ML19036A775

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

ML19036A775
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Site:	San Onofre
Issue date:	06/30/2018
From:	City of Riverside, CA
To:	Office of Nuclear Reactor Regulation
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C O 'M , P R E H E N S I V E ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2018 CITY OF RIVERSIDE, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2018 Prepared by the Finance Department Edward Enriquez, Interim Chief Financial Officer/Treasurer 3900 Main Street, Riverside, California 92522 (951) 826-5660 This report was printed on recycled stock

CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal....................................................................................................................

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

viii Legislative and City Officials..........................................................................................................

ix Organization Chart......................................................................................................................

ix FINANCIAL SECTION Independent Auditors' Report........................................................................................................

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

3 Basic Financial Statements:

Government-wide Financial Statements:

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

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

19 Statement of Activities.......................................................................................................

20 Fund Financial Statements:

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

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

22 Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds.......

23 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities...........................................................

24 Statement of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual -General Fund.............................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

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

29 Statement of Net Position/(Deficit)

Fiduciary Funds.......................................................................

31 Statement of Changes in Net Position/(Deficit)

Fiduciary Fund -Private-Purpose Trust..................

32 Notes to Basic Financial Statements........................................................................................

33 Required Supplementary Information (Unaudited).............................................................................

68 Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet -Non major Governmental Funds....................................................

73 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds.................................................................................................

75 Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual -Non major Governmental Funds....................................................................................

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

81 Combining Statement of Revenues, Expenses and Changes in Net Position -Nonmajor Enterprise Func;ts...

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... ...... ... ... ....... 83 CITY OF RIVERSIDE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS FINANCIAL SECTION (CONT.) Combining Statement of Cash Flows -Non major Enterprise Funds .......................................... . Combining Statement of Net Position -Internal Service Funds ................................................. . Combining Statement of Revenues, Expenses and Changes in Net Position -Internal Service Funds .................................................................................................................... . Combining Statement of Cash Flows -Internal Service Funds ................................................. . Combining Statement of Changes in Assets and Liabilities -Agency Fund ................................. . Balance Sheet -Combining General Fund Schedule ............................................................. . Statement of Revenues, Expenditures and Changes in Fund Balances -Combining General Fund Schedule ............................................................................................................... . Balance Sheet-Combining Capital Outlay Fund Schedule ................................................

-: .... . Statement of Revenues, Expenditures and Changes in Fund Balances -Combining Capital Outlay Fund Schedule ........................................................................................................ . STATISTICAL SECTION Table 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Net Position by Component-Last Ten Fiscal Years ............................................................... . Changes in Net Position -Last Ten Fiscal Years .................................................................... . Fund Balances of Governmental Funds -Last Six Fiscal Years ...................................................... . Changes in Fund Balances of Governmental Funds -Last Ten Fiscal Years ............................... . Business-Type Activities Electricity Revenues By Source-Last Ten Fiscal Years ........................ . Governmental Activities Tax Revenues By Source -Last Ten Fiscal Years .................................. . Taxable Sales by Category -Last Ten Calendar Years .......................................................... . Assessed Value and Estimated Actual Value of Taxable Property-Last Ten Fiscal Years ............. . Direct and Overlapping Property Tax Rates -Last Ten Fiscal Years .......................................... . Principal Property Taxpayers

-Current Year and Nine Years Ago ............................................. . Property Tax Levies and Collections

-Last Ten Fiscal Years .................................................... . Electricity Sold by Type of Customer-Last Ten Fiscal Years .................................................. . Electricity Rates -Last Ten Fiscal Years .............................................................................. . Top 10 Electricity Customers

-Current Year and Nine Years Ago ............................................. . Ratios of Outstanding Debt by Type-Last Ten Fiscal Years .................................................... . Ratios of General Bonded Debt Outstanding

-Last Ten Fiscal Years ......................................... . Direct and Overlapping Governmental Activities Debt. ............................................................ . Legal Debt Margin Information

-Last Ten Fiscal Years ........................................................... . Pledged-Revenue Coverage Business Type Activity Debt-Last Ten Fiscal Years ....................... . Demographic and Economic Statistics

-Last Ten Calendar Years ........................................... . Principal Employers

-Current Year and Nine Years Ago ......................................................... . Full-Time Equivalent City Government Employees by Function -Last Ten Fiscal Years ................ . Operating Indicators by Function -Last Ten Fiscal Years ....................................................... . Capital Asset Statistics by Function -Last Ten Fiscal Years ................................................... . 84 87 88 89 92 94 95 96 97 99 100 102 103 105 106 107 108 109 110 111 112 113 114 115 116 117 119 120 121 122 123 124 125 October 31, 2018 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, 2018. 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 rational 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, 2018. 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 the 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 offederal awards/grants.

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

t=>rofile of the City of Riverside The City of Riverside, incorporated on October 11, 1883, is located in the western portion of Riverside County, about 60 miles east of Los Angeles. The City currently occupies a land area of 81.507 square miles. The City operates under the council-manager form of government, with a seven-member council elected by ward for four-year overlapping terms. The mayor is elected at large for a four-year term and is the presiding officer of the Council, but does not have a vote except in the case of a tie. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, City Attorney and City Clerk. The City Manager is responsible for carrying out the policies and ordinances of the Council, for overseeing the day-to-day operations of the City, and for appointing the heads of various departments.

The Council is elected on a non-partisan basis. The City provides a full range of services which include general government, public safety (police, fire, disaster preparedness and building inspection), construction and maintenance of highways and streets, economic development, culture and recreation, electric, water, airport, refuse, sewer, and senior citizen/handicap transportation.

In addition to general City activities, the Council is financially accountable for the Riverside Housing Authority, Riverside Public Financing Authority, Riverside Municipal Improvements Corporation and the Successor Agency, which was formed to hold the assets of the former Redevelopment Agency; therefore, these entities are included as an integral part of the City's financial statements.

Additional information on these legally separate entities can be found in note 1 in the Notes to Basic Financial Statements.

The biennial budget serves as the foundation for the City's financial planning and control. Consistent with the City's Charter, the City Manager presents the proposed budget to the City Council for review at least thirty-five calendar days prior to the beginning of the fiscal year. The Council is required to hold public hearings on the proposed budget and to adopt a final budget no later than June 30, which is the close of the City's fiscal year. The appropriated budget is prepared by fund and department.

Department heads may make transfers of appropriations within a department.

Transfers of appropriations between departments, however, require the approval of the Council. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on page 25 as part of the basic financial statements for the governmental funds. For governmental funds other than the general fund, with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report, which begins on page 77. Local economy: The City is located in Inland Southern California, which consists of Riverside and San Bernardino Counties (the "MSA"). The population of Inland Southern California, at approximately 4.2 million, is larger than 24 states. The City leads the Inland Southern California in most measures of economic power, including population, income, employment, bank deposits, assessed valuation, office space and college enrollment.

The population of the City is 325,860 which places it as the 12 1 h largest in California.

The Inland Empire-consisting of Riverside and San Bernardino Counties-has rebounded strongly from the trough of the Great Recession in terms of employment, income, and population growth. Gains in population have been due in part to the ongoing quest for affordable housing-the Inland Empire is one of the most affordable regions in the state. From July 2017 to July 2018, nonfarm employment in the Inland Empire increased 3.4%, outpacing California as a whole by 1.4 percentage points. ii For a region that was among the hardest hit by the recession and the mortgage market meltdown of the past decade, this is welcome news. The Inland Empire has sustained a faster pace of nonfarm employment growth than the state since April 2012 and the region's unemployment rate will finish the year at around the 4% mark. Nearly every local industry has added jobs over the past year and employee wages are on the rise.

• The MSA is projected to grow in future years because land values continue to remain well below those in Los Angeles, Orange and San Diego Counties.

Among the City's challenges is a lack of available space for manufacturing and industrial development within current boundaries.

• Goals and Vision: In February 2015, Council approved the Riverside 2.0 Strategic Plan, which established new City Council Strategic Goals that aligned with the four pillars of "Seizing our Destiny".

After more than a year of working towards Riverside 2.0 goals, the plan was re-examined and updated to remove goals that were accomplished, revise existing goals to better reflect priorities, and add goals consistent with new priorities.

The new Riverside 2.1 strategic goals reflected seven areas of strategic priority along with five effective government principles.

Through various strategic planning workshops the City Council identified the following seven strategic priorities for the City:

• Enhanced Customer Service -Improved quality of life

• Economic Development

-Continue to develop an economically vibrant City

• Community Services -Provide appealing, accessible and safe venues

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

• Improve Housing Diversity and Options

• Improve Teamwork and Communication

• Reduce Taxpayer Liability and Reduce Costs Wherever Possible As a result of the development of the seven strategic priorities, the Riverside 2.1 Strategic Plan was formed to implement the vision. The purpose of the Riverside 2.1 Strategic Plan is to advance the City of Riverside's mission statement:

The City of Riverside is committed to providing high quality municipal services to ensure safe, inclusive, and livable community.

Additionally, the Riverside 2.1 Strategic Plan is intended to advance Seizing Our Destiny which is Riverside's community-driven campaign that builds on the city's existing strengths to create an even better place to live, work and play for future generations.

The Seizing Our Destiny Campaign was developed by City officials and civic leaders and encompasses a 20-year strategic vision that mobilizes the skills and resources of a broad cross-section of Riverside toward one common goal-a better community for us all. The goal, or Vision, has four primary aspects for Riverside:

• Nurture Intelligent Growth

• Catalyst for Innovation

• Location of Choice

• Evolve as a Unified City iii Riverside 2.1 also includes five effective government principles that are reinforced through management's actions:

• Accountability

• Transparency

• Responsiveness

• Financial Prudence

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

For the fiscal year (FY) 2018-19 and 2019-20 Budget Cycle, the City's second two-year budget in the context of a five-year financial plan was presented.

It is a process designed to bring continued transparency to the City's finances, operations and strategic goals both internally with employees and departments, and externally with the residents and businesses.

For the second time, the City's budget included a comprehensive Five-Year Capital Improvement Program (CIP) document as a separate section which serves as a framework for policy decisions on the two-year budget as well as in the future. Among other things; the year plan allows the City to illustrate fiscal impacts of budget decisions on the General Fund Reserves through June 30, 2023. The CIP provides funding for the City's critical and essential infrastructure projects in the amount of $82 million for Fiscal Year (FY) 2018/19 and an additional

$73 million for FY 2019/20. Over the course of five years (FY 2018/19 through FY 2022/23), the City anticipates investing a total of $408 million in our essential assets. The CIP responds to the needs of our residents to ensure the ,streets, public buildings, sewer, water, and electric infrastructure, and parks are well maintained and operated for optimum health and safety, added value, increased efficiency and functionality, enhanced attractiveness and beautification, and compliance to legal mandates.

The CIP document places equal emphasis on planning for new projects as well as improving and preserving existing capital 'assets. 1 The City's CIP document includes a list of Unfunded CIP Projects.

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

Measure Z: Measure Z is a one-cent transaction and use tax, with revenues going directly to the City of Riverside.

The collection of an additional one-cent sales tax authorized by voters through Measure Z began on April 1, 2017. After hearing recommended Measure Z spending options from City staff and the Budget Engagement Commission, on May 16, 2017, the City Council approved a five-year Measure Z Spending Plan for 33 initiatives covering public safety, financial discipline/responsibility, critical operating needs, facility capital needs, quality of life, and technology.

For the purposes of this Measure Z Five-Year Financial Plan, the tenets of the original spending plan have been carried through two additional years, FY 2020/22 and FY 2022/23. The one-cent increase in sales tax is iv estimated to generate between $48 million and $52 million annually specifically for the City of Riverside's General Fund, which pays for most services.

General Fund Restructuring:

As part of the City's Mid-Cycle Budget Update, staff analyzed all General Fund activity and determined that restructuring of the General Fund for fiscal year 2017-2018 was required in order to provide for greater transparency between true General Fund activity and other financial activity that has historically been in the General Fund. New funds have been established for Civic Entertainment and Special Districts.

While the majority of these items are self-supported by specific revenues, certain operations will require a General Fund operating transfer to ensure expenditures are supported by revenues.

These changes reduce the size of the General Fund by approximately

$19.1 million, from $275.7 million based on projections to $256.6 million. Also, in order to ensure continued transparency, debt related Pension Obligation Bonds were allocated to the appropriate funds to properly reflect their proportional share of the obligation; the result of which eliminated previously recorded Advances in the General Fund. In addition, debt service related expenditures, previously recorded directly in the General Fund, are now reflected with all other General Fund debt in the Debt Service Fund. The General Fund's proportional share of the debt service expenditures, are now reflected as a transfer to the Debt Service Fund. Lastly, in an effort to continually improve our financial transparency, staff will continue to review and restructure the General Fund in fiscal year 2018-2019 by creating a separate Grants Fund; by their very nature, grants are self-supporting activities.

Additionally, we will allocate any remaining non-General Fund debt to the appropriate funds to properly reflect their proportional share of the obligations.

Financial policies:

Fiscal policies establish framework for managing the City's financial resources and safeguarding the City's assets in compliance with relevant regulatory mandates, industry standards, and best practices.

Maintaining healthy reserves in the General Fund, and other Funds as well, is a critical component of the City's sound financial management practices.

In February 2018, the City adopted a Long-Term Financial Planning Policy to assist City leaders (elected officials and City management) in making prudent and informed financial decisions regarding economic development, tax policy and labor negotiations.

Credit rating agencies encourage long-term financial planning, and generally favor government entities with such plans when assigning bond ratings. The policy requires the City to adopt long-term financial plans spanning at least five years for all major City funds (e.g., General, Electric, Water, Sewer, etc.) in conjunction with the biennial (two-year) budget. The long-term financial plan should incorporate the following elements as relevant and appropriate:

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

• Past revenue and expenditure trends;

• Forecast assumptions;

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

• Compliance with existing City fiscal policies.

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

The City's General Fund Reserve Policy, adopted by the City Council on September 6, 2016, requires maintaining the General Fund reserve at 15%. The City Council set an aspiration goal of the General Fund Reserve at 20%; this goal was recently reaffirmed through adoption of the "Responsible Spending Vision Pledge" on October 4, 2016. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded. a Certificate of Achievement .for Excellence in Financial Reporting (Program) to the City for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2017. This was the ninth consecutive year that the City has received this prestigious award. The City received this award for publishing an easily readable and efficiently organized CAFR that satisfied both Generally Accepted Accounting Principles (GAAP) and applicable legal requirements.

This award is valid for a period of one year only. We believe that our current CAFR continues to meet the Program's requirements and we are submitting it to the GFOA again this year. The Government Finance Officers Association (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the City for its Popular Annual Financial Report (PAFR) for the fiscal year ended June 30, 2017. This was the first time the City prepared such a report and is humbled by the award. This is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. The Award is for a period of one year only. The City will continue to participate in the program. Budget Presentation Award: The City received the GFOA's Distinguished Budget Presentation Award for its annual budget document for the fiscal year beginning July 1, 2017. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communication device. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Financ:e Department and oversight from the City Manager's Office. We would like to express our appreciation to all members of the department who assisted and contributed to its preparation.

Credit also must be given to the Budget Engagement Commission and Mayor and the City Council for their unfailing support for maintaining the highest standards of professionalism in the management of the City's finances.

vi Respectfully submitted, Edward Enriquez Interim Chief Financial Officer/City Treasurer vii Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Riverside California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 ~p.~ Executive Director/CEO

• viii The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Riverside for our Comprehensive Annual Financial Report for the fiscal year ended June 30, 2017. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards.

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

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

ORGANIZATION CHART (' \ CITY LEADERSHIP RustyBaaey Moye, (0 Communityond GaryGeuss.

OlyAltomey

.;

• .,, (. Eeonom!c Development Rnonco Q) * \.~ Ubrory Museum& Cufff.lfal ABab1 Al Zollnka .Colleen Nicol Clly Monoger Ot-1Clerk.

8 * * (9 ~-,p *** General Human lnnovotton

& Services RelOUtC&I Tochnology (0 E})

• e f'mla. Rec:reotion a.nd Police Publii:Wo,ks Rlvenldo Community Sorvicos ~ublic Ufilltios 1 / ix LEG IS LA TIVE OFFICIALS Rusty Bailey ...................................................................................

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

Councilmember

-Ward 1 Andy Melendrez

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

Councilmember-Ward 2 Mike Soubirous

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

Councilmember

-Ward 3 Chuck Conder .................................................

Councilmember

-Ward 4 Chris Mac Arthur .............................................

Councilmember

-Ward 5 Jim Perry .........................................................

Councilmember

-Ward 6 Steve Adams ...................................................

Councilmember

-Ward 7 CITY OFFICIALS Al Zelinka ..........................................................................

City Manager* Rafael Guzman ...................................................

Assistant City Manager Lea Deesing ........................................................

Assistant City Manager Colleen J. Nicol .......................................................................

City Clerk* Gary Geuss ........................................................................

City Attorney*

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

Chief of Police George Khalil .....................................................

Chief Innovation Officer David Welch ...... Interim Community

& Economic Development Director Edward Enriquez .....................

Interim Chief Financial Officerffreasurer Michael Moore .........................................................................

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

Public Works Director Stephanie Holloman .....................................

Human Resources Director Erin Christmas

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

Library Director Robyn Peterson ...............................

Museum & Cultural Affairs Direct6r Adolfo Cruz ...................

Parks, Recreation

& Community Svcs. Director Todd Jorgenson

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

Interim General Manager -Public Utilities Carl Carey ......................................................

General Services Director *Appointed by City Council

Certified Public Accountants Honorable Mayor and Members of the City Council City of Riverside, California

• Report on the Financial Statements Independent Auditor's Report 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 year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, as listed in the table of contents.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General oJ 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, 2018, 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. Macias Gini & O'Connell LLP 4675 MacArthur Court, Suite 600 Newport Beach, CA 92660 www.mgocpa.com Emphasis of Matter As discussed in Notes 1 to the basic financial statements, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting (or Postemployment Benefit Other Than Pension. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 -18, pension schedule of changes in net pension liability and related ratios during the measurement period on page 69, pension schedule of plan contributions on page 70, and schedule of changes in total OPEB liability and related ratios on page 71, be presented to supplement the basic financial statements.

Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

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

Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements.

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

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

Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2018 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance.

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

H..ci<AS Gw { C)Ct>Mdl l1iP Newport Beach, California October 31, 2018 2 Management's Discussion and Analysis (Unaudited)

As management of the City, we offer this narrative overview and analysis of financial activities for the fiscal year ended June 30, 2018. 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 (0,000). Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements, comprised of three components:

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

This report also contains certain supplementary information.

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

The statement of net position presents information on all of the City's assets, liabilities, and deferred inflows and outflows of resources, with the difference reported as net position.

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

The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities).

The governmental activities of the City include general government, public safety, highways and streets, and culture and recreation.

The business-type activities of the City include Electric, Water, Sewer, Civic Entertainment, Refuse, Public Parking, Airport and Transportation services.

The government-wide financial statements include the activities of the City and three blended component units, which consist of the Riverside Housing Authority, Riverside Public Financing Authority, and the Riverside Municipal Improvements Corporation.

Although 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 also 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 3

funds, which is not included in the government-wide statements since the resources of those funds are not available to support the City's own programs.

Both the Governmental Activities and the Business-Type Activities are presented on the accrual basis of accounting, a basis of accounting that differs from the modified accrual basis of accounting used in presenting governmental fund financial statements.

Note 1 of the Notes to Basic Financial Statements fully describe these bases of accounting.

Proprietary funds, discussed below, also follow the accrual basis of accounting.

The government-wide financial statements can be found on pages 19-20 of this report. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives.

The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

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

governmental, proprietary, and fiduciary.

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

However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. It is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements.

Reconciliations to facilitate this comparison are provided for both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances.

The major reconciling items relate to capital assets and debt. In the Governmental Funds, acquisitions of capital assets are treated as "expenditures" because upon purchase of a capital asset, cash used for the acquisition is no longer available for other purposes.

The issuance of debt provides cash, which is now available for specified purposes.

Accordingly, at the end of the fiscal year, the unrestricted fund balances of the Governmental Funds reflect spendable resources available for appropriation by the City Council. Spendable balances are not presented on the face of the government-wide financial statements.

The City maintains fourteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund and Capital Outlay Fund, which are major funds. Data from the other twelve governmental funds are combined into a single, aggregated presentation.

Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and can be found on pages 73-79 in this report. The City adopted an annual appropriated budget for its General Fund for the Year ended June 30, 2018. A budgetary comparison statement has been provided to demonstrate compliance with this budget. The governmental fund financial statements can *be found on pages 21-25 of this report. 4 Proprietary funds The City maintains two different types of proprietary funds, enterprise and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements.

The City uses enterprise funds to account for Electric, Water, Sewer, Civic Entertainment, Refuse, Public Parking, Airport and Transportation services.

Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions.

The City uses internal service funds to account for self-insured insurance programs, central stores and its fleet of vehicles.

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

Internal service funds are presented a,s proprietary funds because both enterprise and internal service funds follow the accrual basis of accounting.

Proprietary funds provide the same type of information as the government-wide financial statements (business-type activities}, only in more detail. The proprietary fund financial statements provide separate information for the Electric, Water and Sewer operations, all of which are considered to be major funds of the City. The five remaining proprietary funds noted above are combined into a single, aggregated presentation.

All internal service funds are also combined into a single, aggregated presentation in the proprietary fund financial statements.

Individual fund data for the non-major proprietary funds and the internal service funds is provided in the form of combining statements and can be found on pages 81-90 in this report. The basic proprietary fund financial statements can be found on pages 26-30 of this report. Fiduciary funds Fiduciary funds are used to account for situations where the City's role is purely custodial.

Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City's own programs.

The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary fund financial statements can be found on page 31-32 of this report, and the combining statement for the agency fund can be found on page 92. Notes to Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

The Notes to Basic Financial Statements begin on page 33 of this report. Government-wide Financial Analysis The following table presents a summarization of the City's assets, liabilities, deferred inflows and outflows, and net position for its governmental and business-type activities.

As noted earlier, a government's net position may serve over time as a useful indicator of its financial position.

5 (Amounts presented in Thousands)

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

Net investment in capital assets 1,093,896 1,102,409 800,227 702,844 1,894,123 1,805,253 Restricted 112,183 104,853 80,717 93,570 192,900 198,423 Unrestricted (364,500)

(362,146) 199,143 245,116 (165,357)

(117,030)

Total net position $ 841,579 $ 845,116 $ 1,080,087

$ 1,041,530

$1,921,666

$1,886,646 The City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1,921,666 at June 30, 2018, an increase of $35,020 from June 30, 2017. By far the largest portion of the City's net position of 99% reflects its investment in capital assets (i.e., land, buildings, machinery, equipment and infrastructure), net of any related debt that is still outstanding used to acquire those assets and net of unspent bond proceeds and cash held in bond reserve accounts.

The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

An additional portion of the City's net position 10% represents resources that are subject to external restrictions on how they may be used. The remaining unrestricted net position may be used to meet the government's ongoing obligations to citizens and creditors.

Of this amount, $199,143 is held by the business-type activities and $(364,500) net deficit is held by the governmental activities.

Unrestricted net position in the amount of $(165,357), a net position decrease of 41 % from prior year, is the change in resources available to fund City programs to citizens and debt obligations to creditors.

The negative unrestricted net position is primarily the result of the reporting of the City's net pension liability in accordance with an accounting standard issued by the Government Accounting Standards 6

Board (GASB) that relates to pension activity; Statement No. 68, "Accounting and Financial Reporting for Pensions -an amendment of GASB Statement No. 27." Governmental activities decreased the City's net position by $(3,537) to $841,579 for the year ended June 30, 2018. The primary result of this decrease is due to a prior period adjustment of ($1,001) related to the reporting of the other-post employment benefits liability in accordance with an accounting standard issued by the GASB that relates to other post-employment benefits; Statement No. 75, "Accounting and Financial Reporting for Postemployment Benefits Other than Pensions." On the following page is a condensed summary of activities of the City's governmental and business-type operations for the period ended June 30, 2018 with the prior fiscal year presented for comparative purposes.

Also included in the following analysis are revenue and expense graphs to aid in understanding the results of the current year's activities. (Balance of page intentionally left blank) 7 (Amount presented in Thousands)

Gowrnmental Business type Activities Activities Total 2018 2017 2018 2017 2018 2017 Rewnues: Program Rewnues: Charge for services $ 38,117 $ 57,340 $ 544,164 $ 517,941 $ 582,281 $ 575,281 Operating Grants and Contributions 22,548 19,374 3,374 3,751 25,922 23,125 Capital Grants and Contributions 18,039 7,617 26,957 24,151 44,996 31,768 General Rewnues: Sales taxes 120,338 75,883 120,338 75,883 Property taxes 63,515 59,526 63,515 59,526 Other taxes and fees 39,263 39,539 39,263 39,539 lnwstment income 5,187 6,145 3,939 2,650 9,126 8,795 Other 4,450 2,050 12,901 14,662 17,351 16,712 Total Rewnues 311,457 267,474 591,335 563,155 902,792 830,629 Expenses:

General gowmment 45,360 45,110 45,360 45,110 Public safety 216,772 160,665 216,772 160,665 Highways and streets 42,544 38,585 42,544 38,585 Culture and recreation 38,362 48,806 38,362 48,806 Interest on long-term debt 12,414 16,028 12,414 16,028 Electric 333,061 317,335 333,061 317,335 Water 68,281 62,189 68,281 62,189 Sewer 54,136 38,305 54,136 38,305 Civic Entertainment 19,995 19,995 Airport 2,179 1,998 2,179 1,998 Refuse 22,082 21,953 22,082 21,953 Transportation 4,782 4,221 4,782 4,221 Public parking 6,186 5,448 6,186 5,448 Total expenses 355,452 309,194 510,702 451,449 866,154 760,643 Increase (decrease) in net position (43,995) (41,720) 80,633 111,706 36,638 69,986 Transfers, net 41,459 45,716 (41,459) (45,716) Total changes in net position (2,536) 3,996 39,174 65,990 36,638 69,986 Net position -beginning, as previously stated 845,116 825,679 1,041,530 975,540 1,886,646 1,801,219 Prior period adjustment (1,001) (617) (1,618) Net position -beginning, as restated 844,115 841,120 1,040,913 975,540 1,885,028 1,816,660 Net position -ending $ 841,579 $ 845,116 $1,080,087

$ 1,041,530

$ 1,921,666

$ 1,886,646 8

Governmental activities.

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

• While variances between years exist for the various revenue categories, the total net increase was approximately

$44.0 million or 16%, which is largely attributable to a significant increase in sales tax due to Measure Z. As the result of Measure Z, a one cent sales tax initiative that was approved by voters in November 2016, the City experienced a significant increase in sales tax revenue of $44.0 million of which $43.6 million is directly related to the passing and implementation of Measure Z.

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

• While variances between years exist for the various expense functions, the total net increase was approximately

$46.3 million or 13%. This is primarily related to an increase of approximately

$39 million in pension expense related to the annual recording of the City's pension liability;

$29.3 million of the pension expense was related to public safety. The increase in Public safety was also a factor due to funding from Measure Z sales tax for additional safety needs. Increases in other expense categories were minimal and in line with anticipated results. (Balance of page intentionally left blank) 9 Program Revenues and Expenses -Governmental Activities

-Fiscal Year Comparison 2018 vs. 2017 $250,000 $200,000 $150,000 $100,000 $50,000 $0 General government Public saf e ty Highways and street s 10 Culture and recreation Interest on term debt

• 2 018 Ex p enses 2017 Expenses w 2018 Program revenues 2017 Program revenues Taxes 8.83% Investment Property Taxes 20.39% Revenues by Source -Governmental Activities

-Fiscal Year Comparison 2017 vs. 2016 2018 Charges for Services 12.24% 7.24% Capital Grants & Contribut i ons 5.79% Sa l es Taxes 38.64% 1 1 Investment 2.48% Franch i se Taxes 1.80% U t i l ity Users Taxes 10.45% Property Taxes 22.25% 2017 Charges for Services 21.44% Operat i ng Grants & Contributions 7.24% Capital G r a n ts & Contributions 2.85%

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

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

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

Charges for Services 92.0% Revenues by Source -Business-Type Activities

-Fiscal Year Comparison 2018 Operating Grants & Contr ib utions Capital Grants & Contribut i ons 4.6% I nco m e 0.7% 2.2% 1 2 Charges for Services 92.0% 2017 Operating Grants & Co ntribu tions 0.7% Ca p i ta l Gra nt s & Contrib ution s 4.3% Investment In come 0.5% Mi sce ll aneous 2.6%

Financial Analysis of the City's Funds Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources.

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

In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. 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. (Amounts presented in Thousands)

Total assets Total liabilities Deferred inflows of resources Unavailable revenue Fund balances Nonspendable Restricted Committed Assigned Unassigned Total fund balance Total liabilities, deferred inflows and fund balances General Fund 2018 2017 $ 127,266 $ 125,798 $ 32,957 $ 36,536 4,685 1,947 2,991 53,800 23,242 6,192 26,168 2,651 14,968 7,644 39,283 ----89, 624 83,070 $ 127,266 $ 125,798 Capital Outlay Fund 2018 2017

$ 27,688 $ 23,681 $ 1,159 $ 2,559 81 3,176 26,448 17;946 26,448 17,946 $ 27,688 $ 23,681 Other Governmental Funds 2018 2017 $ 103,808 $ 100,635 $ 9,346 $ 10,440 38,769 4,855 50,838 37,688 1,601 50,930 (24) 55,693 52,507 $ 103,808 $ 100,635 Total Governmental Funds 2018 2017 $ 258,762 $ 250,114 $ 43,462 $ 49,535 43,535 6,802 80,277 53,800 23,242 47,056 27,769 71,527 14,968 7,644 39,259 ----171,765 153,523

$ 258,762 $ 250, 114 As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $171,765 an increase of $18,242 compared to the prior year. Additionally, 4% of the fund balance $6,802 is nonspendable, which comprises the portion of fund balance that cannot be spent due to form. $80,277 or 47% 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 granters.

Committed fund balance of $53,800 or 31 % of the fund balance was set aside for economic contingencies which is 20% of the 2018-2019 General Fund adopted expenditure budget of $269,000.

$23,242 or 14% 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 $7,644 or 4% is unassigned, meaning it is available for spending at the City's discretion.

The City's governmental funds reported combined total assets of 13

$258,762 at June 30, 2018, an increase of $8,648 compared to the prior year. Liabilities and deferred inflows of resources amounted to $86,997, a decrease of $9,594. The General Fund is the principal operating fund of the City. At the end of the current fiscal year, total fund balance equaled $89,624 in comparison to $59,974 in the prior year, as restated.

The increase in fund balance is due to the increased sales tax revenues from Measure Z and the cost saving efforts by departments during the current year. The portion of fund balance classified as unassigned was $7,644 and $53,800 classified as committed for future economic contingencies.

Proprietary funds. The City's proprietary funds provide the same type of information found in the 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 $189,276, $5,349, and $46,821 respectively.

The unrestricted net position for the Electric, Water and Sewer Funds in the prior year was $207,042, $27,550, and $18,614, respectively.

The decrease in unrestricted net position of the Electric Fund was primarily attributable to the payment on bond defeasance and funding of capital projects.

The decrease in unrestricted net position of the Water Fund was the result of the use of unrestricted cash and casli equivalents to fund capital projects.

The increase in unrestricted net position for the Sewer Fund is primarily a result of operating activities as described below. Electric Fund operating results experienced a decrease in charges for services of $1,550. Retail sales (residential, commercial, industrial, and other sales) represent 84.1 % of total revenues.

Retail sales, net of reserve/recovery were $305,969 and $308,781 for years ended June 30, 2018 and 2017, respectively.

The decrease in charges for services was due to a slight decrease in consumption and a decrease in proceeds from the sale of renewable energy credits and settlement recoveries, offset by an increase in regulatory transactions and transmission revenues.

Operating expenses increased

$16,937 or 5.80%, due to an increase in pension expense, power supply costs, transmission access charges from the California Independent System Operator (ISO) and general operating expenses.

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

Retail sales, net of reserve/recovery were $58,216 and $54,596 for the years ended June 30, 2018 and 2017, respectively.

The increase in retail sales was primarily due to the lifting of drought restrictions.

Overall expenses were higher which primarily relates to pension expense as a result of pension accounting standards.

In addition, there was an increase in"production costs resulting from higher consumption and general operating expenses.

Net position of the Sewer Fund increased by $12,740 and $25,436 for the years ended June 30, 2018 and 2017, respectively.

Operating revenues increased by $5,346 or 8.9% primarily as a result of an annual rate increase of 8.5% and increased consumption.

Depreciation and amortization expense increased by $5,897 and interest expense and fiscal charges increased by $8,352. These changes are due to the completion of sewer capital projects and their current year depreciation.

14 General Fund Budgetary Highlights Total Revenues Expenditures:

General Government Public Safety Highways & Streets Culture & Recreation Capital Outlay Debt Service Total Expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources Net change in fund balances Fund balance -beginning, as previously stated Prior period adjustment Fund balance -ending Original Budget 226,480 17,209 176,797 19,056 44,330 227 195 257,814 (31,334) 34,244 2,910 83,070 (23,096) 62,884 Final Budget 267,833 31,831 191,684 21,079 33,071 6,017 283,682 (15,849) 21,271 5,422 83,070 (23,096) 65,396 Actual Amounts 271,316 15,635 184,608 18,643 29,136 2,646 14 250,682 20,634 9,016 29,650 83,070 (23,096) 89,624 Variance with Final Budget $3,483 16,196 7,076 2,436 3,935 3,371 (14) 33,000 36,483 (12,255) 24,228 0 0 $24,228 The primary reason for final budgeted revenues and expenditures increasing from the Original Budget was due to the Measure Z budget adopted during the mid-year budget cycle; therefore Measure Z budget was only included in the Final Budget. Actual amounts differed from the final fund budget are as follows: Actual expenditures were less than final budgeted amounts by approximately

$33.0 million. This is primarily associated with unspent appropriations for grants, capital projects and other special programs that were not completed during the year (which are carried over to the next fiscal year) as well as the cost saving efforts by City Departments.

15 Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for governmental and business-type activities as of June 30, 2018 amounted to $3,220,574 (net of accumulated depreciation).

This investment includes land, intangibles, buildings and improvements, machinery and equipment, park facilities, roads, highways, and bridges. The total increase in the City's net investment in capital assets for the current fiscal year was $30,289 (a decrease of $50,479 for governmental activities and an increase of $80,768 for business-type activities).

Major capital improvements during the current fiscal year included:

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

Construction in progress totaled $171,473 at June 30, 2018 an increase of $46,229 or 36.9%. The increase in construction in progress is primarily related to the Riverside Transmission Reliability Project (RTRP) and related reliability improvements to the Utility's 230 KV Transmission Substation and Switchgear upgrade for Springs Substation.

Depreciation expense during the fiscal year was $47,939 for governmental activities and $66,632 for business-type activities. (Amount presented in Thousands) 2018 Gm.ernmental Activities Land $343,022 Construction in progress 68,894 Buildings 110,802 lmprm.ements other than Buildings 146,343 Machinery and equipment 23,170 Intangibles 87 Infrastructure 613,481 City of Riverside's Capital Assets (net of depreciation) 2017 $343,918 44,310 115,087 197,482 22,971 131 632,379 Business Type Activities 2018 2017 $94,900 $80,246 102,579 80,934 466,259 471,137 1,177,665 1,123,191 33,888 37,080 39,484 41,419 Total $1,305,799

$1,356,278

$1,914,775

$1,834,007 2018 $437,922 171,473 577,061 1,324,008 57,058 39,571 613,481 $3,220,574 Additional information on the City's capital assets can be found in note 5 on page 44 of this report. 16 Total 2017 $424,164 125,244 586,224 1,320,673 60,051 41,550 632,379 $3,190,285 Long-term debt. At the end of the current fiscal year, the City had total debt outstanding of $1,614,823 which includes bonded debt of $1,416,505.

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

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

• 37,854 36,246 37,854 Revenue Bonds 1,139,864 1,180,345 1,139,864 1,180,345 Loans Payable 1,746 41,325 1,746 41,325 Notes Payable 78,583 35,255 78,583 35,255 Capital Leases 25,647 17,193 6,821 6,209 32,468 23,402 Landfill Capping 4,770 5,390 4,770 5,390 Water Acquisition Rights 938 938 938 938 Compensated Absences 24,985 22,790 8,596 8,279 33,581 31,069 Claims liability 46,232 44,945 46,232 44,945 Total $356,927 $424,728 $1,257,896

$1,236,416

$1,614,823

$1,661,144 The City's total debt decreased by $46,321 or 2.87% during the current fiscal year. The net decrease is primarily related to principal obligation payments on bonded debt. The City's Water Utility maintains "AAA" and "AA+" ratings, from Standard & Poors and Fitch, respectively, for their revenue bonds, while the Electric Utility maintains "AA-" ratings from both rating agencies.

The City's general obligation bond ratings are "AA" and "AA," respectively.

State statutes limit the amount of general obligation debt a governmental entity may issue to 15 percent of its total adjusted assessed valuation.

The legal debt limit was $747,624 at June 30, 2018, which applies only to general obligation debt. At June 30, 2018, the City had $10,388 of general obligation debt, resulting in available legal debt capacity of $737,236.

Additional information on the City's long-term debt can be found in note 6 beginning on page 45 of this report. 17 Economic Factors and Next Year's Budget and Rates D Unemployment in the City of Riverside is 4.4% as compared to 5.0% for the prior year. D The largest impact to the City's long-term financial stability relates to pension costs form CalPERS. Over the next five years, the City's total CalPERS expenditures will increase 45% from $74.5M in FY 2018-19 to approximately

$108.3M in FY 2022-23. The cost increases are mainly due to investment losses by CalPERS during the Great Recession, which impacted all of the California agencies' retirement plans managed by CalPERS. Additional factors causing cost increases, which impact all or many agencies include:

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

• Long-term investment returns not meeting expectations (e.g. 8.8% over the last five years, 4.4% over the last 10 years, and 6.6% over the last 20 years).

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

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

• Miscellaneous Plan -12.314%.

Unfunded Liability Payment of $18,743

• Safety:Plan

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

The General Fund Budget for fiscal year 2018/19 of approximately

$269 million was adopted. It represents an increase from the prior year of approximately

.75%. Expenditure growth is expected to outpace revenue growth due to the rising costs of PERS. Request for information This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances.

Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Department, 3900 Main Street City of Riverside, CA 92522. 18

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

Governmental Business-type Assets ActMUes ActiVltles Total Cash and investments 166,980 405,930. 572,910 Receivables.

net 92,012 55,714 147,726 Inventory 6,284 2,842 9,126 Prepaid items 2,362 33,473 35,835 Deposits 1,586 1,586 Internal balances (4,203) 4,203 Restricted assets: Cash and cash equivalents 58,928 58,928 Cash and investments at fiscal agent 14,278 121,850 136,128 otlm 990 990 Advances to Successor Agency Trust Fund 3,327 4,227 7,554 Land and improvements held for resale 3,272 3,272 Regulatory assets 8,130 8,130 Derivative instruments 299 299 Land and other capital assets not being depreciated 411,916 218,971 630,887 Capital assets (net of accumulated depreciation) 893,883 1,695,804 2,589,687 Total assets 1,590,111 2,612,947 4,203,058 Deferred Outflows of Resources Changes In derivative values 10,286 12,561 22,847 Charge on refunding 3,894 15,160 19,054 Pension contributions, changes in assumptions and differences in experience 125,155 52,644 177,799 Hi!lwood note payable 4,424 4,424 Total deferred outflows of resources 139,335 84,789 224,124 UablllUes Accounts payable and other current !!abilities 29,066 20,474 49,540 Accrued interest payable 2,416 14,331 16,747 Unearned revenue 455 1,397 1,852 Deposits 8,558 7,789 16,347 Regulatory liability 28 28 Derivative instruments 13,977 20,821 34,798 Decommissioning liability 60,577 60,577 Noncurrent liabilities:

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

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

Total net position 841,579 1,080,087 1,921,666 The notes to basic financial statements are an integral part of this statement 19 City of Riverside Statement of Activities For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Net (Expense)

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

General government

$ 45,360 $ (17,652) $ 24,605 $ 6 $ 257 $ (2,840) $ $ (2,840) Public safety 216,772 9,158 1,880 14,127 4,220 (205,703)

(205,703)

Highways and streets 42,544 4,686 5,554 8,054 13,410 {20,212) {20,212) Culture and recreation 38,362 3,808 6,078 361 152 (35,579) (35,579) Interest on long-term debt 12,414 (12,414) (12,414) Total governmental activities 355,452 38,117 22,548 18,039 (276,748)

(276,748)

Business type activities:

Electric 333,061 364,516 20,182 51,637 51,637 Water 68,281 66,828 4,181 2,728 2,728 Sewer 54,136 65,081 32 10,977 10,977 Civic Entertainment 19,995 16,393 875 (2,727) (2,727) Airport 2,179 1,562 841 224 224 Refuse 22,082 23,085 1,003 1,003 Transportation 4,782 441 3,374 846 (121) (121) Public parking 6,186 6,258 72 72 Total business type activities 510,702 544,164 3,374 26,957 63,793 63,793 Total $ 866,154 $ 582,281 $ 25,922 $ 44,996 $ (276,748)

$ 63,793 $ (212,955)

General revenues:

Taxes: Sales 120,338 120,338 Property 63,515 63,515 Utility users 27,498 27,498 Franchise 4,972 4,972 Transient occupancy tax 6,793 6,793 Intergovernmental, unrestricted 172 172 Investment income 5,187 3,939 9,126 Miscellaneous 4,278 12,901 17,179 Subtotal 232,753 16,840 249,593 Transfers, net 41,459 (41,459) Total general revenues and transfers 274,212 (24,619) 249,593 Change in net position (2,536) 39,174 36,638 Net position -beginning, as previously stated 845,116 1,041,530 1,886,646 Prior period adjustment (1,001) (617) (1,618) Net position -beginning, as restated 844,115 1,040,913 1,885,028 Net position -ending $ 841,579 $ 1,080,087

$ 1,921,666 The notes to basic financial statements are an integral part of this statement.

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

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

Interest Property taxes Sales tax Utility billed Accounts Intergovernmental Notes Prepaid items Due from other funds Advances to Successor Agency Trust Fund Land & improvements held for resale Total assets Liabilities Accounts payable Accrued payroll Retalnage payable Intergovernmental Unearned revenue Deposits Due to other funds Advances from other funds Total liabifities Deferred Inflows of Resources Unavailable revenue Total deferred inflows of resources Fund Balances Nonspendable:

Inventories, prepaids and deposits Advances Permanent fund principal Restricted for: Housing and redevelopment Debt service Transportation and pubUc works Other purposes Committed for: Economic contingency Assigned to: General government Public safety Highways and streets Culture and recreation Continuing projects Unassigned Total fund balances Total fiabilities, deferred inflows of resources, and fund balances The notes to basic financial statements are an integral part of this statement.

General Fund $ 64,142 16 193 3,676 23,654 1,226 5,642 5,325 10 1,947 656 175 127,266 $ 7,463 16,442 13 151 330 6,556 32,957 4,665 4,665 1,947 175 2,037 779 53,600 2,634 1,959 2,164 620 15,665 7,644 69,624 127,266 Other Governmental Total Governmental Capital Outlay Fund Funds Funds $ 16,643 40,411 143,196 2 14,256 14,276 62 154 429 213 4,069 23,654 1,226 1,606 66 7,316 7,353 3,763 16,461 36,064 36,094 415 2,362 858 3,327 3,327 3,097 3,272 27,668 103,808 256,762 $ 966 2,126 10,575 16,447 46 516 577 6 157 125 455 6,556 633 633 6,060 6,060 1,159 9,346 43,462 61 36,769 43,535 61 36,769 43,535 30 1,977 3,327 3,327 1,496 1,496 18,627 19,002 11,509 13,546 26,446 17,051 43,499 3,451 4,230 53,600 2,634 1,959 2,164 620 15,665 7,644 26,446 55,693 171,765 27,686 103,806 $ 256,762 21 City of Riverside Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2018 (amounts expressed in thousands)

Total fund balances -governmental funds 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. Deferred refunding charges are not available resources and, therefore, are not reported in the funds. Deferred amounts on pensions related to contributions after the measurement date Deferred amounts on pensions related to the net difference between projected and actual earnings on pension plan investments Deferred amounts on OPEB related to the net difference between projected and actual earnings on pension plan investments Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds. Accrued interest payable for the current portion of interest due on various debt issues has not been reported in the governmental funds. Long-term liabilities, as listed below, are not due and payable in the current period and therefore are not reported in the funds. Bonds Certificates of participation Capital leases Loan payable Bond premiums Net OPEB liability Net pension liability Compensated absences The City uses derivative instruments to hedge its exposure to changing interest rates through the use of interest rate swaps. The following related items have been reflected in the* Statement of Net Position.

Net fair value of interest rate swaps Deferred amount related to the hedgeable portion of the derivative instrument Internal service funds are used by management to charge the costs of insurance, centralized purchasing and fleet management to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the Statement of Net Position.

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

$ 171,765 1,298,494 3,894 122,805 (14,638) (868) 43,535 (2,416) $ (105,097)

(149,705)

(25,647) (1,746) (2,766) (19,629) (431,488)

(24,553) (760,631)

$ (13,977) 10,286 (3,691) (16,670) $841,579 22 City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the fiscal year ended June 30, 201 a (amounts expressed in thousands)

Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current: General government Public safety Highways and streets Culture and recreation Capital outlay Debt service: Principal Interest Bond issuance costs Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Issuance of long-term debt Proceeds from the sale of capital assets Total other financing sources (uses) Net change in fund balances Fund balances -beginning, as previously stated Prior period adjustment Fund balances -ending General Fund $ 223,116 10,015 10,513 17,438 3,699 402 2,318 3,815 271,316 15,635 184,608 18,643 29,136 2,646 14 250,682 20,634 59,332 (50,738) 422 9,016 29,650 83,070 (23,096) $ 89,624 The notes to basic financial statements are an integral part of this statement.

Other Total Capital Outlay Governmental Governmental Fund Funds Funds $ $ $ 223,116 2,427 12,442 11,989 19,952 42,454 17,438 18 3,717 504 6,207 7,113 112 1,016 3,446 2,883 2,018 8,716 15,488 31,638 318,442 5,500 21,135 6,308 190,916 564 19,207 246 29,382 10,299 20,559 33,504 21,904 21,904 12,746 12,746 10 24 10,299 67,837 328,818 5,189 (36,199) (10,376) 6,312 37,130 102,774 (3,004) (12,279) (66,021) 14,500 14,500 5 34 461 3,313 39,385 51,714 8,502 3,186 41,338 17,946 52,507 153,523 (23,096) $ 26,448 $ 55,693 $ 171,765 23 City of Riverside Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Net change in fund balances -total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures.

However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. In the current year, depreciation exceeded capital asset additions, as listed below: Capital asset additions Depreciation expense The net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to decrease net position.

The net effect of transfering assets and liabilities for the establishment of the Civic Entertainment Fund Revenues related to prior years that are available in the current fiscal year are reported as revenue in the governmental funds. In contrast, revenues that are earned but unavailable in the current year are deferred in the governmental funds. For government-wide reporting, revenue is recognized when earned, regardless of availability.

The amount reflects the timing differences for revenue recognition.

The issuance of long-term debt (e.g., bonds, leases, notes) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position.

Also, governmental funds immediately report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities.

The net effect of these differences in the treatment of long-term debt and related items is listed below: Principal repayments Net pension liability Net OPEB liability Compensated absences Interest Issuance of long-term debt 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.

Change in net position of govern!11ental activities The notes to basic financial statements are an integral part of this statement.

24 $ 40,035 (46,848) $ 21,904 (38,869) (1,013) (2,199) 849 (14,500) $ 41,338 (6,813) (1,699) (294) (3,521) (33,828) 2,281 $ (2,536)

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

Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Rental and investment income Miscellaneous Total revenues Expenditures Current: General government Public safety Highways and streets Culture and recreation Capital outlay Debt service: Bond issuance costs Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Issuance of long-term debt Proceeds from the sale of capital assets Total other financing sources (uses) Net change in fund balances Fund balances -beginning, as previously stated Prior period adjustment Fund balances -ending Original Budget Final Budget $ 174,538 $ 219,992 10,500 10,454 1,525 10,971 26,923 16,440 1,745 1,414 4,494 495 4,172 4,208 2,583 3,859 226,480 267,833 17,209 31,831 176,797 191,684 19,056 21,079 44,330 33,071 227 6,017 195 257,814 283,682 (31,334) (15,849) 46,143 83,114 (12,784) (65,461) 885 3,618 34,244 21,271 2,910 5,422 83,070 83,070 (23,096) (23,096) $ 62,884 $ 65,396 25 Variance with Actual Final Budget $ 223,116 $ 3,124 10,015 (439) 10,513 (458) 17,438 998 3,699 2,285 402 (93) 2,318 (1,890) 3,815 (44) 271,316 3,483 15,635 16,196 184,608 7,076 18,643 2,436 29,136 3,935 2,646 3,371 14 (14) 250,682 33,000 20,634 36,483 59,332 (23,782) (50,738) 14,723 422 (3,196) 9,016 (12,255) 29,650 24,228 83,070 (23,096) $ 89,624 $ 24,228 City of Riverside Statement of Net Position Proprietary Funds June 30, 2018 (amounts expressed In thousands)

Business-type Activities

-Enterprise Funds Governmental Other Enterprise Total Enterprise Activities-Internal Assets Electric Water Sewer Funds Funds Service Funds Current assets: Cash and investments

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

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

Rate stabilization cash and cash equivalents 1,000 1,000 Other restricted cash and cash equivalents 48,359 8,451 1,118 57,928 Public benefit programs receivable 881 109 990 Total current assets 364,672 65,425 99,745 18,926 548,768 30,611 Non-current assets: Restricted assets: Cash and investments at fiscal agent 69,047 2,315 50,488 121,850 Regulatory assets 1,731 1,525 4,874 8,130 Derivative instruments 299 299 Prepaid items -non-current 11,131 11,131 Advances to other funds 3,992 3,992 2,403 Advances to Successor Agency Trust Fund 4,227 4,227 Capital assets: Land 52,111 20,841 2,768 19,180 94,900 458 Intangible assets, non-depreciable 10,651 10,841 21,492 Intangible assets, depreciable 21,472 4,022 119 25,613 219 Accumulated depreciation

-intangible assets, depreciable (6,104) (1,463) (54) (7,621) (132) Buildings 62,375 19,962 496,939 35,925 615,201 4,092 Accumulated depreciation

-buildings (10,260) (6,622) (123,448)

(8,612) (148,942)

(718) Improvements other than buildings 944,199 624,203 152,190 74,503 1,795,095 1,315 Accumulated depreciation

-improvements other than buildings (366,866)

(211,105)

(23,365) (16,094) (617,430)

(470) Machinery and equipment 44,027 14,803 16,398 22,861 98,089 1.1,265 Accumulated depreciation

-machinery and equipment (24,826) (12,986) (9,179) (17,210) (64,201) (8,977) Construction in progress 54,475 23,969 23,836 299 102,579 253 Total non-current assets 867,390 488,780 592,209 116,025 2,064,404 9,708 Total assets 1,232,062 554,205 691,954 134,951 2,613,172 40,319 Deferred Outflows of Resources Changes in derivative values 10,692 1,869 12,561 Charge on refunding 8,997 6,163 15,160 Pension contributions, changes in assumptions and differences in experience 30,596 10,882 6,866 4,300 52,644 2,350 Hillwood note payable 4,424 4,424 Total deferred outflows of resources 50,285 23,338 6,866 4,300 84,789 2,350 Continued 26 City of Riverside Statement of Net Position Proprietary Funds June 30, 2018 (amounts expressed In thousands)

Business.type Activities

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

Accounts payable 11,618 3,388 1,835 2,184 19,025 1,277 Accrued payroll 201 76 45 33 355 20 Retainage payable 223 433 423 15 1,094 13 Unearned revenue 61 64 1,269 1,397 Deposits 6,397 813 579 7,789 Due to other funds 225 225 436 Capital leases -current 824 211 533 1,568 Water stock acquisitions

-current 150 150 Notes payable -current 1,202 788 2,920 4,910 Landfill capping -current 250 250 Claims and judgments

-current 9,872 Compensated absences -current 4,547 1,506 1,110 508 7,671 377 current liabilities payable from restricted assets: Revenue bonds 14,445 5,635 13,515 33,595 Pension obligation bonds 2,018 728 462 342 3,550 145 Decommissioning liability 5,457 5,457 Accrued interest 4,846 1,542 7,943 14,331 Total current liabilities 50,637 15,748 26,124 8,858 101,367 12,140 Non-current liabilities:

Revenue bonds 520,894 178,998 406,377 1,106,269 Pension obligation bonds 8,400 3,028 1,924 1,422 14,774 604 Notes payable 20,322 659 52,692 73,673 Capital leases 2,274 1,884 1,095 5,253 Advances from other funds 335 Decommissioning liability 55,120 55,120 Regulatory liability 28 28 Derivative instruments 15,228 5,593 20,821 Claims and judgments 36,360 Water stock acquisitions 788 788 Landfill capping 4,520 4,520 Compensated absences 521 344 41 19 925 55 Net OPES liability 8,283 3,410 2,417 2,097 16,207 950 Net pension liability 108,886 38,880 24,675 15,484 187,925 8,364 Total non-current liabilities 719,606 253,247 436,093 77,357 1,486,303 46,668 Total liabilities 770,243 268,995 462,217 86,215 1,587,670 58,808 Deferred Inflows of Resources Regulatory charges 773 16,426 17,199 Change in derivative values 289 289 Pension contributions, changes In assumptions and differences in experience 6,396 2,585 1,915 1,265 12,161 495 OPEB contributions, changes In assumptions and differences In experience 296 112 76 71 555 36 Total deferred inflows of resources 6,692 3,470 18,417 1,625 30,204 531 Net Position Net Investment in capital assets 267,230 291,562 148,839 92,596 800,227 7,305 Restricted for debt service 16,691 6,186 21,142 44,019 Restricted for landfill capping 1,118 1,118 Restricted for programs and regulatory requirements 32,215 1,981 1,384 35,580 Unrestricted 189,276 5,349 46,821 (42,303) 199,143 (23,975) Total net position (deficit) 505,412 305,078 218,186 51,411 1,080,087 (16,670) The notes to basic financial statements are an integral part of this statement.

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

Electric Operating revenues:

Charges for services $ 364,516 Operating expenses:

Personnel services 57,626 Contractual services 7,333 Maintenance and operation 197,496 General 10,958 Materials and supplies 1,027 Claims/Insurance 907 Depreciation and amortization 33,585 Total operating expenses 308,932 Operating income (loss) 55,584 Non-operating revenues (expenses):

Operating grants Interest income 2,567 Other 6,829 Gain (loss) on retirement of capital assets 579 Capital improvement fees Interest expense and fiscal charges (24,129) Total non-operating revenues (expenses)

(14,154) Income (loss) before capital contributions and transfers 41,430 Cash capital contributions 3,170 Noncash capital contributions 17,012 Transfers in Transfers out (40,073) Change in net position 21,539 Net position (deficit)

-beginning 484,201 Prior period adjustment (328) Net position -beginning 483,873 Net position (deficit)

-ending $ 505,412 The notes to basic financial statements are an integral part of this statement.

$ $ Business-type Activities

• Enterprise Funds Governmental Other Enterprise Total Enterprise Activities-Internal Water Sewer Funds Funds Service Funds 66,828 $ 65,081 $ 47,739 $ 544,164 $ 24,773 17,027 11,903 10,198 96,754 5,596 2,828 1,721 12,969 24,851 656 9,633 8,567 7,856 223,552 2,740 14,268 4,591 15,396 45,213 3,056 777 3,876 1,412 7,092 265 399 855 423 2,584 14,733 14,914 13,621 4,916 67,036 1,091 59,846 45,134 53,170 467,082 28,137 6,982 19,947 (5,431) 77,082 (3,364) 3,374 3,374 250 1,071 51 3,939 150 2,803 21 1,157 10,810 434 177 (12) (236) 508 97 1,583 1,583 (8,435) (9,002) (2,054) (43,620) (36) (5,205) (6,339) 2,292 (23,406) 645 1,777 13,608 (3,139) 53,676 (2,719) 2,975 32 2,562 8,739 1,206 18,218 10,436 10,436 5,000 (6,173) (900) (4,749) (51,895) (215) 12,740 5,110 39,174 2,281 305,418 205,531 46,380 1,041,530 (18,914) (125) (85) (79) (617) (37) 305,293 205,446 46,301 1,040,913 (18,951) 305,078 $ 218,186 $ 51,411 $ 1,080,087

$ (16,670) 28 City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

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

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

(3,553) Cash paid to other suppliers of goods or services (204,412)

(16,731) (22,001) (37,808) (280,952)

(21,788) Other receipts 6,829 1,566 27 1,582 10,004 434 Net cash provided by operating activities 103,335 28,480 32,519 1,814 166,148 14 Cash flows from noncapital financing activities:

Transfers in 10,142 10,142 5,000 Transfers out (40,073) (6,173) (900) (4,749) (51,895) Operating grants 3,374 3,374 Receipts (payments) on interfund advances 316 (53) 994 (82) 1,175 969 Payments on pension obligation bonds (1,894) (683) (435) (418) (3,430) (137) Net cash (used) provided by noncapital financing activities (41,651) (6,909) (341) 8,267 (40,634) 5,832 Cash flows from capital and related financing activities:

Purchase of capital assets (27,460) (27,824) (15,106) (2,978) (73,368) (762) Proceeds from the sale of capital assets 671 177 92 940 97 Principal payment on bond defeasance (11,005) (11,005) Principal paid on long-term obligations (14,602) (5,626) (9,945) (2,852) (33,025) Interest paid on long-term obligations (25,894) (8,320) (18,707) (2,054) (54,975) (36) Capital improvement fees 1,583 1,583 Capital lease proceeds Contributions 3,154 3,806 32 2,562 9,554 Net cash (used) for capital and related financing activities (75,136) (37,787) (42,143) (5,230) (160,296)

(701) Cash flows from investing activities:

Sale and (purchase) of investments 13,895 (78) (15) 13,802 (32) Interest from investments 2,442 290 1,071 51 3,854 150 Net cash provided by investing activities 16,337 290 993 36 17,656 118 Ne( change in cash and cash equivalents 2,885 (15,926) (8,972) 4,887 (17,126) 5,263 Cash and cash equivalents, beginning (including

$47,133 for Electric, $10,653 for Water, $87,895 for Sewer and $1,738 for Other Enterprise Funds in restricted accounts.)

302,629 74,156 149,836 8,166 534,787 18,521 Cash and cash equivalents, ending (including

$48,359 for Electric, $10,766 for Water, $51,488 for Sewer and $1,118 for Other Enterprise Funds in restricted accounts.)

$ 305,514 $ 58,230 $ 140,864 $ 13,053 $ 517,661 $ 23,784 Continued 29 City of Riverside Proprietary Funds Statement of Cash Flows For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Continued Governmental Other Total Activities-Enterprise Enterprise Internal Electric Water Sewer Funds Funds Service Funds Reconciliation of operating income (loss) to net cash (used) provided by operating activities:

Operating income (loss) $ 55,584 $ 6,982 $ 19,947 $ (5,431) $ 77,082 $ (3,364) Other nonoperating items 6,829 1,566 21 1,157 9,573 434 Adjustments to reconcile operating income (loss) to net cash (used) provided by operating activities:

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

Utility billed receivable 701 96 (565) (62) 170 Utility unbilled receivable 1,553 149 (112) (10) 1,580 Accounts receivable 420 228 262 (1,152) (242) (27) Intergovernmental receivable (25) 238 (422) 448 239 175 Inventory (168) (52) (220) (284) Prepaid and deposit items (1,758) (74) 19 (619) (2,432) Benefit programs receivable 46 (46) Regulatory assets 71 407 478 Derivative instruments (299) (299) Accounts payable 307 710 (2,438) 877 (544) (67) Accrued payroll 201 76 45 33 355 20 Retainage payable 61 240 196 15 512 13 Other payables 93 47 97 37 274 (4) Deposits payable 401 61 579 1,041 Regulatory liability 28 28 Landfill capping (620) (620) Claims and judgments 1,287 Change in derivative values 289 289 Net pension liability and related changes in deferreq outflows and inflows of resources 9,056 3,149 1,913 1,182 15,300 694 Net OPES liability and related changes in deferred outflows and inflows of resources 378 144 97 91 710 46 Deferred regulatory charges (65) (65) Decommissioning liability (4,097), (4,097) Net cash provided by operating activities

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

Capital contributions

$ 17,012 $ 1,206 $ $ $ 18,218 $ Capital assets -transfer from governmental activities 39,487 39,487 Loss on retirement of capital assets (12) (236) (248) Payment on note payable including interest offset by rent credit 1,237 1,237 Well relocation with note payable 4,100 4,100 Note payable and derivative swap -transfer from governmental activities (39,193) (39,193) Decrease in fair value of investments (79) (79) The notes to basic financial statements are an integral part of this statement.

30 City of Riverside Statement of Net Position/(Deficit)

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

Successor Agency Private-Purpose Agency Trust Fund Fund Assets Cash and investments

$ 35,445 $ 3,309 Cash and investments at fiscal agent 12,214 4,688 Receivables:

Interest 110 10 Accounts 143 Notes 2,670 Direct financing lease receivable 15,150 Deposits 2 Property tax receivables 81 Land and improvements held for resale 9,275 Capital assets: Land 185 Total assets 75,194 8,088 Liabilities Accounts payable 39 Accrued interest 3,860 Advances from other funds 7,554 Bonds payable 207,359 Pension obligation bonds payable 554 Notes payable 4,338 Held for bond holders 8,087 Total liabilities 223,704 8,088 Deferred Inflows of Resources Deferred charge on refunding 1,148 Total deferred inflows of resources 1,148 Net Position/(Deficit)

Held by Successor Agency (149,658)

Total net position/(deficit)

$ (149,658)

$ The notes to basic financial statements are an integral part of this statement 31 City of Riverside Statement of Changes in Net Position/(Deficit)

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

Additions Property tax revenue Rental and investment income Miscellaneous Total additions Deductions Professional services and other deductions Redevelopment projects Interest expense Total deductions Change in Net Position/(Deficit)

Net position/(deficit)

-beginning Net position/(deficit)

-ending The notes to basic financial statements are an integral part of this statement Successor Agency Private-Purpose Trust Fund $ $ 24,230 641 69 24,940 2,560 1,015 9,497 13,072 11,868 (161,526)

(149,658) 32 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 1. Summary of Significant Accounting Policies The City of Riverside (City) was incorporated on October 11, 1883 as a Charter City and operates under a Council-Manager form of Government.

The more significant accounting policies reflected in the financial statements are summarized as follows: A. Reporting Entity The financial statements present the City and its component units, entities for which the City is financially accountable.

Blended component units are legally separate entities, but in substance are part of the City's operations and their data is combined with that of the City's. The City has no component units that meet the criteria for discrete presentation.

All of the City's component units have a June 30 year end. Blended Component Units Riverside Housing Authority (Housing Authority) was established in 2006 by the City. The Housing Authority's primary purpose is to provide safe and sanitary housing accommodations for persons with low or moderate income. The Housing Authority's activity has been combined with that of the primary government because City Council members serve as the Housing Authority's commissioners and because the City is financially accountable and operationally responsible for all matters. Riverside Public Financing Authority (Public Financing Authority) was organized in December 1987 by the City and the Redevelopment Agency. Pursuant to Assembly Bill 1X 26 (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies were dissolved effective February 1, 2012. Subsequently, the City became the Successor Agency to the Redevelopment Agency. The Parking Authority of the City of Riverside was added as an additional member of the Public Financing Authority on August 14, 2012. The Public Financing Authority's activity has been combined with that of the primary government because City Council members serve as the Public Financing Authority's board members and because the Public Financing Authority exclusively provides financing assistance to the primary government.

The City is also financially accountable and operationally responsible for all matters. Riverside Municipal Improvements Corporation (Municipal Improvements Corporation) was created in 1978 and operates under provisions of the Nonprofit Public Benefit Corporation Law of the State of California.

The 33 (amounts expressed in thousands)

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

The City is financially accountable and operationally responsible for all matters. Fiduciary Component Unit Successor Agency to the Redevelopment Agency of the City of Riverside (Successor Agency) is a separate legal entity, which was formed to hold the assets and liabilities of the former Redevelopment Agency pursuant to City Council actions taken on March 15, 2011 and January 10, 2012. The activity of the Successor Agency is overseen by an Oversight Board comprised of individuals appointed by various government agencies and the City of Riverside as Successor Agency of the former Redevelopment Agency. The nature and significance of the relationship between the City and the Successor Agency is such that it would be misleading to exclude the Successor Agency from the City's financial statements. The Successor Agency is presented herein in the City's fiduciary funds as a private-purpose trust fund. Complete financial statements are prepared for the Riverside Public Financing Authority and the Successor Agency to the Redevelopment Agency of the City of Riverside, which can be obtained from the City's Finance Department, 3900 Main Street, Riverside, California, 92522 or online at www.riversideca.gov.

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

Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business type activities, which rely to a significant extent on fees and charges for support. The statement of net position presents financial information on all of the City's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position.

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

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues.

Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Indirect expenses are allocated to the various functions based on a proportionate utilization of the services rendered.

Such allocations consist of charges for accounting, human resources, information technology and other similar support services.

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

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

C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide, proprietary and private-purpose trust fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting.

Agency funds report only assets and liabilities and therefore have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied on the property.

Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met. An allowance for doubtful accounts is maintained for the utility and other miscellaneous receivables.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting.

Revenues are recognized as soon as they are both measurable and available.

Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues are considered to be available if they are generally collected within 60 days after year end, except for revenue associated with neglected property abatement which is eleven (11) months and except for grant revenue, including reimbursement received from 34 (amounts expressed in thousands}

Transportation Uniform Mitigation Fees, which is six (6) months. Grant revenue is recognized if received within six (6) months of year end to enable the matching of revenue with applicable expenditures.

Expenditures generally are recorded when a liability is incurred under accrual accounting.

However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, special assessments, sales taxes, franchise taxes, licenses, charges for services, amounts due from other governments and interest associated with the current fiscal period are all considered to be susceptible to accrual. Other revenue items such as fines and permits are considered to be measurable and available only when the government receives cash, and are therefore not susceptible to accrual. The government reports the following major governmental funds: The General fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Capital Outlay fund accounts for the construction and installation of street and highway capital improvements for the City, including improvements funded by the % % sales tax approved by Riverside County in 1988. The government reports the following major proprietary funds: The Electric fund accounts for the activities of the City's electric distribution operations.

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

The Sewer fund accounts for the activities of the City's sewer systems. Additionally, the government reports the following fund types: Internal service funds account for self-insurance, central stores and central garage on a cost reimbursement basis. Fiduciary funds include private-purpose trust and agency funds. The private-purpose trust fund accounts for assets and activities of the dissolved Redevelopment Agency, which is accounted for in the Successor City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Agency Trust. The agency fund is used to account for special assessments that service no-commitment debt. The permanent fund is a governmental fund that is used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City's Library programs. expendable net position on the Statement of Net Position includes $1.5 million of permanent fund principal which are considered nonexpendable.

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

Internally dedicated resources are reported as general revenues rather than as program revenues.

Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations.

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

D. Cash and Investments The City values its cash and investments in accordance with the provisions of Governmental Accounting Standards Board Statement No. 72 (GASS 72), Fair Value Measurement and Application, which requires governmental entities to use valuation techniques that are appropriate under the circumstances and for which sufficient data are available to measure fair value. The techniques should be consistent with one or more of the following approaches:

the market approach, the cost approach or the income approach.

Cash accounts of all funds are pooled for investment purposes to enhance safety and liquidity while maximizing interest earnings.

Investments are stated at fair value except for investments in investment contracts which are recorded at contract value. All highly liquid investments (including restricted assets) with a maturity of 90 days or less when purchased are considered cash equivalents.

Cash and investments held on behalf of proprietary funds by the City Treasurer 35 (amounts expressed in thousands) are considered highly liquid and are classified as cash equivalents for the purpose of presentation in the statement of cash flows. E. Restricted Cash and Investments Certain proceeds of long-term indebtedness, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net position because their use is limited by applicable bond covenants.

Restricted cash and investments also include cash set aside for nuclear decommissioning, public benefit programs, regulatory requirements and rate stabilization because their use is legally restricted to a specific purpose. Unspent proceeds received from the City's landfill capping surcharge are also recorded as restricted assets. F. Allowance for Doubtful Accounts Management determines the allowance for doubtful accounts by analyzing customer accounts for all balances over 60 days old. The allowance for doubtful accounts is then adjusted at fiscal year-end based on the amount equal to the annual uncollectible accounts.

Utility customer closed accounts are written off when deemed uncollectible.

Recoveries to utility customer receivables previously written off are recorded when received.

For non-utility accounts receivables, delinquent notices after 60 days are sent to customers with outstanding balances.

After 120 days, accounts still outstanding are referred to the City's collection agency. As of June 30, 2018, the City had an allowance for doubtful account balance of $6,768. G. Land and Improvements Held for Resale Land and improvements held for resale were generally acquired for future development projects.

The properties are carried at the lower of cost or net realizable value. H. Inventory Supplies are valued at cost using the average-cost method. Costs are charged to user departments when consumed rather than when purchased.

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

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 J. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, right of way, and similar items), are reported in the applicable governmental activities and business-type activities of the government-wide financial statements and in the proprietary funds and the fiduciary private-purpose trust fund statements of net position.

The government defines capital assets as assets with an initial, individual cost of more than five thousand dollars and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Costs include: labor; materials; interest during construction; allocated indirect charges such as engineering, construction and transportation equipment, retirement plan contributions and other fringe benefits.

Donated capital assets are recorded at estimated fair market value at the date of donation.

Intangible assets that cost more than one hundred thousand dollars with useful lives of at least three years are capitalized and are recorded at cost. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed for proprietary funds. For the year ended June 30, 2018, business-type activities capitalized net interest costs of $12,054 in the government-wide financial statements.

Total interest expense incurred by the business-type activities before capitalization was $55,301. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Capital assets other than land are depreciated using the straight-line method. Estimated useful lives used to compute depreciation are as follows: Buildings and Improvements Improvements other than Buildings Intangibles

-Depreciable Machinery and Equipment Infrastructure K. Compensated Absences 30-50 years 20-99 years 3-15 years 3-15 years20-100 years City employees receive 10 to 25 vacation days a year based upon length of service. A maximum of two years' vacation accrual may be accumulated and unused vacation is paid in cash upon separation.

City employees generally receive one day of sick leave for each month of employment with unlimited accumulation.

Upon retirement or death, certain 36 (amounts expressed in thousands) employees or their estates receive a percentage of unused sick leave paid in a lump sum based on longevity.

The General, Electric and Water funds have been primarily used to liquidate such balances.

The liability associated with these benefits is reported in the government-wide statements.

Vacation and sick leave of proprietary funds is recorded as an expense and as a liability of those funds as the benefits accrue to employees.

L. Derivative Instruments The City's derivative instruments are accounted for in accordance with Government Accounting Standards Board Statement No. 53 (GASB 53), Accounting and Financial Reporting for Derivative Instruments, which requires the City to report its derivative instruments at fair value. Changes in fair value for effective hedges that are achieved with derivative instruments are reported as deferrals in the statements of net position.

The City uses derivative instruments to hedge its exposure to changing interest rates through the use of interest rate swaps. The City had debt that was layered with "synthetic fixed rate" swaps, which was refunded in 2008 and 2011. The balance of the deferral account for each swap is included as part of the deferred charge on refunding associated with the new bonds. The swaps were also employed as a hedge against the new debt. Hedge accounting was applied to that portion of the hedging relationship, which was determined to be effective.

The negative fair value of the interest rate swaps related to the new hedging relationship has been recorded and deferred on the statement of net position.

See Note 9 for further discussion related to the City's interest rate swaps. Various transactions permitted in the Utility's Power Resources Risk Management Policies may be considered derivatives, including energy and/or gas transactions for swaps, options, forward arrangements and congestion revenue rights. The City has determined that all of its contracts including congestion revenue rights fall under the scope of "normal purchases and normal sales" and are exempt from GASB 53. M. Long-Term Obligations Long-Term Debt Long-term debt and other long-term obligations are reported as liabilities in the applicable governmental and business-type activities columns in the government-wide financial statements and in the proprietary funds and City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 fiduciary private-purpose trust fund statements of net position.

Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements, government fund types recognize bond issuance costs as expenditures during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuance are reported as other financing uses. Decommissioning Federal regulations require the Electric Utility to provide for the future decommissioning of its ownership share of the nuclear units at San Onofre. The Electric Utility has established trust accounts to accumulate resources for the decommissioning of the nuclear power plant and restoration of the beachfront at San Onofre. Based on the most recent site specific cost estimate as of September 2014, submitted by Southern California Edison (SCE) and accepted by the Nuclear Regulatory Commission (NRC), the Electric Utility has fully funded the San Onofre Nuclear Generating Station ("SONGS")

decommissioning liability.

The Electric Utility has set aside $57, 154 in cash investments with the trustee and $8,245 in an internally designated decommissioning reserve as the Electric Utility's estimated share of the decommissioning cost of SONGS as of June 30, 2018. With the recent retirement of SONGS units 2 and 3, there is much uncertainty as to future unknown costs to decommission SONGS. Although management believes the current cost estimate is the upper bound of decommissioning obligations, the Electric Utility has conservatively decided to continue to set aside $1,581 per year in an unrestricted designated cash reserve for unexpected costs not contemplated in the current estimates.

On February 23, 2016, the City Council adopted a resolution authorizing the commencement of SONGS decommissioning effective June 7, 2013. This resolution allows the Electric Utility to access the decommissioning trust funds to pay for its share of decommissioning costs. As of June 30, 2018, the Electric Utility has paid to date $23,512 in decommissioning obligations, all of which have been reimbursed by the trust funds. The plant site easement at San Onofre terminates May 2024. The plant must be decommissioned and the site restored by the time the easement terminates.

37 (amounts expressed in thousands)

N. Claims and Judgments Payable Claims and judgments payable are recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Such claims, including an estimate for claims incurred but not reported at year end, are recorded as liabilities in the self-insurance internal service fund. As of June 30, 2018, the City had an obligation related to claims and judgments which is reflected as a liability on the government-wide statements and is more fully described in Note 7. 0. Fund Equity In the fund financial statements, governmental fund balance is made up of the following components:

• Nonspendable fund balance is the portion of fund balance that cannot be spent due to form. Examples include inventories, prepaid amounts, long-term loans, and notes receivable, unless the proceeds are restricted, committed or assigned.

Also, amounts that must be maintained intact legally or contractually, such as the principal of a permanent fund are reported within the nonspendable category.

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

• Committed fund balance is the portion of fund balance that can only be used for specific purposes due to formal action of the City Council through adoption of a resolution prior to the end of the fiscal year. Once adopted, the limitation imposed by resolution remains in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation.

The City Council approved the General Fund Reserve Policy setting a 10% minimum in the Emergency Reserve and 5% in the Contingency Reserve with an aspirational goal of 15% in the Emergency Reserve. The Emergency Reserve was established for the purpose of addressing any extremely unusual. and infrequent occurrences, such as a major natural disaster or a major unforeseen settlement.

Utilization of the Emergency Reserve requires declaration of an emergency by a two-thirds majority of the City Council, and specification of the maximum dollar amount to be used. The Contingency Reserve was established for the purpose of providing a "bridge" to facilitate a measured and thoughtful reduction in expenditures during times of economic downturn, rather than making immediate and drastic budget reductions without the time for proper evaluation.

Utilization of the Contingency Reserve, including City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 specification of the maximum dollar amount to be used, requires approval by a two-thirds majority of the City Council. The reserves committed at June 30, 2018 were calculated utilizing fiscal year 2018-2019 adopted General Fund expenditure budget of $269,000.

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

Intent can be expressed by the City Council or by an official to which the City Council delegates the authority.

On February 22, 2011, the City Council approved a policy whereby the authority to assign fund balance was delegated to the City's chief financial officer, which authorized the assignment of fund balance for specific programs or purposes in accordance with City Council directives.

The City also uses budget and finance policy to authorize the assignment of fund balance, which is done through the adoption of the budget and subsequent budget amendments throughout the year.

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

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

P. Net Position Net position represents the difference between assets and deferred outflows less liabilities and deferred inflows. Net position invested in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the related acquisition, construction or improvement . of those assets excluding unspent debt proceeds.

Restricted net position represents restricted assets less liabilities and deferred inflows related to those assets. Restricted assets are recorded when there are limitations imposed on their use either through legislation adopted by the City or through external restrictions imposed by creditors, granters or laws or regulations of other governments.

Restricted resources are used first to fund appropriations.

Q. lnterfund Transactions lnterfund transactions are accounted for as revenues and expenditures or expenses.

Transactions, which constitute reimbursements, are eliminated in 38 (amounts expressed in thousands) the reimbursed fund and accounted for as expenditures or expenses in the fund to which the transaction is applicable.

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

Related receivables and payables are classified as "due from/to other funds" on the accompanying fund level statements.

The noncurrent portion of long-term interfund loans receivable are reported as advances and, for governmental fund types, are equally offset by nonspendable fund balance to indicate that the receivable is not in spendable form. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." R. Unearned Revenue Unearned revenues arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to meeting all eligibility requirements.

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

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

Accordingly, unavailable revenue is reported only in the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources (revenue) in the period that the amounts become available.

T. Deferred Outflows and Deferred Inflows of Resources When applicable, the statement of net position and the balance sheet will report a separate section for deferred outflows of resources.

Deferred outflows of resources represent outflows of resources (consumption of net position) that apply to future periods and that, therefore will not be recognized as an expense or expenditure until that time. Conversely, deferred inflows of resources represent inflows of resources (acquisition of net position) that apply to future periods and that, therefore, are not recognized as an inflow of resources (revenue) until that time. U. Regulatory Assets and Deferred Regulatory Charges City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 In accordance with GASB Statement No. 62, enterprise funds that are used to account for rate-regulated activities are permitted to defer certain expenses and revenues that would otherwise be recognized when incurred, provided that the City is recovering or expects to recover or refund such amounts in rates charged to its customers.

Accordingly, regulatory assets and/or deferred regulatory charges have been recorded in the Electric, Sewer and Refuse funds. V. Property Tax Calendar Under California law, general property taxes are assessed for up to 1 % of the property's assessed value. General property taxes are collected by the counties along with other special district taxes and assessments and voter approved debt. General property tax revenues are collected and pooled by the county throughout the fiscal year and then allocated and paid to the county, cities and school districts based on complex formulas prescribed by State statutes.

Property taxes are calculated on assessed values as of January 1 for the ensuing fiscal year. On January 1 of the fiscal year the levy is placed and a lien is attached to the property.

Property taxes are due in two installments.

The first installment is due November 1 and is delinquent after December 10. The second installment is due February 1 and is delinquent after April 10. The City generally accrues only those taxes, which are received within sixty days after the year-end.

Under the Teeter plan, the County of Riverside has responsibility for the collection of delinquent taxes and the City receives 100% of the levy. W. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenditures.

Specifically, the City has made certain estimates and assumptions relating to the revenues due and expenditures incurred through fiscal year end, collectability of its receivables, the valuation of property held for resale, the useful lives of capital assets, and the ultimate outcome of claims and judgments.

Actual results may differ from those estimates and assumptions.

X. Pensions 39 (amounts expressed in thousands)

For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Riverside California Public Employees' Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Y. Other Post Employment Benefit (OPEB) OPEB refers to the benefits, other than pensions, that the City provides as part of an employee's retirement benefits.

The net OPEB liability is defined as the liability of employers contributing to employees for benefits provided through a defined benefit OPEB plan that is administered through a trust. In order to improve the financial reporting of these benefits, the City has implemented GASB 75, which is explained in detail under New Accounting Pronouncements.

Z. New Accounting Pronouncements Effective July 1, 2017, the accompanying financial statements reflect the implementation of Governmental Accounting Standards Board Statement No. 75 (GASB 75), Accounting and Financial Reporting For Postemployment Benefits Other Than Pensions.

The primary objective of GASB 75 is to improve financial reporting by state and local governments in regards to postemployment benefits other than pensions (OPEB). These improvements provide users of financial statement decision-useful information, supports assessments of accountability and interperiod equity, and creates additional transparency.

GASS 75 accomplishes this by requiring recognition of the entire OPEB liability, a more comprehensive measure of OPEB expense, along with new note disclosures and required supplementary information.

The City implemented this Statement which resulted in a restatement of beginning net position by $1,618, recognition of deferred inflow of resources of $1,459, establishment of a net OPEB liability of $36,786, and additional disclosures (Note 15). 2. Legal Compliance

-Budgets Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for all departments within the general, special revenue City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 and capital project funds. Formal budgets are not employed for debt service funds because debt indenture provisions specify payments.

The permanent fund is not budgeted.

Biannually, during the period December through February, department heads prepare estimates of required appropriations for the following two-year budget cycle. These estimates are compiled into a proposed operating budget that includes a summary of proposed expenditures and financial resources and historical data for the preceding budget cycle. The operating budget is presented by the City Manager to the City Council for review. Public hearings are conducted to obtain citizen comments.

The City Council generally adopts the budget during one of its June meetings.

The City Manager is legally authorized to transfer budgeted amounts between divisions and accounts within the same department.

Transfer of appropriations between departments or funds and increased appropriations must be authorized by the City Council. Expenditures may not legally exceed budgeted appropriations at the departmental level within a fund. All appropriations shall lapse at the end of the fiscal year to the extent they have not been expended or lawfully encumbered, except for appropriations for capital projects which shall continue to their completion.

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

lnwstments

$ 630,336 lnwstments at fiscal agent 146,488 776,824 Cash on hand and deposits with financial institutions 46,798 $ 823,622 The amounts are reflected in the statements of net position of the wide and fiduciary fund financial statements:

40 Cash and investments Restricted cash and cash equivalents Restricted cash and investments at fiscal agent Total per statement of net position Fiduciary fund cash and investments (amounts expressed in thousands)

$ 572,910 58,928 136,128 Fiduciary fund cash and investments vvith fiscal agent 767,966 38,754 16,902 $ 823,622 The City follows the practice of pooling cash and investments of all funds except for funds required to be held by outside fiscal agents under the provisions of bond indentures, which are administered by outside agencies.

Interest income earned on pooled cash and investments is allocated monthly to funds based on the beginning and month-end balances.

Interest income from cash and investments held at fiscal agents is credited directly to the related account. Bank deposits are covered by federal depository insurance for the first $250 or by collateral held in the pledging bank's trust department in the name of the City. Authorized Investments Under provisions of the City's investment policy, and in accordance with California Government Code Section 53601, the City Treasurer may invest or deposit in the following types of investments:

Max Max% of Maturity Portfolio Local Agency Investment Fund (State Pool) N/A 100% Money Market Funds N/A 20% Mutual Funds N/A 20% Joint Powers Authority Pools N/A N/A Corporate Medium Term Notes 5 Years 30% Municipal Bonds 5 Years 30% Negotiable Certificates of Deposit 5 Years 30% Mortgage Pass-Through and Asset-Backed Securities 5 Years 20% Certificates of Deposit Placement Services 5 Years 30% Collateralized Time Deposits 5 Years 30% Federally Insured Time Deposits 5 Years 30% Supranational Securities 5 Years 15% Federal Agency Securities 5 Years N/A City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 U.S. Treasury Notes/Bonds Repurchase Agreements Commercial Paper of "prime" quality Bankers' Acceptances Reverse Repurchase Agreements 5 Years N/A 1 Year N/A 270 Days 25% 180 Days 10% 92 Days 20% Investments in Corporate Medium Term Notes may be invested in securities rated "A" or better by at least two nationally recognized statistical rating agencies.

No more than 5% of the market value of the portfolio may be invested in any single issuer. Investments in Negotiable Certificates of Deposit exceeding federal deposit insurance limits shall be issued by institutions which have long-term debt obligations rated "A" (or the equivalent) or better and short-term debt obligations, if any, rated "A1" (or the equivalent) or better by at least two nationally recognized statistical rating agencies.

No more than 5% of the market value of the portfolio may be invested in any single issuer of negotiable or non-negotiable certificates of deposit. Investments in Commercial Paper may be invested in securities rated "A 1" ( or the equivalent) or higher by at least one nationally recognized statistical rating agency. In addition, debt other than Commercial Paper, if any, issued by corporations in this category must be rated at least "A" (or the equivalent) or

• better by at least one nationally recognized statistical rating agency. No more than 5% of the market value of the portfolio may be invested in any single issuer. For purposes of this issuer limitation, holdings of Commercial Paper shall be combined with holdings of Corporate Medium-Term Notes. No more than 25% of the total market value of the portfolio may be invested in Commercial Paper. No more than 10% of the outstanding Commercial Paper of any single issuer may be purchased.

The City's investment policy provides two exceptions to the above; one is for investments authorized by debt agreements (described below) and the other for funds reserved in the San Onofre Nuclear Generating Station Decommissioning Account for which the five-year maturity limitation may be extended to the term of the operating license. Investments Authorized by Debt Agreements Provisions of debt agreements, rather than the general provisions of the California Government Code or the City's investment policy, govern investments of debt proceeds held by bond fiscal agents. Permitted 41 (amounts expressed in thousands) investments are specified in related trust agreements and include the following:

• Securities of the U.S. Government and its sponsored agencies

• Bankers' Acceptances rated in the single highest classification

• Commercial Paper rated AA or higher at the time of purchase

• Investments in money market funds rated in the single highest classification, except for certain debt proceeds which have no minimum rating requirement

• Municipal obligations rated Aaa/AAA or general obligations of states with ratings of at least A2/A or higher by both Moody's and S&P

• Investment Agreements No maximum percentage of the related debt issue or maximum investment in one issuer is specified.

Disclosures Relating to Fair Value Measurement and Application The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles.

The hierarchy is based on the valuation inputs used to measure fair value of assets. Level 1 are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The levels of valuation inputs are as follows: Level 1 -Quoted prices for identical assets or liabilities in an active market Level 2 -Observable inputs other than quoted market prices; and Level 3 -Unobservable inputs The City has the following recurring fair value measurements as of June 30, 2018:

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Total Money Market Funds $ 148,627 Federal Agency Securities 7,938 U.S. Treasury Notes/Bonds 301,172 Corp. Medium Term Notes 35,839 Negotiable Certificates of Deposits 7,394 Held by Fiscal Agent Money Market Funds 11,025 Commercial Paper 662 U.S. Treasury Notes/Bonds 66,050 Federal Agency Securities 1,691 Corp. Medium Term Notes 16,649 Total 597,047 Investments not subject to fair value hierarchy:

State Investment Pool 169,016 Investment Contracts 10,761 Total Investments

$ 776,824 Disclosures Relating to Interest Rate Risk Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (Level (Level 1) (Level 2) 3) $ $ 148,627 $ 7,938 301,172 35,839 7,394 11,025 662 66,050 1,691 16,649 $ $ 597,047 $ Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.

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

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

42 (amounts expressed in thousands)

Remaining Maturity (in Months) 12 Months 13 to 24 Total or Less Months Money Market Funds $ 148,627 $ 148,627 $ Federal Agency Securities 7,938 U.S. Treasury Notes/Bonds 301,172 40,693 140,724 Corp. Medium Term Notes 35,839 8,488 14,870 State Investment Pool 129,366 129,366 Negotiable Certificates of Deposit 7,394 4,460 984 Held by Fiscal Agent Money Market Funds 11,025 11,025 State Investment Pool 39,650 39,650 Investment Contracts 10,761 Commercial Paper 662 662 U.S. Treasury Notes/Bonds 66,050 30,698 8,890 Federal Agency Securities 1,691 1,332 Corp. Medium Term Notes 16,649 10,303 3,379 Total $ 776,824 $ 425,304 $ 168,847 The City assumes that callable investments will not be called. Disclosures Relating to Credit Risk 25 to 60 Months $ 7,938 119,755 12,481 1,950 26,462 359 2,967 $ 171,912 More than 60 Months. $ 10,761 $ 10,761 Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.

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

Presented below is the actual rating as of year-end for each investment type: Ratings as of Year End Total AM AA A BBB Unrated Money Market Funds $ 148,627 $ $ 143,510 $ 5,117 $ -$ Federal Agency Securities 7,938 7,938 U.S. Treasury Notes/Bonds 301;172 301,172 Corp. Medium Term Notes 35,839 35,839 State Investment Pool 129,366 129,366 Negotiable Certificates of Deposits 7,394 7,394 Held by Fiscal Agent Money Market Funds 11,025 7,840 3,185 State Investment Pool 39,650 39,650 Investment Contracts 10,761 10,761 Commercial Paper 662 662 U.S. Treasury Notes/Bonds 66,050 66,050 Federal Agency Securities 1,691 1,691 Corp. Medium Term Notes 16,649 2,880 2,967 3,379 7,423 Total $ 776,824 $ 387,571 $ 193,077 $ 12,343 $ 7,423 $ 176,410 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Concentration on Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stated above. For fiscal year ended June 30, 2018, the City did not have any investments in any one issuer (other than U.S. Treasury securities, money market funds, and external investment pools) that represent 5% or more of total City investments.

Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City's investment policy requires that a third party bank trust department hold all securities owned by the City. All trades are settled on a delivery vs. payment basis through the City's safekeeping a*gent. The City has no deposits with financial institutions; bank balances are swept daily into a money market account. The pledge to secure deposits is administered by the California Commissioner of Business Oversight.

Collateral is required for demand deposits at 110% of all deposits not covered by federal depository insurance (FDIC) if obligations of the United States and its agencies, or obligations of the State or its municipalities, school districts, and district corporations are pledged. Collateral of 150% is required if a deposit is secured by first mortgages or first trust deeds upon improved residential real property located in California.

All such collateral is considered to be held by the pledging financial institutions' trust departments or agents in the name of the City. Obligations pledged to secure deposits must be delivered to an institution other than the institution in which the deposit is made; however the trust department of the same institution may hold them.

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

Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the 43 (amounts expressed in thousands) oversight of the Treasurer of the State of California.

The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio).

The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. 4. Direct Financing Lease Receivable The former Redevelopment Agency had a direct financing lease arrangement with the State of California (the State) for a twelve-story office building, which was transferred to the Successor Agency. The lease term is for thirty years and the State takes ownership of the facility at the conclusion of that term. The lease calls for semi-annual payments not less than the debt service owed on the related lease revenue bonds issued by the former Redevelopment Agency for the purchase and renovation of the building.

The future minimum lease payments to be received are as follows: Fiscal Year 2019 2020 2021 2022 2023 Thereafter Total Due Less: Amount applicable to interest Total direct financing lease receivable

$ $ 2,625 2,659 2,692 2,724 2,759 5,609 19,068 (3,918) 15,150 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 5. Capital Assets The following is a summary of changes in the capital assets during the fiscal year ended June 30, 2018. Beginning Additons/

Deletions/

Ending Governrrental activities:

Balance Transfers In Transfers Out Reclassrrications Balance Capital assets, not depreciated:

Land $ 343,918 $ 1,091 $ (1,987) $ $ 343,022 Construction in progress 44,310 24.584 68,894 Total capital assets not depreciated 388,228 25.675 (1,987) 411,916 Capital assets being depreciated:

Buildings 183,641 453 184,094 lrrproverrents other than buildings 314,404 2,367 (44,201) 272,570 Machinery and equiprrent 89,501 6,352 (2,826) (386) 92,641 Intangibles, depreciable 219 219 Infrastructure 1,013,776 16,838 (10,772) 1,019,842 Total capital assets being depreciated 1,601,541 26,010 (13,598) (44,587) 1,569,366 Less accurrulated depreciation for: Buildings (68,554) (4,738) (73,292) lrrproverrents other than buildings (116,922)

(12,060) 2,755 (126,227)

Machinery and equiprrent (66,530) (5,900) 2,766 193 (69,471) Intangibles, depreciable (88) (44) (132) Infrastructure (381,397)

(25,197) 233 (406,361)

Total accurrulated depreciation (633,491)

(47,939) 2,999 2,948 (675,483)

Total capital assets being depreciated, net 968,050 (21,929) (10,599)

(41,639) 893,883 Governrrental activities capital assets, net $1,356,278

$ 3,746 $ (12,586) $ (41,639) $1,305,799 Beginning Additons/

Deletions/

Ending Business-type activtties:

Balance Transfers h Transfers Out Reclassffications Balance Capital assets, not depreciated:

Land $ 80,246 $ 14,654 $ $ $ 94,900 htangibles, non-depreciable 21,492 21,492 Construction in progress 80,934 69,647 (48,002) 102,579 Total capital assets not depreciated 182,672 84,301 (48,002) 218,971 Capital assets being depreciated:

Buildings 606,984 8,256 (39) 615,201 Improvements other than buildings 1,695,979 57,003 (2,088) 44,201 1,795,095 Machinery and equipment 96,617 3,550 (2,464) 386 98,089 Intangibles, depreciable 24,597 1,016 25,613 Total capital assets being depreciated 2,424,177 69,825 (4,591) 44,587 2,533,998 Less accumulated depreciation for: Buildings (135,847)

(13,134) 39 (148,942)

Improvements other than buildings (572,788)

(43,883) 1,996 (2,755) (617,430)

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

(7,621) Total accumulated depreciation (772,842)

(66,632) 4,228 (2,948) (838,194)

Total capital assets being depreciated, net 1,651,335 3,193 (363) 41,639 1,695,804 Business-type activities capital assets, net $1,834,007

$ 87,494 $ (48,365) $ 41,639 $1,914,775 44 (amounts expressed in thousands)

Depreciation expense was charged to various functions as follows: Governmental activities:

General government

$ 5,394 Public safety 5,667 Highway and streets, including general infrastructure 25,951 Culture and recreation 10,927 Total depreciation expense -governmental activities

$ 47,939 Business-type activities:

Electric $ 33,585 Water 14,914 Sewer 13,621 Entertainment 975 Airport 693 Refuse 1,138 Transportation 714 Public Parking 992 Total depreciation expense -business-type activities

$ 66,632 6. Long-Term Obligations Changes in Long-Term Obligations:

Below is a summary of changes in long-term obligations during the fiscal year: Beginning Ending Due Within Go\ernmental activities:

Balance Additions Reclass Reductions Balance One Year General obligations bond $ 11,513 $ $ $ (1,125) $ 10,388 $ 1,195 Pension obligation bonds 92,592 (22,210) (9,499) 60,883 10,435 Certificates of participation 156,516 (5,716) 150,800 5,825 Lease revenue bonds 37,854 (1,608) 36,246 1,560 Loan payable 41,325 (39,174) (405) 1,746 417 Capital leases 17,193 14,500 (2,152) (3,894) 25,647 4,284 Compensated absences 22,790 16,167 (13,972) 24,985 15,306 Claims liability 44,945 13,690 (12,403) 46,232 9,872 $ 424,728 $ 44,357 $ (63,536) $ (48,622) $ 356,927 $ 48,894

Internal Service Funds Internal Service Funds are used to account for the financing of goods and services provided by one City department to other City departments on a cost-reimbursement basis. Self-Insurance Trust -To account for the operations of the City's self-insured workers' compensation, unemployment and liability programs.

Central Sta.res Fund -To account for the operations of the City's centralized supplies inventory, including receiving and delivery services provided to City departments.

Central Garage Fund -To account for the maintenance and repair of all city-owned vehicles and motorized equipment, except for Police vehicles.

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

Assets Current assets: Cash and investments Receivables (net of allowance for uncollectibles)

Interest Accounts Intergovernmental Inventory Total current assets Non-current assets: Advances to other funds Capital assets: Land Intangible assets, depreciable Accumulated depreciation-intangible assets, depreciable Buildings Accumulated depreciation-buildings Improvements other than buildings Accumulated depreciation

-improvements other than buildings Machinery and equipment Accumulated depreciation-machinery and equipment Construction in progress

• Total non-current assets: Total assets Deferred Outflows of Resources Pension contributions, changes in assumptions and differences In experience Total deferred outflows of resources Llablllties Current liabilities:

Accounts payable Accrued payroll Retainage payable Due to other funds Pension obligation bonds -current Claims and judgments

-current Compensated absences -current Total current liabilities Non-current liabilities:

Advances from other funds Per,sion obligation bonds Claims and judgments Compensated absences Net OPEB liability Net pension liability Total non-current liabilities Total liabilities Deferred Inflows of Resources Pension contributions, changes ln assumptions and differences in experience OPEB contributions, changes in assumptions and differences In experience Total deferred inflows of resources Net Position Net investment in capital assets Unrestricted Total net position Self.Insurance Trust 16,867 52 43 51 17,013 335 219 (132) 5 (4) 423 17,436 306 306 766 3 18 9,872 Central Stores 5,836 5,836 139 (139) 5,836 336 336 318 436 24 _______ 4_7_, _______ 7_5 10,706 856 73 36,360 7 131 1,066 37,637 48,343 17 23 88 {30,712) (30,624) 102 11 154 1,193 1,460 2,316 66 71 3,785 3,785 Central Garage Total 6,917 23,784 23 75 7 50 367 418 448 6,284 7,762 30,611 2,068 2,403 458 458 219 (132) 4,092 4,092 (718) (718) 1,315 1,315 (470) (470) 11,121 11,265 (8,834) {8,977) 253 253 9,285 9,708 17,047 40,319 1,708 2,350 1,708 2,350 193 1,277 14 20 13 13 436 103 145 9,872 255 377 578 12,140 335 335 429 604 36,360 37 55 665 950 6,105 8,364 7,571 46,668 B,149 58,808 412 495 25 36 437 531 7,217 7,305 2,952 {23,975) 10,169 (16,670) 87 City of Riverside Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Operating revenues:

Charges for services Operating expenses:

Personnel services Contractual services Maintenance and operation General Materials and supplies.

Claims/Insurance Depreciation and amortization Total operating expenses Operating income (loss) Non-operating revenues (expenses):

Interest income Other Gain (loss) on retirement of capital assets Interest expense and fiscal charges Total non-operating revenue (expenses)

Income before capital contributions and transfers Transfers in Change in net position Net position -beginning, as previously stated Prior period adjustment Net position -beginning, as ~estated Net position -ending Self-Insurance Trust $ 14,052 932 565 3 1,934 2 14,647 45 18,128 (4,076) 85 3 26 (3) 111 (3,965) 5,000 1,035 (31,653) (6) (31,659) $ (30,624) $ $ 88 Central Stores Central Garage Totals 1,240 $ 9,481 $ 24,773 807 3,857 5,596 2 89 656 33 2,704 2,740 369 753 3,056 13 250 265 7 79 14,733 1,046 1,091 1,231 8,778 28,137 9 703 (3,364) 65 150 431 434 71 97 (5) (28) (36) (5) 539 645 4 1,242 (2,719) 5,000 4 1,242 2,281 3,787 8,952 (18,914) (6) (25) (37) 3,781 8,927 (18,951) 3,785 $ 10,169 $ (16,670)

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

Cash flows from operating activities:

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

Transfers in Receipts on interfund advances Payments on pension obligation bonds Net cash (used) provided by noncapital financing activities Cash flows from capital and related financing activities:

Purchase of capital assets Proceeds from the sale ofcapital assets Interest paid on long-term obligation Net cash (used) for capital and related financing activities Cash flows from investing activities:

Sale and (purchase) of investments Interest from investments Net cash provided by investing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning Cash and cash equivalents, ending Self-Insurance Trust $ 14,002 $ 486 (17,031) 3 (2,540) 5,000 439 (16) 5,423 26 (3) 23 (24) 85 61 2,967 13,900 $ 16,867 $ Central Central Stores Garage Total 1,240 $ 9,679 $ 24,921 (693) {3,346) (3,553) (694) (4,063) (21,788) 431 434 (147) 2,701 14 5,000 175 355 969 (23) (98) (137) 152 257 5,832 (762) (762) 71 97 (5) (28) (36) (5) (719) (701) (8) (32) 65 150 57 118 2,296 5,263 4,621 18,521 $ 6,917 $ 23,784 Continued 89 City of Riverside Combining Statement of Cash Flows Internal Service Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Reconciliation of operating income (loss) to net cash (used) provided by operating activities:

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

Depreciation and amortization Changes in assets, liabilities and deferred inflows/outflows of resources:

Accounts receivable Intergovernmental receivable Inventory Accounts payable Accrued payroll Retainage payable Other payables Claims and judgments Net pension liability and related charges in deferred outflows and inflows of resources Net OPEB liability and related charges in deferred outflows and inflows of resources Net cash (used) provided by operating activities Self-Insurance Trust $ (4,076) 3 45 (26) (24) 120 3 16 1,287 102 10 $ (2,540) 90 Continued Central Central Stores Garage Total $ 9 $ 703 $ (3,364) 431 434 1,046 1,091 (1) (27) 199 175 (166) (118) (284) (104) (83) (67) 3 14 20 13 13 5 (25) (4) 1,287 99 493 694 7 29 46 $ (147) $ 2,701 $ 14

Agency Fund The City's Agency Fund is used to account for special assessments that service no-commitment debt.

City of Riverside Fiduciary Fund -Agency Fund Combining Statement of Changes in Assets and Liabilities For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Balance July 1, 2017 Assets Cash and investments

$ 3,181 Cash and investments at fiscal agent 5,068 Interest receivable 8 Property taxes receivable 34 Total assets $ 8,291 Liabilities Accounts payable $ Held for bond holders 8,291 Total liabilities

$ 8,291 $ $ $ $ Balance Additions Deductions June 30, 2018 3,992 $ 3,864 $ 3,309 3,756 4,136 4,688 57 55 10 81 34 81 7,886 $ 8,089 $ 8,088 64 $ 63 7,822 8,026 8,087 7,886 $ 8,089 $ 8,088 92

COMBINING GENERAL FUND AND CAPITAL OUTLAY SCHEDULES WITH MEASURE Z FUND ACTIVITY City of Riverside Balance Sheet Combining General Fund Schedule June 30, 2018 (amounts expressed in thousands)

Assets General Fund Measure Z Fund Total General Fund Cash and investments

$ 76,455 $ 7,687 $ 84,142 Cash and investments at fiscal agent 18 18 Receivables (net of allowance for uncollectibles)

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

Inventories, prepaids and deposits 1,932 15 1,947 Restricted for: Housing and redevelopm~nl 175 175 Debt service 2,037 2,037 Other purposes 779 779 Committed for: Economic contingency 53,800 53,800 Assigned to: General government 2,425 209 2,634 Public safety 1,110 849 1,959 Highways and streets 1,255 909 2,164 Culture and recreation 620 620 Continuing projects 7,250 8,615 15,865 Unassigned 7,644 7,644 Total fund balances 71,383 18,241 89,624 Total liabilities, deferred inflows of resources, and fund balances $ 108,185 $ 19,081 $ 127,266 94 City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances Combining General Fund Schedule For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Total General General Fund Measure Z Fund Fund Revenues Taxes $ 166,914 $ 56,202 $ 223,116 Licenses and permits 10,015 10,015 Intergovernmental 10,513 10,513 Charges for services 17,438 17,438 Fines and forfeitures 3,699 3,699 Special assessments 402 402 Rental and investment income 2,312 6 2,318 Miscellaneous 3,815 3,815 Total revenues 215,108 56,208 271,316 Expenditures Current: General government 14,181 1,454 15,635 Public safety 166,204 18,404 184,608 Highways and streets 18,528 115 18,643 Culture and recreation 29,136 29,136 Capital outlay 2,646 2,646 Debt service: Bond issuance costs 14 14 Total expenditures 230,709 19,973 250,682 Excess (deficiency) of revenues over (under) expenditures

• (15,601) 36,235 20,634 other financing sources (uses) Transfers in 48,397 10,935 59,332 Transfers out (39,650) (11,088) (50,738) Transfers in from Measure Z Fund

• 20,482 20,482 Transfers out to General Fund* (20,482) (20,482) Proceeds from the sale of capital assets 422 422 Total other financing sources (uses) 29,651 ~20,635) 9,016 Net change in fund balances 14,050 15,600 29,650 Fund balances -beginning 80,429 2,641 83,070 Prior period adjustment (23,096) (23,096) Fund balances -ending $ 71,383 $ 18,241 $ 89,624

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

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

MeasureZ Capital Assets Capital Outlay Outlay Total Capital Outlay Cash and investments

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

Interest 71 11 82 Accounts 1,608 1,608 Intergovernmental 7,353 7,353 Total assets $ 23,177 $ 4,511 $ 27,688 Liabilities Accounts payable $ 953 $ 33 $ 986 Retainage payable 48 48 Unearned revenue 125 125 Total liabilities 1,126 33 1,159 Deferred Inflows of Resources Unavailable revenue 81 81 Total deferred inflows of resources 81 81 Fund Balances Restricted for: Transportation and public works 21,970 4,478 26,448 Total fund balances 21,970 4,478 26,448 Total liabilities, deferred inflows of resources, and fund balances $ 23,177 $ 4,511 $ 27,688 96 City of Riverside Statement of Revenues, Expenditures and Changes in Fund Balances Combining Capital Outlay Fund Schedule For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Measure Z Capital Total Capital <:apital Outlay Outlay Outlay Revenues Intergovernmental

$ 11,989 $ $ 11,989 Special assessments 504 504 Rental and investment income 112 112 Miscellaneous 2,883 2,883 Total revenues 15,488 15,488 Expenditures Current: Capital outlay 8,697 1,602 10,299 Total expenditures 8,697 1,602 10,299 Excess (deficiency) of revenues over (under) expenditures 6,791 (1,602) 5,189 Other financing sources (uses) Transfers in 240 6,072 6,312 Transfers out (3,004) (3,004)-Proceeds from the sale of capital assets 5 5 Total other financing sources (uses) (2,759) 6,072 3,313 Net change in fund balances 4,032 4,470 8,502 Fund balances -beginning 17,938 8 17,946 Fund balances -ending $ 21,970 $ 4,478 $ 26,448 97

Statistical Section (Unaudited)

This part of the City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Financial Trends 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 These schedules contain informat property and sales taxes. Debt Capacity 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 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 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.

99 105 115 121 124 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

Table 1 City of Riverside Net Position by Component Last Ten Fiscal Years !accrual basis of accounting) (In thousands)

Fiscal Year 2009 2010 2011 20121 2013 2014 2015 2016 2017 2018 Governmental activities Net investment in capital assets $ 950,496 $ 976,614 $ 1,019,892

$ 1,076,485

$ 1,083,485

$1,106,384

$1,126,220

$ 1,123,910 $1,102,409 $1,093,896 Restricted 98,903 108,932 80,820 86,325 80,712 96,587 105,847 106,488 104,853 112,183 Unrestricted (41;861) (80,947) (90,159) 23,145 17,989 (2,049) (406,388)

(389,278)

(362,146)

(364,500)

Total governmental activities net position $ 1,007,538

$ 1,004,599

$ 1,010,553

$ 1,185,955

$ 1,182,186

$1,200,922

$ 825,679 $ 841,120 $ 845,116 $ 841,579 Business-type activities Net investment in capital assets $ 659,904 $ 660,619 $ 654,974 $ 666,919 $ 609,691 $ 616,844 $ 626,166 $ 654,870 $ 702,844 $ 800,227 Restricted 38,621 59,863 56,397 54,923 69,068 68,507 75,660 85,526 93,570 80,717 Unrestricted 207,405 219,720 256,038 285,062 330,833 359,698 209,469 235,144 245,116 199,143 Total business-type activities net position $ 905,930 $ 940,202 $ 967,409 $ 1,006,904

$ 1,009,592

$1,045,049

$ 911,295 $ 975,540 $1,041,530

$1,080,087 Primary government Net investment in capital assets $ 1,610,400

$ 1,637,233

$ 1,674,866

$ 1,743,404

$ 1,693,176

$1,723,228

$1,752,386

$ 1,778,780

$1,805,253

$1,894,123 Restricted 137,524 168,795 137,217 141,248 149,780 165,094 181,507 192,014 198,423 192,900 Unrestricted 165,544 138,773 165,879 308,207 348,822 357,649 (196,919)

(154,134)

(117,030)

(165,357)

Total primary government net position $ 1,913,468

$ 1,944,801

$ 1,977,962

$ 2,192,859

$ 2,191,778

$2,245,971

$1,736,974

$ 1,816,660

$1,886,646

$1,921,666 1 The increase in total governmental activities net position (and related unrestricted net position) is primarily due to the dissolution of the Redevelopment Agency. 99 Table 2 City of Riverside Changes In Net Position Last Ten Fiscal Years {accrual basis of accounting) (In thousands)

Page 1 of 2 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Expenses Governmental activities:

General government

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

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

Charges for services:

General government

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

Charges for services:

Electric 314,164 309,910 313,703 333,029 347,933 344,037 347,621 354,530 366,066 364,516 Water 54,923 57,534 62,084 65,206 68,489 68,691 66,051 57,250 62,627 66,828 Sewer 23,247 27,342 32,769 37,747 43,772 46,162 50,336 52,664 59,735 65,081 Entertainment 16,393 Airport 1,232 1,315 1,342 1,524 1,396 1,100 1,260 1,549 1,578 1,562 Refuse 18,394 18,712 19,134 19,588 20,829 20,677 21,360 21,806 22,567 23,085 Transportation 336 328 344 352 344 413 385 377 359 441 Public parking 4,332 4,876 5,205 4,803 4,777 4,382 4,609 4,918 5,009 6,258 Operating grants and contributions 1,929 2,487 2,159 2,738 2,718 2,524 3,869 2,322 3,751 3,374 Capital grants and contributions 17,288 6,838 7,337 21,164 11,734 11,486 8,027 18,868 24,151 26,957 Total business-type activities program revenues 435,845 429,342 444,077 486,151 501,992 499,472 503,518 514,284 545,843 574,495 Total primary government program revenues $ 568,567 $ 526,914 $ 545,823 $ 615,861 $ 597,872 $ 608,358 $ 615,334 $608,175 $630,174 $653,199 (continued}

100 Table 2 City of Riverside Changes in Net Position Last Ten Fiscal Years !accrual basis of accounting)

!in thousands)

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

Governmental activities

$(174,506)

$ (232,736)

$ (226,010)

$ (182,649)

$ (198,356)

$ (176,557)

$ (168,076)

$ (194,861)

$(224,863)

$ (276,748)

Business-type activities 49,404 45,707 39,229 65,659 75,698 63,471 63,454 75,907 94,394 63,793 Total primary government net expense $(125,102)

$ (187,029)

$ (186,781)

$ (116,990)

$ (122,658)

$ (113,086)

$ (104,622)

$ (118,954)

$(130,469)

$(212,955)

General Revenues and Other Changes in Net Position Governmental activities:

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

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

(41,216) (45,716) (41,459)

Extraordinary items (41,259 Total business-type activities (14,095) (11,435) (12,022) (26,164) (73,010) (28,014) (29,710) (11,662)

(28,404) (24,619) Total primary government 245,961 218,362 219,942 335,274 121,577 167,279 184,952 198,640 200,455 249,593 Change in Net Position Governmental activities

$ 85,550 $ (2,939) $ 5,954 $ 178,789 $ (3,769) $ 18,736 $ 46,586 $ 15,441 $ 3,996 $ (2,536) Business-type activities 35,309 34,272 27,207 39,495 2,688 35,457 33,744 64,245 65,990 39,174 Total primary government

$ 120,859 $ 31,333 $ 33,161 $ 218,284 $ (1,081) $ 54,193 $ 80,330 $ 79,686 $ 69,986 $ 36,638 1 The increase in total governmental activities net position is primarily due to the dissolution of the Redevelopment Agency. 2 The decrease in total business-type activities net position is primarily due to the power plant closure. 101 Table 3 City of Riverside Fund Balances of Governmental Funds Last Six Fiscal Years (modified accrual basis of accounting, in thousands) 2013 General fund Nonspendable

$ 26,421 Restricted 2,196 Committed Assigned 10,711 Unassigned 37,763 Total general fund $ 77,091 All other governmental funds Nonspendable

$ 1,441 Restricted for: Housing and redevelopment 26,410 Debt service 25,884 Transportation and public works 16,487 Other purposes 2,003 Unassigned Total all other governmental funds $ 72,225 2014 $ 24,419 2,204 14,505 37,732 $ 78,860 $ 1,460 26,223 26,177 54,876 321 $ 109,057 Note: Certain reclassifications have been made to prior year balances to conform with current year's presentation.

The City of Riverside implemented GASB 54 in the fiscal year ended June 30, 2011. The City has elected to show six years of data for this schedule.

102 2015 2016 2017 2018 $ 23,642 $ 23,094 $ 26,168 $ 1,947 2,985 3,067 2,651 2,991 53,800 13,965 9,922 14,968 23,242 39,059 29,495 39,283 7,644 $ 79,651 $ 65,578 $ 83,070 $ 89,624 $ 1,625 $ 1,619 $ 1,601 $ 4,855 25,523 24,746 24,098 18,827 26,203 26,221 6,455 11,509 36,347 36,876 34,178 43,499 2,326 3,628 4,145 3,451 (24 $ 92,024 $ 93,090 $ 70,453 $ 82,141 Table4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting) (in thousands)

Page 1 of 2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenues:

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

General government

$ 25,995 $ 23,835 $ 26,090 $ 18,835 $ 15,713 $ 13,558 $ 17,799 $ 19,900 $ 20,650 $ 21,135 Public safety 145,802 138,594 140,994 150,878 150,290 151,721 157,660 164,800 163,712 190,916 Highways and streets 18,452 14,987 14,587 16,651 16,294 16,944 16,594 17,416 17,504 19,207 Culture and recreation 26,859 40,373 44,345 57,538 45,356 34,275 37,527 39,583 40,643 29,382 Capital outlay 180,394 131,908 105,689 75,482 -73,581 72,365 60,060 53,208 31,000 33,504 Debt Service: Principal 44,349 48,078 89,264 83,378 45,006 45,500 49,101 51,987 72,700 21,904 Interest 33,033 31,267 32,611 24,133 15,116 16,787 17,048 16,451 16,115 12,746 Debt issuance costs 259 231 174 169 581 843 172 180 29 24 Payment for advance refunding 3,521 Total expenditures

$ 475,143 $ 429,273 $ 453,754 $ 427,064 $ 365,458 $ 351,993 $ 355,961 $ 363,525 $ 362,353 $ 328,818 Excess of revenues over (under) expenditures

$ (141,621)

$ (143,768)

$ (153,257)

$ (151,512)

$ (120,781)

$ (99,092) $ (94;199) $ (91,475) $ (88,747) $ (10,376) (continued) 103 Table 4 City of Riverside Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis accounting) (in thousands)

Page 2 of2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Other financing sources (uses): Transfers in $100,797 $ 88,303 $ 214,631 $ 196,859 $ 56,572 $ 58,469 $ 61,510 $ 61,384 $ 94,521 $ 102,774 Transfers out (58,710) (48,150) (180,280)

(156,305)

(14,178) (15,369) (18,829)

(20,168) (48,805) (66,021) Issuance of long term debt 30,425 51,821 104,875 34,940 99,753 87,037 30,940 31,145 31,578 14,500 Capital lease financings 3,116 2,000 7,203 6,625 4,450 5,846 2,109 Sales of capital assets (5,798) 529 (1,629) 156 82 931 (114) 261 4,199 461 Payments to refunded bond agent (43,591) Total other financing sources (uses) 66,714 95,619 139,597 75,650 105,841 137,693 77,957 78,468 83,602 51,714 Extraordinary items: Dissolution of Riverside Redevelopment Agency: Transfer of assets and liabilities to Successor Agency (130,174)

Transfer of assets from Successor Agency 28,121 Assumption of obligation (4,927) Total extraordinary items (106,980 Net change in fund balances $ (74,907) $ (48,149) $ (13,660) $ (182,842)

$ (14,940) $ 38,601 $ (16,242) $ (13,007) $ (5,145) $ 41,338 Debt service as a percentage of noncapital expenditures 26.058% 23.211% 32.757% 32.507% 21.039% 21.803% 22.360%

21.714% 26.625% 11.999% (1) (2) (3) (1) Increase relates to $30 million refinancing of 20058 pension bonds that took place in May 2008, which became due in-full in June 2009. The $30 million Pension Bond Anticipation Notes have been paid in-full and immediately re-issued each year in 2009, 2010, 2011, 2012, 2013 and 2014. (2) Increase in debt service related to one-time early redemption of $31.7 million of 2011 Redevelopment Tax Allocation Bonds and $9.1 million of loan proceeds that were drawn-down during the year and re-paid within the year. (3) Includes one-time early redemption of $33.3 million of 2011 Redevelopment Tax Allocation Bonds. 104 Table 5 City of Riverside Business-Type Activities Electricity Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (in thousands)

Other Fiscal Residential Commercial Industrial Wholesale Other Transmission Operating Total Year Sales Sales Sales Sales Sales Revenue Revenue Revenues 2009 105,525 65,532 97,100 4,674 5,684 18,673 12,250 309,438 2010 107,301 65,091 97,458 1,466 5,639 21,100 11,855 309,910 2011 107,792 64,039 102,067 124 5,529 22,091 12,061 313,703 2012 110,471 66,047 107,455 50 5,614 30,735 12,657 333,029 2013 118,173 66,632 110,680 638 5,712 32,688 13,410 347,933 2014 111,880 67,063 111,260 115 5,600 32,630 15,489 344,037 2015 114,112 68,572 112,283 60 5,654 30,587 16,353 347,621 2016 116,997 69,759 113,756 3 4,737 32,924 16,354 354,530 2017 117,662 71,456 115,432 9 4,782 35,497 21,228 366,066 2018 115,630 71,128 115,106 2 4,792 37,484 20,374 364,516 105 Table 6 City of Riverside Governmental Activities Tax Revenues By Source Last Ten Fiscal Years ' (accrual basis of accounting) (in thousands)

Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sales Tax 1 $ 41,882 39,645 44,157 47,701 50,222 55,096 59,437 60,976 75,883 120,338 Property Tax 2 $ 116,420 104,087 100,802 74,179 52,904 51,323 54,864 55,545 59,526 63,515 Utility Users Tax $ 25,964 25,975 26,691 27,320 28,206 28,092 28,076 27,828 27,958 27,498 Franchise Tax $ 5,144 4,477 4,937 4,883 4,959 5,046 5,543 5,730 4,814 4,972 Transient Occupancy Tax $ 2,912 2,488 2,731 2,995 3,703 4,189 5,280 6,093 6,622 6,793 Total Taxes $ 192,322 176,672 179,318 157,078 139,994 143,746 153,200 156,172 174,803 223,116 1 Increase in sales tax in fiscal year 2017 is due to Measure Z which was passed by the voters November 2016 and became effective April 1, 2017. Measure Z is a one percent transaction and use tax. 2 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.

106.

Table 7 City of Riverside Taxable Sales by Category Last Ten Calendar Years (in thousands of dollars) .2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Apparel Stores $ 154,899 $ 152,564 $ 161,802 $ 168,352 $ 175,320 $ 178,349 $ 188,670 $ 203,001 $ 214,852 $ 210,158 General Merchandise 466,096 435,230 432,303 '444,125 450,988 463,355 475,147 477,903 478,538 465,490 Food Stores 172,195 170,151 167,259 169,380 181,719 193,368 209,022 217,902 168,854 169,922 Eating and Drinking Places 383,596 364,291 371,419 395,423 422,153 447,841 483,901 533,317 582,262 609,705 Building Materials 374,161 307,894 292,605 349,398 376,011 454,468 514,993 567,790 636,415 666,907 Auto Dealers and Supplies 949,747 786,012 847,986 965,529 1,118,907 1,280,633 1,461,217 1,548,385 1,608,231 1,588,854 Service Stations 424,252 301,654 350,904 419,497 430,322 418,110 413,128 370,257 338,762 360,830 Other Retail Stores 564,633 487,924 501,071 517,583 535,945 550,157 595,305 633,089 692,375 677,850 All Other Outlets 1,104,611 893,809 977,260 1,072,513 1,008,206 1,154,492 1,312,607 1,461,982 1,474,160 1,481,019 Total $ 4,594,190

$ 3,899,529

$ 4,102,609

$ 4,501,800

$ 4,699,571

$ 5,140,773

$ 5,653,990

$ 6,013,625

$ 6,194,449

$ 6,230,735 Source: State of California Board of Equalization and the Hdl Companies.

Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available.

The categories presented are intended to provide alternative information regarding the sources of the City's revenue. 107 Table 8 City of Riverside Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands)

Ci Dissolved Redevelopment Agency 1 Fiscal Year Taxable Taxable Ended Less: Assessed Less: Assessed June 30 Secured Unsecured Exemptions Value Secured Unsecured Exemptions Value 2009 24,428,633 1,330,053 (7,515,667) 18,243,019 5,998,768 581,943 (224,025) 6,356,686 2010 22,644,262 1,299,353 (7,103,040) 16,840,575 5,598,484 564,825 (266,257) 5,897,052 2011 22,056,793 1,260,923 (6,920,720) 1'6,396,996 5,396,219 544,906 (268,323) 5,672,802 2012 22,031,328 1,264,151 (6,952,649) 16,342,830 5,395,632 572,153 (270,313) 5,697,472 2013 22,313,665 1,244,448 (7,142,401) 16,415,712 NIA NIA NIA NIA 2014 23,045,134 1,201,634 (7,394,982) 16,851,786 NIA NIA NIA NIA 2015 24,482,621 1,329,391 (7,945,000) 17,867,012 NIA NIA NIA NIA 2016 25,710,122 1,225,375 (8,432,984) 18,502,513 NIA NIA NIA NIA 2017 26,927,989 1,311,356 (9,029,817) 19,209,528 NIA NIA NIA NIA 2018 28,373,517 1,354,934 (9,791,810) 19,936,641 NIA NIA NIA NIA Notes: In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1 % based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only re-assessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Assessed valuations are based on 100 percent of estimated actual value. 1 In accordance with the timeline set forth in Assembly Bill 1X 26 (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. 2 Total Direct Rate is the weighted average of all individual direct rates. Beginning in 2013114, the Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas. Source: Riverside County Auditor-Controller 108 Total Direct Rate 2 0.343 0.350 0.347 0.348 0.348 0.125 0.124 0.124 0.124 0.124 Table 9 City of Riverside Direct and Overlapping Property Tax Rates (Rate per $100 of Assessed Valuation)

Last Ten Fiscal Years 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Basic Levy 1 1.000 1.000 1.000 1.000 1.000 1.000 Unified School Districts Debt Service 2 0.259 0.284 0.301 0.332 0.325 0.390 City of Riverside Debt Service 0.007 0.006 0.006 0.006 0.006 0.007 Metropolitan Water District Original Area 0.004 0.004 0.004 0.004 0.004 0.004 Riverside City Community College Debt Service 0.013 0.012 0.015 0.017 0.017 0.018 Total Direct & Overlapping 3 Tax Rates 1.283 1.307 1.325 1.358 1.352 1.418 City's Share of 1 % Levy Per Prop 1 J4 0.145 0.145 0.145 0.145 0.145 0.145 General Obligation Debt Rate 0.007 0.006 0.006 0.006 0.006 0.007 Redevelopment Rate 5*7 1.004 1.004 1.004 1.004 Total Direct Rate* 0.343 0.350 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 any voter approved bonds. Includes:

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

3 Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners. 4 City's share of 1 % levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city. ERAF general fund tax shifts may not be included in tax ratio figures. 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 statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1_ 26 eliminated Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter.

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. 1.000 0.377 0.006 0.004 0.018 1.405 0.145 0.006 0.124 7 In a=rdance with the timeline sefforth in Assembly Bill X1 26 (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. Note: Amounts presented in this table have been restated for prior years to reflect the most current information available.

Source: Riverside County Assessor 2007/08 -2016/17 Tax Rate Table. 109 2015/16 2016/2017 2017/2018 1.000 1.000 1.000 0.487 0.495 0.517 0.006 0.006 0.006 0.004 0.004 0.004 0.017 0.016 0.016 1.514 1.521 1.543 0.145 0.145 0.145 0.006 0.006 0.006 0.124 0.124 0.124 Table 10 City of Riverside Principal Property Taxpayers Current Year and Nine Years Ago Property Owner Riverside Healthcare System Tyler Mall Rohr Inc La Sierra University State Street Bank and Trust Co Cole ID Corona Pointe Apartments BRE Properties CPT Riverside Plaza LLC Riverside Fair Isle Apartments Riverside Colonnade MEF Realty Press Enterprise Company Mission Grove Plaza Riverside Plaza Totals Notes: Taxable Assessed Value $ 273,296 214,956 148,268 134,779 129,258 107,100 102,163 98,937 89,829 87,753 $ 1,386,339 2018 Percentage of Total Taxable Assessed Rank Value 1 1.0% 2 0.8% 3 0.5% 4 0.5% 5 0.5% 6 0.4% 7 0.4% 8 0.4% 9 0.3% 10 0.3% 4.9% The amounts shown above include assessed value data for both the City and the Successor Agency. Source: Riverside County Assessor 2017/18 and 2008/09 Combined Tax Rolls 110 (in thousands) 2009 Percentage of Taxable Total Taxable Assessed Assessed Value Rank Value $ 109,056 5 0.4% 179,147 2 0.7% 0.0% 133,363 3 0.5% 83,391 7 0.3% 180,571 1 0.7% 0.0% 112,991 4 0.5% 89,303 6 0.4% 82,248 8 0.3% 80,354 9 0.3% 68,517 10 0.3% $1,118,941 4.5%

Table 11 City of Riverside Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Taxes Collected within the Ended Levied for Fiscal Year of the Levy June 30 Fiscal Year Amount Percentage of Levy 2009 $ 86,251 $ 84,134 97.55% 2010 77,228 74,491 96 .. 46% 2011 74,608 72,327 96.94% 2012 41,020 40,340 98.34% 2013 43,333 42,447 97.96% 2014 45,138 44,684 98.99% 2015 48,846 48,427 99.14% 2016 50,023 49,585 99.12% 2017 53,655 53,252 99.25% 2018 57,567 57,173 99.32% Note: (in thousands)

Collections in Subsequent Total Collections To Date Years Amount Percentage of Levy $ 2,117 $ 86,251 100.00% 2,737 77,228 100.00% 2,281 74,608 100.00% 680 41,020 100.00% 886 43,333 100.00% 454 45,138 100.00% 419 48,846 100.00% 49,585 99.12% 53,252 99.25% 57,173 99.32% The table reflects amounts related to the City. In addition, it includes amounts related to the Redevelopment Agency through dissolution (1/31/12).

The amounts collected by the Redevelopment Agency include monies that were passed-though to other agencies.

Current tax levies are the original charge as provided by the County of Riverside.

Current tax collections do not include supplemental taxes, aircraft taxes or other property taxes. The City adopted the Teeter plan available with the County of Riverside effective Fiscal year 2014. Under the Teeter plan the County of Riverside has responsibility for the collection of delinquent taxes and the City receives 100% of the levy. 111 Table 12 City of Riverside Electricity Sold by Type of Customer Last Ten Fiscal Years 2009 Type of Customer:

Residential 733 Commercial 433 Industrial 946 Wholesale sales 137 Other 33 Total 2,282 Total direct rate Monthly Base Rate 1 13.06 2010 2011 2012 701 666 688 406 400 413 906 912 969 44 7 2 32 31 31 2,089 2,016 2,103 18.06 18.06 18.06 (in millions of kilowatt-hours) 2013 2014 2015 2016 2017 2018 726 700 711 726 730 727 419 421 428

• 438 448 447 1,003 997 995 983 996 999 14 4 2 1 31 30 31 23 23 22 2,193 2,152 2,167 2,170 2,198 2,195 18.06 18.06 18.06 18.06 18.06 18.06 1 Monthly Base Rate includes a Reliability Charge of $5.00 (small residence 1 oo* amp) implemented in January 2008. In January 201 O the Reliability Charge increased to $10.00 (small residence 100 amp). Source: Riverside Public Utilities, Finance Services 112 Table 13 City of Riverside Electricity Rates Last Ten Fiscal Years (Average Rate in Dollars per Kilowatt-Hour)

Fiscal Year Ended June 30 Residential 2009 0.14389 2010 0.15307 2011 0.16173 2012 0.16068 2013 0.16274 2014 0.15995 2015 0.16050 2016 0.16119 2017 0.16116 2018 0.15910 Commercial 0.15122 0.16014 0.16001 0.15991 0.15913 0.15936 0.16022 0.15915 0.15958 0.15902 Source: Riverside Public Utilities, Finance Services Industrial Other 0.10271 0.17169 0.10756 0.17876 0.11194 0.18089 0.11088 0.17938 0.11030 0.18375 0.11156 0.18513 0.11282 0.18291 0.11577 0.20908 0.11586 0.21287 0.11524 0.21288 113 Table 14 City of Riverside Top 10 Electricity Customers Current Year and Nine Years Ago Electricity Customer Local University Local Government Local Government Local School District Corporation Corporation Corporation Hospital Hospital Local University Corporation Corporation Hospital Retail Sales Per Financial Statements N/A -not available Electricity Charges $12,548,112 8,075,057 7,864,356 4,442,089 3,990,337 3,695,864 3,159,703 2,777,910 2,716,410 2,620,281

$51,890,119

$306,656,506 Source: Riverside Public Utilities, Finance Services 2018 Rank 1 2 3 4 5 6 7 8 9 10 2009 Percent of Percent of Total Electric Electricity Total Electric Revenues Charges Rank Revenues 4.09% $7,481,477 2 2.73% 2.63% 7,805,664 1 2.85% 2.56% 6,184,476 3 2.26% 1.45% 4,351,162 4 1.59% 1.30% 3,251,002 5 1.19% 1.21% 2,323,394 6 0.85% 1.03% 1,952,604 7 0.71% 0.91% 1,762,868 10 0.64% 0.89% 0.00% 0.85% 0.00% 1,943,163 8 0.71% 1,768,410 9 0.65% 0.00% 16.92% $38,824,220 14.18% $ 273,841,491 114 Table 15 City of Riverside Ratios of Outstanding Debt by Type Last Ten Fiscal Years (in thousands}

Governmental Activities General Pension Certificates Fiscal Obligation Redevelopment Revenue Obligation of Capital Notes/Loans Year Bonds Bonds Bonds Bonds 2 Participation Leases Pa:£able 2009 18,171 285,743 139,410 198,268 7,455 8,749 2010 17,533 278,867 136,050 211,212 6,303 9,291 2011 16,845 305,195 132,095 207,246 6,670 8,849 2012 16,107 127,480 202,703 5,220 4,000 2013 15,314 43,762 122,005 158,697 8,424 28,652 2014 14,460 42,344 115,775 191,446 13,168 47,611 2015 13,546 40,891 108,725 187,212 14,966 45,574 2016 12,567 39,398 101,000 181,429 12,006 43,482 2017 11,513 37,854 92,592 156,516 17,193 41,325 2018 10,388 36,246 60,883 150,800 25,647 1,746 Business-Type Activities Pension Total Percentage Debt Fiscal Revenue Notes/Loans Capital Obligation Primary of Personal Per Year Bonds Pa:£able Leases Bonds 2 Government lncome 1 Caeita 1 2009 670,512 7,915 2,574 1,342,931 20.15% 4.54 2010 968,393 7,249 2,151 1,637,049 24.83% 5.44 2011 1,071,554 76,747 1,720 1,826,921 27.58% 6.01 2012 1,063,853 73,821 1,332 1,494,516 21.94% 4.84 2013 1,031,839 70,798 2,558 1,482,049 21.41% 4.75 2014 1,094,290 36,030 2,266 1,557,390 22.54% 4.96 2015 1,239,634 37,225 1,720 1,689,493 24.64% 5.38 2016 1,208,851 37,793 4,694 1,641,220 23.93% 5.22 2017 1,180,345 35,255 6,209 1,578,802 22.11% 4.83 2018 1,139,864 78,583 6,821 18,324 1,529,302 20.81% 4.69 1 These ratios are calculated using personal income and population data for the prior calendar year. 2 The 2005 and 2017 Taxable Pension Obligation Bonds were divided between Governmental Activities, Business-Type Activities, and the Successor Agency. Source: City of Riverside Notes to Financial Statements and Statistical Table 20. 115 Table 16 City of Riverside Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (in thousands, except per capita amount) General Certificates Tax Percent of/ Fiscal Obligation Pension of Allocation Assessed Year Bonds Bonds Participation Bonds Total Value 1 2009 18,171 139,410 198,268 285,743 641,592 3.52% 2010 17,533 136,050 211,212 278,867 643,662 3.82% 2011 16,845 132,095 207,246 305,195 661,381 4.03% 2012 16,107 127,480 202,703 346,290 2.12% 2013 15,314 122,005 158,697 296,016 1.80% 2014 14,460 115,775 191,446 321,681 1.91% 2015 13,546 108,725 187,212 309,483 1.73% 2016 12,567 101,000 181,429 294,996 1.65% 2017 11,513 92,592 156,516 260,621 1.36% 2018 10,388 79,207 150,800 240,395 1.21% Notes: General bonded debt is debt payable with governmental fund and enterprise fund resources.

1 Assessed value has been used because the actual value of taxable property is not readily available in the State of California.

2 These ratios are calculated using population data for the prior calendar year. Source: City of Riverside Notes to Financial Statements and Reserve Cash Reconciliation maintained by City Finance Department.

116 Per caeita 2 2,167 2,140 2,175 1,122 949 1,024 985 909 798 738 Table 17 City of Riverside Direct and Overlapping Governmental Activities Debt As of June 30, 2018 2017-18 Assessed Valuation:

Less Dissolved Redevelopment Agency Incremental Valuation:

Adjusted Assessed Valuation:

Overlapping debt repaid with property taxes 2 Metropolitan Water District Riverside County Flood Control and Water Conservation District Zone No. 4 Riverside City Community College District Alvord Unified School District Riverside Unified School District Corona-Norco Unified School District Jurupa Unified School District Moreno Valley Unified School District Alvord Unified School District Community District No.2006-1 Riverside Unified School District Community Facilities Districts City of Riverside Community Facilities Districts City of Riverside 1915 Act Bonds Total overlapping debt repaid with property taxes Total Debt $ 60,600,000 16,750,000 256,365,337 208,288,867 224,730,000 433,791,926 124,587,972 112,668,521 7,430,000 74,225,000 13,855,000 21,950,000 117 $ 28,103,778,537 8,167,137,151

$ 19,936,641,386

%Applicable 1.034 % 2.096 28.706 70.672 85.973 0.001 0.002 10.378 82.333 89.479-100 100 100 $ $ Page 1 of2 City's Share of Debt 1 626,604 351,080 73,592,234 147,201,908

193,207,123 4,338 2,492 11,692,739 6,117,342 74,118,738 13,855,000 21,950,000 542,719,598 (continued)

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

Qualified Zone Academy bonds are included based on principal due at maturity.

Ratios to 2017-18 Assessed Valuation:

Total debt repaid with property taxes ................................... . City direct debt ($304,034,000)

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

.. Combined total direct and overlapping debt.. ......................... . Ratios to Dissolved Redevelopment Incremental Valuation

($8.167.137.151):

Total overlapping tax Increment debt... ............................... . 1.93% 1.08% 4.29% 2.72% Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

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

118 Table 18 City of Riverside Legal Debt Margin Information Last Ten Fiscal Years 2009 2010 2011 Assessed valuation

$18,243,019

$16,840,575

$ 16,396,996 Conversion percentage 25% 25% 25% Adjusted assessed valuation 4,560,755 4,210,144 4,099,249 Debt limit percentage 15% 15% 15% Debt limit 684,113 631,522 614,887 Total net debt applicable to limit: 18,171 17,533 16,845 Legal debt margin 665,942 613,989 598,042 Total net debt applicable to the limit as a percentage of debt limit 2.7% 2.8%

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. 2.7% 2012 $ 16,342,830 25% 4,085,708 15% 612,856 16,107 596,749 2.6% Source: City of Riverside, Statistical Table 8, Statistical Table 15 and Notes to Financial Statements.

119 $ (in thousands) 2013 2014 2015 2016 2017 2018 16,415,712

$ 16,851,786 $17,867,012 $18,502,513

$ 19,209,528

$ 19,936,641 25% 25% 25% 25% 25% 25% 4,103,928 4,212,947 4,466,753 4,625,628 4,802,382 4,984,160 15% 15% 15% 15% 15%

15% 615,589 631,942 670,013 693,844 720,357 747,624 15,314 14,460 13,546 12,567 11,513 10,388 600,275 617,482 656,467 681,277 708,844 737,236 2.5% 2.3% 2.0% 1.8% 1.6%

1.4%

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

Electric Revenue Bonds Water Revenue Bonds Less: Net Less: Net Fiscal Pledged Operating Available Debt Service Pledged Operating Available Debt Service Year Revenue' Exeenses 1 Revenue Princieal Interest Coverage Revenue' Exeenses 1 Revenue Princieal Interest Coverage 2008 314,733 219,680 95,053 19,460 16,790 2.62 67,312 33,827 33,485 4,355 4,275 3.88 2009 320,447 202,904 117,543 20,572 24,941 2.58 60,886 35,639 25,247 4,473 6,728 2.25 2010 320,560 199,040 121,520 21,574 22,572 2.75 61,985 35,953 26,032 4,533 8,008 2.08 2011 319,177 212,878 106,299 23,029 25,087 2.21 84,328 35,220 49,108 4,799 9,263 3.49 2012 340,098 221,876 118,222 25,174 27,630 2.24 73,557 35,309 38,248 4,708 8,872 2.82 2013 348,187 226,997 121,190 18,486 25,941 2.73 72,700 35,940 36,760 5,395 8,700 2.61 2014 347,541 241,136 106,405 21,632 27,575 2.16 71,317 37,698 33,619 4,574 8,536 2.56 2015 348,244 250,578 . 97,666 15,485 26,532 2.32 66,010 36,725 . 29,285 5,258 8,342 2.15 2016 371,029 249,607 . 121,422 16,460 25,780 2.87 60,047 35,608 . 24,439 5,533 8,063 1.80 2017 368,956 251,998 . 116,958 14,032 25,553 2.95 65,689 37,956 . 27,733 5,486 8,124 2.04 2018 368,116 257,785 . 110,331 15,675 25,045 2.71 71,054 40,767 . 30,287 6,098 8,049 2.14 Sewer Revenue Bonds Less: Net Fiscal Pledged Operating Available Debt Service Year Revenue' Exeenses 1 Revenue Princieal Interest Coverage 2010 31,470 26,865 4,605 666 151 5.64 2011 37,772 27,575 10,197 692 125 12.48 2012 42,562 29,632 12,930 692 5,471 2.10 2013 52,944 29,999 22,945 7,465 10,891 1.25 2014 52,098 28,930 23,168 7,753 10,781 1.25 2015 51,288 27,598 23,690 8,056 10,958 1.25 2016 68,412 31,864 36,548 8,405 20,786 1.25 2017 78,337 29,921 48,416 9,010 19,621 1.69 2018 68,735 31,513 37,222 9,184 19,136 1.31 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

1 Amounts have been calculated in accordance with the provisions set forth in the debt covenants.

Total operating expenses exclusive of depreciation.

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

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

120 Table 20 City of Riverside Demographic and Economic Statistics Last Ten Calendar Years Calendar Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sources: Per Personal Capita lncome 2 Personal Unemployment Population 1 (in thousands)

Income 2 Rate 3 296,038 6,665,142 22,514 8.6 300,769 6,592,294 21,918 13.7 304,051 6,623,143 21,783 14.8 308,511 6,811,923 22,080 13.7 311,955 6,923,217 22,193 9.7 314,034 6,909,376 22,002 8.4 314,221 6,857,559 21,824 7.9 324,696 6,953,323 21,414 6.4 326,792 7,139,080 21,845 5.8 325,860 7,349,024 22,552 5.1 1 California State Department of Finance. 2 Demographic Estimates for 2005-2009 are based on the last available Census. Projections are developed by incorporating all of the prior census data released to date. Demographic Data is totaled from Census Block Groups that overlap the City's boundaries.

Demographic Estimates for 2010 and later are per the US Genus Bureau, most recent American Community Survey. 3 State of California Empolyment Development Department.

121 Table 21 City of Riverside Principal Employers Current Year and Nine Years Ago 2018 2009 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment County of Riverside 11,865 1 8.1% University of California 8,686 2 6.0% 7,127 1

• 4.6% Riverside Unified School District 4,000 3 2.7% 4,200 2 2.7% Kaiser 3,484 4 2.4% 3,900 3 2.5% City of Riverside 2,504 5 1.7% 2,749 4 1.8% California Baptist University 2,285 6 1.6% Riverside Community Hospital 2,200 7 1.5% 1,600 8 1.0% Alvord Unified School District 1,800 8 1.2% 2,000 5 1.3% UTC Aerospace Systems 1,200 9 0.8% Parkview Community Hospital 897 10 0.6% 915 9 0.6% Riverside Community College District 2,000 6 1.3% Fleetwood Enterprises 1,963 7 1.3% Riverside Medical Clinic 750 10 0.5% Total 38,921 26.7% 27,204 17.5% Source: City of Riverside, Economic Development Department 122 Table 22 City of Riverside Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years 2009 2010 2011 2012 2013 2014 2 2015 2016 2017 2018 Function General government 439.10 433.40 431.40 440.40 413.90 356.25 361.25 394.24 417.55 453.80 Public safety (sworn and non-sworn personnel)

Police 1 591.93 589.93 589.93 599.93 596.75 551.75 553.75 554.75 512.00 558.00 Fire 254.21 255.46 255.46 255.46 255.46 255.00 255.00 251.00 239.00 245.00 Highways and streets 369.65 349.50 348.11 357.11 362.11 333.48 308.00 308.00 272.00 271.00

• Sanitation 58.60 59.00 56.00 56.00 57.00 59.00 57.00 59.00 59.00 59.00 Culture and recreation 340.71 328.07 328.07 341.22 351.48 269.98 274.45 286.75 276.23 276.10 Airport 7.00 7.00 9.50 9.50 9.50 6.00 6.00 6.00 7.00 7.00 Water 167.00 177.65 180.15 181.15 181.15 182.15 181.15 181.15 174.15 158.65 Electric 408.10 419.45 448.50 452.50 459.50 462.50 464.50 466.50 471.75 475.25 Total 2,636.30 2,619.46 2,647.12 2,693.27 2,686.85 2,476.11 2,461.10 2,507.39 2,428.68 2,503.80 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 Cbuncil deleted a number of long-term unfunded positions.

Source: City of Riverside, Finance Department 123 Table 23 City of Riverside Operating Indicators by Function Last Ten Fiscal Years Function/Program 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Police Arrests 10,150 8,690 8,118 7,736 8,362 9,321 10,310 9,242 8,358 8,423 Fire Number of calls answered 26,397. 26,484 27,322 27,637 29,988 30,668 32,943 35,905 36,150 38,501 Inspections 7,638 7,234 6,505 10,074 10,151 12,476 8,770 6,636 6,482 6,519 Public works: Street resurfacing (miles) 18.90 20.00 21.25 18.43 16.50 35.38 38.75 39.01 27.09 17.37 Parks and recreation Number of recreation classes 21,884 27,762 37,303 43,318 41,364 45,707 43,007 53,907 53,308 54,025 Number of facility rentals 36,822 34,565 42,638 43,288 43,358 46,432 44,363 47,772 48,097 46,904 Water Number of accounts 64,062 64,231 64,349 64,367 64,591 64,829 65,102 65,094 65,428 65,640 Annual consumption (eel) 29,721,236 26,687,271 25,902,439 27,062,142 28,186,178 28,887,304 26,007,490 22,529,463 25,340,729 27,514,374 Electric Number of accounts 106,385 106,335 106,855 107,321 107,525 108,358 108,388 108,776 109,274 109,619 Annual consumption (kwh) 2,282 2,089 2,016 2,103 2,193 2,152 2,167 2,170 2,197 2,195 Sewer: New connections 18,765 16,971 17,746 18,166 17,607 17,274 17,553 17,669 17,654 17,551 Average daily sewage treatment 33.00 33.29 30.06 29.84 29.57 28.49 27.15 26.35 27.19 26.16 (millions of gallons) 1 Amounts expressed in millions N/A -not available Source: City of Riverside, various departments 124 Table 24 City of Riverside Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function Public Safety Police Stations 3 3 3 3 3 3 3 3 3 3 Substations 5 4 4 4 4 4 4 4 5 4 Helicopters 4 4 4 4 4 3 3 3 3 2 Airplane 0 0 0 0 0 0 0 0 0 Fire Stations 14 14 14 14 14 14 14 14 14 14 Active apparatus 30 30 26 27 28 28 31 33 32 33 Reserve apparatus 7 7 9 9 11 11 8 9 9 9 Training facilities 1 1 1 1 1 1 1 Highways and streets Streets (miles) 8136.89 867.96 868.39 868.70 868;89 871.19 872.16 872.22 872.01 872.24 Streetlights 29,675 29,757 29,868 29,933 29,949 29,968 29,986 30,427 30,467 30,479 Signalized intersections 365 362 362 365 365 367 386 381 382 384 Culture and recreation Parks acreage 2,773.00 2,773.00 2,811.00 2,811.00 2,891.00 2,911.80 2,926.80 2,983.00 2,983.00 2,988.00 Community centers 11 11 11 11 11 11 11 11 11 11 Playgrounds 41 41 41 41 43 44 44 46 46 46 Swimming pools 7 7 7 7 7 7 7 7 7 7 Softball & baseball diamonds 44 44 44 44 44 44 44 44 44 44 Library branches 7 7 8 8 8 8 8 8 8 8 Museum exhibit-fixed 6 5 8 5 3 3 4 5 5 o' Museum exhibit-special 2 2 2 1 4 4 5 6 6 1' Water Fire hydrants 7,523 7,593 7,632 7,682 7,726 7,754 7,758 7,908 7,952 8,173 Sewer Sanitary sewers (miles) 794 820 823 829 829 829 820 829 827 820 Electric Miles of overhead distribution system 522.0 519.0 517.0 515.0 513.0 513.0 513.0 513.0 513.0 514.0 Miles of underground system 769.0 782.0 791.0 804.0 810.0 814.0 815.0 817.0 826.0 831.0 1 The decrease in total numbers of Museum's exhibits is due to the closure of the Riverside Metropolitan Museum for expansion and ~enovation.

The Museum is expected to reopen as early as late 2020. Source: City of Riverside, various departments 125

City ef Arts &...Innovation . 3900 Main Street Riverside, CA 92522 ExploreRiverside.com City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Beginning Business-type activnies:

Balance Additions Reclass Reductions Revenue bonds $1,180,345

$ $ Pension obligation bonds 21,656 llbtes payable 35,255 8,600 39,174 Capnal leases 6,209 2,152 Water stock acquisnion rights 938 Landfill capping 5,390 Corrpensated absences 8,279 7,714 $1,236,416

$ 16,314 $ 62,982 Governmental activities:

General Obligation Bonds

-Governmental Activities:

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

$ (40,481) (3,332) (4,446) (1,540) (620) (7,397) $ (57,816) Ending Due Within Balance One Year $1,139,864

$ 33,595 18,324 3,550 78,583 4,910 6,821 1,568 938 150 4,770 250 8,596 7,671 $1,257,896

$ 51,694 Principal Outstanding

$10,280 108 $10,388 Remaining general obligation bond debt service payments will be made from unrestricted revenues of the General fund. Annual debt service requirements to maturity are as follows: Fiscal Year 2019 2020 2021 2022 2023 2024-2028 Premium Total Principal

$ 1,195 1,290 1,380 1,475 1,560 3,380 108 $ 10,388 Interest $ 492 436 373 306 229 189 $ 2,025 Pension Obligation Bonds -Governmental Activities:

In 2018, the 2005 and 2017 Taxable Pension Obligation Bonds were distributed between Governmental

$ $ Total 1,687 1,726 1,753 1,781 1,789 3,569 108 12,413 Principal Outstanding 45 (amounts expressed in thousands)

Activities, Business-Type Activities, and the Successor Agency to properly reflect their proportional share. $89,540 California Statewide Community Development Authority (Public Safety) 2004 Taxable Pension Obligation Bond; 2.65% to 5.896%, due in annual installments from $1,125 to $10,715 through June 1, 2023. $30,000 2005 Taxable Pension Obligation Bonds Series A; 3.85% to 4.78%, due in annual installments

$630 to $3,860 through June 1, 2020; $3,122 relates to Governmental Activities.

$31,960 2017 Taxable Pension Obligation Bonds Series A; 1.25% to 3.125%, due in annual installments from $2,910 to $3,580 through June 1, 2027; $13,704 relates to Governmental Activities.

Subtotal Less: Bond Discount Total Pension Obligation Bonds -Governmental Activities

$44,400 3,122 13,704 61,226 (343) $60 883 Remaining pension obligation bond debt service payments will be made from unrestricted revenues of the General fund. Annual debt service requirements to maturity are as follows: Fiscal Year Principal Interest Total 2019 $ 10,435 $ 3,126 $ 13,561 2020 10,675 2,591 13,266 2021 10,280 2,030 12,310 2022 11,226 1,478 12,704 2023 12,247 867 13,114 2024-2028 6,363 504 6,867 Discount (343) (343) Total $ 60,883 $ 10,596 $ 71,479 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Certificates of Participation

-Governmental Activities:

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

• September 1, 2036. $128,300 2008 Riverside Renaissance Certificates of Participation; issued at a variable rate; however, the City entered into an agreement to convert to a fixed rate of 3.4%. For information on the swap agreement see Note 9. Due in annual installments from $2,900 to $7,200 through March 1, 2037. $35,235 2013 Pavement Rehab Certificates of Participation; 4.0% to 5.0%, due in annual installments from $1,285 to $2,855 through June 1, 2033. Subtotal Plus: Unamortized bond premium Total Certificates of Participation Principal Outstanding

$16,485 102,000 149,705 1,095 $150 800 Remaining certificates of participation debt service payments will be made from unrestricted revenues of the debt service fund. Annual debt service requirements to maturity are as follows: Fiscal Year 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 Premium Total Principal

$ 5,825 6,120 6,420 6,625 6,835 38,680 47,065 32,135 1,095 $ 150,800 Interest $ 5,694 5,468 5,232 4,984 4,728 19,367 11,178 2,601 $ 59,252 $ $ Total 11,519 11,588 11,652 11,609 11,563 58,047 58,243 34,736 1,095 210,052 46 (amounts expressed in thousands)

Lease Revenue Bonds -Governmental Activities:

On August 15, 2012, the City issued the Series 2012A Lease Revenue Refunding Bonds in the amount of $41,240. The bonds were issued to refinance the 2003 Certificates of Participation.

Interest on the bonds is payable semi-annually on May 1 and November 1 of each year, commencing May 1, 2013. The rate of interest varies from 2% to 5% per annum depending on maturity date. Principal is payable in annual installments ranging from $1,295 to $2,840 commencing November 1, 2013 and ending November 1, 2033. Add: Unamortized bond premium Total Lease Revenue Bonds -Governmental Activities Principal Outstanding

$34,340 1,906 $36 246 Remaining lease revenue bond debt service payments will be made from unrestricted revenues of the debt service fund. Annual debt service requirements to maturity are as follows: Fiscal Year 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 Principal

$ 1,560 1,640 1,725 1,810 1,905 10,230 12,630 2,840 1,906 Interest $ 1,511 $ 1,432 1,347 1,259 1,166 4,518 1,921 57 Total 3,071 3,072 3,072 3,069 3,071 14,748 14,551 2,897 1,906 Premium Total $ 36,246 $ 13,211 =$=====4=9=,4=57:::::::

Loans Payable -Governmental Activities:

2012 financing arrangement in the amount of $4,000 for the construction of Ryan Bonaminio Park at the Tequesquite Arroyo. The debt will be paid with resources from the General Fund in semi-annual debt service payments of approximately

$468 per year over a Principal Outstanding City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 10 year period, which includes interest at an annualized rate of 3.05%. Remaining loans payable debt service payments will be made from unrestricted revenues of the debt service fund. Annual debt service requirements to maturity are as follows: Fiscal Year 2019 2020 2021 2022 Total $ $ Business-type activities:

Principal 417 430 443 456 1,746 Interest $ $ 50 37 24 11 122 Total $ $ 467 467 467 467 1,868 The following debt has been issued for the purpose of generating capital resources for use in acquiring or constructing municipal facilities or infrastructure projects.

Long-Term Obligations at June 30, 2018: Revenue Bonds: Electric $141,840 2008 Electric Refunding/Revenue Bonds; Series A & C. The bonds were issued at a variable rate; however, the City entered into an agreement to convert to a fixed rate of 3.1 % and 3.2% for the Series A & C bonds, respectively.

See Note 9 for information on the swap agreements.

Bonds are due in annual installments from $700 to $7,835 through October 1, 2035. $209,740 2008 Electric Revenue Bonds; Series D fixed rate bonds, 3.6% to 5.0%, due in annual installments from $3,460 to $22,540 through October 1, 2038. In May 2018, the Electric Fund defeased $11,005 of the total outstanding

$206,280 of 2008 Electric Revenue Bonds, Series D with monies received from settlements and cost recoveries associated with the early closure of the San Onofre Nuclear Generation Station Units 2 and 3 (SONGS). The partial defeasance related to bond Principal Outstanding

$112,515 47 (amounts expressed in thousands) proceeds that funded part of the Steam Generator Replacement Project and other SONGS capital costs. The partial bond defeasance will reduce debt and realized interest savings of $10,233 over the remaining 20-year life of the bonds. $34,920 2009 Electric Refunding/Revenue Bonds; Series A fixed rate bonds, 4.0% to 5.0%, due in annual installments from $1,150 to $7,035 through October 1, 2018. The bonds refunded the 1998 series and partially refunded the 2001 series. $140,380 2010 Electric Revenue Bonds; Series A and B fixed rate bonds, 3% to 7.65%, due in annual installments from $95 to $33,725 through October 1, 2040. $56,450 2011 Electric Revenue Refunding Bonds; Series A. The bonds were issued at a variable rate; however, the City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements see Note 9. Bonds are due in annual installments from $725 to $5,175 through October 1, 2035. $79,080 2013 Electric Revenue Refunding Bonds; Series A fixed rate bonds, 3% to 5.25%, due in annual installments from $795 to $12,685 through October 1, 2043. Subtotal Add: Unamortized bond premium Subtotal $58,235 2008 Water Revenue Bonds; Series B fixed rate bonds, 4.0% to 5.0%, due in annual installments from $1,210 to $7,505 through October 1, 2038. $31,895 2009 Water Refunding/Revenue Bonds; Series A fixed rate bonds, 3.0% to 5.0%, due in annual installments from $2,360 to $4,335 through October 1, 2020. The bonds refunded the 1998 series and partially refunded the 2001 series. 195,275 1,275 137,940 41,925 39,785 528,715 6,624 $535,339 $55,415 7,255 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 $67,790 2009 Water Revenue Bonds; Series B fixed rate bonds, 5.1 % to 6.3%, due in annual installments from $2,475 to $4,985 through October 1, 2039. $59,000 2011 Water Refunding/Revenue Bonds; Series A. The bonds were issued at a variable rate; however the City entered into an agreement to convert to a fixed rate of 3.2%. For information on the swap agreements see Note 9. Bonds are due in annual installments from $600 to $3,950 through October 1, 2035. Subtotal Add: Unamortized bond premium Subtotal Sewer $240,910 2009 Sewer Revenue Bonds; Series A & B fixed rate bonds, 4% to 7.2%, due in annual installments from $5,555 to $13,350 through August 1, 2039. $200,030 2015 Sewer Revenue Bonds; Series A fixed rate bonds, 4% to 5%, due in annual installments from $4,790 to $14,175 through August 1, 2040. Subtotal Add: Unamortized bond premium Subtotal Total Revenue Bonds 67,790 52,425 182,885 1 748 $184,633 $195,665 200,030 395,695 24,197 $419,892 $1 139 864 Remaining revenue bond debt service payments will be made from revenues of the Electric, Water and Sewer Enterprise funds. Annual debt service requirements to maturity are as follows: 48 {amounts expressed*in thousands)

Electric Utilit~ Fund Water Utili!Y Fund Fiscal Year Principal Interest Total Principal 2019 $ 14,445 $ 23,086 $ 37,531 $ 5,635 2020 14,995 22,516 37,511 5,865 2021 15,535 21,955 37,490 6,080 2022 16,085 21,371 37,456 6;320 2023 16,675 20,758 37,433 6,535 2024-2028 93,830 92,890 186,720 36,630 2029-2033 115,230 70,709 185,939 44,420 2034-2038 133,885 42,946 176,831 54,120 2039-2043 105,410 9,385 114,795 17,280 2044-2048 2,625 66 2,691 Premium 6,624 6,624 1,748 Total $ 535,339 $ 325,682 $ 861,021 $ 184,633 Sewer utilitl Fund Fiscal Year Principal Interest 2019 $ 13,515 $ 18,488 $ 2020 14,075 17,929 2021 10,820 17,372 2022 11,345 16,844 2023 11,905 16,289 2024-2028 68,835 72,128 2029-2033 87,445 53,517 2034-2038 111,180 29,779 2039-2043 66,575 4,339 Premium 24,197 Total $ 419,892 $ 246,685 $ Pension Obligation Bonds -Business Type Activities:

In 2018, the 2005 and 2017 Taxable Pension Obligation Bonds were distributed between Governmental Activities, Business-Type Activities, and the Successor Agency to properly reflect their proportional share. $30,000 2005 Taxable Pension Obligation Bonds Series A; 3.85% to 4.78%, due in annual installments

$630 to $3,860 through June 1, 2020. $3,400 relates to Business Type Activities.

$31,960 2017 Taxable Pension Obligation Bonds Series A; 1.25% to 3.125%, due in annual installments from $ $ Interest Total 7,352 $ 12,987 7,120 12,985 6,889 12,969 6,658 12,978 6,426 12,961 28,032 64,662 20,007 64,427 10,002 64,122 595 17,875 1,748 93,081 $ 277,714 Total 32,003 32,004 28,192 28,189 28,194 140,963 140,962 140,959 70,914 24,197 666,577 Principal Outstanding

$3,400 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 $2,910 to $3,580 through June 1, 2027. $14,924 relates to Business Type Activities.

Total Pension Obligation Bonds -Business Type Activities Fiscal Year Principal Interest 2019 $ 3,550 $ 553 2020 2,952 432 2021 1,595 331 2022 1,629 297 2023 1,668 256 2024-2028 6,930 549 Total $ 18,324 $ 2,418 Notes Payable -Enterprise Funds: Sewer fund loan from State of California for Cogeneration project, 2.336%, payable in net annual installments of $339, beginning January 29, 2003 through January 29, 2021 Sewer fund loan from State of California for Headworks project, 1.803%, payable in net annual installments of $477, beginning November 6, 1999 through November 6,2018 Public parking fund loan for Fox Entertainment Plaza project, 3.85%, payable in net annual installments of $1,747, beginning June 16, 2011 through December 16, 2031. Notes payable consists of several agreements with Hillwood Enterprises, L.P. (Hillwood) for its development of logistic centers located in the City of San Bernardino.

As part of these agreements, the Water fund purchased land from Hillwood and subsequently leased it back to the entity. In addition, the agreements require Hillwood to relocate wells located on the properties as well as terminate an existing lease. In consideration of the cost of the land purchase, well relocations and lease termination, the Water fund will make payments to $ $ Total $18,324 4,103 3,384 1,926 1,926 1,924 7,479 20,742 Principal Outstanding

$ 978 469 18,256 49 (amounts expressed in thousands)

Hillwood in a form of a credit with Hillwood's rental payments to the Water fund for the first 15 years of the leases. On July 19, 2012, the City secured financing in the amount 'of $41,650 with BBVA Compass Bank for the renovation and expansion of the Riverside Convention*

Center. In March 2014, the financing arrangement with BBVA was increased to $44,650. The financing consists of an initial 21-month variable rate interest only period during construction that has a swap transaction layered over the remaining 20-year amortization resulting in a "synthetic fixed" rate of 3.24% for 20 of the 22 years. For information on the swap agreement see Note 9. At the end of the construction period, principal and interest are due on the first of each month, with equal payments each year of approximately

$2,850. Total notes payable -Enterprise Funds Remaining notes payable debt service payments will be 21,524 37 356 $78 583 made from unrestricted revenues of the Sewer fund. Annual debt service requirements to maturity are as follows: Sewer Fund Fiscal Year Principal Interest Total 2019 $ 788 $ 28 $ 816 2020 326 14 340 2021 333 7 340 Total $ 1,447 $ 49 $ 1,496 Public Parking Fund Fiscal Year Principal Interest Total 2019 $ 1,054 $ 693 $ 1,747 2020 1,095 652 1,747 2021 1,137 609 1,746 2022 1,182 565 1,747 2023 1,227 519 1,746 2024-2028 6,892 1,842 8,734 2029-2033 5,669 445 6,114 Total $ 18,256 $ 5,325 $ 23,581 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Fiscal Year 2019 2020 2021 2022 2023 2024-2028 2029-2033 Total Fiscal Year 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 Total Capital Leases: $ $ Water Fund Principal 1,202 1,273 1,348 1,428 1,511 8,970 5,792 21,524 Interest $ 556 524 490 455 4.15 1,389 212 $ 4,041 Convention Center Principal Interest 1,866 1,170 1,935 1,102 1,987 1,049 2,048 989 2,110 926 11,561 3,621 13,459 1 , 722 -~~~-2~,3_9_0_

76 37,356 10,655 $ $ Total Total 1,758 1,797 1,838 1,883 1,926 10,359 6,004 25,565 3,036 3,037 3,036 3,037 3,036 15,182 15,181 2,466 48,011 The City leases various equipment through capital leasing arrangements in the governmental and proprietary fund types. These activities are recorded for both governmental and business-type activities in the government-wide financial statements.

The assets and related obligations under leases in governmental funds are not recorded in the fund statements.

For proprietary funds, the assets and their related liabilities are reported directly in the fund. Amortization applicable to proprietary assets acquired through capital lease arrangements is included with depreciation for financial statement presentation.

The assets acquired through capital leases are as follows: 50 Asset Buildings and improvements Machinery and equipment Subtotal Less: Accumulated depreciation Total (amounts expressed in thousands)

Governmental Business-type Activities Activities

$ 1,103 $ 728 32,493 6,086 33,596 6,814 (10,817) (3,024) $ 22,779 =$======~3!,,;,,7~90~

The future minimum lease obligations as of June 30, 2018 were as follows: Governmental Business-type Fiscal Year 2019 -$.,....-___ A_c_ti_vi_tie_s Activities 4,821 $ 1,700 2020 3,640 1,687 2021 3,640 1,378 2022 3,640 819 2023 2,808 626 Thereafter

____ ..;..:9,_47...cBc....

1,039 Total minimum lease payments Less: Amount representing interest (rates ranging from 1.2% to 9%) Total capital lease payable Contracts

-Enterprise Funds: Water stock acquisition rights payable on demand to various water companies Letters of Credit: $ 28,027 7,249 (2,380) 25,647 $ (428) 6,821 Principal Outstanding The City's 2008 Certificates of Participation and 2008 Electric Revenue Bonds (Series A and C) require an additional layer of security between the City and the purchaser of the bonds. The City has entered into the following letters of credit ("LOG") in order to provide liquidity should all or a portion of the debt be optionally tendered to the remarketer without being successfully remarketed:

Debt Issue 2008 Certificates of Participation 2008A Electric Revenue Bonds 2008C*Electric Revenue Bonds LOC Provider Bank of America, N.A. Barclays Bank, PLC Barclays Bank, PLC LOC Expiration Date 2021 2021 2021 Annual Commitment Fee 0.400% 0.325% 0.325%

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 To the extent that remarketing proceeds are insufficient or not available, tendered amounts will be paid from drawings made under an irrevocable direct-pay letter of credit. Liquidity advances drawn against the LOC that are not repaid will be converted to an installment loan with principal to be paid quarterly not to exceed a 5-year period. The City would be required to pay annual interest equal to the highest of 8.0%, the Prime Rate plus 2.50%, the Federal Funds Rate plus 2.50% and 150% of the yield on the 30-year U.S. Treasury Bond. No amounts have ever been drawn against the three letters of credit due to a failed remarketing.

The various indentures allow the City to convert the mode of the debt in the case of a failed remarketing.

The following are legally required debt service cash reserves.

These amounts, at a minimum, are held by the City or fiscal agents at June 30, 2018: Governmental long-term obligations:

Certificates of participation

$ 8,771 Total $ 8,771 Enterprise funds: Electric $ 10,800 Sewer 16,508 Total $ 27,308 The City has a number of debt issuances outstanding that are collateralized by the pledging of certain revenues.

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

Description of Pledged Revenue Electric revenues Water revenues Sewer revenues Annual Amount of Annual Debt Service Pledged Revenue Payments (all of (net of expenses, debt secured by where required) this revenue) $ 110,331 * $ 40,720 30,287

• 14,147 37,221 ** 28,320 Debt Service Coverage Ratio for FY 06/30/18 $ 2.71 2.14 1.31 51 (amounts expressed in thousands)

• Excludes non-cash pension expense ** Includes cash set-aside in a rate stabilization account in accordance with applicable bond covenants.

There are also a number of limitations and restrictions contained in Assessment Bond indentures.

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

Landfill Capping: State and Federal laws and regulations require the City to place a final cover on all active landfills when closed and to perform certain maintenance and monitoring functions at the landfill site for 30 years after closure. To comply with these laws and regulations, the City is funding the costs of closure and "final capping" of the Tequesquite landfill located in the City. This area, comprised of approximately 120 acres, operated as a "Class II Sanitary Landfill" until its closure in 1985. During its operation, the landfill did not accept hazardous waste and no clean up and abatement or cease and desist orders have been issued to the City. The capacity used at June 30, 2018 was 100%. The remaining post closure period is currently 12 years. The estimated costs as determined by an independent consultant and updated by the City's Engineering Department are associated with flood control upgrades, remediation of possible ground water contamination and control of methane gas. All potential costs have been recognized in the financial statements.

However, there is the potential for these estimates to change due to inflation, deflation, technology, or change in laws or regulations.

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

The portion of costs to be recovered through future rates is classified as a regulatory asset and will be amortized over future periods. 7. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

Property insurance coverage has a limit of $1,000,000, with a deductible of $100. Earthquake and flood insurance coverage has a limit of $25,000, with a deductible of 5% (subject to $100 minimum) for earthquake and $100 for flood. Workers' compensation insurance coverage has a limit of $25,000, with a self-insured retention of $3,000 per occurrence.

The City carries commercial general liability insurance coverage in the amount of $20,000 per occurrence for general and auto liability claims greater than $3,000. There were no claims settled in the last three fiscal years that exceed City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 insurance coverage.

Internal service funds have been established to account for and finance the uninsured risks of loss. All funds of the City participate in the Risk Management program and make payments to the Internal Service Funds based on actuarial estimates of the amounts needed to fund prior and current year claims and incidents that have been incurred but not reported.

lnterfund premiums are accounted for as quasi -external transactions and are therefore recorded as revenues of the Internal Service funds in the fund financial statements.

Changes in the self-insurance fund's claims liability amounts are: Unpaid claims, June 30, 2016 Incurred claims (including IBNR's) Claim payments and adjustments Unpaid claims, June 30, 2017 Incurred claims (including IBNR's) Claim payments and adjustments Unpaid claims, June 30, 2018 8. Other Long-Term Obligations

$ 43,269 10,284 (8,608) 44,945 13,690 (12,403) $ 46,232 Changes in Long-Term Obligations:

Below is a summary of changes in term obligations during the fiscal year for the former Redevelopment Agency, which is accounted for in the Successor Agency Trust (a fiduciary fund): Beginning Balance Additions Reclass Reductions Successor Agency Bonds $ 217,147 $ $ $ (9,788) Pension obligation bonds 554 Notes Payable 4,728 (390) $ 221,875 $ $ 554 $ (10,178) Successor Agency Bonds: $26,255 State of California Department of General Services Project, 2003 Lease Revenue Refunding Bonds, Series A; 2% to 5% due in annual installments from $545 to $2,230 through Oct. 1, 2024. $4,810 State of California Dept. of General Services Project, 2003 Lease Revenue Refunding Bonds, Series B; $310 serial bonds 1.20% to 1.42% through Oct.1, $ $ Ending Due Within Balance One Year 207,359 $ 9,320 554 4,338 448 212,251 $ 9,768 Principal Outstanding 12,835 52 (amounts expressed in thousands) 2004; $620 term bonds at 3.090% due Oct. 1, 2008; $1,110 term bonds at 4.340% due Oct. 1, 2014 and $2,770 term bonds at 5.480% due Oct. 1, 2024. $8,340 Downtown/Airport Merged Project Area and Casa Blanca Project Area 2007 Tax Allocation Bonds, Tax Exempt, Series A, serial bonds 4.0% to 4.25% due in annual installments from $20 to $590 through Aug. 1, 2025; $4,980 term bonds at 4.5% due Aug. 1, 2029; $410 term bonds at 4.375% due Aug .. 1, 2037. $14,850 Downtown/Airport Merged Project Area and Casa Blanca Project Area 2007 Tax Allocation Bonds, Taxable, Series B, $4,050 term bonds at 5.2% due Aug. 1, 2017; $10,800 term bonds at 5.8% due Aug. 1, 2028. $89,205 University Corridor/Sycamore Canyon Merged Project Area, Arlington Project Area, Hunter Park/Northside Project Area, Magnolia Center Project Area, and La Sierra/Arlanza Project Area 2007 Tax Allocation Bonds, Tax-Exempt, Series C, serial bonds 4.0% to 5.0% due in annual installments from $50 to $3,210 through Aug. 1, 2025; $17,955 term bonds at 4.5% due Aug. 1, 2030; $47,775 term bonds at 5.0% due Aug. 1, 2037. $43,875 University Corridor/Sycamore Canyon Merged Project Area, Arlington Project Area, Hunter Park/Northside Project Area, Magnolia Center Project Area, and La Sierra/Arlanza Project Area 2007 Tax Allocation Bonds, Taxable, Series D, $15,740 term bonds at 5.24% due Aug. 1, 2017; $28,135 term bonds at 5.89% due Aug. 1, 2032. 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, 2,090 8,120 10,800 83,885 28,135 City of Riverside Notes to Basic Financial Statements For the year ended June 30. 2018 2034. The rate of interest varies from 0.6% to 5% per annum. Subtotal Add: Unamortized bond premium Total Successor Agency Bonds 51,040 196,905 10A54 $207,359 Remaining debt service will be paid by the Successor Agency Trust from future property tax revenues.

Annual debt service requirements to maturity are as follows: Fiscal Year 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 Premium Total Principal

$ 9,320 9,830 10,805 11,405 11,945 56,525 45,560 41,515 10,454 $ 207,359 Interest $ 9,778 9,288 8,762 8,197 7,600 28,833 15,956 4,962 $ 93,376 Pension Obligation Bonds -Successor Agency: In 2018, the 2005 and 2017 Taxable Pension Obligation Bonds were distributed between Governmental Activities, Business-Type Activities, and the Successor Agency to properly reflect their proportional share. $30,000 2005 Taxable Pension Obligation Bonds Series A; 3.85% to 4.78%, due in annual installments

$630 to $3,860 through June 1, 2020; $133 relates to the Successor Agency. $31,960 2017 Taxable Pension Obligation Bonds Series A; 1.25% to 3.125%, due in annual installments from $2,910 to $3,580 through June 1, 2027; $421 relates to the Successor Agency. Total Pension Obligation Bonds -Successor Agency $ $ Total 19,098 19,118 19,567 19,602 19,545 85,358 61,516 46,477 10,454 300,735 Principal Outstanding 133 53 (amounts expressed in thousands)

Notes Payable -Successor Agency: These notes payable have been issued to promote development and expansion within the City's redevelopment areas. Pepsi Cola Bottling Company of Los Angeles, 10.5%, payable in net annual installments of $341, subject to recording of completion.

HUD Section 108 loan for Mission Village Project, 6.15% to 6.72%, payable in semi-annual installments beginning Aug. 1, 1999 of $110 to $420 through Aug. 1, 2018. Smith's Food & Drug Centers Inc., 6% payable in variable installments, subject to payment of annual Community Facilities District assessment.

Total Notes Payable -Successor Agency Principal Outstanding 2,987 420 931 $4,338 Remaining debt service will be paid by the Successor Agency Trust from future property tax revenues.

Annual debt service requirements to maturity are as follows: Fiscal Year 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 2039-2043 Total Principal

$ 448 31 34 38 42 1,217 471 777 1,280 $ 4,338 Interest Total $ 320 $ 768 310 341 307 341 304 342 300 342 1,423 2,640 1,238 1,709 933 1,710 430 1,710 $ 5,565 =$=====9=,9=0=3 As a result of action by the State of California to dissolve all redevelopment agencies in the state, the Successor Agency no longer receives the full amount of tax increment previously pledged by the dissolved redevelopment agency to its bondholders.

In its place is a new revenue stream provided to the Successor Agency that represents only that portion of tax increment that is necessary to pay the enforceable obligations approved by the California Department of Finance.

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 For the current year, debt service payments as a percentage of the pledged gross revenue (or net of certain expenses where. so required by the debt agreement) are indicated in the table below. The debt service coverage ratios for the Successor Agency also approximate the relationship of debt service to pledged revenue for the remainder of the term of the commitment.

Description of Pledged Revenue Property Taxes: Non-Housing Housing Annual Amount of Pledged Revenue (net of expenses, where required)

• $ 56,415 10,358 Annual Debt Service Payments (all of debt secured by this revenue) $ 14,307 2,353 Debt Service Coverage Ratio for FY 06/30/18 3.94 4.40

• The computations above are based on the total tax increment generated for the year ended June 30, 2018 for each project area that had been pledged as collateral for the Bonds. As discussed above, only a portion of tax increment has been actually remitted to the Successor Agency and reported as revenue in the accompanying financial statements.

Assessment Districts and Community Facilities Districts Bonds (Not obligations of the City): As of June 30, 2018, the City has several series of Assessment District and Community Facility District Bonds outstanding in the amount of $42,375. Bonds were issued for improvements in certain districts and are long-term obligations of the property owners. The City Treasurer acts as an agent for the property owners in collecting the assessments, forwarding the collections to bondholders and initiating foreclosure proceedings, if applicable.

Since the debt does not constitute an obligation of the City, it is not reflected as a term obligation of the City and is not reflected in the accompanying basic financial statements.

9. Derivative Instruments Interest Rate Swaps The City has six cash flow hedging derivative instruments, which are pay-fixed swaps. These swaps were employed as a hedge against debt that was refunded in 2008 and 2011 and against debt issued in 2012. The balance of the deferral account for each swap is included as part of the deferred charge on refunding associated with the new bonds. The swaps were also employed 54 (amounts expressed in thousands) as a hedge against the new debt. Hedge accounting was applied to that portion of the hedging relationship, which was determined to be effective.

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

The following is a summary of the derivative activity for the year ended June 30, 2018: Change in Fair Value Fair Value Notional as of for Fiscal Amount 06/30/18 Year Governmental activities 2008 Renaissance Certificates of Participation

$ 102,000 $ (13,977) $ 5,521 Business-type activities 2008 Electric Refunding/Revenue Bonds Series A . 68,525 (4,777) 2,888 2008 Electric Refunding/Revenue Bonds Series C 41,975 (5,235) 2,207 2011 Electric Refunding/Revenue Bonds Series A 41,925 (5,216) 2,202 2011 Water Refunding/Revenue Bonds Series A 52,425 (5,593) 2,600 2012 Convention Center Financing 35,045 299 1,165 Objective:

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

("COP"). Also, in 2012, the City entered into an additional interest rate swap agreement in connection with the Convention Center financing with BBVA Compass Bank. Terms: Per the existing swap agreements, the City pays a counterparty a fixed payment and receives a variable payment computed as 62.68% of the London Interbank Offering Rate ("LIBOR")

one month index plus 12 basis points for the Electric and Water swaps. For the COP swap, the City pays a fixed payment and receives a variable payment computed as 63.00% of the LIBOR one month index plus 7 basis points. The Convention Center financing consists of an initial 21-month variable rate interest only period during construction, which swaps to a fixed rate for the remaining 20-year amortization whereby the City will pay a fixed payment and will receive a variable payment computed at 65.01 % of the LIBOR one month index plus 150 basis points. The lease interest rate on the Convention Center has a cap at the lesser of 12% or the highest rate permitted by applicable law whereas the related swap does not have a cap. The swaps have notional amounts equal to the principal amounts stated above. The notional value of the swaps and City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 the principal amounts of the associated debt decline by $975 to $7,200 until the debt is completely retired in fiscal year 2037. The bonds and the related swap agreements for the 2008A Electric Revenue Bonds mature on October 1, 2029, 2008C Electric and 2011A Electric and 2011A Water Revenue/Refunding Bonds mature on October 1, 2035. The 2008 Certificates of Participation mature on March 1, 2037. The loan with BBVA Compass Bank will be paid in full on April 1, 2034. As of June 30, 2018, rates were as follows: Interest rate swap: Fixed payment to counterparty Variable payment from counterparty Net interest rate swap payments Variable rate bond coupon payments Synthetic interest rate on bonds Interest rate swap: Fixed payment to counterparty Variable payment from counterparty Net interest rate swap payments Variable rate bond coupon payments Synthetic interest rate on bonds 2008 Electric Refunding/

Revenue Bonds Series A Rates 3.11100% -0.47498%

2.63602% 0.39419% 3.03021% 2011 Water Refunding/

Revenue Bonds Series A Rates 3.20000% -0.41887%

2.78113% 0.32721% 3.10834% 2008 Electric Refunding/

Revenue Bonds Series C Rates 3.20400% -0.47558%

2.72842% 0.39465% 3.12307% 2008 Renaissance COPs Rates 3.36200% -0.43840%

2.92360% 0.41818% 3.34178% 2011 Electric Refunding/

Revenue Bonds Series A Rates 3.20100% -0.44435%

2.75665% 0.36625% 3.12290% 2012 Convention Center Financing Rates 3.24000% -1.90203%

1.33797% 1.90203% 3.24000% Fair Value: As of June 30, 2018, in connection with all swap arrangements, the transactions had a combined net negative fair value of ($34,499).

Because the coupons on the City's variable-rate bonds adjust to changing interest rates, the bonds do not have a corresponding fair value decrease.

The fair value 55 (amounts expressed in thousands) was developed by a pricing service using the zero-coupon method. This method calculates the future net settlement payments required by the swap, assuming that the current forward rates implied by the yield curve correctly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical coupon bonds due on the date of each future net settlement of the swap. Credit risk: The City is not exposed to credit risk on the swaps because those swaps have a negative fair value. The swap counterparties, Bank of America, N.A., Bank of America Corp. and J.P. Morgan Chase & Co. were rated A+, BBB+ and A-respectively by Standard & Poor's. To mitigate the potential for credit risk for these swaps, the swap agreements require the fair value of the swap to be collateralized by the counterparty with U.S. Government securities if the counterparties' rating decreases to negotiated trigger points. Collateral would be posted with a third-party custodian.

At June 30, 2018, there is no requirement for collateral posting for any of the outstanding swaps. Basis risk: The city is exposed to basis risk on its pay-fixed interest rate swap and rate cap hedging derivative instruments because the variable-rate payments received by the city on these hedging derivative instruments are based on a rate or index other than interest rates the city pays on its hedged variable-rate debt. If a change occurs that results in the rates' moving to convergence, the expected cost savings may not be realized.

Termination risk: The derivative contract uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy.

The Schedule to the Master Agreement includes an "additional termination event." That is, a swap may be terminated by the City if either counterparty's credit quality falls below "BBB-" as issued by Standard and Poor's. The City or the counterparty may terminate a swap if the other party fails to perform under the terms of the contract.

If a swap is terminated, the variable-rate bond would no longer carry a synthetic interest rate. Also, if at the time of termination a swap has a negative fair value, the City would be liable to the counterparty for a payment equal to the swap's fair value. Swap payments and associated debt: As of June 30, 2018, the debt service requirements of the variable-rate debt and net swap payments assuming current interest rates remain the same, for their term are summarized in the following table. As rates vary, variable-rate bond interest payments and net swap payments will vary.

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Variable-Rate Bonds Fiscal Year Principal Interest 2019 $ 13,516 $ 1,905 2020 16,610 1,809 2021 17,262 1,718 2022 17,823 1,621 2023 18,310 1,519' 2024-2028 88,561 6,103 2029-2033 102,849 3,308 2034-2038 71,290 473 Total $ 346,221 .$ 18,456 10. Economic Contingency Interest Rate Swaps, Net $ 9,344 8,917 8,458 7,979 7,488 30,579 17,655 3,468 $ 93,888 Total $ 24,765 27,336 27,438 27,423 27,317 125,243 123,812 75,231 $ 458,565 A portion of fund balance has been committed within the General Fund for future economic contingencies.

The amount that has been set aside is equal to approximately 20% of the 2018-2019 General Fund adopted expenditure budget. 11. lnterfund Assets, Liabilities and Transfers Due From/To Other Funds: These balances resulted from expenditures being incurred prior to receipt of the related revenue source. The following table shows amounts receivable/payable between funds within the City at June 30, 2018: Receivable Funds General Fund Electric Fund Water Fund Total

• Internal service fund Payable Funds Nonmajor Governmental Funds Nonmajor Enterprise Funds Central Stores Fund

• Central Stores Fund

• Amount $ 633 225 858 305 131 $ 1,294 56 (amounts expressed in thousands)

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

The following table shows amounts advanced from funds within the City to other funds within the City at June 30, 2018: Receivable Funds Sewer Fund Self-Insurance Trust Fund

• Central Garage Fund

• Total

• Internal service fund Payable Funds Nonmajor Governmental Funds Central Garage Fund* Nonmajor Governmental Funds Amount $ 3,992 335 2,068 $ 6,395 In addition, the following advances to the former Redevelopment Agency are accounted for in the Private-Purpose Trust Fund of the Successor Agency: Receivable Funds Nonmajor Governmental Funds Electric Fund Total Amount 3,327 4,227 $ 7,554 Transfers In/Out: Transfers are primarily .used to (1) move revenu~s to the fund that statute or budget requires to expend them, and (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due. The following table $hows ~mounts transferred to/from funds within the City for the year ended June 30, 2018:

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Transfers In Funds General Fund Capital Outlay Fund Nonmajor Governmental Funds Nonmajor Enterprise Funds Liability Insurance Trust Fund *

• Internal service fund Transfers Out Funds Nonmajor Governmental Funds Electric Fund Water Fund Sewer Fund General Fund Nonmajor Governmental Funds General Fund Capital Outlay Fund Nonmajor Governmental Funds Nonmajor Enterprise Funds General Fund Nonmajor Enterprise Funds Governmental Activities

• • General Fund Total Amount $ 12,186 40,073 6,173 900 59,332 6,276 36 6,312 31,041 3,004 57 3,028 37,130 8,421 1,721 294 10,436 5,000 $118,210 ** Transfer of assets, net ($41,639) and liabilities

($41,345) from Governmental Activities establishment of the Civic Entertainment Fund 12. Deficit Net Position Deficit net position exists in the Self-Insurance Internal Service Fund ($30,624).

This City adopted a Self-Insurance Reserve Policy that will address the _on-going deficit in fund balance, In the past, the City began funding a portion of the deficit in the internal service fund via self-insurance rate increases phased in over several years. However, the increases continue to be offset by unusually large losses incurred during the year combined with an adjustment for the increase in the amount estimated for claims and judgments.

Management believes that there are sufficient funds on hand to cover current payment obligations and plans to continue to control costs and increase rates. However, the Self-Insurance Reserve Policy specifically address minimum cash balance requirements in the Self-Insurance Trust Fund in-line with best practices.

In conjunction with the new reserve policy, City Council has approved a funding plan to increase the cash reserve balances over the next 57 (amounts expressed in thousands) two fiscal years. The plan calls for cash contributions of $2 500 for the next fiscal year. Implementation of the reserve policy, the cash f~nding approved by City Council and the increased rates should provide the fund greater financial stability for future needs. Deficit net position exists in the Successor Agency Private-Purpose Trust Fund ($149,658).

The deficit in the Successor Agency Trust Fund will be reduced over the years as the related debt is paid-off with funds received from the Redevelopment Property Tax Trust Fund (RPTIF), which is administered by the County Auditor-Controller.

13. Litigation The City is a defendant in various lawsuits arising in the normal course of business.

Present lawsuits and other claims against the City are incidental to !he ordinary course of operations and are largely covered by the City's msurance program. In the opinion of management and the City Attorney, such claims and litigation will not have a materially adverse effect upon the financial position or results of operation of the City. 14. City Employees Retirement Plan (A) Plan Description.

The City of Riverside contributes to the California Public Employees Retirement System (CalPERS), an agent multiple employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries.

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

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

A copy of CalPERS' annual financial report may be obtained online at www.calpersca.gov. (B) Funding Policy. The City has contributed at the actuarially determined rate provided by CalPERS' actuaries.

Participants are required to contribute 8% for miscellaneous employees and 9% for safety employees of their annual covered salary. The City has a multiple tier retirement plan with benefits varying by plan. The City pays the employees' contributions to CalPERS for both miscellaneous and safety employees hired on or before specific dates as follows: Safety (Police):

• 1 51 Tier (RPOA, RPOA Supervisory

& RPAA Management)

-The retirement formula is 3% at age 50 for employees hired on or before February 16, 2012 (RPOA, RPAA Management) or June 8, City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 2012 (RPOA Supervisory).

Effective January 1, 2018, employees were required to pay 1.5% of their pensionable income, with the City contributing the other 7.5%. Only in the event that annual wages increase in excess of 2%, will the following apply: Effective January 1, 2019, employees will be required to pay an additional portion of their pensionable income. This portion is a three year increase of 1.5% (2019), 1.5% (2020) and 1.5% (2021). By 2021, employees will be contributing*

6% of their pensionable income, with the City contributing the other 3%.

• 2nd Tier (RPOA, RPOA Supervisory

& RPAA Management)

-The retirement formula is 3% at age 50 for RPOA and RPAA Management employees hired on or after February 17, 2012 and RPOA Supervisory employees hired on or after June 8, 2012 pay their share (9%) of contributions.

• 3rd Tier (RPOA, RPOA Supervisory

& RPAA) -The retirement formula is 2.7% at age 57 for new members hired on or after January 1, 2013 and the employee must pay the normal cost to CalPERS which is currently at 11.50%. Classic members (CalPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a different tier. Safety (Fire):

• 1st Tier -The retirement formula is 3% at age 50 for employees hired before June 11, 2011. Effective January 1, 2019, employees will be required to pay a portion of their pensionable income. This portion is a three year increase of 2.5% (2019), 2.5% (2020) and 3% (2021 ). By 2021, employees will be contributing 8% of their pensionable income.

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

• 3rd Tier -The retirement formula is 2.7% at age 57 for new members hired on or after January 1, 2013. A new member, as defined by the Public Employees' Pension Reform Act (PEPRA), hired on or after January 1, 2013 pay 50% of the normal cost to CalPERS which is/currently 11.50% of compensation.

Miscellaneous:

• 1st Tier-a The retirement formula is 2. 7% at age 55 for employees hired on or before October 18, 2011. Effective January 1, 2018 for unrepresented employees (Sr. Management, 58 (amounts expressed in thousands)

Management, Professional, Para-professional, Supervisory, Confidential, and Executive units, excluding the Chief of Police and the Fire Chief), the employees were required to pay 2% of their pensionable income, with the City contributing the other 6%. Effective January 1, 2019, employees will be required to pay an additional portion of their pensionable income. This portion is a three year increase of 2% (2019), 2% (2020) and 2% (2021 ). By 2021, employees will be contributing the entire 8% of their pensionable income. o The retirement formula is 2.7% at age 55 for SEIU and SEIU Refuse employees hired before June 7, 2011. Currently, employees are required to pay 6% of their pensionable income with the City contributing the other 2%. Effective January 1, 2019, employees will be required to pay an additional portion of their pensionable income. This portion is a two year increase of 1 % (2019) and 1 % (2020). By 2020, employees will be contributing the entire 8% of their pensionable income. o The retirement formula is 2.7% at age 55 for IBEW and IBEW Supervisory employees hired on or before October 18, 2011. Effective November 1, 2017 employees were required to pay 2% of their total pensionable income with the City paying the remaining 6%. Effective each November 1st, employees will be required to pay an additional portion of their pensionable income. This portion is a three year increase of 2% (2018), 2% (2019) and 2% (2020). By November 2020, employees will be contributing the entire 8% of their pensionable income.

• 2nd Tier -The retirement formula is 2.7% at age 55, and: o Miscellaneous employees, IBEW, and I_BEW Supervisory hired on or after October 19, 2011 pay their share (8%) of contributions.

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

• 3rd Tier-The retirement formula is 2% at age 62 for new members hired on or after January 1, 2013 and the employee must pay the normal cost to CalPERS which is currently at 7%. Classic City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 members (CalPERS members prior to 12/31/12) hired on or after January 1, 2013 may be placed in a different tier. The contribution requirements of plan members and the City are established and may be amended by CalPERS. (C) Benefits Provided -CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full time employment.

Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits.

All members are eligible for non-duty disability benefits after five years of service. The death benefit is one of the following:

the Basic Death Benefit, the 1959 Survivor Benefit Level Ill, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied .as specified by the Public Employees' Retirement Law. (D) Employees Covered -At June 30, 2017, the following employees were covered by the benefit terms of each Plan: Inactive employees or beneficiaries currently receiving benefits are 2,114 and 766 for the Miscellaneous and Safety Plans, respectively.

Inactive employees entitled to but not yet receiving benefits are 1,325 and 165 for Miscellaneous and Safety Plans, respectively.

Active employees were 1,599 and 556 for Miscellaneous and Safety Plans, respectively. (E) Contributions

-Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as

• of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. (F) Net Pension Liability

-The City's net pension liability for each Plan is measured as the total pension liability, less the pension plan's fiduciary net position.

The net pension liability of each of the Plans is measured as of June 30, 2017, using an annual actuarial valuation as of June 30; 2016 rolled forward to June 30, 2017 using standard update procedures.

59 (amounts expressed in thousands)

A summary .of principal assumptions and methods used to determine the net pension liability is shown below. Actuarial Assumptions

-The total pension liabilities in the June 30, 2016 actuarial.

valuations were determined using the following actuarial assumptions:

Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions Discount Rate Inflation Payroll Growth Projected Salary Increase Investment Rate of Return Mortality Miscellaneous Safety June 30, 2016 June 30, 2016 June 30, 2017 June 30, 2017 7.15% 2.75% Entry-Age Normal Cost Method 7.15% 2.75% 3.0% 3.0% Depending on age, service, and type of employment.

7.50% (1) . 7.50% (1) The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries.

(1) Net of pension plan investment expenses, including inflation Discount Rate -The discount rate used to measure each plan's total pension liability as of June 30, 2017 was 7.15% a reduction from the previous discount rate of 7.65%. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the discount rates used to measure total pension liability are adequate and the use of the municipal bond rate calculation is not necessary.

The long term expected discount rates are applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called "GASB Crossover Testing Report" that can be obtained from the CalPERS website. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 In determining the long-term expected rate qf return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the term (first 10 years) and the long-term (11-60 years) using a building-block approach.

Using the expected nominal returns for both short-term and term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation.

These geometric rates of return are net of administrative expenses.

Current Target Real Return Asset Class Allocation Years 1 -10 (1) Global Equity 47.00% 4.90% Global Fixed Income 19.00% 0.80% Inflation Sensitive 6.00% 0.60% Private Equity 12.00% 6.60% Real Estate 11.00% 2.80% Infrastructure and Forestland 3.00% 3.90% Liquidity 2.00% -0.40% (1) An expected inflation of 2.5% used for this period (2) An expected inflation of 3.0% used for this period (G) Changes in the Net Pension Liability The changes in the Net Pension Liability for each Plan follows:

Real Return Years 11 + (2) 5.38% 2.27% 1.39% 6.63% 5.21% 5.36% -0.90% 60 Miscellaneous Balance at June 30, 2017 Changes in the year: Service Cost Interest on Total Pension Liability Changes of Assumptions Differences between Expected and Actual Experience Net Plan to Plan Resource Movement Contribution

-employer Contribution

-employee Net Investment Income Benefit Payments, including Refunds of Employee Contributions Administrative Expenses Net Changes Balance at June 30, 2018 Safety Balance at June 30, 2017 Changes in the year: Service Cost Interest on Total Pension Liability Changes of Assumptions Differences between Expected and Actual Experience Net Plan to Plan Resource Movement Contribution

-employer Contribution

-employee Net Investment Income Benefit Payments, including Refunds of Employee Contributions Administrative Expenses Net Changes Balance at June 30, 2018 $ $ (amounts expressed in thousands)

Increase (Decrease)

Total Pension Liability Plan Fiduciary Net Position Net Pension Liabilitv/(Asset) 1,261,562

$ 952,062 $ 309,500 $ $ 24,766 92,725 79,037 (26,068) (60,108) 110,352 1,371,914

$ Total Pension Liability 936,802 21,373 70,337 59,768 (18) (47,009) 104,451 1,041,253 116 30,477 6,115 104,771 (60,108) 24,766 92,725 79,037 (26,068) (116) (30,477) (6,115) (104,771)

(1,406) 1,406 79,965 30,387 1,032,027

$====3=39=,8=87

Increase (Decrease)

Plan Fiduciary Net Position $ 695,450 $ (119) 26,775 2,449 76,844 (47,009) (1,027) 57,913 753,363 Net Pension Liability//Asset)

$ 241,352 $ 21,373 70,337 59,768 (18) 119 (26,775) (2,449) (76,844) 1,027 46,538 287,890 Sensitivity of the Net Pension Liability to Changes in the Discount Rate -The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

City of Riverside Notes to Basic Financial Statements For the.year ended June 30, 2018 Miscellaneous Plan's Net Pension Liability/(Asset)

Safety Plan's Net Pension Liability/(Asset)

Discount Rate -1% (6.15%) $ 531,959 Discount Rate -1% (6.15%) $ 433,466 Current Discount Rate (7.15%) $ 339,887 Current Discount Rate (7.15%) $ 287,890 Discount Rate +1% (8.15%) $ 182,557 Discount Rate +1% (8.15%) $ 168,802 Pension Plan Fiduciary Net Position -Detailed information about each pension plan's fiduciary net position is available in the separately issued CalPERS financial reports. H. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions.

For the year ended June 30, 2018, the City recognized pension expense of $54,879. At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Miscellaneous Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date, net $ 29,948 $ Changes of assumptions 56,380 Differences between expected and actual experience (22,573) Net differences between projected and actual earnings on plan investments 14,658 Total $ 100,986 $ (22,573) *I I 61 (amounts expressed in thousands)

Safety Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date, net $ 25,286 $ Differences between actual and actuarial determined contributions Changes of assumptions 40,812 Differences between expected and actual experience (4,721) Net differences between projected and actual earnings on plan investments 10,715 Total $ 76,813 $ (4,721) $55,233 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. The remaining amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Deferred Outflows/(lnflows) of Resources Fiscal Year Miscellaneous Safety 2018 $ 10,283 $ 7,312 2019 30,838 22,099 2020 14,902 17,531 2021 (7,558) (137) 15. Other Post-Employment Benefits (OPEB) Plan description

-The City's defined benefit OPEB plan, Retiree Health Plan, provides continuation of medical (including prescription drugs) and dental coverage benefits to retirees and surviving spouses in the form of an implied rate subsidy. The Retiree Health Benefits plan is a single employer defined benefit OPEB plan administered by the City. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. Benefits provided -Eligibility for continuation of coverage requires retirement from the City and CalPERS with at least 5 years of City service. The retiree is responsible for 100% of the premium cost for coverage, which is based on the blended experience of both the active and retired employees.

The City is not required by law or contractual agreement to provide funding other than the pay-as-you-go amount necessary to provide current benefit to eligible retirees City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 and beneficiaries.

Retiree and spousal coverage terminates when the retirees becomes covered under another employer health plan, or when the retiree reaches Medicare eligibility ago, which is currently age 65. However, retiree benefit continues to the surviving spouse if the retiree elects the CalPERS survivor annuity. Employees covered by benefit terms -At June 30, 2017, the following employees were covered by the benefit terms: Inactive plan members or beneficiaries currently receiving benefits Active plan members 304 2,121 Total 2,425 Significant Actuarial Assumptions Used in Calculating the Total OPEBUability The total OPEB liability was determined by actuarial valuation as of June 30, 2017 using the following actuarial assumptions:

Valuation Date: Measurement Date: Funding Policy: Discount Rate: Inflation Rate: Salary Inflation:

Salary Increases Mortality June 30, 2017 June 30, 2017 Pay-as-you-go for implicit rate subsidy 3.40% per annum. This discount rate is the average, rounded to 5 basis points, of the range of 3-20 year municipal bond rate indices: S&P Municipal Bond 20 Year High Grade Rate Index, Bond Buyer 20-Bond GO Index, and Fidelity GO AA 20 Year Bond Index. 2.75% per annum 3.0% per annum The benefits are not payroll related but the City's cost for each individual's projected City .contribution is allocated over their lifetime as a level-percentage of pay. For cost method purposes the merit increases from the most recent CalPERS pension plan valuation will be used CalPERS 2014 Experience Study Sensitivity an~lysis of total OPEB liability for healthcare cost trend rates The following presents the total OPEB liability, calculating using the healthcare cost trend rate of 6.00%/HMO and 6.50%/PPO, as well as what the total OPEB liability would be if it were calculated using a discount rate that is point lower (5.00%/HMO and 5.50%/PPO) or 1-percentage-point higher (7.00%/HMO and 7.50%/PPO) than the current rate: 62 Total OPEB liability 1% Decrease $ 33,065 (amounts expressed in thousands)

Current healthcare cost trend rates $ 36,786 1% Increase $ 41,136 Sensitivity analysis of total OPEB liability for discount rates The following presents the total OPEB liability, calculating using the discount rate of 3.40%, as well as what the total OPEB liability would be if it were calculated using a discount rate that is 1-percenrtage-point lower (2.40%) or 1-percentage-point higher (4.40%) than the current rate: Current discount 1% Decrease Total OPEB liability

$ 39,886 $ rate 36,786 Change in total OPEB liability 1% Increase $ 33,967 For fiscal year 2018, the City recognized total OPEB expense of $3,436. The following table shows the change in the total OPEB liability for the year ended June 30, 2018: Beginning total OPEB liability Service cost Interest Changes of assumptions 2017 $ 36,542 Benefit of implied subsidy payments Net changes 2,554 1,090 (1,668) (1,732) 244 Ending total OPEB liability

$ 36,786 Deferred outflows/inflows of Resources At June 30, 2018, the City reported deferred inflows of resources related to OPEB from the following sources: Changes of assumptions Total Deferred inflows of resources

$ 1,459 $ 1,459 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Amounts reported as deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending June 30, 2018 2019 2020 2021 2022 Thereafter Deferred inflows of resources

$ (209) (209) (209) (209) (209) (414) $ (1,459) 16. Commitments and Contingencies lntermountain Power Agency The Electric Utility has entered into a power purchase contract with lntermountain Power Agency (IPA) for the delivery of electric power. The Electric Utility's share of IPA power is equal to 7.6 percent, or approximately 137.1 MW, of the net generation output of IPA's 1,800 MW coal-fueled generating station, known as lntermountain Power Project (IPP), located in central Utah. The contract expires in 2027 and the debt fully matures in 2024. The contract constitutes an obligation of the Electric Utility to make payments solely from operating revenues.

The power purchase contract requires the Electric Utility to pay certain minimum charges that are based on debt service requirements and other fixed costs. Such payments are considered a cost of production.

On September 29, 2006, Senate Bill 1368 (SB 1368) was enacted into law. The bill requires electric service providers to limit financial investments in power plants to those that adhere to greenhouse gas performance standards as determined by the Public Utilities Commission.

Pursuant to this legislation, the Electric Utility is prohibited from renewing its participation in IPP if it remains a coal fueled generating resource.

On June 16, 2015, the City Council approved the lntermountain Power Project renewal agreements, including the Second Amendatory Power Sales Contract and the Renewal Power Sales Contract, and authorized participation in the IPP renewal subscription process. The Second Amendatory Power Sales Contract became effective March 16, 2016. The generation component of IPP under the Renewal Power Sales Contract (Repower Project) is envisioned to be a natural gas fueled combined cycle plant with total capacity of 1,200 MW. The Renewal Power Sales 63 (amounts expressed in thousands)

Contract contemplates a term of fifty years, through June 2077 for the Repower Project. The Electric Utility is authorized to participate in the subscription process for up to 5 percent of the Repower Project or approximately 60 MW. On January 5, 2017, the Electric Utility executed the Renewal Power Sales Contract and all other necessary documents for the first two rounds of the subscription process. The Electric Utility accepted an offer of 4.167 percent entitlement or 50 MW generation capacity in the IPP Repower Project based on the 1,200 MW designed capacity, which is within the maximum participation level approved by the City Council. The Electric Utility's corresponding Southern Transmission System allocation is 5.278 percent or approximately 127 MW. The IPP Repower Project renewal subscription process was completed after two rounds on January 17, 2017 and all entitlements in the project were fully subscribed.

The Electric Utility's reduced power would allow it to diversify its energy portfolio in the future. Further, under the Renewal Power Sales Contract, the Electric Utility has the right to exit from the Repower Project by no later than November 1, 2019, if it is determined that the Repower Project is not cost beneficial to its customers.

The Electric Utility is a me*mber of the Southern California Public Power Authority (SCPPA), a joint powers agency. SCPPA provides for the financing and construction of electric generating and transmission projects for participation by some or all of its members. To the extent the Electric Utility participates in projects developed by SCPPA, it has entered into Power Purchase or Transmission Service Agreements, entitling the Electric Utility to the power output or transmission service, as applicable, and the Electric Utility will be obligated for its proportionate share of the project costs whether or not such generation output of transmission service is available.

The projects and the Electric Utility's proportionate share of SCPPA's obligations, including final maturities and contract expirations are as follows: Project Percent Share Entitlement Final Maturit~ Contract Exeiration Palo Verde Nuclear Generating Station 5.40% 12.3MW 2017 2030 Southern Transmission System 10.20% 244.0MW 2027 2027 Mead-Phoenix Transmission 4.00% 18.0 MW 2020 2030 Mead-Adelanto Transmission 13.50% 118.0 MW 2020 2030 Terms of Take or Pay Commitments As part of the take-or-pay commitments with IPA and SCPPA, the Electric Utility has agreed to pay its share of current and long-term obligations.

Management intends to pay these obligations from operating revenues received during the year that payment is due. A long-term obligation has not been recorded on the accompanying financial statements for these City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 commitments.

Take-or-pay commitments terminate upon the later of contract expiration or final maturity of outstanding bonds for each project. The outstanding debts associated with the take-or-pay obligations have fixed interest rates which range from 1.43 percent to 5. 75 percent. The schedule below details the amount of principal and interest that is due and payable by the Electric Utility as part of the take-or-pay contract for each project in the fiscal year indicated.

IPA SCPPA TOTAL Debt Service Payment lntermountain Southern Mead-. Mead-(in thousands)

Power Transmission Phoenix Adelanto All Year Endinn June 30 Proiect Svstem Transmission Transmission Proiects 2019 17,345 7,893 257 2,881 28,376 2020 17,232 6,913 254 2,859 27,258 2021 15,829 7,926 189 2,136 26,080 2022 10,834 9,448 --20,282 2023 8,059 7,258 --15,317 2024-2028 840 20,175 --21,015 Total $ 70,139 $ 59,613 $ 700 $ 7,876 $ 138,328 In addition to debt service, the Electric Utility's entitlements require the payment of fuel costs, operating and maintenance, administrative and general and other miscellaneous costs associated with the generation and transmission facilities discussed above. These costs do not have a similar structured payment schedule as debt service and vary each year. The costs incurred for the year ended June 30, 2018 is as follows (in thousands):

Palo Verde lntermountain Nuclear Southern Hoover Mead-Mead-Power Generating Transmission Dam Phoenix Adelanto All FISCAL YEAR Project Station S:istem U[!rating Transmission Transmission Projects 2018 $ 20,755 $ 3,653 $ 3,529 $ 14 $ 58 $ 302 $28,311 2017 $ 23,000 $ 3,285 $ 2,712 $ 58 $ 64 $ 254 $29,373 These costs are included in production and purchased power or transmission expense on the Statements of Revenues, Expenses and Changes in Net Position.

The Electric Utility has become a Participating Transmission Owner with the California Independent System Operator (CAISO) and has turned over the operational control of its transmission entitlements including the Southern Transmission System, Mead-Phoenix and Mead-Adelanto Transmission Projects.

In return, users of the California's high voltage transmission grid are charged for, and the Electric Utility receives reimbursement for, transmission 64 (amounts expressed in thousands) revenue requirements, including the costs associated with these three transmission projects.

Hoover Uprating Project The Electric Utility's entitlement in the Hoover project through SCPPA will terminate on September 30, 2017. In March 2014, the Electric Utility prepaid its share of outstanding debt incurred by the Bureau of Reclamation in connection with the acquisition and construction of the Hoover Power Project Visitors Center and Air Slots. The payment of principal and interest on the debt is a component of the cost of power and energy payable by Hoover contractors, which includes SCPPA participants that receive power from the Hoover Power Project under agreements with the Western Area Power Administration.

Because Bureau Debt bears interest at rates that are substantially higher than current market interest rates, the Electric Utility elected to prepay the debt in order to realize savings on power costs in the future. The Electric Utility's share of the debt is recorded on the statements of net position as unamortized purchased power to be amortized over the remaining term of the project through 2017. As of June 30, 2018, the balance was fully amortized.

On August 23, 2016, the City Council approved a 50-year Electric Service Contract (ESC) and an Amended and Restated Implementation Agreement (IA) with the Western Area Power Administration (Western), Bureau of Reclamation for 30 MW of hydroelectric power. The contract with Western will be effective October 1, 2017. The ESC extends the Electric Utility's 30 MW entitlement in the Hoover project an additional 50 years. The IA is a supplemental agreement to the ESC that establishes administrative, budgetary and project oversight by creating project committees and process for decision making plant operations.

Nuclear Insurance The Price-Anderson Act (the Act) requires that all utilities with nuclear generating facilities purchase the maximum private primary nuclear liability insurance available

($450 million) and participate in the industry's secondary financial protection plan. The secondary financial protection program is the industry's retrospective assessment plan that uses deferred premium charges from every licensed reactor owner if claims and/or costs resulting from a nuclear incident at any licensed reactor in the United States were to exceed the primary nuclear insurance at that plant's site. Effective April 7, 2018, the Act limits liability from third-party claims to approximately

$13.1 billion per incident.

Under the industry wide retrospective assessment program provided City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 for under the Act, assessments are limited to $127.3 million per reactor for each nuclear incident occurring at any nuclear reactor in the United States, with payments under the program limited to $19.0 million per reactor, per year, per event to be indexed for inflation every five years. Based on the Electric Utility's interest in Palo Verde and ownership in SONGS, the Electric Utility would be responsible for a maximum assessment of $5.8 million, limited to payments of $0. 9 million per incident, per year. If the public liability limit above is insufficient, federal regulations may impose further revenue-raising measures to pay claims, including a possible additional assessment on all licensed reactor operators.

Renewable Portfolio Standards (RPS) On April 12, 2011, the California Renewable Energy Resources Act (SBX1-2) was passed by the State Legislative and signed by the Governor.

SBX1-2 revised the amount of statewide retail electricity sales from renewable resources in the State Renewable Energy Resources Program to 33 percent by December 31, 2020 in three stages: average of 20 percent of retail sales during 2011-2013; 25 percent of retail sales by December 31, 2016; and 33 percent of retail sales by December 31, 2020. The Riverside Public Utilities Board and City Council approved the enforcement program required by SBX1-2 on November 18, 2011 and December 13, 2011, respectively, and further approved the Electric Utility's RPS Procurement plan implementing the new RPS mandates on May 3, 2013 and May 14, 2013, respectively.

The Electric Utility met the 20 percent mandates from 2011-2013 and the 25 percent mandate by December 31, 2016. The additional future mandates are expected to be met with resource procurement actions as outlined in the Electric Utility's RPS Procurement Plan. For calendar year 2017, renewable resources provided 36 percent of retail sales requirements.

On September 11, 2015, California legislature passed Senate Bill 350 (SB 350) increasing the RPS mandate beyond December 31, 2020 above 33 percent to 50 percent by December 31, 2030. SB 350 was signed into law by the Governor on October 7, 2015. The Electric Utility expects to be able to substantially meet the increased RPS mandates imposed by SB 350 with the portfolio of renewable resources outlined below. In an effort to increase the share of renewables in the Electric Utility's power portfolio, the Electric Utility entered into power purchase agreements (PPA) and power sales agreements (PSA) with various entities described below in general on a "take-and-pay" basis. The contracts in the following tables were executed as part of compliance with this standard.

65 (amounts expressed in thousands)

On September 10, 2018, the 100 Percent Clean Energy Act of 2018 (SB 100) was signed. This bill further increases the RPS goals of SBX1-2 and SB 350 by maintaining the 33 percent RPS target by December 31, 2020, while modifying the RPS percentages to be 44 percent by December 31, 2024, 52 percent by December 31, 2027, 60 percent by December 31, 2030, with an end goal of 100 percent of total retail sales of electricity in California generated from eligible renewable energy resources and zero-carbon resources by December 31, 2045. It is expected that the CEC will have further guidance and enforcement procedures for POUs. RPU will continue to monitor the outco,me and impacts of any upcoming workshops and regulations in meeting the new requirements.

Long-term renewable PPAs and PSAs in operation (dollars in thousands):

Estimated Maximum Contract Annual Cost Supplier Salton Sea Power LLC Wintec Energy, Ltd. WKNWagner SunEdison

-AP North Lake Dominion -Columbia II GlidePath Power Solutions

-GPS Cabazon Wind LLC Capital Dynamics -Kingbird Solar B, LLC FlP Solar sPower -Summer Solar sPower -Antelope Big Sky Ranch sPower -Antelope DSR 1 Solar Capital Dynamics -Tequesquite Landfill Solar American Renewable Power-Loyalton CalEnergy

-Salton Sea Portfolio Phase 1 Total Type Geothermal Wind Wind Photovoltaic Photovoltaic Wind Photovoltaic Photovoltaic Photovoltaic Photovoltaic Photovoltaic Biomass Geothermal Contract 1 Expiration For 2019 46.0~ 5/31/2020

$ 29,165 1.3 12/30/2018 124 6.0 12/22/2032 1,318 20.0~ 8/11/2040 4,623 11.1 12/22/2034 2,314 39.0~ 1/1/2025 4,299 14.0 12/31/2036 2,867 10.0 12/31/2041 1,748 10.0 12/31/2041 1,748 25.0 12/19/2036 3,826 7.3 12/31/2040 1,341 0.8~ 4/19/2023 615 20.0 12/31/2039 12,187 210.5~ $ 66,175 1 All contracts are contingent on energy delivery from specific related generating facilities.

The Electric Utility has no commitment to pay any amounts except for energy delivered on a monthly basis from these facilities except for any economic curtailments directed by the Electric Utility. Long-term renewable PPAs with expected delivery:

Supplier Type CalEnergy

-Salton Sea Portfolio Phase 2 Geothermal CalEnergy

-Salton Sea Portfolio Phase 3 Geothermal Total Maximum Expected Contract 1 Delivery 20.0 MW 1/1/2019 46.0 MW 6/1/2020 66.0 MW Energy Delivery Contract No Later Term Than In Years 1/1/2019 21 6/1/2020 20 City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 1 All contracts are contingent on energy delivered from specific related generating facilities.

The Electric Utility has no commitment to pay any amounts except for energy delivered on a monthly basis from these facilities except for any economic curtailments directed by the Electric Utility. Cap-and-Trade Program Assembly Bill (AB) 32, enacted in 2006, mandated that the California Air Resources Board (GARB) develop regulations for the reduction of greenhouse gas (GHG) emissions to the 1990 levels by the year 2020. In January 2013, emission compliance obligations developed by GARB began under the and-Trade Program (Program).

This Program requires electric utilities to have GHG allowances on an annual basis to offset GHG emissions associated with generating electricity.

To ease the transition and mitigate the rate impacts to retail customers, GARB will allocate certain amounts of GHG allowances at no cost to electrical distribution utilities.

The Electric Utility's free allocation of GHG allowances is expected to be sufficient to meet the Electric Utility's direct GHG compliance obligations.

At times, the Electric Utility may have allocated allowances in excess of its compliance obligations that can be sold into the GARB quarterly auctions.

In fiscal year ended June 30, 2018, the Electric Utility received $8,131 in proceeds related to the sale of the GHG allowances which are included on the Statements of Revenues, Expenses and Changes in Net Position as operating revenue. The Electric Utility has established a restricted Regulatory Requirement reserve to comply with regulatory restrictions and governing requirements related to the use of the GHG proceeds.

The available funds are to be utilized for qualifying projects, consistent with the goals of AB 32 to benefit the retail ratepayers.

The balance in the Regulatory Requirement reserve was $16,093 as of June 30, 2018. The Electric Utility also purchases GHG allowances which can be used in future periods for GHG compliance regulations.

The balance of purchased GHG allowances was $1,097 as of June 30, 2018 and is recorded as inventory in the statement of net position.

17. Tax Abatements In November 2012, the City entered into a tax sharing agreement with a local business to incentivize an expansion of their facility.

Assistance is provided in the form of a rebate of sales and property taxes over fifteen years in an amount not to exceed $4,500. The agreement expires on the earlier of: 1) total cumulative tax rebate of $4,500; or 2) fifteen years in fiscal 2027-28. 66 (amounts expressed in thousands)

Incremental Sales Tax Revenue can be generated from sales, over the fiscal 2011-12 base period, reported to the State Board of Equalization at the business site and from third party vendor transactions occurring using the business site as the point of sale. Incremental Property Tax Revenue is generated from the increase in County assessed valuation over the 2012-13 base period values, for the parcels designated in the agreement.

For parcels acquired after 2012-13 in the project area, the acquisition price will become its base year valuation.

The initial 2012-13 base year assessed valuation is $114,293 and has been adjusted to $125,043 for the parcels acquired in 2014-15. The business is due 100% of the incremental Property tax revenue due to the City from the project area tax rate. It is calculated as 11 % of the value determined from taking 1 % of the difference of current net assessed valuation over the adjusted base valuation.

The cumulative rebate payment as of June 30, 201.8 is $327. 18. Prior Period Adjustments A prior period adjustment of $23,096 was made to decrease the General Fund's fund balance related to the elimination of advances related to the Pension Obligation Bonds. The 2005 and 2017 Taxable Pension Obligation Bonds were distributed between Governmental Activities, Business-Type Activities, and the Successor Agency to properly reflect their proportional share. The restatement of beginning fund balance of the General Fund is summarized as follows: General Fund Net position at July 1, 2017, as previously stated Elimination of Advances related to POBs Net position at July 1, 2017, as restated $ $ 83,070 (23,096) 59,974 Prior period adjustments of $1,001 and $617 were made to decrease the governmental activities' and the business-type activities' net position, respectively.

The adjustment were made to reflect the prior period costs related to the net OPEB liability.

The restatement of beginning net position of the governmental activities and business-type activities are summarized as follows:

City of Riverside Notes to Basic Financial Statements For the year ended June 30, 2018 Governmental Activities Net position at July 1, 2017, as previously stated $ Net OPEB liability Net position at July 1, 2017, as restated $ Internal Service Funds Net position at July 1, 2017, as previously stated $ Net OPEB liability Net position at July 1, 2017, as restated $ Business-Type Activities Electric Fund Net position at July 1, 2017, as previously stated $ Net OPEB liability Net position at July 1, 2017, as restated $ Water Fund Net position at July 1, 2017, as previously stated $ Net OPEB liability Net position at July 1, 2017, as restated $ Sewer Fund Net position at July 1, 2017, as previously stated $ Net OPEB liability Net position at July 1, 2017, as restated $ 845,116 (1,001) 844,115 (81,914) (37) (81,951) 484,201 (328) 483,873 305,418 (125) 305,293 205,531 (85) 205,446 67 (amounts expressed in thousands)

Non-Major Business-Type activities Net position at July 1, 2017, as previously stated Net OPEB liability Net position at July 1, 2017, as restated $ $ 46,380 (79) 46,301

Required Supplementary Information Consists of the following:

• Schedule of Changes in Net Pension Liability and Related Ratios During the Measurement Period

• Schedule of Plan Contributions

• Other Post-Employment Benefits (OPEB) Schedule of Changes in Total OPEB Liability and Related Ratio City of Riverside Required Supplementary Information

• Unaudited Schedule of Changes In Net Pension Liability and Related Ratios During the Measurement Period (Thousands)

Last 1 O Years* 6/30/2017 6/30/2016 6/30/2015 6/30/2014 Miscellaneous TOTAL PENSION LIABILITY Safett Miscellaneous Safett Miscellaneous Safett Miscellaneous Service Cost $ 24,766 $ 21,373 $ 22,189 $ 18,144 $ 22,228 $ 18,187 $ 23,320 Interest 92,725 70,337 90,913 67,513 87,436 64,815 84,965 Changes of Assumptions 79,037 59,768 (21,782) (16,117) Difference Between Expected and Actual Experience (26,068) (18) (8,417) (4,373) (23,548) (6,835) Benefit Payments, Including Refunds and Employee Contribution (60,108) (47,009) (57,702) (44,609) (53,853) (42,076) (50,770) Net Change In Total Pension Liability

$ 110,352 $ 104,451 $ 46,983 $ 36,675 $ 10,481 $ 17,974 $ 57,515 Total Pension Liability.

Beginning 1,261,562 936,802 1,214,579 900,127 1,204,098 882,153 1,146,583 Total Pension Liability

-Ending (a) $ 1,371,914

$ 1,041,253

$ 1,261,562

$ 936,802 $ 1,214,579

$ 900,127 $ 1,204,098 PLAN FIDUCIARY NET POSITION Contributions

-Employer $ 30,477 $ 26,775 $ 29,426 $ 26,483 $ 25,996 $ 23,384 $ 27,583 Contributions

• Employee 6,115 2,449 5,187 1,837 4,380 924 2,294 Net lnveslment Income 104,771 76,844 4,958 3,478 21,671 15,632 145,843 Benefit Payments, Including Refunds and Employee Contribution (60,108) (47,009) (57,702) (44,609) (53,853) (42,076) (50,770) Administrative and Other Expenses (1,290) (1,146) (594) (428) (1,056) (816) Net Change In Fiduciary Net Position $ 79,965 $ 57,913 $ (18,725) $ (13,239) $ {2,862) $ (2,952) $ 124,950 Plan Fiduciary Net Position

• Beginning 952,062 695,450 970,787 708,689 973,649 711 641 848,699 Plan Fiduciary Net Position

• Ending (b) 1,032,027 753,363 952,062 695,450 970,787 708,689 973,649 Plan Net Pension Liability Ending (a)-(b) $ 339,887 $ 287,890 $ 309,500 $ 241,352 $ 243,792 $ 191,438 $ 230,449 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 75.23% 72.35% 75.47% 74.24% 79.93% 78.73% 80.86% Total

• Employee Payroll $ 116,465 $ 68,459 $ 114,521 $ 64,778 $ 113,850 $ 64,648 $ 113,869 Net Pension Liability as a Percentage of Total

• Employee Payroll 291.84% 420.53% 270.26% 372.58% 214.13% 296,12% 202.38% * -Historical information is required only for measurement periods where GASB 68 is applicable.

Notes to Schedule:

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2016. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit also know as Golden Handshakes.

Changes of Assumptions:

In 2017, the accounting discount rate reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflected an adjustment of the discount rate from 7.5% (net of administrative expenses) to 7.65% (without a reduction for pension plan adminstrative expenses).

In 2014, amounts reported were based on the 7.5% discount rate. 69 $ $ $ $ $ $ $ Safett 18,818 62,249 (38,981) 42,086 840,067 882,153 23,156 365 107,032 (38,981) 91,572 620,069 711,641 170,512 80.67% 64,715 263.48%

City of Riverside Required Supplementary Information

-Unaudited Schedule of Plan Contributions (Thousands)

Last 10 Years* Actuarially Determined Contribution Contributions in Relation to the Actuarially Determined Contribution Contribution Excess Total Covered Payroll Contributions as a Percentage of Total -Covered Payroll Notes to Schedule 2017-18

• Miscellaneous Safetl $26,955 $23,076 (30,477) (26,775) $ (3,522) $ (3,699) $121,957 $68,251 22.10% 33.81% The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2016-17 were from the June 30, 2014 public agency valuations.

Actuarial Cost Method Amortization Method/Period Asset Valuation Method Inflation Salary increases Payroll Growth Investment rate of return Retirement

~ge Mortality * -Historical information is required only for measurement periods where GASB 68 is applicable.

Other Information:

For changes to prevoius year's information, refer to past GASB 68 reports. 70 2016-17

• Miscellaneous

$24,885 (29,426) $ (4,541) $ $116,465 21.37% Safe!}'. $21,886 (26,483) (4,597) $68,459 31.97% 2015-16

• 2014-15

• Miscellaneous

$21,063 $ (25,997) $ (4,934) $ $114,521 18.39% Entry Age Normal Level Percent of Payroll Market Value of Asset 2.75% Safe!}'. 18,452 (23,384) (4,932) $64,778 28.48% Varies by Entry Age and Service 3.00% Miscellaneous

$ 20,505 $ (27,584) $ (7,079) $ $113,850 18.01% 7 .50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period 1997 to 2011. The probabilities of mortality are based on the 2014 Cal PERS Experience Study for the period 1997 to 2011. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries.

Safe!}'. 17,341 (23,156) (5,815) $64,648 26.82%

City of Riverside Required Supplementary Information

-Unaudited Schedule of Changes in Total OPEB Liability and Related Ratio Reporting period June 30, 2018 Measurement period June 30, 2017 Beginning Total OPEB Liability

$ 36,542 Service Cost 2,554 Interest 1,090 Changes in Assumptions (1,668) Benefit of Implied Subsidy Payments {1,732) Net Changes 244 Ending Total OPEB Liability

$ 36,786 Covered -Employee Payroll $ 170,858 Total OPEB Liability as Percentage of Covered Employee Payroll 21.53% 71

Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.

Urban Areas Security Initiative (UASI) Fund-To account for UASI grants received from the U.S. Department of Homeland Security.

Gas Tax Fund -To account for the construction and maintenance of the road network system of the City. Financing is provided by the City's share of state gasoline taxes which state law requires to be used to maintain streets. Air Quality Improvements Fund -To account for qualified air pollution reduction programs funded by the South Coast Air Quality Management District.

Housing & Community Development Fund -To account for federal grants received from the Department of Housing and Urban Development (HUD). The grants are used for the development of a viable urban community by providing decent housing, a suitable living environment, and expanding economic opportunities, principally for persons with low and moderate incomes. National Pollution Discharge Elimination System (NPDES) Storm Drain Fund -To account for storm drain maintenance and inspection required for California storm water permits. Activities are funded by a special assessment district of Riverside County, California.

Special Districts Fund -To account for Loving Homes, Village at Canyon Crest, Sycamore Highlands, Riverwalk, Riverwalk Parks Projects, and Street Lighting districts.

Housing Fund-To account for the housing activities for persons with low or moderate income. Capital Projects Funds Capital Projects Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. Special Capital Improvement Fund -To account for the acquisition, construction and installation of capital improvements and a Community Facilities District within the City. Storm Drain Fund -To account for the acquisition, construction and installation of storm drains in the City. Transportation Fund -To account for the construction and installation of street and highway improvements in accordance with Articles 3 and 8 of the Transportation Development Act of 1971 of the State of California.

Debt Service Fund Debt Service Funds are used to account for the accumulation of resources for, and the payment of, long-term debt principal, interest, and related costs. The General Debt Service Fund accounts for the resources accumulated and payments made for principal, interest and related costs on term general obligation debt of governmental funds. Permanent Fund Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs.

Library Special Fund-To account for the monies held in trust for the benefit of the Riverside City Public Library System.

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

Special Revenue Housing & Urban Areas Air Quality Community NPDES Storm Assets Security Initiative Gas Tax Improvements Development Drain Speclal Districts Housing Total Cash and investments

$ $ 14,990 $ 1,070 $ 3,239 $ 425 $ 556 $ 12,277 $ 32,559 Receivable (net of allowance for uncollectibles):

Interest 50 4 13 43 110 Property taxes 101 101 Accounts 34 2 36 Intergovernmental 609 399 104 2,161 190 3,463 Notes 13,645 24,239 36,064 Prepaid items 30 30 Advances to Successor Agency Trust Fund 3,327 3,327 Land & improvements held for resale 443 2,654 3,097 Total assets $ 609 $ 15,473 $ 1,176 $ 19,733 $ 615 $ 659 $ 42,540 $ 60,607 Liabilities Accounts payable $ 59 $ 284 $ 44 $ 1,539 $ 9 $ 31 $ 19 $ 1,965 Accrued payroll 2 1 2 5 Retainage payable 511 511 lntergorvernmental 6 6 Due to other funds 550 550 Total liabilities 609 795 44 1,541 10 37 21 3,057 Deferred Inflows of Resources Unavailable revenue 14,286 24,239 36,527 Total deferred inflows of resources 14,266 24,239 36,527 Fund Balances Nonspendable:

inventories, prepaids and deposits 30 30 Advances 3,327 3,327 Restricted for. Housing and redevelopment 3,674 14,953 18,627 Transportation and public works 14,676 1,134 605 622 17,039 Total fund balances 14,676 1,134 3,904 605 622 18,260 39,223 Total liabilities deferred inflows of resources, and fund balances $ 609 $ 15,473 $ 1,178 $ 19,733 $ 615 $ 659 $ 42,540 $ 60,807 Continued 73 City of Riverside Combining Balance Sheet Nonmajor Governmental Funds June 30, 2018 (amounts expressed in thousands)

Permanent Capital Projects Fund Total Nonmajor Special Capital General Governmental Assets Improvement Storm Drain Transportation Total Debt Service Library Special Funds Cash and investments

$ 4,192 $ 1,579 $ $ 5,771 $ 583 $ 1,498 $ 40,411 Cash and investments at fiscal agent 1,084 1,084 13,174 14,258 Receivable (net of allowance for uncolleclibles):

Interest 16 5 21 23 154 Property taxes 112 213 Accounts 30 66 Intergovernmental 225 95 320 3,783 Notes 38,084 Prepaid items 385 415 Advances to Successor Agency Trust Fund 3,327 Land & improvements held for resale 3,097 Total assets $ 5,517 $ 1,584 $ 95 $ 7,196 $ 14,307 $ 1,498 $ 103,808 Liabilities Accounts payable $ 8 $ 13 $ $ 21 $ 120 $ $ 2,126 Accrued payroll 5 Retainage payable 5 5 516 Intergovernmental 6 Due to other funds 83 83 633 Advance from other funds 3,399 3,399 2,661 6,060 Total liabilifies 3,412 13 83 3,508 2,781 9,346 Deferred Inflows of Resources Unavailable revenue 225 225 17 38,769 Total deferred inflows of resources 225 225 17 38,769 Fund Balances Nonspendable:

Inventories, prepaids and deposits 30 Advances 3,327 Permanent fund principal 1,498 1,498 Restricted for: Housing and redevelopment 18,827 Debt service 11,509 11,509 Transportation and public works 12 12 17,051 Other purposes 1,880 1,571 3,451 3,451 Total fund balances 1,880 1,571 12 3,463 11,509 1,498 55,693 Total liabilities, deferred inflows of resources, and fund balances $ 5,517 $ 1,584 $ 95 $ 7,196 $ 14,307 $ 1,498 $ 103,808 74 City of Riverside Combining Statement of Revenues, Expenditures and Changes In Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2018 (amounts expressed In thousands)

Special Revenue Housing & Urban Area Security Air Quality Community Initiative Gas Tax Improvement Development NPDES Storm Drain Special Districts Housing Total Revenues Licenses and permits Intergovernmental

$ 1,751 $ 8,343 $ 418 $ 8,851 $ $ $ $ 19,363 Charges for services Fines and forfeitures Special assessments 1,215 3,896 5,111 Rental and investment income 65 4 88 1 109 267 Miscellaneous 207 262 898 1,367 Total revenues 1,751 8,408 629 9,201 1,216 3,896 1,007 26,108 Expenditures Current: General government 479 946 3,183 4,608 Public safety 1,751 4,557 6,308 Highways and streets 564 564 Culture and recreation 56 56 Capital outlay 8,451 8,134 1,122 17,707 Debt service: Principal 8 19 27 Interest 4 5 Total expenditures 1,751 8,451 479 9,089 1,122 5,177 3,206 29,275 Excess (deficiency) of revenues over (under) expenditures (43) 150 112 94 (1,281) (2,199) (3,167) Other financing sources (uses) Transfers in 49 1,903 124 2,076 Transfers out (38) (38) Proceeds on retirement of capital assets 34 34 Total other financing sources (uses) 34 (38) 49 1,903 124 2,072 Net change in fund balances (9) 112 161 94 622 (2,075) (1,095) Fund balances*

beginning 14,687 1,022 3,743 511 20,355 40,318 Fund balances*

ending $ $ 14,678 $ 1,134 $ 3,904 $ 605 $ 622 $ 18,280 $ 39,223 Continued 75 City of Riverside Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Permanent Caeital Projects Fund* Total Nonmajor Special Capital General Library Governmental Improvement Storm Drain Transportation Total Debt Service Special Funds Revenues Licenses and permits $ 2,287 $ 140 $ $ 2,427 $ $ $ 2,427 Intergovernmental 578 11 589 19,952 Charges for services Fines and forfeitures 18 18 Special assessments 1,096 6,207 Rental and investment income 22 7 29 705 15 1,016 Miscellaneous 86 86 469 96 2,018 Total revenues 2,395 725 11 3,131 2,288 111 31,638 Expenditures Current: General government 874 874 18 5,500 Public safety 6,308 Highways and streets 564 Culture and recreation 190 246 Capital outlay 2,404 437 11 2,852 20,559 Debt service: Principal 21,877 21,904 Interest 63 63 12,678 12,746 Bond issuance costs 10 10 Total expenditures 3,341 437 11 3,789 34,583 190 67,837 Excess (deficiency) of revenues over (under) expenditures (946) 288 (658) (32,295) (79) (36,199) Other financing sources (uses) Transfers in 19 19 35,035 37,130 Transfers out (55) (55) (12,186) (12,279) Issuance of long-term debt 14,500 14,500 Proceeds on retirement of capital assets 34 Total other financing sources (uses) (55) 19 (36) 37,349 39,385 Net change in fund balances (1,001) 307 (694) 5,054 (79) 3,186 Fund balances -beginning 2,881 1,264 12 4,157 6,455 1,577 52,507 Fund balances -ending $ 1,880 $ 1,571 $ 12 $ 3,463 $ 11,509 $ 1,498 $ 55,693 76 City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Nonmajor Special Revenue Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Special Revenue Urban Area Security Initiative Gas Tax Air Quality Improvement Variance Variance Variance Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Intergovernmental

$ 6,020 $ 1,751 $ (4,269) $ 8,290 $ 8,343 $ 53 $ 394 $ 418 $ 24 Rental and investment income 150 65 (85) 4 4 Miscellaneous 254 207 (47) Total revenues 6,020 1,751 (4,269) 8,440 8,408 (32) 648 629 (19) Expenditures Current: General government 1,071 479 592 Public safety 6,020 1,751 4,269 Capital outlay 22,044 8,451 13,593 Total expenditures 6,020 1,751 4,269 22,044 8,451 13,593 1,071 479 592 Excess (deficiency) of revenues over (under) expenditures (13,604) (43) 13,561 (423) 150 573 Other financing sources (uses) Transfers in (out) (38) (38) Proceeds on retirement of capital assets 34 34 Total other financing sources (uses) 34 34 (38) (38) Net change in fund balances (13,604) (9) 13,595 (461) 112 573 Fund balances (deficit), beginning 14,687 14,687 1,022 1,022 Fund balances (deficit), ending $ $ $ $ 1,083 $ 14,678 $ 13,595 $ 561 $ 1,134 $ 573 (continued) 77 City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Nonmajor Special Revenue Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Special Revenue Housing & Community Development NPDES Storm Drain Special Districts Housing Variance Variance Variance Variance Final to Final Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Intergovernmental

$ 8,221 $ 8,851 $ 630 $ $ $ $ $ $ $ $ $ Charges for services Fines and forfeitures Special assessments 1,391 1,215 (176) 4,059 3,896 (163) Rental and investment income 57 88 31 109 109 Miscellaneous 262 262 898 898 Total revenues 8,540 9,201 661 1,391 1,216 (175) 4,059 3,896 (163) 1,007 1,007 Expenditures Current: General government 2,086 946 1,140 10,375 3,183 7,192 Public safety 4,494 4,557 (63) Highways and streets 1,014 564 450 Culture and recreation 228 56 172 Capital outlay 21,158 8,134 13,024 1,976 1,122 854 Debt service: Principal 36 8 28 19 (19) Interest 11 1 10 6 4 2 Total expenditures 23,291 9,089 14,202 1,976 1,122 854 5,736 5,177 559 10,381 3,206 7,175 Excess (deficiency) of revenues over (under) expenditures (14,751) 112 (14,639) (585) 94 (491) (1,677) (1,281) 396 (10,381) (2,199) 8,182 Other financing sources (uses) Transfers in (out) 49 49 1,074 1,903 829 1,099 124 (975) Issuance of long-term debt Proceeds on retirement of capital assets Total other financing sources (uses) 49 49 1,074 1,903 829 1,099 124 (975) Net change in fund balances (14,751) 161 (14,590) (585) 94 (491) (603) 622 1,225 (9,282) (2,075) 7,207 Fund balances (deficit), beginning 3,743 3,743 511 511 20,355 20,355 Fund balances (deficit), ending $ (11,008) $ 3,904 $ (14,590) $ (74) $ 605 $ (491) $ (603) $ 622 $ 1,225 $ 11,073 $ 18,280 $ 7,207 (continued) 78 City of Riverside Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Capital Projects Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Capital Projects Capital Outlay Special Capital Improvement Storm Drain Transportation Variance . Variance Variance Variance Final to Final Final to Final Final to Final Final to Final Budget Actual Budget Budget Actual Budget Budget Actual Budget Budget Actual Budget Revenues Licenses and perm its $ $ $ $ 2,600 $ 2,287 $ (313) $ 130 $ 140 $ 10 $ $ $ Intergovernmental 40,078 11,989 (28,089) 250 (250) 12,674 578 (12,096) 38 11 (27) Special assessments 125 504 379 Rental and investment income 170 112 (58) 22 22 20 7 (13) Miscellaneous 3,750 2,883 (867) 86 86 Total revenues 44,123 15,488 (28,635) 2,850 2,395 (455) 12,824 725 (12,099) 38 11 (27) Expenditures Current: General government 1,100 874 226 Capital outlay 62,443 10,299 52,144 1,271 2,404 (1,133) 13,103 437 12,666 38 11 27 Debt service: Principal 1,391 1,391 Interest 60 63 (3) Total expenditures 62,443 10,299 52,144 3,822 3,341 481 13,103 437 12,666 38 11 27 Excess ( deficiency) of revenues over (under) expenditures (18,320) 5,189 23,509 (972) (946) 26 (279) 288 567 Other financing sources (uses) Transfers in (out) 1,283 3,308 2,025 (55) (55) 19 19 Issuance of long-term debt Gain (loss) on retirement of capital assets 5 (5) Total other financing sources (uses) 1,283 3,313 2,020 (55) (55) 19 19 Net change in fund balances (17,037) 8,502 25,529 (972) (1,001) (29) (279) 307 586 Fund balances (deficit), beginning 17,946 17,946 2,881 2,881 1,264 1,264 70 12 (58) Fund*balances (deficit), ending $ 909 $ 26,448 $ 25,529 $ 1,909 $ 1,880 $ (29) $ 985 $ 1,571 $ 586 $ 70 $ 12 $ (58) 79

Nonmajor Enterprise Funds Enterprise Funds are used to account for the operations that are financed and operated in a manner similar to private business enterprises.

The City's intent is to demonstrate that the cost of services provided to the general public on a continuing basis is financed or recovered through user charges; or the City has decided that the periodic determination of net income is appropriate for accountability purposes.

Civic Entertainment Fund -To account for the operations of the Riverside Fox Theater, Riverside Municipal Auditorium, The Box, and the Riverside Convention Center. Airport Fund -To account for the operations of the City's airport. Refuse Fund -To account for the operations of the City's solid waste and sanitation program which provides for the collection and disposal of solid waste on a user charge basis to residents and businesses.

Transportation

-To account for the operations of the City's Senior Citizens' and Handicapped Transportation System in accordance with Article 4 of the Transportation Development Act of 1971 (SB325) of the State of California.

Federal Transit Administration Funds are also accounted for in this fund.

• Public Parking -To account for the operations and construction of the City's public parking facilities.

City of Riverside Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2018 (amounts expressed in thousands)

Civic Assets Entertainment Airport Refuse Transportation Public Parking Total Current assets: Cash and investments

$ 1,020 $ 883 $ 7,428 $ 1,778 $ 826 $ 11,935 Receivables (net of allowance for uncollectibles)

Interest 3 30 7 5 45 Utility billed 1,100 1,100 Utility unbilled 784 784 Accounts 1,170 94 843 24 788 2,919 Intergovernmental 40 294 20 354 Inventory 52 52 Prepaid items 319 319 Deposits 300 300 Restricted assets: Other restricted cash and cash equivalents 1,118 1,118 Total current assets 2,861 1,020 11,303 2,103 1,639 18,926 Non-current assets: Regulatory assets 4,874 4,874 Derivative instruments 299 299 Capital assets: Land 9,988 9,192 19,180 Buildings 22 2,631 43 33,229 35,925 Accumulated depreciation-buildings (1,503) (17) (7,092) (8,612) Improvements other than buildings 44,201 20,714 2,848 6,740 74,503 Accumulated depreciation-improvements other than buildings (3,662) (8,956) (557) (2,919) (16,094) Machinery and equipment 425 470 16,080 4,756 1,130 22,861 Accumulated depreciation-machinery and equipment (260) (410) (11,887) (3,527) (1,126) (17,210) Construction in progress 299 299 Total non-current assets: 41,025 22,934 9,366 3,546 39,154 116,025 Total assets 43,886 23,954 20,669 5,649 40,793 134,951 Deferred Outflows of Resources Change in derivative values Pension contributions, changes in assumptions and differences in experience 310 2,320 1,063 607 4,300 Total deferred outflows of resources 310 2,320 1,063 607 4,300 Continued 81 City of Riverside Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2018 (amounts expressed in thousands)

Civic Liabilities Entertainment Airport Refuse Transportation Public Parking Total Current liabilities:

Accounts payable BBB 5 1,180 12 99 2,184 Accrued payroll 2 19 8 4 33 Retainage payable 15 15 Unearned revenue 16 1 1,252 1,269 Deposits 579 579 Due to other funds 225 225 Pension obligation bonds -current 40 172 82 48 342 Capital leases -current 533 533 Notes payable -current 1,866 1,054 2,920 Landfill capping -current 250 250 Compensaled absences -current 36 321 123 28 508 Total current liabililies 4,107 83 1,958 1,477 1,233 8,858 Non-current liabililies:

Pension obligalion bonds 167 716 340 199 1,422 Notes payables 35,490 17,202 52,692 Capital leases 1,095 1,095 Regulatory liability 28 28 Landfill capping 4,520 4,520 Compensated absences 12 5 19 Net OPEB liability 131 1,147 553 266 2,097 Net pension liability 1,100 8,350 3,827 2,207 15,484 Total non-current liabilities 36,613 1,399 14,745 4,725 19,875 77,357 Total liabilities 40,720 1,482 16,703 6,202 21,108 86,215 Deferred Inflows of Resources Change in derivative values 289 289 Pension contribulions, changes in assumptions and differences in experience 61 668 314 222 1,265 OPEB contributions, changes in assumptions and differences in experience 4 38 22 7 71 Total deferred inflows of resources 289 65 706 336 229 1,625 Net Position Net investment in capital assets 40,726 22,934 4,492 3,546 20,898 92,596 Restricted for landfill capping 1,118 1,118 Unrestricted (37,849) (217) (30) (3,372) (835) (42,303) Total net position $ 2,877 $ 22,717 $ 5,580 $ 174 $ 20,063 $ 51,411 82 City of Riverside Combining Statement of Revenues, Expenses and Changes in Net Position Nonmajor Enterprise Funds For the fiscal year ended June 30, 2018 (amounts expressed in thousands)

Civic Entertainment Airport Refuse Transportation Public Parking Total Operating revenues:

Charges for services $ 16,393 $ 1,562 $ 23,085 $ 441 $ 6,258 $ 47,739 Operating expenses:

Personnel services 698 5,723 2,677 1,100 10,198 Contractual services 6,476 150 4,352 84 1,907 12,969 Maintenance and operation 365 6,378 526 587 7,856 General 11,123 217 2,778 515 763 15,396 Materials and supplies 17 1,186 201 8 1,412 Insurance 162 32 91 50 88 423 Depreciation and amortization 975 693 1,542 714 992 4,916 Total operating expenses 18,736 2,172 22,050 4,767 5,445 53,170 Operating Income (loss) (2,343) (610) 1,035 (4,326) 813 (5,431) Nonoperating revenues (expenses):

_Operating grants 3,374 3,374 Interest income 4 3 36 3 5 51 Other 32 1,096 29 1,157 Gain (loss) on retirement of capital assets 6 (245) 3 (236) Interest expense and fiscal charges (1,259) (7) (32) (15) (741) (2,054) Total non-operating revenues (1,255) 34 855 3,394 (736) 2,292 Income (loss) before capital contributions and transfers (3,598) (576) 1,890 (932) 77 (3,139) Cash capital contributions 875 841 846 2,562 Transfers in 8,715 1,721 10,436 Transfers out (3,115) (896) (738) (4,749) Change in net position 2,877 265 994 (86) 1,060 5,110 Net position -beginning, as previously stated 22,456 4,629 284 19,011 46,380 Prior period adjustment (4) (43) (24) (8) (79) Net position -beginning, as restated 22,452 4,586 260 19,003 46,301 Net position -ending $ 2,877 $ 22,717 $ 5,580 $ 174 $ 20,063 $ 51,411 83 City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2018 (amounts exeresse*d in thousands)

Civic Public Entertainment Airport Refuse Transeortation Parking Totals Cash flows from operating activities:

Cash received from customers and users $ ,15,223 $ 1,509 $ 22,943 $ 920 $ 6,368 $ 46,963 Cash paid to employees for services (601) (5,030) (2,349) (943). (8,923) Cash paid to other suppliers of goods or services (16,949) (792) (15,359) (1,322) (3,386) (37,808) Other receipts 18 32 1,503 29 1,582 Net cash (used) provided by operating activities (1,708) 148 4,057 (2,722) 2,039 1,814 Cash flows from noncapital financing activities:

Transfers in 8,421 1,721 10,142 Transfers out (3,115) (896) (738) (4,749) Operating grants 3,374 3,374 Receipts (payments) on interfund advances 225 (307) (82) Payments on pension obligation bonds (38) (162) (76) (142) (418) Net cash (used) provided by noncapital financing activities 5,531 (38) (1,058) 3,298 534 8,267 Cash flows from capital and related financing activities:

Purchase of capital assets (586) (884) (1,507) (1) (2,978) Proceeds from the sale of capital assets 6 83 3 92 Principal paid on long-term obligations (1,837) (1,015) (2,852) Interest paid on long-term obligations (1,259) (7) (32) (15) (741) (2,054) Contributions 875 841 846 2,562 Net cash (used) provided for capital and related financing activities (2,807) (44) (1,456) 834 (1,757) (5,230) Cash flows from investing activities:

Sale and (purchase) of investments (8) (4) (3) (15) Interest from investments 4 3 36 3 5 51 Net cash (used) provided by investing activities 4 3 28 (1) 2 36 Net change in cash and cash equivalents 1,020 69 1,571 1,409 818 4,887 Cash and cash equivalents, beginning 814 6,975 369 8 8,166 Cash and cash equivalents, ending $ 1,020 $ 883 $ 8,546 $ 1,778 $ 826 $ 13,053 Continued 84 City of Riverside Combining Statement of Cash Flows Nonmajor Enterprise Funds For the fiscal year ended June 30, 2018 (amounts exeressed in thousands)

Continued Civic Public Entertainment Aireort Refuse Transeortation Parking Totals Reconciliation of operating income (loss) to net cash (used) provided by operating activities:

Operating income (loss) $ (2,343) $ (610) $ 1,035 $ (4,326) $ 813 $ (5,431) Other nonoperating items 32 1,096 29 1,157 Adjustments to reconcile operating income (loss) to net cash (used) provided by operating activities:

Depreciation and amortization 975 693 1,542 714 992 4,916 Changes in assets, liabilities and deferred inflows/outflows of resources:

Utility billed receivable (62) (62) Utility unbilled receivable (10) (10) Accounts receivable (1,170) (13) (70) (8) 109 (1,152) Intergovernmental receivable (40) 487 1 448 Inventory (52) (52) Prepaid and deposit items (619) (619) Regulatory assets 407 407 Derivative instruments (299) (299) Accounts payable 888 . (6) 31 (3) (33) 877 Accrued payroll 2 19 8 4 33 Retainage payable 15 15 Other payables 16 (8) (14) 57 (14) 37 Deposits payable 579 579 Regulatory liability 28 28 Landfill capping (620) (620) Change in derivative values 289 289 Net pension liability and related charges in deferred outflows and inflows of resources 93 640 292 157 1,182 Net OPEB liability and related charges in deferred outflows and inflows of resources 5 48 28 10 91 Net cash (used) provided by operating activities

$ (1,708) $ 148 $ 4,057 $ (2,722) $ 2,039 $ 1,814 Schedule of noncash financing and investing activities:

Capital assets -transfer from governmental activities

$ 39,487 $ $ $ $ $ 39,487 Gain/(Loss) on retirement of capital assets 6 (245) 3 (236) Note payable and derivative swap -transfer from governmental activities (39,193) (39,193) 85