:

Finance 33 33 Public Works 1 1 Debt service:

Principal retirement 610 1,600 16,540 18,750 Interest charges 92 766 16,917 17,775 Total expenditures 703 2,366 33,490 36,559 Excess (deficiency) of revenues over (under) expenditures 22 (2,235) (33,488) (35,701)

Other financing sources:

Transfers in 2_238 45,338 47,576 Total other financing sources 2,238 45,338 47,576 Net change in fund balances 22 3 11,850 11,875 Fund balances at beginning of year 703 2,35A 58,568 61,625 Fund balances at end of year $ 725 $_2,357 $70,418 $ 73.500 See accompanied Independent auditors' report 88

CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - All Debt Service Funds Year Ended June 30, 2014 (In thousands)

General Obligation Bonds Municipal Facilities Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Property taxes $711 $717 $ 6 Intergovernmental revenues 8 5 (3)

Use of money and property 6 3 (3) $ 124 $ 131 $ 7 Total revenues 725 725 124 131 7 Expenditures:

Finance Public Works 703 703 1,755 1,755 Convention, Sports and Entertainment 611 611 Total expenditures 703 703 2,366 2,366 Excess (deficiency) of revenues over (under) expenditures 22 22 (2,242) (2,235) 7 Other financing sources:

Transfers in 2,242 2,238 (4)

Transfers out Total other financing sources (4)

Net change in fund balances 22 22 3 3 Fund balances at beginning of year 703 703 2,354 2,354

$ 2,354 $ 2,357 Fund balances at end of year $725 $725 $ $ 3 (continued) 89

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

Anaheim Resort Improvements Final Variance Budgeted Actual with Final Amounts Amounts Budget Revenues:

Property taxes Intergovernmental revenues Use of money and property $ 2 $ 2 $

Total revenues 2 2 Expenditures:

Finance 33,537 33,490 (47)

Public Works Convention, Sports and Entertainment Total expenditures 33,537 33,490 (47)

Excess (deficiency) of revenues over (under) expenditures (33,535) (33,488) 47 Other financing sources:

Transfers in 43,245 45,338 2,093 Transfers out Total other financing sources 43,245 4 2,093 Net change in fund balances 9,710 11,850 2,140 Fund balances at beginning of year 58,568 58,568 Fund balances at end of year 68,278 $70,418 $ 2J140 See accompanied Independent auditors' report 90

CITY OF ANAHEIM Combining Balance Sheet Nonma jar Capital Projects Funds June 30, 201 4 (Inthousands)

Development Community Storm Streets Impact Services Drain Other Capital Mello-Roos Construction Projects Facilities Construction Improvements Projects Total ASSETS $ 5,049 $ 850 Cash and cash equivalents $1,483 $ 98 $ 1,715 $ 9,195 Investments 14,408 4,231 2,426 279 4,895 26,239 Accounts receivable, net 41 41 Accrued interest receivable 49 17 9 20 95 Due from other funds 5,254 5,254 Due from other governments $12,703 1,472 14,175 Prepaid and other assets 3,541 1 3,542 Restricted cash and cash equivalents 122 14,986 15,108 Due from the Successor Agency 7,A50 7,450 Total assets $13,203 $21,616 UABIUTIES Accounts payable $ 2,865 $ 1,812 $ 489 $ 391 $ 208 $ 1,308 $ 7,073 Wages payable 17 7 1 1 5 31 Deposits 1,184 1,184 Due to other funds Total liabilities 12,553 1,819 490 1,575 209 1,313 17,959 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 10,791 Unavailable resources- 10,791 due from Successor Agency 7,450 7,450 Total deferred inflows of resources 10,791 7,450 18,241 FUND BALANCES Nonspendable:

Prepaid and other assets 3,541 1 3,542 Restrited:

Capital projects 2,685 2,685 Development impact projects 17,687 6,444 1,710 20,303 46,144 Assigned:

Capital projects 310 2,859 3,169 Unassigned (10,641) (10,641)

Total fund balances (deficit) (7,100) 6,755 4 20,303 44,899 Total liabilities, deferred inflows of resources, and fund balances (deficit) $7,245 $13,203 $21,61 $81,099 See accompanied Independent auditors' report 91

CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds Year Ended June 30, 2014 (Inthousands)

Development Community Storm Streets Impact Services Drain Other Capital Mello-Roos Construction Projects Facilities Construction Improvements Projects Total Revenues:

Licenses, fees and permits $ 1,580 $ 911 $ 2 $ 2,493 Intergovernmental revenues $11,162 1,585 1,722 14,469 Charges for services 35 35 Use at money and property 175 222 26 $ 501 $ 80 1,004 Other 2 478 48 528 Total revenues 11,199 40 2,855 28 979 128 18,529 Expenditures:

Current:

Public Works 817 45 90 1,641 9 2,602 Community Services 435 431 2,711 3,577 Capital outlay 16,599 4,859 2,489 65 3,841 4,556 32,409 Debt service:

Principal retirement 458 478 936 Interest charges 427 427 Total expenditures 17,416 5,797 2,920 155 9,098 A,565 39,951 Deficiency of revenues under expenditures (6,217) (2,457) (65) (127) (8,119) (4,437) (21,422)

Other financing sources (uses):

Transfers in 328 500 4,044 4,872 Transfers out (1,211) (4,864) (344) (328) (6,747)

Total other financing sources (uses) (883) 500 (4,864) 3,700 (328) (1,875)

Net change in fund balances (7,100) (1,957) (65) (4,991) (4,419) (4,765) (23,297)

Fund balances at beginning of year 19,644 6,820 6,710 9,963 25,068 68,196 Fund balances (deficit) at end of year $(7,100) $_17,687 $6,755 $1,710 $5544 $20,303 $44899 See accompanied Independent auditors' report 92

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

Streets Construction Development Impact Projects Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Licenses, fees and permits $ 9,325 $ 1,580 $(7,745)

Intergovernmental revenues $53,399 $11,162 $(42,237) 1,585 1,585 Charges for services 100 35 (65) 0 Use oI money and property 100 175 75 Other 2 2 Total revenues 53,499 11,199 (42,300) 9,425 3,340 (6,085)

Expenditures:

Community Development Public Works 53,103 16,706 (36,397) 6,068 5,103 (965)

,5,691 694 (4,997)

Community Services Total expenditures 53,103 16,706 (36,397) 11,759 5,797 (5,962)

Deficiency of revenues under expenditures 396 (5,507) (5,903) (2,334) (2,457) (123)

Other financing sources (uses):

Transfers in 328 328 500 500 Transfers out _ (1,211) (1,211)

Total other financing sources ________(883) (883) 500 500 Net change in fund balances 396 (6,390) (6,786) (2,334) (1,957) 377 Fund balances at beginning of year 19,644 19.644 Fund balances at end of year $ 396 $ (6,390) $ (6,786) $17,310 $17,687 $ 377 Adjustments to reconcile to GAAP:

Land acquisition expenditure from prepaid and other assets (710)

Ending fund balances - GAAP basis $ (7,100)

(continued) 93

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

Community Services Facilities Storm Drain Construction Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues:

Licenses, fees and permits $ 911 $ 911 $ 2 $ 2 Intergovernmental revenues $ 5,049 1,722 (3,327)

Charges for services Use of money and property 86 222 136 26 $ 26 Other Total revenues 5,135 2,855 (2,280) 2 28 26 Expenditures:

Community Development Public Works 4,302 (1,382) 155 155 Community Services 2,920 Total expenditures 4,302 (1,382) 155 155 Deficiency of revenues under expenditures 833 (65) (898) (153) (127) 26 Other financing sources (uses):

Transfers in Transfers out (4,864) (4,864)

Total other financing sources (uses) (4,864) (4,864)

Net change in fund balances 833 (65) (898) (153) (4,991) (4,838)

Fund balances at beginning of year 6,820 6,820 6,754 6,701 Fund balances at end of year $ 7,653 $ 6,755 $ (898) $ 6,548 $ 1,710 $(4,838) 94 (continued)

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

Other Capital Improvements Mello-Roos Projects Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budgcet Amounts Amounts Budaet Revenues:

Licenses, fees and permits Intergovernmental revenues Charges for services Use o money and property $ 427 $ 501 $ 74 $ $ 80 $ 80 Other 478 478 48 48 Total revenues 905 979 74 128 128 Expenditures:

Community Development 905 905 Public Works 2,500 2,318 (182) 25,392 4,565 (20,827)

Community Services 5 875 5,875 Total expenditures 9,280 9,098 (182) 25,392 4,565 (20,827)

Deficiency of revenues under expenditures (8,375) (8,119) 256 (25,392) (4,437) 20,955 Other financing sources (uses):

Transfers in 250 4,044 3,794 Transfers out (344) (344) (328) (328)

Total other financing sources (uses) 250 3,700 3,450 (328) (328)

Net change in fund balances (8,125) (4,419) 3,706 (25,392) (4,765) 20,627 Fund balances at beginning of year 9,963 9.963 25,068 25,068 Fund balances at end of year $ 1,838 $ 5,544 $ 3,706 $ (324) $20,303 $20,627 See accompanied Independent auditors' report 95

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

GENERAL BENEFITS AND INSURANCE FUND - Established to account for employee compensated absences, retirement and health benefits, and self-insurance programs.

MOTORIZED EQUIPMENT FUND - Established to account for motorized equipment used by City departments.

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

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

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

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

Cash and cash equivalents $13,606 $ 1,881 $ 1,476 $1,060 $18,023 Investments 38,821 5,367 4,213 3,025 51,426 Accounts receivable, net 6,283 2 6,285 Accrued interest receivable 134 17 6 9 166 Note receivable 26 26 Interfund receivable 10 10 Inventories 819 819 Prepaid and other assets 336 336 Total current assets 59,216 8,086 5,695 4,094 77,091 Noncurrent assets:

Accounts receivable, less current portion 3,550 3,550 Interfund receivable less current portion 31 31 Net other post-emproyment benefits (OPEB) asset 11,152 11,152 Capital assets:

Buildings, structures and improvements 3,230 4,607 7,837 Machinery and Equipment 81 35,932 19,760 2,315 58,088 Construction in progress 225 225 Less accumulat dpreciation (81) (28,550) (14,102) (5,014) (47,747)

Capital assets, net 10,837 5,658 1,908 18,403 Total noncurrent assets 14,733 10,837 5,658 1,908 33,136 Total assets 73,949 18,923 11,353 6,002 110,227 UABIUTIES Current liabilities:

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

Compensated absences, less current portion 4,747 4,747 Self-insurance liability, less current portion 32,776 32,776 Long-term debt, less current portion 697 697 Total noncurrent liabilities 37,523 697 38,220 Total liabilities 63,833 660 4,507 426 69,426 NET POSITION Net investment in capital assets 10,837 4,333 1,908 17,078 Unrestricted 10,116 7,426 2,513 3,668 23,723 Total net position $10,116 $18,263 $ 6,846 $5,576 $40,801 See accompanied Independent auditors' report 97

CITY OF ANAHEIM Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds Year Ended June 30, 2014 (Inthousands)

General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Operating revenues:

Charges for services $130,363 $11,487 $14,136 $9,367 $165,353 Other 57 7 59 123 Total operating revenues 130,420 11,494 14,136 9,426 165,476 Operating expenses:

Salaries and wages 3,652 3,642 692 3,118 11,104 Maintenance and operations 2,384 5,110 13,089 6,175 26,758 Insurance premiums and claims 9,903 9,903 Compensated absences and other benefits 116,705 116,705 Depreciation 1,936 2,050 221 4,207 Total operating expenses 132,644 10,688 15,831 9,514 168,677 Operating income (loss) (2,224) 806 (1,695) (88) (3,201)

Nonoperating income (expenses):

Investment income 454 59 28 33 574 Interest expense (85) (85)

Gain from disposal of capital assets 305 305 Total nonoperating income 454 364 (57) 33 794 Loss (1,770) 1,170 (1,752) (55) (2,407)

Change in net position (1,770) 1,170 (1,752) (55) (2,407)

Net position at beginning of year 11,886 17,093 8,598 5,631 43,208 Net position at end of year $ 10,116 $18,263 $ 6,846 $5,576 $ 40,801 See accompanied Independent auditors' report 98

CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2014 (inthousands)

General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Cash flows from operating activities:

Receipts from interfund services provided $129,998 $11,487 $14,136 $9,367 $164,988 Payments to suppliers (798) (4,279) (10,817) (6,158) (22,052)

Payments for salaries and wages to employees (5,773) (3,627) (687) (3,114) (13,201)

Payments for interfund services used (1,503) (373) (971) (643) (3,490)

Payments for insurance premiums and claims (10,506) (10,506)

Payments for compensated absences and other benefits (119,471) (119,471)

Other receipts 102 29 92 223 Net cash provided by (used for) operating activities (7,951) 3,237 1,661 (456) (3,509)

Cash flows from noncapital financing activities:

Receipt of interfund balances 21 104 125 Net cash provided by noncapital financing activities 21 104 125 Cash flows from capital and related financing activities:

Proceeds from sale of capital assets 305 305 Capital purchases (1,672) (2,118) (9) (3,799)

Principalpayments on long-term debt (1,121) (1,121)

Interest payments _(85) (85)

Net cash used for capital and related financing activities (1,367) (3,324) (9) (4,700)

Cash flows from investing activities:

Purchase of investment securities (10,128) (3,460) (546) (891) (15,025)

Proceeds from sale and maturity of investment securities 11,750 1,625 1,275 915 15,565 Interest received 424 44 28 32 528 Net cash provided by (used for) investing activities 2,046 (1,791) 757 56 1,068 Increase (decrease) in cash and cash equivalents (5,884) 183 (906) (409) (7,016)

Cash and cash equivalents at beginning of the year 19,490 1,698 2,382 1,469 25,039 Cash and cash equivalents at end of the year $ 13,606 $ 1,881 $ 1,476 $1,060 $18,023 (continued) 99

CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2014 (Inthousands) (continued)

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

Operating income (loss) $ (2,224) $ 806 $ (1,695) $ (88) $ (3,201)

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

Depreciation 1,936 2,050 221 4,207 Changes in assets and liabilities:

Accounts receivable (3,295) 22 33 (3,240)

Inventories (70) (70)

Note receivable 15 15 Prepaid and other assets (278) 756 478 Accounts payable (1,856) (228) 1,301 (626) (1,409)

Wages payable (1,953) 15 5 4 (1,929)

Unearned revenues 103 103 Compensated absences 267 267 Self-insurance liability 1,405 1,405 Other post retirement employment benefits (OPEB) assets (135) (135)

Total adjustments (5,727) 2,431 3,356 368) (308)

$ 3,237 Net cash provided by (used for) operating activities $ (7,951) $ 1,661 $ (4156) $ (3,509)

Schedule of noncash financing and investing activities:

Capital assets financed through capital leases $ 1,077 $ 1,077 Increase in fair value of investments $ 41 $ 11 3 $4A 59 See accompanied Independent auditors' report 100

Fiduciary Funds CITY OF ANAHEIM Statement of Changes in Fiduciary Assets and Liabilities Agency Fund - Mello-Roos Year Ended June 30, 2014 (Inthousands)

Beginning Ending Balance Additions Deductions Balance ASSETS Restricted cash and cash equivalents $5,046 $3,892 $(5,004) $3,934 Restricted investments 3,256 3,256 Due from other governments 57 3,801 (3,823) 35 Total assets $8,359 $7,693 $(8,827) $7,225 UABIIrT1ES Due to bond holders $8,359 $3,870 $(5,004) $7,225 See accompanied Independent auditors' report 101

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11--ýStatistical Section Statistical Section The Statistical Section is included to provide detailed data on the physical, economic, social and political characteristics of the reporting government. It is intended to provide the user with a broader and more complete understanding of the government and its financial affairs than is possible from the basic financial statements and supplementary information included in the Financial Section.

CITY OF ANAHEIM STATISTICAL INFORMATION (Unaudited)

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

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

Net Position by Component - Last Ten Fiscal Years 104 Changes in Net Position - Last Ten Fiscal Years 105 Governmental Activities Tax Revenues by Source - Last Ten Fiscal Years 107 Fund Balances of Governmental Funds - Last Ten Fiscal Years 108 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 109 Revenue capacity These schedules contain information to help the reader assess the City's most significant local revenue sources.

General Government Tax Revenues by Source - Last Ten Fiscal Years 110 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 111 Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years 112 Principal Property Tax Payers - Current Year and Nine Years Ago 113 Property Tax Levies and Collections - Last Ten Fiscal Years 114 Debt capacity These schedules contain information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future.

Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 115 Ratios of Net Genera Bonded Debt Outstanding - Last Ten Fiscal Years 116 Direct and Overlapping Government Activities Debt - As of June 30. 2014 117 Legal Debt Margin information - Last Ten Fiscal Years 119 Pledged-Revenue Coverage - Last Ten Fiscal Years 120 Demographic and economic information These sciedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place.

Demographic and Economic Statistics - Last Ten Fiscal Years 122 Principal Employers - Current and Nine Years Ago 123 Operating information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs.

Full-time Equivalent City Government Emloyees by Function/Program - Last Ten Fiscal Years 125 Operating ndicators by Function - Last en iscal ears 126 Capital Assets Statistics by Function - Last Ten Fiscal Years 128 City of Anaheim Map 130 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

103

CITY OF ANAHEIM Net Position by Component Last Ten Fiscal Years (Inthousands)

(Accrual basis of accounting)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Governmental Activities Net investment incapital assets $1,016,259 $ 894,625 $ 831,430 $ 832,951 $ 794,164 $ 751,910 $ 731,726 $ 665,828 $ 668,628 $ 613,300 Restricted 205,998 196,853 190,868 182,011 150,750 154,306 87,566 69,949 99,443 87,505 Unrestricted 12,668 30,341 16,760 (124,422) (121,283) (92,773) (70,621) (12,765) (40,946) (35,652)

Total Governmental Activities 1,234,925 1,121,819 1,039,058 890,540 823,631 813,443 748,671 723,012 727,125 665,153 Business-type Activities Net investment in capital assets 823,505 787,459 780,093 779,224 756,020 747,379 746,450 701,088 656,377 693,240 Restricted 77,311 71,131 61,235 54,626 49,325 45,493 47,406 38,572 36,008 28,855 Unrestricted 95,505 121,083 112,159 115,445 130,812 145,269 165,196 203,967 215,685 229,051 Total Business-type Activities 996,321 979,673 953,487 949,295 936,157 938,141 959,052 943,627 908,070 951,146 Total Government Net investment in capital assets 1,839,764 1,682,084 1,611,523 1,612,175 1,550,184 1,499,289 1,478,176 1,366,916 1,325,005 1,306,540 Restricted 283,309 267,984 252,103 236,637 200,075 199,799 134,972 108,521 135,451 116,360 Unrestricted 108,173 151,424 128,919 (8,977) 9,529 52,496 94,575 191,202 174,739 193,399 Total Government $2,231,246 $2,101,492 $1,992,545 $1,839,835 $1,759,788 $1,751,584 $1,707,723 $1,666,639 $1,635,195 $1,616,299 Note: Certain reclassifications have been made to prior year data to conform to the current presentation Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 104

CITY OF ANAHEIM Changes in Net Position Last Ten Fiscal Years (Inthousands)

(Accrual 6asis of accounting)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Program Revenues Governmental activities:

Charges for services General government $ 1,779 $ 1,670 $ 1,872 $ 1,872 $ 1,708 $ 1,890 $ 2,088 $ 1,238 $ 1,385 $ 1,442 Police 9,927 9,859 10,122 10,435 10,127 10,089 10,235 9,715 10,477 9,840 Fire 10,166 9,912 9,431 9,518 9,369 9,122 9,850 9,070 8,942 7,909 Community Development 17,305 9,151 7,281 8,143 7,306 5,459 6,212 6,713 6,122 4,667 Planning 7,746 6,404 5,327 6,263 6,453 7,724 9,084 10,778 9,031 6,994 Public Works 13,037 14,012 11,401 9,837 7,619 7,421 8,619 8,234 11,196 6,544 Community Services 3,479 3,556 3,386 4,024 4,561 4,833 4,855 4,043 18,421 4,985 Convention, Sports and Entertainment 10,236 9,574 9,142 4,356 202 200 218 200 200 200 Total charges for services 73,675 64,138 57,962 54,448 47,345 46,738 51,161 49,991 65,774 42,581 Operating grants and contributions 114,584 112,507 108,620 124,358 121,731 110,200 100,393 98,699 88,076 78,846 Capital grants and contributions 110,295 71,472 44,184 70,800 31,828 66,347 30,361 42,997 28,804 20,906 Governmental activities program revenues 298,554 248,117 210,766 248,886 200,904 223,285 181,915 191,687 182,654 142,333 Business-type activities:

Charges for services Electric utility 426,051 451,958 397,931 381,496 377,387 365,526 351,160 310,074 322,845 284,740 Water Utility 65,94.6 60,785 57,748 55,598 56,368 50,807 49,125 49,600 46,926 43,427 Sanitation Utility 57,843 57,230 56,630 56,359 56,023 55,424 54,017 53,215 49,397 46,480 Golf Courses 4,667 4,759 4,802 4,711 5,168 5,634 5,947 6,022 5,736 5,394 Convention, Sports and Entertainment 32,084 29,656 29,389 27,981 30,797 26,987 31,197 32,308 27,357 27,412 Total charges for services 58,51 04,388 -546,500 526,145 525,743 50,7 -491,446 451,219 452,261 407,453 Operating grants and contributions 452 952 1,101 746 1,990 965 1,194 1,160 2,556 2,473 Capital grants and contributions 8,441 6,698 8,954 12,667 5,622 6,620 12,332 4,808 5,749 11,513 Business-type activities program revenues 595,484 62038 556,555 539,558 533,355 511,963 504,972 457,187 460,566 421,439 Total government program revenues 894,038 860,155 767,321 788,444 73-4,259 735,248 686,887 648,874 64-3,220 -563,772 Expenses Governmental activities:

General government 15,790 13,275 11,617 10,911 10,917 12,144 12,610 10,951 7,394 8,943 Police 127,037 124,556 117,840 119,504 125,121 121,162 122,883 115,714 98,484 91,713 Fire 59,510 58,508 58,027 56,393 58,229 57,768 56,434 50,727 50,957 46,596 Community Development 80,043 82,769 95,683 105,937 117,621 109,523 105,651 93,089 87,814 83,183 Planning 17,030 16,917 15,648 15,627 16,822 17,057 17,199 16,107 14,493 13,206 Public Works 60,262 44,740 41,228 44,109 39,017 47,226 43,680 44,473 42,029 39,463 Community Services 34,130 28,925 28,282 30,958 35,372 37,704 39,033 36,827 31,712 28,314 Public Utilities 2,514 2,405 2,315 2,218 1,952 1,515 2,128 1,800 1,704 1,557 Convention, Sports and Entertainment 15,586 13,935 13,584 13,633 9,931 10,069 10,781 10,539 8,652 7,703 Interest on long-term debt 35,514 35,880 42,824 47,985 47,610 47,779 45,502 51,639 46,430 47,105 Governmental Activities Expenses 447,416 42_1,91 0 42-7,048 447,275 462,592 461,947 455,901 431,866 389,669 367,783 (continued) 0 105

CITY OF ANAHEIM Changes in Net Position Last Ten Fiscal Years (Inthousands)

(Accrual basis of accounting) (continued)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Expenses Business-type activities:

Electric Utility 411,246 417,008 386,358 372,129 375,173 359,320 353,204 339,928 365,432 274,423 Water Utility 62,996 57,056 58,319 56,608 55,478 49,309 49,219 51,638 47,187 41,469 Sanitation 53,508 52,813 55,939 49,845 50,521 52,702 49,693 49,338 47,163 45,467 Golf Courses 4,399 4,473 4,114 4,256 4,436 4,495 4,810 4,365 4,433 4,062 Convention, Sports and Entertainment Venues 46,385 45,001 45,278 44,662 45,954 45,487 48,292 46,610 47,833 47,220 Business-type activities expense 578,534 576,351 550,008 527,500 531,562 511,313 505,218 491,879 512,048 412,641 Total government expenses 1,025,950 998,261 977,056 974,775 994,154 973,260 961,119 923,745 901,717 780,424 Net (Expense)/Revenue Governmental activities (148,862) (173,793) (216,282) (198,389) (261,688) (238,662) (273,986) (240,179) (207,015) (225,450)

Business-type activities 16,950 35,687 6,547 12,058 1,793 650 (246) (34,692) (51,482) 8,798 Total government, net (expense) revenue (131,912) (138,106) (209,735) (186,331) (259,895) (238,012) (274,232) (274,871) (258,497) (216,652)

General Revenues and Other Changes in Nlet Position Governmental activities:

Taxes:

Property taxes 66,282 64,311 58,896 59,053 59,689 60,806 59,592 57,937 49,415 43,636 Property tax increments 28,678 47,040 47,731 47,115 45,719 40,710 37,341 34,984 Sales tax and use tax 67,505 65,445 59,654 54,711 51,214 56,035 62,510 64,878 66,972 60,803 Transient occupancy taxes 110,134 102,936 90,376 82,605 77,139 80,055 87,183 83,914 75,979 67,141 Motor vehicle license fees 331 1,783 1,026 1,180 1,532 1,866 2,595 2,113 Other taxes 7,780 7,756 7,272 7,288 7,288 8,041 9,529 10,337 10,817 10,175 Unrestricted investment earnings 2,930 1,094 3,598 3,667 7,012 8,667 15,337 17,597 12,346 8,071 Other 49 1,857 873 614 1,175 394 2,670 1,701 5,078 1,499 Gain from disposal of capital assets Transfers 7,288 12,824 12,571 8,537 19,602 41,141 15,573 (42,874) 8,444 12,400 Extraordinary gain 102,882 Governmental activities 261,968 256,554 364,800 265,298 271,876 303,434 299,645 236,066 268,987 240,822 Business-type activities:

Unrestricted investment earnings 6,986 3,323 10,216 9,617 15,825 19,580 31,244 27,375 16,850 16,592 Other 418 Transfers (7,288) (12,824) (12,571) (8,537) (19,602) (41,141) (15,573) 42,874 (8,444) (12,400)

Business-type activities (302) (9,501) (2,355) 1,080 (3,777) (21,561) 15,671 70,249 8,406 4,610 Total government 261,666 247,053 362,445 266,378 268,099 281,873 315,316 306,315 277,393 245,432 Change in Net Position Governmental activities 113,106 82,761 148,518 66,909 10,188 64,772 25,659 (4,113) 61,972 15,372 Business-type activities 16,648 26,186 4,192 13,138 (1,984) (20,911) 15,425 35,557 (43,076) 13,408 Total government change in net position $129,754 $108,947 $152,710 $ 80,047" $ 8,204 $ 43,861 $ 41,084 $ 31,444 $ 18,896 $ 28,780 Note: Certain reclassifications hove been made to prior fiscal years' data to conform to the current presentation.

Source: Finance Department, City of Anaheim 106 See accomponied Independent auditors' report

CITY OF ANAHEIM Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (Inthousands)

(Accrual basis of accounting)

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

' The decrease in motor vehicle license fees starting from fiscal year 2005 is due to the shifting of revenue from motor vehicle license fees category to the property tax category. This was part of the State of California 2004 Budget Act.

2 The decrease in property tax increments from fiscal year 2012 was due to the dissolution of Redevelopment Agency on February 1, 2012.

' Motor Vehicle License Fees allocation was eliminated per the fiscal year 2012 State Budget.

Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation.

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 107

CITY OF ANAHEIM Fund Balances of Governmental Funds Last Ten Fiscal Years (Inthousands)

(Modified accrual basis of accounting)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 General Fynd Nonspendable $ 2,099 $ 2,531 $ 3,082 $ 3,626 Restricted 6,449 1,766 982 582 Committed 788 Assigned 4,073 4,479 320 141 Unassigned 30,394 29,320 22,636 22,139 Reserv4d $ 4,092 $ 4,530 $ 5,001 $ 8,525 $ 9,701 $ 9,892 Unreserved - designated Unreserved - undesignated 29,490 47,729 37,347 47,409 44,978 39,179 Total General Fund 43,015 38,884 27,020 26,488 33,582 52,259 42,348 55,934 54,679 49,071 Housing Authority Fund Nonspendable 7 38 42 Restricted 41,134 32,234 29,935 7,778 Assigned 11,664 11,823 11,237 9,922 Unassiged Reservý 830 1,373 1,830 162 Unreserved - undesignated 11,603 5,669 6,474 7,935 3,932 5,682 Total Housing Authority Fund 52,805 44,095 41,172 17,742 12,976 7,499 7,304 8,097 3,932 5,682 Transportation Improvement Projects Reserved 3,734 11,403 Restricted 106 1,190 3,613 Unassigned (8,364) (3,900) (11,991) (17,387)

(8,364) (3,794) (10,801) (13,774) 3,734 11,403 Nonmajor NonspendableGovernmental Funds 3,542 4,619 1 631 Restriced 170,950 164,764 157,743 238,061 Assigned 3,291 8,055 7,400 7,761 Unassigned (10,641) (7,331) (20,457) (16,906)

Reserved 126,579 131,357 138,402 120,885 110,289 76,568 Unreserved - designated, reported in:

Special revenue funds 7,349 7,211 6,809 2,415 9,102 14,974 Debt service funds 156 4,433 1,656 2,276 1,137 1,457 Capital projects funds 31,899 41,544 32,809 38,430 45,495 36,497 Unreserved - undesignated, reported in:

Special revenue funds 14,350 5,342 4,199 4,183 14,902 25,955 Capital projects funds (3,376) (7,037) (15,551) (25,687) (22,787) (4,735)

Total nonmajor governmental funds 167,142 170,107 144,687 229,547 176,957 182,850 168,324 142,502 158,138 150,716 Total governmental funds' $254,598 $249,292 $202,078 $260,003 $227,249 $254,011 $217,976 $206,533 $216,749 $205,469

' The City implemented Governmental Accounting Standards Board Statement No. 54 (GASB 54) for the Fiscal Year Ended June 30, 2011.

Fund balance classifications prior to the implementation of GASB 54 are not available Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 108

CITY OF ANAHEIM Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (inthousands)

(Modified accrual basis of accounting)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Revenues Property taxes $ 66,282 $ 64,311 $ 58,896 $ 59,053 $ 59,689 $ 60,806 $ 59,592 $ 57,937 $ 49,415 $ 43,636 Property tax increments 28,678 47,040 47,731 47,115 45,719 40,710 37,341 34,984 Sales and use taxes 68,581 62,793 58,589 55,034 48,210 56,493 64,296 65,695 64,993 59,000 Transient occupancy taxes 110,134 102,936 90,376 82,605 77,139 80,055 87,183 83,914 75,979 67,141 Other taxes 7,012 7078 6401 6486 6,303 6451 6753 7531 7862 7542 Licenses, fees and permits 21,353 22,305 17,067 18,772 21,580 21,062 24,705 37,991 40,625 18,749 Intergovernmental revenues 215,755 186,018 143,348 150,394 141,418 158,729 135,072 112,593 104,705 102,423 Charges for services 32,569 30,883 29,672 24,408 18,351 517,874 17,730 16,799 16,216 15,459 Fines, orfeits and penalties 2,656 2,907 3515 3,304 3,255 3,409 3,767 3,689 3,464 3454 Use of money and property 16,681 8,058 7,1657 10,159 10,236 9,293 16,923 18,208 13,223 9,144 Other 6,555 8,926 6 617 43,645 4,009 10,137 3,755 7,601 18,164 6,143 Total revenues 547,578 496,215 450,816 500,900 437,921 471,424 465,495 452,668 431,987 367,675 Expenditures Tneral government 21,070 18,270 16,502 16,055 15,822 16,953 16,325 15,354 13,667 12,276 Police 120,962 117,702 112,656 114,678 115,379 112,057 115,195 109,467 94,602 86,529 Fire 57,529 56,127 55,886 55,802 55,713 55,966 54,685 48,201 48,383 44,182 Community Development 83,658 86,282 95,352 110,138 126,590 112,406 104,991 94,789 89,098 83,384 Plannin 16,086 15,785 14,408 14,560 15,173 15,489 15,949 14,762 13,907 12,313 Public Works 29,737 25,387 22,861 27,087 19,957 29,321 25,810 26,820 24,646 22,248 Community Services 30602 25268 24,618 27,813 31,311 33,572 35,203 32788 28753 25,724 Public Utilities 2:510 2:398 2,313 2,220 1939 1:507 2:120 1,791 1,704 1,557 Convention Sports and Entertainment 10,714 10,002 9,725 9,917 6,369 6699 7,390 7,399 6,131 5,140 Capital outday 136,597 98,601 55,505 70,918 62,422 52,229 60,906 76,161 77,738 41,301 Deb service:

Principal 24,220 18,948 16,294 12,219 12,777 16,085 27,472 18,065 19,032 10,134 Intqrest charges 18,797 19,808 26,927 33,032 33,509 34,830 28,324 41,187 39,037 38,681 Debt issuance costs 227 70 5,182 4,017 Total expenditures 552,482 494,578 453,047 494,666 496,961 487,184 499,552 490,801 456,698 383,469 Revenues over (under) expenditures (4,904) 1,637 (2,231) 6,234 (59,040) (15,760) (34,057) (38,133) (24,711) (15,794)

Other financing Sources (Uses)

Transfers in 84,813 73,470 131,093 99,571 83,498 121,987 299,410 101,249 95,535 99,166 Transfers Issuance ofoutrefu~ndlina[ bonds (75,953) (59,393) (119,552) (86,621) (59,970) (76,304) 5,084 (288,985) 201,680 91,028)

M5,134 (84,325) (88,277)

Payments to refunded bond escrow agent (5,683) (171,222) (255,325)

Premium on long-term debt 94 4641 Discount on long-term debt (199)

Issuance of long-term debt 1,350 31,500 13,570 8,000 2,769 175 18,238 22,583 7,289 Capital leases 1,649 2,198 Claims settlement proceeds 750 3,848 Special items 1,250 Extraordinary loss (67,235)

Total other financing sources 10,210 45,577 (55,694) 26,520 32,278 51,795 45,500 27,917 35,991 19,428 Net change infund balances $ 5,306 $ 47,214 $ (57,925) $ 32,754 $(26,762) $ 36,035 $ 11,443 $(10,216) $ 11,280 $ 3,634 Debt service as a percentage of non-capital expenditures 10.34% 9.79% 10.87% 10.68% 10.65% 11.71% 12.72% 14.29% 15.32% 14.270/

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 109

CITY OF ANAHEIM General Government Tax Revenues By Source Last Ten Fiscal Years (Inthousands)

(Modified accrual basis of accounting)

Amounts in Dollars Property Taxes Property Tax Increments Secured Unsecured Supplemental Secured Unsecured Surplemental Property Sales Transient Fiscal Property Property Property Property Property Property Taxes and Use Occupancy Other Year Taxes Taxes Taxes Residual Taxes Taxes Taxes in-lieu of VLFP Taxes Taxes Taxes Total 2014 $33,976 $ 1,243 $ 832 $2,873 $27,358 $68,581 $110,134 $7,012 $252,009 2013 33,114 1,194 806 2,834 26,363 62,793 102,936 7,078 237,118 2012 31,770 1,289 207 $21,576' $ 6,884' $ 2182 25,630 58,589 90,376 6,401 242,940 2011 31,848 1,300 373 36,824 8,859 1,357 25,532 55,034 82,605 6,486 250,218 2010 32,267 1,341 385 38,809 8,221 701 25,696 48,210 77,139 6,303 239,072 2009 32,496 1,351 712 37,710 7,986 1,419 26,247 56,493 80,055 6,451 250,920 2008 31,073 1,343 1,326 34,772 9,105 1,842 25,850 64,296 87,183 6,753 263,543 2007 29,919 1,384 1,551 29,090 8,591 3,029 25,083 65,695 83,914 7,531 255,787 2006 26,537 1,171 1,887 27,067 7,954 2,320 19,820 64,993 75,979 7,862 235,590 2005 24,820 1,173 1,824 25,380 7,802 .1,802 15,819 59,000 67,141 7,542 212,303 Collection of property taxes in-lieu of VLF starting in fiscal year 2005 is due to the shifting of revenue from motor vehicle license fees category to the property tax category.

This was part of the State of California 2004 Budget Act.

2 Decrease in property tax increments revenues in fiscal year 2012 was due to dissolution of the Redevelopment Agency on February 1, 2012. Property tax increments were received up to January 31, 2012.

Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation.

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 110

CITY OF ANAHEIM Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (Inthousands)

(Modified Accrual Basis of Accounting)

Fiscal Year 2014 2013 2012 2011 2010 City of Anaheim Secured property $30,548,214 $29,608,967 $28,808,849 $28,600,152 $28,775,989 Unsecured property 1,266,403 1,265,519 1,232,825 1,278,062 1,283,263 Total City of Anaheim 31,814,617 30,874,486 30,041,674 29,878,214 30,059,252 Dissolved Anaheim Redevelopment Agency Secured property 3,916,169 4,338,935 3,977,843 3,751,227 3,762,168 Unsecured property 654,982 683,237 656,505 743,403 762,903 Total Anaheim Redevelopment Agency 4,571,151 5,022,172 4,634,348 4,494,630 4,525,071 Total Taxable Assessed Value $36,385,768 $35,896,658 $34,676,022 $34,372,844 $34,584,323 Total Direct Tax Rate 0.11062% 0.11078% 0.11075% 0.11075% 0.11031%

Fiscal Year 2009 2008 2007 2006 2005 City of Anaheim Secured property $29,329,062 $28,473,221 $26,507,229 $24,081,039 $22,288,504 Unsecured property 1,226,209 1,198,812 2,442,959 1,117,310 1,162,358 Total City of Anaheim 30,555,271 29,672,033 28,950,188 25,198,349 23,450,862 Anaheim Redevelopment Agency Secured property 3,644,931 3,360,645 2,838,528 2,574,542 2,332,303 Unsecured property 789,618 818,255 813,249 734,299 748,144 Total Anaheim Redevelopment Agency 4,434,549 4,178,900 3,651,777 3,308,841 3,080,447 Total Taxable Assessed Value $34,989,820 $33,850,933 $32,601,965 $28,507,190 $26,531,309 Total Direct Tax Rate 0.11024% 0.11041% 0.11041% 0.11083% 0.11117%

Note: In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above.

Source: Auditor-Controller, California Municipal Statistics, Inc, County of Orange, HdL Coren & Cone See accompanied Independent auditors' report 111

CITY OF ANAHEIM Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years (Rate per $100 assessed value)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 City Direct Ratel" City Basic Rated" 0.10851 0.10851 0.10851 0.10851 0.10816 0.10816 0.10816 0.10816 0.10816 0.10816 Anaheim General Obligation Bond Fund 0.00211 0.00227 0.00224 0.00224 0.00215 0.00208 0.00225 0.00225 0.00267 0.00301 0.11062 0.11078 0.11075 0.11075 0.11031 0.11024 0.11041 0.11041 0.11083 0.11117 Overlapping Rates:

Anaheim Elementary General Fund 0.29873 0.29873 0.29873 0.29873 0.29778 0.29778 0.29778 0.29778 0.29778 0.29778 Anaheim High General Fund 0.19043 0.19043 0.19043 0.19043 0.18982 0.18982 0.18982 0.18982 0.18982 0.18982 Educational Revenue Augmentation Fund 0.15592 0.15592 0.15592 0.15592 0.15543 0.15543 0.15543 0.15543 0.15543 0.15543 North Orange Co. Community 0.07755 0.07755 0.07755 0.07755 0.07730 0.07730 0.07730 0.07730 0.07730 0.07730 College General Fund Orange County Cemetery District 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 Orange County Department Of Education 0.01579 0.01579 0.01579 0.01579 0.01574 0.01574 0.01574 0.01574 0.01574 0.01574 Orange County Flood Control District General 0.02197 0.02197 0.02197 0.02197 0.02190 0.02190 0.02190 0.02190 0.02190 0.02190 Orange County General Fund 0.06849 0.06849 0.06849 0.06849 0.06827 0.06827 0.06827 0.06827 0.06827 0.06827 Orange County Harbors Beaches & Parks CSA 0.01698 0.01698 0.01698 0.01698 0.01693 0.01693 0.01693 0.01693 0.01693 0.01693 Orange County Sanitation District #2 Operating 0.03227 0.03227 0.03227 0.03227 0.03469 0.03469 0.03469 0.03469 0.03469 0.03469 Orange County Transportation Authority 0.00312 0.00312 0.00312 0.00312 0.00311 0.00311 0.00311 0.00311 0.00311 0.00311 Orange County Vector Control 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 Orange County Water District 0.00831 0.00831 0.00831 0.00831 0.00893 0.00893 0.00893 0.00893 0.00893 0.00893 Orange County Water District Water Reserve 0.00012 0.00012 0.00012 0.00012 0.00013 0.00013 0.00013 0.00013 0.00013 0.00013 Anaheim Elementary School Districts 0.05848 0.05382 0.05371 0.03363 0.03193 0.02248 0.03544 0.02240 0.02811 0.02641 Anaheim High School Districts 0.02620 0.02858 0.02678 0.02745 0.02617 0.02363 0.02516 0.02355 0.02444 0.02770 North Orange County Community College 0.01704 0.01902 0.01742 0.01758 0.01662 0.01493 0.01502 0.01444 0.00520 0.00580 Water District Rate 0.00350 0.00350 0.00370 0.00370 0.00430 0.00430 0.00450 0.00470 0.01666 0.01441 Total Direct and Overlapping Rates 1.10733 1.10719 1.10385 1.08460 1.08117 1.06742 1.08237 1.06734 1.07708 1.07733

"' Excludes rates associated with mello-roos districts.

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

New construction, including tenant improvements, is assessed at its current value.

Source: Auditor-Controller, Orange County See accompanied Independent auditors' report 112

CITY OF ANAHEIM Principal Property Tax Payers Current Year and Nine Years Ago (In thousands)

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

See accompanied independent auditors' report 113

CITY OF ANAHEIM Property Tax Levies and Collections Last Ten Fiscal Years (Inthousands)

Collected within the Total Collected within the Total Fiscal Year of the Levy Collections to Date Fiscal Year of the Levy Collections to Date Collections Collections Total in Total Tax in Fiscal Taxes Percentage Subsequent Percentage Increments Percentage Subsequent Percentage Year Levy Amount' of Levy Years Amount of Levy _Levy Amount2 of Levy Years Amount of Levy 2014 $36,293 $35,558 97.97% $ 133 $35,691 98.34%

2013 34,813 34,116 98.00% 384 34,500 99.10%

2012 33,598 32,560 96.91% 512 33,072 98.43% $49,004 $28,3272 57.81% $28,327 57.81%

2011 33,512 32,517 97.03% 558 33,075 98.70% 49,294 45,906 93.13% $ 282 46,188 93.70%

2010 33,627 32,490 96.62% 796 33,286 98.99% 49,119 46,584 94.84% 524 47,108 95.91%

2009 34,579 33,068 95.63% 1,231 34,299 99.19% 48,432 46,057 95.10% 622 46,679 96.38%

2008 34,283 32,798 95.67% 1,237 34,035 99.28% 46,785 44,793 95.74% 552 45,345 96.92%

2007 33,897 32,324 95.36% 789 33,113 97.69% 42,472 39,807 93.73% 549 40,356 95.02%

2006 30,123 29,187 96.89% 446 29,633 98.37% 38,278 36,692 95.86% 669 37,361 97.60%

2005 28,106 27,452 97.67% 341 27,793 98.89% 35,284 33,819 95.85% 321 34,140 96.76%

Excludes property taxes in-lieu of vehicle license fees.

2 Decrease in property tax collection is due to the dissolution of the Redevelopment Agency on February 1, 2012. Property tax increments were received up to January 31, 2012.

Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation.

Source: Auditor-Controller, County of Orange See accompanied Independent auditors' report 114

CITY OF ANAHEIM Ratios of Outstanding Debt by Type Last Ten Fiscal Years (Inthousands, except per capita amount)

Fiscal Year 2014 2013 2012 2011 2010 Governmental Activities Bonds $ 614,757 $ 616,086 $ 616,444 $ 821,587 $ 810,504 Certificates of participation 8,880 10,020 11,085 12,070 12,990 Notes and loans 50,757 54,877 25,546 34,566 29,094 Capital leases 1,325 1,369 1,694 2,341 2,605 Total governmental activities 675,719 682,352 654,769 870,564 855,193 Business-Type Activities Bonds 780,553 863,987 889,581 908,683 805,925 Certificates of participation 38,000 38,000 38,000 38,000 38,000 Notes and loans 48,271 62,722 24,652 30,519 11,379 Capital leases Total business-type activities 866,824 964,709 952,233 977,202 855,304 Total Government $1,542,543 $1,647,061 $1,607,002 $1,847,766 $1,710,497 Percentage of Personal Income 18.88% 19.74% 20.95% 24.57% 23.32%

Per Capita $ 4,429 $ 4,758 $ 4,674 $ 5,418 $ 5,088 Fiscal Year 2009 2008 2007 2006 2005 Governmental Activities Bonds $ 805,068 $ 793,343 $ 740,107 $ 740,959 $ 739,775 Certificates of participation 13,840 23,333 26,788 30,066 33,174 Notes and loans 24,621 27,538 57,614 43,342 28,669 Capital leases 1,235 2,353 2,484 2,220 1,523 Total governmental activities 844,764 846,567 826,993 816,587 803,141 Business-Type Activities Bonds 829,707 689,791 706,126 513,874 528,130 Certificates of participation 38,000 88,185 96,475 125,087 132,952 Notes and loans 12,299 13,189 14,081 14,976 15,842 Capital leases 267 275 180 Total business-type activities 880,006 791,165 816,949 654,212 677,104 Total Government $1,724,770 $1,637,732 $1,643,942 $1,470,799 $1,480,245 Percentage of Personal Income 23.96% 21.93% 22.17% 20.01% 21.48%

Per Capita $ 5,193 $ 4,953 $ 4,985 $ 4,465 $ 4,466 Note: Per capita amounts are estimates.

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

Sources: California State Department of Finance and Finance Department, City of Anaheim US Census Yearly American Community Survey See accompanied Independent auditors' report 115

CITY OF ANAHEIM Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (Inthousands, except per capita amount)

Fiscal Year 2014 2013 2012 2011 2010 Bonds General Obligation $ 1,995 $ 2,605 $ 3,185 $ 3,735 $ 4,255 Lease Revenue' 612,762 613,481 616,444 609,683 605,252 Tax Allocation 208,169 200,997 614,757 616,086 619,629 821,587 810,504 Less amounts available in debt service fund 73,500 61,625 53,398 67,363 69,043 Total net obligation bonds outstanding $541,257 $554,461 $566,231 $754,224 $741,461 Percentage of Assessed Value of Property 1.49% 1.54% 1.63% 2.19% 2.14%

Per capita $ 1,554 $ 1,602 $ 1,647 $ 2,212 $ 2,205 Fiscal Year 2009 2008 2007 2006 2005 Bonds General Obligation $ 4,750 $ 5,220 $ 5,700 $ 6,170 $ 6,625 Lease Revenue 600,064 588,692 582,272 575,125 569,016 Tax Allocation 200,254 199,431 152,135 159,664 164,134 805,068 793,343 740,107 740,959 739,775 Less amounts available in debt service fund 63,560 57,995 39,075 39,232 30,812 Total net obligation bonds outstanding $741,508 $735,348 $701,032 $701,727 $708,963 Percentage of Assessed Value of Property 2.12% 2.17% 2.15% 2.46% 2.67%

Per capita $ 2,233 $ 2,224 $ 2,126 $ 2,130 $ 2,139 Lease revenue total includes accretion payable.

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

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

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 116

CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2014 (Inthousands) 2013-14 Assessed Valuation $36,385,768 DIRECT TAX AND ASSESSMENT DEBT: Outstanding City of Anaheim $F 1,995 DIRECT GENERAL FUND DEBT:

City of Anaheim General Fund Obligations 673,724 TOTAL GROSS DIRECT DEBT 675,719 Less: City of Anaheim Public Financing Authority (100% self-supporting) 612,762 City of Anaheim various revenue funds (100% self-supporting) 52,082 TOTAL NET DIRECT DEBT 10,875 City's Share Total Debt of Debt OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2014  % Applicable(1) 6/30/2014 Metropolitan Water District $ 132,275 1.663% $ 2,200 North Orange Joint Community College District 201,239 28.238 56,826 Rancha Santiago Community College District 285,430 12.695 36,235 Anaheim Union High School District 100,324 68.295 68,516 Fullerton Joint Union High School District 50,238 0.255 128 Garden Grove Unified School District 244,995 0.596 1,460 Placentia - Yorba Unda Unified School District 257,071 19.666 50,556 Anaheim School District 151,621 99.221 150,440 Magnolia School District 17,678 67.688 11,966 Other School Districts 99,833 Various 21,940 City of Anaheim Community Facilities Districts 37,300 100.000 37,300 Orange Unified School District Community Facilities Districts 7,600 4.098-100.000 1,529 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 1,585,604 439,096 OVERLAPPING GENERAL FUND DEBT:

Orange County General Fund Obligations 145,476 8.224% 11,964 Orange County Pension Obligations 32,195 8.224 2,648 Orange County Board of Education Certificates of Participation 15,500 8.224 1,275 Municipal Water District of Orange County Certificate of Participation 7,775 0.001 North Orange County Regional Occupation Program Certificates of Participation 10,690 29.095 3,105 Orange Unified School District Certificates of Participation 33,192 26.160 8,683 Orange Unified School District Benefit Obligations 86,665 26.160 22,672 Placentia-Yorba Linda Unified School District Certificates of Participation 107,236 19.666 21,089 Anaheim Union High School District Certificates of Participation 36,178 68.295 24,708 Fullerton Joint Union High School District Certificates of Participation 22,225 0.255 57 Fullerton School District Certificates of Participation 6,160 0.173 11 TOTAL GROSS OVERLAPPING GENERAL FUND OBUGATION DEBT 503,292 96,212 OVERLAPPING TAX INCREMENT DEBT (Successor Agency):

City of Anaheim Tax Allfcation Bonds 205,705 100.000 205,705 Orange County Neighborhood Project Tax Allocation Bonds 15,285 0.084 13 TOTAL OVERLAPPING TAX INCREMENT DEBT 205,718 TOTAL GROSS OVERLAPPING DEBT 741,026 TOTAL NET OVERLAPPING DEBT 741,026 GROSS COMBINED TOTAL DEBT 1,416,745 (2)

NET COMBINED TOTAL DEBT $ 751,901 117 (continued)

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

(continued)

(1) Percentage of overlapping agency's assessed valuation located within boundaries of the city.

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

Ratios to 2013-14 Assessed Valuation:

Direct Debt ($1,995) 0.01%

Total Direct and Overlapping Tax and Assessment Debt 1.21%

Ratios to Adjusted Assessed Valuation:

Gross Combined Direct Debt ($675,719) 1.86%

Net Combined Direct Debt ($10,875) 0.03%

Gross Combined Total Debt 3.89%

Net Combined Total Debt 2.07%

Ratios to Redevelopment Increment Valuation ($4,571,151)

Total Overlapping Tax Increment Debt 4.50%

Source: California Municipal Statistics, Inc.

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

See accompanied Independent auditors' report 118

CITY OF ANAHEIM Legal Debt Margin Last Ten Fiscal Years (inthousands)

Fiscal Year 2014 2013 2012 2011 2010 Debt limit $ 4,582,232 $ 4,441,345 $ 4,321,327 $ 4,290,023 $ 4,316,398 Total net debt applicable to limit (1,995) (2,605) (3,185) (3,735) (4,255)

Legal debt margin $ 4,580,237 $ 4,438,740 $ 4,318,142 $ 4,286,288 $ 4,312,143 Total net debt applicable to the limit as a percentage of debt limit 0.04% 0.06% 0.07% 0.09% 0.10%

Legal Debt Margin Assessed value $30,548,214 $29,608,967 $28,808,849 $28,600,152 $28,775,989 Debt limit (15% of total assessed value) 4,582,232 4,441,345 4,321,327 4,290,023 4,316,398 Fiscal Year 2009 2008 2007 2006 2005 Debt limit $ 4,399,359 $ 4,270,983 $ 3,976,084 $ 3,612,156 $ 3,343,276 Total net debt applicable to limit (4,750) (5,220) (5,700) (6,170) (6,625)

Legal debt margin $ 4,394,609 $ 4,265,763 $ 3,970,384 $ 3,605,986 $ 3,336,651 Total net debt applicable to the limit as a percentage of debt limit 0.11% 0.12% 0.14% 0.17% 0.20%

Legal Debt Margin Assessed value $29,329,062 $28,473,221 $26,507,227 $24,081,039 $22,288,504 Debt limit (15% of total assessed value) 4,399,359 4,270,983 3,976,084 3,612,156 3,343,276 Note:

Under State Finance Law, the City's outstanding general obligation debt should not exceed 15 percent of total assessed property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds.

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 119

CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (Inthousands)

Redevelopment - Tax Allocation Revenue Bonds2 Tax Less Net Fiscal Increment Operating Available Debt Service Year Revenue Expenses' Revenue Principal Interest Total Coverage 2011 $45,940 $ 8,848 $37,092 $ 55 $10,862 $10,917 3.3976 2010 46,652 21,409 25,243 10,766 10,766 2.3447 2009 46,101 5,300 40,801 10,766 10,766 3.7898 2008 45,719 4,722 40,997 6,000 6,275 12,275 3.3399 2007 40,710 2,729 37,981 3,983 13,417 17,400 2.1828 2006 37,341 5,196 32,145 2,977 11,727 14,704 2.1861 2005 34,984 5,361 29,623 3,014 11,700 14,714 2.0133 2004 31,650 3,321 28,329 4,620 9,996 14,616 1.9382 Operating expenses consist of SERAF contributions and pass through agreements.

2 The Redevelopment Agency dissolved on February 1, 2012.

Electric Utility Revenue Bonds Less Net Debt Service Fiscal Electric Operating Available Year Revenue Expenses3 Revenue Principal Interest Total Coverage 2014 $430,782 $347,290 $ 83,492 $11,590 $30,039 $41,629 2.0056 2013 453,949 349,835 104,114 18,995 33,335 52,330 1.9896 2012 407,787 314,231 93,556 18,175 34,104 52,279 1.7896 2011 391,218 309,274 81,944 17,825 30,825 48,650 1.6844 2010 390,364 309,112 81,252 15,995 31,788 47,783 1.7004 2009 378,916 300,269 78,647 15,370 28,798 44,168 1.7806 2008 373,842 299,534 74,308 14,690 29,450 44,140 1.6835 2007 330,421 265,340 65,081 13,765 24,424 38,189 1.7042 2006 336,091 268,274 65,817 13,145 25,132 38,277 1.7717 2005 297,443 218,562 78,881 15,875 24,780 40,655 1.9403 Operating expenses excludes amortization and depreciation.

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

Source: Finance Department, City of Anaheim (continued) 120

CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (Inthousands)

(continued)

Water Utility Revenue Bonds Less Net Fiscal Water Operating Available Debt Service Year Revenue Expenses4 Revenue Principal Interest Total Coverage 2014 $66,979 $50,046 $16,933 $ 920 $4,217 $5,137 3.2963 2013 61,849 44,838 17,011 950 4,255 5,205 3.2682 2012 59,330 44,615 14,715 915 4,292 5,207 2.8260 2011 56,935 45,293 11,642 880 3,275 4,155 2.8019 2010 57,787 45,231 12,556 1,490 2,544 4,034 3.1125 2009 53,039 40,123 12,916 1,435 1,967 3,402 3.7966 2008 51,052 41,190 9,862 1,375 325 1,700 5.8012 2007 51,595 43,203 8,392 1,325 379 1,704 4.9249 2006 47,904 39,110 8,794 1,870 450 2,320 3.7905 2005 44,484 33,312 11,172 1,340 485 1,825 6.1216 Operating expenses excludes amortization and depreciation.

Sanitation Revenue Bonds Less Net Debt Service Fiscal Wastewater Operating Available Year Revenue' Expenses6 Revenue Principal Interest Total Coverage 2014 $12,572 $5,594 $6,978 $920 $2,079 $2,999 2.3268 2013 12,106 5,477 6,629 880 2,118 2,998 2.2111 2012 11,933 4,832 7,101 835 2,161 2,996 2.3702 2011 11,813 4,030 7,783 805 2,193 2,998 2.5961 2010 11,773 5,452 6,321 775 2,224 2,999 2.1077 2009 10,913 5,176 5,737 2,224 2,224 2.5796 2008 10,299 5,167 5,132 1,532 1,532 3.3499 2007 10,113 6,734 3,379

' Amounts based on the notes to the basic financial statement, segment reporting.

' Operating expenses excludes amortization and depreciation.

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

Source: Finance Department, City of Anaheim See accompanied Independent auditors' report 121

CITY OF ANAHEIM Demographic and Economic Statistics Last Ten Fiscal Years Personal Per Education Orange Income Capita Level in County Fiscal (thousands Personal Median Years of School Unemployment Year Population"'3 of dollars) Income Age") Schooling Enrollment Rate 2014 348,305 $8,647,769 $24,8281 32.4 12.2 64,528 6.20%

8,344,211 24,105 32.4 12.2 64,463 6.10%

2013 346,161 2012 343,793 7,669,678 22,309 32.4 12.2 67,760 7.90%

2011 341,034 7,519,459 22,049 32.4 12.2 67,884 9.20%

2010 336,208 7,333,705 21,813 32.4 12.2 68,331 9.50%

2009 332,120 7,198,701 21,675 32.4 12.2 68,890 9.30%

2008 330,659 7,467,272 22,583 32.4 12.2 68,663 5.30%

2007 329,780 7,416,752 22,490 32.4 12.2 69,296 3.90%

2006 329,373 7,351,605 22;320 32.4 12.2 70,793 3.70%

2005 331,458 6,892,338 20,794 32.4 12.2 71,314 3.90%

"I Population and Median Age were updated to reflect Census 2010 counts.

121 Per capita income for FY 2014 is estimated. Data not readily available.

Sources: California State Department of Finance Anaheim City Superintendent of Schools State of California, Employment Development Department State Department of Commerce and Labor State Department of Education US Census Yearly American Community Survey See accompanied Independent auditors' report 122

CITY OF ANAHEIM Principal Employers Current Year and Nine Years Ago Fiscal Year 2014 2005 Percentage Percenta e of Total of Total City City Employer Rank Employees Employment Rank Employees Employment Disneyland Resort 1 23,402 14.6% 1 22,650 14.4%

Kaiser Foundation Hopital 2 6,070 3.8% 3 1,500 1.0%

Hilton Anaheim 3 1,572 1.0% 6 900 0.6%

Anaheim Regional Medical Center 4 1,300 0.8% 4 1,185 0.8%

Miller's Precision Grinding 5 1,200 0.8%

L-3 Communications 6 1,070 0.7%

Angels Baseball 7 1,050 0.7%

Time Warner 8 900 0.6%

Anaheim Marriott Hotel 8 900 0.6%

G4S Secure Solutions, Inc 9 800 0.5%

West Anaheim Medical Center 10 750 0.5% 8 700 0.4%

Boeing North America 2 3,500 2.2%

Alstyle Apparel 3 1,500 1.0%

Arrowhead Pond of Anaheim 5 1,000 0.6%

Long Beach Mortgage 7 800 0.5%

Anaheim Sports, Inc 8 700 O.4%

Advantage Sales and Marketing 8 700 0.4%

Aramark at Angels Stadium 8 700 0.4%

DDI Corp 8 700 0.4%

First American Real Estate 8 700 O.4%

Specialty Restaurant Crop Total 39,014 24.4% 37,235 23.7%

Note: Statistics prior for Fiscal Year 2004 is not readily available.

Source: Inside Prospects Database See accompanied Independent auditors' report 123

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CITY OF ANAHEIM Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program City Council 7 7 7 7 7 7 7 7 7 7 City Administration 20 20 21 21 24 24 24 22 19 18 City Attorney 31 30 30 30 35 35 35 35 32 32 City Clerk 7 7 6 6 7 7 7 7 7 7 Human Resources 37 38 36 36 40 40 40 40 38 37 Finance 32 32 34 35 40 41 42 42 42 42 City Treasurer 12 12 12 12 12 12 12 12 12 12 Police 549 536 530 554 610 610 604 591 582 570 Fire 262 262 275 277 289 289 290 290 288 285 Community Development 68 78 102 105 106 109 108 114 120 119 Planning 71 69 73 75 93 94 97 96 95 96 Public Works 236 234 235 252 252 252 252 249 247 245 Community Services 87 87 115 123 180 183 184 183 183 179 Public Utilities 353 352 355 377 377 377 367 354 337 335 Convention, Sports and Entertainment 84 83 91 91 91 91 88 88 86 86 Total 1,856 1,847 1,922 2,001 2,163 2,171 2,157 2,130 2,095 2,070 Source: City of Anaheim See accompanied Independent auditors' report 125

CITY OF ANAHEIM Operating Indicators by Function Last Ten Fiscal Years Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program Police Department Number of calls for service 186,042 186,461 189,751 195,587 185,934 191,037 196,241 203,832 173,669 173,669 Number of 911 calls received 145,813 182,856 179,313 165,698 140,529 129,998 125,174 134,938 103,586 92,710 Number of Part I Crimes per 100,000 population 2,883 3,326 3,057 2,886 2,857 2,764 2,899 3,042 3,042 3,250 Number of Arrest 11,846 11,617 11,494 13,345 17,650 15,951 16,212 14,135 Number of Field Reports processed by Records Bureau 38,362 39,066 33,050 35,807 35,256 37,999 40,232 43,000 54,401 62,842 Number of traffic collisions 4,686 4,414 4,044 4,046 4,027 4,251 4,626 4,461 4,837 5,055 Number of Hours of Volunteer service 24,124 23,470 25,309 20,335 18,038 16,201 16,820 15,654 Fire Department Fire responses 885 902 923 983 1,275 1,016 1,082 649 687 519 False alarm responses 1,735 1,424 1,390 1,487 1,467 1,503 1,398 719 678 581 Mutual aid responses 3,001 2,860 2,744 2,707 2,560 2,532 2,662 2,296 2,271 2,530 Medical responses 24,912 24,735 23,061 22,202 24,045 21,553 21,301 16,326 16,679 13,783 Hazardous condition responses 211 207 201 199 207 224 203 263 322 138 Public Works Centerfine miles of arterial highway pavement improved 7.13 5.9 8.7 5.8 9.0 8.1 9.1 8.7 3.5 2.9 Square feet of deteriorated pavement replaced 4,345,480 4,029,806 2,977,482 4,274,463 820,000 780,500 890,500 890,500 920,500 910,250 Square feet of deteriorated pavement slurry sealed 4,422,148 2,850,939 4,208,194 4,167,569 1,975,000 2,532,000 3,483,000 3,483,000 3,522,000 4,175,500 Number of traffic intersections maintained 327 318 318 319 318 318 316 316 308 15 Number of traffic control hubs maintained 19 18 18 18 18 17 16 16 15 1 Square feet of deteriorated sidewalk replaced 96,399 77,590 74,780 62,940 60,000 50,500 50,200 50,200 46,500 48,850 Linear feet of damaged curb/gutter replaced 29,996 25,187 27,661 24,755 11,500 12,500 11,500 11,500 11,500 1,350 Square feet of medians/parkways maintained 5,644,799 5,644,818 5,511,065 5,460,655 5,400,000 5,350,000 5,350,000 5,350,000 5,212,600 5,209,500 Square feet of landscape maintained inthe Anaheim Resort 1,542,442 1,430486 1,430,486 1,430,486 1,430,486 1,419,286 1,419,286 1,419,286 1,419,286 1,419,286 Square feet of hardscape maintained inthe Anaheim Resort 991,360 858,828 858,828 1,001,743 858,828 858,828 858,828 858,828 858,828 858,828 Number of vehicles maintained 1,144 1,106 1,152 1,162 1,331 1,331 1,351 1,283 1,273 1,273 Number of vehicles per mechanic 58 58 50 47 50 55 59 48 50 50 Square feetof interior space maintained 2,700,000 2,362,992 2,176,265 2,176,265 2,176,265 2,176,265 2,176,265 1,941,287 1,882,400 1,882,400 Square feet of exterior space maintained 37,655,278 37,645,278 39,138,187 39,138,187 39,138,187 39,138,187 39,138,187 35,298,000 35,238,900 35,238,900 Number of facility square feet (interior) per worker 150,000 139,000 120,904 114,540 103,631 103,631 103,631 77,651 75,296 75,500 Number of construction projects 165 120 100 136 130 130 132 167 158 130 Number of permit inspections 486 380 404 355 800 800 802 1,623 1,567 1,659 Parks Number of park acres maintained perfll-time equivalent emplaee 75 75 75 75 12.00 12.00 10.52 10.52 10.52 10.39 Number of sports fields prepared 66 66 66 66 66 66 66 66 66 66 Cost per acre of parks maintained. $8,438 $8,192 $8,031 $8,333 $9,651 $9,950 $10,699 $10,288 $9,960 $8,791 Cost per sports field maintained. $4,387 $4,260 $4,133 $4,261 $5,134 $5,134 $4,937 $4,747 $4,596 $4,828 Golf Courses Cost per acre ofgolf course maintained $9,931 $9,595 $9,010 $9,569 $11,327 $10,674 $10,617 $10,305 $9,625 $9,242 Number of rounds played 117,652 118,879 120,675 116,287 124,404 137,948 153,661 157,649 160,614 156,991 Number of acres maintained 200 200 200 200 200 200 200 200 200 200 126 (continued)

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

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

Number of meters 115,474 115,418 115,113 114,662 113,434 112,548 111,784 111,319 110,729 110,635 Megawatt-hours - soles 4,065,552 3,312,018 2,966,119 2,976,014 3,344,188 3,208,123 2,979,396 3,233,508 3,223,728 3,090,382 Megawatt-hours - purchased pawer 3,751,220 3,029,766 2,707,466 2,737,174 3,085,358 2,836,962 2,978,800 2,780,318 2,606,275 2,459,836 Megawatt-hours - owned generation 467,348 410,601 430,323 431,027 410,784 435,835 301,021 696,563 929,787 936,471 Water Utility:

Number of meters 63,002 62,917 62,793 62,717 62,607 62,456 62,436 62,372 62,045 61,883 Millions of gallons sold 20,743 20,464 19,672 19,526 20,492 22,238 23,154 24,075 22,887 22,550 Millions of gallons purchased from Metropalitan Water District 5,286 6,878 7,023 7,398 8,054 6,614 4,978 8,049 10,188 9,144 Millions of gallons pumped from water system wells 16,749 14,659 14,100 13,399 14,669 17,034 18,961 16,844 13,580 14,244 Anaheim Convention Center Number of events serviced 221 263 222 200 232 310 339 347 337 310 Number of attendees 1,020,000 1,070,000 1,059,000 935,000 944,000 917,000 1,008,000 1,098,000 1,002,000 1,202,000 Percentage of occupancy 63.0% 58.0% 62.0% 56.0% 68.0% 56.0% 61.0% 70.0% 58.0% 66.0%

Source: Various City Departments See accompanied Independent auditors' report 127

CITY OF ANAHEIM Capital Assets Statistics by Function Last Ten Fiscal Years Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program Police Department Police Facilities 10 10 10 10 10 10 9 8 6 4 Motorized Equipment 247 247 242 242 250 266 255 251 248 Police Helicopters 2 3 3 3 4 4 3 3 3 3 Shooting Range 1 1 1 1 1 1 Communication/Radio Tower 1 1 1 1 1 Fixed Wing 1 1 11 Fire Department 11 11 11 11 11 11 10 10 Fire stations Training center 1 1 1 1 7 74 79 74 69 74 74 79 79 72 72 Fire trucks, engines, and other vehicles Public Works Streets (center lane miles) 578 578 578 578 588 633 633 633 633 588 Traffic signals 340 318 318 318 306 318 314 312 312 309 Sewers (miles) 575.52 575.52 573.63 570.44 569.60 568.30 565.70 561.50 560.00 560.00 Storm Drains (miles) 151.30 151.30 151.24 151.24 151.24 148.00 148.00 148.00 148.00 148.00 Parks Community parks 11 11 11 11 11 11 11 11 11 11 Mini parks 7 7 7 7 7 7 6 6 6 6 Neighborhood parks 21 21 21 21 21 21 20 20 20 21 Special use parks 7 7 7 7 6 6 6 6 6 6 Golf Courses 2 2 2 2 2 2 2 2 2 2 City Libraries Branch libraries 7 7 7 7 7 7 7 6 5 4 Book mobiles 1 1 1 1 2 2 2 2 2 Museums/Historic properties 5 5 5 5 5 3 3 3 1 (continued) 128

CITY OF ANAHEIM Capital Assets Statistics by Function Last Ten Fiscal Years (continued)

Fiscal Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Function/Program Public Utilities Department Electric Utility:

Transmission, 69 kV, circuit miles 86 87 86 90 80 80 80 77 69 70 Distribution, 12 kV and lower, circuit miles Overhead 420 426 428 440 446 446 453 458 468 800 Underground 666 662 656 658 617 625 615 582 564 620 Water Utility:

Active Wells 17 18 18 18 18 18 21 19 21 23 Reservoirs 14 14 14 14 13 13 13 13 13 13 Water Mains (miles) 753 753 753 752 753 750 750 747 746 747 Fire Hydrants 7,832 7,816 7,812 7,802 7,805 7,751 7,749 7,730 7,720 7,848 Anaheim Convention Center Square footage available 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 Number of exhibit halls 5 5 5 5 5 5 5 5 5 5 Source: Various City Departments See accompanied Independent auditors' report 129

CITY OF ANAHE IM Legend

• CITY HALL 200 S. ANAHEIM BLVD.

A FIRE STATIONS POLICE STATIONS SLIBRARIES CITY FACILITIES

• HEUPORT

41. CANYON RIM PARK 7305 E. Canyon Rim Rd.

PARKS 42. RONALD REAGAN PARK 945 S.Weir Canyon Rd.

1. HANSEN PARK 11. WILLOW PARK 21. COLONY SQUARE 31. OLIVE HILLS PARK 1300 S. Knott St. 1625 W. Crone Ave. 210 E. Lincoln Ave. 4200 Nohl Ranch Rd. 43. ROOSEVELT PARK

2. REID PARK 12. PALM LANE PARK 22. WALNUT GROVE PARK 8160 E.Bauer Rd.

905 S. Anaheim Blvd. 32. RIVERDALE PARK 3100 W. Orange Ave. 1595 Petais Rd. 4545 E. Riverdale Ave. 44. ROSS PARK 1280 W. Santa Ana St.

3. SCHWEITZER PARK 13. SAGE PARK 23. CITRUS PARK 33. PERALTA CANYON PARK 238 S. Bel Air St. 1313 Lido Pl. 104 S. Atchison St 115 N. Pinney Dr. 45. COTTONWOOD PARK

4. MAXWELL PARK 14. STODDARD PARK 24. PONDEROSA PARK 853 W. Cottonwood Cir.

34. PELANCONI PARK 2660 W. Orange Ave. 901 S. Ninth St. 2100 S. Heaster St. 222 S. Avenida Margarita 46. DEER CANYON PARK Mohler & Santa Ana Rd.

5. PETER MARSHALL PARK 15. MANZANITA PARK 25. LINCOLN PARK 35. IMPERIAL PARK 801 N. Magnolia Ave. 1260 Riviera St 1440 E. Lincoln Ave. 450 S. Imperial Hwy. 47. FOUNDERS PARK 400 N. West St

6. BROOKHURST COMMUNITY PARK 16. LA PALMA PARK & STADIUM 26. EDISON PARK 36. EUCALYPTUS PARK 2271 W. Cresent Ave. 1151 La Palms Park Way 1145 Baxter St. 48. COLONY PARK 100 N. Quintana Dr. 501 E. Water St.

7. JOHN MARSHALL PARK 17. PEARSON PARK 27. BOYSEN PARK 37. OAK PARK 49. ENERGY FIELD 2066 Falmouth Ave. 400 N.Harbor Blvd, 951 State College Blvd. 6400 E. Nohl Ranch Rd. 1625 S. Ninth St.

8. MODJESKA PARK 18. LITTLE PEOPLES PARK 28. JUAREZ PARK 38. YORBA REGIONAL PARK 50. MAGNOLIA PARK 1331 S. Nutwood St. 220 W. Elm St. 841 S. Sunkist St. 7600 E. La Palma Ave. 1515 Wright Cir.

9. CLARA BARTON PARK 19. JULIANNA PARK 29. PIONEER PARK 39. OAK CANYON NATURE CENTER 51. FRIENDSHIP PLAZA PARK 1926 Clearbrook Ln. 309 E. Juliana St. 2565 E. Underhil Ave. 200 S. Anaheim Blvd.

6700 Walnut Canyon Rd.

10. CHAPARRAL PARK 20. GEORGE WASHINGTON PARK 30. RIO VISTA PARK 52. ANAHEIM COVES 1770 E. Broadway 40. SYCAMORE PARK 962 S. Rio Vista St.

250 E. Cypress St. 201 N. Park Vista SL 8268 Monte Vista Rd.

130

Anaheim, California Comprehensive Annual Financial Report Year Ended June 30, 2014 Seizing Our Destiny: The Movement for Riverside's ProsperousFuture

CITY OF RIVERSIDE, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2014 Prepared by the Finance Department Brent A. Mason, Finance Director/Treasurer 3900 Main Street, Riverside, California 92522 (951) 826-5660 This report was printed on recycled stock

CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2014 TABLE OF CONTENTS INTRODUCTORY SECTION Page L etter of T ransm ittal ......................................................................................................... i GFOA Certificate of Achievement ...................................................................................... v Legislative and C ity Officials .............................................................................................. vi O rganization C hart .......................................................................................................... vi FINANCIAL SECTION R eport of Independent A uditors ........................................................................................... 1 Management's Discussion and Analysis ................................................................................. 3 Basic Financial Statements:

Government-wide Financial Statements:

Statem ent of N et Position ........................................................................................ 19 Statem ent of A ctivities ........................................................................................... 20 Fund Financial Statements:

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

G eneral Fund .......................................................................................... ...... 25 Statement of Net Position - Proprietary Funds ............................................................... 26 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds ............ 28 Statement of Cash Flows - Proprietary Funds ................................................................ 29 Statement of Net Position/(Deficit) Fiduciary Funds ................................................................... 31 Statement of Changes in Net Position/(Deficit) Fiduciary Fund - Private-Purpose Trust .............. 32 Notes to Basic Financial Statements ............................................................................. 33 Required Supplementary Information (Unaudited) .............................................................. 63 Combining and Individual Fund Statements and Schedules:

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

Nonmajor Governmental Funds ............................................................................ 69 Combining Statement of Net Position - Nonmajor Enterprise Funds ....................................... 73 Combining Statement of Revenues, Expenses and Changes in Net Position - Nonmajor Enterprise F unds ..................................................................................................... . ..... 75

CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2014 TABLE OF CONTENTS FINANCIAL SECTION (CONT.)

Combining Statement of Cash Flows - Nonmajor Enterprise Funds ....................................... 76 Combining Statement of Net Position - Internal Service Funds ............................................. 79 Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service Fu n d s .......................................................................................................... 80 Combining Statement of Cash Flows - Internal Service Funds ............................................. 81 Combining Statement of Changes in Assets and Liabilities - Agency Fund ............................... 84 Capital Assets Used in the Operation of Governmental Funds:

Schedule by Source .......................................................................................... 86 STATISTICAL SECTION Table I Net Position by Component - Last Ten Fiscal Years .......................................................... 88 2 Changes in Net Position - Last Ten Fiscal Years ............................................................... 89 3 Fund Balances of Governmental Funds - Last four Fiscal Years ...................................................... 91 4 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years ............................. 92 5 Business-Type Activities Electricity Revenues By Source - Last Ten Fiscal Years ...................... 94 6 Governmental Activities Tax Revenues By Source - Last Ten Fiscal Years ............................... 95 7 Assessed Value and Estimated Actual Value of Taxable Properiy - Last Ten Fiscal Years ............ 96 8 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years ...................................... 97 9 Principal Property Taxpayers - Current Year and Nine Years Ago ......................................... 98 10 Property Tax Levies and Collections - Last Ten Fiscal Years ............................................... 99 II Electricity Sold by Type of Customer- Last Ten Fiscal Years ............................................. 100 12 Electricity Rates - Last Ten Fiscal Y ears ........................................................................ 101 13 Top 10 Electricity Customers - Current Year and Nine Years Ago ......................................... 102 14 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years ............................................... 103 15 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years ...................................... 104 16 Direct and Overlapping Governmental Activities Debt ....................................................... 105 17 Legal Debt Margin Information - Last Ten Fiscal Years ..................................................... 107 18 Pledged-Revenue Coverage Business Type Activity Debt - Last Ten Fiscal Years ...................... 108 19 Demographic and Economic Statistics - Last Ten Calendar Years ......................................... 109 20 Principal Employers - Current Year and Nine Years Ago .................................................... 110 21 Full-Time Equivalent City Government Employees by Function - Last Ten Fiscal Years .............. III 22 Operating Indicators by Function - Last Ten Fiscal Years ................................................... 112 23 Capital Asset Statistics by Function - Last Ten Fiscal Years ................................................ 113

December 8, 2014 To the Honorable Mayor, Members of the City Council and Citizens of the City of Riverside:

It is our pleasure to submit the Comprehensive Annual Financial Report (CAFR) of the City of Riverside (the City) for the fiscal year ended June 30, 2014.

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

The City's financial statements have been audited by Macias Gini & O'Connell LLP, a firm of certified public accountants. The independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unmodified opinion on the City's financial statements for the fiscal year ended June 30, 2014. The independent auditor's report is presented as the first component of the financial section of this CAFR.

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

i

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

Profile of the City of Riverside The City of Riverside, incorporated on October I1, 1883, is located in the western portion of Riverside County, about 60 miles east of Los Angeles. The City currently occupies a land area of 81.507 square miles.

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

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

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

Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on page 23 as part of the basic financial statements for the governmental funds. For governmental funds other than the general fund, with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report, which begins on page 68.

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

The population of the Inland Empire at approximately 4.2 million is larger than 24 states. The City leads the Inland Empire in most ii

measures of economic power, including population, income, employment, bank deposits, assessed valuation, office space and college enrollment. The population of the City is 314,034, which places it as the sixth largest in Southern California.

Unemployment in the MSA is currently at 8.4% down from 9.7% for the same period last year with modest improvements in the real estate and home building sectors. The Citywide budget for the fiscal year 2014/2015 remains relatively flat and is balanced.

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

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

• Nurture Intelligent Growth

• Catalyst for Innovation

• Location of Choice

• Evolve as a Unified City Long-term financial planning. Annually, the City updates a five (5) year Capital Improvement Program (CIP). Planned capital expenditures during fiscal years 2014/15 - 2018/19 total approximately $505 million. The projects encompass all seven Council wards and enhance the life of all residents. Funding comes from multiple sources, including existing funds; bond proceeds, user fees, special tax revenues, and regional, state and federal funds. In addition to routine electric, water, sewer and transportation-related projects, the CIP includes improvements to Parks, Recreation and Community Services projects; railroad-related projects; and municipal buildings and facilities, such as library, police and fire facilities.

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

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

Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting (Program) to the City of Riverside for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2013. This was the twenty-sixth consecutive year that the City has received this prestigious award. The City received this award for publishing an easily readable and efficiently organized CAFR that satisfied both GAAP and applicable legal requirements.

iii

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

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

Respectfully submitted,

~L~-

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

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Government Finance Officers Association Achievement for Excellence in Financial Reporting to the Certificate of City of Riverside for our Comprehensive Annual Financial Achievement Report for the fiscal year ended June 30, 2013.

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

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

For its Comprehensive Annual Financial Report for the Fiscal Year Ended A Certificate of Achievement is valid for a period of one June 30, 2013 year only. We believe our current report continues to meet the Certificate of Achievement Program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate.

Executive Director/CEO

ORGANIZATION CHART LEGISLATIVE OFFICIALS Rusty Bailey ................................................................................... Mayor Mike Gardner .................................................. Councilmember - Ward 1 Andy Melendrez .............................................. Councilmember - Ward 2 Mike Soubirous ............................................... Councilmember - Ward 3 Paul Davis ....................................................... Councilmember - Ward 4 Chris Mac Arthur ............................................. Councilmember- Ward 5 Jim Perry ......................................................... Councilmember - Ward 6 Steve Adams ................................................... Councilmember - Ward 7 CITY OFFICIALS Scott C. Barber ................................................................. City Manager*

Belinda Graham .................................................. Assistant City Manager Deanna Lorson ................................................... Assistant City Manager Colleen J. Nicol ....................................................................... City Clerk*

- ~1-

- - -....... Cristina Talley ........................................................

Lea Deesing .......................................................

Interim City Attorney*

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

Al Zelinka ........................................... Community Development Director Brent A. Mason .............................................

Chief of Police Chief Innovation Officer Finance Director/Treasurer

-Hil- Michael Moore ......................................................................... Fire Chief Kris Martinez .................................................. General Services Director II Brenda Diederichs ....................................... Human Resources Director Tonya Kennon ................................................................. Library Director Sarah Mundy .................................... Museum & Cultural Affairs Director Adolfo Cruz ................... Parks, Recreation & Community Svcs. Director Girish Balachandran .......................... General Manager - Public Utilities Tom Boyd ....................................... Public Works Director/City Engineer

• Appointed by City Council vi

Newport Beach 4675 MacArthur Court, Suite 600 Newport Beach, CA 92660 Certified Public Accountants. 949.221,0025 Sacramento Independent Auditor's Report Walnut Crook To the Honorable Mayor and Members of the City Council Oakland City of Riverside, California LA/Contury City Report on the Financial Statements San Diego We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Riverside, California (the City), as of and for the fiscal year ended June 30, 2014, and the related Seattle notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents.

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

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

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

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

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2014, and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.

www.mgocpa.com

Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and pension and other post-employment benefits schedules of funding progress as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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

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

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 8, 2014 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standardsin considering the City's internal control over financial reporting and compliance.

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Newport Beach, California December 8, 2014

Management's Discussion and Analysis (Unaudited)

As management of the City of Riverside, we offer this narrative overview and analysis of financial activities for the fiscal year ended June 30, 2014. We encourage readers to consider the information presented here in conjunction with additional information furnished in our letter of transmittal, which can be found on page i of this report. All amounts, unless otherwise indicated, are expressed in thousands of dollars.

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

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

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

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

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

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

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

The government-wide financial statements can be found on pages 19-20 of this report.

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

governmental, proprietary, and fiduciary.

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

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

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The City maintains thirteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund and Capital Outlay Fund, which are major funds. Data from the other eleven governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and can be found on pages 65-69 in this report.

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

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

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

Proprietary funds provide the same type of information as the government-wide financial statements (business type activities), only in more detail. The proprietary fund financial statements provide separate information for the Electric, Water and Sewer operations, all of which are considered to be major funds of the City. The four remaining proprietary funds noted above are combined into a single, aggregated presentation. All internal service funds are also combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the non-major proprietary funds and the internal service funds is provided in the form of combining statements and can be found on pages 73-81 in this report.

The basic proprietary fund financial statements can be found on pages 26-29 of this report.

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

The fiduciary fund financial statements can be found on page 31-32 of this report, and the combining statement for the agency fund can be found on page 84.

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Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements begin on page 33 of this report.

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

Governmental Business type Activities Activities Total 2014 2013 2014 2013 2014 2013 Current and other assets $ 391,053 $ 368,905 $ 740,238 $ 814,367 $1,131,291 $1,183,272 Capital assets, net 1,359,060 1,318,614 1,587,102 1,454,228 2,946,162 2,772,842 Total assets 1,750,113 1,687,519 2,327,340 2,268,595 4,077,453 3,956,114 Deferred Outflows of Resources 19,880 19,763 40,444 40,453 60,324 60,216 Current liabilities 65,949 71,349 154,937 159,173 220,886 230,522 Long-term liabilities 503,073 452,721 1,159,042 1,130,283 1,662,115 1,583,004 Total liabilities 569,022 524,070 1,313,979 1,289,456 1,883,001 1,813,526 Deferred Inflows of Resources 49 1,026 8,756 10,000 8,805 11,026 Net position:

Net investment in capital assets 1,106,384 1,083,485 616,844 609,691 1,723,228 1,693,176 Restricted 96,587 80,712 68,506 69,068 165,093 149,780 Unrestricted (2,049) 17,989 359,699 330,833 357,650 348,822 Total net position $1,200,922 $ 1,182,186 $ 1,045,049 $ 1,009,592 $2,245,971 $2,191,778 The City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $2,245,971 at June 30, 2014, an increase of $54,193 from June 30, 2013.

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By far the largest portion of the City's net position (77 percent) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment and infrastructure), net of any related debt that is still outstanding used to acquire those assets and net of unspent bond proceeds and cash held in bond reserve accounts. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

An additional portion of the City's net position (7 percent) represents resources that are subject to external restrictions on how they may be used. The remaining unrestricted net position may be used to meet the government's ongoing obligations to citizens and creditors. Of this amount, $359,699 is held by the business type activities and $(2,049) net deficit is held by the governmental activities.

The City's total net position increased by $54,193 during the current fiscal year, which reflects growth in governmental activities of

$18,736 as well as an increase of $35,457 in business type activities. Governmental operating results is discussed on page 9 and business-type operating results is discussed on page 12.

On the following page is a condensed summary of activities of the City's governmental and business type operations for the period ended June 30, 2014 with the prior fiscal year presented for comparative purposes. Also included in the following analysis are revenue and expense graphs to aid in understanding the results of the current year's activities.

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(Amount presented in Thousands)

Governmental Business type Activities Activities Total 2014 2013 2014 2013 2014 2013 Revenues:

Program Revenues:

Charge for services $ 46,112 $ 42,193 485,462 $ 487,540 $ 531.574 $ 529,733 Operating Grants and Contributions 14,341 21.485 2,524 2,718 16,865 24,203 Capital Grants and Contributions 48,433 32.202 11,486 11,734 59,919 43.936 General Revenues:

Sales taxes 55,096 50,222 55,096 50,222 Property taxes 51,323 52.904 51,323 52,904 Other taxes and fees 37,327 37,205 37,327 37,205 Investment income 2,759 2,786 8,005 4,744 10,764 7,530 Other 5,688 9,208 7,081 5,767 12,769 14,975 Total Revenues 261,079 248,205 514,558 512,503 775,637 760,708 Expenses:

General government 39.331 54,808 39,331 54,808 Public safety 149,555 147,652 149,555 147,652 Highways and streets 36.564 35,072 36,564 35,072 Culture and recreation 42,252 40,077 42,252 40,077 Interest on long-term debt 17,741 16,627 17,741 16,627 Electric 304,416 292,175 304,416 292,175 Water 60,030 58,768 60,030 58,768 Sewer 40,385 43,945 40,385 43,945 Refuse 20,831 20,581 20,831 20,581 Airport 1.662 2,029 1,662 2,029 Transportation 4.067 3,745 4,067 3,745 Public parking 4.610 5,051 4,610 5,051 Total expenses 285,443 294,236 436,001 426,294 721,444 720,530 Increase (decrease) in net position before transfers and extraordinary items (24,364) (46,031) 78,557 86,209 54,193 40,178 Transfers, net 43,100 42,262 (43,100) (42,262)

Extraordinary items:

Power Plant Closure (41,259) (41,259)

Total changes in net position 18,736 (3,769) 35,457 2,688 54,193 (1,081)

Net position - beginning 1,182,186 1,185,955 1,009,592 1,006,904 2,191,778 2,192,859 Net position - ending $ 1,200,922 $ 1,182,186 $1,045,049 $ 1,009,592 $2,245,971 $2,191,778 8

Governmental activities. Total net position for governmental activities increased by $18,736 or 2% over prior year. Governmental net position in the prior fiscal year decreased by $3,769. Key elements of this year's activity in relation to the prior year are as follows:

Revenues:

• While variances between years exist for the various revenue categories, the total net increase was approximately $15 million, which is largely attributable to an increase in grant revenue and sales tax revenue. Overall grants and contributions increased by $9 million or 17% and sales tax revenue increased by $4.9 million or 10%. The increase in grants and contributions was primarily attributable to a $5 million increase in grant revenue associated with the construction of the Streeter grade separation project which began construction in December 2012. The increase in sales tax revenue relates to an increase in general sales and use tax resulting from increased consumer spending.

Expenses:

• While variances between years exist for the various expense functions, the total net decrease was approximately $8.8 million or less than 3%. This is primarily related to the $10 million judgment recorded in the prior year related to the water settlement.

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Expenses and Program Revenues - Governmental Activities - Fiscal Year Comparison 2014 vs. 2013 S160,000 S140,000 S120,000

$100,000 a 2014 Experses 0 2013 Experses

$80,000 U 2014 Program revenues

$60,000 n 2013 Program revenues

$40,000

$20,000

$0 General governrnent Public safety H ghways and streets Culture and recreation Interest on long-term debt 10

Revenues by Source - Governmental Activities - Fiscal Year Comparison 2014 vs. 2013 2014 2013 Investment Income Charges for Investment income 1,06% services 17.66%

Operating grants & Charges for services Intergovernmental, contributions 17.00%

unrestricted 5.49%

0.10%

Operating grants &

Capital grants & contributions contributions 8.66%

18.55%

Utility users taxes - -- Capital grants &

10.76% contributions 12.97%

Property taxes 19.66% Property taxes Sales taxes 21.31%

21,10%

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Business-type activities. The net position of business type activities increased by $35,457, accounting for a 3.5% increase in total net position. The net position of business type activities increased by $2,688 in the prior year. Key elements of this year's activity in relation to the prior year are as follows:

The increase primarily related to a one-time non-recurring expense of $41,000 incurred in the prior year as a result of the San Onofre Power Plant closure, which was partially offset by the following:

• Charges for services remained relatively flat along service lines resulting in an overall decrease of $2,078.

• Overall expenses increased by $9,707 primarily in Electric due to production and purchased power expense increase of $7,361 related to increased energy prices.

Revenues by Source - Business Type Activities - Fiscal Year Comparison 2014 Operating 2013 grants and Operating contributions grants and 0.5% contributions Capital grants 0.5%

and contributions Capital grants 2.2% Charges for and Charges for services contributions services '. Investment 2.3%

Income 95.1%

94,3% Investment 1.6%

Income 0.9%

Miscellaneous Miscellaneous 1.4% 1.1%

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

The following table summarizes the balance sheet of the City's General, Capital Outlay, and Other Governmental Funds. As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.

Other Total General Fund Capital Outlay Governmental Funds Governmental Funds 2014 2013 2014 2013 2014 2013 2014 2013 Total assets $ 109,891 $114,204 $71,633 $42,321 $ 121,524 $ 120,689 $303,048 $277,214 Total liabilities $ 26.,114 $ 30,309 $29.406 $34,353 $ 15,312 $ 15,525 $ 70,832 $ 80,187 Deferred inflows of resources Unavailable revenue 4,917 6,804 4,860 6,536 34,522 34,371 44,299 47,711 Fund balances Nonspendable 24,419 26,421 1,460 1,441 25,879 27,862 Restricted 2,204 2,196 37,367 1,432 71,963 69,352 111,534 72,980 Assigned 14,505 10,711 14,505 10,711 Unassigned 37,732 37,763 (1,733) 35,999 37,763 Total fund balance 78,860 77,091 37,367 1,432 71,690 70,793 187,917 149,316 Total liabilities, deferred inflows and fund balances $ 109,891 $ 114,204 $71,633 $42,321 $ 121,524 $ 120,689 $303,048 $277,214 13

As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $187,917 an increase of

$38,601 compared to the prior year. Additionally, 14% of the fund balance ($25,879) is nonspendable, which comprises the portion of fund balance that cannot be spent due to form. $111,534 or 59% of fund balance is restricted,which represents the portion of fund balance that is subject to externally enforceable limitations by law, enabling legislation or limitations imposed by creditors or grantors. $14,505 or 8%

of fund balance is constrained by the City's intent to utilize fund balance for specific purposes, which is reported within the fund balance classification assigned. The remainder of the fund balance is unassigned,meaning it is available for spending at the City's discretion. Of that amount, $36,000 has been set aside for future economic contingencies at June 30, 2014 whereas $34,000 had been set aside in the previous year. The City's governmental funds reported combined total assets of $303,048 at June 30, 2014, an increase of $25,834 compared to the prior year. Liabilities and deferred inflows of resources amounted to $115,131, a decrease of $12,767. This primary reason for the increase in total assets and related fund balances is due to unspent bond proceeds in the Capital Outlay Fund associated with the 2013 Certificates of Participation.

The General Fund is the principal operating fund of the City. At the end of the current fiscal year, total fund balance equaled $78,860 in comparison to $77,091 in the prior year. The portion of fund balance classified as unassigned was $37,732, most of which was set aside for future economic contingencies.

Fund balance for the Capital Outlay Fund increased by $35,935. As mentioned previously, the primary reason for the increase is due to unspent bond proceeds in the Capital Outlay Fund associated with the 2013 Certificates of Participation.

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

Unrestricted net position of the Electric, Water and Sewer Funds at the end of the year amounted to $258,514, $78,570, and $19,066 respectively. The unrestricted net position for the Electric, Water and Sewer Funds in the prior year was $241,696, $69,996, and $18,65 1, respectively. The increase in unrestricted net position for the Electric, Water and Sewer Funds is primarily a result of operating activities as described below.

The Electric Fund operating results experienced a decrease in charges for services of $3,896 or 1.2%, primarily from the effects of a decrease in retail load as a result of cooler than normal temperatures. Retail sales (residential, commercial, industrial, and other sales) represent 85.9% of total revenues. Retail sales, net of reserve/recovery were $295,214 and $300,238 for years ended June 30, 2014 and 2013, respectively. Operating expenses increased $12,400 or 4.6%, which primarily relates to an increase in purchased power and distribution costs.

The Water Fund reported strong operating results, with retail sales exceeding the previous year's results. Retail sales (residential, commercial, industrial, and other sales) represent 91.5% of total revenues. Retail sales, net of reserve/recovery were $62,762 and $61,837 14

for the years ended June 30, 2014 and 2013, respectively. The increase in sales was primarily due to a 1.7% increase in commercial consumption.

Net position of the Sewer Fund increased by $10,993 and $2,173 for the years ended June 30, 2014 and 2013, respectively. Operating revenues increased by $2,390 or 5.5% primarily as a result of a rate increase and an increase in capital improvement fee revenue coupled with a reduction in interest expense and overall operating expenses.

General Fund Budgetary Highlights Original Final Actual Variance with Budget Budget Amounts Final Budget Total Revenues $179,955 $197,601 $196,852 ($749)

Expenditures:

General Government 10,636 15,422 10,351 5,071 Public Safety 136,974 149,851 149,450 401 Highways & Streets 18,369 20,213 16,944 3,269 Culture & Recreation 30,331 36,165 34,165 2,000 Capital Outlay 156 13,039 8,589 4,450 Debt Service 15,846 46,786 46,564 222 Total Expenditures 212,312 281,476 266,063 15,413 Deficiency of Revenue Under Expenditures (32,357) (83,875) (69.211) 14,664 Other Financing Sources 32,357 68,306 70,980 2,674 Net Change in Fund Balances (15,569) 1,769 17,338 Beginning Fund Balance 77,091 77,091 77,091 Ending Fund Balance 77,091 $61,522 $78,860 $17,338 Final budgeted revenues increased from the amount originally budgeted as a result of grant related programs and financing associated with capital projects. In addition, final budgeted expenditures increased from the amount originally budgeted as a result of grant related appropriations made during the year.

Actual amounts differed from the final fund budget as follows:

Li Approximately $3.3 million of grant revenue was budgeted but not actually received during the year since the related grant expenditures had not been incurred, which was offset by property tax revenue and sales tax revenue coming in higher than what was budgeted.

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o Actual expenditures were less than budgeted amounts by approximately $15 million. This is primarily associated with unspent appropriations for grants, capital projects and other special programs that were not completed during the year (which are carried over to the next fiscal year).

Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for governmental and business type activities as of June 30, 2014 amounted to

$2,946,162 (net of accumulated depreciation). This investment includes land, intangibles, buildings and improvements, machinery and equipment, park facilities, roads, highways, and bridges. The total increase in the City's net investment in capital assets for the current fiscal year was $173,320 ($40,446 for governmental activities including internal service funds and $132,874 for business type activities).

Major capital improvements during the current fiscal year included: new infrastructure, consisting primarily of street improvements of $46 million and $104 million in Sewer capital improvements primarily related to the plant expansion project.

Construction in progress totaled $293,892 at June 30, 2014. Some of the major projects in process are various Sewer system improvements including phase 1 of the Sewer plant expansion project, the Riverside Transmission Reliability Project (RTRP) and related reliability improvements to the Riverside Public Utility's Sub-Transmission System. Depreciation expense during the fiscal year was

$42,278 for governmental activities and $50,526 for business type activities.

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

Governmental Business Type Activities Activities Total 2014 2013 2014 2013 2014 2013 Land $333,799 $325,215 $51,115 $42,636 $384,914 $367,851 Intangibles 21,964 21,890 21,964 21,890 Buildings 125,869 130,051 153,917 158,428 279,786 288,479 Improvements other than Buildings 220,184 182,249 1,072,578 1,052,832 1,292,762 1,235,081 Machinery and equipment 21,016 19,612 26,647 29,057 47,663 48,669 Infrastructure 625,181 622,972 625,181 622,972 Construction in progress 33,011 38,515 260,881 149,385 293,892 187,900 Total $1,359,060 $1,318,614 $1,5 87,102 $1,454,228 $2,946,162 $2,772,842 Additional information on the City's capital assets can be found in note 5 on page 42 of this report.

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Long-term debt. At the end of the current fiscal year, the City had total debt outstanding of $1,662,115 which includes bonded debt of

$1,588,315.

City of Riverside's Long-Term Debt Governmental Business Type Activities Activities Total 2014 2013 2014 2013 2014 2013 Revenue Bonds $- $- $1,094,290 $1,031,839 $1,094,290 $1,031,839 General Obligation Bonds 14,460 15,314 14,460 15,314 Pension Obligation Bonds 115,775 122,005 115,775 122,005 Certificates of Participation 191,446 158,697 191,446 158,697 Notes Payable 36,030 28,137 36,030 28,137 Loans Payable 47,611 28,652 42,661 47,611 71,313 Capital Leases 13,168 8,424 2,266 2,558 15,434 10,982 Lease Revenue Bonds 42,344 43,762 42,344 43,762 Landfill Capping 6,172 6,457 6,172 6,457 Arbitrage Liability 14 269 14 269 Compensated Absences 21,996 21,761 7,925 7,638 29,921 29,399 Judgment 6,667 10,000 6,667 10,000 Claims liability 35,167 31,569 35,167 31,569 Net OPEB Obligation 14,439 12,537 11,403 9,780 25,842 22,317 Water Acquisition Rights 942 944 942 944 Total $503,073 $452,721 $1,159,042 $1,130,283 $1,662,115 $1,583,004 The City's total debt increased by $79,111 or 5.0% during the current fiscal year. The net increase primarily resulted from the issuance of the 2014A Sewer Bonds and 2013 Certificates of Participation as well as normal scheduled principal maturities, debt refundings, and an increase in claims payable.

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

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State statutes limit the amount of general obligation debt a governmental entity may issue to 15 percent of its total adjusted assessed valuation. The legal debt limit was $631,942 at June 30, 2014, which applies only to general obligation debt. At June 30, 2014, the City had $14,460 of general obligation debt, resulting in available legal debt capacity of $617,482.

Additional information on the City's long-term debt can be found in note 6 beginning on page 43 of this report.

Economic Factors and Next Year's Budget and Rates LI Unemployment in the City of Riverside is 8.4% as compared to 9.7% for the prior year.

LI The required employer contribution rates as a percentage of payroll for the City's retirement program will be changing effective July 1, 2014 as follows:

" Miscellaneous Plan -18.314% to 18.994%.

" Safety Plan- 26.894% to 29.041%.

At the time of budget preparation for fiscal year 2015, the economic outlook for the City was considered to be stable. The General Fund Budget for fiscal year 2015 of approximately $240 million was adopted as balanced. It represents an increase from the prior year of approximately 8%, largely related to an increase in pension costs and debt service for the Convention Center renovation and expansion project and several capital leases.

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

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

18

City of Riverside Statement of Net Position June 30, 2014 (amounts expressed in thousands)

Governmental Business-type Assets Activities Activities Total Cash and investments $ 62,599 $ 322,169 $ 384,768 Receivables, net 113.868 62.962 176,830 Inventory 5,819 2.530 8,349 Prepaid items 241 25,520 25,761 Deposits 300 854 1.154 Derivative instruments 49 49 Internal balances 13,328 (13,328)

Restricted assets:

Cash and cash equivalents 46,506 46,506 Cash and investments at fiscal agent 43.118 234.179 277,297 Other 1,067 1.067 Advances to Successor Agency 46.025 10,236 56.261 Land and improvements held for resale 4.522 4.522 Regulatory assets 25.921 25,921 Net pension asset 101,184 21.622 122,806 Land and other capital assets not being depreciated 366.010 333,488 700,298 Capital assets (net of accumulated depreciation) 992.250 1,253,614 2.245.864 Total assets 1,750.113 2.327,340 4,077.453 Deferred Outflows of Resources Deferred changes in derivative values 14.784 19.277 34.061 Deferred charge on refuniting 5.096 21,167 26.263 Total deferred outflows of resources 19,080 40,444 60,324 Liabilities Accounts payable and other current liabilities 20,399 30,429 56,828 Accrued interest payable 3,519 12,010 15,529 Unearned revenue 7,317 2.229 9,546 Deposits 9.229 4,779 14,008 Derivative instruments 19,485 30,191 49,676 Decommissioning liability 75.299 75,299 Noncurrent liabilities:

Due within one year 76.147 86,427 162,574 Due in more than one year 426,926 1.072,615 1,499,541 Total liabilities 569,022 1,313.979 1,883,001 Deferred Inflows of Resources Deterred changes in derivative values 49 - 49 Deferred regulatory charges 0,756 0,756 Total deferred inflows of resources 49 8.756 8,805 Net Position Net investment in capital assets 1,106,384 616.844 1,723,228 Restricted for:

Expendable:

Capital projects 16,943 - 16,943 Debt service - 51.240 51.240 Economic development 15.328 15,328 Landfill capping 901 901 Public works 17,439 - 17,439 Housing 45.417 45,417 Programs and regulatory requirements 16.365 16.365 Nonexpendable 1.460 1,460 Unrestricted (2.049) 359.699 357.650 Total net position 1,200.922 $ 1,045.049 $ 2.245,971 The notes to the financial statements are an integral pare of this statement.

19

City of Riverside Statement of Activities For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

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

General government $ 39,331 $ (12,357) $ 13,775 $ 4,114 $ 3,893 $ (5,192) $ (5,192)

Public safety 149,555 6,279 7,444 8,444 1,778 (138,168) (138,168)

Highways and streets 36,564 3,369 17,487 680 39,370 17,604 17,604 Culture and recreation 42,252 2,709 7,406 1,103 3,392 (33,060) (33,060)

Interest on long-term debt 17,741 (17,741) (17,741)

Total governmental activities 285,443 46,112 14,341 48,433 (176,557) (176,557)

Business type activities:

Electric 304,416 344,037 4,008 $ 43,629 43,629 Water 60,030 68,691 3,534 12,195 12,195 Sewer 40,385 46,162 2,698 8,475 8,475 Refuse 20,831 20,677 (154) (154)

Airport 1.662 1,100 296 (266) (266)

Transportation 4,067 413 2,524 950 (180) (180)

Public parking 4,610 4,382 (228) (228)

Total business type activities 436,001 485,462 2,524 11,486 63,471 63,471 Total $ 721,444 $ 531,574 $ 16.865 $ 59,919 (176,557) 63,471 (113,086)

General revenues:

Taxes:

Sales 55,096 55.096 Property 51,323 51,323 Utility users 28,092 28,092 Franchise 5,046 5,046 Transient occupancy tax 4,189 4,189 Intergovemmental. unrestricted 263 263 Investment income 2,759 8,005 10,764 Miscellaneous 5,425 7,081 12,506 Subtotal 152,193 15,086 167,279 Transfers, net 43,100 (43,100)

Total general revenues and transfers 195,293 (28,014) 167,279 Change in net position 18,736 35,457 54,193 Net position - beginning 1,182,186 1,009,592 2,191,778 Net position - ending $ 1,200,922 $ 1,045,049 $ 2,245,971 The notes to the financial statements are an integral part of this statement.

20

City of Riverside Balance Sheet Governmental Funds June 30, 2014 (amounts expressed in thousands)

Other Governmental Total Governmental Assets General Fund Capital Outlay Funds Funds Cash and investments $ 31,017 $ - $ 28,399 $ 59,416 Cash and investments at fiscal agent 4,564 25.675 12,879 43,118 Receivables (net of allowance for uncollectibles)

Interest 1 84 134 219 Property taxes 5,027 5,027 Sales tax 13,106 13,106 Utilitybilled 1,182 1,182 Accounts 8,014 1,700 2 9,716 Intergovernmental 4,445 44,174 2,582 51,201 Notes 33,267 33,267 Prepaid items 241 241 Deposits 300 300 Due from other funds 18,116 18,116 Advances to other funds 23,226 23,226 Advances to Successor Agency 652 39,739 40,391 Land & improvements held for resale 4,522 4,522 Total assets 109,891 $ 71,633 $ 121,524 $ 303,048 Liabilities Accounts payable $ 7,531 $ 4,961 $ 1,564 5 14,056 Accrued payroll 8,635 30 8,665 Retainage payable 10 134 1,396 1,540 Intergovernmental 159 159 Unearned revenue 387 6.930 - 7,317 Deposits 9,226 - 3 9,229 Due to other funds - 17,381 602 17,983 Advances from other funds 166 - 11,717 11,883 Total liabilities 26.114 29.406 15,312 70.832 Deferred Inflows of Resources Unavailable revenue 4,917 4,860 34.522 44,299 Total deferred inflows of resources 4,917 4,860 34,522 44,299 Nonspendable:

Inventories, prepaids and noncurrent receivables 541 541 Advances 23,878 23,878 Permanent fund principal 1,460 1,460 Restricted for.

Housing and redevelopment 26,223 26,223 Debt service 1,819 26,177 27,996 Transportation and public works 37,367 17,509 54,876 Other purposes 385 2,054 2,439 General government 1,422 1,422 Public safety 834 834 Highways and streets 819 819 Culture and recreation 1,004 1,004 Continuing projects 10,426 10,426 Unassigned 37,732 11,7331 35,999 Total fund balances 78,860 37.367 71,690 187.917 Total liabilities, deferred inflows of resources, and fund balances $ 109,891 $ 71,633 $ 121,524 $ 303,048 The notes to the financial statements are an integral part of this statement.

CITY OF RIVERSIDE RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2014 (amounts expressed in thousands)

Total fund balances - governmental funds $187,917 Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets net of accumulated depreciation used in governmental activities that are not current financial resources and, therefore, are not reported in the funds. 1,352,707 The net pension asset is not an available resource and, therefore, is not reported in the funds. 99,800 Deferred refunding charges are not available resources and, therefore, are not reported in the funds. 5,096 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds. 44,299 Accrued interest payable for the current portion of interest due on various debt issues has not been reported in the governmental funds. (3,519)

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

Bonds payable $ (170,015)

Certificates of participation payable (190,580)

Capital leases payable (13,168)

Loan payable (47,611)

Bond premiums (3,430)

Net OPEB obligation (13,767)

Compensated absences (21,437)

Judgment payable (6,667)

(466,675)

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

Net fair value of interest rate swaps $ (19,436)

Deferred amount related to the hedgeable portion of the derivative instrument 14,735 (4,701)

Internal service funds are used by management to charge the costs of insurance, centralized purchasing and fleet management to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the Statement of Net Position. (14,002)

Net position of governmental activities $1,200,922 22

City of Riverside Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Other Total Governmental Governmental General Fund Capital Outlay Funds Funds Revenues Taxes $ 143,748 $ $ - $ 143,748 Licenses and permits 7,694 - 1,550 9,244 Intergovernmental 12,915 28,719 17,714 59,348 Charges for services 15,734 - - 15,734 Fines and forfeitures 7,283 - - 7,283 Special assessments 4,219 288 1,765 6,272 Rental and investment income 1,857 307 2,151 4,315 Miscellaneous 3,402 1,780 1,775 6,957 Total revenues 196,852 31,094 24,955 252,901 Expenditures Current:

General government 10,351 3,207 13,558 Public safety 149,450 2,271 151,721 Highways and streets 16,944 16,944 Culture and recreation 34,165 110 34,275 Capital outlay 8,589 48,333 15,443 72,365 Debt service:

Principal 40,202 5,298 45,500 Interest 6,259 - 10,528 16,787 Bond issuance costs 103 738 2 843 Total expenditures 266,063 49,071 36,859 351,993 Excess (deficiency) of revenues over (under) expenditures (69,211) (17,977) (11,904) (99,092)

Other financing sources (uses)

Transfers in 45,695 12,774 58,469 Transfers out (13,184) (2,185) - (15,369)

Issuance of long term debt 30,940 56,097 87,037 Capital lease financings 6,625 - - 6,625 Sales of capital assets 904 27 931 Total other financing sources and uses 70,980 53,912 12,801 137,693 Net change in fund balances 1,769 35,935 897 38,601 Fund balances - beginning 77,091 1,432 70,793 149,316 Fund balances - ending $ 78,860 37,367 $ 71,690 $ 187,917 The notes to the financial statements are an integral part of this statement.

23

CITY OF RIVERSIDE RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the year ended June 30, 2014 (amounts expressed in thousands)

Net change in fund balances-total governmental funds $38,601 Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount bv which caoital outlays exceeded deoreciation in the current oeriod. as listed below:

Capital asset additions $ 66,315 Depreciation expense (41,706) 24,609 The net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to increase net position. 12,697 Revenues in the statement of activities that do not meet the "availability" criteria for revenue recognition and therefore are not reported as revenue in the funds. (3,412)

The amortization of the net pension asset reported in the statement of activities does not require the use of current financial resources and, therefore, is not reported as an expenditure in the governmental funds. (4,851) i ne issuance OTiong-term aent (e.g., oonus, ieases, notesj proviaes current Tinancial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds immediately report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. The net effect of these differences in the treatment of long-term debt and related items is listed below.

Principal repayments $ 45,500 Payment of judgment 3,333 Other post-employment benefit liabilities (1,810)

Compensated absences (168)

Interest 79 Premiums on the issuance of long-term debt (1,211)

Issuance of long-term debt (92,451) (46,728)

Internal service funds are used by management to charge the costs of insurance, centralized purchasing and fleet management to individual funds. The net revenue (expense) of certain activities of internal service funds is reported with governmental activities. (2,180)

Change in net position of governmental activities $ 18,736 The notes to the financial statements are an integral part of this statement.

24

City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the year ended June 30, 2014 Budgeted Amounts Actual Variance with (amounts expressed in thousands) Original Final Amounts Final Budget Public safety:

Police 82,023 91,303 91,208 95 Fire 44,809 48,384 48,019 365 Budgeted Amounts Actual Variance with Animal regulation 3,487 3,501 3,483 18 Original Final Amounts Final Budget Building and zoning inspection 2,152 2,152 2,195 (43)

Revenues Street lighting 4,503 4,511 4,545 (34)

Taxes $ 140,868 $ 140,868 $ 143,748 $ 2,880 Total public safety 136,974 149,851 149,450 401 Licenses and permits 7,736 7,736 7,694 (42)

Intergovernmental 1,195 16,185 12,915 (3,270) Highways and streets 18,369 20,213 16,944 3,269 Charges for services 13,087 15,739 15,734 (5)

Fines and forfeitures 5,516 5,516 7,283 1,767 Culture and recreation Special assessments 4,401 4,401 4,219 (182) Library 6,630 7,461 6,882 579 Rental and investment income 1,318 1,318 1,857 539 Museum & cultural affairs 7,990 9,775 9,698 77 Miscellaneous 5,834 5,838 3,402 (2,436) Parks, recreation & community services 15,711 18,929 17,585 1,344 Total culture and recreation 30,331 36,165 34,165 2,000 Total revenues 179,955 197,601 196,852 (749)

Capital outlay 156 13,039 8,589 4,450 Expenditures General government: Debt service:

Mayor 888 935 855 80 Principal 9,319 40,259 40,202 57 Council 1,278 1,278 1,215 63 Interest 6,527 6,424 6,259 165 Manager 7,176 7,517 6,912 605 Bond issuance costs 103 103 Attorney 3,917 4,375 4,226 149 Total debt service 15,846 46,786 46,564 222 Clerk 1,342 1,485 1,369 116 Community development 9,634 10,421 9,200 1,221 Total expenditures 212,312 281,476 266,063 15,413 Human resources 2,942 3,244 2,952 292 General services 8,492 9,713 7,694 2,019 Deficiency of revenue under expenditures (32,357) (83,875) (69,211) 14,664 Finance 8,254 8,612 8,236 376 Innovation & technology 10,451 11,580 9,646 1,934 Other financing sources (uses)

Transfers in 42,493 45,695 45,695 Subtotal 54,374 59,160 52,305 6,855 Transfers out (10,226) (15,251) (13,184) 2,067 Allocated expenditures (43,738) (43,738) (41,954) (1,784) Issuance of long term debt 30,940 30,940 Capital lease proceeds 6,625 6,625 Total general government 10,636 15,422 10,351 5,071 Sale of capital assets 90 297 904 607 continued Total other financing sources 32,357 68,306 70,980 2,674 The notes to the financial statements are an integral part of this statement. Net change in fund balances (15,569) 1,769 17,338 Fund balance, beginning 77,091 77,091 77,091 -

Fund balance, ending $ 77,091 $ 61,522 $ 78,860 $ 17,338 25

City of Riverside Statement of Net Position Proprietary Funds June 30, 3014 (amounts expressed in thousands)

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

Cash and investments $ 210,929 86,181 $ 18,794 $ 6,265 $ 322,169 $ 3,183 Receivables (net allowances for uncollectibles)

Interest 1,127 429 53 40 1,649 44 Utility billed 17,634 4,475 2,675 1,041 25,825 Utility unbilled 14,731 3,347 1,722 723 20,523 54 Accounts 3,930 1,601 134 1,217 6,882 Intergovernmental 385 241 706 85 1,417 52 Other 3,333 3,333 Inventory 1,202 1,328 2,530 5,819 Prepaid items 22,345 17 15 22,377 Deposits 854 854 Due from other funds 914 392 1,306 Restricted assets:

Cash and cash equivalents:

Rate stabilization cash and cash equivalents 9,360 - 9,360 Other restricted cash and cash equivalents 27,878 8,367 901 37,146 Public benefit programs receivable 939 128 - 1,067 Total current assets 302,868 108,511 34,787 10,272 456,438 9,152 Non-current assets:

Restricted assets:

Cash and investments at fiscal agent 176,349 10,554 47,276 234,179 Regulatory assets 17,451 943 1,028 6,499 25,921 Prepaid items - non-current 3,143 3,143 Other receivables 3,333 3,333 Advances to other funds 7,283 7,283 6,224 Advances to Successor Agency 5,800 4,436 10,236 5,634 Net pension asset 11,450 4,926 3,151 2,095 21,622 1,384 Capital assets:

Land 8,717 20,484 2,734 19,180 51,115 458 Intangible assets, non-depreciable 10,651 10,841 - 21,492 Intangible assets, depreciable 325 385 120 830 Accumulated depreciation - intangible assets, depreciable (123) (228) (7) - (358)

Buildings 23,093 18,340 191,696 35,881 269,010 1,488 Accumulated depreciation - buildings (6,448) (5,058) (97,903) (5,684) (115,093) (300)

Improvements other than buildings 857,377 543,755 100,179 28,084 1,529,395 726 Accumulated depreciation - improvements other than buildings (267,734) (163,605) (17,233) (8,245) (456,817) (83)

Machinery and equipment 31,626 13,306 11,215 19,993 76,140 10,809 Accumulated depreciation - machinery and equipment (17,173) (11,203) (6,876) (14,241) (49,493) (8,227)

Construction in progress 51,105 15,828 193,913 35 260,881 1,482 Total non-current assets 905,609 462,601 441,012 83,597 1,892,819 19,595 Total assets 1,208,477 571,112 475,799 93,869 2,349,257 28,747 Deferred Outflows of Resources Deferred changes in derivative values 16,336 2,941 19,277 Deferred charge on refunding 12,952 8,215 21,167 Total deferred outflows of resources 29,288 11,156 40,444 Continued 26

City of Riverside Statement of Net Position Proprietary Funds June 30, 3014 (amounts expressed in thousands)

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

Accounts payable 11,401 3,224 1,303 1,032 16,960 1,808 Accrued payroll 1,292 465 305 196 2,258 100 Retainage payable 283 410 20 713 71 Unearned revenue 2,229 2,229 Deposits 3,844 935 4,779 Due to other funds 133 133 1,306 Capital leases - current 700 700 Water stock acquisitions - current 150 906 150 Notes payable - current 731 1,637 Landfill capping - current 200 200 Claims and judgments - current 11,122 Compensated absences - current 3,613 1,348 995 524 6,480 267 Current liabilities payable from restricted assets:

Revenue bonds 14,920 5,015 57,325 77,260 Accrued interest 5,770 1,801 4,439 12,010 Accounts payable 2,023 1,356 7,119 10,498 Total current liabilities 43,846 14,704 72,217 5,240 136,007 14,674 Non-current liabilities:

Revenue bonds 593,094 202,176 221,760 1,017,030 Notes payable 9,482 3,725 21,186 34,393 Capital leases 1,566 1,566 Advances from other funds 11,284 4,855 3,106 2,539 21,784 3,066 Decommissioning liability 75,299 75,299 Derivative instruments 22,108 8,083 30,191 Claims and judgments 24,045 Water stock acquisitions 792 792 Landfill capping 5,972 5,972 Compensated absences 830 333 185 97 1,445 292 Other postemployment benefits 5,749 2,446 1,734 1,474 11,403 672 Other payables 14 - 14 Total non-current liabilities 709,944 228,167 230,510 31,268 1,199,889 28,075 Total liabilities 753,790 242,871 302,727 36,508 1,335,896 42,749 Deferred Inflows of Resources Deferred regulatory charges 6,667 2,089 8,756 Total deferred inflows of resources 6,667 2,089 8,756 Net Position Net investment in capital assets 196,771 245,731 121,431 52,911 616,844 6,353 Restricted for debt service 15,808 5,930 29,502 51,240 Restricted for landfill capping 901 901 Restricted for programs and regulatory requirements 12,882 2,499 984 16,365 Unrestricted 258,514 78,570 19,066 3,549 359,699 (20,355)

Total net position $ 483,975 $ 332,730 $ 170,983 $ 57,361 $ 1,045,049 _14,0021 The notes to the financial statements are an integral part of this statement.

27

City of Riverside Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

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

Charges for services $ 344,037 $ 68,691 $ 46,162 $ 26,572 $ 485,462 $ 21,772 Operating expenses:

Personnel services 37,572 12,847 9,916 8,169 68,504 4,164 Contractual services 7,394 2,326 1,470 5,545 16,735 141 Maintenance and operation 190,510 9,236 7,486 7,238 214,470 2,176 General 12,083 12,871 6,119 4,119 35,192 2,151 Materials and supplies 756 761 3,440 1,373 6,330 222 Claims/Insurance 1,342 591 499 300 2,732 14,628 Depreciation and amortization 27,260 12,799 6,861 4,013 50,933 572 Total operating expenses 276,917 51,431 35,791 30,757 394,896 24,054 Operating income (loss) 67,120 17,260 10,371 (4,185) 90,566 (2,282)

Non-operating revenues (expenses):

Operating grants 2,524 2,524 Interest income 6,041 1,049 827 88 8,005 229 Other 3,444 698 1,691 1,204 7,037 (4)

Gain (loss) on retirement of capital assets 293 (253) (11) 536 565 (4)

Capital improvement fees 2,684 2,684 Interest expense and fiscal charges (27,499) (8,599) (4,583) (945) (41,626) (119)

Total non-operating revenues (expenses) (17,721) (7,105) 608 3,407 (20,811) 102 Income (loss) before capital contributions and transfE 49,399 10,155 10,979 (778) 69,755 (2,180)

Cash capital contributions 2,890 2,278 1,246 6,414 Noncash capital contributions 1,118 1,256 14 2,388 Transfers in 3,333 3,333 Transfers out (38,704) (6,991) (738) (46,433)

Change in net position 14,703 10,031 10,993 (270) 35,457 (2,180)

Total net position - beginning 469,272 322,699 159,990 57,631 1,009,592 (11,822)

Total net position - ending $ 483,975 332,730 $ 170,983 57,361 $ 1,045,049 (14,002)

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

28

City of Riverside Proprietary Funds Statement of Cash Flows For the fiscat year ended June 30, 2014 (amounts expressed in thousands)

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

Cash received from customers and users $ 348,296 $ 69,567 $ 45,787 $ 27,841 $ 491,491 $ 22,585 Cash paid to employees for services (34,466) (12,591) (10,419) (7,911) (65,387) (3,863)

Cash paid to other suppliers of goods or services (221,460) (22,331) (19,941) (19,701) (283,433) (14,781) 698 1,201 9,122 1 Other receipts 3,444 3,779 Net cash provided (used) by operating activities 95,814 35,343 19,206 1,430 151,793 3,942 Cash flows from noncapital financing activities:

Transfers in 3,333 3,333 Transfers out (38,704) (6,991) (738) (46,433)

Receipts on interfund advances 793 364 254 1,411 5,366 Outflows on interfund advances (497) (214) (137) (1,401) (2,249) (6,675)

Advances to other funds Net cash (used) provided by noncapital financing (38,408) (3,508) 117 (2,139) (43,938) (1,309) activities Cash flows from capital and related financing activities:

Purchase of capital assets (36,349) (22,648) (104,392) (1,787) (165,176) (3,716)

Proceeds from the sale of capital assets 341 2 2,642 2,985 Proceeds from long-term obligations 2,315 50,000 52,315 Principal paid on long-term obligations (21,827) (4,363) (7,841) (878) (34,909)

Interest paid on long-term obligations (29,400) (8,848) (10,913) (944) (50,105) (104)

Capital improvement fees 2,684 2,684 Grant Proceeds 2,633 2,633 Capital contributions 2,890 2,278 1,246 6,414 Bond issuance costs (454)

(19) (103) (576)

Net cash (used) for capital and related financing activities (82,484) (33,598) (70,565) 2,912 (183,735) (3,820)

Cash flows from investing activities:

Purchase of investments 5,301 5,301 Income from investments 5,748 1,004 861 73 7,686 161 Net cash provided by investing activities 11,049 1,004 861 73 12,987 161 Net change in cash and cash equivalents (14,029) (759) (50,381) 2,276 (62,893) (1,026)

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

$32,780 for Water, $113,614 for Sewer and $1,185 for Other Enterprise Funds in restricted accounts.) 335,085 105,861 125,811 4,890 571,647 4,209 Cash and cash equivalents, ending (including $110,127 for Electric,

$18,921 for Water, $56,636 for Sewer and $901 for Other Enterprise Funds in restricted accounts.) $ 321,056 $ 105,102 $ 75,430 $ 7,166 $ 508,754 $ 3,183 Continued 29

City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2014 (amounts expressed in thousands) Continued Governmental Other Total Activities-Enterprise Enterprise Internal Electric Water Sewer Funds Funds Service Funds Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating Income (loss) $ 67,120 $ 17,260 $ 10,371 $ (4,185) $ 90,566 $ (2,282)

Other receipts 3,444 698 1,690 1,201 7,033 1 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation and amortization 27,260 12,799 6,861 4,013 50,933 572 Amortization of pension costs 504 217 139 93 953 61 (Increase) Decrease in utility billed receivable (681) 4 (219) (896)

(Increase) Decrease in utility unbilled receivable 186 129 (125) 190 (Increase) Decrease in accounts receivable 4,869 565 16 1,275 6,725 (3)

(Increase) in intergovernmental receivable (47) (6) (53)

(Increase) Decrease in prepaid items (5,168) 2 (5,166)

Decrease in inventory 22 22 872 (Decrease) Increase in accounts payable (1,725) 3,025 (941) (840) (481) 885 Increase (Decrease) in accrued payroll 8 488 496 80 Increase (Decrease) in retainage payable (966) (966)

Increase (Decrease) in other payable 400 467 316 (323) 860 159 Increase in deferred regulatory charges 2,089 2,089 Increase (Decrease) in deposits 473 177 (8) 642 (Decrease) in decommissioning liabilitity (868) (868)

(Decrease) in landfill capping (286) (286)

Increase in claims and judgments S - - - - 3,597 Net cash provided by operating activities $ 95,814 $ 35,343 $ 19,206 $ 1,430 $ 151,793 $ 3,942 Schedule of noncash financing and investing activities:

Capital Contributions - capital assets $ 1,118 $ 1,256 $ $ $ 2,374 $

Land purchase with note payable 9,482 9,482 Proceeds of refunding debt 80,236 80,236 The notes to the financial statements are an integral part of this statement.

30

City of Riverside Statement of Net Positionl(Deficit)

Fiduciary Funds June 30, 2014 (amounts expressed in thousands)

Successor Agency Private-Purpose Agency Trust Fund Fund Assets Cash and investments $ 26,105 $ 5,666 Cash and investments at fiscal agent 25,974 6,740 Receivables:

Interest 97 26 Accounts 22 Notes 22,235 Direct financing lease receivable 20,510 Deposits 2 Property tax receivables 114 Land & improvements held for resale 15,799 Capital assets:

Land 185 Equipment 6 Accumulated depreciation - equipment (6)

Total assets 110,929 12,546 Liabilities Accounts payable 1,155 Retainage payable 229 Accrued interest 4,940 Advances from City of Riverside 56,261 Bonds payable 248,040 Notes payable 5,607 Held for bond holders 12,546 Total liabilities 316,232 12,546 Deferred Inflows of Resources Deferred charge on refunding 301 Total deferred inflows of resources 301 Net Positionl(Deficit)

Held by Successor Agency (205,604)

Total net position/(deficit) $ (205,604)

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

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

Fiduciary Fund - Private-Purpose Trust Fund For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Successor Agency Private-Purpose Trust Fund Additions Property tax revenue $ 26,460 Rental and investment income 2,624 Miscellaneous 1,240 Total additions 30,324 Deductions Professional services and other deductions 2,613 Redevelopment projects 8,129 Interest expense 13,680 Total deductions 24,422 Change in Net Positioni(Deficit) 5,902 Net position/(deficit) - beginning (211,506)

Net position/(deficit) - ending $ (_205,604L The notes to the financial statements are an integral part of this statement 32

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

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

A. Reporting Entity Fiduciary Component Unit These financial statements present the City and its component units, entities for which the City is financially accountable. Blended component units are Successor A-qency to the Redevelopment Agency of the City of Riverside legally separate entities, but in substance are part of the City's operations (Successor Agency) is a separate legal entity, which was formed to hold the and their data is combined with that of the City's. The City has no component assets and liabilities of the former Redevelopment Agency pursuant to City units that meet the criteria for discrete presentation. All of the City's Council actions taken on March 15, 2011 and January 10, 2012. The activity component units have a June 30 year end. of the Successor Agency is overseen by an Oversight Board comprised of individuals appointed by various government agencies and the City of Blended Component Units Riverside as Successor Agency of the former Redevelopment Agency. The nature and significance of the relationship between the City and the Riverside Housing Authority (Housing Authority) was established in 2006 by Successor Agency is such that it would be misleading to exclude the the City. The Housing Authority's primary purpose is to provide safe and Successor Agency from the City's financial statements. The Successor sanitary housing accommodations for persons with low or moderate income. Agency is presented herein in the City's fiduciary funds as a private-purpose The Housing Authority's activity has been combined with that of the primary trust fund government because City Council members serve as the Housing Authority's commissioners and because the City is financially accountable and Complete financial statements are prepared for the Riverside Public operationally responsible for all matters. Financing Authority and the Successor Agency to the Redevelopment Agency of the City of Riverside, which can be obtained from the City's Riverside Public Financing Authority (Public Financing Authority) was Finance Department, 3900 Main Street, Riverside, California, 92522 or online organized in December 1987 by the City and the Redevelopment Agency. at www.riversideca.gov.

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

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

accountable and operationally responsible for all matters.

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

33

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

The statement of activities demonstrates the degree to which the direct Transportation Uniform Mitigation Fees, which is six (6) months and sales tax expenses of a given function or segment are offset by program revenues. revenue which is seven (7) months, as described below. Grant revenue is Direct expenses are those that are clearly identifiable with a specific function recognized if received within six (6) months of year end to enable the or segment. Program revenues include 1) charges to customers or matching of revenue with applicable expenditures. Expenditures generally applicants who purchase, use, or directly benefit from goods, services, or are recorded when a liability is incurred under accrual accounting. However, privileges provided by a given function or segment and 2) grants and debt service expenditures, as well as expenditures related to compensated contributions that are restricted to meeting the operational or capital absences and claims and judgments, are recorded only when payment is requirements of a particular function or segment. Taxes and other items not due.

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

of charges for accounting, human resources, information technology and The State bond issue will remain outstanding for an uncertain number of other similar support services. years, but the bonds are currently estimated to retire in 2016. These in-lieu sales taxes will be paid to the City by the State on a different calendar than Separate financial statements are provided for governmental funds, sales taxes, which are paid monthly, three months in arrears. The vast proprietary funds, and fiduciary funds, even though the latter are excluded majority of the in-lieu amount will be paid during the applicable fiscal year; from the government-wide financial statements. Major individual however, the final payment of the in-lieu sales taxes will not be paid until the governmental funds and major individual enterprise funds are reported as January following the end of the applicable fiscal year. Since 2004, the final separate columns in the fund financial statements. "true-up" payment has been reported in the fiscal year that the revenue was earned and thus provides consistency in the reporting of sales tax revenue.

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

when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized The government reports the following major governmental funds:

as revenues in the year for which they are levied on the property. Grants and similar items are recognized as revenue as soon as all eligibility The General fund is the government's primary operating fund. It accounts requirements have been met. An allowance for doubtful accounts is for all financial resources of the general government, except those maintained for the utility and other miscellaneous receivables. required to be accounted for in another fund.

Governmental fund financial statements are reported using the current The Capital Outlay fund accounts for the construction and installation of financial resources measurement focus and the modified accrual basis of street and highway capital improvements for the City, including accounting. Revenues are recognized as soon as they are both measurable improvements funded by the 1/ % sales tax approved by Riverside County and available. Revenues are considered to be available when they are in 1988.

collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues are considered to be available if they are generally collected within 60 days after year end, except for revenue associated with neglected property abatement which is eleven (11) months and except for grant revenue, including reimbursement received from 34

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

The government reports the following major proprietary funds: assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

The Electric fund accounts for the activities of the City's electric distribution operations. D. Cash and Investments The Water fund accounts for the activities of the City's water distribution The City values its cash and investments in accordance with the provisions operations. of Government Accounting Standards Board (GASB) Statement No. 31, "Accounting and Financial Reporting for Certain Investments and External The Sewer fund accounts for the activities of the City's sewer systems. Investment Pools (GASB 31)," which requires governmental entities to report certain investments at fair value in the statement of net position/balance Additionally, the government reports the following fund types: sheet and recognize the corresponding change in the fair value of investments in the year in which the change occurred. Fair value is Internal service funds account for self-insurance, central stores and determined using published market prices.

central garage on a cost reimbursement basis.

Cash accounts of all funds are pooled for investment purposes to enhance Fiduciary funds include private-purpose trust and agency funds. The safety and liquidity while maximizing interest earnings. Investments are private-purpose trust fund accounts for assets and activities of the stated at fair value except for investments in investment contracts which are dissolved Redevelopment Agency, which is accounted for in the recorded at contract value. All highly liquid investments (including restricted Successor Agency Trust. The agency fund is used to account for special assets) with a maturity of 90 days or less when purchased are considered assessments that service no-commitment debt. cash equivalents. Cash and investments held on behalf of proprietary funds by the City Treasurer are considered highly liquid and are classified as cash The permanent fund is a governmental fund that is used to report equivalents for the purpose of presentation in the Statement of Cash Flows.

resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City's Library E. Restricted Cash and Investments programs. Non-expendable net position on the Statement of Net Position includes $1 million of permanent fund principal which are considered Certain proceeds of long-term indebtedness, as well as certain resources set nonexpendable. aside for their repayment, are classified as restricted assets on the statement of net position because their use is limited by applicable bond covenants.

Amounts reported as program revenues include 1) charges to customers for Restricted cash and investments also include cash set aside for nuclear goods, services, or privileges provided, 2) operating grants and contributions, decommissioning, public benefit programs, regulatory requirements and rate and 3) capital grants and contributions, including special assessments. stabilization because their use is legally restricted to a specific purpose.

Internally dedicated resources are reported as general revenues rather than Unspent proceeds received from the City's landfill capping surcharge are as program revenues. Likewise, general revenues include all taxes. also recorded as restricted assets.

Proprietary funds distinguish operating revenues and expenses from non- F. Land and Improvements Held for Resale operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a Land and improvements held for resale were generally acquired for future proprietary fund's principal ongoing operations. The sewer fund also development projects. The properties are carried at the lower of cost or net recognizes as operating revenue the portion of connection fees intended to realizable value.

recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital 35

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

G. Inventory Buildings and Improvements 30-50 years Improvements other than Buildings 20-99 years Supplies are valued at cost using the average-cost method. Costs are Intangibles - Depreciable 3-15 years charged to user departments when consumed rather than when purchased. Machinery and Equipment 3-15 years Infrastructure 20-100 years H. Prepaid Items J. Compensated Absences Payments to vendors for services benefiting future periods are recorded as prepaid items and expenditures are recognized when items are consumed. City employees receive 10 to 25 vacation days a year based upon length of service. A maximum of two years' vacation accrual may be accumulated and I. Capital Assets unused vacation is paid in cash upon separation.

Capital assets, which include property, plant, equipment, and infrastructure City employees generally receive one day of sick leave for each month of assets (eg., roads, bridges, sidewalks, right of way, and similar items), are employment with unlimited accumulation. Upon retirement or death, certain reported in the applicable governmental activities and business-type activities employees or their estates receive a percentage of unused sick leave paid in of the government-wide financial statements and in the proprietary funds and a lump sum based on longevity. The General, Electric and Water funds have the fiduciary private-purpose trust fund statements of net position. The been primarily used to liquidate such balances.

government defines capital assets as assets with an initial, individual cost of more than five thousand dollars and an estimated useful life in excess of one The liability associated with these benefits is reported in the government-year. Such assets are recorded at historical cost or estimated historical cost wide statements. Vacation and sick leave of proprietary funds is recorded as if purchased or constructed. Costs include: labor; materials; interest during an expense and as a liability of those funds as the benefits accrue to construction; allocated indirect charges such as engineering, construction employees.

and transportation equipment, retirement plan contributions and other fringe benefits. Donated capital assets are recorded at estimated fair market value K. Derivative Instruments at the date of donation. Intangible assets that cost more than one hundred thousand dollars with useful lives of at least three years are capitalized and The City's derivative instruments are accounted for in accordance with are recorded at cost. Government Accounting Standards Board (GASB) Statement No. 53, "Accounting and Financial Reporting for Derivative Instruments (GASB 53),"

Interest incurred during the construction phase is reflected in the capitalized which requires the City to report its derivative instruments at fair value.

value of the asset constructed for proprietary funds. For the year ended June Changes in fair value for effective hedges that are achieved with derivative 30, 2014, business-type activities capitalized net interest costs of $8,608 in instruments are reported as deferrals in the statements of net position.

the government-wide and fund financial statements. Total interest expense The City uses derivative instruments to hedge its exposure to changing incurred by the business-type activities (and the enterprise funds on the interest rates through the use of interest rate swaps. The City had debt that proprietary funds statements) before capitalization was $50,234. was layered with "synthetic fixed rate" swaps, which was refunded in 2008 and 2011. At the time of the refunding, hedge accounting ceased to be The costs of normal maintenance and repairs that do not add to the value of applied. The balance of the deferral account for each swap is included as the asset or materially extend asset lives are not capitalized. Capital assets part of the deferred charge on refunding associated with the new bonds. The other than land are depreciated using the straight-line method. Estimated swaps were also employed as a hedge against the new debt. Hedge useful lives used to compute depreciation are as follows: accounting was applied to that portion of the hedging relationship, which was determined to be effective. The negative fair value of the interest rate swaps related to the new hedging relationship has been recorded and deferred on the statement of net position. In 2012, the City also entered into an additional interest rate swap agreement, which has a positive fair value and is recorded 36

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) and deferred on the statement of net position. See Note 10 for further internally restricted cash reserve for unexpected costs not contemplated in discussion related to the City's interest rate swaps. the current estimates.

Various transactions permitted in the Utility's Power Resources Risk Increases to the funds held for the decommission liability are from amounts Management Policies may be considered derivatives, including energy set aside and investment earnings. The investment earnings are included in and/or gas transactions for swaps, options, forward arrangements and investment income. These earnings, as well as amounts set aside, are congestion revenue rights. The City has determined that all of its contracts reflected as decommissioning expense which is reflected as a component of including congestion revenue rights fall under the scope of "normal maintenance and operation expense in the statement of revenues, expenses purchases and normal sales" and are exempt from GASB 53. and changes in net position. To date, the Electric Utility has set aside

$77,897 in cash investments with the trustee and $1,725 in an internally L. Long-Term Obligations restricted decommissioning reserve as the Electric Utility's estimated share of the decommissioning cost of San Onofre, and these amounts are reflected Long-Term Debt as restricted assets and unrestricted cash and cash equivalents, respectively, on the Statements of Net Position. The Electric Utility's Long-term debt and other long-term obligations are reported as liabilities in decommissioning liability is equivalent to the total funds accumulated less the applicable governmental and business-type activities columns in the $4,323 paid as decommissioning costs for the fiscal year ended June 30, government-wide financial statements and in the proprietary funds and 2014 and is reflected as a non-current liability. The plant site easement at fiduciary private-purpose trust fund statements of net position. Bond San Onofre terminates May 2024. The plant must be decommissioned and premiums and discounts are deferred and amortized over the life of the the site restored by the time the easement terminates.

bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. M. Claims and Judgments Payable In the fund financial statements, government fund types recognize bond Claims and judgments payable are recognized when it is probable that a issuance costs as expenditures during the current period. The face amount liability has been incurred and the amount of loss can be reasonably of debt issued is reported as other financing sources. Premiums received on estimated. Such claims, including an estimate for claims incurred but not debt issuances are reported as other financing sources while discounts on reported at year end, are recorded as liabilities in the self-insurance internal debt issuance are reported as other financing uses. service fund. As of June 30, 2014, the City had an obligation related to a judgment, which is reflected as a liability on the government-wide statements Decommissioning and is more fully described in Note 8.

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

The Electric Utility has established trust accounts to accumulate resources In the fund financial statements, governmental fund balance is made up of for the decommissioning of the nuclear power plant and restoration of the the following components:

beachfront at San Onofre. Based on the most recent site specific cost " Nonspendable fund balance is the portion of fund balance that cannot estimate as of July 2013, prepared by ABZ Incorporated, the Electric Utility be spent due to form. Examples include inventories, prepaid amounts, has fully funded the San Onofre Nuclear Generating Station ("SONGS") long-term loans, and notes receivable, unless the proceeds are decommissioning liability. With the recent retirement of SONGS units 2 and restricted, committed or assigned. Also, amounts that must be 3, there is much uncertainty as to future unknown costs to decommission maintained intact legally or contractually, such as the principal of a SONGS. Although management believes the current cost estimate is the permanent fund are reported within the nonspendable category.

upper bound of decommissioning obligations, the Electric Utility has

" Restricted fund balance is the portion of fund balance that is subject to conservatively decided to continue to set aside $1,581 per year in an externally enforceable limitations by law, enabling legislation or limitations imposed by creditors or grantors.

37

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

" Committed fund balance is the portion of fund balance that can only be P. Interfund Transactions used for specific purposes due to formal action of the City Council through adoption of a resolution prior to the end of the fiscal year. Interfund transactions are accounted for as revenues and expenditures or Once adopted, the limitation imposed by resolution remains in place expenses. Transactions, which constitute reimbursements, are eliminated in until a similar action is taken (the adoption of another resolution) to the reimbursed fund and accounted for as expenditures or expenses in the remove or revise the limitation. No amounts have been reported within fund to which the transaction is applicable.

this category of fund balance.

During the year, transactions occur between individual funds for goods

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

Intent can be expressed by the City Council or by an official to which provided or services rendered. Related receivables and payables are classified as "due from/to other funds" on the accompanying fund level the City Council delegates the authority. On February 22, 2011, the City Council approved a policy whereby the authority to assign fund statements. The noncurrent portion of long-term interfund loans receivable are reported as advances and, for governmental fund types, are equally balance was delegated to the City's chief financial officer, which offset by a fund balance reserve to indicate that the receivable is not in authorized the assignment of fund balance for specific programs or purposes in accordance with City Council directives. The City also spendable form.

uses budget and finance policy to authorize the assignment of fund Any residual balances outstanding between the governmental activities and balance, which is done through the adoption of the budget and subsequent budget amendments throughout the year. business-type activities are reported in the government-wide financial statements as "internal balances".

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

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

followed by assigned resources, and finally unassigned resources.

R. Unavailable Revenue

0. Net Position Unavailable revenue arises only under a modified accrual basis of accounting. Accordingly, unavailable revenue is reported only in the Net position represents the difference between assets and deferred outflows governmental funds balance sheet. These amounts are deferred and less liabilities and deferred inflows. Net position invested in capital assets recognized as an inflow of resources (revenue) in the period that the consists of capital assets, net of accumulated depreciation, reduced by the amounts become available.

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

38

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

When applicable, the statement of net position and the balance sheet will and assumptions relating to the revenues due and expenditures incurred report a separate section for deferred inflows of resources. Deferred inflows through fiscal year end, collectability of its receivables, the valuation of of resources represent inflows of resources (acquisition of net position) that property held for resale, the useful lives of capital assets, and the ultimate apply to future periods and that, therefore, are not recognized as an inflow of outcome of claims and judgments. Actual results may differ from those resources (revenue) until that time. estimates and assumptions.

T. Regulatory Assets and Deferred Regulatory Charges

2. Legal Compliance - Budgets In accordance with GASB Statement No. 62, enterprise funds that are used to account for rate-regulated activities are permitted to defer certain Budgets are adopted on a basis consistent with accounting principles expenses and revenues that would otherwise be recognized when incurred, generally accepted in the United States of America. Annual appropriated provided that the City is recovering or expects to recover or refund such budgets are adopted for all departments within the general, special revenue amounts in rates charged to its customers. Accordingly, regulatory assets and capital project funds. Formal budgets are not employed for debt service and/or deferred regulatory charges have been recorded in the Electric, funds because debt indenture provisions specify payments. The permanent fund is not budgeted.

Water, Sewer and Refuse funds.

U. Property Tax Calendar During the period December through February of each fiscal year, department heads prepare estimates of required appropriations for the Under California law, general property taxes are assessed for up to 1% of the following fiscal year. These estimates are compiled into a proposed property's assessed value. General property taxes are collected by the operating budget that includes a summary of proposed expenditures and counties along with other special district taxes and assessments and voter financial resources and historical data for the preceding fiscal year. The approved debt. General property tax revenues are collected and pooled by operating budget is presented by the City Manager to the City Council for the county throughout the fiscal year and then allocated and paid to the review. Public hearings are conducted to obtain citizen comments. The City county, cities and school districts based on complex formulas prescribed by Council generally adopts the budget during one of its June meetings. The State statutes. City Manager is legally authorized to transfer budgeted amounts between divisions and accounts within the same department. Transfer of Property taxes are calculated on assessed values as of January 1 for the appropriations between departments or funds and increased appropriations ensuing fiscal year. On July 1 of the fiscal year the levy is placed and a lien must be authorized by the City Council. Expenditures may not legally exceed is attached to the property. Property taxes are due in two installments. The budgeted appropriations at the departmental level within a fund. All first installment is due November 1 and is delinquent after December 10. appropriations shall lapse at the end of the fiscal year to the extent they have The second installment is due February 1 and is delinquent after April 10. not been expended or lawfully encumbered, except for appropriations for The City generally accrues only those taxes, which are received within sixty capital projects which shall continue to their completion.

days after the year-end. Under the Teeter plan, the County of Riverside has responsibility for the collection of delinquent taxes and the City receives 3. Cash and Investments 100% of the levy.

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

V. Use of Estimates Investments $ 391,630 The preparation of financial statements in conformity with accounting Investments at fiscal agent 305,464 principles generally accepted in the United States of America requires 697,094 management to make estimates and assumptions that affect the reported Cash on hand and deposits with financial institutions 74,962 amounts of assets and liabilities, disclosure of contingent assets and Non-negotiable certificates of deposit 1,000 liabilities at the date of the financial statements, and the reported amounts of $ 773.05E revenue and expenditures. Specifically, the City has made certain estimates 39

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

The amounts are reflected in the statements of net position of the more than 15% of the market value of the portfolio may be invested in one government-wide and fiduciary fund financial statements: corporation.

Cash and investments $ 384,768 The City's investment policy provides two exceptions to the above; one is for Restricted cash and cash equivalents 46,506 investments authorized by debt agreements (described below) and the other Restricted cash and investments at fiscal agent 277,297 for funds reserved in the San Onofre Nuclear Generating Station Total per statement of net position 708,571 Decommissioning Account for which the five-year maturity limitation may be Fiduciary fund cash and investments 64,485 extended to the term of the operating license.

$ 773.056 Investments Authorized by Debt Aqreements The City follows the practice of pooling cash and investments of all funds Provisions of debt agreements, rather than the general provisions of the except for funds required to be held by outside fiscal agents under the provisions of bond indentures, which are administered by outside agencies. California Government Code or the City's investment policy, govern investments of debt proceeds held by bond fiscal agents. Permitted Interest income earned on pooled cash and investments is allocated monthly investments are specified in related trust agreements and include the to funds based on the beginning and month-end balances. Interest income following:

from cash and investments held at fiscal agents is credited directly to the related account. Bank deposits are covered by federal depository insurance Securities of the U.S. Government and its sponsored agencies for the first $250 or by collateral held in the pledging bank's trust department Bankers' Acceptances rated in the single highest classification in the name of the City. Commercial Paper rated AA or higher at the time of purchase Investments in money market funds rated in the single highest Authorized Investments classification, except for certain debt proceeds which have no minimum rating requirement Under provisions of the City's investment policy, and in accordance with Municipal obligations rated Aaa/AAA or general obligations of states with California Government Code Section 53601, the City Treasurer may invest or ratings of at least A2/A or higher by both Moody's and S&P deposit in the following types of investments:

Investment Agreements Max Max % of Maturity Portfolio No maximum percentage of the related debt issue or maximum investment in Money Market Funds N/A 20% one issuer is specified.

Securities of the U.S. Government and its sponsored agencies 5 Years N/A Disclosures Relatinq to Interest Rate Risk Corporate Medium-Term Notes 5 Years 30%

Local Agency Investment Fund (State Pool) Interest rate risk is the risk that changes in market interest rates will N/A 100%

adversely affect the fair value of an investment. Generally, the longer the Negotiable Certificates of Deposit 5 Years 30% maturity of an investment, the greater the sensitivity of its fair value to Repurchase Agreements 1 Year N/A changes in market interest rates. The City's investment policy requires that Reverse Repurchase Agreements 90 Days 20% the interest rate risk exposure be managed by purchasing a combination of Bankers Acceptances 180 Days 40% shorter term and longer term investments and by timing cash flows from Commercial Paper of "prime" quality 270 Days 25% maturities so that a portion of the portfolio is maturing or coming close to Local Agency Bonds N/A N/A maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Investments in Corporate Medium Term Notes may be invested in securities rated A or better by Moody's or Standard and Poor's rating services and no Information about the sensitivity of the fair values of the City's investments (including investments held by fiscal agent) to market interest rate 40

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) fluctuations is provided by the following table that shows the distribution of Concentration on Credit Risk the City's investments by maturity:

The investment policy of the City contains no limitations on the amount that Remaining Maturity (in Months) can be invested in any one issuer beyond that. stated above. Investments in 12 Months 13 to 24 25 to 60 More than any one issuer (other than U.S. Treasury securities, money market funds, Investment Type Total or Less Months Months 60 Months and external investment pools) that represent 5% or more of total City Money Market Funds $ 7,398 $ 7,398 $ - $ $ investments are as follows:

Federal Agency Securities 79,715 53,445 26,270 U.S. Treasury Notes/Bonds 138,374 23,306 115,068 Issuer Investment Type Reported Amount Corp. Medium Term Notes 54,569 12,317 20,480 21,772 Deutsche Bank Securities Inc. Investment Contract $82,249 State Investment Pool 99,435 99,435 Negotiable CDs 12,139 3,967 5,437 2,735 Custodial Credit Risk Held by Fiscal Agent Money Market Funds 40,607 40,607 State Investment Pool 19,332 19,332 Custodial credit risk for deposits is the risk that, in the event of the failure of a Investment Contracts 150,332 24,173 25,726 89,672 10,761 depository financial institution, a government will not be able to recover its Commercial Paper 12,877 12,877 deposits or will not be able to recover collateral securities that are in the Fed. Agency Securities 61,634 1,193 10,323 50,118 possession of an outside party. The custodial credit risk for investments is Corp. Med. Term Notes 20 682 ,057 18,625 Total $697094 the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of The City assumes that callable investments will not be called. its investment or collateral securities that are in the possession of another Disclosures Relating to Credit Risk party. The City's investment policy requires that a third party bank trust department hold all securities owned by the City. All trades are settled on a Generally, credit risk is the risk that an issuer of an investment will not fulfill delivery vs. payment basis through the City's safekeeping agent. The City its obligation to the holder of the investment. This is measured by the has no deposits with financial institutions; bank balances are swept daily into assignment of a rating by a nationally recognized statistical rating a money market account.

organization.

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

The City is a voluntary participant in the Local Agency Investment Fund Ratings as of Year End (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the Total AAA AA A Unrated City's investment in this pool is reported in the accompanying financial Investment Type statements at amounts based upon the City's pro-rata share of the fair value Money Market Funds $ 7,398 $ 1,062 $ 1,290 $ 5,046 $

Federal Agency Securities 79,715 79,715 provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost U.S. Treasury Notes/Bonds 138,374 138,374 of that portfolio). The balance available for withdrawal is based on the Corporate Medium Term Notes 54,569 44,301 10,268 accounting records maintained by LAIF, which are recorded on an amortized State Investment Pool 99,435 - - 99,435 cost basis.

Negotiable CDs 12,139 - 12,139 Held by Fiscal Agent Money Market Funds 40,607 9,232 29,650 1,725

4. Direct Financing Lease Receivable State Investment Pool 19,332 - 19,332 Investment Contracts 150,332 - 150,332 The former Redevelopment Agency had a direct financing lease arrangement Commercial Paper 12,877 12,877 - with the State of California (the State) for a twelve-story office building, which Federal Agency Securities 61,634 61,634 was transferred to the Successor Agency. The lease term is for thirty years Corporate Medium Term Notes 20,682 8 0 344 -

Total 2 1*6M _ 2*2-.9U and the State takes ownership of the facility at the conclusion of that term.

41

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30. 2014 (amounts expressed inthousandsl The lease calls for semi-annual payments not less than the debt service Business type activities: Beginning Additions/ Deletions/ Ending Balance Transfers In Transfers Oul Balance owed on the related lease revenue bonds issued by the former Capital assets, not depreciated:

Redevelopment Agency for the purchase and renovation of the building. The Land $ 10,558 $ (2,079) $51,115 future minimum lease payments to be received are as follows: Intangibles, non-depreciable 21,492 21,492 Construction in progress 174,847 (63,351)

Total capital assets not depreciated 149,38 2015 $ 2,507 185,405 (65.430) 2016 2,533 Capital assets being depreciated:

2017 2,561 Buildings 267,232 1,778 - 269,010 2018 2,598 Improvements other than buildings 1,475,267 58,011 (3,883) 1,529,395 2019 2,626 Intangibles, depreciable 645 185 -830 Thereafter 16,443 Machinery and equipment 7452 3,0 179) 7,4 Total Due 29,268 Total capital assets being Less: amount applicable to interest depreciated 1,817,70 6337 (5,74 1,875,7 (8,758) Less accumulated depreciation for:

Total direct financing lease receivable Buildings (108,804) (6,289) - (115,093)

Improvements

5. Capital Assets other than buildings (422,435) (38,404) 4,022 (456,817)

Intangibles, depreciable (247) (111) - (358)

Machinery and equipment (45.469) (5.722) 1,9 (49,493)

The following is a summary of changes in the capital assets during the fiscal Total accumulated depreciation (576.955) (50.526) 5,2 (621,.761) year ended June 30, 2014. Total capital assets being depreciated, net 1,240,15 1~2,5 46 1,23,64 Beginning Additions/ Deletions/ Ending Governmental activities: Balance Transfers In Transfers Out Balance Business type activities Capital assets, not depreciated:

capital assets, net ~I ~ $198-258 Skd,8 Land $ 325,215 $ 8,628 $ (44) $ 333,799 Construction in progress 38,515 (29.160) 33,011 Depreciation expense was charged to various functions as follows:

Total capital assets not depreciated 363,730 (29,204) 366,810 Capital assets being depreciated: Governmental activities:

Buildings 180,337 469 (152) 180,654 General government $ 4,490 Improvements Public safety 4,113 other than buildings 250,021 49,324 299,345 Highways and streets, including depreciation of Machinery and equipment 79,782 6,449 (3,669) 82,562 general infrastructure assets 22,989 Infrastructure 910,700 (331) 9j34,1 Total capital assets being Culture and recreation depreciated 1,20,840 8048 (4,152) 1,497,74 Total depreciation expense - governmental activities $42.2Z8 Less accumulated depreciation for:

Buildings (50,286) (4,618) 119 (54,785) Business type activities:

Improvements Electric $27,260 other than buildings (67,772) (11,389) (79,161)

Machinery and equipment (60,170) (4,567) 3,191 (61,546) Water 12,799 Infrastructure (287,728) (21,704) (309,432) Sewer 6,861 Total accumulated depreciation (465,956) (42,278) (504.924) Refuse 1,223 Total capital assets being Special Transportation 612 depreciated, net 954,884 38,208 (842) Airport 698 Governmental activities Public Parking capital assets, net IL318.6-14 Total depreciation expense - business type activities 42

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

6. Long-Term Obligations The following debt has been issued for the purpose of generating capital resources for use in acquiring or constructing municipal facilities or Changes in Long-Term Obligations: Below is a summary of changes in long-infrastructure projects.

term obligations during the fiscal year:

Governmental Activities: Long-Term Obliqations at June 30, 2014:

Due Principal Beginning Ending Within Revenue Bonds: Outstanding Balance Additions Reductions Balance One Year General Obligation Electric Bonds $15,314 $ $ 854 $14,460 $ 900 Pension Obligation $27,500 2004 Electric Revenue Bonds; Series A fixed Bonds 122,005 30,940 37,170 115,775 37,990 Certificates of rate bonds, due in a final principal installment of $2,645 Participation 158,697 36,446 3,697 191,446 4,210 on October 1, 2014, interest of 5.0%. $ 2,645 Capital Leases 8,424 6,625 1,881 13,168 2,635 Lease Revenue $141,840 2008 Electric Refunding/Revenue Bonds; Bonds 43,762 1,418 42,344 1,330 Series A and C. The bonds were issued at a variable Loan Payable 28,652 19,650 691 47,611 2,036 rate; however the City entered into an agreement to Compensated convert to a fixed rate of 3.1% for the Series A bonds Absences 21,761 12,480 12,245 21,996 12,372 and 3.2% for the C bonds. For information on the swap Claims Liability 31,569 13,582 9,984 35,167 11,122 agreements see note 10. Bonds are due in annual Judgment 10,000 - 3,333 6,667 3,333 Net OPEB installments from $700 to $7,835 through October 1, Obligation 12,537 2,566 664 14,439 2035. 112,515 Total *52.,zt

• .,2* 57.937

$209,740 2008 Electric Revenue Bonds; Series D fixed Business-type activities: rate bonds, 3.6% to 5.0%, due in annual installments Due from $3,460 to $25,345 through October 1, 2038. 209,740 Beginning Ending Within Balance Additions Reductions Balance One Year $34,920 2009 Electric Refunding/Revenue Bonds; Revenue Bonds $1,031,839 $134,841 $72,390 $1,094,290 $77,260 Series A fixed rate bonds, 4.0% to 5.0%, due in annual Loan Payable 42,661 42,661 installments from $1,150 to $7,035 through October 1, Notes Payable 28,137 9,482 1,589 36,030 1,637 2018. The bonds refunded the 1998 series and Capital Leases 2,558 353 645 2,266 700 Landfill Capping 285 200 partially refunded the 2001 series. 13,815 6,457 6,172 Arbitrage Liability 269 255 14 Water Stock $140,380 2010 Electric Revenue Bonds; Series A and B Acquisition fixed rate bonds, 3% to 5.0%, due in annual installments Rights 944 2 942 150 from $95 to $33,725 through October 1, 2040. 140,380 Compensated Absences 7,638 6,536 6,249 7,925 6,480 $56,450 2011 Electric Revenue Refunding Bonds; Series Net OPEB A. The bonds were issued at a variable rate; however, Obligation 9,780 2,190 567 11,403 SM12.63 1.5904 the City entered into an agreement to convert to a fixed Total rate of 3.2%. For information on the swap agreements see note 10. Bonds are due in annual installments from

$725 to $5,175 through October 1, 2035. 41,925 43

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 For he yar ededJune30. 014(amounts expressed in thousandsl

$79,080 2013 Electric Revenue Refunding Bonds; Series $50,000 2014 Sewer Revenue Bonds; variable rate A fixed rate bonds, 3% to 5.25%, due in annual financing with Wells Fargo due June 1, 2015. The installments from $795 to $12,685 through October 1, interest rate is 70% of the LIBOR one-month index plus 2043. 50 basis points.

Subtotal 597,580 Subtotal 277,115 10,434 Add: Unamortized bond premium 1,970 Add: Unamortized bond premium

$608,014 $279,085 Water Total Revenue Bonds $1.094-290

$58,235 2008 Water Revenue Bonds; Series B fixed Remaining revenue bond debt service payments will be made from revenues rate bonds, 4.0% to 5.0%, due in annual installments of the Electric, Water and Sewer Enterprise funds. Annual debt service from $1,210 to $7,505 through October 1, 2038. $58,235 requirements to maturity are as follows:

$31,895 2009 Water Refunding/Revenue Bonds; Electric Utility Fund Water Utility Fund Series A fixed rate bonds, 3.0% to 5.0%, due in annual Fiscal Year PrincioaJ Interest Total Principal Interest Total installments from $2,360 to $4,335 through October 1, 2015 $14,92( $26,194 $ 41,114 $ 5,015 $ 8,276 $13,291 2020. The bonds refunded the 1998 series and 2016 15,821 25,519 41,344 5,260 8,046 13,306 partially refunded the 2001 series. 21,205 2017 13,32( 24,863 38,183 5,180 7,814 12,994 2018 13,791 24,279 38,074 5,415 7,577 12,992 2019 14,44~5 23,636 38,081 5,635 7,352 12,987

$67,790 2009 Water Revenue Bonds; Series B fixed 2020-2024 80,571 109,462 190,037 31,580 33,265 64,845 rate bonds, 3.3% to 4.1%, due in annual installments 2025-2029 97,7115 91,628 189,343 38,055 26,563 64,618 from $2,475 to $4,985 through October 1, 2039. 67,790 2030-2034 120,15~5 68,298 188,453 46,200 18,174 64,374 2035-2039 149,04( 38,047 187,087 56,430 7,625 64,055 2040-2041 77,79( 4,844 82,634 4,985 103 5,088

$59,000 2011 Water Refunding/Revenue Bonds; Series Premium 1043d 4 $46.77 10,434 3,436 3 436 A. The bonds were issued at a variable rate; however Total $_ $331.9B6 the City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements see note 10. Bonds are due in annual installments from Sewer Utility Fund 56,525

$600 to $3,950 through October 1, 2035. Fiscal Year Princioa I Interest Total 2015 $ 57,32~5 $10,435 $ 67,760 Subtotal 203,755 2016 7,66(0 9,811 17,471 Add: Unamortized bond premium 3,436 2017 8,05~5 9,418 17,473

$207,191 2018 8,41(0 9,063 17,473 2019 8,72~5 8,747 17,472 2020-2024 32,88 5 39,244 72,129 Sewer 2025-2029 36,56(0 31,749 68,309 2030-2034 46,01( 0 22,306 68,316

$240,910 2009 Sewer Revenue Bonds; Series A & B 2035-2039 58,13~5 10,180 68,315 fixed rate bonds, 3.65% to 5.0%, due in annual 2040 13,35(0 312 13,662 Premium 1,97(0 1,970 installments from $5,555 to $13,350 through August 1, Total 5 151265 2039. $227,115 44

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 f,,n,,.

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,n,+*

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21.

General Obligation Bonds: Principal Outstanding Remaining pension obligation bond debt service payments will be made from unrestricted revenues of the General fund. Annual debt service requirements

$20,000 Fire Facility Projects, Election of 2003 General to maturity are as follows:

Obligation Bond; 3.0% to 5.5%, due in annual installments from $410 to $1,740 through August 1, Fiscal Year Principal Interest Total 2024. $14,295 2015 $ 37,990 $ 4,950 $ 42,940 Add: Unamortized bond premium 165 2016 7,930 4,391 12,321 Total General Obligation Bonds $14A60 2017 8,880 3,971 12,851 2018 9,920 3,482 13,402 Remaining general obligation bond debt service payments will be made from 2019 11,035 2,936 13,971 unrestricted revenues of the General fund. Annual debt service requirements 2020-2023 40$020 5,891 45,911 to maturity are as follows: Total $141 .396 Fiscal Year Principal Interest Total 2015 $ 900 $ 671 $ 1,571 Principal 2016 965 634 1,599 Certificates of Participation: Outstanding 2017 1,040 592 1,632 2018 1,110 544 1,654 $19,945 2006 Galleria at Tyler Public Improvements 2019 1,195 492 1,687 Certificates of Participation; 4.0% to 5.0%, due in 2020-2024 7,345 1,485 8,830 annual installments from $435 to $1,270 through 2025 1,740 48 1,788 September 1, 2036. $18,585 Premium 165 165 Total -$4.466 $18.926 $128,300 2008 Riverside Renaissance Certificates of Participation; issued at a variable rate; however, the Principal City entered into an agreement to convert to a fixed Pension Obligation Bonds: Outstanding rate of 3.4%. For information on the swap agreement see note 10. Due in annual installments from $2,900 to

$89,540 California Statewide Community Development $7,200 through March 1, 2037. 116,100 Authority (Public Safety) 2004 Taxable Pension $20,660 2010 Recovery Zone Facility Hotel Project Obligation Bond; 2.65% to 5.896%, due in annual Certificates of Participation; 4.0% to 5.5%, due in installments from $1,125 to $10,715 through June 1, $66,320 annual installments from $415 to $1,410 through March 2023. 1,2040. 20,660

$30,000 2005 Taxable Pension Obligation Bonds $35,235 2013 Pavement Rehab Certificates of Series A; 3.85% to 4.78%, due in annual installments Participation; 4.0% to 5.0%, due in annual installments

$630 to $3,860 through June 1, 2020. 18,515 from $1,285 to $2,855 through June 1, 2034 35,235 Subtotal 190,580

$30,940 2014 Taxable Pension Obligation Refunding Plus: Unamortized bond premium 866 Bond Anticipation Notes; rate at June 30, 2014 was Total Certificates of Participation $191.445 0.60%, $30,940 due June 1, 2015.

Total Pension Obligation Bonds $115.775 45

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Remaining certificates of participation debt service payments will be made Fiscal Year Principal Interest Total from unrestricted revenues of the debt service fund. Annual debt service 2015 $1,330 $ 1,743 $ 3,073 requirements to maturity are as follows: 2016 1,370 1,702 3,072 2017 1,420 1,653 3,073 Fiscal Year Principal Interest Total 2018 1,485 1,588 3,073 2015 $ 4,210 7,495 11,705 2019 1,560 1,511 3,071 2016 5,730 7,345 13,075 2020-2024 9,080 6,271 15,351 2017 5,920 7,137 13,057 2025-2029 10,540 4,058 14,598 2018 6,110 6,922 13,032 2030-2034 13,160 1,370 14,530 2019 6,310 6,700 13,010 Premium 2,399 22399 2020-2024 35,955 29,521 65,476 Total $42.3-44 $19.896 $62.24Q 2025-2029 43,720 21,734 65,454 2030-2034 50,650 12,141 62,791 Principal 2035-2039 30,565 2,943 33,508 Loans Payable - Governmental Activities: Outstanding 2040 1,410 78 1,488 In March 2012 the City entered into a financing Premium 866 866 arrangement in the amount of $4,000 with Pinnacle Total $191,44 $102*16 Public Finance, Inc. for the construction of Ryan Bonaminio Park at the Tequesquite Arroyo. The debt Principal will be paid with resources from the General Fund in Lease Revenue Bonds - Governmental Activities: Outstandinq semi-annual debt service payments of approximately On August 15, 2012, the City issued the Series 2012A $468 per year over a 10 year period, which includes Lease Revenue Refunding Bonds in the amount of interest at an annualized rate of 3.05%. $ 3,294

$41,240. The bonds were issued to refinance the 2003 Certificates of Participation. Interest on the bonds is On July 19, 2012, the City secured financing in the payable semi-annually on May 1 and November 1 of amount of $41,650 with BBVA Compass Bank for the renovation and expansion of the Riverside Convention each year, commencing May 1, 2013. The rate of interest varies from 2% to 5% per annum depending on Center. In March 2014, the financing arrangement with maturity date. Principal is payable in annual BBVA was increased to $44,650. The financing installments ranging from $1,295 to $2,840 consists of an initial 21-month variable rate interest only commencing November 1, 2013 and ending November period during construction that has a swap transaction 1, 2033. The refunding transaction resulted in an layered over the remaining 20-year amortization economic gain of $2,455 and a reduction of $3,034 in resulting in a "synthetic fixed" rate of 3.24% for 20 of future debt service payments. the 22 years. For information on the swap agreement

$39,945 see note 10. At the end of the construction period, Add: Unamortized bond premium 2 399 principal and interest are due on the first of each Total Lease Revenue Bonds - Governmental Activities month, with equal payments each year of approximately $2,850. 44,317 Remaining lease revenue bond debt service payments will be made from unrestricted revenues of the debt service fund. Annual debt service Total Loans Payable - Governmental Activities requirements to maturity are as follows:

46

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the Year ended-June 30, 2014 For he yar ededJune30. 014(amounts expressed in thousands)

Remaining loans payable debt service payments will be made from Remaining notes payable debt service payments will be made from unrestricted revenues of the debt service fund. Annual debt service unrestricted revenues of the Sewer fund. Annual debt service requirements requirements to maturity are as follows: to maturity are as follows:

Fiscal Year Principal Interest Total Sewer Fund 2015 $ 2,036 $1,467 $ 3,503 Fiscal Year Principal Interest Total 2016 2,094 1,409 3,503 2015 $ 731 $ 85 $ 816 2017 2,157 1,346 3,503 2016 745 72 817 2018 2,222 1,281 3,503 2017 759 58 817 2019 2,283 1,220 3,503 2018 774 43 817 2020-2024 11,579 5,004 16,583 2019 788 29 817 2025-2029 11,921 3,261 15,182 2020-2021 659 20 679 2030-2034 13$319 1,293 14612 Total $3O7 Total Public Parking Fund Notes Payable - Enterprise Funds: Principal Fiscal Year Principal Interest Total Outstandinq 2015 $ 906 $ 841 $ 1,747 Sewer fund loan from State of California for 2016 940 807 1,747 Cogeneration project, 2.336%, payable in net annual 2017 977 770 1,747 installments of $339, beginning January 29, 2003 2018 1,014 733 1,747 through January 29, 2021 $2,191 2019 1,054 693 1,747 2020-2024 5,917 2,817 8,734 Sewer fund loan from State of California for Headworks 2025-2029 7,160 1,574 8,734 project, 1.803%, payable in net annual installments of 2030-2032 4,124 241 4,365

$477, beginning November 6, 1999 through November Total $2_2092 _$8476 $30_-568 6, 2018 2,265 Public parking fund loan from City National Bank for Water Fund Fox Entertainment Plaza project, 3.85%, payable in net annual installments of $1,747, beginning June 16, 2011 Fiscal Year Principal Interest Total 2015 $- $- $-

through December 16, 2031 22,092 2016 40 156 196 In 2014, the Water fund purchased property from 2017 483 152 635 Hillwood Enterprises, L.P. (Hillwood). The property 2018 492 144 636 was subsequently leased back to Hillwood, which is to 2019 512 136 648 be developed into a logistics center. In consideration of 2020-2024 2,900 543 3,443 the costs to purchase the property the Water fund will 2025-2029 3,522 279 3,801 make payments to Hillwood in the form of a credit equal 2030-2031 1,533 26 1,559 to Hillwood's rental payments to the Water fund for the Total $9.482 $1.-436 $1O91 first 15 years of the lease. Rent will commence the earlier of when Hillwood starts construction of the logistic center or May 20, 2016. 9,482 Total notes payable - Enterprise Funds 47

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Principal Capital Leases:

Contracts - Enterprise Funds: Outstanding The City leases various equipment through capital leasing arrangements in Water stock acquisition rights payable on the governmental and proprietary fund types. These activities are recorded demand to various water companies $941 for both governmental and business-type activities in the government-wide Current Year Refunding: financial statements. The assets and related obligations under leases in On July 25, 2013 the City issued $79,080 of 2013A Electric Revenue governmental funds are not recorded in the fund statements. For proprietary Refunding Bonds, which refunded previously outstanding debt. The funds, the assets and their related liabilities are reported directly in the fund.

refunding resulted in an increase in debt service payments of $10,962 over Amortization applicable to proprietary assets acquired through capital lease the next 30 years and an economic gain of $2,961. arrangements is included with depreciation for financial statement presentation.

Letters of Credit:

The assets acquired through capital leases are as follows:

The City's 2008 Certificates of Participation and 2008 Electric Revenue Bonds (Series A and C) require an additional layer of security between the Governmental Business-Type City and the purchaser of the bonds. The City has entered into the following Asset Activities Activities letters of credit ("LOC") in order to provide liquidity should all or a portion of Buildings and improvements $1,103 $ -

the debt be optionally tendered to the remarketer without being successfully Equipment 9,722 4,830 remarketed: Subtotal 10,825 4,830 LOC Annual Less: Accumulated depreciation (3,315) (1,738)

Expiration Commitment Debt Issue LOC Provider Date Fee Total 2008 Certificates of Participation Bank of America, N.A. 2015 0.450% The future minimum lease obligations as of June 30, 2014 were as follows:

2008A Electric Revenue Bonds Barclays Bank, PLC 2017 0.275%

2008C Electric Revenue Bonds Bank of America, N.A. 2017 0.390% Governmental Business-type Years Ending June 30, Activities Activities To the extent that remarketing proceeds are insufficient or not available, 2015 $2,854 $ 751 tendered amounts will be paid from drawings made under an irrevocable 2016 2,854 387 direct-pay letter of credit. 2017 2,232 322 2018 2,232 322 Liquidity advances drawn against the LOC that are not repaid will be 2019 1,927 322 converted to an installment loan over a 5-year period. The City would be Thereafter 1,771 309 required to pay $63,420 a year for 5 years (assuming a 12 percent interest 20 1 Copiers rate) if $116,100 of 2008 Certificates of Participation and $112,515 of 2008 Total Minimum lease payments 13,890 2,414 Electric Revenue Bonds (Series A and C) were "put" and not resold. No Less: Amount representing interest amounts have ever been drawn against the three letters of credit due to a (rates ranging from 1.2% to 9%) (722) (148) failed remarketing. Total capital lease payable $2.266 The various indentures allow the City to convert the mode of the debt' in the case of a failed remarketing.

48

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

The following are legally required debt service cash reserves. These Landfill Capping:

amounts, at a minimum, are held by the City or fiscal agents at June 30, 2014: State and Federal laws and regulations require the City to place a final cover on all active landfills when closed and to perform certain maintenance and Governmental longi-term obligations: monitoring functions at the landfill site for 30 years after closure. To comply Certificates of Participation $10,281 with these laws and regulations, the City is funding the costs of closure and Total $1O281 "final capping" of the Tequesquite landfill located in the City. This area, comprised of approximately 120 acres, operated as a "Class II Sanitary Enterprise funds: Landfill" until its closure in 1985. During its operation, the landfill did not Electric $14,833 accept hazardous waste and no clean up and abatement or cease and desist Sewer 20,142 orders have been issued to the City. The capacity used at June 30, 2014 was Total $34-975 100%. The remaining post closure period is currently 19 years.

The City has a number of debt issuances outstanding that are collateralized The estimated costs as determined by an independent consultant and by the pledging of certain revenues. The amount and term of the remainder updated by the City's Engineering Department are associated with flood of these commitments are indicated in the debt service to maturity tables control upgrades, remediation of possible ground water contamination and presented in the accompanying notes. The purposes for which the proceeds control of methane gas. All potential costs have been recognized in the of the related debt issuances were utilized are disclosed in the debt financial statements. However, there is the potential for these estimates to descriptions in the accompanying notes. For the current year, debt service change due to inflation, deflation, technology, or change in laws or payments as a percentage of the pledged gross revenue (or net of certain regulations. The City is recovering such costs in rates charged to its expenses where so required by the debt agreement) are indicated in the customers. The portion of costs to be recovered through future rates is table below. The debt service coverage ratios also approximate the classified as a regulatory asset and will be amortized over future periods.

relationship of debt service to pledged revenue for the remainder of the term of the commitment. 7. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage Debt Service to, and destruction of assets; errors and omissions; injuries to employees; Annual Amount of Annual Debt Service Coverage Ratio and natural disasters. Property insurance coverage has a limit of Pledged Revenue Payments (of all Description of (net of expenses, debt secured by for FYE $1,000,000, with a deductible of $100. Earthquake and flood insurance Pledged Revenue where required) this revenue) 6/30/14 coverage has a limit of $25,000, with a deductible of 5% for earthquake and Electric revenues $106,405 $49,207 2.16 $100 for flood. Workers' compensation insurance coverage has a limit of Water revenues 36,761 13,110 2.80 Sewer revenues 18,534 1.25

$25,000, with a self-insured retention of $3,000 per occurrence. The City 23,168" carries commercial insurance in the amount of $20,000 for general and auto

• Includes $2,425 of cash set-aside in a rate stabilization account in liability claims greater than $3,000. There were no claims settled in the last accordance with applicable bond covenants. three fiscal years that exceed insurance coverage. Internal service funds have been established to account for and finance the uninsured risks of loss.

There are also a number of limitations and restrictions contained in All funds of the City participate in the Risk Management program and make Assessment Bond indentures. The City believes they are in compliance with payments to the Internal Service Funds based on actuarial estimates of the all significant limitations and restrictions. amounts needed to fund prior and current year claims and incidents that have been incurred but not reported. Interfund premiums are accounted for as quasi - external transactions and are therefore recorded as revenues of the Internal Service funds in the fund financial statements.

49

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Changes in the self-insurance fund's claims liability amounts are: $17,025 1999 University Corridor/Sycamore Canyon Merged Project Area, Tax Allocation Bonds, Series A; Unpaid Claims, June 30, 2012 $27,542 $6,205 serial bonds, 3.4% to 4.7% due in annual Incurred claims (including IBNR's) 20,897 installments from $40 to $570 through Aug. 1, 2014; Claim payments and adjustments (16,870) $4,810 term bonds at 4.75% due Aug. 1, 2021; and Unpaid Claims, June 30, 2013 31,569 $6,010 term bonds at 5.0% due Aug. 1, 2027. 11,390 Incurred claims (including IBNR's) 13,582 Claim payments and adjustments (9,984) $6,055 1999 University Corridor/Sycamore Canyon Unpaid Claims, June 30, 2014 Merged Project Area, Subordinate Tax Allocation Bonds, Series B; $1,900 serial bonds, 4.5% to 5.5%

8. Judgment due in annual installments from $35 to $190 through In April 2013, the City settled a lawsuit challenging its century-old practice of Sep. 1, 2013; $1,135 term bonds at 5.5% due Sep. 1, transferring Water Fund monies to the General Fund. Under the settlement 2018; and $3,020 term bonds at 5.625% due Sep. 1, agreement, the General Fund agreed to pay $10 million over a three year 2027. 4,155 period beginning in fiscal year 2013/14. In fiscal year 2013/14, the General

$20,395 1999 Casa Blanca Project Area, Tax Fund paid the first installment of $3,333. The remaining obligation is $6,667, Allocation Bonds, Series A; $8,925 serial bonds, 3.4%

which has been reflected as a liability in the government-wide statements.

to 4.7% due in annual installments from $455 to $780

9. Other Long-Term Obligations through Aug. 1, 2014; $2,565 term bonds at 4.75% due Aug. 1, 2017; $4,035 term bonds at 4.75% due Aug. 1, Changes in Long-Term Obligations: Below is a summary of changes in long- 2021; and $4,870 term bonds at 5% due Aug. 1, 2025. 12,250 term obligations during the fiscal year for the former Redevelopment Agency, which is accounted for in the Successor Agency Trust (a fiduciary fund): $4,550 Arlington Redevelopment Project, 2004 Tax Allocation Bonds, Series A; $420 term bonds at 3.8%

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

Due 1, 2024; $3,515 term bonds at 4.7% due Aug. 1, 2034. 4,175 Beginning Ending Within Balance* Additions Reductions Balance One Year $2,975 Arlington Redevelopment Project Area, 2004 Redevelopment Tax Allocation Bonds; Series B: 5.5% due in annual Agency bonds $ 256,222 $ $ 8,182 $248,040 $8,310 Notes Payable 6,257 650 5,607 733 installments from $85 to $235 through Aug. 1, 2024. 2,010 Total

$26,255 State of California Department of General Principal Services Project, 2003 Lease Revenue Refunding Redevelopment Agency Bonds: Outstanding Bonds, Series A; 2% to 5% due in annual installments from $545 to $2,230 through Oct. 1, 2024. 17,790

$13,285 1991 Public Financing Authority Revenue Bonds, Series A, Multiple Project Areas; $1,470 serial $4,810 State of California Dept. of General Services revenue bonds 7.15% to 7.6%, due in annual Project, 2003 Lease Revenue Refunding Bonds, Series installments from $100 to $145 through Feb. 1, 2003; B; $310 serial bonds 1.20% to 1.42% through Oct.1, and $4,175 term bonds, 8.0%, due in annual 2004; $620 term bonds at 3.090% due Oct. 1, 2008; installments from $155 to $450 through Feb. 1, 2018 $1,110 term bonds at 4.340% due Oct. 1, 2014 and (portion not refunded). $ 85 $2,770 term bonds at 5.480% due Oct. 1, 2024. 2,975 50

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

$40,435 Downtown/Airport Merged Project Area, 2003 $43,875 University Corridor/Sycamore Canyon Merged Tax Allocation and Refunding Bonds; $32,720 serial Project Area, Arlington Project Area, Hunter bonds 2.0% to 5.25% due in annual installments from Park/Northside Project Area, Magnolia Center Project

$1,220 to $1,955 through Aug. 1, 2023; and $7,715 Area, and La Sierra/Arlanza Project Area 2007 Tax term bonds at 5.0% due in annual installments from 26,780 Allocation Bonds, Taxable, Series D, $15,740 term

$195 to $2,060 through Aug. 2034. bonds at 5.24% due Aug. 1, 2017; $28,135 term bonds at 5.89% due Aug. 1, 2032. 34,785 Subtotal 242,840

$24,115 2005 Housing Set-Aside Tax Allocation Bonds; Add: Unamortized bond premium 5,200

$17,025 serial bonds 3.0% to 4.625% due in annual Total Redevelopment Agency Bonds 1248.040 installments from $505 to $1,165 through Aug. 1, 2025;

$2,425 term bonds at 5.0% due Aug. 1, 2028; and Remaining debt service will be paid by the Successor Agency Trust from

$4,665 term bonds at 4.85% due Aug. 1, 2034. 18,415 future property tax revenues. Annual debt service requirements to maturity are as follows:

$8,340 Downtown/Airport Merged Project Area and Fiscal Year Principal Interest Total Casa Blanca Project Area 2007 Tax Allocation Bonds, 2015 $ 8,310 $12,047 $ 20,357 Tax Exempt, Series A, serial bonds 4.0% to 4.25% due 2016 8,520 11,665 20,185 in annual installments from $20 to $590,000 through 2017 8,905 11,256 20,161 Aug. 1, 2025; $4,980 term bonds at 4.5% due Aug. 1, 2018 9,660 10,799 20,459 2029; $410 term bonds at 4.375% due Aug. 1, 2037. 8,220 2019 10,125 10,299 20,424 2020-2024 61,015 42,744 103,759

$1,465 California Statewide Communities Development 2025-2029 58,175 26,736 84,911 Authority 2005 Taxable Revenue Bonds, Series A 2030-2034 45,205 13,826 59,031 (CRA/ERAF Loan Program); 3.87% to 5.01% due in 2035-2038 32,925 3,110 36,035 Premium 5,200 5,200 annual installments of $105 to $180 through Aug. 1, 180 Total $248.040 $142.482 $390,522 2015.

$14,850 Downtown/Airport Merged Project Area and Casa Blanca Project Area 2007 Tax Allocation Bonds, Principal Taxable, Series B, $4,050 term bonds at 5.2% due Notes Payable - Successor Agency: Outstandinq Aug. 1, 2017; $10,800 term bonds at 5.8% due Aug. 1, 2028. 12,520 These notes payable have been issued to promote $2,987 development and expansion within the City's

$89,205 University Corridor/Sycamore Canyon Merged redevelopment areas.

Project Area, Arlington Project Area, Hunter Park/Northside Project Area, Magnolia Center Project Pepsi Cola Bottling Company of Los Angeles, 10.5%,

Area, and La Sierra/Arlanza Project Area 2007 Tax payable in net annual installments of $341, subject to Allocation Bonds, Tax-Exempt, Series C, serial bonds recording of completion. 775 4.0% to 5.0% due in annual installments from $50 to

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

due Aug. 1, 2037. 87,110 51

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

HUD Section 108 loan for University Village, 5.36% to Debt Service 7.66%, payable in semi-annual installments beginning Annual Amount of Annual Debt Service Coverage Pledged Revenue Payments (of all Ratio Aug. 1, 1996 of $272 to $425 through Aug. 1, 2015 Description of (net of expenses, debt secured by for FYE HUD Section 108 loan for Mission Village Project, Pledged Revenue where required) this revenue) 6/30/14 6.15% to 6.72%, payable in semi-annual installments Property Taxes:

beginning Aug. 1, 1999 of $110 to $420 through Aug. 1, Non-Housing $41,335 $15,298 2.70 Housing 8,667 2,765 3.13 2018 1,845

• The computations above are based on the total tax increment generated for Total notes payable - Successor Agency the year ended June 30, 2014 for each project area that had been pledged as collateral for the Bonds. As discussed above, only a portion of tax increment has been actually remitted to the Successor Agency and reported Remaining debt service will be paid by the Successor Agency Trust from as revenue in the accompanying financial statements.

future property tax revenues. Annual debt service requirements to maturity are as follows: Assessment Districts and Community Facilities Districts Bonds (Not obligations of the City)

Fiscal Year Principal Interest Total 2015 As of June 30, 2014, the City has several series of Assessment District and

$ 733 $ 383 $ 1,116 2016 771 357 1,128 Community Facility District Bonds outstanding in the amount of $45,350.

2017 399 337 736 Bonds were issued for improvements in certain districts and are long-term 2018 428 323 751 obligations of the property owners. The City Treasurer acts as an agent for 2019 462 306 768 the property owners in collecting the assessments, forwarding the collections 2020-2024 286 1,423 1,709 to bondholders and initiating foreclosure proceedings, if applicable. Since 2025-2029 471 1,238 1,709 the debt does not constitute an obligation of the City, it is not reflected as a 2030-2034 777 933 1,710 long-term obligation of the City and is not reflected in the accompanying 2035-2038 1Q280 430 1,710 basic financial statements.

Total Conduit Debt Obligations As a result of action by the State of California to dissolve all redevelopment agencies in the state, the Successor Agency no longer receives the full Mortgage Revenue Bonds outstanding of $5,385 and Industrial Development amount of tax increment previously pledged by the dissolved redevelopment Revenue Bonds of $1,700 are not included in the accompanying financial agency to its bondholders. In its place is a new revenue stream provided to statements. These bonds are special obligations of third parties and payable the Successor Agency that represents only that portion of tax increment that solely from and secured by a pledge of the receipts received from loans and is necessary to pay the enforceable obligations approved by the California certain other reserve funds and related monies. The bonds are not payable Department of Finance. from any other revenues or assets of the City. Neither the faith and credit nor the taxing power of the City, the State of California or any political For the current year, debt service payments as a percentage of the pledged subdivision thereof is pledged to the payment of the principal and interest on gross revenue (or net of certain expenses where so required by the debt the bonds.

agreement) are indicated in the table below. The debt service coverage ratios for the Successor Agency also approximate the relationship of debt service to pledged revenue for the remainder of the term of the commitment.

52

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

10. Derivative Instruments during construction, which swaps to a fixed rate for the remaining 20-year amortization whereby the City will pay a fixed payment and will receive a Interest Rate Swaps variable payment computed at 65.01% of the LIBOR one month index plus 150 basis points. The lease interest rate on the Convention Center has a The City has six cash flow hedging derivative instruments, which are pay- cap at the lesser of 12% or the highest rate permitted by applicable law fixed swaps. These swaps were employed as a hedge against debt that was whereas the related swap does not have a cap. The swaps have notional refunded in 2008 and 2011 and against debt issued in 2012. At the time of amounts equal to the principal amounts stated above. The notional value of the refundings, hedge accounting ceased to be applied. The balance of the the swaps and the principal amounts of the associated debt decline by $975 deferral account for each swap is included as part of the deferred charge on to $7,200 until the debt is completely retired in fiscal year 2037.

refunding associated with the new bonds. The swaps were also employed as a hedge against the new debt. Hedge accounting was applied to that The bonds and the related swap agreements for the 2008A Electric Revenue portion of the hedging relationship, which was determined to be effective. Bonds mature on October 1, 2029, 2008C Electric and 2011A Electric and Hedge accounting was also applied to the swap associated with the debt 2011A Water Revenue/Refunding Bonds mature on October 1, 2035. The issued in 2012, which was also determined to be effective. 2008 Certificates of Participation mature on March 1, 2037. The loan with BBVA Compass Bank will be paid in full on April 1, 2034.

The following is a summary of the derivative activity for the year ended June 30, 2014: As of June 30, 2014 rates were as follows:

Change in Fair Value Fair Value 2008 Electric 2008 Electric 2011 Electric Notional as of for Fiscal Refunding/ Refunding/ Refunding/

Amount 6/30/14 Year Revenue Revenue Revenue Bonds Bonds Bonds Governmental Activities Series A Series C Series A 2008 Renaissance Certificates of Participation $116,100 (19,485) (146) 2012 Convention Center Financing 41,406 49 (977) Rates Rates Rates Business-Type Activities Interest rate swap:

2008 Electric Refunding/Revenue Bonds Sedes A 68,525 (8,845) 800 Fixed payment to counterparty 3.11100% 3.20400% 3.20100%

2008 Electric Refunding/Revenue Bonds Series C 41,975 (6,646) 410 2011 Electric Refunding/Revenue Bonds Series A 41,925 (6,617) 411 Variable payment from counterparty (0.42414%) (0.42543%) (0.24925%)

2011 Water Refunding/Revenue Bonds Series A 56,525 (8,083) (199) Net interest rate swap payments 2.68686% 2.77857% 2.95175%

Variable-rate bond coupon payments 0.35041% 0.34837% 0.14338%

Objective: In order to lower borrowing costs as compared to fixed-rate Synthetic interest rate on bonds 312fi94% a3.9513%

bonds, the City entered into interest rate swap agreements in connection with its $141,840 2008 Electric Revenue Bonds (Series A and C), $56,450 2011 2011 Water Electric Revenue Bonds, $59,000 2011 Water Revenue Bonds and $128,300 Refunding/ 2012 2008 Certificates of Participation ("COP"). Also, in 2012, the City entered Revenue 2008 Convention into an additional interest rate swap agreement in connection with the Bonds Renaissance Center Series A COPs Financing Convention Center financing with BBVA Compass Bank.

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

fixed payment and receives a variable payment computed as 62.68% of the Fixed payment to counterparty 3.20000% 3.36200% 3.24000%

London Interbank Offering Rate ("LIBOR") one month index plus 12 basis points for the Electric and Water swaps. For the COP swap, the City pays a Variable payment from counterparty (0.24900%) (0.39595%) (1.59857%)

Net interest rate swap payments 2.95100% 2.96605% 1.64143%

fixed payment and receives a variable payment computed as 63.00% of the Variable-rate bond coupon payments 0.16488% 0.38032% 1.59857%

LIBOR one month index plus 7 basis points. The Convention Center Synthetic interest rate on bonds __WI5_66% -346&U% 3U24010%

financing consists of an initial 21-month variable rate interest only period 53

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Fair Value: As of June 30, 2014, in connection with all swap arrangements, carry a synthetic interest rate. Also, if at the time of termination a swap has a the transactions had a combined net negative fair value of <$49,627>. negative fair value, the City would be liable to the counterparty for a payment Because the coupons on the City's variable-rate bonds adjust to changing equal to the swap's fair value.

interest rates, the bonds do not have a corresponding fair value decrease.

The fair value was developed by a pricing service using the zero-coupon Swap payments and associated debt: As of June 30, 2014, the debt service method. This method calculates the future net settlement payments required requirements of the variable-rate debt and net swap payments assuming by the swap, assuming that the current forward rates implied by the yield current interest rates remain the same, for their term are summarized in the curve correctly anticipate future spot interest rates. These payments are following table. As rates vary, variable-rate bond interest payments and net then discounted using the spot rates implied by the current yield curve for swap payments will vary.

hypothetical zero-coupon bonds due on the date of each future net settlement of the swap.

Variable-Rate Bonds Credit risk: The City is exposed to credit risk on one of its derivative Fiscal Year Interest instruments that has a positive fair value. The counterparty for this swap is Ending Rate BBVA/Compass Bank. To mitigate credit risk, the City has the ability to June 30 Principal Interest Swaps. Net Total offset swap payments due to it from BBVA/Compass pursuant to the swap, 2015 $ 5,842 $ 1,692 $ 10,540 $ 18,074 against current and future rental payments required to be made by the City to 2016 6,138 1,654 10,389 18,181 Compass Mortgage Corporation under the lease agreement. The City is not 2017 5,964 1,614 10,235 17,813 exposed to credit risk on the remaining swaps because those swaps have a 2018 7,217 1,571 10,058 18,846 negative fair value. The swap counterparties, Bank of America, N.A., Bank 2019 13,516 1,514 9,736 24,766 of America Corp. and J.P. Morgan Chase & Co. were rated A, A- and A 2020-2024 86,525 6,418 41,555 134,498 respectively by Standard & Poor's. To mitigate the potential for credit risk for 2025-2029 91,151 4,369 29,403 124,923 these swaps, the swap agreements require the fair value of the swap to be 2030-2034 105,979 2,050 15,391 123,420 collateralized by the counterparty with U.S. Government securities if the 2035-2039 49,050 194 1 790 51,034 counterparties' rating decreases to negotiated trigger points. Collateral Total $371,.382 $21 .076 $139,0_97 $531555 would be posted with a third-party custodian. At June 30, 2014, there is no requirement for collateral posting for any of the outstanding swaps. 11. Economic Contingency Basis risk: The city is exposed to basis risk on its pay-fixed interest rate A portion of unassigned fund balance within the General Fund is set aside for swap and rate cap hedging derivative instruments because the variable-rate future economic contingencies. The amount that has been set aside is equal payments received by the city on these hedging derivative instruments are to approximately 15% of General Fund expenditures.

based on a rate or index other than interest rates the city pays on its hedged variable-rate debt. If a change occurs that results in the rates' moving to 12. Interfund Assets, Liabilities and Transfers convergence, the expected cost savings may not be realized.

Due From/To Other Funds: These balances resulted from expenditures being incurred prior to receipt of the related revenue source.

Termination risk: The derivative contract uses the International Swap Dealers Association Master Agreement, which includes standard termination The following table shows amounts receivable/payable between funds within events, such as failure to pay and bankruptcy. The Schedule to the Master the City at June 30, 2014:

Agreement includes an "additional termination event." That is, a swap may be terminated by the City if either counterparty's credit quality falls below "BBB-" as issued by Standard and Poor's. The City or the counterparty may terminate a swap if the other party fails to perform under the terms of the contract. If a swap is terminated, the Variable-rate bond would no longer 54

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Receivable Fund Payable Fund Amount In addition, the following advances to the former Redevelopment Agency are General Nonmajor Governmental Funds $ 602 accounted for in the Private-Purpose Trust Fund of the Successor Agency:

Capital Outlay Fund 17,381 Receivable Fund Amount Nonmajor Enterprise Funds 133 General $ 652 18,116 Nonmajor Governmental Funds 39,739 Electric Central Stores

• 914 Electric 5,800 Sewer 4,436 Water Central Stores

• 392 Self-Insurance Trust

• 5,634 Total Total

• Internal service fund Transfers In/Out: Transfers are primarily used to (1) move revenues to the fund that statute or budget requires to expend them, and (2) move receipts Advances To/From Other Funds: These balances consist of advances used restricted to debt service from the funds collecting the receipts to the debt to fund capital projects in advance of related financing/assessments and for service fund as debt service payments become due.

other long-term borrowing purposes.

The following table shows amounts transferred to/from funds within the City The following table shows amounts advanced from funds within the City to as of June 30, 2014:

other funds within the City at June 30, 2014:

Transfer In Fund Transfer Out Fund Amount Receivable Fund Payable Fund Amount General Electric $38,704 General Electric $11,284 6,991 Water Water 4,855 45.695 Sewer 3,106 Nonmajor Governmental Funds 516 General Fund 9,851 Nonmajor Enterprise Funds 2,087 Nonmajor Governmental Self-Insurance Trust

• 204 Funds Capital Outlay Fund 2,185 Central Stores

• 213 Nonmajor Enterprise Funds 738 Central Garage

• 961 12,774 23,226 Water General Fund 3 333 Self-Insurance Trust

• Nonmajor Enterprise Funds 452 General Fund 166 Total Nonmajor Governmental Funds 458 Central Garage

• 1,688 13. Deficit Net Position 2,764 Deficit net position exists in the Self-Insurance Internal Service Fund

($25,953). In order to begin funding a portion of the deficit in the internal Central Garage

• Nonmajor Governmental Funds 3,460 service fund, self-insurance rates were increased in the current year.

However, this was offset by unusually large losses incurred during the year Sewer Nonmajor Governmental Funds 7$283 combined with an adjustment for the increase in the amount estimated for

$36-733 claims and judgments. Management believes that there are sufficient funds Total on hand to cover current payment obligations and plans to continue to control 55

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) costs and increase rates over the next few years as needed to match (B) Funding Policy. For each of the fiscal years shown on the following page, expected long-term payment requirements. the City has contributed at the actuarially determined rate provided by PERS' Deficit net position exists in the Special Capital Improvement Fund ($1,733). actuaries. Participants are required to contribute 8% (9% for safety The deficit relates to short-term borrowings, which will be repaid over the employees) of their annual covered salary. The City has a multiple tier next six years as park development fees are expected to increase as the retirement plan with benefits varying by plan. The City pays the employees' local economy continues to recover contribution to CaIPERS for both miscellaneous and safety employees hired on or before specific dates as follows:

Deficit net position also exists in the Successor Agency Private-Purpose Trust Fund ($205,604). The deficit in the Successor Agency Trust Fund will Safety (Police):

be reduced over the years as the related debt is paid-off with funds received

• 1st Tier (RPOA, RPOA Supervisory & RPAA) - The retirement from the Redevelopment Property Tax Trust Fund (RPTTF), which is formula is 3% at age 50 for employees hired before February 16, administered by the County Auditor-Controller. 2012. The City pays the employee share (9%) of contributions on their behalf and for their account.

14. Litigation

• 2 d Tier (RPOA only) - The retirement formula is 3% at age 50 and The City is a defendant in various lawsuits arising in the normal course of new employees hired on or after February 17, 2012 pay their share business. Present lawsuits and other claims against the City are incidental to (9%) of contributions.

the ordinary course of operations and are largely covered by the City's self-

• 3 rd Tier (RPOA, RPOA Supervisory & RPAA) - The retirement insurance program. In the opinion of management and the City Attorney, formula is 2.7% at age 57 for new members hired on or after January such claims and litigation will not have a materially adverse effect upon the 1, 2013 and the employee must pay the employee share (9%).

financial position or results of operation of the City. Classic members (CalPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a different tier.

The Water Utility is a plaintiff in a lawsuit against several entities that either Safety (Fire):

owned or leased a property site in the City of Colton and City of Rialto that is

• 1 st Tier - The retirement formula is 3% at age 50 for employees hired contaminated by perchlorate. The lawsuit was filed March 31, 2009, and no trial date has been set. before June 11, 2011. The City pays the employee share (9%) of contributions on their behalf and for their account.

15. City Employees Retirement Plan

• 2nd Tier - The retirement formula is 3% at age 55 and new employees hired on or after June 11, 2011 pay their share (9%) of (A) Plan Description. The City of Riverside contributes to the California Public contributions.

Employees Retirement System (CaIPERS), an agent multiple employer

• 3 rd Tier - The retirement formula is 2.7% at age 57 for new members public employee defined benefit pension plan. CalPERS provides retirement hired on or after January 1, 2013 and the employee must pay the and disability benefits, annual cost-of-living adjustments, and death benefits employee share (9%). Classic members (CalPERS members prior to plan members and beneficiaries. CalPERS acts as a common investment to 12/31/12) hired on or after January 1, 2013 may be placed in a and administrative agent for participating public entities within the State of different tier.

California. PERS issues a publicly available financial report that includes Miscellaneous:

financial statements and required supplementary information for the cost a Tier - The retirement formula is 2.7% at age 55. The City pays 1 st sharing plans that are administered by PERS. Benefit provisions and all other requirements are established by state statute and City ordinance. A copy of the employee share (8%) of contributions on their behalf and for their CaIPERS' annual financial report may be obtained online at account except for general SEIU employees, which contributed 2%

www.calpersca.gov. in fiscal year 2013/14, with the City paying the remaining 6% of the employee share.

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

56

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 +k .4 For the yar ended une 30. 214 loll I.JU tO VAIJC00CU "I LIILUaOO aU o SEIU and SEIU Refuse employees hired on or after June 7, In 2004 and 2005, the City issued pension obligation bonds to fund the 2011 pay their share (8%) of contributions. unfunded actuarial accrued liability for safety and miscellaneous employees.

o All other miscellaneous employees hired on or after October The asset related to the net pension asset will be amortized in accordance 19, 2011 pay their share (8%) of contributions. with the method used by CalPERS for calculating actuarial gains and losses 3 Tier - The retirement formula is 2% at age 62 for new members over a 19-year period. A total of $122,806 of net pension assets is included hired on or after January 1, 2013 and the employee must pay the in the Government-wide Statement of Net Position and in the proprietary fund employee share ranging from 7-8% based on bargaining group statements.

classification. Classic members (CalPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a Determination of Net Pension Asset as of June 30, 2014:

different tier.

Misc Safety The contribution requirements of plan members and the City are established and may be amended by CalPERS. Annual required contribution $ 20,151 $17,206 Interest on net pension asset (3,887) (5,763)

(C) Annual Pension Cost. The required contribution was determined as part Adjustment to annual required contribution 6,097 9,418 of the June 30, 2011 actuarial valuation using the entry age normal actuarial Annual pension cost 22,361 20,861 cost method. The actuarial assumptions included (a) 7.50% investment rate Less contributions made (20,151) (17,206) of return (net of administrative expenses), (b) projected salary increases of Decrease in net pension asset 2,210 3,655 3.30% per year compounded annually, attributable to inflation, and (c) 2.75% Net pension asset, beginning of year (51,825) (76,846) expected long term inflation. The actuarial value of CalPERS assets was Net pension asset, end of year determined using techniques that smooth the effects of short-term volatility in the market value of investments (smoothed market value). All changes in the Schedule of funding for CalPERS:

unfunded actuarial accrued liability due to plan amendments, changes in Entry actuarial assumptions, or changes in actuarial methodology are amortized Age Unfunded/

separately as a level percentage of pay over a closed 20-year period. All Normal (Overfunded) gains or losses are tracked and amortized over a rolling 30-year period with Actuarial Actuarial UAAL as the exception of special gains and losses in fiscal years 2008-2009, 2009- Actuarial Accrued Actuarial Accrued Annual a % of Valuation Liability Value of Liability Funded Covered Covered 2010 and 2010-2011. Each of these years' gains or losses has been isolated Plan Date (AAL) Assets (UAAL) Ratio Payroll Payroll and amortized over fixed and declining 30 year periods (as opposed to the current rolling 30 year amortization). Misc. 6/30/11 $998,216 887,857 110,359 88.9 108,106 102.1 Safety 6/30/11 $731,074 650,954 80,120 89.0 62,538 128.1 Three-year trend information for CalPERS:

Fiscal Annual Net Pension 16. Other Post-Employment Benefits Year Pension  % of APC Obligation June 30, Plan Cost (APC) Contributed (Asset) The City provides healthcare benefits to retirees in the form of an implied rate 2012 Misc $21,661 92.8% subsidy. Retirees and active employees are insured together as a group,

$(53,694) 2012 Safety 18,542 86.6% (79,890) thus creating a lower rate for retirees than if they were insured separately.

2013 Misc 21,907 91.5% (51,825) Although the retirees are solely responsible for the cost of their health 2013 Safety 18,945 83.9% (76,846) insurance benefits through this plan, the retirees receive the benefit of a 2014 Misc 22,361 90.1% (49,615) lower rate. The difference between these amounts is the implied rate 2014 Safety 20,861 82.5% (73,191) subsidy, which is considered an other post-employment benefit (OPEB) under GASB 45.

57

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

Retiree coverage terminates either when the retiree becomes covered under results are compared to past expectations and new estimates are made another employer health plan, or when the retiree reaches Medicare eligibility about the future. The method used by the actuary was the entry age normal age, which is currently age 65. Spousal coverage is available until the retiree cost method. The actuarial assumptions included (a) discount rate of 4.30%,

becomes covered under another employer health plan, attains Medicare (b) 2.75% inflation, (c) projected salary increases of 3.00% annually and (d) eligibility age, or dies. However, the retiree benefit continues to the surviving healthcare cost trend rates ranging from 5.0% to 7.0%.

spouse if the retiree elects the CalPERS survivor annuity.

Projections of benefits are based on the substantive plan (the plan as The contribution requirements are established by the City Council. The City understood by the employer and plan members) and include the types of is not required by law or contractual agreement to provide funding other than benefits in force at the valuation date and the pattern of sharing benefit costs the pay-as-you-go amount necessary to provide current benefits to eligible between the city and the plan members to that point. Actuarial calculations retirees and beneficiaries.

reflect a long-term perspective and employ methods and assumptions that The City's annual OPEB cost (expense) is reported based on the annual are designed to reduce short-term volatility in actuarial accrued liabilities and required contribution of the employer (ARC), an amount actuarially the actuarial value of assets.

determined in accordance with GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost Three-year trend information:

each year and amortize any unfunded actuarial liability (or funding excess) Fiscal Year Actual Yoof ARC (UAAL) over a period not to exceed thirty years. The ARC for the year ended June 30, ARC Contributions rntributed June 30, 2014 was $4,913, which consisted of normal cost of $2,553 and UAAL amortization of $2,360. The ARC as a percentage of payroll was 3.2% 2012 $5,821 $1,426 25%

for the year ended June 30, 2014. 2013 6,011 1,626 27%

2014 4,913 1,232 25%

As of June 30, 2013, the most recent actuarial valuation date, the OPEB plan was 0.0% funded. The actuarial accrued liability for benefits was $47 million, Fiscal Year Annual  % of OPEB Cost Net OPEB and the actuarial value of assets was $0, resulting in an unfunded actuarial June 30, OPEB Cost Contributed Obligqation accrued liability (UAAL) of $47 million.

2012 $5,789 25% $17,796 Determination of the Net OPEB Obligation as of June 30, 2014: 2013 6,147 26% 22,317 2014 4,756 26% 25,842 Annual required contribution $ 4,913 The table below displays the funding progress of the plan and is based upon Interest on net OPEB obligation 960 Amortization of net OPEB obligation the most recent actuarial valuation data:

(1,116)

Annual benefit pension cost 4,757 Unfunded UL as a Less contributions made (1,232) Actuarial Actuarial Actuarial Actuarial Annual %of Increase in net OPEB obligation 3,525 Valuation Accrued Value of Liability Funded Covered Covered Net OPEB liability, beginning of year 225317 Date Liability Assets (U$L1 Ratio Payroll Payroll Net OPEB liability, end of year M258-42 6/30/13 $47,195 $ - *$47,195 0% $153,077 31%

Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual 58

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousandsl

17. Commitments and Contingencies Terms of Take or Pay Commitments A. Long-Term Electric Utility 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.

Intermountain Power AQency Management intends to pay these obligations from operating revenues received during the year that payment is due. A long-term obligation has not The Electric Utility has entered into a power purchase contract with been recorded on the accompanying financial statements for these Intermountain Power Agency (IPA) for the delivery of electric power. The commitments. Take-or-pay commitments terminate upon the later of contract Electric Utility's share of IPA power is equal to 7.6 percent, or approximately expiration or final maturity of outstanding bonds for each project.

137.1 MW, of the net generation output of IPA's 1,800 MW coal-fueled Outstanding debts associated with the take-or-pay obligations have variable generating station located in central Utah. The contract expires in 2027 and interest rates for the Palo Verde Nuclear Generating Station Project and the the debt fully matures in 2024. remaining projects have fixed interest rates which range from 0.35 percent to 6.13 percent. The schedule below details the amount of principal and interest The contract constitutes an obligation of the Electric Utility to make payments that is due and payable by the Electric Utility as part of the take-or-pay solely from operating revenues. The power purchase contract requires the contract for each project in the fiscal year indicated.

Electric Utility to pay certain minimum charges that are based on debt service requirements. Such payments are considered a cost of production. SCPPA Fiscal Southern California Public Power Authority Year IPA PV STS Hoover MPP MAT Total 2015 $14,786 $ 669 $ 8,310 $ 703 $ 269 $ 3,087 $ 27,824 On November 1, 1980, the City of Riverside joined with the Imperial Irrigation 2016 22,127 672 8,364 701 269 3,013 35,146 District and the cities of Los Angeles, Anaheim, Vernon, Azusa, Banning, 2017 11,650 675 8,182 701 262 2,952 24,422 Colton, Burbank, Glendale and Pasadena to create the Southern California 2018 16,935 679 8,020 699 258 2,910 29,501 Public Power Authority (SCPPA) by a Joint Powers Agreement under the 2019 18,827 7,927 257 2,882 29,893 laws of the State of California. As of July 2001, the City of Cerritos was Thereafter 551421 54,497 443 4,995 115356 Total $95.300 22f..2._142 admitted as a member. The primary purpose of SCPPA is to plan, finance, develop, acquire, construct, operate and maintain projects for the generation and transmission of electric energy for sale to its participants. SCPPA is Final maturities of outstanding debt associated with take-or-pay obligations governed by a Board of Directors, which consists of one representative for and related contract expirations are as follows:

each of the members. During the 2013-14 and 2012-13 fiscal years, the Electric Utility paid approximately $17,440 and $16,171, respectively, to SCPPA under various take-or-pay contracts. These payments are reflected as a component of maintenance and operation expense in the financial statements. Proiect Final Maturity Contract Expiration Palo Verde Nuclear Generating Station 2017 2030 Southern Transmission System 2027 2027 The projects and the Electric Utility's proportionate share of SCPPA's Hoover Dam Uprating 2017 2017 obligations, including final maturities and contract expirations are as follows: Mead - Phoenix Transmission 2020 2030 Mead - Adelanto Transmission 2020 2030 Proiect Percent Share Entitlement Palo Verde Nuclear Generating Station (PV) 5.4% 12.3MW In addition to debt service, Riverside's entitlements require the payment of Southern Transmission System (STS) 10.2% 244.0MW fuel costs, operating and maintenance, administrative and general and other Hoover Dam Uprating (Hoover) 31.9% 30.0MW miscellaneous costs associated with the generation and transmission Mead - Phoenix Transmission (MPP) 4.0% 18.0MW Mead - Adelanto Transmission (MAT) 13.5% 118.0MW 59

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) facilities discussed above. These costs do not have a similar structured Calendar year 2013, renewable resources provided 24% of retail sales payment schedule as debt service and vary each year. requirements.

The costs incurred for the year ended June 30, 2014 and 2013, are as In an effort to increase the share of renewables in the Electric Utility's power follows (in thousands): portfolio, the Electric Utility entered into power purchase agreements with various entities described below on a "take-and-pay" basis. The contracts in Fiscal Year IPA P__v STS Hoover MPT MAT Total the following table were executed as part of compliance with this standard.

2014 $24,466 $2,416 $3,296 $104 $ 50 $ 312 $30,644 2013 $26,445 $2,528 $2,405 $ 97 $ 41 $ 338 $31,854 Long-term renewable power purchase agreements:

Estimated These costs are reflected as a component of maintenance and operation Maximum Contract Annual Cost expense on the statement of revenues, expenses and changes in net Supplier Type Contract Expiration for 2015 position. Salton Sea Power LLC Geothermal 46.0MW 5/31/20 $ 23,675 Wintec Wind 1.3MW 12/30/18 211 B. Other Commitments WKN Wagner Wind 6.0MW 12/22/32 1,113 533MW Power Purchase Agreements:

Energy Delivery Contract The Electric Utility has a firm power purchase agreement with Bonneville Maximum Expected No Later Term Power Administration (BPA) for the purchase of capacity (50 megawatts Contract1 InYears Supplier Type Delivery Than during the summer months and 13 megawatts during the winter months) CalEnergy Geothermal 86.0MW 2/11/16 2/11/16 25 beginning April 30, 1996, for 20 years. Effective May 1, 1998, these summer AP North Lake Photovoltaic 20.0MW 6/30/15 12/31/15 25 and winter capacity amounts increased to 60 megawatts and 15 megawatts, FTP Solar respectively, for the remainder of the second agreement. On January 29, Summer Solar Photovoltaic 10.0MW 6/30/16 12/31/16 25 2013, Riverside revised the delivery and return portion of the agreement to Antelope Big allow for a flat 40 MW of delivery during May and June through calendar year Sky Ranch Photovoltaic 10.0MW 6/30/16 12/31/16 25 2013, 2014 and 2015. The Agreement with BPA will terminate on May 1, First Solar Photovoltaic 14.0MW 12/31/15 6/30/16 20 2016. Recurrent Clearwater Photovoltaic 14.9MW Delayed 12/31/15 20 Dominion Columbia II Photovoltaic 11.1MW 12/31/14 12/31/15 20 Cabazon Wind Wind 39.0MW 1/1/15 12/31/15 10 On April 12, 2011, the California Renewable Energy Resources Act (SB 2 Solar Star Photovoltaic 7.3MW 9/30/15 12/31/15 25 (1X)) was passed by the State Legislative and signed by the Governor. SB 2 212.3MW (1X) revised the amount of statewide retail electricity sales from renewable resources in the State Renewable Energy Resources Program to 33% by 1 Contracts are contingent on energy production from specific related December 31, 2020 in three stages: average of 20% of retail sales during generating facilities. Riverside has no commitment to pay any amounts 2011-2013; 25% of retail sales by December 31, 2016; and 33% of retail except for energy produced on a monthly basis from these facilities.

sales by December 31, 2020. The Riverside Public Utilities Board and City Council approved the enforcement program required by SB 2 (1X) on Construction Commitments:

November 18, 2011 and December 13, 2011, respectively, and further approved the City's RPS Procurement plan implementing the new RPS As of June 30, 2014, the Sewer and Electric Utilities had approximately $86 mandates on May 3, 2013 and May 14, 2013, respectively. It is expected that million and $11 million, respectively, in major construction commitments the City will be able to meet the new mandates with new resource related to unfinished capital projects. These construction commitments are procurement actions as outlined in the City's RPS Procurement Plan. For expected to be funded primarily with current and future bond proceeds.

60

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands)

C. Jointly-Owned Utility Project - SONGS The regulations categorize the decommissioning activities into three phases:

initial activities, major decommissioning and storage activities, and license The City has a 1.79% undivided ownership interest in Units 2 and 3 of termination. Initial activities include providing notice of permanent cessation SONGS, located south of the City of San Clemente in northern San Diego of operations (accomplished on June 12, 2013) and notice of permanent County; however, on June 7, 2013, Southern California Edison (SCE) removal of fuel from the reactor vessels (provided by SCE to the NRC on announced in a press release its plan to retire Units 2 and 3 of SONGS June 28 and July 22, 2013 for Units 3 and 2, respectively). Within two years permanently. Consequently, the units are no longer a source of supply for the after the announcement of retirement, SCE, as the operating licensee must Electric Utility, but remain associated with certain of its costs, including those submit a post-shutdown decommissioning activities report, an irradiated fuel associated with the units' shutdown and decommissioning. management plan and a site-specific decommissioning cost estimate. SCE currently estimates that it will provide the other initial activity phase plans and SONGS was operated and maintained by SCE, under an agreement with the cost estimates to the NRC by the end of 2014.

City and San Diego Gas & Electric Company (SDG&E), which expires upon termination of the easement for the plant in 2024. The three-member SCE has prepared a draft decommissioning plan, an environmental SONGS Board of Review approved the budget for capital expenditures and evaluation and an updated cost estimate to decommission the San Onofre operating expenses. The City and the two other owners each had one nuclear plant. The draft plan, called a Post-Shutdown Decommissioning representative on that board. The participation agreement provided that each Activities Report (PSDAR), spells out the timetable for major owner was entitled to its proportionate share of benefits of, and paid its decommissioning work expected to begin in early 2016 and indicates proportionate share of costs and liabilities incurred by SCE for, construction, adequate funds exist to pay for the work. SCE estimates that it will cost $4.4 operation and maintenance of the project; each owner's obligation was billion to safely complete the 20-year decommissioning of San Onofre.

several, and not joint or collective.

There are no separate financial statements for the jointly-owned utility plant In 2005, the CPUC authorized a project to install four new steam generators since each participant's interests in the utility plant and operating expenses in Units 2 and 3 at SONGS and remove and dispose of the predecessor are included in their respective financial statements. The Electric Utility will generators. SCE completed the installation of these steam generators in continue to set aside approximately $1,600 per year to fund 2010 and 2011 for Units 2 and 3, respectively. Replacement of the steam decommissioning costs. The Electric Utility's portion of current and long-term generators was expected to enable plant operations to continue through at debt associated with the decommissioning of SONGS is included in the least 2022, and perhaps beyond, subject to the approval of the Nuclear accompanying financial statements.

Regulatory Commission (NRC).

Replacement Power Costs In January 2012, a water leak occurred in one of the heat transfer tubes of Unit 3's steam generators, causing it to be shut down. At that time, Unit 2 During the outage, the City has procured replacement power to serve its was off-line for a planned outage when unexpected wear in areas of tube-to- customers' requirements. These costs are in addition to the operating and support structure were found. Units 2 and 3 remained off-line for extensive maintenance expenses paid annually during normal operations.

inspections, testing and analysis of their steam generators. On June 7, 2013, Replacement power costs incurred by the City as a result of the outage SCE unilaterally announced its plan to retire Units 2 and 3 permanently. (commencing on January 31, 2012 for Unit 3 and March 5, 2012 for Unit 2) were approximately $13.2 million and are reported as regulatory assets on The current plant site easement for SONGS terminates on May 12, 2024 and the Statements of Net Position.

would need to be extended in order for the plant to be decommissioned and the site restored. Contractual Matters As a result of SCE's decision to permanently retire SONGS Units 2 and 3, The replacement steam generators for Units 2 and 3 were designed and SCE has begun the decommissioning phase of the plant. The process of manufactured by Mitsubishi Heavy Industries (MHI) and were warranted for decommissioning a nuclear power plant is governed by NRC regulations. an initial period of 20 years from acceptance. MHI was contractually 61

CITY OF RIVERSIDE NOTES TO BASIC FINANCIAL STATEMENTS For the year ended June 30, 2014 (amounts expressed in thousands) obligated to repair or replace defective items and to pay specified damages for certain repairs. MHI's liability under the purchase agreement is limited to

$138 million and excludes consequential damages, defined to include "the cost of replacement power." The limitations are subject to certain exceptions.

There are insurance policies for both property damage and accidental outage issued by Nuclear Electric Insurance Limited (NEIL), and SCE has notified NEIL of claims under the two policies. The City is a named insured on the SCE insurance policies covering SONGS and will assist SCE in pursuing claims recoveries from NEIL, but there is no assurance that the City will recover all or any of its applicable costs under these arrangements. To the extent that any third-party recoveries are made, they will reduce cost to the Electric Utility. In fiscal year 2014, the City continued to collect from customers, through its rates, which paid for the City's share of the ongoing operating costs and replacement power related to SONGS.

As a result of the decision by SCE to permanently retire Units 2 and 3 of SONGS prior to the expiration of the NRC licenses, the City expects to incur certain costs resulting from the early termination of long-term uranium fuel supply contracts. On November 12, 2013, Uranium One Inc. served a Demand for Arbitration on SCE, SDG&E and the City, seeking an award of damages in the approximate amount of $12.5 million. Uranium One, Inc.

asserts damages from a purchase agreement to deliver certain amounts of uranium concentrates in 2011, 2012 and 2013. On April 25, 2014, Energy Resources of Australia, Ltd. and Rossing Uranium Ltd. served a Demand for Arbitration on SCE, asserting similar claims as Uranium One Inc. and seeking an award of damages in the approximate amount of $19.5 million.

No arbitration dates have been set and the City cannot estimate the outcomes of these pending claims at this time.

18. Subsequent Events 2014 Subordinate Tax Allocation Refunding Bonds On October 16 2014, the Successor Agency to the Redevelopment Agency of the City of Riverside issued 2014 Subordinate Tax Allocation Refunding Bonds (Series A and B) in the amount of $62,980. The bonds were issued to refund certain obligations of the former Redevelopment Agency of the City of Riverside. Interest is due semi-annually on March 1 and September 1, commencing March 1, 2015. Principal is due in annual installments from

$160 to $4,745 through September 1, 2034. The rate of interest varies from 0.6% to 5% per annum.

62

-4 ___

Required Supplementary Information Consists of the following:

• Pension Plan Funding Progress

• Other Post-Employment Benefits (OPEB) Funding Progress

CITY OF RIVERSIDE REQUIRED SUPPLEMENTARY INFORMATION - UNAUDITED

SUMMARY

OF PENSION OBLIGATION AND OTHER POST EMPLOYMENT BENFITS FUNDING PROGRESS (THOUSANDS)

Employee Retirement System - Schedule of Funding Progress Value of Assets Unfunded Liability Funded Ratios Actuarial Value Annual UL as a June 30, 2012 of Assets Market Value of Covered  % of Actuarial Valuation Date (AVA) Assets (MVA) Accrued Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 919,572 $ 766,804 $ 1,046,200 $ 126,628 $ 279,395 87.9% 73.3% $ 110,037 115.1%

Safety 673,938 561,734 766,405 92,468 204,672 87.9% 73.3% 63,115 146.5%

Total $ 1,593,510 $ 1,328,538 $ 1,812,605 $ 219,096 $ 484,067 $ 173,152 Value of Assets Unfunded Liability Funded Ratios Actuarial Value Annual UL as a June 30, 2011 of Assets Market Value of Covered  % of Actuarial Valuation Date (AVA) Assets (MVA) Accrued Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 887,857 $ 786,080 $ 998,216 $ 110,359 $ 212,136 88.9% 78.7% $ 108,106 102.1%

Safety 650,954 575,006 731,074 80,120 156,068 89.0% 78.7% 62,538 128.1%

Total $ 1,538,811 $ 1,361,086 $ 1,729,290 $ 190,479 $ 368,204 $ 170,644 Value of Assets Unfunded Liability Funded Ratios Actuarial Value Annual UL as a June 30, 2010 Actuarial of Assets Market Value of Covered  % of Valuation Date (AVA) Assets (MVA) Accrued Liability AVA MVA AVA MVA Payroll Payroll Miscellaneous $ 846,368 $ 660,844 $ 952,499 $ 106,131 $ 291,656 88.9% 69.4% $ 106,590 99.6%

Safety 621,107 483,776 685,213 621,107 201,437 90.6% 70.6% 61,778 103.8%

Total $ 1,467,475 $ 1,144,620 $ 1,637,712 $ 727,238 $ 493,093 $ 168,368 Other Post-Employment Benefits - Schedule of Funding Progress Unfunded Funded Annual UL as a Actuarial Value Liability Ratios Covered  % of Actuarial Valuation Date of Assets (AVA) Accrued Liability AVA AVA Payroll Payroll June 30, 2013 $ 47,195 $ 47,195 $ 153,077 31%

June 30, 2011 56,060 56,060 149,321 38%

June 30, 2009 54,869 54,869 132,275 41%

63

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

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

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

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

Housing & Community Development Fund - To account for Federal grants received from the Department of Housing and Urban Development (HUD).

The grants are used for the development of a viable urban community by providing decent housing, a suitable living environment, and expanding economic opportunities, principally for persons with low and moderate incomes.

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

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

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

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

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

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

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

The General Debt Service Fund accounts for the resources accumulated and payments made for principal, interest and related costs on long-term general obligation debt of governmental funds.

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

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

City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2014 (amounts expressed in thousands)

Special Revenue Housing &

Urban Areas Air Quality Community NPDES Storm Assets Security Initiative Gas Tax Improvements Development Drain Housing Total Cash and investments $ $ 17,867 $ 571 $ 1,194 $ $ 1,383 $ 21,015 Cash and investments at fiscal agent - 163 163 Receivable (net of allowance for uncollectibles):

Interest 86 6 8 102 Accounts 2 2 Intergovernmental 545 208 96 1,077 656 - 2,582 Notes - - 12,602 - 20,665 33,267 Advances to Successor Agency - 20,571 20,571 Land & improvements held for resale - - 1,310 - 3,212 4,522 Total assets $ 545 $ 18,161 $ 669 $ 16,191 $ 656 $ 46,002 $ 82,224 Liabilities Accounts payable $ 298 $ 306 $ 22 $ 331 $ $ 110 $ 1,067 Accrued payroll 16 14 30 Retainage payable 1,364 1,364 Deposits 3 3 Due to other funds 247 - 355 602 Advance from other funds - - 516 - 458 974 Total liabilities 545 1,670 22 863 355 585 4,040 Deferred Inflows of Resources Unavailable revenue - - 13,913 - 20,609 34,522 Total deferred inflows of resources 13,913 20,609 34,522 Fund Balances (Deficits)

Restricted for:

Housing and redevelopment - - 1,415 - 24,808 26,223 Transportation and public works 16,491 647 - 301 - 17,439 Total fund balances (deficits) - 16,491 647 1,415 301 24,808 43,662 Total liabilities deferred inflows of resources, and fund balances (deficits) $ 545 $ 18,161 $ 669 $ 16,191 $ 656 $ 46,002 $ 82,224 65

City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2014 (amounts expressed in thousands)

Permanent Capital Projects Fund Total Nonmajor Special Capital General Governmental Assets Improvement Storm Drain Transportation Total Debt Service Library Special Funds Cash and investments $ 3,053 $ 2,043 $ 70 $ 5,166 $ 758 $ 1,460 $ 28,399 Cash and investments at fiscal agent 2,418 - - 2,418 10,298 - 12,879 Receivable (net of allowance for uncollectibles):

Interest 15 11 26 6 134 Accounts 2 Intergovernmental 2,582 Notes 33,267 Advances to Successor Agency 19,168 39,739 Land & improvements held for resale 4,522 Total assets $ 5,486 $ 2,054 $ 70 $ 7,610 30,230 $ 1,460 $ 121,524 Liabilities Accounts payable $ 326 $ - S - $ 326 $ 171 $ - $ 1,564 Accrued payroll 30 Retainage payable 32 32 1,396 Deposits 3 Due to other funds 602 Advance from other funds 6,861 6,861 3,882 11,717 Total liabilities 7,219 7,219 4,053 15,312 Deferred Inflows of Resources Unavailable revenue - - - -34,522 Total deferred inflows of resources - - - -34,522 Fund Balances (Deficits)

Nonspendable:

Permanent fund principal 1,460 1,460 Restricted for:

Housing and redevelopment 26,223 Debt service 26,177 26,177 Transportation and public works - 70 70 17,509 Other purposes 2,054 - 2,054 2,054 Unassigned (1,733) - - (1,733) (1,733)

Total fund balances (deficits) (1,733) 2,054 70 391 26,177 1,460 71,690 Total liabilities, deferred inflows of resources, and fund balances (deficits) $ 5,486 $ 2,054 $ 70 $ 7,610 $ 30,230 $ 1,460 $ 121,524 66

City of Riverside Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Special Revenue Housing &

Urban Area Security Air Quality Community Initiative Gas Tax Improvement Development NPDES Storm Drain Housing Total Revenues Intergovernmental $ 2,271 $ 9,418 $ 480 $ 5,429 $ - $ $ 17,598 Special assessments - 657 657 Rental and investment income 202 5 33 - 96 336 Miscellaneous - 258 314 - 564 1,136 Total revenues 2,271 9,620 743 5,776 657 660 19,727 Expenditures Current:

General government 556 423 1,472 2,451 Public safety 2,271 2,271 Capital outlay 7,479 4,736 532 12,747 Debt service:

Interest 12 5 17 Bond issuance costs 2 2 Total expenditures 2,271 7,479 556 5,173 532 1,477 17,488 Excess (deficiency) of revenues over (under) expenditures 2,141 187 603 125 (817) 2,239 Other financing sources (uses)

Sales of capital assets 27 27 Total other financing sources (uses) 27 27 Net change in fund balances 2,141 187 603 125 (790) 2,266 Fund balances - beginning 14,350 460 812 176 25,598 41,396 Fund balances - ending $ $ 16,491 $ 647 $ 1,415 $ 301 $ 24,808 $ 43,662 67

City of Riverside Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Permanent Capital Projects Fund Special Total Nonmajor Capital General Library Governmental Improvement Storm Drain Transportation Total Debt Service Special Funds Revenues Licenses and permits 1,422 $ 128 $ $ 1,550 $ -$

1,550 Intergovernmental 116 116 17,714 Special assessments 1,108 1,765 Rental and investment income 30 22 1 53 1,748 14 2,151 Miscellaneous 105 105 419 115 1,775 Total revenues 1,557 266 1 1,824 3,275 129 24,955 Expenditures Current:

General government 736 4 740 16 3,207 Public safety 2,271 Culture and recreation 110 110 Capital outlay 2,517 179 2,696 15,443 Debt service:

Principal 5,298 5,298 Interest 69 69 10,442 10,528 Bond issuance costs 2 Total expenditures 3,322 183 3,505 15,756 110 36,859 Excess (deficiency) of revenues over (under) expenditures (1,765) 83 1 (1,681) (12,481) 19 (11,904)

Other financing sources (uses)

Transfers in 12,774 12,774 Sales of capital assets 27 Total other financing sources (uses) 12,774 12,801 Net change in fund balances (1,765) 83 1 (1,681) 293 19 897 Fund balances - beginning 32 1,971 69 2,072 25,884 1,441 70,793 Fund balances - ending (1,733) $ 2,054 $ 70 $ 391 $ 26,177 $ 1,460 $ 71,690 68

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Special Revenue Urban Area Security Initiative Gas Tax Air Quality Improvement Variance Variance Variance Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Intergovernmental $ 3,171 $ 2,271 $ (900) $ 6,985 $ 9,418 $ 2,433 $ 360 $ 480 $ 120 Rental and investment income - - 150 202 52 5 5 Miscellaneous - 233 258 25 Total revenues 3,171 2,271 (900) 7,135 9,620 2,485 593 743 150 Expenditures Current:

General government 922 556 366 Public safety 3,349 2,271 1,078 Capital outlay 19,267 7,479 11,788 Total expenditures 3,349 2,271 1,078 19,267 7,479 11,788 922 556 366 Net change in fund balances (178) 178 (12,132) 2,141 14,273 (329) 187 516 Fund balances (deficit), beginning 14,350 14,350 - 460 460 Fund balances (deficit), ending $ (178) $ $ 178 $ 2,218 $ 16,491 $ 14,273 $ 131 $ 647 $ 516 (continued) 69

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Special Revenue Housing & Community Development NPDES Storm Drain Housing Variance Variance Variance Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Intergovernmental $ 6,473 $ 5,429 $ (1,044) $ $ 65 $ 5 $ - $ - $

Special assessments 604 657 53 Rental and investment income 28 33 5 96 96 Miscellaneous 404 314 (90) 564 564 Total revenues 6,905 5,776 (1,129) 604 657 53 660 660 Expenditures Current:

General government 1,277 423 854 1,423 1,472 (49)

Capital outlay 16,900 4,736 12,164 747 532 215 Debt service:

Principal 23 23 Interest 15 12 3 5 (5)

Bond issuance costs 2 (2)

Total expenditures 18,215 5,173 13,042 747 532 215 1,423 1,477 (54)

Excess (deficiency) of revenues over (under) expenditures (11,310) 603 11,913 (143) 125 268 (1,423) (817) 606 Other financing sources (uses)

Sale of capital assets - -- - -27 27 Total other financing sources (uses) - -- - -27 27 Net change in fund balances (11,310) 603 11,913 (143) 125 268 (1,423) (790) 633 Fund balances (deficit), beginning 812 812 176 176 25,598 25,598 Fund balances (deficit), ending $ (10,498) $ 1,415 $ 11,913 $ 33 $ 301 $ 268 $ 24,175 $ 24,808 $ 633 (continued) 70

City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Nonmajor Governmental Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Capital Projects Capital Outlay Special Capital Improvement Storm Drain Transportation Variance Variance Variance Variance Final to Final Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Licenses and permits $ $ $ 3,120 $ 1,422 $ (1,698) $ 100 $ 128 $ 28 $

Intergovernmental 84,092 28,719 (55,373) 3,345 116 (3,229) 1 Special assessments 125 288 163 Rental and investment income 170 307 137 30 30 25 22 (3)

Miscellaneous 11 3,599 1,780 (1,819) - 105 105 Total revenues 87,986 31,094 (56,892) 3,120 1,557 (1,563) 3,470 266 (3,204) - 1 1 Expenditures Current:

General government 2,336 736 1,600 4 4 Capital outlay 138,244 48,333 89,911 4,634 2,517 2,117 4,857 179 4,678 Debt service:

Interest 137 69 68 Bond issuance costs 738 738 Total expenditures 138,982 49,071 89,911 7,107 3,322 3,785 4,861 183 4,678 Excess (deficiency) of revenues over (under) expenditures (50,996) (17,977) 33,019 (3,987) (1,765) 2,222 (1,391) 83 1,474 1 1 Other financing sources (uses)

Transfers out (1,521) (2,185) 664------ -

Issuance of long-term debt 54,886 54,886 Bond Premium 1,211 1,211 Total other financing sources (uses) 54,576 53,912 664-- -----

Net change in fund balances 3,580 35,935 33,683 (3,987) (1,765) 2,222 (1,391) 83 1,474 -1 Fund balances (deficit), beginning 1,432 1,432 32 32 1,971 1,971 69 69 Fund balances (deficit), ending $ 5,012 $ 37,367 $ 33,683 $ (3,955) $ (1,733) $ 2,222 $ 580 $ 2,054 $ 1,474 $ 69 $ 70 $ 1 71

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

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

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

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

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

City of Riverside Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2014 (amounts expressed in thousands)

Assets Airport Refuse Transportation Public Parking Total Current assets:

Cash and investments $ 3,444 $ 2,477 $ 344 $ 6,265 Receivables (net of allowance for uncollectibles)

Interest 23 12 5 40 Utility billed 1,041 1,041 Utility unbilled 723 723 Accounts 34 592 36 555 1,217 Intergovernmental 75 1 9 85 Restricted assets:

Other restricted cash and cash equivalents _ 901 - 901 Total current assets 109 6,724 2,526 913 10,272 Non-current assets:

Regulatory assets 6,499 6,499 Net pension asset 214 1,164 560 157 2,095 Capital assets:

Land 9,988 9,192 19,180 Buildings 2,631 22 33,228 35,881 Accumulated depreciation-buildings (1,245) (10) (4,429) (5,684)

Improvements other than buildings 19,662 1,691 6,731 28,084 Accumulated depreciation-improvements other than buildings (6,510) - (98) (1,637) (8,245)

Machinery and equipment 412 14,487 3,956 1,138 19,993 Accumulated depreciation-machinery and equipment (307) (9,978) (2,948) (1,008) (14,241)

Construction in progress - 35 35 Total non-current assets: 24,845 12,172 3,208 43,372 83,597 Total assets 24,954 18,896 5,734 44,285 93,869 Continued 73

City of Riverside Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2014 (amounts expressed in thousands)

Liabilities Airport Refuse Transportation Public Parking Total Current liabilities:

Accounts payable 7 853 24 148 1,032 Accrued payroll 12 105 50 29 196 Retainage payable 20 20 Unearned revenue 2,229 2,229 Due to other funds 133 133 Notes payable - current 906 906 Landfill capping - current 200 200 Compensated absences - current 22 393 70 39 524 Total current liabilities 174 1,551 2,373 1,142 5,240 Non-current liabilities:

Notes payables 21,186 21,186 Advances from other funds 213 1,160 558 608 2,539 Landfill capping 5,972 5,972 Compensated absences 4 73 13 7 97 Other postemployment benefits 99 824 375 176 1,474 Total non-current liabilities 316 8,029 946 21,977 31,268 Total liabilities 490 9,580 3,319 23,119 36,508 Net Position Net investment in capital assets 24,631 4,509 2,648 21,123 52,911 Restricted for landfill capping 901 901 Unrestricted (167) 3,906 (233) 43 3,549 Total net position $ 24,464 $ 9,316 2,415 $ 21,166 57,361 74

City of Riverside Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Airport Refuse Transportation Public Parking Total Operating revenues:

Charges for services $ 1,100 $ 20,677 $ 413 $ 4,382 $ 26,572 Operating expenses:

Personnel services 544 4,472 2,106 1,047 8,169 Contractual services 51 3,960 20 1,514 5,545 Maintenance and operation 225 5,911 661 441 7,238 General 113 3,578 382 46 4,119 Materials and supplies 19 1,114 221 19 1,373 Insurance 28 115 49 108 300 Depreciation and amortization 698 1,630 612 1,073 4,013 Total operating expenses 1,678 20,780 4,051 4,248 30,757 (103) (4,185)

Operating Income (loss) (578) (3,638) 134 Nonoperating revenues (expenses):

Operating grants 2,524 2,524 Interest income 51 30 7 88 Other 84 413 8 699 1,204 Gain/loss on retirement of capital assets 27 (19) 4 524 536 Interest expense and fiscal charges (11) (32) (16) (886) (945)

Total non-operating revenues 100 413 2,550 344 3,407 Income (loss) before capital contributions and transfers (478) 310 (1,088) 478 (778)

Cash capital contributions 296 950 1,246 Transfers out (738) (738)

Change in net position (182) 310 (138) (260) (270)

Total net position - beginning 24,646 9,006 2,553 21,426 57,631 Total net position - ending $ 24,464 $ 9,316 $ 2,415 $ 21,166 $ 57,361 75

City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Public Airport Refuse Transportation Parking Totals Cash flows from operating activities:

Cash received from customers and users $ 1,120 $ 20,785 $ 1,006 4,930 $ 27,841 Cash paid to employees for services (537) (4,363) (1,999) (1,012) (7,911)

Cash paid to other suppliers of goods or services (733) (14,831) (1,676) (2,461) (19,701)

Other receipts 83 413 6 699 1,201 Net cash provided (used) by operating activities 2,004 (2,663) 2,156 1,430 Cash flows from noncapital financing activities:

Transfers out - (738) (738)

(329) (51) (25) (996) (1,401)

Outflows on interfund advances Net cash (used) by noncapital financing activities (329) (51) (25) (1,734)

Cash flows from capital and related financing activities:

Purchase of capital assets (25) (834) (928) (1,787)

Proceeds from the sale of capital assets 27 9 4 2,602 2,642 Principal paid on long-term obligations (7) (871) (878)

Interest paid on long-term obligations (11) (32) (16) (885) (944)

Grant proceeds 109 2,524 - 2,633 Capital contributions 296 950 - 1,246 Net cash (used) provided for capital and related financing activities 396 (23) 2,621 (82) 2,912 Cash flows from investing activities:

Income from investments - 42 28 3 73 Net cash provided by investing activities 42 28 3 73 Net change in cash and cash equivalents 1,972 (39) 343 2,276 Cash and cash equivalents, beginning 2,373 2,516 1 4,890 Cash and cash equivalents, ending $ 4,345 $ 2,477 $ 344 $ 7,166 Continued 76

City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands) Continued Public Airport Refuse Transportation Parking Totals Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating Income (loss) (578) $ (103) (3,638) 134 $ (4,185)

Other receipts 83 413 6 699 1,201 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation and amortization 698 1,630 612 1,073 4,013 Amortization of pension costs 9 52 25 7 93 Decrease in accounts receivable 20 108 593 554 1,275 (Increase) due from other governments (6) (6)

Increase (Decrease) in accounts payable (297) 133 (343) (333) (840)

Increase (Decrease) in accrued payroll (15) 471 30 2 488 Increase (Decrease) in other payable 13 (414) 52 26 (323)

(Decrease) in landfill capping (286) - - (286)

Net cash provided (used) by operating activities (67) $ 2,004 2,663) 2,156 $ 1,430 77

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

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

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

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

City of Riverside Combining Statement of Net Position Internal Service Funds June 30, 2014 (amounts expressed in thousands)

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

Cash and investments $ 1,118 $ - $ 2,065 $ 3,183 Receivables (net of allowance for uncollectibles)

Interest 16 28 44 Accounts 54 54 Intergovernmental 46 6 52 Inventory 5,444 375 5,819 Total current assets 1,180 5,444 2,528 9,152 Non-current assets:

Advances to other funds 2,764 3,460 6,224 Advances to Successor Agency 5,634 5,634 Net pension asset 205 215 964 1,384 Capital assets:

Land 458 458 Buildings 1,488 1,488 Accumulated depreciation-buildings (300) (300)

Improvements other than buildings 726 726 Accumulated depreciation - improvements other than buildings 139 (83) (83)

Machinery and equipment 5 10,665 10,809 Accumulated depreciation-machinery and equipment (139) (8,088) (8,227)

Construction in progress 1,482 1,482 Total non-current assets: 8,60Y8 215 10,772 19,595 Total assets 9,788 5,659 13,300 28,747 Liabilities Current liabilities:

Accounts payable 233 212 1,363 1,808 Accrued payroll 13 16 71 100 Retainage payable 71 71 Due to other funds 1,306 1,306 Claims and judgments - current 11,122 11,122 Compensated absences - current 15 45 207 267 Total current liabilities 11,383 1,579 1,712 14,674 Non-current liabilities:

Advances from other funds 204 213 2,649 3,066 Claims and judgments 24,045 24,045 Compensated absences 17 48 227 292 Other postemployment benefits 92 111 469 672 Total non-current liabilities 24,358 372 3,345 28,075 Total liabilities 35,741 1,951 5,057 42,749 Net Position Net investment in capital assets 5 6,348 6,353 Unrestricted (25,958) 3,708 1,895 2o,3ý55 Total net position 8,243 $ (14,002)

(25,953) $ 3,708 79

City of Riverside Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

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

Charges for services $ 11,894 $ 1,511 $ 8,367 $ 21,772 Operating expenses:

Personnel services 511 662 2,991 4,164 Contractual services 68 73 141 Maintenance and operation 4 26 2,146 2,176 General 1,034 367 750 2,151 Materials and supplies 1 11 210 222 Claims/Insurance 14,572 9 47 14,628 Depreciation and amortization - - 572 572 Total operating expenses 16,190 1,075 6,789 24,054 Operating income (loss) (4,296) 436 1,578 (2,282)

Non-operating revenues (expenses):

Interest income 153 76 229 Other 1 (5) (4)

Gain (loss) on retirement of capital assets (4) (4)

Interest expense and fiscal charges (72) (6) (41) (119)

Total non-operating revenue (expenses) 82 (6) 26 102 Change in net position (4,214) 430 1,604 (2,180)

Total net position - beginning (21,739) 3,278 6,639 (11,822)

Total net position - ending (25,953) 3,708 8,243 $ _14,002) 80

City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

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

Cash received from customers and users $ 11,902 $ 2,322 8,361 $ 22,585 Cash paid to employees for services (487) (631) (2,745) (3,863)

Cash paid to other suppliers of goods or services (12,059) (460) (2,262) (14,781)

Other receipts 1 Net cash provided (used) by operating activities (643) 1,231 3,354 3,942 Cash flows from noncapital financing activities:

Receipts on interfund advances 3,692 1,674 5,366 Outflows on interfund advances (1,948) (1,225) (3,502) (6,675)

Net cash provided (used) by noncapital financing activities 1,744 (1,225) (1,828) (1,309)

Cash flows from capital and related financing activities:

Interest paid on long-term obligation (72) (6) (26) (104)

Purchase of capital assets (5) (3,711) (3,716)

Net cash (used) for capital and related financing activities (6) (3,737) (3,820)

Cash flows from investing activities:

Income from investments 94 67 161 94 67 161 Net increase (decrease) in cash and cash equivalents 1,118 (2,144) (1,026)

Cash and cash equivalents, beginning 4,209 4,209 Cash and cash equivalents, ending 1,118 $ 2,065 $ 3,183 Continued 81

City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2014 (amounts expressed in thousands) Continued Self-Insurance Central Central Reconciliation of operating income (loss) to net cash provided Trust Stores Garage Total (used) byoperating activities:

Operating (loss) income $ (4,296) $ 436 $ 1,578 $ (2,282) 1 - - 1 Other receipts Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation and amortization - - 572 572 Amortization of pension costs 9 9 43 61 (Increase) Decrease in account receivable 8 (11) (3)

Decrease in inventory - 811 61 872 Increase (Decrease) in accounts payable 23 (46) 908 885 Increase in other payable 13 21 125 159 Increase in accrued payroll 2 - 78 80 Increase in claims and judgments 3,597 - 3,597 Net cash (used) provided by operating activities $ (643) $ 1,231 $ 3,354 $ 3,942 82

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

City of Riverside Fiduciary Fund - Agency Fund Combining Statement of Changes in Assets and Liabilities For the fiscal year ended June 30, 2014 (amounts expressed in thousands)

Balance Balance July 1, 2013 Additions Deductions June 30, 2014 Assets Cash and investments $ 6,688 $ 4,908 $ 5,930 $ 5,666 Cash and investments at fiscal agent 6,778 5,938 5,976 6,740 Interest receivable 33 212 219 26 Accounts receivable 24 24 Property taxes receivable 124 114 124 114 Total assets 13,647 F - 11,172 12,273 12,546 Liabilities Accounts payable $ - $ 82 $ 82 -

Held for bond holders 13,647 11,090 12,191 12,546 Total liabilities $ 13,647 $ 11,172 $ 12,273 $ 12,646 84

CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS

City of Riverside Capital Assets Used in the Operation of Governmental Funds Schedule By Source June 30, 2014 (amounts expressed in thousands)

Governmental funds capital assets:

Land $ 333,799 Buildings and improvements 180,653 Improvements other than buildings 299,345 Machinery and equipment 82,561 Infrastructure 934,614 Construction in progress 33,011 Total governmental funds capital assets $ 1,863,983 Investments in governmental funds capital assets by source:

Certificates of participation $ 122,610 Gifts 322,300 Operating revenue 537,498 General obligation bonds 4,364 Revenue bonds 21,229 County contracts and grants 316 State grants 40,506 Asset forfeiture - state 994 Asset forfeiture - federal 2,870 Housing and community development grants 18,955 Other federal grants 35,248 Community facilities bonds 1,026 Assessment district bonds 397 Capital leases 10,825 RDA tax increment bonds 2,983 Capital projects funds 741,862 Total governmental funds capital assets $ 1,863,983 86

Statistical Section (Unaudited)

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

Contents Page Financial Trends 88 These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time.

Revenue Capacity 94 These schedules contain information to help the reader assess the factors affecting the City's ability to generate property and sales taxes.

Debt Capacity 103 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future.

Demographic and Economic Information 109 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments.

Operating Information 111 These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs.

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

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

Fiscal Year 2005 2006 2007 2008 2009 2010 2011 20121 2013 2014 Governmental activities Net investment in capital assets $ 515,354 $ 622,336 $ 712,801 $ 850,740 $ 950,496 $ 976,614 $1,019,892 $ 1,076,485 $ 1,083,485 $ 1,106,384 Restricted 154,957 158,038 107,982 102,677 98,903 108,932 80,820 86,325 80,712 96,587 Unrestricted (46,419) (51,261) (34,245) (31,429) (41,861) (80,947) (90,159) 23,145 17,989 (2,049)

Total governmental activities net position $ 623,892 $ 729,113 $ 786,538 $ 921,988 $ 1,007,538 $1,004,599 $ 1,010,553 $ 1,185,955 $1,182,186 $1,200,922 Business-type activities Net investment in capital assets $ 402,377 $ 425,285 $ 520,059 $ 601,999 $ 659,904 $ 660,619 $ 654,974 $ 666,919 $ 609,691 $ 616,844 Restricted 54,540 71,386 57,613 43,341 38,621 59,863 56,397 54,923 69,068 68,507 Unrestricted 229,462 250,041 242,966 225.281 207,405 219,720 256,038 285,062 330,833 359,698 Total business-type activities net position $ 686,379 $ 746,712 $ 820,638 $ 870,621 $ 905,930 $ 940,202 $ 967,409 $ 1,006,904 $1,009,592 $ 1,045,049 Primary government Net investment in capital assets $ 917,731 $ 1,047,621 $ 1,232,860 $ 1,452,739 $ 1,610,400 $1,637,233 $ 1,674,866 $ 1,743,404 $1,693,176 $ 1,723,228 Restricted 209,497 229,424 165,595 146,018 137,524 168,795 137,217 141,248 149,780 165,094 Unrestricted 183,043 198,780 208,721 193,852 165,544 138,773 165,879 308,207 348,822 357,649 Total primary government net position $ 1,310,271 $ 1,475,825 $ 1,607,176 $ 1,792,609 $ 1,913,468 $1,944,801 $1,977,962 $ 2,192,859 $2,191,778 $2,245,971 1 The increase in total governmental activities net position (and related unrestricted net position) is primarily due to the dissolution of the Redevelopment Agency.

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Table 2 City of Riverside Changes in Net Position Last Ten Fiscal Years (accrual basis of accountina) (in thousands) Page 1of 2 Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Expenses Governmental activities:

General government $ 58,460 $ 74,458 $ 105,486 $ 113,897 $ 71,391 $ 85,110 $ 72,606 $ 48,731 $ 54,808 $ 42,664 Public safety 110,969 120,470 114,312 122,783 142,353 137.338 139,364 148,605 147,652 149,555 Highways and streets 20,364 20,757 22,556 26,986 29.700 31,492 32,131 35,342 35,072 36,564 Culture and recreation 26,353 32,602 28,016 31,659 29,423 44,319 50,017 54,594 40,077 42,252 Interest on long-term debt 15,885 16,358 26,378 34,075 34,361 32,049 33,638 25,087 16,627 17,741 Total governmental activities expenses 232,031 264,645 296,748 329,400 307,228 330,308 327,756 312,359 294,236 288,776 Business-type activities:

Electric 200,030 226.186 232,346 271,412 269,209 256,860 275,922 288,799 292,175 304,416 Water 36,709 39,486 42,108 47,570 53,931 55,402 56,390 56,715 58,768 60,030 Sewer 26,108 27,299 29,510 31,209 34,853 41,248 42,276 43,702 43.945 40,385 Refuse 12,841 14,546 16,490 18,430 18,425 20,527 20,046 19,979 20.581 20,831 Airport 1,185 1,004 1,201 1,418 1,734 2,206 2,320 2,646 2,029 1,662 Transportation 2,557 2,917 2,831 3,190 3.194 3,368 3,493 3,667 3,745 4,067 Public parking 824 2,701 3,762 4,093 5,095 4,024 4.401 4,984 5,051 4,610 Total business-type activities expenses 280,254 314,139 328,248 377,322 386,441 383,635 404,848 420,492 426,294 436,001 Total primary government expenses $ 512,285 $ 578,784 $ 624.996 $ 706.722 $ 693,669 $ 713,943 $ 732,604 $732,851 $720,530 $724,777 Program Revenues Governmental activities:

Charges for services:

General government $ 25,995 $ 24,683 $ 10,245 $ 23,969 $ 13.691 $ 12,933 $ 14,241 $ 14,662 $ 13,336 $ 13,775 Public safety 6,982 5,645 12,410 9,924 8,414 8,177 8.075 7,837 7,793 7,444 Highways and streets 23,108 25,412 30,563 19,695 14,391 17,847 16,985 16,532 15,825 17,487 Culture and recreation 7.002 7,716 8,302 4.370 3,168 2,367 3.180 4,622 5,237 7,406 Operating grants and contributions 16,140 13,150 12,101 15,024 23,313 32,853 21,127 31,581 21,485 14,341 Capital grants and contributions 5,292 18,618 10,557 115.982 69,745 23.395 38,138 54,476 32,202 48,433 Total governmental activities program revenues 84,519 95,424 84,178 188,964 132,722 97.572 101,746 129,710 95.880 108,886 Business-type activities:

Charges for services:

Electric 252,322 259,572 278,888 305,299 314,164 309,910 313,703 333,029 347,933 344,037 Waler 34.002 37,613 47,080 49,855 54,923 57,534 62,084 65,206 68.489 68.691 Sewer 21,967 21,510 24.057 22,525 23,247 27,342 32.769 37,747 43,772 46,162 Refuse 14,492 15,160 15,833 16,289 18,394 18,712 19.134 19,588 20,829 20,677 Airport 1,088 1,162 1,263 1,423 1,232 1,315 1,342 1,524 1,396 1,100 Transportation 200 238 302 313 336 328 344 352 344 413 Public parking 2,961 2,837 3,431 3,717 4,332 4,876 5,205 4.803 4,777 4,382 Operating grants and contributions 2,261 2,704 1,939 3,308 1,929 2,487 2,159 2,738 2,718 2.524 Capital grants and contributions 32,317 29,293 40,066 29,215 17,288 6,838 7,337 21.164 11,734 11,486 Total business-type activities program revenues 361.610 370,089 412,859 431.944 435.845 429,342 444.077 486.151 501.992 499.472 Total primary government program revenues $ 446,129 $ 465.513 $ 497.037 $ 620.908 $ 568.567 $ 526,914 $ 545.823 $615,861 $597,872 $608,358 (continued) 89

Table 2 City of Riverside Changes In Net Position Last Ten Fiscal Years Fiscal Year 2005 2006 2007 2008 2009 2010 2011 20121 2013' 2014 Net Revenues (Expense)

Governmentalactivities $(147,512) $(169,221) $ (212,570) $(140,436) $ (174,506) $ (232,736) $ (226,010) $ (182,649) $(198,356) $(179,890)

Business-type activities 81.356 55,950 84,611 54,622 49,404 45,707 39,229 65,659 75,698 63,471 Total primary government net expense $ (66,156) $(113,271) $ (127,959) $ (85,814) $ (125,102) $ (187,029) $ (186,781) $ (116,990) $(122,658) (1116,419)

General Revenues and Other Changes In Net Position Governmental activities:

Taxes Sales $ 53.348 $ 57,522 $ 55,666 $ 50,526 $ 41,882 $ 39,645 $ 44,157 $ 47,701 $ 50,222 $ 55,096 Property 61,553 80,934 106,114 114,176 116,420 104,087 100,802 74,179 52,904 51,323 Utility users 22,133 23,502 25,384 26.267 25,964 25,975 26,691 27,320 28,206 28,092 Franchise 4,481 4,813 5,031 4,972 5,144 4,477 4,937 4,883 4,959 5,046 Transient occupancy 3,828 4,372 3,581 3,795 2,912 2,488 2,731 2,995 3,703 4,189 Intergovernmental, unrestricted 1,795 1,747 1,863 2,074 4,569 1,339 1,285 351 337 263 Unrestricted grants and contributions 15,220 39,653 29,743 - - - - - - -

Investment earnings 7,815 10,150 18,582 25,670 15,941 8,289 7,439 4,440 2,786 2,759 Miscellaneous 5,756 26,173 4,228 9,480 5,137 3,344 9,544 9,273 9,208 5,425 Transfers 14,918 25,576 31,171 32,326 42,087 40,153 34,378 40,679 42,262 46,433 Extraordinary items - - - - - - 149,617 -

Total governmental activities 190,847 274,442 281,363 269,286 260,056 229,797 231,964 361,438 194,587 198,626 Business-type activities:

Investment income 7.548 11,259 16,988 22,756 23,402 21,271 17,548 11,405 4,744 8,005 Miscellaneous 7,362 18,700 3,498 4,931 4,590 7,447 4,808 3,110 5,767 10,414 Special item (3,014) - - - - - - - - -

Transfers (14,918) (25,576) (31,171) (32,326) (42,087) (40,153) (34,378) (40,679) (42,262) (46,433)

Extraordinary items - - - (41,259) -

Total business-type activities 13,022) 4,383 (10,685) (4,639) (14,095) (11,435) (12,022) (26,164) (73,010) (28,014)

Total primary government 187,825 278,825 270.678 264,647 245,961 218,362 219,942 335,274 121,577 170,612 Change in Net Position Governmental activities $ 43.335 $ 105,221 $ 68,793 $ 128,850 $ 85,550 $ (2,939) $ 5,954 $ 178,789 $ (3,769) $ 18,736 Business-type activities 78,334 60,333 73,926 49,983 35,309 34,272 27,207 39,495 2,688 35,457 Total primary government $ 121,669 $ 165,554 $ 142,719 $ 178,833 $ 120,859 $ 31,333 $ 33,161 $ 218,284 $ (1,081) $ 54,193

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

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

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Table 3 City of Riverside Fund Balances of Governmental Funds Last Four Fiscal Years (modified accrual basis of accounting, in thousands) 2011 20121,2 2013 2014 General fund Nonspendable $ 26,646 $ 25,720 $ 26,421 $ 24,419 Restricted 82,249 2,803 2,196 2,204 Assigned 15,589 6,380 10,711 14,505 Unassigned 36,359 39,347 37,763 37,732 Total general fund $ 160,843 $ 74,250 $ 77,091 $ 78,860 All other governmental funds Nonspendable $ 1,626 $ 1,539 $ 1,441 $ 1,460 Restricted for:

Housing and redevelopment 96,571 26,911 26,410 26,223 Debt service 56,526 29,080 25,884 26,177 Transportation and public works 26,459 31,075 16,487 54,876 Other purposes 5,073 1,401 2,003 2,054 Unassigned - - - (1,733)

Total all other governmental funds $ 186,255 $ 90,006 $ 72,225 $ 109,057 The decrease in fund balance of the General Fund primarily relates to the transfer of land held for resale (in the amount of $76.3 million) to the Redevelopment Agency Capital Projects Fund, which had been transferred to the General Fund during the fiscal year ended June 30, 2011.

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

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

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

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Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting) (in thousands) Page 1 of 2 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenues:

Taxes $ 142,056 $ 170,638 $ 191,131 $ 200,438 $ 192,322 $ 177,255 $ 179,318 $ 156,593 $ 139,994 $ 143,748 Licenses and permits 14,389 16,351 12,984 10,027 7,368 6,899 7,657 9,292 10,173 9,244 Intergovernmental 42,568 55,178 47,934 79,423 86,873 60,550 61,082 66,618 50,734 59,348 Charges for services 11,299 11,538 11,914 11,325 9,099 9,570 10,720 11,774 12,062 15,734 Fines and forfeitures 2,006 2,098 2,778 4,573 6,213 7,512 8,928 6,293 6,234 7,283 Special assessments 6,272 6,247 6,170 5,245 5,431 5,464 6,014 6,276 6,669 6,272 Use of money and property 10,915 14,324 22,587 27,970 18,620 11,173 10,173 8,095 3,878 4,315 Miscellaneous 9,996 8,502 6,164 12,796 7,596 7,082 16,605 10,611 14,933 6,957 Total revenues $ 239,501 $ 284,876 $ 301,662 $ 351,797 $ 333,522 $ 285,505 $ 300,497 $ 275,552 $ 244,677 $ 252,901 Expenditures:

General government $ 21,800 $ 25,193 $ 39,093 $ 26,177 $ 25,995 $ 23,835 $ 26,090 $ 18,835 $ 15,713 $ 13,558 Public safety 117,267 126,007 139,739 151,773 145,802 138,594 140,994 150,878 150,290 151,721 Highways and streets 11,695 11,281 19,722 25,209 18,452 14,987 14,587 16,651 16,294 16,944 Culture and recreation 28,939 31,017 31,039 30,622 26,859 40,373 44,345 57,538 45,356 34,275 Capital outlay 64,127 121,978 149,325 171,952 180,394 131,908 105,689 75,482 73,581 72,365 Debt Service:

Principal 8,599 9,733 12,045 11,257 44,349 48,078 89,264 83,378 45,006 45,500 Interest 15,025 19,205 21,330 31,239 33,033 31,267 32,611 24,133 15,116 16,787 Debt issuance costs 1,538 - 2,551 697 259 231 174 169 581 843 Payment for advance refunding - - - - - - - - 3,521 -

Total expenditures $ 268,990 $ 344,414 $ 414,844 $ 448,926 $ 475,143 $ 429,273 $ 453,754 $ 427,064 $ 365,458 $ 351,993 Excess of revenues over (under) expenditures $ (29,489) $ (59,538) $ (113,182) $ (97,129) $ (141,621) $ (143,768) $ (153,257) $ (151,512) $(120,781) $ (99,092)

(continued) 92

Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting)

(in thousands) Page 2 of 2 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Other financing sources (uses):

Transfers in $ 49,944 $ 59,545 $ 84,306 $ 62,841 $ 100,797 $ 88,303 $ 214,631 $ 196,859 $ 56,572 $ 58,469 Transfers out (35,026) (33,969) (53,135) (30,515) (58,710) (48,150) (180,280) (156,305) (14,178) (15,369)

Issuance of long term debt 85,691 20,969 299,645 164,408 30,425 51,821 104,875 34,940 99,753 87,037 Capital lease financings - - - - - 3,116 2,000 - 7,203 6,625 Sales of capital assets 6,230 1,281 541 8,931 (5,798) 529 (1,629) 156 82 931 Payments to refunded bond agent (9,167) - - (148,975) - - - - (43,591) -

Total other financing sources (uses) 97,672 47,826 331,357 56,690 66,714 95,619 139,597 75,650 105,841 137,693 Special item - pension contribution (32,141)

Extraordinary items:

y:

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

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

Total extraordinary items (106,980) -

Net change in fund balances $ 36,042 $ (11,712) $ 218,175 $ (40,439) $ (74,907) $ (48,149) $ (13,660) $ (182,842) $ (14,940) $ 38,601 Debt service as a percentage of noncapital expenditures 15.301% 13.777% 14.011% 16.947% 26.058% 23.211% 32.757% 32.507% 21.039% 21.803%

(1) (2) (3) (4)

(1) Increase in debt service related to the issuance of the 2007 Redevelopment Agency Tax Allocation Bonds and 2008 Riverside Renaissance Certificates of Participation.

(2) Increase relates to $30 million refinancing of 2005B pension bonds that took place in May 2008, which became due in-full in June 2009. The $30 million Pension Bond Anticipation Notes have been paid in-full and immediately re-issued each year in 2009, 2010, 2011,2012, 2013 and 2014.

(3) Increase in debt service related to one-time early redemption of $31.7 million of 2011 Redevelopment Tax Allocation Bonds and $9.1 million of loan proceeds that were drawn-down during the year and re-paid within the year.

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

93

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

Other Fiscal Residential Commercial Industrial Wholesale Other Transmission Operating Total Year Sales Sales Sales Sales Sales Revenue Revenue Revenues 2005 $ 79,786 $ 59,998 $ 59,157 $ 15,249 6,337 $ 20,213 $ 12,697 $ 253,437 2006 85,243 53,773 71,084 11,952 7,139 20,043 9,183 258,417 2007 94,426 55,421 83,698 9,913 5,713 20,097 9,536 278,804 2008 99,981 60,768 92,697 14,805 5,425 19,211 12,405 305,292 2009 105,525 65,532 97,100 4,674 5,684 18,673 12,250 309,438 2010 107,301 65,091 97,458 1,466 5,639 21,100 11,855 309,910 2011 107,792 64,039 102,067 124 5,529 22,091 12,061 313,703 2012 110,471 66,047 107,455 50 5,614 30,735 12,657 333,029 2013 118,173 66,632 110,680 638 5,712 32,688 13,410 347,933 2014 111,880 67,063 111,260 115 5,600 32,630 15,489 344,037 94

Table 6 City of Riverside Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (in thousands)

Utility Transient Fiscal Sales Property Users Franchise Occupancy Total Year Tax Tax1 Tax Tax Tax Taxes 2005 53,348 61,553 22,133 4,481 1,795 143,310 2006 57,522 80,934 23,502 4,813 4,372 171,143 2007 55,666 101,469 25,384 5,031 3,581 191,131 2008 50,526 114,176 26,267 4,972 3,795 199,736 2009 41,882 116,420 25,964 5,144 2,912 192,322 2010 39,645 104,087 25,975 4,477 2,488 176,672 2011 44,157 100,802 26,691 4,937 2,731 179,318 2012 47,701 74,179 27,320 4,883 2,995 157,078 2013 50,222 52,904 28,206 4,959 3,703 139,994 2014 55,096 51,323 28,092 5,046 4,189 143,746 1 Decrease in property taxes in fiscal years 2012 and 2013 relates to the dissolution of the Redevelopment Agency. Upon the dissolution of the Redevelopment Agency on February 1, 2012, property taxes received by the Successor Agency are reported in a private-purpose trust fund and therefore are excluded from the activities of the primary government.

95

Table 7 City of Riverside Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands)

City Dissolved Redevelopment Agency' Fiscal Total Year Taxable Taxable Direct Ended Less: Assessed Less: Assessed Tax June 30 Secured Unsecured Exemptions Value Secured Unsecured Exemptions Value Rate2 2005 15,540,982 951,211 (2,751,844) 13,740,349 1,775,655 158,148 (33,654) 1,900,149 0.266 2006 17,557,341 1,058,995 (4,002,177) 14,614,159 2,914,600 210,025 (51,992) 3,072,633 0.309 2007 20,672,126 1,140,891 (5,417,388) 16,395,629 4,145,700 410,625 (93,261) 4,463,064 0.304 2008 23,618,776 1,291,972 (6,960,666) 17,950,082 5,509,441 553,124 (138,490) 5,924,075 0.334 2009 24,428,633 1,330,053 (7,515,667) 18,243,019 5,998,768 581,943 (224,025) 6,356,686 0.343 2010 22,644,262 1,299,353 (7,103,040) 16,840,575 5,598,484 564,825 (266,257) 5,897,052 0.349 2011 22,056,793 1,260,923 (6,920,720) 16,396,996 5,396,219 544,906 (268,323) 5,672,802 0.347 2012 22,031,328 1,264,151 (6,952,649) 16,342,830 5,395,632 572,153 (270,313) 5,697,472 0.348 2013 22,313,665 1,244,448 (7,142,401) 16,415,712 N/A N/A N/A N/A 0.348 2014 23,045,134 1,201,634 (7,394,982) 16,851,786 N/A N/A N/A N/A 0.125 Notes:

In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor (limited to a maximum increase of 2%). With few exceptions, property is only re-assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above.

Assessed valuations are based on 100 percent of estimated actual value.

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

2 Total Direct Rate is the weighted average of all individual direct rates. Beginning in 2013/14, the Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas.

Source: Riverside County Auditor-Controller 96

Table 8 City of Riverside Direct and Overlapping Property Tax Rates (Rate per $100 of Assessed Valuation)

Last Ten Fiscal Years 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1

Basic Levy 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2

Unified School Districts Debt Service 0.234 0.220 0.155 0.185 0.291 0.326 0.334 0.363 0.409 0.462 City of Riverside Debt Service 0.011 0.009 0.008 0.006 0.007 0.006 0.0Q6 0.006 0.006 0.007 Eastern Municipal Water Improvement District 0.023 0.010 0.009 0.008 - -

Metropolitan Water Distdct Original Area 0.006 0.005 0.005 0.005 0.004 0.004 0.004 0.004 0.004 0.004 Riverside City Community College Debt Service 0.018 0.018 0.018 0.013 0.013 0.012 0.015 0.017 0.017 0.018 Rubidoux Community Service Debt Service 0.003 - - - - -

3 Total Direct & Overlapping Tax Rates 1.295 1.262 1.195 1.217 1.315 1.348 1.359 1.390 1.436 1.491 City's Share of 1% Levy Per Prop 134 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 0.145 General Obligation Debt Rate 0.011 0.009 0.009 0.006 0.007 0.006 0.006 0.006 0.006 0.007 57 Redevelopment Rate . 1.006 1.005 1.005 1.005 1.004 1.004 1.004 1.004 - -

6 Total Direct Rate 0.266 0.309 0.304 0.334 0.343 0.349 0.347 0.348 0.348 0.125 1 In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of the various intergovernmental overlapping debt, 2 Includes: Alvord Unified School District, Corona Norco Unified School District, Jurupa Unified School District, Moreno Valley Unified School District, Riverside Unified School District and Val Verde Unified School District.

3Ovedapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners.

4 City's share of 1% levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city. ERAF general fund tax shifts may not be included in tax ratio figures.

5 RDA rate is based on the largest RDA tax rate area (TRA) and includes only rate(s) from indebtedness adopted prior to 1989 per California State statue. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter.

6 Total Direct Rate is the weighted average of all individual direct rates. Beginning in 2013/14, the Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas.

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

Source: Riverside County Assessor 2004/05 - 2013/14 Tax Rate Table.

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Table 9 City of Riverside Principal Property Taxpayers Current Year and Nine Years Ago (in thousands) 2014 2005 Percentage of Percentage of Taxable Total Taxable Taxable Total Taxable Assessed Assessed Assessed Assessed Property Owner Value Rank Value Value Rank Value Tyler Mall $ 194,241 1 0.8% $ 141,698 1 0.9%

La Sierra University 136,505 2 0.6%

Riverside Healthcare System 110,756 3 0.5% 52,395 6 0.3%

Rohr Inc 108,703 4 0.5% 49,989 7 0.3%

Cole ID 93,330 5 0.4%

State Street Bank & Trust Co of Calif 91,636 6 0.4% 101,260 2 0.6%

Vestar Riverside Plaza 84,860 7 0.4%

Corona Pointe Apartments 77,450 8 0.3%

7450 Northrop Drive Apartments 73,297 9 0.3%

Canyon Springs Marketplace Corp 70,030 10 0.3%

BRE Properties 91,589 3 0.6%

California State Teachers Retirement 55,391 4 0.4%

Charter Comm Entertainment II 54,931 5 0.4%

Bottling Group 49,168 8 0.3%

Press Enterprise Company 44,912 9 0.3%

Mission Grove Park Apartments 44,270 10 0.3%

Totals $ 1,040,808 4.5% $ 685,603 4.4%

Notes:

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

Source: Riverside County Assessor 2013/14 and 2004/05 Combined Tax Rolls 98

Table 10 City of Riverside Property Tax Levies and Collections Last Ten Fiscal Years (in thousands)

Last Ten Fiscal Years (in thousands)

Collections Fiscal Year Taxes Collected within the in Ended Levied for Fiscal Year of the Levy Subsequent Total Collections To Date June 30 Fiscal Year Amount Percentage of Levy Years Amount Percentage of Levy 2005 36,825 36,332 98.66% 493 36,825 100.00%

2006 52,532 51,815 98.64% 717 52,532 100.00%

2007 69,246 67,046 96.82% 2,200 69,246 100.00%

2008 83,996 82,345 98.03% 1,651 83,996 100.00%

2009 86,251 84,134 97.55% 2,117 86,251 100.00%

2010 77,228 74,491 96.46% 2,737 77,228 100.00%

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

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

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

2014 45,138 44,684 98.99% - 44,684 98.99%

Note:

The table reflects amounts related to the City. In addition, it includes amounts related to the Redevelopment Agency through dissolution (1/31/12). The amounts collected by the Redevelopment Agency include monies that were passed-though to other agencies. Current tax levies are the original charge as provided by the County of Riverside. Current tax collections do not include supplemental taxes, aircraft taxes or other property taxes.

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

99

Table 11 City of Riverside Electricity Sold by Type of Customer Last Ten Fiscal Years (in millions of kilowatt-hours) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Type of Customer:

Residential 675 696 748 734 733 701 666 688 726 700 Commercial 530 474 456 441 433 406 400 413 419 421 Industrial 707 810 924 960 946 906 912 969 1,003 997 Wholesale sales 470 287 295 357 137 44 7 2 14 4 Other 50 58 39 34 33 32 31 31 31 30 Total 2,432 2,325 2,462 2,526 2,282 2,089 2,016 2,103 2,193 2,152 Total direct rate Monthly Base Rate 3.36 3.36 5.00 11.35 13.06 18.06 18.06 18.06 18.06 18.06 Monthly Base Rate includes a Reliability Charge of $5.00 (small residence 100 amp) implemented in January 2008. In January 2010 the Reliability Charge increased to $10.00 (small residence 100 amp).

Source: Riverside Public Utilities, Finance Services 100

Table 12 City of Riverside Electricity Rates Last Ten Fiscal Years (Average Rate in Dollars per Kilowatt-Hour)

Fiscal Year Ended June 30 Residential Commercial Industrial Other 2005 0.11813 0.11321 0.08369 0.12768 2006 0.12222 0.11330 0.08798 0.12373 2007 0.12621 0.12164 0.09059 0.14493 2008 0.13613 0.13781 0.09658 0.16099 2009 0.14389 0.15122 0.10271 0.17169 2010 0.15307 0.16014 0.10756 0.17876 2011 0.16173 0.16001 0.11194 0.18089 2012 0.16068 0.15991 0.11088 0.17938 2013 0. 16274 0.15913 0.11030 0.18375 2014 0.15995 0.15936 0.11156 0.18513 Source: Riverside Public Utilities, Finance Services 101

Table 13 City of Riverside Top 10 Electricity Customers Current Year and Nine Years Ago 2014 2005 Percent of Percent of Electricity Total Electric Electricity Total Electric Electricity Customer Charges Revenues Charges Revenues Local University $10,947,884 3.70% N/A N/A Local Government 8,335,217 2.82% N/A N/A Local Government 7,386,521 2.50% N/A N/A Local School District 4,189,035 1.42% N/A N/A Corporation 3,677,670 1.24% N/A N/A Corporation 3,315,738 1.12% N/A N/A Corporation 2,775,346 0.94% N/A N/A Hospital 2,453,555 0.83% N/A N/A Corporation 2,120,900 0.72% N/A N/A Corporation 2,113,037 0.71% N/A N/A

$47,314,903 16.00% N/A N/A Retail Sales Per Financial Statements $295,803,687 N/A - not available Source: Riverside Public Utilities, Finance Services 102

Table 14 City of Riverside Ratios of Outstanding Debt by Type Last Ten Fiscal Years (in thousands)

Governmental Activities General Pension Certificates Fiscal Obligation Redevelopment Revenue Assessment Obligation of Capital Notes/Loans Year Bonds Bonds Bonds Bonds Bonds Participation Leases Payable 2005 20,280 144,024 148,280 57,336 7,431 10,645 2006 19,858 140,195 146,470 55,571 6,008 10,215 2007 19,331 296,598 144,450 192,874 4,929 9,759 2008 18,774 292,244 142,170 200,273 9,391 9,040 2009 18,171 285,743 139,410 198,268 7,455 8,749 2010 17,533 278,867 136,050 211,212 6,303 9,291 2011 16,845 305.195 132,095 207,246 6,670 8,849 2012 16,107 127,480 207,278 5,220 4,000 2013 15,314 43,762 122,005 158,697 8,424 28,652 2014 14,460 42,344 115,775 191,446 13,168 47,611 Business-Type Activities Total Percentage Debt Fiscal Revenue Notes/Loans Capital Primary of Personal Per Year Bonds Payable Leases Government Income 1 Capita1 2005 419,581 10,459 392 818,428 14.98% 2.91 2006 509,577 9,841 317 898,052 15.47% 3.13 2007 482,929 9,211 253 1,160,334 18.67% 4.01 2008 720,749 8,569 211 1,401,421 21.51% 4.80 2009 670,512 7,915 2,574 1,342,931 20.15% 4.54 2010 968,393 7,249 2,151 1,637,049 24.83% 5.44 2011 1,071,554 76,747 1,720 1,826,921 27.58% 6.01 2012 1,063,853 73,821 1,332 1,499,091 22.01% 4.86 2013 1,031,839 70,798 2,558 1,482,049 21.41% 4.75 2014 1,094,290 36,030 2,266 1,557,390 22.54% 4.96 1 These ratios are calculated using personal income and population data for the prior calendar year.

Source: City of Riverside Notes to Financial Statements and Statistical Table 19.

103

Table 15 City of Riverside Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (in thousands, except per capita amount)

General Certificates Tax Percent of Fiscal Obligation Pension of Allocation Assessed Per 2

Year Bonds Bonds Participation Bonds Total Value 1 Capita 2005 20,280 148,280 57,336 144,024 369,920 2.69% 1,316 2006 19,858 146,470 55,571 140,195 362,094 2.48% 1,264 2007 19,331 144,450 192,874 296,598 653,253 3.98% 2,260 2008 18,774 142,170 200,273 292,244 653,461 3.64% 2,239 2009 18,171 139,410 198,268 285,743 641,592 3.52% 2,167 2010 17,533 136,050 211,212 278,867 643,662 3.82% 2,140 2011 16,845 132,095 207,246 305,195 661,381 4.03% 2,175 2012 16,107 127,480 207,278 350,865 2.15% 1,137 2013 15,314 122,005 158,697 296,016 1.80% 949 2014 14,460 115,775 191,446 321,681 1.91% 1,024 Notes:

General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (which, the City has none.)

1Assessed value has been used because the actual value of taxable property is not readily available in the State of California.

2 These ratios are calculated using population data for the prior calendar year.

Source: City of Riverside Notes to Financial Statements and Reserve Cash Reconciliation maintained by City Finance Department.

104

Table 16 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30, 2014 Page 1 of 2 2013-14 Assessed Valuation: $ 22,864,558,235 Less Dissolved Redevelopment Agency Incremental Valuation: 6,012,772,332 Adjusted Assessed Valuation: $ 16,851,785,903 City's Share Total Debt  % Applicable of Debt1 2

Overlapping debt repaid with property taxes Metropolitan Water District $ 1,322,750 1.059% $ 1,400,792 Riverside City Community College District 227,729,565 29.816 67,899,847 Alvord Unified School District 227,560,233 71.179 161,975,098 Riverside Unified School District 139,315,000 87.040 121,259,776 Corona-Norco Unified School District 260,100,000 0.001 2,601 Jurupa Unified School District 46,700,000 0.002 934 Moreno Valley Unified School District 36,708,522 11.159 4,096,304 Alvord Unified School District Community District No.2006-1 7,960,000 82.333 6,553,707 Riverside Unified School District Community Facilities Districts 89,052,000 89.479-100. 88,906,388 City of Riverside Community Facilities Districts 15,210,000 100. 15,210,000 City of Riverside 1915 Act Bonds 26,755,000 100. 26,755,000 Total overlapping debt repaid with property taxes $ 494,060,447 (continued) 105

Table 16 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30, 2014 Page 2 of 2 2

Other overlapping debt Riverside County General Fund Obligations $ 718,909,871 11.053% $ 79,461,108 Riverside County Pension Obligations 334,515,000 11.053 36,973,943 Riverside County Board of Education Certificates of Participation 2,700,000 11.053 298,431 Alvord Unified School District Certificates of Participation 2,027,061 71.179 1,442,842 Corona-Norco Unified School District Certificates of Participation 29,000,000 0.001 290 Jurupa Unified School District Certificates of Participation 6,450,000 0.002 129 Moreno Valley Unified School District Certificates of Participation 13,279,998 11.159 1,481,915 Riverside Unified School District General Fund Obligations 11,880,000 87.040 10,340,352 Total other overlapping debt 129,999,010 Less: Riverside County supported obligations 1,116,603 128,882,407 Overlapping tax Increment debt 262,192,206 Total overlapping debt 885,135,060 City direct debt 424,804,000 Combined total direct and overlapping debt $ 1,309,939,060 (1) Debt balances are as of April 1, 2014 (most recent available) for other agency debt, and June 30, 2014 for all City of Riverside direct debt.

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

Qualified Zone Academy bonds are included based on principal due at maturity.

Ratios to 2013-14 Assessed Valuation:

Total debt repaid with property taxes .................................... 2.16%

City direct debt ($424,804,000) .......................................... 1.86%

Combined total direct and overlapping debt ............................ 5.73%

Ratios to Dissolved Redevelopment Incremental Valuation ($6,012,772,332):

Total overlapping tax Increment debt ................................... 4.36%

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

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

106

Table 17 City of Riverside Legal Debt Margin Information Last Ten Fiscal Years (in thousands) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Assessed valuation $13,740,349 $14,614,159 $16,395,629 $17,950,082 $ 18,243,019 $ 16,840,575 $ 16,396,996 $ 16,342,830 $ 16,415,712 $ 16,851,786 Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%

Adjusted assessed valuation 3,435,087 3,653,540 4,098,907 4,487,521 4,560,755 4,210,144 4,099,249 4,085,708 4,103,928 4,212,947 Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

Debt limit 515,263 548,031 614,836 673,128 684,113 631,522 614,887 612,856 615,589 631,942 Total net debt applicable to limit: 20,280 19,858 19,331 18,774 18,171 17,533 16,845 16,107 15,314 14,460 Legal debt margin 494,983 528,173 595,505 654,354 665,942 613,989 598,042 596,749 600,275 617,482 Total net debt applicable to the limit as a percentage of debt limit 3.9% 3.6% 3.1% 2.8% 2.7% 2.8% 2.7% 2.6% 2.5% 2.3%

The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect a the time that the legal debt margin was enacted by the State of California for local governments located within the State, Source: City of Riverside, Statistical Table 7 and Notes to Financial Statements.

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Table 18 City of Riverside Pledged-Revenue Coverage Business Type Activity Debt Last Ten Fiscal Years (in thousands)

Electric Revenue Bonds Water Revenue Bonds Less: Net Less: Net Fiscal Pledged Operating Available Debt Service Pledged Operating Available Debt Service 1 1 1 Year Revenue Expenses Revenue Principal Interest Coverage Revenue Expenses' Revenue Principal Interest Coverage 2005 262,350 164,159 98,191 14,555 12,143 3.68 45,348 26,436 18,912 4,045 2,591 2.85 2006 265,086 184,421 80,665 15,015 15,245 2.67 66,226 27,028 39,198 3,875 3,790 5.11 2007 289,784 187,700 102,084 18,815 14,200 3.09 55,699 29,461 26,238 4,300 3,454 3.38 2008 314,733 219,680 95,053 19,460 16,790 2.62 67,312 33,827 33,485 4,355 4,275 3.88 2009 320,447 202,904 117,543 20,572 24,941 2.58 60,886 35,639 25,247 4,473 6,728 2.25 2010 320,560 199,040 121,520 21,574 22,572 2.75 61,985 35,953 26,032 4,533 8,008 2.08 2011 319,177 212,878 106,299 23,029 25,087 2.21 84,328 35,220 49,108 4,799 9,263 3.49 2012 340,098 221,876 118,222 25,174 27,630 2.24 73,557 35,309 38,248 4,708 8,872 2.82 2013 348,187 226,997 121,190 18,486 25,941 2.73 72,700 35,940 36,760 5,395 8,700 2.61 2014 347,541 241,136 106,405 21,632 27,575 216 71,317 37,698 36,761 4,574 8,536 2.80 Sewer Revenue Bonds Less: Net Fiscal Pledged Operating Available Debt Service 1

Year Revenue Expenses' Revenue Principal Interest Coverage 2010 31,470 26,865 4,605 666 151 5.64 2011 37,772 27,575 10,197 692 125 12.48 2012 42,562 29,632 12,930 692 5,471 2.10 2013 52,944 29,999 22,945 7,465 10,891 1.25 2014 52,098 28,930 23,168 7,753 10,781 1.25 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

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

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

The City of Riverside does not have any pledged revenue related to Govermental Activities.

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Table 19 City of Riverside Demographic and Economic Statistics Last Ten Calendar Years Per Personal Capita 2

Calendar Income Personal Unemployment Year Population (in thousands) Income 2 Rate 3 2004 281,192 5,462,823 19,427 6.1 2005 286,572 5,806,339 20,261 5.4 2006 289,045 6,214,628 21,501 5.1 2007 291,814 6,514,489 22,324 6.1 2008 296,038 6,665,142 22,514 8.6 2009 300,769 6,592,294 21,918 13.7 2010 304,051 6,623,143 21,783 14.8 2011 308,511 6,811,923 22,080 13.7 2012 311,955 6,923,217 22,193 9.7 2013 314,034 6,909,376 22,002 8.4 Sources:

1 California State Department of Finance.

2 Demographic Estimates for 2004-2009 are based on the last available Census. Projections are developed by incorporating all fo the prior census data released to date. Demographic Data is totaled from Census Block Groups that overlap the City's boundaries. Demographic Estimates for 2010 and later are per the US Cenus Bureau, most recent American Community Survey.

3 State of California Empolyment Development Department.

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Table 20 City of Riverside Principal Employers Current Year and Nine Years Ago 2014 2005 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment County of Riverside 11,187 1 7.6% N/A N/A N/A University of California 7,218 2 4.9% N/A N/A N/A Riverside Unified School District 3,461 3 2.4% N/A N/A N/A Kaiser 3,156 4 2.1% N/A N/A N/A City of Riverside 2,476 5 1.7% N/A N/A N/A Riverside Community Hospital 1,880 6 1.3% N/A N/A N/A Riverside County Office of Education 1,765 7 1.2% N/A N/A N/A Alvord Unified School District 1,445 8 1.0% N/A N/A N/A Parkview Community Hospital 1,350 9 0.9% N/A N/A N/A Riverside Community College District 1,061 10 0.7% N/A N/A N/A Total 34,999 23.8% N/A N/A N/A - not available Source: City of Riverside, Finance Department 110

Table 21 City of Riverside Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Function General government 331.88 377.15 412.22 436.35 439.10 433.40 431.40 440.40 413.90 356.25 Public safety (sworn and non-sworn personnelI)

Police 568.83 589.33 618.33 637.33 591.93 589.93 589.93 599.93 596.75 551.75 Fire 221.11 221.73 251.73 254.21 254.21 255.46 255.46 255.46 255.46 255.00 Highways and streets 281.35 262.35 286.35 318.35 369.65 349.50 348.11 357.11 362.11 333.48 Sanitation 48.49 59.49 60.29 64.29 58.60 59.00 56.00 56.00 57.00 59.00 Culture and recreation 300.92 311.45 324.26 339.52 340.71 328.07 328.07 341.22 351.48 269.98 Airport 6.00 6.00 7.00 7.00 7.00 7.00 9.50 9.50 9.50 6.00 Water 130.00 133.00 142.00 167.00 167.00 177.65 180.15 181.15 181.15 182.15 Electric 305.60 337.60 351.35 404.60 408.10 419.45 448.50 452.50 459.50 462.50 Total 2,194.18 2,298.10 2,453.53 2,628.65 2,636.30 2,619.46 2,647.12 2,693.27 2,686.85 2,476.11 1 In fiscal year 2009 the Crossing Guards program (46.40 FTEs) was moved from the Police Department to the Public Works Department (highways and streets).

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

Source: City of Riverside, Finance Department 111

Table 22 City of Riverside Operating Indicators by Function Last Ten Fiscal Years Function/Program 20'05 2006 2007 2008 2009 2010 2011 2012 2013 2014 Police Arrests 11,280 10,093 9,827 9,367 10,150 8,690 8,118 7,736 8,362 9,321 Fire Number of calls answered 26,505 26,696 27,458 27,429 26,397 26,484 27,322 27,637 29,988 30,668 Inspections 17,028 19,261 7,261 10,812 7,638 7,234 6,505 10,074 10,151 12,476 Public works:

Street resurfacing (miles) 102.45 51.26 73.40 26.27 18.90 20.00 21.25 18.43 16.50 35.38 Parks and recreation Number of recreation classes 15,195 16,272 19,079 22,146 21,884 27,762 37,303 43,318 41,364 45,707 Number of facility rentals 27,074 27,483 32,980 35,076 36,822 34,565 42,638 43,288 43,358 46,432 Water Number of accounts 62,492 62,985 63,431 63,494 64,062 64,231 64,349 64,367 64,591 64,829 Annual consumption (ccf) 27,8175,253 28,865,030 32,110,208 30,583,266 29,721,236 26,687,271 25,902,439 27,062,142 28,186,178 28,887,304 Electric Number of accounts 103,463 104,294 105,226 106,015 106,385 106,335 106,855 107,321 107,525 108,358 Annual consumption (kvh) 2,432 2,359 2,462 2,526 2,282 2,089 2,016 2,103 2,193 2,152 Sewer:

New connections 9,621 16,717 15,423 16,412 18,765 16,971 17,746 18,166 17,607 17,274 Average daily sewage treatment 38.07 35.91 32.50 32.10 33.00 33.29 30.06 29.84 29.57 28.49 (millions of gallons)

'Amounts expressed in millions N/A - not available Source: City of Riverside, various departments 112

Table 23 City of Riverside Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2005 2006 2007 (1) 2008 2009 2010 2011 2012 2013 2014 Function Public Safety Police Stations 2 3 3 3 3 3 3 3 3 3 Substations 7 5 4 4 5 4 4 4 4 4 Helicopters 4 4 4 4 4 4 4 4 4 3 Fire Stations 13 13 14 14 14 14 14 14 14 14 Active apparatus 30 29 30 30 30 30 26 27 28 28 Reserve apparatus 5 6 6 6 7 7 9 9 11 11 Training facilities 1 1 1 1 1 1 1 1 1 1 Highways and streets Streets (miles) 836.00 845.35 852.04 864.68 866.89 867.96 868.39 868.70 868.89 871.19 Streetlights 28,581 28,847 29,028 29,312 29,675 29,757 29,868 29,933 29,949 29,968 Signalized intersections 322 353 358 363 365 362 362 365 365 367 Culture and recreation Parks acreage 2,534.00 2,534.00 2,773.00 2,773.00 2,773.00 2,773.00 2,811.00 2,811.00 2,891.00 2,911.80 Community centers 11 11 11 11 11 11 11 11 11 11 Playgrounds 26 27 38 38 41 41 41 41 43 44 Swimming pools 7 6 7 7 7 7 7 7 7 7 Softball & baseball diamonds 35 33 44 44 44 44 49 51 54 54 Library branches 5 6 6 6 7 7 8 8 8 8 Museum exhibit-fixed 8 7 13 8 6 5 8 5 3 3 Museum exhibit-special 2 5 2 2 2 1 4 4 1

Water Fire hydrants 6,926 7.127 7,187 7,381 7,523 7,593 7,632 7,682 7,726 7,754 Sewer Sanitary sewers (miles) 765 775 785 794 794 820 823 829 829 829 Electric Miles of overhead distribution system 531.0 527.0 528.0 523.5 522.0 519.0 517.0 515.0 513.0 513.0 Miles of underground system 622.0 663.0 704.0 741.6 769.0 782.0 791.0 804.0 810.0 814.0 Source: City of Riverside, various departments (1) Museum Fixed Exhibits - In 2007, the Riverside Municipal Museum remodeled a number of the spaces within the museum allowing the museum the opportunity to debut new exhibitions and to display more permanent collections in addition to partnering with others on exhibits that were available that year.

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