NEW ISSUE-FULL BOOK-ENTRY
RATING: Moody’s: “Aa2”
(See “Rating” herein)
In the opinion of Fulbright & Jaworski LLP, Los Angeles, California, a member of Norton Rose Fulbright, Bond Counsel, under
existing statutes, regulations, rulings and court decisions, and assuming compliance with the tax covenants described herein, interest on
the Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the owners thereof for
federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax. It is also the opinion
of Bond Counsel that under existing law interest on the Bonds is exempt from personal income taxes of the State of California. See “TAX
MATTERS” herein.
$7,230,000
REDONDO BEACH COMMUNITY FINANCING AUTHORITY
(Los Angeles County, California)
WASTEWATER REVENUE REFUNDING BONDS
2014 Series A
(BANK QUALIFIED)
Dated: Date of Delivery
Due: May 1, as shown on inside cover
The $7,230,000 Redondo Beach Community Financing Authority Wastewater Revenue Refunding Bonds, 2014 Series A (the “Bonds”) are
being issued by the Financing Authority to (i) refund all of the Redondo Beach Public Financing Authority Revenue Bonds, 2004 Series A
(The City of Redondo Beach Wastewater System Financing Project), currently outstanding in the principal amount of $8,500,000 (the
“2004 Bonds”); and (ii) pay costs of issuance of the Bonds.
The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company,
New York, New York (“DTC”), and will be available to ultimate purchasers in integral multiples of $5,000, under the book-entry system
maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as
the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the owners shall mean Cede & Co., and shall
not mean the ultimate purchasers of the Bonds. Interest on the Bonds will be payable on May 1 and November 1 of each year,
commencing November 1, 2014. Payments of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC, or
its nominee, Cede & Co., by U.S. Bank National Association, as trustee (the “Trustee”), so long as DTC or Cede & Co. is the registered
owner of the Bonds. Disbursements of such payments to DTC’s Participants is the responsibility of DTC and disbursements of such
payments to the Beneficial Owners is the responsibility of DTC’s Participants and Indirect Participants. See “APPENDIX D – BOOK-ENTRY
SYSTEM.”
The Bonds are payable from and secured by a first pledge of certain payments received by the Financing Authority from the City under the
Installment Sale Agreement, dated as of April 1, 2014 (the “Installment Sale Agreement”), by and between City and the Financing
Authority, and from interest and other income derived from certain funds and accounts held under the Indenture of Trust, dated as of
April 1, 2014, by and among the Financing Authority, the City and the Trustee. The City’s obligation to make payments under the
Installment Sale Agreement is payable solely from all Net Revenues as defined herein received by the City from the ownership or operation
of the City’s wastewater and sewer collection and conveyance system (the “Wastewater Enterprise”). See “SECURITY FOR THE
BONDS – Revenues; Pledge of Revenues.”
The Bonds are subject to redemption prior to maturity. See “THE BONDS – Redemption.”
The Bonds are limited obligations of the Financing Authority and are not secured by a legal or equitable pledge of, or charge or
lien upon, any property of the Financing Authority or any of its income or receipts, except the Revenues under the Indenture.
Neither the full faith and credit of the Financing Authority nor that of the City or any member of the Financing Authority is
pledged for the payment of the interest on or principal of the Bonds and no tax or other source of funds, other than the Revenues,
is pledged to pay the interest on or principal of the Bonds. The payment of the principal of or interest on the Bonds does not
constitute a debt, liability or obligation of the Financing Authority, the City or any member of the Financing Authority for which
any such entity is obligated to levy or pledge any form of taxation or for which any such entity has levied or pledged any form of
taxation. The Financing Authority has no taxing power.
For a discussion of some of the risks associated with the purchase of the Bonds, see “RISK FACTORS.”
This cover page contains information for quick reference only. It is not intended to be a summary of all factors relating to an
investment in the Bonds. Investors must read the entire Official Statement before making any investment decision.
The Bonds are offered when, as and if delivered to and received by the Underwriter, subject to the approving opinion of Fulbright &
Jaworski LLP, Los Angeles, California, a member of Norton Rose Fulbright, Bond Counsel and Disclosure Counsel to the Financing
Authority. Certain legal matters will be passed on for the Financing Authority and the City by Michael W. Webb, Esq., City Attorney of the
City and Counsel to the Financing Authority. Certain legal matters will be passed upon for the Underwriter by its counsel Stradling Yocca
Carlson & Rauth, A Professional Corporation, Newport Beach, California. It is anticipated that the Bonds will be available for delivery
through the facilities of DTC on or about April 15, 2014.
Dated: March 25, 2014
$7,230,000
Redondo Beach Community Financing Authority
Wastewater Revenue Refunding Bonds
2014 Series A
Base CUSIP No. 757697*
Maturity Date
(May 1)
Principal
Amount
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
$225,000
245,000
255,000
265,000
280,000
290,000
300,000
310,000
325,000
340,000
355,000
375,000
395,000
405,000
430,000
Interest
Rate
3.000%
5.000
4.000
4.000
4.000
4.000
4.000
4.000
5.000
5.000
5.000
5.000
3.250
5.000
5.000
Yield
0.220%
0.460
0.810
1.140
1.460
1.870
2.190
2.450
2.640
2.790
2.950
3.110
3.470
3.380
3.490
Price
102.898
109.227
109.573
111.272
112.308
112.119
111.755
111.253
118.876
119.241
117.707 C
116.196 C
97.706
113.698 C
112.699 C
CUSIP
AA5
AB3
AC1
AD9
AE7
AF4
AG2
AH0
AJ6
AK3
AL1
AM9
AN7
AP2
AQ0
$2,435,000 4.000% Term Bonds due May 1, 2034, Yield 4.150% CUSIP* No. 757697AV9
c: Yield to the optional redemption date of May 1, 2024 at par.
*
CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP
Global Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers
Association. This data is not intended to create a database and does not serve in any way as a substitute for the
CUSIP Services. Neither the Underwriter, the Financing Authority nor the City is responsible for the selection or
correctness of the CUSIP numbers set forth herein.
CITY OF REDONDO BEACH
REDONDO BEACH COMMUNITY FINANCING AUTHORITY
City Council and Financing Authority Governing Board
Steve Aspel, Mayor/Chairperson of the Financing Authority
Steve Sammarco, Mayor Pro tem/Boardmember
Bill Brand, Councilmember/Boardmember
Jeff Ginsburg, Councilmember/Boardmember
Pat Aust, Councilmember/Boardmember
Matthew J. Kilroy, Councilmember/Boardmember
____________________________________
City and Financing Authority Officials
William P. Workman, City Manager and Executive Director
Peter Grant, Assistant City Manager and Assistant Executive Director
Eleanor Manzano, City Clerk and Financing Authority Secretary
Steven Diels, City Treasurer and Financing Authority Treasurer
Craig Koehler, Finance Director
Mike Witzansky, Public Works Director
Michael W. Webb, City Attorney and Financing Authority Counsel
Special Services
Bond Counsel and Disclosure Counsel
Fulbright & Jaworski LLP,
a member of Norton Rose Fulbright
Los Angeles, California
Financial Advisor
The PFM Group
Los Angeles, California
Trustee
U.S. Bank National Association
Los Angeles, California
Verification Agent
Barthe & Wahrman, PA
Bloomington, Minnesota
No dealer, broker, salesperson or other person has been authorized by the Financing Authority,
the City, or the Underwriter to give any information or to make any representations, other than as
contained in this Official Statement, and if given or made, such information or representations must not
be relied upon as having been authorized by the Financing Authority, the City, or the Underwriter. This
Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there
be any sale of, the Bonds by any person in any jurisdiction in which it is unlawful for such person to
make such offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Statements contained in this Official Statement that involve estimates, forecasts or matters of opinion,
whether or not expressly described herein, are intended solely as such and are not to be construed as
representations of fact.
The information set forth herein has been furnished by the Financing Authority and the City and
includes information from sources that are believed to be reliable. The information and expressions of
opinion contained herein are subject to change without notice and neither the delivery of this Official
Statement nor any sale made shall, under any circumstances, create any implication that there has been no
change in the affairs of the Financing Authority, the City, or other matters described herein since the date
hereof. This Official Statement, including any supplement or amendment hereto, is intended to be
deposited with the Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace
Access website.
The Underwriter has provided the following sentence for inclusion in this Official Statement.
The Underwriter has reviewed the information in this Official Statement in accordance
with, and as part of, its responsibilities to investors under the federal securities laws as
applied to the facts and circumstances of this transaction, but the Underwriter does not
guarantee the accuracy or completeness of such information.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVER ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
Cautionary Statements Regarding Forward-Looking Statements in this Official Statement
This Official Statement contains certain “forward-looking statements” concerning the Wastewater
Enterprise and the operations, performance and financial condition of the City, including their future
economic performance, plans and objectives and the likelihood of success in developing and expanding.
These statements are based upon a number of assumptions and estimates which are subject to significant
uncertainties, many of which are beyond the control of the Financing Authority and the City. The words
“may,” “would,” “could,” “will,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “estimate” and
similar expressions are meant to identify these forward-looking statements. Results may differ materially
from those expressed or implied by these forward-looking statements. Except as otherwise stated, neither
the City nor the Financing Authority plan to issue any updates or revisions to those forward-looking
statements if or when its expectations or events, conditions or circumstances on which such statements are
based occur.
TABLE OF CONTENTS
Page
Page
Article XIIIA ............................................... 29
Article XIIIB ............................................... 29
Proposition 218 ........................................... 30
Effect of Proposition 218 on City ............... 31
Proposition 26 ............................................. 32
Future Initiatives ......................................... 33
INTRODUCTION ................................................. 1
THE REFINANCING PLAN ................................ 2
General .......................................................... 2
Plan of Refunding ......................................... 2
SOURCES AND USES OF FUNDS ..................... 3
RISK FACTORS ................................................. 33
Limited Obligations .................................... 33
Management and Operation Costs .............. 33
Natural Disasters ......................................... 33
Forecasts ..................................................... 34
Limited Recourse on Default ...................... 34
Initiatives..................................................... 34
Bankruptcy .................................................. 34
Regulation ................................................... 34
IRS Audit of Tax-Exempt Bond Issues ....... 35
Tax Exemption ............................................ 35
Additional Obligations ................................ 35
Secondary Market ....................................... 35
THE BONDS ......................................................... 3
General .......................................................... 3
Redemption ................................................... 4
DEBT SERVICE REQUIREMENTS ................... 6
SECURITY FOR THE BONDS ............................ 6
Revenues; Pledge of Revenues ..................... 6
Installment Sale Payments ............................ 7
Unconditional Obligation .............................. 9
Rate Covenant ............................................... 9
Rate Stabilization Fund ............................... 10
Other Covenants.......................................... 10
Parity Obligations ....................................... 11
Special Obligation ....................................... 12
THE FINANCING AUTHORITY ...................... 36
CONTINUING DISCLOSURE........................... 36
THE WASTEWATER ENTERPRISE ................ 12
General Description and History ................. 12
Existing System .......................................... 13
Capital Improvements Program .................. 14
Wastewater Treatment Facility ................... 16
Wastewater Rates and Revenues ................. 16
Wastewater Enterprise Users ...................... 19
Rate Setting Process .................................... 21
Billing and Collections............................... 21
Comparative Wastewater Rates and
Charges ................................................ 22
Impact Fees ................................................. 22
Wastewater Enterprise Summary
Financial Information........................... 24
Projected Net Revenues and Coverage
Estimates .............................................. 26
Outstanding Wastewater Enterprise
Obligations ........................................... 27
Investments ................................................. 27
Pension and Other Post-Employment
Benefits ................................................ 27
LEGAL OPINION............................................... 37
FINANCIAL ADVISOR ..................................... 37
TAX MATTERS ................................................. 37
Tax Exemption ............................................ 35
Tax Accounting Treatment of Bond
Premium and Original Issue
Discount on Bonds ............................... 38
Other Tax Consequences ............................ 39
NO LITIGATION................................................ 40
RATING .............................................................. 40
UNDERWRITING .............................................. 40
BANK QUALIFICATION .................................. 40
VERIFICATION OF MATHEMATICAL
COMPUTATIONS ....................................... 41
MISCELLANEOUS ............................................ 41
CONSTITUTIONAL LIMITATIONS ON
APPROPRIATIONS AND FEES ................ 29
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
APPENDIX F
THE CITY OF REDONDO BEACH ................................................................................. A-1
AUDITED FINANCIAL STATEMENTS OF THE CITY
AS OF JUNE 30, 2013......................................................................................................... B-1
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS .................................................... C-1
BOOK ENTRY SYSTEM ................................................................................................... D-1
PROPOSED FORM OF BOND COUNSEL OPINION ....................................................... E-1
FORM OF CONTINUING DISCLOSURE AGREEMENT ................................................ F-1
i
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
OFFICIAL STATEMENT
$7,230,000
REDONDO BEACH COMMUNITY FINANCING AUTHORITY
WASTEWATER REVENUE REFUNDING BONDS
2014 SERIES A
INTRODUCTION
General. The purpose of this Official Statement (which includes the cover page, inside cover and
the appendices) is to provide information concerning the issuance, sale and delivery by the Redondo
Beach Community Financing Authority (the “Financing Authority”) of its Wastewater Revenue
Refunding Bonds, 2014 Series A (the “Bonds”), in the aggregate principal amount of $7,230,000.
Financing Authority. The Financing Authority is a joint exercise of powers authority organized
under the laws of the State of California and composed of the City of Redondo Beach, California (the
“City”) and the Redondo Beach Parking Authority (the “Parking Authority”). The Financing Authority
was formed in 2012 to assist in the financing and refinancing of certain programs and projects of the City,
and for the purpose of aiding in the financing of capital improvements. See “THE AUTHORITY.”
City. The City is located on the coastal edge of Los Angeles County, approximately 20 miles
from downtown Los Angeles and approximately 7 miles south of Los Angeles International Airport. The
City was incorporated in 1892 and adopted a charter in 1949. The City operates under its City Charter
with a Council-Manager form of government. See “APPENDIX A – THE CITY.”
Authority and Purpose of Issue. The Bonds are being issued pursuant to the Marks-Roos Local
Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 of the Government
Code of the State of California (the “Act”), and an Indenture of Trust, dated as of April 1, 2014 (the
“Indenture”), by and between the Financing Authority and U.S. Bank National Association, as trustee (the
“Trustee”). The proceeds of the sale of the Bonds will be used to refund all of the $10,335,000 Redondo
Beach Public Financing Authority Revenue Bonds, 2004 Series A (City of Redondo Beach Wastewater
System Financing Project), currently outstanding in the principal amount of $8,500,000 (the “2004
Bonds”), and to pay certain costs of issuance of the Bonds. See “SOURCES AND USES OF FUNDS”
and “THE REFINANCING PLAN.”
Security and Source of Payment. The Bonds are payable from and secured by a first pledge of
certain payments (the “Installment Sale Payments”) received by the Financing Authority from the City
under an Installment Sale Agreement, dated as of April 1, 2014 (the “Installment Sale Agreement”), by
and between the Financing Authority and the City, and from certain interest and other income derived
from certain funds and accounts held under the Indenture (collectively, the “Revenues”). The obligation
of the City to make the Installment Sale Payments is payable solely from all gross income and revenue
received by the City from the ownership or operation of the City’s wastewater and sewer collection and
conveyance system (the “Wastewater Enterprise”), less all operation and maintenance costs of the
Wastewater Enterprise (the “Net Revenues,” as more fully described below). Under the Installment Sale
Agreement, the City has irrevocably pledged all Net Revenues to the payment of the Installment
Payments, subject to the terms and conditions of the Installment Sale Agreement. See “SECURITY FOR
THE BONDS – Revenues; Pledge of Revenues.”
The Bonds are limited obligations of the Financing Authority and are not secured by a legal or
equitable pledge of, or charge or lien upon, any property of the Financing Authority or any of its income
or receipts, except the Revenues under the Indenture. Neither the full faith and credit of the Financing
Authority nor that of the City or any member of the Financing Authority is pledged for the payment of the
interest on or principal of the Bonds and no tax or other source of funds, other than the Revenues, is
pledged to pay the interest on or principal of the Bonds. The payment of the principal of or interest on the
Bonds does not constitute a debt, liability or obligation of the Financing Authority, the City or any
member of the Financing Authority for which any such entity is obligated to levy or pledge any form of
taxation or for which any such entity has levied or pledged any form of taxation. The Financing
Authority has no taxing power.
Wastewater Enterprise. The City provides wastewater and sewer collection and conveyance
services to 13,744 sewer connections of which 13,118 are residential connections and the remaining 626
are non-residential connections. Wastewater is conveyed to treatment plants of the Sanitation Districts of
Los Angeles County for treatment which bills customers separately for treatment costs. See “THE
WASTEWATER ENTERPRISE.”
The summaries and references of documents, statutes, reports and other instruments referred to
herein do not purport to be complete, comprehensive or definitive, and each such summary and reference
is qualified in its entirety by reference to each document, statute, report or instrument. The capitalization
of any word not conventionally capitalized or otherwise defined herein, indicates that such word is
defined in a particular agreement or other document and, as used herein, has the meaning given it in
such agreement or document. See “APPENDIX C – SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS” for summaries of certain of such definitions.
THE REFINANCING PLAN
General
Proceeds of the Bonds will be used to refund all of the Redondo Beach Public Financing
Authority Revenue Bonds, 2004 Series A (City of Redondo Beach Wastewater System Financing
Project), currently outstanding in the aggregate principal amount of $8,500,000 (the “2004 Bonds”), and
pay costs of issuance of the Bonds.
Plan of Refunding
The 2004 Bonds were issued in the original principal amount of $10,335,000, pursuant to an
Indenture of Trust, dated as of May 1, 2004 (the “2004 Indenture”), by and between the Redondo Beach
Public Financing Authority (the “Authority”) and U.S. Bank National Association, as trustee for the 2004
Bonds. The 2004 Bonds were issued to fund improvements to the Wastewater Enterprise, including, but
not limited to, repairing, rehabilitating, and/or replacing sewer pipe, pump stations, lift stations and
generators, acquiring smart manhole covers, upgrading and repairing SCADA system, CCTV inspections,
and a sewer master plan.
Barthe & Wahrman, PA, certified public accountants (the “Verification Agent”), will deliver a
report stating that the firm has verified the accuracy of mathematical computations concerning the
adequacy of the uninvested cash initially deposited in the Escrow Fund to pay the interest due with
respect to the 2004 Bonds to and including May 1, 2014 (the “Redemption Date”), and to pay on the
Redemption Date the principal amount of the 2004 Bonds to be redeemed, without premium. See
“VERIFICATION OF MATHEMATICAL COMPUTATIONS.”
2
SOURCES AND USES OF FUNDS
The following sets forth the estimated sources and uses of funds related to the issuance of the
Bonds.
Sources of Funds:
Principal Amount
Net Original Issue Premium/Discount
Release from 2004 Indenture
Prior Debt Service Reserve Fund
Prior Debt Service Fund
Total Sources of Funds
$7,230,000.00
525,117.45
666,209.35
453,634.38
$8,874,961.18
Uses of Funds:
2004 Bonds Escrow Fund
Deposit to Costs of Issuance Fund(1)
$8,708,634.38
166,326.80
Total Uses of Funds
$8,874,961.18
(1)
Includes fees of financial advisor, bond and disclosure counsel, verification agent, rating agency
and trustee, underwriter’s discount, printing costs and miscellaneous fees.
THE BONDS
General
The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as
nominee of The Depository Trust Company, New York, New York (“DTC”) and will be available to
ultimate purchasers in integral multiples of $5,000, under the book-entry system maintained by DTC.
While the Bonds are subject to the book-entry system, the principal, interest and any redemption premium
with respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such
payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the Bonds as
described herein. See “APPENDIX D – BOOK-ENTRY SYSTEM.”
The Bonds will be dated their date of delivery and will bear interest at the rates set forth on the
inside cover page of this Official Statement, payable on November 1, 2014, and semiannually thereafter
on May 1 and November 1 of each year (each, an “Interest Payment Date”) until maturity or earlier
redemption. Subject to the redemption provisions set forth herein, the Bonds will mature on the dates and
in the amounts set forth on the inside cover page. Interest on the Bonds will be payable semiannually
calculated based on a 360-day year of 12 thirty-day months on each Interest Payment Date to the person
whose name appears on the registration books as the Owner as of the 15th calendar day of the month
immediately preceding such Interest Payment Date (a “Record Date”), such interest to be paid by check
of the Trustee mailed on the Interest Payment Date by first class mail to the Owner at the address of such
Owner as its appears on the registration books; provided however, that payment of interest will be made
by wire transfer in immediately available funds to an account at a financial institution in the United States
of America to any Owner of Bonds in the aggregate principal amount of $1,000,000 or more who
furnishes written wire instructions to the Trustee before the applicable Record Date. Principal of any
Bond and any premium upon redemption will be paid by check of the Trustee upon presentation and
surrender thereof at the Office of the Trustee. Principal of and interest and premium (if any) on the Bonds
will be payable in lawful money of the United States of America. So long as Cede & Co. is the registered
3
owner of the Bonds, payments of principal and interest on the Bonds will be paid to DTC as registered
owner of the Bonds. See “APPENDIX D – BOOK-ENTRY SYSTEM.”
Each Bond will bear interest from the Interest Payment Date next preceding the date of
authentication, unless (a) it is authenticated after a Record Date and on or before the following Interest
Payment Date, in which event it will bear interest from such Interest Payment Date, or (b) unless it is
authenticated on or before October 15, 2014, in which event it shall bear interest from the Closing Date;
provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such
Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made
available for payment.
Redemption
Optional Redemption
The Bonds maturing on or before May 1, 2024 are not subject to optional redemption prior to
maturity. The Bonds maturing on or after May 1, 2025 are subject to redemption prior to their respective
maturity dates, at the option of the Financing Authority, by lot within a maturity on any date on or after
May 1, 2024, as a whole or in part (in such maturities as are designated to the Trustee by the Financing
Authority or, if the Financing Authority fails to designate such maturities, on a proportionate basis among
maturities), from prepayment of Installment Payments made at the option of the City, at the redemption
price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date
of redemption, without premium.
Mandatory Sinking Fund Redemption
The Bonds maturing on May 1, 2034 are also subject to redemption prior to their respective stated
maturities, on any May 1 on or after May 1, 2030, in part by lot, from mandatory sinking fund payments
at a redemption price equal to the principal amount thereof, plus accrued interest, if any, to the
redemption date, without premium, as set forth below in the aggregate principal amounts and on the dates
as set forth in the following table; provided, however, that if some but not all of such Bonds have been
redeemed pursuant to optional or special mandatory redemption provisions of the Indenture, the total
amount of all future sinking fund payments shall be reduced by the aggregate principal amount of such
Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral
multiples of $5,000.
Schedule of Mandatory Sinking Fund Redemptions
Term Bonds Maturing May 1, 2034
Sinking Fund
Redemption Date
(May 1)
2030
2031
2032
2033
2034†
Principal
Amount
$450,000
470,000
485,000
505,000
525,000
________
†
Maturity
4
Notice of Redemption
The Trustee on behalf and at the expense of the Financing Authority will mail (by first-class mail,
postage prepaid) notice of any redemption to: (i) the respective Owners of any Bonds designated for
redemption, at least 30 but not more than 60 days prior to the redemption date, at their respective
addresses appearing on the Registration Books, and (ii) the Securities Depositories and to one or more
Information Services, at least 30 but not more than 60 days prior to the redemption; provided, however,
that neither failure to receive any such notice so mailed nor any defect therein will affect the validity of
the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. In
addition to mailed notice, the notice to the Securities Depositories and Information Service will be given
by telephonically confirmed facsimile transmission or overnight delivery service or by such other means
approved by such institutions. Such notice will state the date of the notice, the redemption date, the
redemption place and the redemption price and will designate the CUSIP numbers, the bond numbers and
the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in
whole) of the Bonds to be redeemed, and will require that such Bonds be then surrendered at the Office of
the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds
will not accrue from and after the redemption date. If at the time of mailing of any notice of optional
redemption there has not been deposited with the Trustee monies sufficient to redeem all the Bonds called
for redemption, such notice will state that it is subject to the deposit of the redemption monies with the
Trustee not later than the opening of business on the redemption date and will be of no effect unless such
monies are so deposited.
Selection of Bonds for Redemption
Whenever provision is made for the optional redemption of Bonds of more than one maturity, the
Bonds to be redeemed will be selected by the Financing Authority evidenced by a Written Request of the
Financing Authority filed with the Trustee at least 60 days (or shorter time as agreed to by the Trustee)
prior to the date of redemption (provided that, in any event, the principal and interest due on the Bonds
Outstanding following such redemption will be equal in time and amount to the unpaid payments due
under the Installment Sale Agreement); and in each case, the Trustee will select the Bonds to be redeemed
within any maturity by lot in any manner which the Trustee in its sole discretion deems appropriate. For
purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 portions and
such portions will be treated as separate Bonds which may be separately redeemed.
5
DEBT SERVICE REQUIREMENTS
The amounts required to be set aside each Fiscal Year for principal, sinking fund payments and
interest relating to the Bonds are set forth below.
Bond Year
Ending
May 1
Principal
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
$ 225,000.00
245,000.00
255,000.00
265,000.00
280,000.00
290,000.00
300,000.00
310,000.00
325,000.00
340,000.00
355,000.00
375,000.00
395,000.00
405,000.00
430,000.00
450,000.00
470,000.00
485,000.00
505,000.00
525,000.00
$ 322,459.17
301,987.50
289,737.50
279,537.50
268,937.50
257,737.50
246,137.50
234,137.50
221,737.50
205,487.50
188,487.50
170,737.50
151,987.50
139,150.00
118,900.00
97,400.00
79,400.00
60,600.00
41,200.00
21,000.00
$ 547,459.17
546,987.50
544,737.50
544,537.50
548,937.50
547,737.50
546,137.50
544,137.50
546,737.50
545,487.50
543,487.50
545,737.50
546,987.50
544,150.00
548,900.00
547,400.00
549,400.00
545,600.00
546,200.00
546,000.00
Total
$7,230,000.00
$3,696,759.17
$10,926,759.17
Interest
Total
SECURITY FOR THE BONDS
Revenues; Pledge and Assignment of Revenues
All Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the
Trustee in any fund or account established under the Indenture (other than amounts on deposit in the
Rebate Fund) are irrevocably pledged to the payment of the interest and premium, if any, on and principal
of the Bonds as provided in the Indenture, and the Revenues shall not be used for any other purpose while
any Bonds remain Outstanding; provided, however, that out of the Revenues and other moneys of the
Wastewater Enterprise there may be applied such sums for such purposes as are permitted under the
Indenture. Such pledge constitutes a first pledge of and charge and lien upon the Net Revenues (defined
below) and all other moneys on deposit in the funds and accounts established under the Indenture for the
payment of the interest on and principal of the Bonds, in accordance with their terms and the terms of the
Indenture. The City has no other outstanding obligation secured by a pledge and lien on the Net
Revenues
To carry out and effectuate the pledge, charge and lien on the Net Revenues of the Wastewater
Enterprise provided in the Indenture, the Financing Authority agrees and covenants that, with respect to
the Wastewater Enterprise, all Revenues when and as received shall be received by the Financing
6
Authority in trust for the benefit of the holders of the Bonds and shall be deposited when and as received
by the Financing Authority in the Revenue Fund created under the Indenture and which funds the
Financing Authority agrees and covenants to maintain with the Trustee so long as any Bonds are
Outstanding. All Revenues shall be accounted for through and held in trust in the Revenue Fund, and the
Financing Authority has no beneficial right or interest in any of the Revenues except only as provided in
the Indenture.
“Revenues” are defined in the Indenture as (a) all amounts received by the Financing Authority or
the Trustee pursuant or with respect to the Installment Sale Agreement, including, without limiting the
generality of the foregoing, all of the Installment Payments (including both timely and delinquent
payments, any late charges, and whether paid from any source), prepayments, insurance proceeds,
condemnation proceeds, but excluding any Additional Payments; (b) all moneys and amounts held in the
funds and accounts established under the Indenture; and (c) investment income with respect to any
moneys held by the Trustee under the Indenture.
Installment Payments
Pursuant to the Installment Sale Agreement, the City is obligated to make Installment Sale
Payments, but solely from Net Revenues, which are sufficient to provide for the payment of the principal
of and interest on the Bonds. As security for the payment of the Bonds, the Financing Authority has
assigned to the Trustee the Financing Authority’s rights and remedies under the Installment Sale
Agreement, including the right to receive the Installment Sale Payments.
As stated below, the obligation of the City to pay the Installment Sale Payments is limited to the
Net Revenues. The Installment Sale Agreement defines “Net Revenues” as, for any period, an amount
equal to all of the Gross Revenues received during such period minus the amount required to pay all
Operation and Maintenance Costs becoming payable during such period. These terms are defined as
follows:
“Gross Revenues” means all income, rents, rates, fees, charges and other moneys derived
from the ownership or operation of the Wastewater Enterprise, including, without limiting the
generality of the foregoing, (1) all income, rents, rates, fees, charges, business interruption
insurance proceeds or other moneys derived by the City from the sale, furnishing and supplying
of wastewater treatment or other services, facilities, and commodities sold, furnished or supplied
through the facilities of or in the conduct or operation of the business of the Wastewater
Enterprise, plus (2) the earnings on and income derived from the investment of such income,
rents, rates, fees, charges, or other moneys, including City reserves for the Wastewater Enterprise,
the Rate Stabilization Fund established under the Installment Sale Agreement, but excluding in all
cases customer deposits or any other deposits or advances subject to refund until such deposits or
advances have become the property of the City and excluding any proceeds of taxes required by
law to be used by the City to pay bonds issued after the Bonds. If interest on any Parity
Obligations is being reimbursed to the City by the United States of America pursuant to Section
54AA of the Code, or any future similar program, then Gross Revenues shall include such interest
being paid or reimbursed by the United States of America.”
“Operation and Maintenance Costs” means the reasonable and necessary costs and
expenses paid by the City for maintaining and operating the Wastewater Enterprise, including but
not limited to (a) the cost of utilities, including electricity and other forms of energy supplied to
the Wastewater Enterprise, (b) the reasonable expenses of management and repair and other costs
and expenses necessary to maintain and preserve the Wastewater Enterprise in good repair and
working order and (c) the reasonable administrative costs of the City attributable to the operation
and maintenance of the Wastewater Enterprise, including insurance and other costs described in
7
the Installment Sale Agreement, but in all cases excluding (i) debt service payable on obligations
incurred by the City with respect to the Wastewater Enterprise, including but not limited to the
Installment Payments and debt service payments on any Parity Obligations, (ii) depreciation,
replacement and obsolescence charges or reserves therefor and (iii) amortization of intangibles or
other bookkeeping entries of a similar nature.
“Wastewater Enterprise” means the entire wastewater system of the City, including all
facilities, properties and improvements at any time owned, controlled or operated by the City for
the treatment of wastewater, and any necessary lands, rights, entitlements and other property
useful in connection therewith, together with all extensions thereof and improvements thereto at
any time acquired, constructed or installed by the City, including the Improvements.
Gross Revenues consist primarily of User Fees and Impact Fees as defined “THE
WASTEWATER ENTERPRISE – Wastewater Rates and Revenues.”
In order to carry out and effectuate the obligation of the City to pay the Purchase Price by paying
the Installment Sale Payments, the City agrees and covenants in the Installment Sale Agreement that all of
the Gross Revenues will be deposited by the City immediately upon receipt in the Wastewater Enterprise
Fund. Operation and Maintenance Costs shall be paid out of the Wastewater Enterprise Fund as such
payments become due and payable. On or before each Installment Payment Date, the City will withdraw
from the Wastewater Enterprise Fund, and transfer to the Trustee first, (on a parity with the transfers for
the payment of principal of or interest on any Parity Obligations), without preference or priority as to any
Parity Obligations, for deposit in the Revenue Fund, an amount of Net Revenues which, together with the
balance then on deposit in the Bond Service Fund for the Bonds (other than amounts resulting from the
prepayment of the Installment Payments and other than amounts required for payment of principal of or
interest on any Bonds which have matured or been called for redemption but which have not been
presented for payment), is equal to the aggregate amount of the Installment Payments coming due and
payable on the next succeeding Interest Payment Date, and second, any amounts required to restore the
balance in a Parity Obligation Reserve Fund, if any, to its reserve requirement, without preference or
priority as to any Parity Obligations, and ratably among Parity Obligation Reserve Funds, if insufficient
funds to restore all Parity Obligation Reserve Funds.
If prior to an Installment Payment Date, the City has determined that Net Revenues will be
insufficient in amount to pay in full the Installment Payments next coming due under the Installment Sale
Agreement and other principal and interest payments next coming due for any Parity Obligations, then
amounts transferred to the Trustee from the Wastewater Enterprise Fund to the Revenue Fund and to the
trustees for the Parity Obligations will be made ratably without preference or priority among the
Installment Payments and such other principal and interest payments for any Parity Obligations.
The City will manage, conserve and apply the Gross Revenues on deposit in the Wastewater
Enterprise Fund in such a manner that all deposits required to be made pursuant to the Installment Sale
Agreement will be made at the times and in the amounts so required. Subject to the foregoing sentence,
so long as no Event of Default has occurred and is continuing under the Installment Sale Agreement and
or any documents governing the Parity Obligations, the City may use and apply Net Revenues in the
Wastewater Enterprise Fund for (i) deposits to the Rate Stabilization Fund, (ii) the payment of Additional
Payments, (iii) the payment of any subordinate obligations or any unsecured obligations, (iv) the
acquisition and construction of extensions and betterments to the Wastewater Enterprise, (v) the
prepayment of any obligations of the City relating to the Wastewater Enterprise, or (vi) any other lawful
purposes of the Wastewater Enterprise Fund. All monies in the Wastewater Enterprise Fund may be
invested by the City from time to time in any Authorized Investment.
8
Unconditional Obligation
Installment Sale Payments due under the Installment Sale Agreement are calculated to be in an
amount sufficient to provide for the payment of the principal of and the interest on the Bonds. The
obligations of the City to make the Installment Payments and the Additional Payments (defined as fees
costs and expenses of Trustee, attorneys, auditors, engineers and accountants due under the Installment
Sale Agreement or the Indenture) from the Net Revenues and to perform and observe the other
agreements contained in the Installment Sale Agreement is absolute and unconditional and, until such
time as all of the Installment Payments, all of the Additional Payments and all other amounts coming due
and payable under the Installment Sale Agreement have been fully paid or prepaid, the City will not
suspend or discontinue payment of the Installment Payments, will perform and observe all other
agreements contained in the Installment Sale Agreement, and will not terminate the Installment Sale
Agreement for any cause, including, without limiting the generality of the foregoing, the occurrence of
any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction,
destruction of or damage to the Wastewater Enterprise, sale of the Wastewater Enterprise, the taking by
eminent domain of title to or temporary use of any component of the Wastewater Enterprise, commercial
frustration of purpose, any change in the tax or law other laws of the United States of America or the
State or any political subdivision of either or any failure of the Financing Authority or the Trustee to
perform and observe any agreement, whether express or implied, or any duty, liability or obligation
arising out of or connected with the Indenture or the Installment Sale Agreement.
Rate Covenant
The City covenants under the Installment Sale Agreement that it will fix, prescribe, revise and
collect rates, fees and charges for the services and facilities furnished by the Wastewater Enterprise
during each Fiscal Year, which are at least sufficient, after making allowances for contingencies and error
in the estimates, to yield Gross Revenues sufficient to pay the following amounts in the following order
of priority:
(a)
All Operation and Maintenance Costs estimated by the City to become due and payable
in such Fiscal Year;
(b)
All Installment Payments and payments of principal of and interest on any Parity
Obligations as they become due and payable during such Fiscal Year, without preference or priority,
except to the extent Installment Payments or interest on any Parity Obligations are payable from proceeds
of the Bonds or Parity Obligations deposited for such purpose; provided, however, if interest on any
Parity Obligations is reasonably anticipated to be reimbursed to the City by the United States of America
pursuant to Section 54AA of the Code, or any future similar program, then interest payments with respect
to such Parity Obligations will be reduced by the amount of such interest reasonably anticipated to be
paid or reimbursed by the United States of America;
(c)
All amounts, if any, required to restore the balance in any Parity Obligation Reserve Fund
to the full amount of its reserve requirement; and
(d)
All payments required to meet any other obligations of the City which are charges, liens,
encumbrances upon, or which are otherwise payable from, the Net Revenues during such Fiscal Year.
In addition, the City will fix, prescribe, revise and collect rates, fees and charges for the services
and facilities furnished by the Wastewater Enterprise during each Fiscal Year which are sufficient to yield
Net Revenues which are at least equal to 120% of the amount described in the preceding clauses (b) and
(c) for such Fiscal Year.
9
Rate Stabilization Fund
To avoid fluctuations in its fees and charges of the Wastewater Enterprise, the City will maintain
and hold a separate fund to be known as the “Rate Stabilization Fund”. From time to time the City may
deposit in the Rate Stabilization Fund from remaining Net Revenues, such amounts as the City
determines, provided that deposits with respect to any Fiscal Year may be made at any time during such
Fiscal Year and until (but not after) the day which is 180 days following the end of such Fiscal Year. The
City may withdraw amounts from the Rate Stabilization Fund for inclusion in Gross Revenues for any
Fiscal Year, or for any other lawful purpose of the Wastewater Enterprise, such withdrawals to be made at
any time during such Fiscal Year and until (but not after) the day which is 180 days after the end of such
Fiscal Year. All interest or other earnings upon deposits in the Rate Stabilization Fund may be withdrawn
therefrom and accounted for as Gross Revenues. Amounts on deposit in the Rate Stabilization Fund do
not constitute Gross Revenues until withdrawn and returned to the Wastewater Enterprise Fund.
The City has not currently funded the Rate Stabilization Fund.
Other Covenants
Additional covenants contained in the Installment Sale Agreement include, but are not limited to,
the following:
“Maintenance, Utilities, Taxes and Assessments.” Throughout the Term of the
Installment Sale Agreement, all improvement, repair and maintenance of the Wastewater
Enterprise will be the responsibility of the City, and the City will pay for or otherwise arrange for
the payment of all utility services supplied to the Wastewater Enterprise, which may include,
without limitation, janitor service, security, power, gas, telephone, light, heating, water and all
other utility services, and shall pay for or otherwise arrange for the payment of the cost of the
repair and replacement of the Wastewater Enterprise resulting from ordinary wear and tear. The
City will also pay or cause to be paid all taxes and assessments of any type or nature, if any,
charged to the Financing Authority or the City affecting any part of the Wastewater Enterprise or
the respective interests or estates therein; provided, however, that with respect to special
assessments or other governmental charges that may lawfully be paid in installments over a
period of years, the City will be obligated to pay only such installments as are required to be paid
during the Term of the Installment Sale Agreement as and when the same become due.
“Operation of Wastewater Enterprise.” The City covenants and agrees to operate the
Wastewater Enterprise in an efficient and economical manner and to operate, maintain and
preserve the Wastewater Enterprise in good repair and working order. The City covenants that, in
order to fully preserve and protect the priority and security of the Bonds, the City will pay from
the Net Revenues and discharge all lawful claims for labor, materials and supplies furnished for
or in connection with the Wastewater Enterprise which, if unpaid, may become a lien or charge
upon the Net Revenues prior or superior to the lien granted hereunder, or which may otherwise
impair the ability of the City to pay the Installment Payments in accordance with the Installment
Sale Agreement.
“Insurance.” The City will procure and maintain, or cause to be procured and
maintained, but only in the event and to the extent available from reputable insurers at reasonable
cost, casualty insurance against loss or damage to any improvements constituting any part of the
Wastewater Enterprise, covering such hazards as are customarily covered with respect to works
and property of like character, and a standard comprehensive general insurance policy or policies
in protection of the Financing Authority, the City and their respective members, officers, agents
and employees providing for indemnification of said parties against direct or contingent loss or
liability for damages for bodily and personal injury, death or property damage occasioned by
10
reason of the operation of the Wastewater Enterprise. Said policies shall provide coverage in
such liability limits and shall be subject to such deductibles as shall be customary with respect to
works and property of a like character. Such liability insurance may be maintained as part of or
in conjunction with any other liability insurance coverage carried by the City, and may be
maintained in whole or in part in the form of self-insurance by the City, or in the form of the
participation by the City in a joint powers agency or other program providing pooled insurance.
“Eminent Domain and Insurance Proceeds.” If all or any part of the Wastewater
Enterprise is taken by eminent domain proceedings, or if the City receives any insurance proceeds
resulting from a casualty loss to the Wastewater Enterprise, the net proceeds, at the option of the
City, will be applied either to the prepayment of the Installment Sale Payments or will be used to
substitute other components for the condemned or destroyed components of the Wastewater
Enterprise.
Parity Obligations
In addition to the Installment Payments, the City may issue or incur other bonds, notes, loans,
advances or indebtedness payable from Net Revenues on a parity with the Installment Payments to
provide financing for the Wastewater Enterprise in such principal amount as shall be determined by the
City. The City may issue or incur any such Parity Obligations subject to the following specific conditions
which are hereby made conditions precedent to the issuance and delivery of such Parity Obligations:
(a)
No Event of Default has occurred and is continuing, and the City will deliver a
certificate to that effect to the Trustee;
(b)
The Net Revenues, calculated in accordance with accounting principles
consistently applied, as shown by the books of the City for the latest Fiscal Year or as shown by
the books of the City for any more recent 12 month period selected by the City, in either case
verified by a certificate or opinion of an Independent Accountant employed by the City, plus (at
the option of the City) the Additional Revenues, will be at least equal to 120% of the amount of
Maximum Annual Debt Service; and
(c)
The trustee or fiscal agent for such Parity Obligations shall be the same entity
performing the functions of Trustee under the Indenture.
Notwithstanding the foregoing provisions, there are no limitations on the ability of the City to issue any
Parity Obligations at any time to refund any outstanding Bonds or any outstanding Parity Obligations
provided such issuance of Parity Obligations produces annual debt service savings to the City.
The provisions of subsection (b) above will not apply to the portion of Parity Obligations to the extent the
proceeds of such Parity Obligations will be deposited in an irrevocable escrow for the purpose of paying
the principal of and interest and premium (if any) on such Parity Obligations.
“Additional Revenues” means, with respect to the issuance of any Parity Obligations, an allowance for
Net Revenues (a) from any additions or improvements to or extensions of the Wastewater Enterprise to be
financed from the proceeds of such Parity Obligations or from any other source, all in an amount equal to
75% of the estimated additional Net Revenues to be derived from such additions, improvements and
extensions for the first 12 month period in which each addition, improvement or extension is respectively
to be in operation, all as shown by the certificate or opinion of a qualified independent engineer employed
by the City; and/or (b) arising from any increase in the charges made for service from the Wastewater
Enterprise which have been approved prior to the incurring of such Parity Obligations, in an amount equal
to the total amount by which the Net Revenues would have been increased if such increase in charges had
11
been in effect during the whole of the most recent completed Fiscal Year or during any more recent 12
month period selected by the City, all as shown by the certificate or opinion of an Independent
Accountant or independent consultant.
Special Obligation
The City’s obligation to pay the Installment Payments is a special obligation of the City limited
solely to the Net Revenues. Under no circumstances shall the City be required to advance moneys
derived from any source of income other than the Net Revenues and other sources specifically identified
in the Installment Sale Agreement for the payment of such Installment Sale Payments.
THE WASTEWATER ENTERPRISE
General Description and History
The City provides wastewater collection and conveyance services to 13,744 sewer connection
laterals, including 8,384 single-family laterals, 4,734 multi-family and condominium laterals, and 626
nonresidential laterals, covering, with few exceptions, all parcels within the City limits. Wastewater is
conveyed to Los Angeles County Sanitation Districts (the “Districts”) treatment plants for treatment. See
“Wastewater Treatment Facility.” The City has no contractual obligations for large industrial users of the
Wastewater Enterprise.
The City owns, operates and maintains 112 miles of 3- to 24-inch diameter collector and trunk
sewer line, 2,110 manholes, 15 pump stations and 9 emergency power generators. Except for the 3- and
4-inch force mains, 99.8% of the sewer pipes are vitrified clay pipe. The force mains are steel pipes.
Approximately 40 miles of sewer pipe is between 26 and 50 years old and the remaining sewer pipe is
between 50 and 75 years old, with the average age of the sewer pipes being approximately 50 years old.
The oldest pump station was constructed in the early 1960’s and the newest was constructed in 2000. The
system is maintained by the Public Works Department. Sewer pipeline maintenance is ongoing and
sewers are currently cleaned on average once every 2 years, with “areas of concerns” being cleaned up to
four times per year.
The Wastewater Enterprise is operated pursuant to a Waste Discharge Requirement (WDR) order
(Order No. 2006-003-DWQ – Statewide General Waste Discharge Requirements for Sanitary Sewer
Systems) (the “Order”) issued by the California State Regional Water Quality Control Board (SRWQCB).
Based on the City’s current and past efforts to maintain the Wastewater Enterprise, occasional spills have
not resulted in any fines, consent decrees or penalties imposed by SRWOCB, and the City is in
compliance with applicable laws and the Order.
In the Installment Sale Agreement, the City covenants to maintain or cause to be maintained, but
only if and to the extent available at reasonable cost from reputable insurers, liability and casualty
insurance in such amounts and against such risks as shall be appropriate for sewer systems of like size and
with similar facilities as the Wastewater Enterprise.
Prior to 2003, wastewater service was funded through the City’s general fund and impact fees.
See “Wastewater Rates and Revenues” below.
The Wastewater Enterprise currently employs 10 people full time, and operates one shift, seven
days a week.
12
Existing System
The Wastewater Enterprise consists of a collection and conveyance system only. Treatment
services are provided by the Districts. The wastewater from the City’s collection system tributary area is
routed through the trunk sewers to the City’s 15 pump stations. The stations pump sewage to the 78-inch
diameter Districts’ interceptor located in the City of Manhattan Beach. The wastewater is then
transported through this interceptor pipe to the Districts’ treatment plant in the City of Carson. At the
plant, the wastewater is treated and either discharged into the Pacific Ocean or used for landscape
irrigation, industrial process cooling or other recycled water needs.
Collection System. The current average daily flow within the Wastewater Enterprise is 6 million
gallons per day. The Wastewater Enterprise relies on gravity flow through the sewer main when possible,
but due to terrain restrictions, it also relies on 15 pump stations to pump the collected wastewater from
low points to suitable locations for continuing the flow by gravity. The Wastewater Enterprise consists of
approximately 112 miles of gravity pipelines that vary in size from 3 to 24 inches in diameter. A
summary of the trunk sewer pipeline length by diameter is provided in the following table.
TABLE 1
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Pipe Diameter Summary
Diameter (inches)
3
4
6
8
10
12
15
18
24
Total
Length (feet)
370
492
9,187
524,923
16,242
7,354
13,814
1,015
675
573,641
Percent
0.06%
0.08
1.60
91.51
2.83
1.28
2.33
0.18
0.12
100.00%
________________
Source: The City of Redondo Beach.
Pumping Stations. The Wastewater Enterprise includes 15 pump stations. The oldest pump
station was constructed in the early 1960’s and the newest was constructed in 2000. The following table
lists each of the pump stations and their locations.
13
TABLE 2
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Pumping Stations
Name
Address
Alta Vista Ball Field
Alta Vista Com. Ctr.
American Legion
Armour/Goodman
Basin 3
Carnegie
Flagler
Harbor Drive
Mole B
Morgan
Portofino Way
Rindge
Wylie
Yacht Club Way
Emergency Operations Ctr
801 Camino Real
801 Camino Real
Behind 412 Camino Real
NE Corner Armour Lane/Goodman Ave
Pier Parking Structure
2019 Carnegie Lane
1507 Flagler Lane
531 North Harbor Drive
Marina Way and Restrooms
1622 Morgan Lane
Portofino Way at Harbor Drive
Across from 542 Rindge Lane
1738 Steinhart Avenue
Yacht Club Way at Harbor Drive
City Hall
________________
Source: The City of Redondo Beach.
Capital Improvements Program
Over the last 20 years, the City has spent over $15 million to upgrade the Wastewater Enterprise,
with approximately $9,900,000 from the 2004 Bond issue, $1,200,000 from Impact Fees and $4,100,000,
from City general fund moneys. Since the adoption of its first capital improvement program in 2000, the
City has taken a systematic approach in implementing wastewater system improvements. The City’s 15
pump stations, the heart of the entire wastewater system, are surveyed, repaired and replaced as
necessary. The City also conducts a video survey of the entire wastewater system. System deficiencies are
identified, categorized, and ranked in order of severity. The City maintains the system through
inspection; clean-out and repair of damaged sewer sections; root and rodent control; the jetting of
blockages; as well as operations and maintenance of the pump stations, telemetry and back-up generators.
In December 2010, the City completed the System Evaluation and Capacity Assurance Plan
(SEACAP). The study used a combination of empirical data and established formulas to assess the
capacity of the Wastewater Enterprise and its sufficiency to handle flow based on zoning and use
designations of parcels served by the Wastewater Enterprise. The results showed that the Wastewater
Enterprise did not have capacity issues. The study concluded that in current conditions, less than 1% of
the entire network of pipes is deficient to handle flow based on formula capacities. Future growth of the
City was projected on a parcel basis using residential units and building square footages for such
projected uses. The study concluded that in 2030, just over 1% of the entire network of pipes would be
deficient to handle flow based on formula capacities. Capacity assessment for the future scenario
assumes the City takes no action to further increase the capacity of the existing system. The study made a
number of recommendations to address the aging infrastructure and identified areas that need routine
maintenance due to tree root intrusion, fats/oil/grease and debris but the evaluation did not conclude the
existing sanitary sewer system as having capacity issues (i.e., the ability to accept the flows generated
within the City).
14
In December 2011, the Environmental Protection Agency (EPA) conducted a sewer collection
system inspection – a rigorous exercise including detail document review, interviews with relevant staff
and physical inspections of facilities. EPA’s audit was primarily aimed at addressing sewer overflows
and based on the assessment of the auditors, EPA also concluded that the Wastewater Enterprise does not
have capacity issues. The audit recommended improvements to documentation, reporting to the
SRWQCB and implementation of the maintenance routine in a timely fashion as recommended by the
SEACAP.
A 2012 review of current State and federal wastewater mandates and the 2011 completion of
updates to the City’s Sewer System Management Plan (SSMP), including the SEACAP, Rehabilitation
and Replacement Program, and the Operation and Maintenance (O&M) Program, identified $33 million
dollars of capital improvement needs over the next 15 years and $800,000 of additional annual operation
and maintenance expenditures (primarily for additional personnel over the next 3-5 years). The system
improvements were identified as $3.1 million of capacity improvement projects, $11.2 million of
condition improvement projects, and $18.7 million of pump station improvement projects. The additional
annual operation and maintenance expenditures have been included in the projected expenses for
Wastewater Enterprise beginning in Fiscal Year 2013-14 in Table 15 under “Projected Net Revenues and
Coverage Estimates.”
The following table includes the City’s current capital improvement program for the Wastewater
Enterprise, funding the capital improvements and rehabilitation projects in the priority identified by the
2012 review. The City’s current CIP includes $6.7 million in pump station improvements. Other major
capital projects planned or currently underway include an upgraded Supervisory Control and Data
Acquisition (SCADA) system, closed circuit television inspections, and a comprehensive repair and
replacement program over the identified 15-year planning period. Future capital needs are projected to be
approximately $1 million to $2.5 million annually through Fiscal Year 2017-18.
TABLE 3
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
5-Year Capital Improvement Program
Fiscal Years 2013-14 through 2017-18
Description
2013-14(1)
Portofino Way Pump Station
$2,076,190
System-wide Sewer Inspection (2)
500,000
Alta Vista Pump Station Design
Alta Vista Pump Station Construction
Morgan Sewer Pump Station Design
Morgan Sewer Pump Station Construction
Public Works Yard Clarifier Unit Constr. (3)
200,000
Sanitary Sewers Facilities Rehabilitation (2)
959,179
2,000,000
Sanitary Sewers SCADA Installation (3)
Yacht Club Way Pump Station Design (3)
200,000
Yacht Club Way Pump Station Constr.
Total CIP (current dollars)
$5,935,363
2014-15
2015-16
- $ 200,000
$ 200,000
- 1,300,000
1,000,000 1,000,000
1,300,000
-
2016-17
2017-18
$1,500,000
1,000,000 $1,000,000
-
$2,500,000 $2,500,000
$2,500,000 $1,000,000
________________
(1). Includes $5,035,363 of carryover funds budgeted in previous fiscal years for projects not yet completed.
(2). All or portion of contract awarded.
(3). Under design.
Source: The City of Redondo Beach
15
The City has no current plan to issue or incur any additional obligations secured by Net
Revenues. Additional capital improvements are expected to be paid on a pay-as-you-go basis from
amounts on hand and from future Wastewater Enterprise fund balances. The Wastewater Enterprise’s
current fee structure anticipates revenues sufficient to make capital expenditures from the Wastewater
Enterprise fund of between $1 million and $2.5 million each year through Fiscal Year 2017-18. See
“Projected Net Revenues and Estimated Coverage” below.
Wastewater Treatment Facility
The wastewater collected by the City-owned sewer system discharges into the wastewater system
of the Sanitation Districts of Los Angeles County (the “Districts”), specifically either County Sanitation
District No. 5 of Los Angeles County or South Bay Cities Sanitation District of Los Angeles County. All
collected wastewater from the City and neighboring municipalities is treated at the Districts’ City of
Carson treatment plant, the Joint Water Pollution Control Plant (“JWPCP”). The plant occupies
approximately 420 acres, 200 acres of which are used as buffer areas between the operational areas and
surrounding residential neighbors. The JWPCP is one of the largest wastewater treatment plants in the
world and is the largest of the Districts’ wastewater treatment plants. The facility provides both primary
and secondary treatment for approximately 280 million gallons of wastewater per day (mgd), and has a
total permitted capacity of 400 mgd. The plant serves a population of approximately 3.5 million people
throughout Los Angeles County. Prior to discharge, the treated wastewater is disinfected with sodium
hypochlorite and sent to the Pacific Ocean through a network of outfalls. These outfalls extend 1 ½ miles
off the Palos Verdes Peninsula to a depth of 200 feet. The plant’s National Pollutant Discharge
Elimination System (NPDES) permit contains approximately 27,000 permit limits. In 2013, National
Association of Clean Water Agencies (NACWA) presented the JWPCP with a Platinum 11 award in
recognition of eleven consecutive years of 100% compliance with those NPDES permit limits.
While the City owns and operates the sewer mains between the private sewer laterals and the
Districts’ trunk lines, the Districts own and operate their trunk lines and treatment plants and ocean
outlets. The City’s User Fees (described below) are used on City owned sewer mains, manholes and
pump stations only.
The Districts levy their own user charges collected on the County property tax bill, as well as
receive a portion of the 1% general tax levy, to fund treatment operations and their own capital needs.
The current annual user charge for a single-family residence within South Bay Cities Sanitation District is
$122 and within County Sanitation District No. 5 is $136. These amounts are separate and in addition to
the City’s User Fee.
Other than the levied annual user charges for City-owned parcels within the Districts, there are no
separate financial obligations of the City to the Districts or other charges of the Districts collected by or
paid by the City to the Districts.
Wastewater Rates and Revenues
Establishment of User Fee Rates. In 1994, the City Engineer identified $16,000,000 in needed
sewer improvements and recommended implementation of a wastewater user fee. In June of 1995, the
City Council approved a wastewater use fee and a wastewater capital facility impact fee. The wastewater
use fee was subsequently vetoed by the Mayor and was not implemented. The wastewater capital facility
impact fee (the “Impact Fee”) was implemented and over the last six fiscal years has generated between
$17,000 and $286,000 annually from new development in the City. See “Impact Fees” below.
16
In 2000, the City adopted its first five-year capital improvement program which identified multiyear sewer improvement projects and upgrades to the system to meet State and federal regulatory
requirements. In 2003, after satisfying all procedural requirements of Proposition 218 (See “Proposition
218” below), the City Council adopted a wastewater user fee rate structure and set the City’s first
wastewater user fee rates (the “User Fee”) to be charged to all property owners in the City, provided that
property not connected to the sewer system (i.e., vacant, undeveloped property or property using a septic
sewer system) is exempt from the User Fee.
For residential customers, the fee schedule is a fixed monthly rate per dwelling unit depending on
the class of dwelling. For non-residential customers, the fee schedule is based on water consumption of
the non-residential customer multiplied by fixed rate set for non-residential customers. In May 2004, the
City Council approved the issuance of the 2004 Bonds to finance the capital improvement program for the
repair, replacement and rehabilitation of the Wastewater Enterprise.
In 2008, the City conducted a five-year Wastewater Rate and Financial Plan Study. On June 3,
2008, the City Council approved Ordinance No. 3018-18 that increased the rates set in 2003 using the
same rate structure.
In July 2011, the City Council retained the services of a consultant to update the Wastewater
Enterprise funding plan and wastewater user fees to ensure there were sufficient funds: for completing
sewer collection system rehabilitation projects; ongoing maintenance and operation; meeting bond rate
covenant requirements, SRWQCB Order expense requirements and inflationary escalations to operating
costs over the five-year study period. In December 2011, the City Council received the final draft of the
Wastewater User Fee Study and on February 28, 2012 conducted a public hearing in accordance with
Proposition 218 on the proposed revisions to the User Fee rates. On March 6, 2012, the City Council
adopted Ordinance No. 3087-12 that set the current rate structure effective July 1, 2012.
The currently-approved User Fee rate for a single-family residential customer is $13.25 per
month or $159 per year. On July 1, 2014, the currently-approved User Fee rate for a single-family
residential customer will increase to $16.25 per month or $195 per year in accordance with Ordinance
No. 3087-12 without further action of the City.
User Fee Rate Structure. For residential customers, the fee structure is a flat monthly rate per
dwelling unit based on the class of dwelling unit: single-family, small condominium (2-3 units), large
condominium (4 or more units), multi-family with 2-3 units and multi-family with 4 or more units. For
non-residential customers, the fee schedule is a monthly rate multiplied by water consumption of the
customer.
The fee structure divides the residential customers into three categories. The first category
contains single-family homes and small condominium (2-3 units) and the current monthly rate is $13.25
per dwelling unit (increasing to $16.25 on July 1, 2014). The second category contains large
condominium (4 or more units) and multi-family types with 2-3 units and the current monthly rate is
$10.31 per dwelling unit (increasing to $12.64 on July 1, 2014). The third category contains multi-family
types with 4 or more units and the current monthly rate is $7.09 per dwelling unit (increasing to $8.70 on
July 1, 2014). The three residential categories were established based on the average daily wastewater
discharged to the sewer system from all of the residential units within that category. Due to the fact that
most customers of the Wastewater Enterprise are residential and are calculated at a flat monthly fee, the
impacts, if any, of current drought conditions or water conservation measures should have little impact on
the User Fee revenue generated in the foreseeable future for the Wastewater Enterprise.
17
For industrial, commercial, institutional or mixed use customers, a separate single monthly rate
based on water use was set for such non-residential customers, regardless of the type of customer. The
currently-approved monthly rate for non-residential customers is $1.13 per 100 cubic feet of water (ccf)
usage based on the latest actual annual water usage record available to the City established annually. On
July 1, 2014, the currently-approved monthly rate for non-residential customers will increase to $1.39 per
ccf of water usage.
Each of the past and present rate setting processes were implemented based on wastewater rate
and financial plan studies which included a 5-year projection of costs. The financial plan included
estimates for both operational and capital improvement needs based on regulations and system conditions
known at the time the study was conducted. Each study affirmed the rate distribution model as fair and
equitable. Rate studies are reviewed and updated every five years.
The following table presents a summary of historical and current User Fee rates from Fiscal Year
2003.
TABLE 4
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Historical and Current Monthly User Fee Rates
First Increase1
Initial
Second Increase2
User Class
2003
2008-09
2009-10
2011-12
Per Dwelling Unit
Single Family
Small Condo Complex 2-3 DU
Large Condo Complex 4+DU
Multi-Family 2-3 DU
Multi-Family 4+ DU
$5.00
5.00
3.89
3.89
2.68
$7.00
7.00
5.45
5.45
3.75
$7.12
7.12
5.54
5.54
3.82
$0.43
$0.60
$0.61
Per ccf(3) of Water Usage
Commercial/Non-Residential
(Mixed Use/Com/Ind/Inst)
2012-13
2013-14
14/15 and
thereafter
$7.25
7.25
5.64
5.64
3.88
$10.25
10.25
7.97
7.97
5.49
$13.25
13.25
10.31
10.31
7.09
$16.25
16.25
12.64
12.64
8.70
$0.62
$0.88
$1.13
$1.39
____________________________
(1)
Rates increase occurred every July 1st beginning in 2009-10 per percentage change in Consumer Price Index for All Urban
Consumers (CPI-U) – Los Angeles-Riverside-Orange County, CA.
(2)
Current rate structure includes increased fixed rates.
(3)
ccf (100 cubic feet) of water is equal to 748 gallons. Average monthly water usage is established based on the latest actual
annual water usage record available to the City. On an annual basis, the City recalculates the monthly charge by using the latest
available annual water usage record of each non-residential user. Any water proven to be used for boilers, cooling towers or
similar devises that will not be discharged into the sewer system may be deducted from the annual water usage record for rate
calculation purposes.
_____________________________
Source: The City of Redondo Beach.
Historical User Fee Revenue. Based upon the established User Fees, the following table shows
the historical gross revenues derived by the User Fees for the past five fiscal years.
18
TABLE 5
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Historical User Fee Revenues
2008-09
2009-10
2010-11
2011-12
2012-13
Billed User Fees
Uncollectable User Fees
$2,347,573
(123,919)
$2,410,508
(60,546)
$2,408,708
(50,973)
$2,450,995
460
$3,533,743
(90,109)
Actual User Fees Received
$2,223,654
$2,349,962
$2,357,785
$2,451,455
$3,443,634
________________
Source: The City of Redondo Beach.
Wastewater Enterprise Users
The following table provides a summary of the type and number of connections and parcels
served by the Wastewater Enterprise as of December 31, 2013.
TABLE 6
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Number and Category of Connections
(as of December 31, 2013)
Dwelling Units (DU)
User Class
Residential Parcels
Single Family Dwelling
Condominium Dwelling
Small Complex of Condos
Large Complex of Condos
Multi-family Dwellings
Multi-family 2-3 Units
Multi-family 4+ Units
Residential Subtotal
Number
Connections
Percentage
Number
8,384
29%
8,384
61.0%
4,581
4,167
16
14
2,080
350
15.0
2.6
2,558
9,186
28,876
9
32
100%
1,150
1,154
13,118
8.4
8.4
95.4%
43
463
61
59
626
13,744
0.3
3.4
0.5
0.4
4.6%
100.0%
Non-residential Parcels
Mixed Use
Commercial
Industrial
Institutional
Non-residential Subtotal
Total
________________
Source: The City of Redondo Beach.
19
Percentage
The following table provides a summary of the historical number of connections for the
Wastewater Enterprise based on type of customer for the last five fiscal years.
TABLE 7
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Number of Historical Connections by Type
(as of June 30)
Type of Customer
2008-09
2009-10
2010-11
2011-12
2012-13
Residential
Industrial
Commercial
Institutional
Mixed Use
13,102
66
464
89
43
13,107
61
462
61
43
13,109
56
466
58
42
13,105
61
457
61
43
13,106
61
463
59
43
13,764
13,734
13,731
13,727
13,732
Total
____________________________
Source: The City of Redondo Beach.
As the majority of the City is residential, no one individual user tends to have a dominating
influence either on the revenues or operations of the Wastewater Enterprise. In 2012-13, residential
customers accounted for approximately 76% of total sewage discharge while commercial and nonresidential customers accounted for 24%. In 2012-13, residential customers accounted for approximately
83% of total revenue and commercial and non-residential customers accounted for approximately 17% of
total revenues. The Wastewater Enterprise does not meter usage. Usage is estimated for non-residential
customers, based upon water use which is metered. The following table lists the top ten users of the
Wastewater Enterprise as measured by charges, including their classification of use, 100 cubic feet per
day (based on water usage) and percentage of total billed revenue. The ten largest customers of the
Wastewater Enterprise as measured by charges for the Fiscal Year ended June 30, 2013, were responsible
for approximately 10% of Wastewater Enterprise revenue during such period.
TABLE 8
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Ten Largest Customers
Fiscal Year ended June 30, 2013
Account Name
AES Redondo Beach LLC
City of Redondo Beach Leased Properties
Redondo Beach Unified – South Bay Union High
Northrop Grumman Systems
Beach Cities Health District
Crown Plaza Holiday Inn
Redondo Beach Unified – Washington & Adams
Redondo Beach Unified – Alta Vista School
Marina Way Mole B
Village at Redondo
Type of Use
Usage
(ccf)
Billed
Amount
% of
Revenue
Power Plant
Harbor Facilities
Education
Aerospace
Health
Hotel
Education
Education
Harbor Facilities
Apartment
146,871
28,890
27,009
25,340
18,275
16,985
16,295
13,640
12,910
12,047
$165,964
32,646
30,520
28,634
20,630
19,103
18,413
15,413
14,588
13,613
4.7%
0.9
0.9
0.8
0.6
0.5
0.5
0.4
0.4
0.4
10.1%
________________
Source: The City of Redondo Beach.
20
The Wastewater Enterprise’s top customer, AES Redondo Beach LLC (AES), has stated its
intention to remove the existing power plant within the City and replace it with a smaller, cleaner and
more efficient natural gas power plant to address recent changes to California environmental law
requiring power plants to significantly reduce the use of ocean water for cooling. According to AES, a
new modern plant would use 12 acres of land, just 25% of the existing plant footprint, leaving 75% for
reuse as waterfront restaurants, shops, and other mixed use, and such project would typically take 7-10
years. AES is currently in the pre-construction stage, which includes permitting, contract negotiations
and financing and is expected to take 3 years. On-site construction, commissioning and startup
activities will require about 2½ years; and demolition and removal of the existing plants will begin
toward the end of the construction stage and will likely take 3 additional years, according to AES.
Rate Setting Process
The City is required by the Installment Purchase Agreement to establish rates and charges for the
use of the Wastewater Enterprise to produce Net Revenues sufficient to cover the operation and
maintenance expenses of the Wastewater Enterprise and so that the Net Revenues are equal to at least
1.20 times the Debt Service due and payable in each fiscal year. In compliance with Proposition 218 User
Fees are established or modified by ordinance adopted by a majority vote of the City Council following
notice and a public hearing. The City gives written notice to the record owner of each parcel of land
affected by the User Fee. The City must then hold a hearing upon the proposed increase at least 45 days
after the written notice is mailed, and, if no majority of the property owners of the identified parcels
present written protests against the increase, the City may increase the User Fee. No election requiring
voter approval is currently mandated for wastewater rate increases by current California law or City
ordinance. The current rates and approved rate increase set for July 1, 2014 were the results of
compliance with the Proposition 218 process described above. See “Wastewater Rates and Revenues.”
Utility rates and charges are reviewed as part of the City’s budgetary process. Once results of
operations for the various enterprise funds are known, a determination is made as to whether it is
appropriate for rate adjustments to be made. The timing of rate adjustments may or may not coincide
with the budget adoption process, but the implications of any rate adjustment are considered in budget
development.
Each year prior to June 1, the City Manager submits to the City Council a preliminary budget for
the fiscal year commencing the following July 1. The preliminary budget includes expected expenditures
or expenses, as appropriate, and the means of financing them. Typically, City Council review occurs
prior to adoption of the budget and public meetings are conducted in June to obtain citizen comments.
The final budget is generally adopted prior to July 1.
In each fiscal year, total expenditures of any fund may not exceed the total appropriation for that
fund. However, the City Council may amend the budget at any time during the fiscal year by adoption of
supplemental appropriations and transfers between funds.
Billing and Collection
Approximately 93% of the User Fee revenue is collected through the County tax roll and is a
separate item on the property tax bill. The remaining 7% is collected through a hand-bill process. The
lessees and sublessees within the Harbor area of the City, where the City is the property owner, as well as
other public agencies and utilities, are billed quarterly, directly by the City. The City does not actively
pursue delinquent accounts on the County tax roll; its remedies consist of recovery of delinquent amounts
and penalties when paid or following foreclosure proceedings after five years. The County of Los
Angeles has not implemented the Teeter Plan for tax roll collections. Delinquent accounts billed by hand
are handled on a case-by-case basis by City staff. For Fiscal Year ending June 30, 2013, the delinquency
21
rate for the Wastewater Enterprise was approximately 2.4%. The City does not anticipate an increase in
payment delinquencies. See Table 5 – Historical User Fee Revenues.
Comparative Wastewater Rates and Charges
The following table shows the City’s monthly User Fee as compared to other nearby cities in
Southern California (lowest to highest).
TABLE 9
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Comparison of Average Current Monthly
Single-Family Sewer User Fee
Single-Family Dwelling
Monthly User Fee(1)
City/Agency
Long Beach
Inglewood
Newport Beach
Whittier
Torrance
Huntington Beach
Azusa
South Pasadena
Redondo Beach
Fullerton
San Luis Obispo
Manhattan Beach
Burbank
Los Angeles County Average
Carlsbad
Riverside
Carson
Santa Monica
San Juan Capistrano
Laguna Beach
$ 7.50
7.50
7.68
7.98
8.71
10.54
10.99
12.92
13.25
13.34
16.25
17.48
22.79
23.59
25.02
25.77
26.61
27.48
27.64
46.75
________________
(1)
Wastewater collection rates only. Assumes 30 day month and average single-family
water use of 234 gallons per day. Rates are as of March 1, 2014.
Source: The City of Redondo Beach – compiled by survey and review of websites and/or
applicable ordinances/resolutions.
Impact Fees
In June of 1995, the City Council approved the Impact Fee, a wastewater capital facility impact
fee on new development. The current rate of the Impact Fee became effective on October 5, 2000. There
are no proposed changes to the Impact Fees. The tables below set forth the current Impact Fee and
historical collections for the last six fiscal years. In Fiscal Year 2012-13, Impact Fee revenues increased
significantly from previous years due to the development of two hotel projects within the City.
22
TABLE 10
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Impact Fee Rates
Category
Amount
Single-family
Multi-family
Commercial/Industrial
Institutional
$2,020 per unit
$1,415 per unit
$1,215 per 1,000 sq. ft.
$1,615 per 1,000 sq. ft.
________________
Source: The City of Redondo Beach.
TABLE 11
CITY OF REDONDO BEACH WASTEWATER ENTERPRISE
Historical Impact Fee Revenues
Impact Fee Revenue
2007-08
2008-09
2009-10
$59,183
$17,040
$28,770
________________
Source: The City of Redondo Beach.
23
2010-11
$32,445
2011-12
$70,395
2012-13
$286,225
Wastewater Enterprise Summary Financial Information
The following table presents the audited financial results of the City’s Wastewater Enterprise for
the years ending June 30, 2009 through June 30, 2013. Operating Revenues include User Fees and
Impact Fees as “sales and service charges,” as well as internal service funds designated as
“miscellaneous” paid by the City.
TABLE 12
CITY OF REDONDO BEACH
WASTEWATER ENTERPRISE FUND
Historical Revenues, Expenses and Changes in Net Position
Fiscal Years Ending June 30, 2009 through June 30, 2013
2009
Operating Revenues
Sales and service charges(1)
Miscellaneous(2)
Total Operating Revenues
2010
2011
2012
2013
$2,293,090
15,000
$2,308,090
$2,437,816
21,754
$2,459,570
$2,444,086
18,795
$2,462,881
$2,575,279
17,618
$2,592,897
$ 3,738,670(3)
26,041
$ 3,764,711
$ 654,343
100,248
$ 768,143
94,809
$ 698,092
108,014
$ 886,220
128,895
$ 857,931
77,514
25,828
42,157
214,260
260,096
268,901
$1,565,832
33,441
47,946
162,442
529,716
102,772
$1,739,269
30,599
52,959
133,518
789,404
204,736
$2,017,322
34,642
50,506
141,509
1,299,338
204,282
$2,745,392
46,431
52,806
167,115
34,399
202,589
$ 1,438,785
Operating Income (Loss)
$ 742,258
$ 720,301
$ 445,559
$ (152,495)
$ 2,325,926
Non-Operating Revenue (Exp)
Investment income
Gain/loss on sale of fixed asset
Interest expense
Total Non-Operating Rev (Exp)
$ 207,922
(526,413)
$ (318,491)
$ 97,669
(16,398)
(468,050)
$ (386,779)
$ 73,284
(459,650)
$ (386,366)
$ 16,187
(451,050)
$ (434,863)
(442,050)
$ (442,050)
Net Income (Loss)
$ 423,767
$ 333,522
$ 59,193
$ (587,358)
$ 1,883,876
(385,313)
-
-
Operating Expenses
Personnel services
Contractual service
Supplies, training &
memberships
Utilities
Repairs and Maintenance
Capital improvements
Depreciation expense
Total Operating Expenses
Transfers in
Transfers out
Change in Net Position (Assets)
$
38,454
$ 333,522
$
Fund Balance - July 1
$8,722,911
$8,761,365
Fund Balance - June 30
$8,761,365
$9,094,887
____________________
(1). Includes User Fees and Impact Fees.
(2). Revenues derived from internal service fund amounts charged to and paid by City.
(3). Increase due primarily to 2012 User Fee rate increase.
Source: The City of Redondo Beach.
24
59,193
3,586
-
-
$ (583,772)
$ 1,883,876
$9,094,887
$9,154,080
$ 8,570,308
$9,154,080
$8,570,308
$10,454,184
The following table shows assets, liabilities and fund equity of the City’s Wastewater Enterprise
as of June 30, 2009 through June 30, 2013 as reported in the City’s financial statements.
TABLE 13
CITY OF REDONDO BEACH
WASTEWATER ENTERPRISE FUND
Balance Sheet
Fiscal Years Ending June 30, 2009 through 2013
ASSETS
Current Assets:
Cash and cash equivalents
Receivables:
Accounts
Taxes
Due from other governments
Prepaid items
Deferred charges
Restricted:
Cash with fiscal agent
Total Current Assets
Noncurrent Assets:
Capital assets:
Non-depreciable
Depreciable, net
Total capital assets
Total Noncurrent Assets
Total Assets
LIABILITIES
Liabilities
Current Liabilities:
Accounts payable
Accounts liabilities
Unearned revenue
Accrued compens. absences
Bonds, notes and capital leases
Total Current Liabilities
Noncurrent Liabilities:
Accrued compensated
absences
Bonds, notes and capital leases
Total Non-Current Liabilities
Total Liabilities
NET POSITION (ASSETS):
Investment in capital assets
Unrestricted
Total Net Position (Assets)
2009
2010
2011
2012
$ 3,539,520
$ 2,768,299
$ 5,009,026
$ 4,353,959
$ 5,625,524
29,874
63,461
109
317,832
35,036
66,852
305,119
34,989
68,411
133
292,406
42,360
122,023
279,693
60,742
56,065
266,979
6,310,835
$10,261,635
6,220,558
$ 9,395,864
4,067,003
$ 9,471,968
4,062,207
$ 8,860,242
4,099,468
$10,108,778
7,992,735
7,992,735
$ 7,992,735
9,043,169
9,043,169
$ 9,043,169
8,838,433
8,838,433
$ 8,838,433
8,634,152
8,634,152
$ 8,634,152
512,111
8,431,563
8,943,674
$ 8,943,674
$18,254,370
$18,439,033
$18,310,401
$17,494,394
$19,052,452
$
$
$
$
$
146,052
30,116
4,603
237,374
418,145
$
$
162,219
24,788
4,389
222,626
414,022
$
59,530
$
60,546
$
79,672
21,862
16,039
2,364
207,626
327,563
$
128,182
22,060
19,757
7,693
212,626
390,318
$
47,422
$
48,434
2013
$
34,763
44,488
4,545
242,626
326,422
$
64,329
9,118,020
$ 9,165,442
8,953,828
$ 8,953,828
8,682,769
$ 8,742,299
8,445,395
$ 8,505,941
8,207,517
$ 8,271,846
$ 9,493,005
$ 9,334,166
$ 9,156,321
$ 8,924,086
$ 8,598,268
$ 4,977,928
3,783,437
$ 8,761,365
$ 6,145,707
2,949,180
$ 9,094,887
$ 4,000,041
5,154,080
$ 9,154,080
$ 4,013,590
4,556,718
$ 8,570,308
$ 4,592,999
5,861,185
$10,454,184
__________________
Source: The City of Redondo Beach.
25
The following table sets forth the historical calculations for the coverage relating to the 2004
Bonds for fiscal years ending June 30, 2009 through June 30, 2013 pursuant to requirements set forth in
the documents relating to the 2004 Bonds.
TABLE 14
CITY OF REDONDO BEACH
WASTEWATER ENTERPRISE FUND
Historical Coverage Calculation
Fiscal Years Ending June 30, 2009 through June 30, 2013
2009
2010
2011
2012
2013
Gross Revenues
User Fees(1)
Miscellaneous (2)
Total
$ 2,223,654
15,000
$ 2,238,654
$ 2,349,962
21,754
$ 2,371,716
$ 2,357,735
18,795
$ 2,376,530
$ 2,451,455
17,618
$ 2,469,073
$ 3,443,638
26,041
$ 3,469,675
O & M Costs
Capital improvements(3)
Depreciation expense(3)
Total
$(1,565,832)
260,096
268,901
$(1,036,836)
$(1,739,269)
529,716
102,772
$(1,106,781)
$(2,017,322)
789,404
204,736
$(1,023,182)
$(2,745,392)
1,299,338
204,282
$(1,241,772)
$(1,438,785)
34,399
202,589
$(1,201,797)
Net Revenues
$ 1,201,818
$ 1,264,934
$ 1,353,348
$ 1,227,301
$ 2,267,878
Debt service
$ 676,050
$ 678,050
$ 674,650
$ 676,050
$ 677,050
1.78x
1.87x
Coverage Ratios
____________________
2.01x
1.82x
3.35x
(1). Excludes Impact Fees which were not part of Gross Revenues under the 2004 Bond documents. Under the Indenture,
Gross Revenues include Impact Fees.
(2). Revenues derived from internal service fund amounts charged to and paid by the City.
(3). Capital improvements and depreciation expenses are not treated as Operation and Maintenance costs under the 2004 Bond
documents and are therefore added back.
Source: The City of Redondo Beach.
Projected Net Revenues and Coverage Estimates
The following table sets forth the City’s estimated Wastewater Enterprise projected revenues and
expenditures and resulting projected Net Revenues for the fiscal years ending June 30, 2014 through
June 30, 2018. Included within the projected revenues, is the increased User Fees going into effect on
July 1, 2014, assumed level capacity usage of Wastewater Enterprise and no increase for City internal
service fund revenues (the in lieu amount charged to the City by the Wastewater Enterprise) and other
miscellaneous revenue. Included within the projected expenses is an increase of 4% per year for the cost
of personnel services, operations and maintenance costs (including the $800,000 increase described in the
2012 City study), internal service fund allocations, and Waste Discharge Requirement (WDR) and
Sanitary Sewer Management Plan (SSMP) compliance expenses.
Although the City believes that the projections of future operating results of the Wastewater
Enterprise are reasonable, there can be no assurance that actual operating results will match the
projections due to changes in general economic conditions and similar factors. There can be no
assurance that the Wastewater Enterprise will not be adversely affected by future economic conditions,
governmental policies or other factors beyond the control of the City.
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TABLE 15
CITY OF REDONDO BEACH
WASTEWATER ENTERPRISE FUND
Projected Net Revenues and Coverage Estimates
Budget
2013-14
Estimated
2014-15
Estimated
2015-16
Estimated
2016-17
Estimated
2017-18
Gross Revenues
User Fees(1)
Miscellaneous(2)
Other Revenue
Total Gross Revenues
$4,380,000
26,041
96,000
$4,502,041
$5,412,765
20,000
45,000
$5,477,765
$5,412,765
20,000
45,000
$5,477,765
$5,412,765
20,000
45,000
$5,477,765
$5,412,765
20,000
45,000
$5,477,765
O & M Costs(3)
Personnel
Maintenance & Operations
Internal Service Fund Alloc
Minor Capital Outlay
WDR SSMP Expense(4)
Billing Expense
Total O & M Costs
1,001,260
284,072
72,106
15,000
793,835
3,082
$2,169,355
1,101,386
314,159
78,596
15,000
865,280
3,206
$2,377,629
1,145,441
326,725
81,742
15,000
899,891
3,334
$2,472,133
1,191,259
339,794
85,011
15,000
935,887
3,467
$2,570,418
1,238,909
339,794
85,011
15,000
973,320
3,606
$2,655,642
Available Net Revenues
$2,332,686
$3,100,136
$3,005,632
$2,907,347
$2,822,123
Debt service
$ 662,269
$ 547,460
$ 546,988
$ 544,738
$ 544,538
3.52x
5.66x
5.49x
5.34x
5.18x
Coverage Ratio
____________________
(1) Assumes approved rate increase for July 1, 2014 is implemented.
(2) Revenues derived from internal service fund amounts charged to and paid by City.
(3) Excludes depreciation, interest expense and capital/rehabilitation expenses. Operating expenses include current and projected
increase of $800,000 of operation and maintenance expenses as identified in 2012 City study.
(4) WDR (Waste Discharge Requirement) and SSMP (Sanitary Sewer Management Plan) expenses imposed by law including
additional personnel, training, reports, studies and other government compliance costs.
Source: The City of Redondo Beach.
Outstanding Wastewater Enterprise Obligations
Other than the 2004 Bonds being refunded by the Bonds, the City has no other long-term
obligations secured by the Net Revenues.
Investments
The City has adopted an investment policy (the “Investment Policy”), last reviewed on April 2,
2013, to cover all funds and investment activities of the City, except investments governed by bond
indentures and employee deferred compensation funds. A complete copy of the Investment Policy can be
found on the City’s website.
Pension and Other Post-Employment Benefits
The Wastewater Enterprise is allocated a portion of the costs of the City’s employment costs,
including benefits. The City provides three Tier 1 defined benefit pension plans – two for safety
employees (3% at 55 for Fire and 3% at 50 for Police) and one for miscellaneous employees (2% at 55).
27
Beginning July 2012, two additional Tier 2 defined benefit pension plans were provided – one for safety
employees (3% at 55 with a 4.5% employee contribution for Fire and 3% at 55 for Police) and one for
miscellaneous employees (2% at 60). Beginning January 2013, pursuant to the California Public
Employee’s Pension Reform Act of 2013 (PEPRA), Tier 3 defined benefit pension plans were added,
2.7% at 57 for safety employees and 2% at 62 for miscellaneous employees. These plans are part of the
California Public Employees Retirement System (CalPERS), which acts as a common investment and
administrative agent for participating public employers within the State. The City makes contributions to
the plans based on amounts determined by CalPERS actuaries. On April 17, 2013, CalPERS approved a
recommendation to change the CalPERS amortization and rate smoothing policies. Beginning with the
June 30, 2013 valuations that set the 2015-16 rates, CalPERS will no longer use an actuarial value of
assets and will employ an amortization and smoothing policy that will pay for all gains and losses over a
fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period.
For Fiscal Year 2012-13, the City contributed the Tier 1 full-time employees’ required
contributions on their behalf and for their account. Tier 2 and Tier 3 plans require most employees to
contribute to the cost of their employee contribution. Additionally, as part of the compensation reductions
the City negotiated with employee bargaining groups, nearly all employees make a contribution toward
the City’s employer contribution to CalPERS.
The employer rate for safety employees in Fiscal Year 2012-13 was 40.4%, up from 38.4% in
Fiscal Year 2011-12, with the miscellaneous employees’ rate increasing from 14.1% to 14.5%. Rates have
increased from Fiscal Year 2012-13 levels for the 2013-14 Fiscal Year to 40.6% for safety employees and
14.9% for miscellaneous employees, and for the 2014-15 Fiscal Year to 43.4% for safety employees and
16.2% for miscellaneous employees. Further increases are expected in the coming years as a result of
CalPERS decision to lower the discount rate (rate of return) on its investment portfolio, its announced
demographic and actuarial adjustments, and its decision to smooth investment losses from 2008 and 2009
over a period of time. CalPERS projects for Fiscal Year 2015-16 a 46.5% rate for safety employees and a
17.7% rate for miscellaneous employees.
The total contribution paid by the City toward pension benefits for Fiscal Year 2012-13 was
$10.1 million, which includes the employer and employer-paid member contributions. Approximately
1%, or $98,000, was charged to the Wastewater Fund. The anticipated total City contribution for Fiscal
Year 2013-14 is estimated to be approximately $10.8 million and is expected to increase again in Fiscal
Year 2014-15.
Aside from contributing to CalPERS, the City also contributes to Social Security. The Fiscal Year
2012-13 total cost for Social Security and Medicare coverage was $1.6 million, of which $34,000, or
3.2%, is from the Wastewater Fund. Safety employees do not participate in Social Security and Medicare,
except for those employees hired after 1986, who are required to participate in Medicare.
The City also provides post-retirement health care benefits to its employees in accordance with
agreements reached with various employee bargaining groups.
The City pays for retirees’ health care premiums in these plans up to limits established in the
agreements with the bargaining units. All post retirement healthcare benefits end at age 65. These
payments are paid through an Other Post Employment Benefits (OPEB) trust, which was established by
the City in Fiscal Year 2009-10 to comply with GASB 45. The OPEB trust allows the City to prefund
actuarially derived OPEB costs that are expected to be incurred in future periods. In Fiscal Year 2012-13,
the City contributed $1.3 million to the OPEB trust to cover current and future retiree medical benefits
(approximately $24,000 or 1.8% from Wastewater Enterprise); however, future contributions may vary
based on future actuarial studies. As of June 30, 2013, the City was providing benefits to 105 participants,
none of which were Wastewater employees.
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CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND FEES
Under the California Constitution, the power of initiative is reserved to the voters for the purpose
of enacting statutes and constitutional amendments. In the past, the voters have exercised this power from
time to time, including through the adoption of Propositions 13 and 218.
From time to time other State and local initiative measures could be adopted, affecting the ability
of the City to increase revenues and to increase appropriations.
Article XIIIA
On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the
California Constitution (“Article XIIIA”). Article XIIIA limits the maximum ad valorem tax on real
property to 1% of full cash value thereof, except that additional ad valorem taxes may be levied to pay
debt service on indebtedness approved by voters prior to July 1, 1978 and (as a result of an amendment to
Article XIIIA approved by California voters on June 3, 1986) on bonded indebtedness for the acquisition
or improvement of real property which has been approved on or after July 1, 1978 by two-thirds of the
voters voting on such indebtedness. Article XIIIA defines full cash value to mean “the County Assessor’s
valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or, thereafter, the
appraised value of real property when purchased, newly constructed, or a change in ownership has
occurred after the 1975 assessment.” This full cash value may be increased at a rate not to exceed 2% per
year to account for inflation. Article XIIIA has subsequently been amended to permit reduction of the full
cash value based in the event of declining property values caused by damage, destruction, or other factors
and to provide that there would be no increase in the full cash value base in the event of reconstruction of
property damaged or destroyed in a disaster and in other minor or technical ways.
Article XIIIB
Article XIIIB of the California State Constitution limits the annual appropriations of the State and
of any city, county, school district, authority or other political subdivision of the State to the level of
appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the
cost of living and population. The “base year” for establishing such appropriations limit is the 1978-79
fiscal year and the limit is to be adjusted annually to reflect changes in population and consumer prices.
Adjustments in the appropriations limit of an entity may also be made if (i) the financial
responsibility for a service is transferred to another public entity or to a private entity, (ii) the financial
sources for the provision of services is transferred from taxes to other revenues, or (iii) the voters of the
entity approve a change in the limit for a period of time not to exceed four years.
Appropriations subject to Article XIIIB generally include the proceeds of taxes levied by the
State or other entity of local government, exclusive of certain State subventions and refunds of taxes.
“Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to an entity of
government from (i) regulatory licenses, user charges, and user fees (but only to the extent such proceeds
exceed the cost of providing the service or regulation), and (ii) the investment of tax revenues. Article
XIIIB includes a requirement that if an entity’s revenues in any year exceed the amounts permitted to be
spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two
years. Certain expenditures are excluded from the appropriations limit including payments of
indebtedness existing or legally authorized as of January 1, 1979, or of bonded indebtedness thereafter
approved by the voters and payments required to comply with court or federal mandates which without
discretion require an expenditure for additional services or which unavoidably make the providing of
existing services more costly.
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Proposition 218
General. On November 5, 1996, California voters approved Proposition 218, the so-called “Right
to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which
affect the ability of local governments to levy and collect both existing and future taxes, assessments, and
property-related fees and charges. Proposition 218, which generally became effective on November 6,
1996, changed, among other things, the procedure for the imposition of any new or increased propertyrelated “fee” or “charge,” which is defined as “any levy other than an ad valorem tax, a special tax or an
assessment, imposed by a [local government] upon a parcel or upon a person as an incident of property
ownership, including user fees or charges for a property related service” (and referred to in this section as
a “property-related fee or charge”).
Specifically, under Article XIIID, before a municipality may impose or increase any propertyrelated fee or charge, the entity must give written notice to the record owner of each parcel of land
affected by that fee or charge. The municipality must then hold a hearing upon the proposed imposition or
increase at least 45 days after the written notice is mailed, and, if there is not a majority of the property
owners of the identified parcels who present written protests against the proposal, the municipality may
impose or increase the property-related fee or charge, without voter approval, for fees or charges for
sewer, water, and refuse collection services.
Further, under Article XIIID, revenues derived from a property-related fee or charge may not
exceed the funds required to provide the “property-related service” and the entity may not use such fee or
charge for any purpose other than that for which it imposed the fee or charge. The amount of a propertyrelated fee or charge may not exceed the proportional cost of the service attributable to the parcel, and no
property-related fee or charge may be imposed for a service unless that service is actually used by, or is
immediately available to, the owner of the property in question.
In addition, Article XIIIC provides that “the initiative power shall not be prohibited or otherwise
limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of
initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments
and neither the Legislature nor any local government charter shall impose a signature requirement higher
than that applicable to statewide statutory initiatives.”
Judicial Interpretation of Proposition 218. After Proposition 218 was enacted in 1996, appellate
court cases and an Attorney General opinion initially indicated that fees and charges levied for water and
wastewater services would not be considered property-related fees and charges, and thus not subject to the
requirements of Article XIIID regarding notice, hearing and protests in connection with any increase in
the fees and charges being imposed. However, three recent cases have held that certain types of water and
wastewater charges could be subject to the requirements of Proposition 218 under certain circumstances.
In Richmond v. Shasta Community Services District (9 Cal. Rptr. 3rd 121), the California
Supreme Court addressed the applicability of the notice, hearing and protest provisions of Article XIIID
to certain charges related to water service. In Richmond, the Court held that connection charges are not
subject to Proposition 218. The Court also indicated in dictum that a fee for ongoing water service
through an existing connection could, under certain circumstances, constitute a property-related fee and
charge, with the result that a local government imposing such a fee and charge must comply with the
notice, hearing and protest requirements of Article XIIID.
In Howard Jarvis Taxpayers Association v. City of Fresno (March 23, 2005), the California Court
of Appeal, Fifth District, concluded that water, sewer and trash fees are property-related fees subject to
Proposition 218 and a municipality must comply with Article XIIID before imposing or increasing such
30
fees. The California Supreme Court denied the City of Fresno’s petition for review of the Court of
Appeal’s decision on June 15, 2005.
In July 2006 the California Supreme Court, in Bighorn-Desert View Water Agency v. Verjil (39
Cal. 4th 205), addressed the validity of a local voter initiative measure that would have (a) reduced a
water agency’s rates for water consumption (and other water charges), and (b) required the water agency
to obtain voter approval before increasing any existing water rate, fee, or charge, or imposing any new
water rate, fee, or charge. The court adopted the position indicated by its statement in Richmond that a
public water agency’s charges for ongoing water delivery are “fees and charges” within the meaning of
Article XIIID, and went on to hold that charges for ongoing water delivery are also “fees” within the
meaning of Article XIIIC’s mandate that the initiative power of the electorate cannot be prohibited or
limited in matters of reducing or repealing any local tax, assessment, fee or charge. Therefore, the court
held, Article XIIIC authorizes local voters to adopt an initiative measure that would reduce or repeal a
public agency’s water rates and other water charges. (However, the court ultimately ruled in favor of the
water agency and held that the entire initiative measure was invalid on the grounds that the second part of
the initiative measure, which would have subjected future water rate increases to prior voter approval,
was not supported by Article XIIIC and was therefore invalid.)
The court in Bighorn specifically noted that it was not holding that the initiative power is free of
all limitations; the court stated that it was not determining whether the electorate’s initiative power is
subject to the statutory provision requiring that water service charges be set at a level that will pay for
operating expenses, provide for repairs and depreciation of works, provide a reasonable surplus for
improvements, extensions, and enlargements, pay the interest on any bonded debt, and provide a sinking
or other fund for the payment of the principal of such debt as it may become due.
Current Practice Regarding Rates and Charges. The City’s practice has been to provide public
notice of proposed wastewater rate increases through means that include, among others, holding
informational presentations at community group meetings, mailings to residential and commercial
customers of public hearings on rate increases, and press releases and media campaigns regarding rate
increases, followed by public hearings conducted by the City Council. The most recent rate increase was
enacted by the City in strict compliance with the procedures mandated by Proposition 218 and Bighorn.
Conclusion. It is not possible to predict how courts will further interpret Article XIIIC and Article
XIIID in future judicial decisions, and what, if any, further implementing legislation will be enacted.
Under the Bighorn case, local voters could adopt an initiative measure that reduces or repeals the City’s
rates and charges, though it is not clear whether (and California courts have not decided whether) any
such reduction or repeal by initiative would be enforceable in a situation in which such rates and charges
are pledged to the repayment of bonds or other indebtedness. There can be no assurance that the courts
will not further interpret, or the voters will not amend, Article XIIIC and Article XIIID to limit the ability
of local agencies to impose, levy, charge and collect increased fees and charges for wastewater, or to call
into question previously adopted wastewater rate increases.
Effect of Proposition 218 on the City
The general financial condition of the City may be affected by provisions of Article XIIIC and
Article XIIID. In particular, provisions of Article XIIIC (i) require taxes for general governmental
purposes to be approved by a majority vote and taxes for specific purposes, even if deposited into the
General Fund, to be approved by two-thirds vote, (ii) require any general purpose tax which the City
imposed, extended or increased, without voter approval, after December 31, 1994, to be approved by
majority vote on November 5, 1998 and (iii) provide that all taxes, assessments, fees and charges are
subject to reduction or repeal at any time through the initiative process, subject to overriding
constitutional principles relating to the impairment of contracts. Provisions of Article XIIID that affect the
31
ability of the City to fund certain services or programs that it may be required or choose to fund include
(i) adding notice, hearing, protest and, in some cases, voter approval requirements to impose, increase or
extend certain assessments, fees and charges and (ii) adding stricter requirements for finding
individualized benefits associated with such levies.
The ability of the City to comply with its covenants under the Installment Sale Agreement and to
generate Net Revenues sufficient to pay the Installment Payments and, therefore, the principal of and
interest on the Bonds may be adversely affected by actions and events outside of the control of the City
and may be adversely affected by actions taken (or not taken) under Article XIIIC or Article XIIID by
voters, property owners, taxpayers or payers of assessments, fees and charges.
Furthermore, any remedies available to the owners of the Bonds upon the occurrence of an event
of default under the Installment Sale Agreement are in many respects dependent upon judicial actions
which are often subject to discretion and delay and could prove both expensive and time consuming to
obtain. In addition to the possible limitations on the ability of the City to comply with its covenants under
the Installment Sale Agreement, the rights and obligations under the Bonds and the Indenture may be
subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and
other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the
exercise of judicial discretion in appropriate cases and to limitations on legal remedies against cities in the
State of California. Based on the foregoing, in the event the City fails to comply with its covenants under
the Installment Sale Agreement, including its covenants to generate sufficient Net Revenues, as a
consequence of the application of Article XIIIC and Article XIIID, or to pay principal of or interest on the
Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of
the holders of the Bonds.
Proposition 26
On November 2, 2010, State voters approved Proposition 26 which amended certain sections of
Article XIIIC. The proposition attempts to define “tax” as used within Article XIIIC as “any levy, charge,
or exaction of any kind imposed by a local government, except the following: (1) a charge imposed for a
specific benefit conferred or privilege granted directly to the payor that is not provided to those not
charged, and which does not exceed the reasonable costs to the local government of conferring the benefit
or granting the privilege; (2) a charge imposed for a specific government service or product provided
directly to the payor that is not provided to those not charged, and which does not exceed the reasonable
costs to the local government of providing the service or product; (3) a charge imposed for the reasonable
regulatory costs to a local government for issuing licenses and permits, performing investigations,
inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and
adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the
purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge
imposed by the judicial branch of government or a local government, as a result of a violation of law; (6)
a charge imposed as a condition of property development; and (7) assessments and property-related fees
imposed in accordance with the provisions of Article XIII D.” The local government bears the burden of
proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the
amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the
manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s
burdens on, or benefits received from, the governmental activity.
The foregoing discussion of Proposition 218 and Proposition 26 should not be considered an
exhaustive or authoritative treatment of the provisions of such propositions or the possible effects of
Proposition 218 and Proposition 26. Interim rulings, final decisions, legislative proposals and legislative
enactments affecting Proposition 218 and Proposition 26 may impact the City’s ability to make debt
service payments on the Bonds. The City does not expect to be in a position to control the consideration
32
or disposition of these issues and cannot predict the timing or outcome of any judicial or legislative
activity related to these issues.
Future Initiatives
Articles XIIIC, XIIID and Proposition 26 were adopted as measures that qualified for the ballot
pursuant to California’s initiative process. From time to time other initiatives could be proposed and
adopted affecting Net Revenues or the City’s ability to increase its rates for wastewater service. See
“Proposition 218” above.
RISK FACTORS
Payment by the City of the Installment Payments and, therefore, of principal of and interest on
the Bonds, depends primarily upon the Net Revenues derived from operation of the Wastewater
Enterprise. Some of the events which could affect the revenues received by the Wastewater Enterprise are
set forth below. The following discussion of risks is not meant to be an exhaustive list of the risks
associated with the purchase of the Bonds and the order in which the risks are discussed does not
necessarily reflect the relative importance of the various risks.
Limited Obligations
The Installment Payments are limited obligations of the City and are not secured by a legal or
equitable pledge or charge or lien upon any property of the City or any of its income or receipts, except
the Net Revenues. The obligation of the City to pay debt service on the Bonds from Net Revenues does
not constitute an obligation of the City to levy or pledge any form of taxation or for which the City has
levied or pledged any form of taxation. The City is obligated under the Installment Sale Agreement to
make Installment Payments solely from Net Revenues. There is no assurance that the City can succeed in
operating the Wastewater Enterprise such that the Net Revenues in the future will be sufficient for that
purpose.
Maintenance and Operation Costs
There can be no assurance that the City’s expenses for the Wastewater Enterprise will be
consistent with the descriptions in this Official Statement. Changes in technology, changes in quality
standards, loss of large customers, increased or decreased development, increases in the cost of operation,
or other expenses could require increases in rates or charges in order to comply with the City’s rate
covenant in the Installment Sale Agreement. Although the City has covenanted to fix, prescribe, revise
and collect rates, fees and charges of the Wastewater Enterprise at certain levels, there can be no
assurance that such amounts will be collected in the amounts and at the time necessary to make timely
payments with respect to the Bonds.
Natural Disasters
Any natural disaster or other physical calamity, including earthquake, storms, coastal flooding,
tsunami, fires and explosions, strikes, sabotage, riots, and spills of hazardous substances, may have the
effect of reducing Gross Revenues through damage to the Wastewater Enterprise and/or adversely
affecting the economy of the surrounding area. The Installment Sale Agreement requires the City to
maintain insurance or self-insurance, but only if and to the extent available at reasonable cost from
reputable insurers. In the event of total loss of the Wastewater Enterprise, there can be no assurance that
insurance proceeds will be adequate to redeem all outstanding Bonds or that losses in excess of the
insured amount will not occur. The City cannot predict what disasters or force majeure events may occur
in the future.
33
Forecasts
Although the City believes that the projections herein of future operating results of the
Wastewater Enterprise are reasonable, there can be no assurance that actual operating results will match
the projections due to changes in general economic conditions and similar factors. In addition, the
Wastewater Enterprise and economic development within the service area of the City are subject to
federal, State and local regulations. There can be no assurance that the Wastewater Enterprise will not be
adversely affected by future economic conditions, governmental policies or other factors beyond the
control of the City.
Limited Recourse on Default
Failure by the City to make Installment Payments constitutes an event of default under the
Installment Sale Agreement and the Trustee is permitted to pursue remedies at law or in equity to enforce
the City’s obligation to make such payments. Although the Trustee has the right to accelerate the total
unpaid principal amount of the Installment Payments, there is no assurance that the City would have
sufficient funds to pay the accelerated amounts.
The ability of the City to comply with its covenants under the Installment Sale Agreement and to
generate Net Revenues sufficient to pay the Installment Payments and, therefore, of principal of and
interest on the Bonds, may be adversely affected by actions and events outside of the control of the City
and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or
persons obligated to pay assessments, fees and charges. Furthermore, the remedies available to the owners
of the Bonds upon the occurrence of an event of default under the Installment Sale Agreement are in
many respects dependent upon judicial actions which are often subject to discretion and delay and could
prove both expensive and time consuming to obtain.
Initiatives
In recent years several initiative measures have been proposed or adopted which affect the ability
of local governments to increase taxes and rates. There is no assurance that the electorate or the State
legislature will not at some future time approve additional limitations which could affect the ability of the
City to implement rate increases which could reduce Net Revenues and adversely affect the security for
the Bonds. See CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND FEES—
Proposition 218.”
Bankruptcy
The rights and remedies provided in the Installment Sale Agreement and the Indenture may be
limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable
principles that may affect the enforcement of creditors’ rights, to the exercise of judicial discretion in
appropriate cases and to limitations on legal remedies against public agencies in the State of California.
The various opinions of counsel to be delivered with respect to the Bonds, the Installment Sale
Agreement and the Indenture, including the opinion of Bond Counsel, will be similarly qualified. If the
City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the Bonds and the
City could be prohibited from taking any steps to enforce their rights under the Indenture.
Regulation
The SRWQCB issues orders which establishes the discharge limits and monitoring requirements
for the Wastewater Enterprise. The City’s order is a license to operate the Wastewater Enterprise and
34
requires that the City comply with Federal, State, and local laws and regulations. The primary laws that
regulate the Wastewater Enterprise are found in the Federal Clean Water Act and the State Porter Cologne
Water Act. Generally, Board order compliance costs are stable and do not change significantly from year
to year. If the construction of new facilities to the Wastewater Enterprise are required for compliance with
a SRWQCB order, a time schedule is usually adopted to allow the City the time to design and build the
new facilities. When new Wastewater Enterprise facilities are completed, compliance costs will generally
increase during startup. These increased costs, however, are absorbed into the operational funding of the
Wastewater Enterprise. Rate studies determine how the compliance costs are passed on to the users of the
system.
Non-compliance costs with a SRWQCB order can be significant. Most violations of an order,
however, if any, are minor or occasional in occurrence and result in minor fines and or penalties. Due to
the structure of an order, most non-compliance issues result in multiple violations. No fines have been
imposed by SRWQCB over the past 5 years with respect to the Wastewater Enterprise. Through constant
monitoring, testing, and operation, operators are able to correct most issues before they escalate into large
fines. However, future unaddressed spills or major violations of an order may carry significant fines and
increase the cost of operation and maintenance of the Wastewater Enterprise impacting the remaining Net
Revenues available to pay Installment Payments and the payment of debt service on the Bonds.
IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt
bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for
audit by the Internal Revenue Service. It is also possible that the market value of the Bonds might be
affected as a result of such an audit of the Bonds (or by an audit of similar bonds).
Tax Exemption
The Authority and the City have covenanted that they will take all actions necessary to assure the
exclusion of interest with respect to the Bonds from the gross income of the Owners of the Bonds to the
same extent as such interest is permitted to be excluded from gross income under the Internal Revenue in
the gross income of the Owners thereof for federal tax purposes. See “TAX MATTERS.”
Additional Obligations
The Installment Sale Agreement permits the incurrence of obligations by the City secured by Net
Revenues on a parity basis or a subordinate basis to the Installment Sale Agreement. Such additional
obligations would increase debt service payable from Net Revenues and could adversely affect debt
service coverage with respect to the Bonds. In such event, however, the Rate Covenant will remain in
effect. See “SECURITY FOR THE BONDS—Rate Covenant.”
Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary
market exists, that any Bonds can be sold for any particular price. Occasionally, because of general
market conditions or because of adverse history or economic prospects connected with a particular issue,
secondary marketing practices in connection with a particular issue are suspended or terminated.
Additionally, prices of issues for which a market is being made will depend upon then-prevailing
circumstances. Such prices could be substantially different from the original purchase price.
35
THE FINANCING AUTHORITY
The Redondo Beach Community Financing Authority was established pursuant to a Joint
Exercise of Powers Agreement dated July 2, 2012, by and between the City and the Redondo Beach
Parking Authority (the “Joint Powers Agreement”). The Joint Powers Agreement was entered into
pursuant to the provisions of Articles 1, 2 and 4, Chapter 5, Division 7, Title 1 of the California
Government Code. The Financing Authority was created for the primary purpose of assisting the
financing or refinancing of certain capital improvements for its members.
The Financing Authority is administered by a governing board comprised of all of the individuals
who currently are the Mayor and the members of the City Council of the City. The Financing Authority
has no independent staff. The Executive Director of the Financing Authority is the City Manager of the
City, and the Treasurer of the Financing Authority is the Treasurer of the City. The Executive Director
serves as Chief Executive Officer of the Financing Authority, and the Treasurer has custody of all money
of the Financing Authority from whatever source.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of owners of the Bonds to provide certain financial
information and operating data relating to the City by not later than 9 months after the end of the City’s
fiscal year (presently June 30) in each year commencing with its report for the 2013-14 fiscal year (the
“Annual Report”) and to provide notices of the occurrence of certain enumerated events. The Annual
Report will be filed by the Dissemination Agent on behalf of the City with the Municipal Securities
Rulemaking Board (the “MSRB”). The notices of enumerated events will be filed by the Trustee on
behalf of the City with the MSRB. These covenants have been made in order to assist the Underwriter in
complying with Securities and Exchange Commission Rule 15c2-12 (the “Rule”). The specific nature of
the information to be contained in the Annual Report or the notices of enumerated events by the City is
summarized in “APPENDIX F – FORM OF CONTINUING DISCLOSURE AGREEMENT.”
The City has a continuing disclosure requirement in relation to the 2004 Bonds, and, along with
the Redondo Beach Redevelopment Agency (and successor agency) (the “Agency”), in relation to the
$7,645,000 Redondo Beach Community Financing Authority Refunding Revenue Bonds, 2008 Series A
(South Bay Center Redevelopment Project) (the “2008 Bonds”). The Agency has a continuing disclosure
requirement in relation to the $2,965,000 Redondo Beach Public Financing Authority Refunding Revenue
Bonds, Series 2001 (Redevelopment Agency of the City of Redondo Beach – Redondo Pier
Reconstruction Refinancing Project) (the “2001 Bonds”). The City and the Agency failed to file the
2011-12 annual reports for the above-referenced bonds in a timely manner. In addition, the City omitted
information on the ten largest users of the Wastewater Enterprise from its annual reports for the 2004
Bonds. The City and the Agency failed to file notices regarding the downgrade of the MBIA rating or
upgrades of the 2004 Bonds and 2008 Bonds.
Although the City and the Agency did not timely file complete annual reports for its previous
undertakings with regard to the Rule, the City has subsequently made the requisite filings with the
dissemination agents, and the dissemination agents have subsequently posted those filings with the
MSRB, and the City is currently in compliance with respect to its continuing disclosure obligations, and
has implemented procedures to ensure timely filing of its complete Annual Reports and Material Event
Notices, consistent with the respective Continuing Disclosure undertakings, in the future. It has been, and
will continue to be, the practice of the City to include the required information required to be provided on
the Wastewater Enterprise in the statistical section of the City’s comprehensive audited financial reports.
36
LEGAL OPINION
Fulbright & Jaworski LLP, a limited liability partnership registered under the laws of Texas, is
acting as Bond Counsel and also Disclosure Counsel to the Financing Authority. Each of Fulbright &
Jaworski LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright
Canada LLPd and Norton Rose Fulbright South Africa (incorporated as Deneys Reitz, Inc.) is a separate
legal entity and is a member of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright
Verein helps coordinate the activities of its members, but does not itself provide legal services to clients.
The issuance of the Bonds is subject to the approving opinion of Fulbright & Jaworski LLP, as
Bond Counsel, to be delivered in substantially the form set forth in APPENDIX E herein. Fulbright &
Jaworski LLP, in its role as Bond Counsel, has undertaken no responsibility to the owners of the Bonds
for the accuracy, completeness or fairness of this Official Statement or any other offering material related
to the Bonds, and expresses no opinion to the Owners with respect thereto. Certain legal matters also will
be passed upon for the City and the Financing Authority by Michael W. Webb, Esq., as City Attorney and
the Financing Authority Counsel, respectively, for the Financing Authority by Fulbright & Jaworski LLP,
a member of Norton Rose Fulbright, as Disclosure Counsel to the Financing Authority, and for the
Underwriter by Stradling, Yocca, Carlson & Rauth, A Professional Corporation. The compensation of
Fulbright & Jaworski LLP for this issue is contingent on the successful sale of the Bonds.
FINANCIAL ADVISOR
The Authority has retained The PFM Group as financial advisor (the “Financial Advisor”) in
connection with the issuance of the Bonds. The Financial Advisor has not been engaged, nor have they
undertaken, to audit, authenticate or otherwise verify the information set forth in the Official Statement,
or any other related information available to the Authority or the City, with respect to accuracy and
completeness of disclosure of such information. The Financial Advisor has reviewed this Official
Statement but makes no guaranty, warranty or other representation respecting accuracy and completeness
of the information contained in this Official Statement.
TAX MATTERS
Tax Exemption
The Internal Revenue Code of 1986 (the “Code”) imposes certain requirements that must be met
subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded
pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax
purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in
the gross income of the owners thereof for federal income tax purposes retroactive to the date of issuance
of the Bonds. The Financing Authority has covenanted to maintain the exclusion of the interest on the
Bonds from the gross income of the owners thereof for federal income tax purposes.
In the opinion of Fulbright & Jaworski LLP, Los Angeles, California, Bond Counsel, a member
of Norton Rose Fulbright, under existing statutes, regulations, rulings and court decisions, interest on the
Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the
covenants mentioned herein, interest on the Bonds is excluded pursuant to section 103(a) of the Code
from the gross income of the owners thereof for federal income tax purposes. In the further opinion of
Bond Counsel, under existing statutes, regulations, rulings and court decisions, the Bonds are not
“specified private activity bonds” within the meaning of section 57(a)(5) of the Code and, therefore,
interest on the Bonds will not be treated as an item of tax preference for purposes of computing the
alternative minimum tax imposed by section 55 of the Code. Receipt or accrual of interest on Bonds
owned by a corporation may affect the computation of the alternative minimum taxable income. A
37
corporation’s alternative minimum taxable income is the basis on which the alternative minimum tax
imposed by section 55 of the Code will be computed.
Pursuant to the Indenture and in the Tax Certificate Pertaining to Arbitrage and Other Matters
under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be delivered by the City and
the Financing Authority in connection with the issuance of the Bonds, the City and the Financing each
Authority will make representations relevant to the determination of, and will make certain covenants
regarding or affecting, the exclusion of interest on the Bonds from the gross income of the owners thereof
for federal income tax purposes. In reaching its opinions described in the immediately preceding
paragraph, Bond Counsel will assume the accuracy of such representations and the present and future
compliance by the City and the Financing Authority with such covenants.
Except as stated in this section above, Bond Counsel will express no opinion as to any federal or
state tax consequence of the receipt of interest on, or the ownership or disposition of, the Bonds.
Furthermore, Bond Counsel will express no opinion as to any federal, state or local tax law consequence
with respect to the Bonds, or the interest thereon, if any action is taken with respect to the Bonds or the
proceeds thereof predicated or permitted upon the advice or approval of other counsel. Bond Counsel has
not undertaken to advise in the future whether any events after the date of issuance of the Bonds may
affect the tax status of interest on the Bonds or the tax consequences of the ownership of the Bonds.
Bond Counsel’s opinion is not a guarantee of a result, but represents its legal judgment based
upon its review of existing statutes, regulations, published rulings and court decisions and the
representations and covenants of the Financing Authority described above. No ruling has been sought
from the Internal Revenue Service (the “Service”) with respect to the matters addressed in the opinion of
Bond Counsel, and Bond Counsel’s opinion is not binding on the Service. The Service has an ongoing
program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the
Bonds is commenced, under current procedures the Service is likely to treat the Financing Authority as
the “taxpayer,” and the owners would have no right to participate in the audit process. In responding to or
defending an audit of the tax-exempt status of the interest on the Bonds, the Financing Authority may
have different or conflicting interest from the owners. Public awareness of any future audit of the Bonds
could adversely affect the value and liquidity of the Bonds during the pendency of the audit, regardless of
its ultimate outcome.
Existing law may change to reduce or eliminate the benefit to bondholders of the exemption of
interest on the Bonds from personal income taxation by the State of California or of the exclusion of the
interest on the Bonds from the gross income of the owners thereof for federal income tax purposes. Any
proposed legislation or administrative action, whether or not taken, could also affect the value and
marketability of the Bonds. Prospective purchasers of the Bonds should consult with their own tax
advisors with respect to any proposed or future changes in tax law.
A copy of the form of opinion of Bond Counsel relating to the Bonds is included in APPENDIX
E.
Tax Accounting Treatment of Bond Premium and Original Issue Discount on Bonds
To the extent that a purchaser of a Bond acquires that Bond at a price in excess of its “stated
redemption price at maturity” (within the meaning of section 1273(a)(2) of the Code), such excess will
constitute “bond premium” under the Code. Section 171 of the Code, and the Treasury Regulations
promulgated thereunder, provide generally that bond premium on a tax-exempt obligation must be
amortized over the remaining term of the obligation (or a shorter period in the case of certain callable
obligations); the amount of premium so amortized will reduce the owner’s basis in such obligation for
federal income tax purposes, but such amortized premium will not be deductible for federal income tax
38
purposes. Such reduction in basis will increase the amount of any gain (or decrease the amount of any
loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of the
obligation. The amount of premium that is amortizable each year by a purchaser is determined by using
such purchaser’s yield to maturity. The rate and timing of the amortization of the bond premium and the
corresponding basis reduction may result in an owner realizing a taxable gain when its Bond is sold or
disposed of for an amount equal to or in some circumstances even less than the original cost of the Bond
to the owner.
The excess, if any, of the stated redemption price at maturity of Bonds of a maturity over the
initial offering price to the public of the Bonds of that maturity is “original issue discount.” Original issue
discount accruing on a Bond is treated as interest excluded from the gross income of the owner thereof for
federal income tax purposes and is exempt from California personal income tax to the same extent as
would be stated interest on that Bond. Original issue discount on any Bond purchased at such initial
offering price and pursuant to such initial offering will accrue on a semiannual basis over the term of the
Bond on the basis of a constant yield method and, within each semiannual period, will accrue on a ratable
daily basis. The amount of original issue discount on such a Bond accruing during each period is added
to the adjusted basis of such Bond to determine taxable gain upon disposition (including sale, redemption
or payment on maturity) of such Bond. The Code includes certain provisions relating to the accrual of
original issue discount in the case of purchasers of Bonds who purchase such Bonds other than at the
initial offering price and pursuant to the initial offering
Persons considering the purchase of Bonds with original issue discount or initial bond premium
should consult with their own tax advisors with respect to the determination of original issue discount or
amortizable bond premium on such Bonds for federal income tax purposes and with respect to the state
and local tax consequences of owning and disposing of such Bonds.
Other Tax Consequences
Although interest on the Bonds may be exempt from California personal income tax and excluded
from the gross income of the owners thereof for federal income tax purposes, an owner’s federal, state or
local tax liability may be otherwise affected by the ownership or disposition of the Bonds. The nature and
extent of these other tax consequences will depend upon the owner’s other items of income or deduction.
Without limiting the generality of the foregoing, prospective purchasers of the Bonds should be aware
that (i) section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to
purchase or carry the Bonds and the Code contains additional limitations on interest deductions applicable
to financial institutions that own tax-exempt obligations (such as the Bonds), (ii) with respect to insurance
companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the
deduction for loss reserves by 15% of the sum of certain items, including interest on the Bonds, (iii)
interest on the Bonds earned by certain foreign corporations doing business in the United States could be
subject to a branch profits tax imposed by section 884 of the Code, (iv) passive investment income,
including interest on the Bonds, may be subject to federal income taxation under section 1375 of the Code
for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year
if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income,
(v) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement
benefits to take into account, in determining the taxability of such benefits, receipts or accruals of interest
on the Bonds and (vi) under section 32(i) of the Code, receipt of investment income, including interest on
the Bonds, may disqualify the recipient thereof from obtaining the earned income credit. Bond Counsel
will express no opinion regarding any such other tax consequences.
The Internal Revenue Code of 1986 (the “Code”) imposes certain requirements that must be met
subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded
pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax
39
purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in
the gross income of the owners thereof for federal income tax purposes retroactive to the date of issuance
of the Bonds. The Financing Authority and the City have covenanted to maintain the exclusion of the
interest on the Bonds from the gross income of the owners thereof for federal income tax purposes.
NO LITIGATION
There is no action, suit, or proceeding known by the Financing Authority or the City to be
pending or threatened at the present time restraining or enjoining the delivery or in any way contesting or
affecting the validity of the Bonds, the Indenture, the Installment Sale Agreement or any proceedings of
the Financing Authority or the City taken with respect to the execution or delivery thereof.
RATING
Moody’s Investors Service, Inc. has assigned the Bonds a rating of “Aa2.” Such ratings reflect
only the views of such organization and any desired explanation of the significance of such ratings should
be obtained from Moody’s, at the following address: Moody’s Investors Service, Inc., 7 World Trade
Center, 250 Greenwich Street, New York, NY 10007. The City and the Financing Authority have
furnished to Moody’s certain materials and information with respect to the Financing Authority, the City
and the Bonds. Generally, a rating agency bases its rating on the information and materials furnished to it
and on investigations, studies and assumptions of its own. There is no assurance such ratings will
continue for any given period of time or that such ratings will not be revised downward or withdrawn
entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. The
Financing Authority, the City and the Underwriter have undertaken no responsibility to oppose any such
proposed revision or withdrawal. Any such downward change in or withdrawal of the ratings might have
an adverse effect on the market price or marketability of the Bonds.
UNDERWRITING
The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”)
pursuant to a Bond Purchase Agreement among the Underwriter, the Financing Authority and the City
(the “Purchase Agreement”). The Underwriter has agreed to purchase all of the Bonds for an aggregate
purchase price of $7,721,031.09, subject to certain conditions set forth in the Purchase Agreement. The
purchase price for the Bonds reflects a net original issue premium of $525,117.45 and an underwriter’s
discount of $34,086.36. The Underwriter may offer and sell the Bonds to certain dealers (including
dealers depositing Bonds into investment trusts), dealer banks, banks acting as agent and others at prices
lower than said public offering prices.
BANK QUALIFICATION
Section 265 of the Code provides, in general, that interest expense to acquire or carry tax-exempt
obligations is not deductible from the gross income of the owner of such obligations. In addition, section
265 of the Code generally disallows 100% of any deduction for interest expense that is incurred by
“financial institutions” described in such section and is allocable, as computed in such section, to taxexempt interest on obligations acquired after August 7, 1986. The disallowance does not apply to interest
expense allocable to tax-exempt obligations (other than private activity bonds that are not qualified
501(c)(3) bonds) that are designated by an issuer as “qualified tax-exempt obligations.” An issuer may
designate obligations as “qualified tax-exempt obligations” only if the amount of the issue of which they
are a part, when added to the amount of all other tax-exempt obligations (other than private activity bonds
that are not qualified 501(c)(3) obligations and other than certain refunding bonds) issued or reasonably
anticipated to be issued by the issuer during the same calendar year, does not exceed $10,000,000.
40
The Authority has designated the Bonds as “qualified tax-exempt obligations” and has certified
its expectation that the above-described $10,000,000 ceiling will not be exceeded. Accordingly, it is
anticipated that financial institutions that purchase the Bonds will not be subject to the 100%
disallowance of interest expense allocable to interest on the Bonds under section 265(b) of the Code.
However, the deduction for interest expense incurred by a financial institution that is allocable to the
interest on the Bonds will be reduced by 20% pursuant to section 291 of the Code.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
The Verification Agent will deliver a report stating that the firm has verified the accuracy of
mathematical computations concerning the adequacy of the uninvested cash initially deposited in the
Escrow Fund to pay the interest due with respect to the 2004 Bonds to and including the Redemption
Date, and to pay on the Redemption Date the Redemption Price thereof.
The report of the Verification Agent will include the statement that the scope of its engagement
was limited to verifying the mathematical accuracy of the computations contained in such schedules
provided to it and that the Verification Agent has no obligation to update its report because of events
occurring, or data or information coming to its attention, after the date of its report.
MISCELLANEOUS
All quotations from, and summaries and explanations of the Indenture, the Installment Sale
Agreement, the Bonds or other documents contained herein do not purport to be complete, and reference
is made to said documents and statutes for full and complete statements of their provisions.
This Official Statement is submitted only in connection with the sale of the Bonds by the
Financing Authority. All estimates, assumptions, statistical information and other statements contained
herein, while taken from sources considered reliable, are not guaranteed by the Financing Authority, the
City or the Underwriter. The information contained herein should not be construed as representing all
conditions affecting the Financing Authority, the City or the Bonds.
41
All information contained in this Official Statement pertaining to the Financing Authority and the
City has been furnished by the Financing Authority and the City and the execution and delivery of this
Official Statement has been duly authorized by the Financing Authority and the City.
REDONDO BEACH COMMUNITY FINANCING
AUTHORITY
By:
/s/ Peter Grant
Acting Executive Director
CITY OF REDONDO BEACH
By:
42
/s/ Peter Grant
Acting City Manager
APPENDIX A
THE CITY OF REDONDO BEACH
General
The City was incorporated in 1892 and adopted a charter in 1949. The City is located on the
coastal edge of Los Angeles County, approximately 20 miles from downtown Los Angeles and
approximately 7 miles south of Los Angeles International Airport and spans 6.3 square miles. The City’s
population as of January 1, 2013 is 67,396. The City remains a mostly residential, non-industrial
community. It is a highly-educated, upscale community where the median cost of a home is over
$800,000 as calculated by Zillow in December 2013.
The City provides a full range of municipal services. These include public safety (police and fire
protection); recreation and community services; library; parks; maintenance and improvement of streets
and infrastructure; planning and zoning; housing; economic development; transit and general government.
The City also operates and maintains a large recreational and commercial harbor, including King Harbor,
a 1,509-slip recreational boating harbor; the Redondo Beach Pier and Seaside Lagoon; and a bathing and
surfing beach. The City has significant areas of employment and retail activity in the northern industrial
complex anchored by Northrop Grumman, while the South Bay Galleria anchors the east end of the City.
The Harbor/Pier and the Riviera Village made up of specialty shops and services is located at the south
end of the City.
City Government
The City is divided into five districts and under a Council-Manager form of government. One
councilperson is elected from each district and serves four year overlapping terms at elections held every
two years. Each councilperson has a limit of two full terms. The Mayor is elected from the City at large,
and is also limited to two full terms. Other elected officials are the City Treasurer, City Attorney and the
City Clerk, serving terms of four years, but can be re-elected an unlimited number of times. The City
Council is responsible for, among other things, passing ordinances, adopting the budget, and appointing
the City Manager.
The members of the City Council and expiration dates of their respective terms are as follows:
Council Member
District
Term Expires
Steve Aspel, Mayor
Jeff Ginsburg, Councilmember
Bill Brand, Councilmember
Pat Aust, Councilmember
Steve Sammarco, Councilmember
Matthew J. Kilroy, Councilmember
District 1
District 2
District 3
District 4
District 5
April 2017
April 2017
April 2017
April 2015
April 2017
April 2015
In addition to sitting as the governing board of the City, the Mayor and the City Council act as the
Board of Directors for various component units of the City, including the Financing Authority, the
Housing Authority, and the Successor Agency to the Redevelopment Agency of the City of Redondo
Beach. The City Manager is responsible for carrying out the policies and ordinances of the City Council
and for appointing heads of the City’s various departments.
A-1
City full-time employees numbered 431 as of June 30, 2013, of which 155 are assigned to the
Police Department and 96 are sworn employees. There are 60 sworn employees in the Fire Department.
The Fire Department has three (3) stations.
Current City Management staff include the following:
William P. Workman, City Manager. William P. Workman was appointed by the Redondo
Beach City Council to serve as City Manager effective January 2005. Under the City’s council/manager
form of government, the City Manager serves as the chief operating officer of the City. Prior to working
for the City, Mr. Workman served as Assistant City Administrator for the City of Huntington Beach, and
City Manager for the City of Corona.
Mr. Workman is a member of the South Bay City Manager’s Association (Immediate Past
President), Chairman of the Redondo City Manager’s Harbor & Pier, and Riviera Village Stakeholders
Working Groups, and an Executive Board Member of the Redondo Beach Roundtable. Mr. Workman has
a Bachelors of Arts degree in Geography and History from California State University, Fullerton, and a
Masters in Public Administration from University of Southern California. He is also an Ex-Officio Board
Member of the Redondo Beach Chamber of Commerce.
Craig Koehler, Finance Director. Craig Koehler has served as Finance Director for the City
since 2013. Prior to working for the City, Mr. Koehler served as the Interim Finance Director for the City
of El Monte. Prior to this, Mr. Koehler was employed as a Director of Finance and Treasurer for a Special
Water District for three years, and Chief Financial Officer for a Joint Power Authority for approximately
7 years. Mr. Koehler has more than 30 years of experience in finance. Mr. Koehler received a Bachelor of
Science degree in Business Administration from California State University, Long Beach, and has also
earned certification in advanced governmental accounting. Mr. Koehler is a member of the California
State Municipal Finance Officers Association, and the Government Finance Officers Association of the
United States.
Mike Witzansky, Public Works Director. Mr. Witzansky has served as Public Works Director
for the City since July 2010 and prior to that served as the City’s Recreation and Community Services
Director beginning in January 2006. Before working for the City, Mr. Witzansky served as an
Administrative Analyst and Senior Business Manager for the City of Torrance for approximately six
years. Mr. Witzansky received a Bachelor of Arts degree in Politics from Pomona College. Mr.
Witzansky is a member of the American Public Works Association and is currently the Chairman of the
Board of Directors for the Torrance Community Credit Union.
A-2
Income
A yearly comparison of the total person income and per capita income for the last ten reported
years for the County of Los Angeles is set forth in the table below.
COUNTY OF LOS ANGELES
INCOME DEMOGRAPHICS
Calendar
Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Personal Income
(000,000s)
Per Capita
Personal Income
$309,827
326,402
346,053
373,322
390,296
413,317
402,281
410,675
420,913
443,006
$31,611
33,167
35,147
37,991
39,794
42,195
40,867
41,791
42,564
44,474
____________________
Source: State of California Employment Development Department.
Population
The City’s population as of January 1, 1990 was 60,400, and as of January 1, 2000, was 63,261,
an increase of 4.7%. The City’s population increased approximately 2% between 2004 and 2013. The
following table shows the population of the City and the County for the last ten years, as of January 1 of
each year.
POPULATION STATISTICS
Year
City of Redondo Beach
Los Angeles County
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
66,008
65,931
65,782
65,738
65,839
66,162
66,716
66,895
67,041
67,396
9,806,944
9,816,153
9,798,609
9,780,808
9,785,474
9,801,096
9,822,121
9,847,712
9,889,520
9,958,091
____________________
Source: U.S. Department of the Census and the California State Department of Finance.
A-3
Construction Activity
The value of building permits issued in the City in 2013 totaled $78,769,000. Approximately 6%
of the building permits issued over the last five years were for new residential construction. The
following table presents building permit valuations for the City from calendar year 2009 through 2013.
CITY OF REDONDO BEACH
BUILDING PERMIT VALUATIONS
Type of Permit:
Valuation ($000)
Residential
Other Additions
Alterations
Non-Residential
Total Valuation
# new residential units:
# of Total Permits
2009
2010
2011
2012
2013
$10,608
1,141
7,605
16,398
$35,752
34
867
$ 4,898
5,518
5,184
24,773
$40,373
19
827
$14,607
1,247
9,352
12,989
$38,195
50
1,158
$18,813
953
10,585
34,559
$64,910
67
1,036
$21,832
31,528
10,629
14,780
$78,769
70
1,166
____________________
Source: City of Redondo Beach Building Department.
Employment and Industry
The service industries, notably hotels, restaurants and retail trade, account for a large proportion
of the labor force within the City. Small manufacturing firms, primarily electronics, finance, insurance
and real estate are the other major sectors of employment. The aerospace industry is also represented in
the City by Northrop Grumman located in the northern industrial area of the City.
The civilian labor force, employment and unemployment for the City, County and State, as well
as average employment by industry for the County, for the years 2008 through 2013, are outlined in the
following tables.
A-4
CITY OF REDONDO BEACH, LOS ANGELES COUNTY
AND STATE OF CALIFORNIA
LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
Yearly Average for Years 2008 through 2013
Year
Area
Civilian
Labor Force
Employed
Unemployed
2008
City of Redondo Beach
Los Angeles County
California
United States
46,100
4,936,000
18,207,300
154,287,000
44,300
4,566,900
16,893,900
145,362,000
1,800
369,100
1,313,500
8,924,000
3.9%
7.5
7.2
5.8
2009
City of Redondo Beach
Los Angeles County
California
United States
44,800
4,936,000
18,207,300
154,287,000
42,000
4,566,900
16,893,900
145,362,000
2,800
369,100
1,313,500
8,924,000
6.2%
11.6
11.3
9.3
2010
City of Redondo Beach
Los Angeles County
California
United States
44,000
4,911,900
18,330,500
153,889,000
41,600
4,294,200
16,063,500
139,064,000
3,000
617,700
2,267,000
14,825,000
6.7%
12.6
12.4
9.6
2011
City of Redondo Beach
Los Angeles County
California
United States
44,800
4,927,200
18,404,500
153,617,000
41,900
4,323,000
16,237,300
139,869,000
2,900
604,200
2,167,200
13,747,000
6.6%
12.3
11.8
8.9
2012
City of Redondo Beach
Los Angeles County
California
United States
44,700
4,879,700
18,320,200
154,974,000
42,100
4,345,700
16,560,300
142,469,000
2,000
534,000
1,934,500
12,506,000
5.8%
11.0
10.5
8.1
City of Redondo Beach
Los Angeles County
California
United States
____________________
45,700
4,960,300
18,596,800
155,389,000
43,300
4,470,700
16,933,300
143,929,000
2,400
489,600
1,663,500
11,460,000
5.2%
9.90
8.9
7.4
2013
Source: State of California Employment Development Department.
A-5
Unemployment
Rate
LOS ANGELES COUNTY
ANNUAL AVERAGE EMPLOYMENT BY INDUSTRY
2008 through 2012
2008
Agriculture
Non-Agriculture
Construction and Mining
Manufacturing
Trade, Transportation and Utilities
Information
Professional & Business Services
Leisure & Hospitality
Other Services
Government
Total All Industries
____________________
2009
2010
2011
2012
6,900
6,200
6,200
5,600
5,400
4,070,700 3,824,100 3,772,500 3,797,100 3,864,300
149,600
121,400
108,600
109,000
113,000
434,500
389,200
373,200
366,800
365,700
803,300
742,600
739,300
747,700
762,000
210,300
191,200
191,500
191,900
190,300
582,600
529,800
527,500
542,900
567,200
401,600
385,600
384,800
394,600
414,000
146,100
137,900
136,700
136,900
140,700
603,700
595,800
579,600
565,500
556,800
4,077,600 3,830,300 3,778,700 3,802,700 3,869,700
Totals may not add up due to rounding.
Source: State of California Employment Development Department.
Major Employers
The following table shows major employers in the City for the Fiscal Year ended June 30, 2013.
CITY OF REDONDO BEACH
PRINCIPAL EMPLOYERS
June 30, 2013
Name of Company
Northrop Grumman
Redondo Beach Unified School District
City of Redondo Beach
Crown Plaza (Holiday Inn)
The Cheesecake Factory
U.S. Post Office
Nordstrom, Inc.
Target Store
DHL Global Forwarding
Macy’s
Employees
% of Total Employment w/in City
5,645
995
431
339
261
260
254
217
206
206
16.33%
2.88
1.25
0.98
0.76
0.75
0.73
0.63
0.60
0.60
_____________________________
Source: City of Redondo Beach.
A-6
Assessed Valuation
Local secured assessed valuations in the City increased approximately 54% between fiscal years
2004 and 2013. The table below presents the assessed valuations in the City from 2004 to 2013.
CITY OF REDONDO BEACH
ASSESSED VALUATION OF TAXABLE PROPERTY
Last Five Fiscal Years Ending June 30
Fiscal Years
(Ending)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Assessed
Value
$ 7,806,803,523
8,226,139,068
9,069,569,628
10,009,448,728
10,702,653,367
11,277,756,486
11,366,238,160
11,615,436,098
11,761,105,629
12,050,139,612
____________________
Source. County of Los Angeles Assessor’s Office.
Economic and other factors beyond the City’s control, such as economic recession, deflation or
land values, or the complete or partial destruction of taxable property caused by, among other
eventualities, earthquake, flood or other natural disaster could cause a deduction in the assessed value of
taxable property in the City.
CITY OF REDONDO BEACH
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years Ending June 30
Fiscal
Year
Total Tax
Levy
2004
$16,229,288
2005
19,327,612
2006
19,954,589
2007
21,893,557
2008
23,253,318
2009
24,948,068
2010
25,278,747
2011
25,809,271
2012
26,025,500
2013
27,652,911
____________________
Current
Tax
Collections
Percent of
Levy
Collected
$15,968,858
18,856,789
19,442,404
21,130,547
22,214,291
23,904,011
24,462,121
25,195,837
25,493,811
27,193,269
98.40%
97.56
97.43
96.51
95.53
95.82
96.77
97.62
97.96
98.34
Source: County of Los Angeles Auditor/Controller.
A-7
Delinquent
Tax
Collections
Total Tax
Collections
Total
Collections
as Percent
of Current
Levy
506,977
459,220
455,758
477,535
646,294
1,156,615
1,204,949
1,083,378
799,155
789,478
$16,475,835
19,316,009
19,898,162
21,608,082
22,860,082
25,667,070
25,279,214
26,279,214
26,292,966
27,982,747
101.52%
99.94
99.724
98.70
98.31
100.45
101.54
101.82
101.03
101.19
Tax Levies and Delinquencies
The City uses the facilities of Los Angeles County for the assessment and collection of taxes.
City taxes are collected at the same time and on the same tax rolls as County, district and special district
taxes. Taxes on the secured roll are payable in two installments on November 1 and February 1 of each
fiscal year, and become delinquent after December 10 and April 10, respectively. Taxes on unsecured
property are assessed and payable March 1 and become delinquent the following August 31. A 10%
penalty attaches to delinquent taxes which have been levied on property on the secured roll. Such
property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty,
plus a redemption penalty of 1/2 per month to the time of redemption. If taxes are unpaid for a period of
five years or more, the property is deeded to the State and is subject to sale by the County Tax Collector.
A list of the ten largest taxpayers in the City for the most recent fiscal year is included in the
following table.
CITY OF REDONDO BEACH
PRINCIPAL TAXPAYERS
June 30, 2013
2013
Assessed
Valuation
Taxpayer
Northrop Grumman Space and Mission
South Bay Center SPE LLC
AES Redondo Beach, LLC
The Kobe Group INC
Noble House Recp Hotel Venture LLC
LPF Redondo Beach INC
HPT IHG Properties Trust
MKEG P LLC
AMB AMS Spinnaker LLC
616 Esplanade Street LLC
Total
$ 537,576,380
194,003,848
173,035,658
64,753,938
60,522,561
54,444,365
43,657,882
37,731,773
33,942,467
33,290,133
4.29%
1.55
1.38
0.52
0.48
0.43
0.35
0.30
0.27
0.27
$1,232,959,005
9.84%
____________________
Source: HdL Cone, Los Angeles County Assessor 2012/213 Combined Tax Rolls.
A-8
Percentage of
Total Assessed
Valuation
Commercial Activity
The following table provides a summary of taxable transactions in the City from January 1, 2008
through a portion of 2012.
CITY OF REDONDO BEACH
TAXABLE TRANSACTIONS
(In Thousands)
2009
2010
2011
2012(1)
$ 54,7031
18,216
29,111
64,534
64,457
130,553
138,846
158,554
71,733
$730,708
$ 46,173
19,144
12,609
69,187
46,647
145,267
83,330
155,109
7,0610
$644,522
$ 50,066
39,401
9,224
66,880
55,139
141,993
92,673
155,812
71,955
$683,143
$ 43,788
55,244
8,863
75,443
73,128
156,783
97,597
162,475
73,795
$747,117
$ 42,111
44,450
6,243
59,956
56,895
124,239
66,611
130,910
60,457
$589,860
101,496
87,737
91,396
105,308
62,416
$832,204
$732,259
$774,538
$852,425
$652,277
2008
Motor Vehicle & Parts
Home Furnishings & Appliances
Building Material and Garden
Food & Beverage Stores
Gasoline Outlets
Clothing
General Merchandise stores
Food Services & Drink
Other retail stores
Retail Stores Totals
All Other Outlets
Total All Outlets
____________________
(1)
Through first three quarters of 2012.
Source: California State Board of Equalization Statistical Research and Consulting Division.
Employee Relations
City employees are represented by 6 employee associations. Pursuant to the City’s Municipal
Code and the Meyers-Millis-Brown-Act, the City and the employee associations negotiate wages, hours
and conditions of employment. Negotiations are currently underway with the 6 employee associations
and are expected to conclude in the near future. Pending new contracts, the union employees are
operating under their respective expired contracts.
Employee Association
Employees
Contract Expiration
Redondo Beach Police Officers (Officers and Sergeants)
89
June 30, 2014
Redondo Beach Police Officers (Police Management Unit)
6
June 30, 2012
Redondo Beach Firefighters
56
June 30, 2012
Redondo Beach Professional and Supervisory
65
June 30, 2012
Redondo Beach City Employees
94
June 30, 2012
California Teamsters Public, Professional & Medical
Employees, Union Local 911
82
June 30, 2012
____________________
Source: City of Redondo Beach.
A-9
Risk Management
The City maintains a self-insurance program for workers’ compensation and liability claims. The
program accumulates resources in the Self-Insurance Program internal service fund to meet potential
losses. For Fiscal Year 2012-13, the self-insurance retention (SIR) is $750,000 for workers’ compensation
and $500,000 for liability. excess coverage up to $100 million for each workers’ compensation claim is
provided by a third-party private insurer, and excess liability up to $20 million for each occurrence is
covered by the Independent Cities Risk Management Authority (ICRMA).
ICRMA is a joint powers authority for medium-sized California municipalities which have agreed
to pool risks and losses. Each member’s share of pooled costs depends on the losses of all members as
well as the member’s own loss experience. Both the workers’ compensation and liability claims programs
are managed by a third-party claims administrator under the direction of the Risk Management Division
of the Human Resources Department.
The amounts included in the Self-Insurance Program internal service fund are significant partly
due to requirements of Government Accounting Standards Board (GASB) Statement No. 10. In
complying with GASB 10, the City must record as a liability and expenditure not only actual risk/loss
experienced in the areas of workers’ compensation and liability, but also claims incurred but not reported
(IBNR). IBNR claims include exposure for losses of which a city is not yet aware, as well as any
statistically probable increase in costs for accidents that are already known to the City. The appropriate
amount to include on the financial statements for IBNR claims is typically developed by an actuary.
As of June 30, 2013, the City recorded that workers’ compensation claims payable totaled $13.8
million, representing an increase of $1.5 million or 9.84%, from the prior period. This increase is
attributable to an increase in reserves based on legislation that changed statutory benefit levels and the
outcomes of future administrative proceedings and litigation. Liability claims payable totaled $2.5
million representing an increase of $37,301, or 1.4%, from the prior period. This increase is attributable to
an increase in estimated reserves and the settlement of claims in previous years. The City participates in a
direct-cost reimbursement method for unemployment insurance. This program is administered by the
State Employment Development Department (EDD) to provide salary continuance for terminated
employees. For Fiscal Year 2012-13, reimbursement to EDD was $66,642.
A-10
APPENDIX B
AUDITED FINANCIAL STATEMENTS
OF THE CITY AS OF JUNE 30, 2013
B-1
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
Comprehensive
Annual
Financial
Report
City of Redondo Beach, California
For the year ending June 30, 2013
City of
Redondo Beach
Redondo Beach, California
Comprehensive Annual Financial Report
For the year ended June 30, 2013
PREPARED BY THE CITY OF REDONDO BEACH, CALIFORNIA
FINANCIAL SERVICES DEPARTMENT
City of Redondo Beach
Comprehensive Annual Financial Report
For the year ended June 30, 2013
Table of Contents
Page
INTRODUCTORY SECTION
Table of Contents ............................................................................................................................................................................................................................. i
Letter of Transmittal ..........................................................................................................................................................................................................................v
GFOA Certificate of Achievement for Excellence in Financial Reporting............................................................................................................................ xviii
List of Principal Officials ................................................................................................................................................................................................................xix
Organizational Structure ................................................................................................................................................................................................................. xx
FINANCIAL SECTION
Independent Auditor’s Report ......................................................................................................................................................................................................... 1
Management’s Discussion and Analysis ........................................................................................................................................................................................ 4
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position ........................................................................................................................................................................................................ 27
Statement of Activities and Changes in Net Position .......................................................................................................................................................... 29
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet.......................................................................................................................................................................................................................... 33
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................................................................. 35
Statement of Revenues, Expenditures and Changes in Fund Balances ......................................................................................................................... 36
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances
of Governmental Funds to the Statement of Activities................................................................................................................................................. 38
Proprietary Fund Financial Statements:
Statement of Net Position ..................................................................................................................................................................................................... 41
Statement of Revenues, Expenses and Changes in Net Position .................................................................................................................................... 43
Statement of Cash Flows ...................................................................................................................................................................................................... 44
i City of Redondo Beach
Comprehensive Annual Financial Report
For the year ended June 30, 2013
Table of Contents
Page
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Position ................................................................................................................................................................................... 47
Statement of Changes in Fiduciary Net Position .............................................................................................................................................................. 48
Notes to the Financial Statements .............................................................................................................................................................................................. 49
Required Supplementary Information:
Budgetary Information ........................................................................................................................................................................................................... 107
Defined Pension Plan ............................................................................................................................................................................................................. 111
Other Post Employment Benefits .......................................................................................................................................................................................... 112
Modified Approach for City Streets Infrastructure Capital Assets.................................................................................................................................. 113
Supplementary Information:
Non-Major Governmental Funds:
Combining Balance Sheet .......................................................................................................................................................................................................... 120
Combining Statement of Revenues, Expenditures and Changes in Fund Balances.......................................................................................................... 123
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual:
State Gas Tax Special Revenue Fund ............................................................................................................................................................................ 126
Parks and Recreation Facilities Special Revenue Fund .............................................................................................................................................. 127
Narcotic Seizure/Forfeiture Special Revenue Fund ................................................................................................................................................... 128
Proposition A Special Revenue Fund............................................................................................................................................................................ 129
Proposition C Special Revenue Fund ............................................................................................................................................................................ 130
Measure R Special Revenue Fund ................................................................................................................................................................................. 131
Local Transportation Article 3 Special Revenue Fund ............................................................................................................................................... 132
Air Quality Improvement Special Revenue Fund ....................................................................................................................................................... 133
Storm Drain Improvement Special Revenue Fund ..................................................................................................................................................... 134
Street Landscaping and Lighting District Special Revenue Fund............................................................................................................................. 135
Community Development Block Grant Special Revenue Fund ................................................................................................................................ 136
ii City of Redondo Beach
Comprehensive Annual Financial Report
For the year ended June 30, 2013
Table of Contents
Page
Supplementary Information, Continued:
Disaster Recovery Special Revenue Fund .................................................................................................................................................................... 137
Housing Authority Special Revenue Fund .................................................................................................................................................................. 138
Subdivision Park Trust Special Revenue Fund............................................................................................................................................................ 139
Low-Mod Income Housing Asset Special Revenue Fund .......................................................................................................................................... 140
Parking Authority Debt Service Fund .......................................................................................................................................................................... 141
Pier Parking Structure Rehabilitation Capital Projects Fund..................................................................................................................................... 142
Capital Improvement Projects Capital Projects Fund ................................................................................................................................................. 143
Internal Service Funds:
Combining Statement of Net Position.................................................................................................................................................................................. 145
Combining Statement of Revenues, Expenditures and Changes in Net Position .......................................................................................................... 146
Combining Statement of Cash Flows ................................................................................................................................................................................... 147
Fiduciary Funds:
Statement of Fiduciary Net Position..................................................................................................................................................................................... 149
Statement of Changes in Fiduciary Net Position ................................................................................................................................................................ 150
Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .............................................................. 152
STATISTICAL SECTION
Net Position by Component ......................................................................................................................................................................................................... 155
Changes in Net Position ................................................................................................................................................................................................................ 156
Fund Balances of Governmental Funds ...................................................................................................................................................................................... 159
Changes in Fund Balances of Governmental Funds ................................................................................................................................................................. 160
Assessed Value and Estimated Actual Value of Taxable Property ......................................................................................................................................... 161
Direct and Overlapping Property Tax Rates .............................................................................................................................................................................. 162
iii City of Redondo Beach
Comprehensive Annual Financial Report
For the year ended June 30, 2013
Table of Contents
Page
STATISTICAL SECTION, CONTINUED
Principal Property Taxpayers ....................................................................................................................................................................................................... 163
Property Tax Levies and Collections ........................................................................................................................................................................................... 164
Ratios of Outstanding Debt by Type ........................................................................................................................................................................................... 165
Direct and Overlapping Governmental Activities Debt ........................................................................................................................................................... 166
Legal Debt Margin Information ................................................................................................................................................................................................... 167
Pledged - Revenue Coverage........................................................................................................................................................................................................ 168
Demographic and Economic Statistics ........................................................................................................................................................................................ 169
Principal Employers....................................................................................................................................................................................................................... 170
Full - Time Equivalent City Government Employees by Function ......................................................................................................................................... 171
Operating Indicators by Function ................................................................................................................................................................................................ 172
Capital Asset Statistics by Function............................................................................................................................................................................................. 173
Redondo Beach South Bay Center Redevelopment Project:
- Certification of Continuing Disclosure ................................................................................................................................................................................ 174
- Historical Project Area Valuations ....................................................................................................................................................................................... 175
- Revenue vs. Levy Analysis ................................................................................................................................................................................................... 176
- Top Ten Taxable Property Owners ...................................................................................................................................................................................... 177
- Recent Appeals History ......................................................................................................................................................................................................... 178
Redondo Beach Public Financing Authority, Wastewater System Financing Project:
- Certification of Continuing Disclosure ................................................................................................................................................................................ 181
- Sewer Rates per Month .......................................................................................................................................................................................................... 182
- Sewer Connections by Type of Customer ........................................................................................................................................................................... 183
iv December 13, 2013
Honorable Mayor, City Council and
Citizens of the City of Redondo Beach:
The Financial Principles of the City of Redondo Beach require we issue the Comprehensive Annual Financial Report by the second Council meeting in
December of each year. Pursuant to this requirement, we hereby submit the Comprehensive Annual Financial Report (CAFR) of the City of Redondo Beach,
California (City), for the fiscal year ended June 30, 2013. These financial statements are presented in conformance with generally accepted accounting
principles (GAAP) and audited in accordance with generally accepted auditing standards by an independent firm of licensed certified public accountants.
The primary purpose in providing this report, as defined by the City Charter, is to inform the Mayor and City Council of all financial and administrative
activities of the previous fiscal year. In addition, this report is directed to two other groups: the citizens of Redondo Beach and the financial community. For
the citizens, the report provides an opportunity to correlate City services and accomplishments with the expenditure of financial resources. For the financial
community, this report provides information necessary to evaluate financial practices of the City, assure their soundness in accordance with GAAP, and
determine the financial capacity of the City to incur and service debt for long-range capital planning.
Responsibility for the accuracy of the data presented and completeness and fairness of the presentation, including disclosures, rests with the City.
Consequently, management assumes full responsibility for the completeness and reliability of all information presented in this report. To provide a
reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed 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
conformance with GAAP. Because the cost of internal controls should not outweigh the benefits, the City’s comprehensive framework of internal controls
has 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.
GAAP requires that management provide a narrative introduction, i.e., overview and analysis to accompany the basic 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 it.
The City’s MD&A can be found immediately following the report of the independent auditors in the financial section of the CAFR.
v
PROFILE OF THE CITY OF REDONDO BEACH
The City of Redondo Beach, incorporated in 1892, is located in the South Bay part of Los Angeles County and spans 6.3 square miles. According to the
State of California’s Department of Finance, Redondo Beach has a population of 67,396 as of January 1, 2013, remaining relatively flat with 2012. The City
remains a highly residential, non-industrial community. It is a highly-educated, upscale community where the median cost of a home is $720,500.
Redondo Beach has significant concentrations of employment and retail activity in the northern industrial complex anchored by Northrop Grumann, while the
South Bay Galleria anchors the east end of the City. The Harbor/Pier area also contributes to the City’s economy, and an eclectic mix of specialty shops
and services known as the Riviera Village is located at the south end. Based on the number of full-time employees, the top ten employers in Redondo
Beach are Northrop Grumann, Redondo Beach Unified School District, the City, Crown Plaza-Holiday Inn, Cheesecake Factory, U.S. Post Office,
Nordstrom, Target, DHL Global Forwarding, and Macy’s.
The City is divided into five districts and operates under a Council-Manager form of government. One councilperson is elected from each district and serves
a term of four years, with a limit of two full terms. The Mayor is elected by the City at large, also limited to serving two full terms of four years each. Other
elected officials are the City Treasurer, City Attorney and City Clerk - all serving terms of four years, but can be re-elected an unlimited number of times.
The City Council is responsible for, among other things, passing ordinances, adopting the budget, establishing policy, appointing committees/commissions
and appointing a City Manager.
In addition to sitting as the governing board of the City, the Mayor and City Council act as the Board of Directors for various component units of the City: the
Redondo Beach Housing Authority, the Redondo Beach Public Financing Authority, the Redondo Beach Community Financing Authority, the Parking
Authority of the City of Redondo Beach, and the Redevelopment/Successor Agency of the City of Redondo Beach. The City Manager is responsible for
carrying out the policies and ordinances of the City Council and for appointing the heads of the City’s various departments. In May 2008, the Mayor and City
Council established an audit committee to enhance the City’s communication with its independent accounting firm, ensuring increased involvement by the
governing board in the City’s accounting processes.
The City provides a full range of municipal services. These include public safety (police and fire protection), recreation and community services, library,
parks, maintenance and improvement of streets and infrastructure, planning and zoning, housing, economic development, transit, and general government.
The City also operates and maintains a harbor under a trust agreement with the State of California.
The annual budget serves as the foundation for the City’s financial planning and control. The City Council is required to adopt an annual budget on or
before June 30 of each year for the General Fund, Special Revenue Funds, Enterprise Funds, Capital Projects Fund and Internal Service Funds. The City
also adopts a five-year capital improvement program and a redevelopment/successor agency budget.
The level of appropriated budgetary control is the total adopted budget, which is defined as the total budget for all funds and divisions, and all revisions and
amendments approved by the City Council subsequent to the initial budget adoption. The City Manager may authorize transfers within each fund and
between line items or programs within each department; however, supplemental appropriations and transfers between funds during the budget year must be
approved by four affirmative votes of the City Council. Unexpended or unencumbered appropriations expire at the end of each fiscal year. Encumbered
appropriations and appropriations related to grants and donations are re-appropriated in the ensuing year’s budget by action of the City Council. The City
utilizes an encumbrance system, whereby commitments, such as purchase orders and unperformed contracts, are recorded as reserved fund balances at
year end.
vi
FACTORS AFFECTING FINANCIAL CONDITION
Economic Outlook
During FY 2012-2013, Redondo Beach experienced a 2.7% change in real property assessed valuations, compared to last year’s 3.11%. Hotel occupancy
rates decreased by 3.3%, and Transient Occupancy Tax revenue increased by 4.5%, due to improved visitation and increased days of stay. The Utility
users’ tax revenue reflected an increase of 3.90% in FY 2012-2013. Redondo Beach continues to exceed the countywide average in total taxable retail
sales, ranking 31 out of 89 cities. Redondo Beach experienced a decrease in its unemployment rate from 6.4% in FY 2011-2012 to 5.4% in FY 2012-2013,
which is well below the Los Angeles County and State of California FY 2012-2013 unemployment rates of 9.2% and 8.9%, respectively.
Economic Development
All sectors of the national and regional economy have been impacted by the stagnant economy. Fortunately, the South Bay region has not been negatively
impacted nearly as much as other areas of Southern California. Opportunities still exist to further minimize the impacts and set the stage for improvement.
The City’s emphasis on economic development is targeted on a number of key strategic goals:

Revitalizing the Harbor and Pier area through a public-private partnership that will renovate 15 waterfront acres.

Reinforcing the desirability of the Riviera Village as a destination for shopping, dining, and services through improved signage and enhanced
streetscapes.

Engaging in advocacy efforts to retain funds for contracts and research and development at Northrup Grumman Corporation and Space Park area
businesses.

Encouraging the continued success of the Artesia Boulevard business district and South Bay Galleria which is poised for a major redevelopment.

Attracting business opportunities through the use of economic development incentive agreements.

Ensuring growth in the business community through business retention, thereby enhancing the community’s overall economic base.

Making investments in infrastructure, such as new Harbor Patrol and Recreation and Community Services facilities and road improvements to
support the local economy.
vii
The City has experienced increases in each of its five major revenue categories: property tax, sales tax, utility users’ tax, motor vehicle in lieu tax, and transient
occupancy tax. These major sources are discussed in more detail below.
Property Tax
The City’s largest revenue source, property tax, is imposed on real property (land and permanently attached improvements, such as buildings) and tangible
personal property (moveable property) located within the City. Property is initially assessed by the County Assessor at a tax rate of 1.0% of the assessed value
and rising no more than 2.0% each year. The City receives revenues equal to 16.6% of the tax rate from the County of Los Angeles - Auditor/Controller’s Office.
The City’s property tax valuations, while slowing from pre-recession levels, continue to be positive. With Redondo Beach being a desirable location, coupled with
continued low mortgage interest rates, the FY 2012-2013 citywide assessed valuation experienced a positive change of $324 million, or 2.65%, to $12.53 billion.
The City’s assessed valuation amount is derived 79.5% from single-family residential properties, 8.7% from commercial properties, 3.6% from industrial properties,
and the remaining 8.2% from vacant and institutional properties. During FY 2012-2013, property tax revenue increased $3.6 million or 18.2%, to $23.16 million
(includes homeowners’ exemption). This increase was due to continuing but steady, economic growth, property reassessments, and increased housing sales. The
housing market began to rebound during the first half of 2012, as home buying increased due to low interest rates and affordable prices. As a result, the annual
increase in property tax revenue appears to be recovering; however, the growth rates are still well below those experienced before the recession.
viii
Sales Tax
The City’s second largest revenue source is sales tax. Sales tax in Los Angeles County is 9.75% of the sale price of taxable goods and services sold at retail.
Redondo Beach receives 1% of taxable sales from the State Board of Equalization. Twenty-five percent of the City’s FY 2012-2013 traditional sales tax base is
now committed to the State for deficit reduction bonds. This amount is backfilled with, and distributed on the same basis as property tax revenue to the City with a
revenue swapping procedure commonly referred to as the “triple flip”.
Sales tax revenue has increased following the end of the recession and this trend has continued through FY 2011-12, with the City receiving $9.59 million in sales
tax revenue, an increase of $693,000, or 7.78%, from prior year. In FY 12-13 the City received $10.23 million in sales tax revenue an increase of $633,454 or
6.6% when compared to FY 11-12. Fiscal year 12-13, sales tax revenue consisted of $7.61 million in local sales tax revenue and $2.62 million in State “triple flip”
funds. Population growth, local competition, consumer confidence, and unemployment are all factors that contribute to the volatility of this key tax-based operating
revenue.
The City is committed to re-establishing a strong local economy through both business retention and business expansion, thereby enhancing the community’s
overall economic base. Although sales related to current retail vendors should, at least, show slight increases, the City anticipates significant contributions to sales
tax revenue in the coming years as the South Bay Marketplace continues to strengthen, new investment in the Harbor’s revitalization comes to fruition, and
collection of sales tax by remote sellers, especially Amazon, is enforced.
Sales Tax
12
Dollars in Millions
10
8
6
4
2
Fiscal Year
ix
12-13
11-12
10-11
09-10
08-09
07-08
06-07
05-06
04-05
03-04
-
Utility Users’ Tax
The City’s third largest revenue source, utility users’ tax (UUT), is imposed on consumers of electric, gas, cable services, water and telephone services. Federal
and state governmental agencies and pay telephone users are exempt. UUT revenue consists of approximately 38% telecommunications and 35% electricity.
Each city sets its UUT rate, and Redondo Beach’s is 4.75%. The City successfully protected this UUT rate by placing a measure on the March 2009 ballot to
modernize the City’s UUT ordinance. This important measure was strongly endorsed by the citizens, passing it by 75%. Therefore, the long-term viability of
telecommunications-based UUT revenue (approximately 38% of the UUT tax) has been secured.
UUT revenue for FY 2012-2013 totaled $7.71 million, reflecting an increase from the prior year of $289,491 or 3.9%. The UUT increase is largely due to one time
recovery of unpaid UUT from Verizon during calendar year 2008 to 2010 paid during FY 12-13. Excluding the one time Verizon UUT recovery, FY 12-13 UUT
increased by $22,073 or 0.30%. For FY 2013-14, the initial estimate of UUT revenue is conservatively projected to increase by $100,000 or 1.2%. This is due to
enhanced business activity coupled with anticipated increased utilization of telecommunication services.
x
Motor Vehicle in Lieu Tax
The City’s fourth largest revenue source is motor vehicle in lieu tax and is imposed by the State on owners of registered vehicles for the privilege of operating a
vehicle on public highways. A portion of the tax is disbursed to cities based on the proportion that the population of each city bears to the total population of all
cities in the State (a per capita formula). The license fee paid to the State by vehicle owners is 0.65% of the market value of the motor vehicle; however, cities are
due 2% of the market value of the motor vehicle. Since there is a discrepancy of 1.35% in what the State collects and what cities are due, the State backfills the
additional 1.35% from its General Fund in the form of property tax revenue. For each year the vehicle is owned, the assessed fee declines in accordance with a
depreciation schedule reflecting the decreased value of the vehicle.
Historically, the City experienced a steady increase in Vehicle Licenses Fee (VLF) until FY 2003-2004, when revenue decreased by $937,000 as a result of State
budgetary realignment reducing the VLF apportionment to a tax rate of 0.65%. In FY 2003-2004, the State Budget Act of 2004 substantially changed the allocation
of VLF revenues to cities and counties. With this, the backfill of 1.35% referenced above was distributed in the form of property tax revenues and the official name
of the tax was changed to Motor Vehicle in Lieu Tax (MVIL). In FY 2004-2005, the MVIL revenue increased by $2.7 million to $5.7 million. This increase was
attributed to the State’s advance repayment of $1.1 million in MVIL funds loaned to the State from prior year, adjustments to prior period apportionments, and
implementation of the revised State allocation formula. Since FY 2005-2006, the City has experienced steady increases in MVIL revenue due to the growth in both
VLF revenues and gains in property tax in lieu. In FY 2012-2013, MVIL revenue totaled $6.33 million, increasing $311,783, or 5.2%, from prior year. This increase
comprises gains in VLF and property tax in lieu revenues of $161,486 and $150,297, respectively.
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Transient Occupancy Tax
The City’s fifth largest revenue source, transient occupancy tax (TOT), is imposed on occupants of hotel, motel, inn, tourist home or other lodging facilities unless
such occupancy is for 30 days or longer. The tax is applied to the customer’s lodging bill at a rate of 12%, which was increased 2% in July 2005, and substantially
enhanced revenues. One percent (1%) of the TOT collected is contributed to the Redondo Beach Chamber of Commerce and Visitors Bureau to support
marketing and tourism in the City. This 1% is not netted against revenues, but rather reflected in the City’s expenditures.
The City TOT revenue has been experiencing positive growth during the past two years and during FY 11-12 TOT revenue exceeded FY 10-11 revenue by
$266,000, or 8.2% to $3.53 million. In FY 12-13 TOT revenue increased by $159,643, or 4.52% to $3.69 million. Although TOT revenue increased, the rate of
increase experienced was at a slower pace when compared to FY 11-12. The slower growth rate was primarily due to scheduled remodeling of the Crown Plaza
and Sunrise Best Western hotels.
xii
LONG-TERM CAPITAL IMPROVEMENT PLANNING
The City annually adopts a Five-Year Capital Improvement Program. The first year funding of capital improvement projects is included in the fiscal year 2012-2013
adopted budget. These projects, however, should not be viewed as immediate resolution to existing infrastructure problems, but instead as part of “setting the
table” for the future. It will take time to rehabilitate the City’s capital assets, and we anticipate our long-range replacement program will protect the City’s valuable
assets for future generations. Meanwhile, the City continues to invest in a number of significant projects:
Street Resurfacing




Residential Street Rehabilitation - In FY 2012-2013, the City awarded a contract for $575,000 for construction of the next phase of its multi-year residential
street rehabilitation program. For FY 2013-2014, the City has budgeted $800,000 to continue the residential resurfacing effort. In addition, the FY 2013-2014
budget includes $250,000 in annual roadway maintenance funds to mitigate the impacts of trash hauling vehicles on City streets.
Arterial Street Resurfacing - In FY 2012-2013, the City completed major resurfacing projects on 190th Street, Manhattan Beach Boulevard and Prospect
Avenue. The total cost of those projects was $1.86 million. For FY 2013-2014, the City budget includes over $3.6 million for additional arterial improvements,
$21,000 for implementing measures to relieve traffic congestion, and $143,000 for sidewalk, curb and gutter improvements.
Citywide Curb Ramp Improvements – The City awarded a contract and began work on $450,000 in citywide curb ramp improvements. The FY 2013-2014
budget includes $160,000 to continue this effort.
Riviera Village Improvements – In FY 2012-2013, the City completed Phase III of streetscape improvements along Catalina Avenue in the Riviera Village.
Phase IV funding, in the amount of $725,000, is included in the FY 2013-2014 budget.
Storm Drain System Improvements
 Water Quality Improvements - The City is continuing to implement an aggressive program to improve the quality of the water discharged from the City’s storm
drain system. In FY 2005-2006, a “Water Quality Task Force” was formed to find solutions to recurring “red tides” and water quality issues in the City’s harbor.
The FY 2013-2014 budget includes $32,000 to implement the last of the Task Force’s recommendations – the harbor trash skimmer project. The City is
working with adjoining Cities to comply with the new Municipal NPDES MS4 permit. The FY 2013-2014 budget includes $200,000 in funding for this effort.
Sewer Improvements
 Sewer Line Replacement - In FY 2012-2013, the City spent $375,000 on upgrades to the City’s sewer facilities system. In June, the City awarded a $1.2
million contract to continue upgrading the City’s sewer facilities system. The FY 2013-2014 budget includes $2.65 million in funding for sewer facility
improvements including a sewer system camera inspection.

Sewer Pump Station Rehabilitation – In FY 2012-2013, the City spent over $140,000 on improvements to the City’s sewer pump stations. The FY 2013-2014
budget includes $4.25 million for upgrades to the City’s sewer pump stations including stations on Portofino Way and Yacht Club Way.
Facility Improvements
 Fire Station 1 Roof Repairs – In FY 2012-2013, the City spent $95,000 on major roof repairs at Fire Station 1. In addition, a new HVAC system was installed
at the historic Veterans Park Community Center.

Seaside Lagoon Restroom Facilities – In FY 2012-2013, vintage neon signage was installed on the recently completed Seaside Lagoon Restroom Facility.
Another major facility currently in the final phases of design is the new Transit Center. The FY 2013-2014 budget includes over $5 million for construction of
the project.

Park Improvements – In FY 2012-2013, the City completed Phase II renovations at Perry Park and a dedication ceremony was held in May. ADA and safety
improvements of $140,000 were completed on parking lots at Dominguez Park and at City Hall.

Waterfront Improvements – In the waterfront, the City completed repairs to the Basin II Seawall and drainage repairs to the pier parking structure.
xiii
CASH MANAGEMENT POLICIES AND PRACTICES
The City invests all idle cash in various investment instruments, as authorized within the City’s Statement of Investment Policy. The City Treasurer employs a buy
and hold philosophy of cash management, ensuring the full return of all investment principal. In February of 2013, the City commenced utilization of FTN Financial
Main Street Advisors in providing non-discretionary investment management services to the City Treasurer. Composition of the City’s investment portfolio consists
of a well diversified mix of Federal Agency instruments, complimented by a blend of AA rated Corporate Medium Term Notes, both investment types of which are
structured along a five-year laddered maturity schedule. In addition, sufficient portfolio liquidity is maintained through continued maintenance of a significant portion
of the investment portfolio’s position in the State managed Local Agency Investment Fund, or LAIF.
The City maintains an Investment Policy certified for reporting excellence by the Association of Public Treasurers – United States & Canada (APT – US&C) and
has established both a written investment policy and investment procedures manual. The Investment Policy is reviewed and approved by both the City Council and
the Budget and Finance Commission on an annual basis. The investment policy’s established performance benchmark is the one-year moving average of the
Two-Year Constant Maturity Treasury index (CMT). In the periodic purchase of investments, both the rate of return provided by LAIF and the yield on the US
Treasury security of closest maturity to the purchased investment serve also as investment performance benchmarks.
The level of investments maintained with LAIF fluctuates in accordance with variations in both the City’s operational and capital improvement program cash flow
requirements. The LAIF balance is maintained at a level of $15 to $35 million, or approximately 33% of the general portfolio’s assets on average, ensuring
maintenance of sufficient investment portfolio liquidity. The yield provided by LAIF has declined over the past year in line with the overall reduction in short-term
market interest rates. Idle investment funds above the liquidity threshold have been placed primarily in Federal Agency investments within the two to five year
investment maturity range. The reduction in market interest rates experienced over the past year have been both anticipated and well managed, proactively
responding to both the City’s operating and capital improvement cash flow requirements. The rate of return on the City’s investment portfolio consistently meets or
exceeds the level of the established investment portfolio performance benchmark. As of June 30, 2013 the City’s general portfolio was invested as follows:
Investments
Bank Certificates of Deposit
Federal Agency Issues
Corporate Medium Term Notes
Local Agency Investment Fund
Total Investments and Averages
Market Value
$ 3,718,588
18,617,060
17,686,935
30,000,000
% of Portfolio
5.31%
26.59%
25.26%
42.84%
Yield to Maturity
1.08%
1.04%
1.78%
0.24%
$70,022,583
100.00%
0.89%
Average Term of Investment
2.15 years
* As required by GASB 31, the City recorded the unrealized loss on certain investments to account for the market value at June 30, 2013. The amount, $361,953,
represents 0.51% of the current market value of the investments within the City’s investment portfolio – an insignificant unrealized decrease in the City’s overall
level of financial resources. This unrealized loss in the value of investments results from structural factors and interest rate movements within the financial
marketplace over the past year impacting the market valuation of the City’s investments in both Federal Agency issues and Corporate Medium Term Notes.
xiv
RISK MANAGEMENT
The City maintains a self-insurance program for workers’ compensation and liability claims. The program accumulates resources in the Self-Insurance Program
internal service fund to meet potential losses. For fiscal year 2012-2013, the self-insurance retention (SIR) is $750,000 for workers’ compensation and $500,000
for liability. Excess coverage up to $100 million for each workers’ compensation claim is provided by a third-party private insurer, and excess liability up to $20
million for each occurrence is covered by the Independent Cities Risk Management Authority (ICRMA).
ICRMA is a joint powers authority for medium-sized California municipalities which have agreed to pool risks and losses. Each member’s share of pooled costs
depends on the losses of all members as well as the member’s own loss experience. Both the workers’ compensation and liability claims programs are managed
by a third-party claims administrator under the direction of the Risk Management Division of the Human Resources Department.
The amounts included in the Self-Insurance Program internal service fund are significant partly due to requirements of Government Accounting Standards Board
(GASB) Statement No.10. In complying with GASB 10, the City must record as a liability and expenditure not only actual risk/loss experienced in the areas of
workers’ compensation and liability, but also claims incurred but not reported (IBNR). IBNR claims include exposure for losses of which a city is not yet aware, as
well as any statistically probable increase in costs for accidents that are already known to the City. The appropriate amount to include on the financial statements
for IBNR claims is typically developed by an actuary.
As of June 30, 2013, the City recorded the following:
Workers’ Compensation Claims
Claims payable totaled $13.8 million representing an increase of $1.5 million or 9.84%, from the prior period. This increase is attributable to an increase in
reserves based on legislation that changed statutory benefit levels and the outcomes of future administrative proceedings and litigation.
Liability Claims
Claims payable totaled $2.5 million representing an increase of $37,301, or 1.4%, from the prior period. This increase is attributable to an increase in estimated
reserves and the settlement of claims in previous years.
Unemployment Insurance
The City participates in a direct-cost reimbursement method for unemployment insurance. This program is administered by the State Employment Development
Department (EDD) to provide salary continuance for terminated employees. For fiscal year 2012-2013, reimbursement to EDD was $66,642.
xv
PENSION AND OTHER POST-EMPLOYMENT BENEFITS
The City provides three Tier 1 defined benefit pension plans – two for safety employees (3% at 55 for Fire and 3% at 50 for Police) and one for miscellaneous
employees (2% at 55). Beginning July 2012, two additional Tier 2 defined benefit pension plans are provided – one for safety employees (3% at 55 with a 4.5%
employee contribution for Fire and 3% at 55 for Police) and one for miscellaneous employees (2% at 60). Beginning January 2013, pursuant to the California
Public Employee’s Pension Reform Act of 2013 (PEPRA), Tier 3 defined benefit pension plans were added, 2.7% at 57 for safety employees and 2% at 62 for
miscellaneous employees. These plans are part of the California Public Employees Retirement System (CalPERS), which acts as a common investment and
administrative agent for participating public employers within the State of California. The City makes contributions to the plans based on amounts determined by
CalPERS actuaries. For FY 2012-2013, the City contributed the Tier 1 full-time employees’ required contributions on their behalf and for their account. Tier 2 and
Tier 3 plans require most employees to contribute to the cost of their employee contribution. Additionally, as part of the compensation reductions the City
negotiated with employee bargaining groups, nearly all employees make a contribution toward the City’s employer contribution to CalPERS.
The employer rate for safety employees in FY 2012-2013 was 40.4%, up from 38.4% in FY 2011-2012, with the miscellaneous employees’ rate increasing from
14.1% to 14.5%. Rates are projected to increase from FY 2012-2013 levels for the 2013-2014 fiscal year to 40.6% for safety employees and 14.9% for
miscellaneous employees. Further increases are expected in the coming years as a result of CalPERS decision to lower the discount rate (rate of return) on its
investment portfolio, its announced demographic and actuarial adjustments, and its decision to smooth investment losses from 2008 and 2009 over a period of
time.
The total contribution paid by the City toward pension benefits was $10.1 million, which includes the employer and employer-paid member contributions.
Approximately 82.3%, or $8.3 million, was charged to the General Fund. The anticipated total City contribution for FY 2013-2014 is estimated to be approximately
$10.8 million and is expected to increase again in FY 2014-2015.
Aside from contributing to CalPERS, the City also contributes to Social Security. The FY2012-2013 total cost for Social Security and Medicare coverage was $1.6
million, of which $1.0 million, or 65.3%, is from the General Fund. Safety employees do not participate in Social Security and Medicare, except for those
employees hired after 1986, who are required to participate in Medicare.
The City also provides post-retirement health care benefits to its employees in accordance with agreements reached with various employee bargaining groups.
The City pays for retirees’ health care premiums in these plans up to limits established in the agreements with the bargaining units. All post retirement healthcare
benefits end at age 65. These payments are paid through an Other Post Employment Benefits (OPEB) trust, which was established by the City in FY 2009-2010
to comply with GASB 45. The OPEB trust allows the City to prefund actuarially derived OPEB costs that are expected to be incurred in future periods. In FY
2012-2013, the City contributed $1.3 million to the OPEB trust to cover current and future retiree medical benefits; however, future contributions may vary based
on future actuarial studies. As of June 30, 2013, the City was providing benefits to 105 participants.
SIGNIFICANT EVENTS AND ACCOMPLISHMENTS
During FY 2012-2013 the City achieved many accomplishments that may not be evident from a review of the financial statements. One of the more important
accomplishments is the result of the Los Angeles County Grand Jury financial evaluation of the 88 cities in Los Angeles County. The City of Redondo Beach
received a #1 ranking on benchmark financial policies, best practices and governance. The City received a score of 97, missing a perfect 100 because we do not
have two months of dedicated General Reserve, only one month.
The Grand Jury assessed revenues, expenditures, fund balances, net assets and liabilities. A #41 ranking was attributed to the City based on their evaluation on
the City’s financial condition. This would be about what one would expect as we have only now begun recovery from the financial havoc caused by the Great
Recession and the State’s takeaway of local revenues. Additionally, this ranking is consistent with the recent HDL per capita revenue comparison showing that
Redondo Beach is not in the top tier of revenue generating cities in Los Angeles County.
xvi
xviii
CITY OF REDONDO BEACH
MAYOR AND CITY COUNCIL
Steve Aspel
Mayor
Jeff Ginsburg
Bill Brand
Pat Aust
Stephen Sammarco
Matt Kilroy
Councilmember
District 1
Councilmember
District 2
Councilmember
District 3
Councilmember
District 4
Councilmember
District 5
CITY OFFICIALS
William P. Workman
City Manager
Peter Grant
Assistant City Manager
Michael Webb
Eleanor Manzano
Stephen Diels
City Attorney
City Clerk
City Treasurer
Joesph Hoefgen
Aaron Jones
Recreation, Transit and Community Services Director
Community Development Director
Robert Metzger
W. Joseph Leonardi
Fire Chief
Chief of Police
Peter Carmichael
Christine Hach
Waterfront and Economic Development Director
Iterim Director of Library Services
Chris Benson
Michael Witzansky
Information Technology Director
Public Works Director
Kym Vieira
Craig Koehler
Human Resources Director
Finance Director
xix
CITIZENS OF REDONDO BEACH
Elected Officials
MAYOR AND CITY COUNCIL
CITY
CITY
ATTORNEY
CITY
CLERK
TREASURER
Boards & Commissions
Board of Appeals &
Uniform Code
Budget & Finance
Commission
Planning
Commission
Library
Commission
Public Arts
Commission
Preservation
Commission
Recreation & Parks
Commission
Suspension
Appeals Board
Harbor
Commission
Public Safety
Commission
Historical
Commission
Public Works
Commission
Youth
Commission
CITY
MANAGER
City Departments
Engineering &
Building Services
Handicapped Access
Appeals Board
Fire
Information
Technology
Waterfront and
Economic
Development
Human Resources
Public
Library
Police
Public Works
Planning
ORGANIZATIONAL CHART
FY 2012-13
xx
Financial
Services
Recreation, Transit &
Community
Services
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
entity’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, 2013, and the respective
changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted
in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison
information and other required supplementary information as listed in the table of contents be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with
management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements.
The introductory section, combining and individual nonmajor fund financial statements, and statistical section, are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements 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
2
additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and
individual nonmajor fund financial statements 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.
Implementation of new pronouncement
As discussed in Note 1 of the financial statements, the City of Redondo Brach adopted the provisions of GASB Statement No. 63, Financial Reporting of
Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2013, on our consideration of the City of Redondo
Beach, California’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and
compliance.
December 13, 2013
San Bernardino, CA
3
CITY OF REDONDO BEACH
MANAGEMENT’S DISCUSSION AND ANALYSIS
Management of the City of Redondo Beach (the “City”) provides the Management Discussion and Analysis of the City’s Comprehensive Annual Financial Report
(CAFR) for readers of the City’s financial statements. This narrative overview and analysis of the financial activities of the City is for the fiscal year ended June 30,
2013. We encourage readers to consider this information in conjunction with the additional information that is furnished in the letter of transmittal, which can be
found preceding this narrative, and with the City’s financial statements, which follow. Keep in mind that the Financial Highlights, immediately following, are strictly
snapshots of information. Net assets, changes in net assets, and fund disclosures are discussed in more detail later in the report.
Financial Highlights - Primary Government

Government-Wide Highlights
Net Position - Assets of the City exceeded its liabilities at fiscal year ending June 30, 2013 by $251.1 million - assets for governmental activities exceeded
liabilities by $183.9 million and assets for business-type activities exceeded liabilities by $67.1 million.
Changes in Net Position - The City’s net assets increased $9.0 million in fiscal year 2012-2013. Net position of governmental activities increased $1.4
million, and net assets of business-type activities increased $7.6 million.

Fund Highlights
Governmental Funds - At the close of fiscal year 2012-2013, the City’s total governmental funds reported a fund balance of $42.5 million, an increase of
$2.4 million from the prior year. Highlighted below are this year’s major funds included in this grouping.
General Fund - The fund balance of the General fund (includes Special Revenue – PERS Reserve Fund of $3.8 million) on June 30, 2013 was $17.6
million, an increase of $4.2 million from the prior year.
Other Intergovernmental Grants Special Revenue Fund – The fund balance of the Special Revenue – Other Intergovernmental Grants Fund on June 30,
2013 was negative $1.0 million, a decrease in the negative fund balance by $275,542 from the prior year.
Debt Service – Public Financing Authority Fund - The fund balance of the Debt Service – Public Financing Authority Fund on June 30, 2013, was $6.8
million, a decrease of $544,133 from the prior year.
4
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of
three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other
supplementary information in addition to the basic financial statements.
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 private-sector
business. They are comprised of the following:

Statement of Net Position
The Statement of Net Position presents summarized information of all the City’s assets and liabilities, with the difference between the two reported as net
assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or
deteriorating. This financial statement combines and consolidates governmental funds’ current financial resources with capital assets and long-term
obligations.

Statement of Activities and Changes in Net Position
The Statement of Activities and Changes in Net Position presents information showing how the government’s net assets changed during the fiscal year. All
changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the 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).
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, public works, cultural and leisure services and housing and community development.
Business type activities include operations of the harbor, sewer (wastewater), solid waste, and transit.
The government-wide financial statements include not only the City itself (known as the primary government), but also the activities of legally separate component
units: the Parking Authority of the City of Redondo Beach, the Redondo Beach Public Financing Authority (PFA), and the Redondo Beach Housing Authority.
Because the City Council acts as the governing board for each of these component units and because they function as part of the City government, their activities
are blended with those of the primary government.
The government-wide financial statements can be found behind the tab section titled Government-Wide Financial Statements.
5
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 funds, proprietary funds, and fiduciary funds.
The fund financial statements provide detail information about each of the City’s most significant funds, called Major Funds. The concept of Major Funds, and the
determination of which are major funds, was established by GASB Statement No. 34 (GASB 34) and replaces the concept of combining like funds and presenting
them in total. Instead, each Major Fund is presented individually, while all Non-Major Funds are summarized and presented in a single column.

Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial
statements. However, unlike the government-wide financial statements, 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. Such information may be useful in evaluating a
government’s near-term financial requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information
presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so,
readers may better understand the long-term impact of the government’s near-term financing decisions. A reconciliation of both the governmental funds
balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balance with the governmental-wide financial
statements can be found on pages behind the tab section titled Government-Wide Financial Statements.
The City has 28 governmental funds, of which three are considered major funds for presentation purposes. Each major fund is presented separately in the
governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances. The City’s three
major funds are: General Fund, Other Intergovernmental Grants Special Revenue Fund, and Public Financing Authority Debt Service Fund. Data from the
non-major governmental funds (e.g., State Gas Tax Fund, Local Transit Fund, Storm Drain Fund, Disaster Recovery Fund) are combined into a single,
aggregated presentation. The governmental funds financial statements can be found on pages behind the tab section titled Fund Financial Statements.
Individual fund data for each of these non-major governmental funds is provided in the form of combining statements on pages behind the tab section titled
Non-Major Governmental Funds.
6

Proprietary Funds
The City maintains two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions
presented as business-type activities in the government-wide financial statements. Enterprise funds are used to account for harbor activities, solid waste
(i.e., collection, recycling and hazardous waste disposal), operations and maintenance of City sewers, and transit activities. Internal service funds are
used to accumulate and account for the City’s vehicles, building maintenance and repair, major facilities repair, information technology, emergency
communications, and insurance. Because internal services predominantly benefit governmental rather than business-type functions, they have been
included within governmental activities in the government-wide financial statements.
Proprietary funds’ financial statements provide the same type of information as the government-wide financial statements, only in more detail. Like the
government-wide financial statements, proprietary funds’ financial statements use the accrual basis of accounting. Separate financial statements are
provided for Harbor Uplands, Harbor Tidelands, Solid Waste, Wastewater, and Transit. Conversely, the internal service funds are combined into a single,
aggregated presentation in the proprietary funds financial statements. Individual fund data for each internal service fund is provided in the form of
combining statements in the Internal Service Funds section of this report.
The basic proprietary funds financial statements can be found behind the tab section titled Fund Financial Statements.

Fiduciary Funds
Fiduciary (Agency) funds are used to account for resources held for the benefit of parties outside the government. Agency funds are not reflected in the
government-wide financial statements because the resources of those funds are not available to support City programs.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The
notes to the financial statements can be found behind the tab section titled Notes to the Financial Statements.
Required Supplementary Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. The required
supplementary information includes disclosure of the modified approach for the city pavement infrastructure and budgetary and pension plan information. This
information can be found behind the tab section titled Required Supplementary Information.
7
City of Redondo Beach's Statement of Net Position
Fiscal Year Ended June 30, 2012 and 2013
Current and Other Assets
Capital Assets, net depreciation
Total Assets
Governmental
Business-Type
Activities
Activities
2012-2013
2011-2012
$ 74,928,984
$ 82,577,571
142,980,777
143,933,767
217,909,761
2012-2013
Total
2011-2012
2012-2013
2011-2012
36,502,231
$ 34,046,422
$ 111,431,215
$ 116,623,993
43,803,140
40,159,444
186,783,917
184,093,211
226,511,338
80,305,371
74,205,866
298,215,132
300,717,204
24,631,047
24,743,229
11,479,916
11,971,704
36,110,963
36,714,933
9,305,294
19,233,339
1,678,597
2,660,186
10,983,891
21,893,525
33,936,341
43,976,568
13,158,513
14,631,890
47,094,854
58,608,458
142,096,683
143,049,830
38,936,171
34,957,595
181,032,854
178,007,425
$
Long-Term Liabilities
Outstanding
Other Liabilities
Total Liabilities
Net investment
in capital assets
Restricted
17,703,725
17,861,803
Unrestricted
24,173,012
21,623,137
$ 183,973,420
$ 182,534,770
Total Net Position
$
8
17,703,725
17,861,803
28,210,687
24,616,381
-
52,383,699
46,239,518
67,146,858
$ 59,573,976
$ 251,120,278
$ 242,108,746
Net Position
The chart above reflects the City’s combined net position (governmental and business-type activities) of $251.1 million at the close of fiscal year ending June 30,
2013.
The largest portion of the City’s total net position (72.1%) reflects investment in capital assets (e.g., land, streets, sewers, buildings, machinery, and equipment)
net of outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not
available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
The remaining City net position (27.9%) represents resources that are either unrestricted or subject to external restrictions (e.g., certain capital projects,
community development, debt services).
Changes in Net Position
Also noted in the chart above, the City’s fiscal year 2012-2013 total net position increased by $9.0 million, or 3.7%, from the prior year. The governmental
activities net position increased $1.4 million, or 0.79%, and business-type activities net position increased $7.6 million, or 12.7%.
The increase in net position of governmental activities of $1.4 million was due to an increase in total assets of $9.1 million. Within total assets, the increase in
capital assets, net of accumulated depreciation, was primarily attributable to Fire Station 1 roof repair and Harbor Patrol Facility Replacement projects. These
capital asset additions also resulted in a corresponding increase in Investments in Capital Assets, Net of Related Debt. The increase in net assets was offset by
decrease in liabilities of $11.5 million. Other liabilities, specifically accounts payable, decreased mainly due to the timing of payments to vendors. Long-term
liabilities, specifically claims and judgments payable increased, due to higher reserves related to workers’ compensation and general liability claims. Increases in
workers’ compensation claims are attributable to an increase in reserves based on future legislation or ballot initiatives that may change statutory benefit levels
and the outcomes of future administrative proceedings and litigation. Increases in general liability claims are attributable to higher reserves based on future
legislation that may affect the tort liability system, and the outcomes of litigation and settlement negotiations primarily related to Police Department firing range.
Business-type activities net assets increased by $7.6 million or 12.7%, the increase was primarily due to the Harbor Patrol Facility Replacement and Seaside
Lagoon rehabilitation projects and lower investment earnings.
9
City of Redondo Beach's Change in Net Position
Fiscal Year Ended June 30, 2012 and 2013
Governmental Activities
Revenues:
2012-2013
Business-Type Activities
2011-2012
2012-2013
2011-2012
$ 16,843,858
$ 15,864,430
Total
2012-2013
2011-2012
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
Total program revenues
$
21,970,592
$
20,351,312
9,925,853
8,590,969
705,357
4,582,744
32,601,802
1,672,668
2,545,504
33,525,025
21,062,030
1,395,363
17,259,793
$
38,814,450
11,598,521
$
36,215,742
9,986,332
3,250,861
4,582,744
53,663,832
50,784,818
General revenues:
Property taxes
30,728,698
28,335,561
-
-
30,728,698
28,335,561
Sales taxes
10,228,355
9,594,901
-
-
10,228,355
9,594,901
7,711,580
7,422,089
-
-
7,711,580
7,422,089
-
-
-
8,703
33,693
-
-
34,912
33,693
Utilities users taxes
Other taxes
Motor vehicle license
8,703
34,912
-
Transient occupancy taxes
3,693,144
3,533,501
-
-
3,693,144
3,533,501
Franchise taxes
1,796,606
1,950,934
-
-
1,796,606
1,950,934
Business license taxes
1,018,677
1,203,591
-
-
1,018,677
1,203,591
Use of money and property
1,212,032
3,371,724
69,851
241,958
1,281,883
3,613,682
Other revenues
1,499,306
2,831,748
2,674,174
181,532
4,173,480
3,013,280
35,578
73,574
Gain (loss) on sale of capital asset
-
-
35,578
73,574
Total general revenues
57,967,591
58,351,316
2,744,025
423,490
60,711,616
58,774,806
Total revenue
90,569,393
91,876,341
23,806,055
17,683,283
114,375,448
109,559,624
Expenses:
General government
11,974,780
8,560,957
-
-
11,974,780
8,560,957
Public safety
43,141,036
43,020,839
-
-
43,141,036
43,020,839
10,589,076
Public works
11,588,895
10,589,076
-
-
11,588,895
Cultural and leisure services
10,933,176
7,389,274
-
-
10,933,176
7,389,274
Housing and community development
10,085,882
13,822,831
-
-
10,085,882
13,822,831
266,651
Interest on long-term debt
266,651
637,624
-
-
9,914,969
-
-
-
Harbor Tidelands
-
-
4,998,098
7,689,071
4,998,098
7,689,071
Harbor Uplands
-
-
3,657,127
3,952,061
3,657,127
3,952,061
Wastewater
-
-
1,880,835
3,196,442
1,880,835
3,196,442
Solid Waste
-
-
3,610,925
3,431,017
3,610,925
3,431,017
Transit
-
-
3,288,696
3,113,076
3,288,696
3,113,076
17,435,681
21,381,667
105,426,101
115,317,237
Total expenses
Change in net position before transfers
Transfers
87,990,420
93,935,570
2,578,973
(2,059,229)
(1,202,508)
(1,017,605)
6,370,374
(3,698,384)
1,202,508
1,017,605
-
637,624
AB 1484 demand payment
8,949,347
-
9,914,969
(5,757,613)
-
.
Extr aor dinar y Item
Gain (loss) on dissolution of Redevelopment Agency
Change in net position
Net position, beginning of year
Net position, end of year
-
27,858,112
-
-
27,858,112
1,376,465
24,781,278
7,572,882
(2,680,779)
8,949,347
22,100,499
182,534,770
157,753,492
59,573,976
62,254,755
242,108,746
220,008,247
$ 183,911,235
$ 182,534,770
$ 67,146,858
$ 251,058,093
$ 242,108,746
10
$ 59,573,976
Levels of revenues and expenditures also impact current assets and other liabilities and, therefore, cause changes in net assets. As reflected above, total
revenues increased in fiscal year 2012-2013 by $4.9 million, or 4.5%. Major increases in program revenues are reflected mainly in:

Charges for services due to an increase in rents and percentages in the Harbor Uplands Fund and growth in parking meter and structure fees, and
increased rates for trash collection.

General revenues increased primarily due to increases in property tax, sales tax, transient occupancy tax, and utility user’s tax.
These increases were offset by decreases in Franchise taxes, Business license tax and use of money and property. The substantial decrease in use of money
and property was due to the decline in investment earnings as a result of the slow recovering economy. The decrease in franchise tax and business license tax
was also a result of the slow recovery of the economy.
Citywide total expenses decreased $9.8 million, or 8.6%, when compared to fiscal year 2011-2012. The substantial decrease in expenses was primarily related to
AB 1484 demand payment (Low and Moderate Income Housing Fund). There were also significant decreases in capital improvement projects and personnel cost
related to the wastewater fund. Offsetting these decreases are increases in general government, public works, and culture and leisure services. Although
personnel costs were lower resulting from a citywide hiring freeze, employee concessions, and elimination of funding for selected filled and vacant positions, these
program expenses increased due to rises in PERS, workers’ compensation and general liability claims. Increases in workers’ compensation claims are attributable
to an increase in reserves based on future legislation or ballot initiatives that may change statutory benefit levels and the outcomes of future administrative
proceedings and litigation. Increases in general liability claims are attributable to higher reserves based on future legislation that may affect the tort liability system,
and the outcomes of litigation.
11
Governmental Activities
As reflected in the Changes in Net Position schedule above, the total governmental activity expenses were $88.0 million in fiscal year 2012-2013; and total
revenues from governmental activities were $90.6 million, of which 36.0% were derived from program revenues consisting of charges for services and grants.
On the following chart, the governmental activity expenses net of program revenues, decreased $5.0 million, or -8.0%, in fiscal year 2012-2013. Net expenses
decreased substantially due to AB 1484 demand payment (Low and Moderate Income Housing Fund). There were also significant decreases in expenses related
to general government, culture and leisure services and interest on long term debt. The decrease in general government resulted primarily from reductions in
personnel costs as a result of a citywide hiring freeze, employee concessions and elimination of funding for selected filled and vacant positions. Culture and leisure
services net expenses decreased due and reduction of construction expenses related to completion of project during prior year. The reduction of the balance of
outstanding bonds also allows for a reduction in interest expense in addition to a reduction of interest on long term debt.
Offsetting the above decreases are increases in public works and housing and community development are related to the construction expenses of the harbor
patrol faculty and seaside lagoon rehabilitation projects. Although personnel costs were lower resulting from a citywide hiring freeze, employee concessions, and
elimination of funding for selected filled and vacant positions, these program expenses increased due to more than offsetting rises in workers’ compensation and
general liability claims.
Percent
Impact to Net Assets
Governmental Activities:
2012-2013
Increase
2011-2012
(Decrease)
Expenses Net of Program Revenues*
General government
$
(659,349)
$
1,855,508
-136%
Public safety
(38,262,249)
(37,482,231)
2%
Public works
(7,054,804)
(4,381,279)
61%
Cultural and leisure services
(7,297,631)
(5,696,885)
28%
Housing and community development
(1,847,934)
(4,153,065)
-56%
(266,651)
(637,624)
-58%
(9,914,969)
100%
$ (60,410,545)
-8%
Interest on long term debt
AB 1484 demand payment
-
Total Governmental Activity Expenses
Net of Program Revenues
$
(55,388,618)
*Program revenues are derived directly from the program itself or from parties outside the reporting government’s taxpayers or citizenry. They reduce the net cost of the function to be
financed from the government’s general revenues.
12
The chart below is a graphical representation of the schedule above
13
General Revenues Related to Governmental Activities
General Revenues
2012-2013
Taxes
$
Use of money and property
Other revenues
Total General Revenues
$
2011-2012
55,220,675
$ 52,074,270
1,212,032
3,371,724
332,376
1,887,717
56,765,083
$ 57,333,711
General revenues are all other revenues not attributable to a specific program and, therefore, not categorized as program revenues. These revenues include
taxes, use of money and property, and other revenues and decreased 0.9% over prior year. The largest decrease was use of money and other revenues.
General Revenues
0.59%
2.14%
Taxes
Use of money and property
Other revenues
97.28%
14
Business-Type Activities
The City has five business-type activities: Harbor Tidelands, Harbor Uplands, Solid Waste, Wastewater, and Transit. The total net position of the business-type
activities increased by $7.6 million from the prior year.
Harbor Tidelands is used for the operations of small boat harbor facilities available to the general public, including related pier activities. This fund is restricted
under the City Tidelands Trust Agreement with the State of California. In fiscal year 2012-2013, the total net position of the Harbor Tidelands increased $5.5
million from prior year.
Harbor Uplands is also used for the operations of small boat harbor facilities available to the general public, including related pier activities. However, the use of
these funds is subject only to the decisions of the City Council. In fiscal year 2012-2013, the total net position of Harbor Uplands increased by $161,406 from prior
year.
Wastewater is funded by a capital facility charge, or more commonly referred to as a sewer user fee. These funds are used to support the operations of the
wastewater fund, which is restricted to sewer infrastructure improvements. In fiscal year 2012-2013, the total net position of Wastewater increased $1.9 million
from the prior year.
Solid Waste is the City’s comprehensive solid waste program, which includes refuse collection, recycling, and hazardous waste disposal services. The solid waste
program is supported through user service fees. In fiscal year FY 2012-2013, the total net position of Solid Waste decreased $1,231 from prior year.
Transit operations provide transportation services mainly to the cities of Redondo Beach, Hermosa Beach, and Manhattan Beach. The transit system is supported
through bus passes, passenger fares, contributions from other local jurisdictions, Transportation Development Act Article 4 funding, and Propositions A and C
discretionary funding. In fiscal year 2012-2013, the total net position of Transit did not change from prior year.
INTERNAL SERVICE FUNDS
The City has six internal service funds, as well as overhead. The internal service funds are: Vehicle Replacement, Building Occupancy, Information Technology,
Self-Insurance Program, Emergency Communications, and Major Facilities Repair. These funds are used to account for interdepartmental operations where
service providers (e.g., fleet, IT, building maintenance) recoup costs by charging user departments.
FINANCIAL ANALYSIS OF INDIVIDUAL FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Please note that unlike the
Government-Wide financial statements displayed previously, the fund financial statements which follow are not reflected on a full accrual basis. Therefore,
amounts reflected in the fund financial statements versus the Government-Wide statements may differ due to this change in accounting methodology.
15
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 financial requirements. In particular, unrestricted fund balance may serve as a useful measure of a government’s net resources
available for spending at the end of the fiscal year.
Governmental Funds - The following schedule is a summary of governmental fund revenues for fiscal year ended June 30, 2013, and includes Major and NonMajor Funds. It reflects the amount and percent of increase or decrease of each source of revenue compared to the prior year.
Source of Revenue
Taxes
Percent
Amount
Percent of
(Decrease)
Increase
FY 12-13
Total
FY 11-12
(Decrease)
55,882,844
62%
$ (4,006,901)
-7.2%
Interdepartmental
6,656,858
7%
(407,230)
-6.1%
Licenses & permits
1,259,505
1%
83,917
6.7%
Fines & forfeitures
1,663,966
2%
(29,180)
-1.8%
Use of money & property
3,146,954
3%
613,547
19.5%
Intergovernmental
13,380,088
15%
2,959,776
22.1%
Charges for services
7,461,642
8%
24,371
0.3%
Other revenues
1,062,143
1%
1,885,905
177.6%
90,514,000
100%
$ (4,552,717)
-5.0%
Total
$
Increase
$
Total governmental fund revenues decreased $4.6 million, or -5.0%, from fiscal year 2012-2013. Intergovernmental decreased $407,230 or 6.1%, due to
reimbursements received for completion of grant funded projects. Charges for services decreased $9,107 or 0.1%, due to decreases in planning fees and plan
check fees. Other revenues increased $1.9 million, or 182.2%, in addition, there were reductions of community donations to various areas of the City.
16
The following schedule is a summary of governmental fund expenditures by function for fiscal year ended June 30, 2013, and includes both Major and Non-Major
Funds. It reflects the amount and percent of increase or decrease for each functional category of expenditures compared to the prior year.
Governmental Funds Expenditures by Categories
Fiscal Year 2012-13
Current:
-
Expenditures
Increase
Percent
Amount
Percent of
(Decrease)
Increase
FY 12-13
Total
FY 11-12
(Decrease)
General government
7%
Current:
General government
$
9,285,279
11%
$ 1,200,104
12.9%
Public safety
42,480,962
49%
236,947
0.6%
Public works
9,212,829
11%
1,816,963
19.7%
Cultural and
3%
9%
Public safety
17%
Public works
-
leisure services
8,567,569
10%
Housing and community
development
Capital outlay
Debt service
9,360,093
11%
6,357,661
7%
$
38.3%
Cultural and leisure services
-
1,650,903
AB 1484 Demand Payment
3,285,372
86,915,296
(4,189,655)
866,303
-44.8%
13.6%
2%
(740,473)
-44.9%
0%
(9,914,969)
-100.0%
100%
$ (7,439,408)
6%
9%
49%
Housing and community development
Capital outlay
Total governmental fund expenditures decreased $7.4 million, or -8.5%, from fiscal year 2012-2013. As mentioned earlier, the variances are attributable to:

General government increased by $1.2 million, or 12.9%, primarily due to increases in attorney fees. Public safety increased by $236,947, or .6%, due to
personnel costs.

Public Works increased by $1.8 million or 19.9% and Cultural and leisure services increased by $3.3 million, or 38.3%, due to increased personnel costs,
as well as construction expenses related to LED Streetlight Replacement Project, Catalina Harbor Advanced Traffic Signal Management project, Aviation
Gym Skylight project, Dale Page and Dominquez Park ADA Restroom improvement projects.

Housing and community development substantially decreased by $4.2 million, or 44.8%, due to the housing Section 8 voucher program and the reduction
in associated administrative costs, and impacts of sequestrations imposed by the Federal Government.

Capital outlay expenditures increased by $866,303 or 13.6%, primarily due to completion of projects and, therefore, reduced construction expenses.

Debt service expenditures substantially decreased by $740,473 or 44.9%. The substantial decrease was due to the refinancing of the Public Financing
Authority 2001 Refunding Revenue Bonds.
17
Although there are three major funds in the City of Redondo Beach which are reported on page one on the MD & A, the following discussions focuses on the
General Fund, which is the major operating fund of the City.
.
REVENUES VS. EXPENDITURES
General Fund – Last Ten Years
Revenues
Expenditures
$75
$70
Dollars in Millions
$65
$60
$55
$50
$45
$40
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Fiscal Year End
Impacts of both increases and decreases to General Fund revenues resulted in a net increase of $5.6 million, or 8.3%, from fiscal year 2011-2012. The
increases in revenue were due to increases in property taxes, sales taxes, utilities users taxes and TOT taxes resulted from a slowly recovery economy
and travel industries. The increase in these revenues was slightly offset by decreases related to lower investment earnings, franchise tax, business license
tax and use of money and property.
18
General Fund Balance
The fund balance of the General Fund as of June 30, 2013 was $17.6 million (includes Special Revenue – PERS Reserve Fund of $3.8 million), an increase of
$4.2 million, when compared to the prior year. The City Council approved the constraints of the General Fund balance reflected below.
FY 10-11
FY 11-12
$ 5,595,596
$ 5,712,942
Compensated Absences
1,088,635
1,108,239
607,602
Carryovers designations
1,283,994
936,283
1,358,673
Encumbrances
428,183
580,110
634,744
Legal Fees
313,000
-
-
Self-Insurance Program Fund Allocation
350,000
1,375,000
2,650,000
Health Ins Premium Increases
65,000
41,673
-
MUNIS Upgrades
50,000
-
-
4,007,236
-
-
17,300
17,300
17,050
CalPers
-
-
3,813,747
Compensation Restoration - POA
-
151,904
737,196
-
10,222
General Fund Contingency
PERS
Petty Cash
Compensation Restoration - Management & Confidential
FY 12-13
$
5,889,783
Compensation Restoration - Other Bargaining Groups
-
-
113,830
Increase Offer to Unions
-
-
332,381
Assigned Contingency
-
-
1,000,000
25,258
-
272,083
Unassigned Balance
As part of year-end activities, the City Council reviews the General Fund balance and determines how the City should commit/assign the unrestricted portion. As
illustrated above, Council constraints of General Fund balance over the past several years reflect the City’s Strategic Plan. Aside from policy-designated amounts
(i.e., General Fund Contingency and Compensated Absences), much of the money is committed or assigned to accomplish strategic goals.
19
GENERAL FUND BUDGETARY HIGHLIGHTS
The final amended fiscal year 2012-2013 budget totaled $72.9 million, excluding transfers out and including net amendments of $4.3 million to the originally
adopted budget. The City Council adopts budget adjustments during the year to reflect both changed priorities and consideration of events that took place
subsequent to the budget adoption. The amendments can be briefly summarized as follows:

Appropriation of $370,000 for special and run-off elections..

Appropriations of $200,000 for the intervener participation in the California Energy Commission’s review of the AES Corporation’s application for a new
power plant application.

Funding of prior-year encumbrances of $680,108.

Funding of carry-over appropriations of $936,283.

Increased mid-year appropriations by $2,099,208.
Budget amendments were funded from/credited to available fund balance. During the year, however, revenues exceeded budgetary estimates by approximately
$540,000 and expenditures were $5.2 million less than budgetary estimates, primarily due to personnel vacancies and contractual services that were not
completed by year-end.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
Capital assets of the City, including infrastructure assets are those assets used in the performance of the City’s functions. At June 30, 2013, net capital assets of
the governmental and business-type activities totaled $143 million and $43.8 million, respectively. Depreciation on capital assets is recognized in the GovernmentWide financial statements.
The City has elected to use the “Modified Approach” as defined by GASB 34 for infrastructure reporting for its paving system (streets). Under GASB 34, eligible
infrastructure capital assets are not required to be depreciated as long as:

The City manages the eligible infrastructure capital assets using an asset management system with characteristics of: 1) an up-to-date inventory, 2)
condition assessments which summarize the results using a measurement scale, and 3) estimated annual amounts budgeted to maintain and preserve an
established condition assessment level.

The City documents the eligible infrastructure capital assets being preserved approximately at the established and disclosed condition assessment level.
20
Prior to FY 2008-2009, the City’s PQI rating, an amalgam of the PCR and the International Roughness Index (IRI) established by the World Bank, was based on a
10.0 scale. In fiscal year 2008-2009, the PQI rating was converted to a 100 point scale to make it comparable to alternative pavement rating methods. City policy
was to achieve an average rating of 80 for all streets by fiscal year 2008-2009 and maintain this rating on a go-forward basis. This rating allows minor cracking
and raveling of the pavement along with minor roughness that could be noticeable to drivers traveling at posted speeds. As of June 30, 2013 the City’s street
system was rated at a PQI of 83.
The City’s budget for street maintenance for the fiscal year ended June 30, 2013 was $10.2 million. Actual expenditures were $2.7 million, with the remaining
budget carried forward as continuing appropriations. The City is judiciously investing in this infrastructure asset as part of the five-year Capital Improvement
Program and will continue to rehabilitate and maintain its streets in order to achieve this goal. The estimated expenditures required to maintain and improve the
overall condition of the streets from July 1, 2013 through June 30, 2014 is a minimum of $5.2 million.
More information on the modified approach for City streets infrastructure capital assets is behind the tab section titled Required Supplementary Information.
Accumulated
Depreciation
Original Cost
Book Value
Capital Assets - Governmental Activities
Land
Buildings and Improvements
Equipment, Vehicles, Machinery
Work in Progress
Construction in Progress
Infrastructure
Total
$
16,522,947
45,979,533
23,496,354
1,003,491
5,717,382
126,984,106
$
(16,982,445)
(14,659,176)
(45,081,415)
$
16,522,947
28,997,088
8,837,178
1,003,491
5,717,382
81,902,691
$
219,703,813
$
(76,723,036)
$
142,980,777
$
11,323,255
684,062
30,708,383
4,337,465
25,487,615
$
(15,266,076)
(13,471,564)
-
$
11,323,255
684,062
15,442,307
(9,134,099)
25,487,615
$
72,540,780
$
(28,737,640)
$
43,803,140
Capital Assets - Business-Type Activities
Land
Construction in Progress
Buildings and Improvements
Equipment, Vehicles, Machinery
Infrastructure
Total
For more information on the City’s capital assets, refer to Note 6 of the Notes to Financial Statements and also the tab section titled Capital Assets Used in the
Operation of Governmental Funds.
21
DEBT ADMINISTRATION
Debt service funds are used to account for the accumulation of resources for payment of interest and principal on bonds issued by the City. The ratio of net
bonded debt to assessed valuation and the amount of bonded debt per capita for the fiscal year 2012-2013 are provided below. These indicators provide
important information for management and concerned citizens, as well as potential investors.
Amount
Net Direct:
Bonded Debt
$
1,334,000
Ratio of Debt
to Assessed
Value of
Property
0.11%
Debt
per
Capita
$
198.01
Bonds issued by the Public Financing Authority (PFA), also a component unit of the City, were originally issued to provide funds to acquire the 1996 Tax Allocation
Bonds of the Redevelopment Agency, to finance certain redevelopment activities with respect to the South Bay Center project area and to provide new monies for
certain public capital improvements within the City. In addition, bonds were issued to refinance the Redevelopment Agency’s Pier Reconstruction bonds and to
finance various improvements to, and to remedy a variety of deficiencies in the facilities of the Wastewater Enterprise. The City has no general obligation bond
indebtedness.
For a complete listing of the City’s long-term debt obligations, refer to Note 8 of the notes to financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
Fiscal year 2012-2013 finds the City’s finances have stabilized, but at a much lower level than forecasted. More work has to be done as we maneuver through the
next financial and economic challenges. We face strong headwinds from high unemployment, high oil prices, housing defaults, increasing pension and health care
costs, accelerated regional and global competition, record level state and federal deficits, raising business failures, and low confidence in government. General
Fund revenues from outside sources are projected to decrease $1,345,780 from the fiscal year 2012-2013 midyear budget. Budgetary expectations reflect:

Property Tax revenue for fiscal year 2013-2014 is projected to decrease by $739,607, or 3.5%, to $20,500,000, excluding property tax in lieu of VLF
and homeowners’ exemptions. This decrease is primarily due to the FY 2012-13 one-time receipts ($1.6 million) of property tax representing the City’s
portion of the State’s/County’s distribution of the former Redevelopment Agency’s housing funds. Overall, the economy is slowly recovering, with
some improvement in the housing market. Redondo Beach’s housing market has been fairly stable through the housing downturn due to its coastal
location. Property tax revenue is the City’s number one source of operating revenue.

Sales and Use Tax revenue is projected to increase $324,000, or 3.2%, to $10,498,000. Sales tax revenue is generally up due to new businesses
replacing closures and an increase in consumer spending. This projection is conservatively based on analysis of current trends, including annual
adjustments to the State “triple flip” sales tax apportionment, receipts from the City’s largest sales tax sources, levels of consumer disposable income,
heightened regional sales tax competition and moderating consumer confidence.
22

Utility Users’ Tax (UUT) revenue is projected to decline by $200,000, or 2.5%, to $7,800,000 with consumers’ conservation efforts and business
closures due to the depressed economy. This estimate is based upon analysis of the projected performance from each of the categorical components
of the City’s UUT tax base, including electricity, natural gas, telecommunications, water, and cable television. UUT revenue provides support for
essential City operational services.

Franchise Fees are projected to increase by $75,000, or 4.0%, to $1,950,000 for FY 2013-14. Components of franchise fee revenue include Time
Warner cable television operations, Southern California Edison electricity franchise, Southern California Gas operations, Verizon, and taxicab
franchise operations. With the exception of revenues from Southern California Gas, revenues from franchise fees reflect moderate increases, which is
in line with growth in local operations. Cable television franchise fees represent about 50% of the overall franchise fee revenue estimate for FY 201314, while projected revenue from the electricity franchise represents about 20%. The franchise revenue generated from the sale and transport of
natural gas utilized to power the local AES power plant represents approximately 20% of the total franchise fee estimate. Cyclical uncertainties of the
deregulated energy environment and their impacts upon the productive utilization rate of the AES power plant require a conservative estimate from this
revenue source.

Investment Earnings for the General Fund for fiscal year 2013-14 are projected to decrease by $210,000, or 35.0%, to $390,000. This decline is
attributable to lower interest rates within the investment marketplace, a reduction in the overall size of the portfolio and the financial unfeasibility of the
annual TRANs program. The three major components of the portfolio are: liquid investments with the State Local Agency Investment Fund, and both
Federal Agency and high-grade corporate Medium-Term Note Investments structured with a 1 to 5 year investment maturity matrix. Enhanced cash
management activities serve as core elements of the City Treasurer's comprehensive cash management program. In addition, implementation of a
strategically focused capital improvement program (CIP) cash management plan will serve to enhance investment returns from CIP funding sources,
while ensuring CIP program liquidity.
Budgeted General Fund appropriations decreased 2.1%, or $1,468,867, to $68,160,062, from the midyear budget. Personnel costs increased .8%, primarily due
to the Public Employees Retirement System (PERS) employer contribution rate increases from 14.080% to 14.526% for the miscellaneous group and from
38.386% to 40.391% for public safety. When added to the employee contribution rates of 7% and 9% for the miscellaneous and public safety groups, respectively,
the total rates used in calculating the fiscal year 2012-2013 personnel amounts are 21.526% and 49.391%. Internal service fund appropriations decreased by
approximately $3.6 million from FY2011-12 budgeted amounts. The largest decreases are due to the Emergency Communications and Vehicle Replacement
Funds, which had one-time equipment replacement needs in FY 2011-12 that are yet to be reflected in FY 2012-13. The FY 2011-12 maintenance and operations
midyear budget is much higher than the FY 2012-13 because the midyear budget also reflects carryover appropriations of $1.7 million, including carryover
encumbrances of about $428 thousand. These carryovers increase the FY 2011-12 amounts and will not be included in FY 2012-13 until year-end adjustments are
made.
During FY 2012-2013, Redondo Beach experienced a 2.7% change in real property assessed valuations, compared to last year’s 3.11%. Hotel occupancy rates
decreased by 3.3%, and Transient Occupancy Tax revenue increased by 4.5%, due to improved visitation and increased days of stay. The Utility users’ tax
revenue reflected an increase of 3.90% in FY 2012-2013. Redondo Beach continues to exceed the countywide average in total taxable retail sales, ranking 31 out
of 89 cities. Redondo Beach experienced a decrease in its unemployment rate from 6.4% in FY 2011-2012 to 5.4% in FY 2012-2013, which is well below the Los
Angeles County and State of California FY 2012-2013 unemployment rates of 9.2% and 8.9%, respectively.
All sectors of the national and regional economy have been impacted by the stagnant economy. Fortunately, the South Bay region has not been negatively
impacted nearly as much as other areas of Southern California. Opportunities still exist to further minimize the impacts and set the stage for improvement.
In order to continue to retain and attract business and stimulate tourism, the City must strive to maintain a business friendly attitude and to provide the highest
quality in municipal services.
23
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
The financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City’s finances and to show
the City’s accountability for the money it receives. If you have questions about this report, or need additional financial information, contact the Financial Services
Department at 415 Diamond Street, Redondo Beach CA 90277, phone 310-318-0683, or e-mail [email protected]
24
BASIC FINANCIAL STATEMENTS
25
GOVERNMENT-WIDE FINANCIAL STATEMENTS
26
CITY OF REDONDO BEACH
Statement of Net Position
June 30, 2013
Governmental
Activities
Primary Government
Business-Type
Activities
Total
ASSETS
Cash and investments
Receivables:
Accounts
Interest
Taxes
Notes and loans
Internal balances
Due from other governments
Advances to other governments
Prepaid items
Deferred charges
Restricted cash and investments with fiscal agents
Capital assets:
Nondepreciable
Depreciable, net
$
55,249,318
$
23,037,950
$
78,287,268
578,024
58,928
160,792
236,933
159,391
7,903,737
29
266,979
4,099,468
1,808,426
317,788
3,871,288
4,542,284
7,931
7,910,221
8,439,468
99,516
404,668
5,742,357
77,297,856
65,682,921
12,007,317
31,795,823
89,305,173
97,478,744
Total capital assets
142,980,777
43,803,140
186,783,917
Total assets
217,909,761
80,305,371
298,215,132
1,230,402
258,860
3,871,288
4,381,492
(229,002)
7,750,830
535,731
99,487
137,689
1,642,889
27
CITY OF REDONDO BEACH
Statement of Net Position
June 30, 2013
Primary Government
Governmental
Activities
Business-Type
Activities
4,552,798
3,575,223
150,000
96,900
854,355
76,018
1,047,691
476,894
154,012
5,600,489
3,575,223
150,000
96,900
1,331,249
230,030
162,323
802,585
1,123,187
24,934
539,126
187,257
802,585
1,662,313
2,298,410
15,524,709
4,719,833
352,985
10,562,871
2,651,395
15,524,709
15,282,704
Total noncurrent liabilities
24,631,047
11,479,916
36,110,963
Total liabilities
33,936,341
13,158,513
47,094,854
142,096,683
38,936,171
181,032,854
Total
LIABILITIES
Accounts payable
Accrued liabilities
Pollution remediation liability
Accrued interest
Unearned revenue
Deposits payable
Noncurrent liabilities:
Due within one year:
Compensated absences payable
Claims and judgments payable
Other long-term debt
Due in more than one year:
Compensated absences payable
Claims and judgments payable
Other long-term debt
NET POSITION
Net investment in capital assets
Restricted for:
Debt service
Public safety
Public works
Housing and community development
6,818,696
1,240,969
8,573,727
1,070,333
Total restricted
17,703,725
Unrestricted
24,173,012
$
Total net position
See accompanying notes to basic financial statements.
28
183,973,420
-
6,818,696
1,240,969
8,573,727
1,070,333
-
17,703,725
28,210,687
$
67,146,858
52,383,699
$
251,120,278
CITY OF REDONDO BEACH
Statement of Activities and Changes in Net Position
For the year ended June 30, 2013
Functions/Programs
Expenses
Program Revenues
Operating
Capital
Grants and
Grants and
Contributions
Contributions
Charges for
Services
Net (Expense) Revenue
and Changes in Net Position
Total
Governmental
Activities
Business-Type
Activities
$
$
Total
Primary government:
Governmental activities:
General government
Public safety
Public works
Cultural and leisure services
Housing and community development
Interest on long term debt
$
Total governmental activities
11,974,780
43,141,036
11,588,895
10,933,176
10,085,882
266,651
$ 11,315,431
4,466,605
2,170,823
1,770,757
2,246,976
-
87,990,420
21,970,592
4,998,098
3,657,127
1,880,835
3,610,925
3,288,696
$
412,182
1,677,530
1,845,169
5,990,972
-
$
685,738
19,619
-
$ 11,315,431
4,878,787
4,534,091
3,635,545
8,237,948
-
(659,349)
(38,262,249)
(7,054,804)
(7,297,631)
(1,847,934)
(266,651)
9,925,853
705,357
32,601,802
5,572,625
3,760,715
3,764,711
3,396,353
349,454
19,055
1,653,613
2,545,504
-
8,118,129
3,760,715
3,764,711
3,415,408
2,003,067
-
3,120,031
103,588
1,883,876
(195,517)
(1,285,629)
3,120,031
103,588
1,883,876
(195,517)
(1,285,629)
17,435,681
16,843,858
1,672,668
2,545,504
21,062,030
-
3,626,349
3,626,349
105,426,101
$ 38,814,450
$ 11,598,521
3,250,861
$ 53,663,832
3,626,349
(51,762,269)
(55,388,618)
-
$
(659,349)
(38,262,249)
(7,054,804)
(7,297,631)
(1,847,934)
(266,651)
(55,388,618)
Business-type activities:
Harbor Tidelands
Harbor Uplands
Wastewater
Solid Waste
Transit
Total business-type activities
Total primary government
$
29
$
(55,388,618)
CITY OF REDONDO BEACH
Statement of Activities and Changes in Net Position
For the year ended June 30, 2013
Governmental
Activities
Business-Type
Activities
30,728,698
3,693,144
10,228,355
1,796,606
1,018,677
7,711,580
8,703
34,912
1,212,032
1,499,306
35,578
(1,202,508)
69,851
2,674,174
1,202,508
30,728,698
3,693,144
10,228,355
1,796,606
1,018,677
7,711,580
8,703
34,912
1,281,883
4,173,480
35,578
-
56,765,083
3,946,533
60,711,616
1,376,465
7,572,882
8,949,347
Total
General revenues and tranfers:
Taxes:
Property taxes
Transient occupancy taxes
Sales Taxes
Franchise Taxes
Business licenses taxes
Utilities users taxes
Other taxes
Motor vehicle license in lieu - unrestricted
Use of money and property
Other
Gain on sale of capital assets
Transfers
Total general revenues and transfers
Change in net position
Net position, beginning of year
Net position, end of year
See accompanying notes to basic financial statements.
30
182,534,770
59,573,976
242,108,746
$ 183,911,235
$ 67,146,858
$ 251,058,093
FUND FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
31
GOVERNMENTAL FUND FINANCIAL STATEMENTS
General Fund - The General Fund is used to account for all revenues and expenditures that are not required to be accounted for in another fund.
Other Intergovernmental Grants Special Revenue Fund – To account for federal, state and other governmental agencies grant funding that supplements
local funding.
Public Financing Authority Debt Service Fund – To account for the payment of interest and principal on tax allocation bonds and other debt issued to
finance City and redevelopment activities.
Total Non-Major Funds - The aggregate of all the non-major governmental funds.
32
CITY OF REDONDO BEACH
Balance Sheet
Governmental Funds
June 30, 2013
Special Revenue Funds Debt Service Funds
Other
Public
Financing
Intergovernmental
Grants
Authority
General
Total
Non-Major
Funds
Total
Governmental
Funds
ASSETS
Pooled cash and investments
Receivables:
Accounts
Interest
Taxes
Notes and loans
Prepaid costs
Due from other funds
Due from other governments
Advances to other funds
Advances to other governments
Restricted assets:
Cash and investments with fiscal agents
Total assets
$
16,694,674
$
352,996
$
125,000
1,148
881,961
-
954,976
221,851
3,871,288
21,430
99,401
333,930
393,275
1,195,660
-
345,184
$
14,501
99
6,280,000
-
-
16,526,923
$
121,204
35,762
4,360,062
195,594
1,215,681
258,860
3,871,288
4,381,492
99,401
333,930
7,750,830
1,195,660
535,731
-
535,731
1,642,889
33,919,777
-
1,642,889
$
23,786,485
$
1,361,105
$
8,282,673
$
21,775,276
$
55,205,539
$
1,321,001
3,575,223
150,000
8,425
76,018
1,097,676
-
$
975,393
845,930
584,159
-
$
1,195
267,122
1,195,660
$
941,184
274,817
1,435,188
-
$
3,238,773
3,575,223
150,000
854,355
76,018
541,939
3,117,023
1,195,660
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable
Accrued liabilities
Pollution remediation liability
Unearned revenue
Deposits payable
Due to other funds
Deferred revenue
Advances from other funds
Total liabilities
6,228,343
2,405,482
33
1,463,977
2,651,189
12,748,991
CITY OF REDONDO BEACH
Balance Sheet
Governmental Funds
June 30, 2013
Special Revenue Funds Debt Service Funds
Other
Public
Total
Total
Intergovernmental
Financing
Non-Major
Governmental
Grants
Authority
Funds
Funds
16,010,908
3,113,179
-
120,831
22,829,604
5,889,783
14,388,624
(772,294)
General
Fund Balances:
Nonspendable
Restricted
Committed
Assigned
Unassigned
120,831
5,889,783
11,275,445
272,083
17,558,142
Total fund balances
Total liabilities and fund balances
See accompanying notes to basic financial statements.
(1,044,377)
$
23,786,485
6,818,696
-
(1,044,377)
$
1,361,105
34
6,818,696
$
8,282,673
19,124,087
$
21,775,276
42,456,548
$
55,205,539
CITY OF REDONDO BEACH
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position
June 30, 2013
Total Fund Balance - Total Governmental Funds
$
42,456,548
Amounts reported for governmental activities in the Statement of Net Position were different because:
Capital assets net of depreciation have not been included as financial resources in governmental fund activity.
Non-depreciable
Depreciable, net
Total capital assets
Government-Wide
Statement of Net
Position
Internal Service
Funds
$
$
$
77,297,856
65,682,921
142,980,777
$
(4,778,587)
(4,778,587)
77,297,856
60,904,334
138,202,190
Accrued interest payable on long-term debt did not require current financial resources. Therefore, accrued
interest payable was not reported as a liability in governmental funds.
(96,900)
Bond issuance costs from issuing debt were expenditures in the fund financial statements. However, they were
deferred and subject to capitalization and amortization in the Government-Wide Financial Statements.
137,689
Revenues were recorded as deferred revenue in the governmental funds because they did not represent
current financial resources at year end.
end However,
However they were recognized as revenues in the Government-Wide
Financial Statements.
3,117,023
Internal Service funds were used by management to charge the costs of certain activities, such as insurance
and fleet, management, to individual funds. The assets and liabilities of the Internal Service funds were
included in governmental activities in the Government-Wide Statement of Net Position.
7,297,405
Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the
governmental funds:
Other long-term debt - due within one year
Government-Wide
Statement of Net
Position
Internal Service
Funds
$
$
Other long-term debt - due in more than one year
Compensated absences payable - due within one year
(4,719,833)
(162,323)
Compensated absences payable - due in more than one year
Total long-term liabilities
$
Net Position of Governmental Activities
See accompanying notes to basic financial statements.
(1,123,187)
(2,298,410)
(8,303,753)
$
439,198
(683,989)
444,894
18,413
(4,274,939)
(143,910)
260,713
1,163,218
(2,037,697)
(7,140,535)
$
35
183,973,420
CITY OF REDONDO BEACH
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2013
Special Revenue Funds Debt Service Funds
Other
Public
Intergovernmental
Financing
Grants
Authority
General
REVENUES:
Taxes
Interdepartmental
Licenses and permits
Intergovernmental
Charges for services
Use of money and property
Fines and forfeitures
Miscellaneous
Total revenues
$
55,882,844
6,656,858
1,259,505
54,040
5,216,209
1,879,243
1,620,958
857,815
$
3,149,452
120,940
$
1,225,845
80
Total
Non-Major
Funds
$
10,176,596
2,245,433
41,866
43,008
83,308
Total
Governmental
Funds
$
55,882,844
6,656,858
1,259,505
13,380,088
7,461,642
3,146,954
1,663,966
1,062,143
73,427,472
3,270,392
1,225,925
12,590,211
90,514,000
9,285,279
41,945,269
3,122,050
5,236,471
8,567,569
-
418,617
69,320
2,947,513
119,155
-
117,076
6,118,888
3,907,038
3,410,148
9,285,279
42,480,962
9,360,093
9,212,829
8,567,569
6,357,661
EXPENDITURES:
Current:
General government
Public safety
Housing and community development
Public works
Cultural and leisure services
Capital outlay
Debt Service:
Principal retirement
Interest and fiscal charges
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
68,156,638
5,270,834
-
1,380,000
270,903
3,435,450
1,770,058
(165,058)
(544,133)
36
13,553,150
(962,939)
1,380,000
270,903
86,915,296
3,598,704
CITY OF REDONDO BEACH
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2013
General
Special Revenue Funds Debt Service Funds
Other
Public
Intergovernmental
Financing
Grants
Authority
Total
Non-Major
Funds
Total
Governmental
Funds
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
839,865
(1,943,237)
(1,103,372)
440,600
440,600
4,167,462
275,542
(544,133)
1,943,237
(2,494,080)
(550,843)
3,223,702
(4,437,317)
(1,213,615)
(1,513,782)
2,385,089
20,637,869
40,071,459
FUND BALANCES:
Beginning of year
End of year
13,390,680
$
17,558,142
See accompanying notes to basic financial statements.
(1,319,919)
$
(1,044,377)
7,362,829
$
6,818,696
37
$
19,124,087
$
42,456,548
CITY OF REDONDO BEACH
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
Year ended June 30, 2013
Net Change In Fund Balances - Total Governmental Funds
$
2,385,089
Amounts reported for governmental activities in the Statement of Activities were different because:
Governmental funds report capital outlays as expenditures. However, in the Government-Wide Statement of
Activities and Changes in Net Position, the costs of those assets was allocated over their estimated useful
lives as depreciation expense. This was the amount of capital assets recorded in the current period.
$
Funds
Government-Wide
Capital Outlay
Expenses
6,357,661
Government-Wide
Statement of Net
Position
Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities and
Changes in Net Position, but they did not require the use of current financial resources. Therefore,
depreciation expense was not reported as expenditures in the governmental funds.
$
(4,218,475)
$
(2,043,328)
Capital asset
contribution
$
(2,545,504)
1,768,829
Internal Service
Funds
$
1,139,594
(3,078,881)
Long-Term compensated absences was reported in the Government-Wide Statement of Activities and
Changes in Net Position, but it did not require the use of current financial resources. Therefore, long-term
compensated absences was not reported as expenditures in the governmental funds.
215,925
Repayment of principal of long-term debt was an expenditure in governmental funds, but the repayment
reduced long-term liabilities in the Government-Wide Statement of Net Position:
Principal retirement
1,380,000
Amortization expense was reported in the Government-Wide Statement of Activities and Changes in Net
Position, but it did not require the use of current financial resources. Therefore, amortization expense was
not reported as an expenditure in the governmental funds:
Amortization of bond premium
Amortization of deferred charges
38
18,989
(27,537)
CITY OF REDONDO BEACH
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
Year ended June 30, 2013
Interest expense on long-term debt was reported in the Government-Wide Statement of Activities and
Changes in Net Position, but it did not require the use of current financial resources. Therefore, interest
expense was not reported as expenditures in governmental funds. The following amount represented the
change in accrued interest from the prior year.
12,800
Certain revenues were recorded as deferred revenue in the governmental funds because they were not
available as current financial resources. However, they were included as revenue in the Government-Wide
Statement of Activities and Changes in Net Position under the full accrual basis.
(156,508)
Internal service funds were used by management to charge the costs of certain activities, such as insurance
and fleet management, to individual funds. The net revenue of the internal service funds was reported with
governmental activities.
(1,080,056)
Change in Net Position of Governmental Activities
See accompanying notes to basic financial statements.
$
39
1,438,650
PROPRIETARY FUND FINANCIAL STATEMENTS
Harbor Tidelands Enterprise Fund - To account for the operations of small boat harbor facilities available to the general public, including related pier
activities. The use of this fund is restricted under the City Tideland Trust Agreement with the State of California.
Harbor Uplands Enterprise Fund - To account for the operations of small boat harbor facilities available to the general public, including related pier
activities. The use of this fund is subject only to the decisions of the City Council.
Wastewater Enterprise Fund - To account for the capital facility charge, more commonly referred to as a sewer user fee. The capital facility charge is
designed to reimburse the City's wastewater system for the capital costs to provide wastewater capacity to new system users. This charge is associated with
the expansion of the system required over time to address increases in wastewater flow generated by new development.
Solid Waste Enterprise Fund - To account for revenues and expenses related to the City's comprehensive solid waste program, including AB 939 funds.
Transit Enterprise Fund - To account for transportation activities of the City.
Internal Service Funds - These funds are used to account for interdepartmental operations where it is the stated intent that costs of providing services to the
departments of the City on a continuing basis be financed or recovered primarily by charges to the user departments.
40
CITY OF REDONDO BEACH
Statement of Net Position
Proprietary Funds
June 30, 2013
Business-Type Activities - Enterprise Funds
Harbor
Solid
Uplands
Wastewater
Waste
Transit
Harbor
Tidelands
Total
Governmental
Activities
Internal
Service Funds
23,037,950
$ 21,329,541
578,024
58,928
160,792
236,933
159,391
29
266,979
14,721
86
-
ASSETS
Current assets:
Cash and cash equivalents
Receivables:
Accounts
Interest
Notes and loans
Due from other funds
Due from other governments
Prepaid items
Deferred charges
Restricted:
Cash with fiscal agent
Total current assets
Noncurrent assets:
Advance to other government
Capital assets:
Non-depreciable
Depreciable, net
$ 13,869,805
220,582
48,187
160,792
236,933
-
$
2,004,103
155,827
7,959
-
$
5,625,524
60,742
56,065
266,979
4,099,468
$
1,228,347
$
310,171
98,340
43,183
29
-
42,533
2,782
60,143
-
-
-
$
4,099,468
-
14,536,299
2,167,889
5,791,049
2,112,688
3,948,589
16,293,281
7,546,617
5,499,942
512,111
8,431,563
93,292
1,477,745
12,007,317
31,795,823
4,778,587
Total capital assets
20,241,870
13,046,559
8,943,674
93,292
1,477,745
43,803,140
4,778,587
Total noncurrent assets
26,032,919
15,159,247
8,943,674
93,292
1,477,745
51,706,877
4,778,587
Total assets
40,569,218
17,327,136
19,052,452
1,463,191
1,893,374
80,305,371
26,122,935
41
10,108,778
-
1,369,899
-
415,629
-
28,598,494
7,903,737
21,344,348
-
CITY OF REDONDO BEACH
Statement of Net Position
Proprietary Funds
June 30, 2013
LIABILITIES
Current liabilities:
Accounts payable
Deposits payable
Due to other funds
Unearned revenue
Accrued compensated absences
Accrued claims and judgments
Bonds, notes, and capital leases
Total current liabilities
Noncurrent liabilities:
Accrued claims and judgments
Accrued compensated absences
Bonds, notes, and capital leases
Total noncurrent liabilities
Total liabilities
NET POSITION
Net investment in capital assets
Unrestricted
Total net position
Harbor
Tidelands
Business-Type Activities - Enterprise Funds
Harbor
Solid
Wastewater
Waste
Transit
Uplands
Total
Governmental
Activities
Internal
Service Funds
168,183
131,217
8,425
296,500
149,252
22,795
6,430
-
34,763
44,488
4,545
242,626
273,280
52,804
2,965
-
422,213
379,602
2,569
-
1,047,691
154,012
476,894
24,934
539,126
1,314,025
20,993
18,413
802,585
439,198
604,325
178,477
326,422
329,049
804,384
2,242,657
2,595,214
119,289
2,355,354
91,042
-
64,329
8,207,517
41,978
-
36,347
-
352,985
10,562,871
15,524,709
260,713
444,894
2,474,643
91,042
8,271,846
41,978
36,347
10,915,856
16,230,316
3,078,968
269,519
8,598,268
371,027
840,731
13,158,513
18,825,530
19,725,576
17,764,674
13,046,559
4,011,058
4,592,999
5,861,185
93,292
998,872
1,477,745
(425,102)
38,936,171
28,210,687
3,894,495
3,402,910
$ 37,490,250
$ 17,057,617
See accompanying notes to basic financial statements.
42
$
10,454,184
$
1,092,164
$ 1,052,643
$
67,146,858
$
7,297,405
CITY OF REDONDO BEACH
Statement of Revenues, Expenses and Changes in Net Position
Proprietary Funds
For the year ended June 30, 2013
Business-Type Activities - Enterprise Funds
Harbor
Solid
Uplands
Wastewater
Waste
Transit
Harbor
Tidelands
Total
Governmental
Activities
Internal
Service Funds
OPERATING REVENUES:
Sales and service charges
Harbor rentals
Miscellaneous
Total operating revenues
$
1,055,230
4,517,395
2,435,111
$
1,585,287
2,175,428
43,846
$
3,764,711
-
$
3,396,353
194,286
$
349,454
931
$
10,151,035
6,692,823
2,674,174
$
15,289,813
82,000
8,007,736
3,804,561
3,764,711
3,590,639
350,385
19,518,032
15,371,813
OPERATING EXPENSES:
Personnel services
Contractual services
Administrative and general expenses
Depreciation expense
Total operating expenses
2,939,881
81,135
1,376,973
468,007
4,865,996
1,709,927
400,672
1,272,642
273,886
857,931
77,514
300,751
202,589
753,709
2,512,281
328,711
16,224
354,273
2,052,614
651,539
230,270
6,615,721
5,124,216
3,930,616
1,190,976
3,657,127
1,438,785
3,610,925
3,288,696
16,861,529
5,324,509
7,481,937
2,936,316
756,025
16,498,787
OPERATING INCOME (LOSS)
3,141,740
147,434
2,325,926
(20,286)
(2,938,311)
2,656,503
(1,126,974)
19,055
19,055
1,638,257
15,356
1,653,613
1,657,312
69,851
(574,152)
15,356
1,168,367
(1,231)
(1,284,698)
3,824,870
NONOPERATING REVENUES (EXPENSES):
Intergovernmental
Investment income
Interest expense
Gain on sale of capital assets
Total nonoperating revenues (expenses)
INCOME (LOSS) BEFORE TRANSFERS
AND CAPITAL CONTRIBUTIONS
55,879
(132,102)
(76,223)
3,065,517
13,972
13,972
(442,050)
(442,050)
161,406
1,883,876
35,811
35,811
(1,091,163)
CAPITAL CONTRIBUTIONS:
Capital asset contribution
TRANSFERS:
Transfers in
Transfers out
Total transfers
Change in net position
2,545,504
(82,190)
(82,190)
5,528,831
-
-
-
-
-
-
161,406
1,883,876
-
2,545,504
1,284,698
1,284,698
(1,231)
-
1,284,698
(82,190)
1,202,508
-
446,846
(435,739)
11,107
7,572,882
(1,080,056)
NET POSITION:
Beginning of year
End of year
31,961,419
16,896,211
$ 37,490,250
$ 17,057,617
8,570,308
$
10,454,184
See accompanying notes to basic financial statements.
43
1,093,395
$
1,092,164
1,052,643
$
1,052,643
59,573,976
$
67,146,858
8,377,461
$
7,297,405
CITY OF REDONDO BEACH
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2013
Business-Type Activities - Enterprise Funds
Harbor
Solid
Uplands
Wastewater
Waste
Transit
Harbor
Tidelands
Total
Governmental
Activities
Internal
Service Funds
$ 19,662,864
(9,942,294)
(6,672,287)
$ 15,375,031
(8,478,640)
(5,320,407)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users
Cash payments to suppliers for goods and services
Cash payments to employees for services
Net cash provided (used) by operating activities
$
8,078,581
(2,018,454)
(3,019,002)
$ 3,845,370
(1,957,423)
(1,710,181)
3,041,125
177,766
$ 3,760,701
(476,840)
(854,206)
2,429,655
$ 3,641,820
(2,785,424)
(742,275)
$
336,392
(2,704,153)
(346,623)
114,121
(2,714,384)
3,048,283
1,575,984
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in
Transfers out
Repayment received from other funds
Repayment received from other governments
Advance to other funds
Subsidy from grants
Net cash provided (used) by noncapital financing activities
(82,190)
29,788
(18,472)
-
(6,742)
-
122,023
(56,065)
(23,139)
-
1,284,698
1,658,409
1,284,698
(82,190)
151,811
(23,139)
(25,214)
1,602,344
446,846
(435,739)
-
(70,874)
(6,742)
65,958
(23,139)
2,943,107
2,908,310
11,107
(994,334)
(283,732)
(132,102)
-
(516,716)
-
(512,111)
(232,626)
(442,050)
-
-
(266,007)
15,356
(2,289,168)
(516,358)
(574,152)
15,356
(1,136,846)
474,473
(450,560)
35,811
(1,410,168)
(516,716)
(1,186,787)
-
(250,651)
(3,364,322)
(1,077,122)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition and construction of capital assets
Proceeds from new capital leases
Principal paid on capital debt
Interest paid on capital debt
Proceeds from sales of capital assets
Net cash used by capital and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received
Net cash provided (used) by investing activities
Net increase (decrease) in cash and cash equivalents
69,156
17,347
-
-
(431)
86,072
-
69,156
17,347
-
-
(431)
86,072
-
(22,359)
2,678,343
1,629,239
(328,345)
1,308,826
90,982
509,969
CASH AND CASH EQUIVALENTS:
Beginning of year
End of year
12,240,566
2,332,448
8,416,166
1,137,365
$ 13,869,805
$ 2,004,103
$ 9,724,992
$ 1,228,347
44
$
332,530
24,459,075
20,819,572
310,171
$ 27,137,418
$ 21,329,541
-
-
-
-
-
(4,099,468)
CITY OF REDONDO BEACH
Statement of Cash Flows, Continued
Proprietary Funds
For the year ended June 30, 2013
Governmental
Business-Type Activities - Enterprise Funds
Activities
Harbor
Harbor
Tidelands
Uplands
Wastewater
Waste
Solid
Internal
$ 13,869,805
-
$ 2,004,103
-
$ 5,625,524
4,099,468
$ 1,228,347
-
$
$ 13,869,805
$ 2,004,103
$ 9,724,992
$ 1,228,347
$
$
$
147,434
$ 2,325,926
$
$ (2,938,311)
468,007
273,886
202,589
16,224
230,270
62,623
1,853
(643,334)
8,222
2,014
-
57,809
197
(284,306)
(17,000)
(254)
-
(18,382)
12,714
(111,289)
3,725
14,372
(56,283)
96,021
65
55,568
11,435
11,377
1,206
32,880
7,650
(48,079)
46,973
96,021
2,115
12,714
(950,481)
(8,778)
24,570
(22,330)
1,586
1,862
440,909
1,498,473
4,103
-
(100,615)
30,332
103,729
134,407
223,927
391,780
2,702,958
$ 2,429,655
$
114,121
$
$
-
Transit
Total
Service Funds
310,171
-
$ 23,037,950
4,099,468
$ 21,329,541
-
310,171
$ 27,137,418
$ 21,329,541
$
$
FINANCIAL STATEMENT PRESENTATION:
Cash and cash equivalents
Cash with fiscal agent
Total cash and cash equivalents and cash with fiscal agent
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss)
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation expense
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(Increase) decrease in taxes receivable
(Increase) decrease in prepaid expenses
(Increase) decrease in deferred charges
Increase (decrease) in accounts payable
Increase (decrease) in deposits payable
Increase (decrease) in claims and judgments
Increase (decrease) in compensated absences
Increase (decrease) in unearned revenue
Total adjustments
Net cash provided (used) by operating activities
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
Capital asset contribution
3,141,740
$
3,041,125
$
177,766
$
2,545,504
$
-
See accompanying notes to basic financial statements.
45
-
(20,286)
2,656,503
1,190,976
756,025
$ (2,714,384)
$
3,048,283
$
$
$
2,545,504
$
-
(1,126,974)
1,575,984
-
FIDUCIARY FUND FINANCIAL STATEMENTS
Agency Funds - These funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. They are used to
account for assets held in an agency capacity for others and therefore cannot be used to support the City's programs.
Redevelopment Obligation Retirement Fund - This fund accounts for the activities of the Successor Agency to the City of Redondo Beach Redevelopment
Agency. The fund’s primary purpose is to expedite the dissolution of the former Agency’s net position (except for the low and moderate income housing
fund’s net position) in accordance with AB x1 26 and AB 1484.
46
CITY OF REDONDO BEACH
Statement of Fiduciary Net Position
Fiduciary Agency Funds
June 30, 2013
Redevelopment
Agency
Obligation
Funds
Retirement Fund
ASSETS
Pooled cash and investments
$
697,106
$
1,033,443
Receivables:
Accounts
5,469
119,880
502
19
$
703,077
1,153,342
$
323,043
-
380,034
-
Interest
Total assets
LIABILITIES
Accounts payable
Deposits payable
Due to other governments
-
375,000
Advances from other governments
-
535,731
Long-term liabilities
Due with one year
-
99,000
Due in more than one year
-
29,112,724
$
Total liabilities
703,077
30,122,455
NET POSITION (DEFICIT)
Net position held in trust
$
See accompanying notes to basic financial statements.
47
(28,969,113)
CITY OF REDONDO BEACH
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the year ended June 30, 2013
Redevelopment
Obligation
Retirement Fund
ADDITIONS:
Charges for services
$
85,248
Investment earnings
76,265
RPTTF distributions
1,580,292
Total additions
1,741,805
DEDUCTIONS
Administration expense
375,000
Contract services
14,026
AB 1484 demand payment
1,221,341
Debt service:
Interest expense
976,222
Total deductions
2,586,589
Change in net position
(844,784)
Net position, beginning of the year
(28,124,329)
Net position, end of the year
See accompanying notes to basic financial statements.
$
48
(28,969,113)
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Redondo Beach, California (City) have been prepared in conformity with generally accepted accounting
principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for
establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below.
A.
Financial Reporting Entity
The City was incorporated on April 29, 1892, under the laws of the State of California and enjoys all the rights and privileges applicable to a Charter City. It
is governed by an elected Mayor and a five-member council.
As required by GAAP, the financial statements present the City and its component units, entities for which the City is considered to be financially
accountable. Blended component units, although legally separate entities are, in substance, part of the City's operations and data from these units are
combined with data of the City. Each blended component unit has a June 30 year-end. The City had no discretely presented component units. The following
entities are reported as blended component units:
The Parking Authority of the City of Redondo Beach (Parking Authority) was established on March 3, 1969, pursuant to the provisions of the Streets and
Highway Code of the State of California. The principal purpose of the Parking Authority is to provide public off-street parking within the City. The
Parking Authority serves all the citizens of the government and is governed by a board comprised of the government's elected council.
The Redondo Beach Housing Authority (Housing Authority) was formed on June 2, 1975, for the purpose of providing affordable, decent housing for lower
income residents of the City. The Housing Authority operates the Fair Housing and Section 8 housing programs. The Housing Authority serves all the
citizens of the government and is governed by a board comprised of the government's elected council.
49
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
A.
Financial Reporting Entity, (Continued)
The Redondo Beach Public Financing Authority (Financing Authority), a joint powers authority, was formed on June 25, 1996, to provide financing for
capital improvement projects. The Agency joined with the City to form the Financing Authority, which is accounted for as a component unit of the
Agency. The Financing Authority operates rental property and issues bonds to provide funds for public capital improvements. The Financing Authority
has the same governing board as the City, which also performs all accounting and administrative functions for the Financing Authority.
The Agency's financial statements, as well as financial information relating to the other component units, can be obtained from the City Clerk's Office or
Financial Services Department located at City Hall.
B.
Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are
accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as
appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the
means by which spending activities are controlled.
Government - Wide Financial Statements
The City's government-wide financial statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These
statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are
not included in these statements.
These basic financial statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the
City's assets, deferred outflows of resources, deferred inflows of resources, and liabilities, including capital assets (as well as infrastructure assets) and longterm liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual
basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is
incurred. 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. Certain indirect costs are included in the program expenses
reported for specific functions.
50
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
B.
Basis of Accounting and Measurement Focus, (Continued)
Certain types of transactions are reported as program revenues for the City in three categories:



Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have
been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal
balances and eliminated in the total primary government column. In the Statement of Activities and Changes in Net Position, internal service fund
transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following
interfund activities have been eliminated:



Due to/from other funds
Advances to/from other funds
Transfers in/ out
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major
governmental funds and non-major funds aggregated. The City has presented all major funds that have met the applicable criteria.
51
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
B.
Basis of Accounting and Measurement Focus, (Continued)
All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting.
Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund
Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the
modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance
expenditures of the current period.
Revenues are recorded when received in cash, except for revenues subject to accrual (generally 60 days after year-end), which are recognized when due. The
primary revenue sources, which have been treated as susceptible to accrual by the City, are property taxes, sales taxes, franchise taxes, special assessments,
intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred.
Deferred revenues arise when potential revenues do not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred
revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring
qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the government has a legal claim to the resources,
the deferred revenue is removed and revenue is recognized.
The reconciliations of the Fund Financial Statements to the Government-Wide Financial Statements are provided to explain the differences created by the
integrated approach of GASB Statement No. 34.
The City reports the following major governmental funds:

General Fund - the City's primary operating fund that accounts for all financial resources of the general government except those required to be
accounted for in another fund.

Other Intergovernmental Grants Special Revenue Fund – accounts for federal, state and other governmental agencies grant funding that
supplements local funding.
52
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
B.
Basis of Accounting and Measurement Focus, (Continued)

Public Financing Authority Debt Service Fund - accounts for the payment of interest and principal on tax allocation bonds and other debt issued to
finance city and redevelopment activities.
Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement
of Cash Flows for each proprietary fund.
A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been
combined with the governmental activities in the government-wide financial statements.
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and
liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position
presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in
which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as
revenue and provisions have been made for uncollectible amounts.
Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported
as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported
as nonoperating expenses.
The City reports all of its enterprise funds as major proprietary funds:

Harbor Tidelands Fund - accounts for the operations of small boat harbor facilities available to the general public, including related pier activities.
The use of this fund is restricted under the City Tideland Trust Agreement with the State of California.

Harbor Uplands Fund - accounts for the operations of small boat harbor facilities available to the general public, including related pier activities.
The use of this fund is subject only to the decisions of the City Council.
53
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
B.
Basis of Accounting and Measurement Focus, (Continued)

Wastewater Fund - accounts for the capital facility charge and a sewer use fee. The charges are designed to reimburse the City's wastewater system
for the capital and maintenance and operations costs necessary for providing wastewater capacity to system users. These charges are associated
with the expansion of the system required over time to address increases in wastewater flow generated by new development.

Solid Waste Fund - accounts for the revenues and expenses related to the City's comprehensive solid waste program, including AB 939 funds.

Transit Fund - accounts for the transportation activities of the City.
Fiduciary Fund Financial Statements
The City maintains two fiduciary fund types. The first is a private-purpose trust fund which uses the economic resources measurement focus and the
accrual basis of accounting. Private-purpose trust funds are used to report trust arrangements under which principal and income benefit individuals,
private organizations, or other governments. The second is an agency fund which has no measurement focus. Agency funds are custodial in nature (assets
equal liabilities) and do not involve the recording of City revenues and expenses.
C.
Use of Restricted/Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City's policy is to apply restricted net
position first.
D.
Cash, Cash Equivalents and Investments
The City pools its available cash for investment purposes. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and
short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with
investments and displayed as Cash and Investments.
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market
investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value
is used as fair value for those securities for which market quotations are readily available.
54
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
D.
Cash, Cash Equivalents and Investments, (Continued)
The City participates in an investment pool managed by the State of California, titled Local Agency Investment Fund (LAIF), which has invested a portion
of the pool funds in Structured Notes and Asset-Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of
California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to change in
interest rates.
In accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures (an amendment of GASB No. 3), certain disclosure requirements, if
applicable, are provided for deposit and investment risk in the following areas:



Interest Rate Risk
Credit Risk
 Overall
 Custodial Credit Risk
 Concentration of Credit Risk
Foreign Currency Risk
For purposes of the statement of cash flows of the proprietary fund types, cash and cash equivalents include all investments, as the City operates an internal
cash management pool which maintains the general characteristics of a demand deposit account.
E.
Restricted Cash and Investments
Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt and for acquisition and construction of capital projects.
Cash and investments are also restricted for deposits held for others within the enterprise funds.
F.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items.
55
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
G.
Interfund Transactions
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due
to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans)." Any
residual balances outstanding between the governmental activities and business-type activities are reported in the governmental-wide financial statements
as "internal balances."
H.
Capital Assets
In the Government-Wide Financial Statements, capital assets, which include land, buildings, improvements, equipment, furniture, and infrastructure assets
(e.g., roads, sidewalks, and similar items), are reported in the applicable governmental or business-type activities. Capital assets are recorded at historical
cost or estimated historical cost if actual cost is not available. Donated assets are valued at their estimated fair value on the date donated.
City policy has set the capitalization threshold for reporting capital assets at the following:
General Capital Assets
Infrastructure Capital Assets
Buildings, Parking Structures and Parking Lots
$
5,000
25,000
100,000
The City has chosen the Modified Approach for reporting of the Street Pavement Subsystem infrastructure assets, and as a result no depreciation is
recorded for that system; instead, all expenditures made for these assets, except for additions and improvements, are expensed in the year incurred. For all
other assets, depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:
Asset
Buildings and Improvements
Equipment
Vehicles
Infrastructure
56
Years
45
5-20
4-20
5-60
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
H.
Capital Assets, (Continued)
The City defines infrastructure as the physical assets that allow the City to function. These assets include:



Streets system
Site amenities such as parking and landscaped areas used by the City in the conduct of its business
Underground utilities
Each major infrastructure system can be divided into subsystems. For example, the street system can be divided into concrete and asphalt pavements,
concrete curb and gutters, sidewalks, medians, etc. Subsystem detail is not presented in these financial statements; however, the City maintains detailed
information on these subsystems.
In June 2013, a visual survey of all pavement segments was conducted to assess the existing surface condition of each of the individual pavement segments.
Upon completion of the study, a Pavement Quality Index (PQI) was calculated for each segment in the City's pavement network to reflect the overall
pavement condition. Ratings ranged from 0 to 100. A PQI of 0 would correspond to badly deteriorated pavement with virtually no remaining life; a PQI of
100 would correspond to pavement with proper engineering design and construction at the beginning of its life cycle. During the year, the comprehensive
survey is updated to reflect the pavement's current condition.
The following conditions were defined:
Condition
Very Good
Good
Fair
Poor
Rating
90-100
70-89
50-69
0-49
In line with the Capital Improvement Program and as presented to the City Council on December 17, 2002, City policy is to achieve an average rating of 80
for all streets beginning in fiscal year 2008-09. This rating allows minor cracking and raveling of the pavement along with minor roughness that could be
noticeable to drivers traveling at posted speeds. For 2011, 2012, and 2013, the City's street system was rated at a PQI of 83 on the average.
57
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
H.
Capital Assets, (Continued)
For a detailed description of the Modified Approach, see the Required Supplementary Information section of this report.
For all other infrastructure systems, the City elected to use the Basic Approach for infrastructure reporting. As such, the City records the assets at historical
cost and depreciates them over their useful lives, and regularly evaluates them for impairment. Expenditures that extend the life of the asset are capitalized.
Interest accrued during capital assets construction, if any, is capitalized for the business-type and proprietary funds as part of the asset cost.
In the fund financial statements, capital assets are not presented. Consequently, capital assets are a reconciling item and are shown in the Reconciliation of
the Balance Sheet of Governmental Funds to the Government-Wide Statement of Net Position.
I.
Interest Payable
In the government-wide financial statements, interest payable on long-term debt is recognized as the liability is incurred for governmental fund types and
proprietary fund types.
In the fund financial statements, governmental fund types do not recognize interest payable, while proprietary fund types recognize the interest payable
when the liability is incurred.
J.
Unearned Revenue and Deferred Revenue
In the government-wide financial statements, unearned revenue is recognized for transactions in which revenue has not yet been earned. Typical
transactions recorded as unearned revenues in the government-wide financial statements are long-term loans receivable and prepaid charges for services.
In the fund financial statements, deferred revenue is recorded when transactions have not yet met the revenue recognition criteria based on the modified
accrual basis of accounting. The City records deferred revenue for transactions in which revenues have not been earned, or in which funds are not available
to meet current financial obligations. Typical transactions in which deferred revenue is recorded are grants received but not yet earned or available.
58
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
K.
Compensated Absences Payable
Only the short-term liability for compensated absences (the amount due to employees for future absences, such as vacation and compensatory time, which
are attributable to services already rendered) is reported as a current liability in the governmental funds and only if they have matured, for example, as a
result of employee resignations and retirements; the long-term liability is reported in the government-wide financial statements. The short-term liability is
the amount that will be liquidated with current financial resources and is expected to be paid during the next fiscal year. All of the liability for compensated
absences applicable to proprietary funds is reported in those funds.
Vacation pay is payable to employees at the time a vacation is taken or upon termination of employment. Employees may accrue from two to three times
their annual accrual rate. Upon termination an employee will be paid for any unused accrued vacation pay. Sick leave is payable when an employee is
unable to work because of illness. Unused sick leave is forfeited upon termination.
L.
Claims and Judgments Payable
The short-term and long-term claims are reported as liabilities in the Self-Insurance Program Internal Service Fund. The short-term liability which will be
liquidated with current financial resources is the amount of the settlement reached, but unpaid, related to claims and judgments entered.
M.
Long-Term Debt
Government-Wide Financial Statements
Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities.
Bond premiums and discounts, as well as issuance costs, 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. Bond issuance costs are reported as deferred charges and amortized over the term of
the related debt.
59
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
M.
Long-Term Debt, (Continued)
Fund Financial Statements
The fund financial statements do not present long-term debt. Consequently, long-term debt is a reconciling item and is shown in the Reconciliation of the
Balance Sheet of Governmental Funds to the Government-Wide Statement of Net Position.
Bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as other financing sources
net of the applicable premium or discount.
Issuance costs, whether or not withheld from the actual net proceeds received, are reported as debt service expenditures.
N.
Net Position
In the Government-Wide Financial Statements, net position is classified in the following categories:
Net investment in capital assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt attributed to the
acquisition, construction, or improvement of the assets.
Restricted Net Position - This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments.
Unrestricted Net Position - This amount is all net position that does not meet the definition of "net investment in capital assets" or "restricted net position."
O.
Fund Balances
In the Governmental Fund Financial Statements, fund balances are classified in the following categories:
Nonspendable - Nonspendable fund balances are items that are not expected to be converted to cash, such as prepaid items and inventories, or items that
are required to be maintained intact, such as principal of an endowment or revolving loan funds.
60
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Ccontinued)
O.
Fund Balances, (Continued)
Restricted - Restricted fund balances include amounts that can be spent only for the specific purposes stipulated by external resources providers, such as
grant providers, constitutionally, or through enabling legislation. Effectively, restrictions may be changed or lifted only with the consent of resource
providers.
Committed - Committed fund balances include amounts that can be used only for the specific purposes when the City Council passes a resolution that
places specific constrains on how the resources may be used. The City Council can modify or rescind the resolution at any time through passage of an
additional resolution.
Assigned - Assigned fund balances comprise amounts intended to be used by the government for specific purposes, but are neither restricted nor
committed. Intent is expressed when the City council approves which resources should be assigned to expenditures of particular purposes during the
adoption of the annual budget. The City Manager uses that information to determine whether those resources should be classified as assigned or
unassigned for presentation in the City’s fund financial statements.
Unassigned - Unassigned fund balance is a residual (surplus) classification used for the General Fund only and includes amounts not contained in the
other classifications. Unassigned amounts in the General Fund are technically available for any purpose. If a governmental fund, other than the General
Fund, has a fund balance deficit, it will be reported as a negative amount in the unassigned classification in that fund.
Spending Policy
Government-Wide Financial Statements and the Proprietary Fund Financial Statements
When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City's policy is to apply restricted net assets
first.
Governmental Fund Financial Statements
When expenditures are incurred for purposes for which all restricted, committed, assigned and unassigned fund balances are available, the City's policy is
to apply in the following order, except for instances wherein an ordinance specifies the source:
61
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
O.
Fund Balances, (Continued)




P.
Restricted
Committed
Assigned
Unassigned
Property Taxes
Under California law, property taxes are assessed and collected by the counties on up to 1% of assessed property value, plus other increases approved by
the voters. Property taxes collected are pooled and then allocated to the cities based on complex formulas.
January 1
June 30
November 1 and February 1
December 10 and April 10
November 20, 2012
December 20, 2012
January 18, 2013
February 20, 2013
March 20, 2013
April 19, 2013
May 20, 2013
June 20, 2013
July 19, 2013
August 20, 2013
Lien Date
Levy Date
Due Dates
Collection Date
Unsecured, redemptions, and SB813 taxes
Homeowners’ exemption, secured, and SB813 taxes
Homeowners’ exemption, secured, and SB813 taxes
Redemptions, secured, and SB813 taxes
Unsecured and SB813 taxes
Secured and SB813 taxes
Redemptions, homeowners’ exemption, secured, and
SB813 taxes
Homeowners’ exemption and SB813 taxes
Secured and SB813 taxes
Secured, redemptions, unsecured, and SB813 taxes
62
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)
Q.
Use of Estimates
The preparation of the basic financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In
addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.
R.
New GASB Pronouncement
Beginning with the current fiscal year, the City implemented GASBS No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources,
and Net Position. This statement is designed to improve financial reporting by standardizing the presentation of deferred outflows of resources and deferred
inflows of resources and their effects on the government’s net position.
Deferred outflows of resources are transactions that result in the consumption of net assets in one period that are applicable to future periods and are not
considered assets as described by the statement. Deferred outflows of resources are required to be presented separately after assets on the statement of net
position.
Deferred inflows of resources are transactions that result in the acquisition of net assets in one period that are applicable to future periods and are not
considered to be liabilities as described by the statement. Deferred outflows of resources are required to be presented separately after liabilities on the
statement of net position.
63
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
2.
STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A.
Excess of expenditures over appropriations in individual funds was as follows:
Fund
Appropriations
Expenditures
$
$
Excess
Major Funds:
General Fund:
Public works
5,200,733
5,236,471
$
(35,738)
Public Financing Authority Debt Service:
Principal retirement
76,812
1,380,000
(1,303,188)
Interest and fiscal charges
64,303
270,903
(206,600)
1,262,243
1,284,698
(22,455)
1,764
28,393
(26,629)
17,060
17,195
(135)
-
5,410
(5,410)
1,209,382
(753,207)
Non-Major Funds:
Proposition A Special Revenue:
Transfers out
Proposition C Special Revenue:
Housing and community development
Disaster Recovery Special Revenue:
Public safety
Subdivision Park Trust Special Revenue:
Housing and community development
Capital Improvement Projects Capital Projects:
Transfers out
B.
456,175
Deficit Fund Balance
The following funds had a deficit balance as of June 30, 2013:
Major Funds:
Other Intergovernmental Grants
Non-Major Funds:
Street Landscaping and Lighting District
Local Transportation Article 3
Community Development Block Grant
Disaster Recovery
(1,044,377)
(5,959)
(176)
(197,515)
(3,644)
The deficit fund balances are expected to be recovered through grant and other revenues and inter-fund transfers.
64
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
3.
CASH AND INVESTMENTS
Cash and investments are presented on the Statement of Net Position as follows at June 30, 2013:
Cash and investments
Restricted cash and investments
with fiscal agents
Total
Government-Wide Statement of Net Position
BusinessGovernmental
Type
Activities
Activities
Total
$
55,257,249 $ 23,037,950 $
78,295,199
$
1,642,889
56,900,138
4,099,468
$ 27,137,418
$
Fiduciary Funds
Statement of
Net Position
$
1,730,549
5,742,357
84,037,556
$
1,730,549
Cash, cash equivalents, and investments consisted of the following at June 30, 2013:
Cash and cash equivalents:
Petty cash
$
Demand deposits - City
17,050
8,703,319
Demand deposits - Successor Agency
988,914
Total cash and cash equivalents
9,709,283
Investments:
Local Agency Investment Fund (LAIF) - City
30,263,190
Local Agency Investment Fund (LAIF) - Successor Agency
30,692
Time deposits
250,000
Negotiable certificates of deposit
3,468,588
Corporate Bonds
17,686,935
US Government Securities
18,617,060
Total investments
70,316,465
Total cash and investments
80,025,748
Cash and investments with fiscal agent
Total
5,742,357
$
65
85,768,105
$
Total
80,025,748
$
5,742,357
85,768,105
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
3.
CASH AND INVESTMENTS, (Continued)
A.
Cash Deposits
The carrying amounts of the City's cash deposits were $8,703,463 at June 30, 2013. Bank balances at June 30, 2013, were $8,880,421 which were fully insured
or collateralized with securities held by the pledging financial institutions in the City's name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as
collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a
general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.
The fair value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by
pledging first trust deed mortgage notes having a value of 150% of the City's total cash deposits. The City may waive collateral requirements for cash
deposits which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization
requirements.
The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond
indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end
cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.
B.
Investments
Under the provisions of the City's investment policy, and in accordance with California Government Code, the following investments are authorized:







United States Treasury Bills, Notes and Bonds
Obligations issued by the Federal Government
Bankers' Acceptances with a maturity of 180 days or less
Time Certificates of Deposits
Negotiable Certificates of Deposit
Commercial Paper with a maturity of 270 days or less
Local Agency Investment Fund (LAIF)
66
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
3.
CASH AND INVESTMENTS, (Continued)
B.
Investments, (Continued)





Medium-Term Notes (5 year maturity or less) of domestic Corporations or Depository Institutions
Mutual Funds
Guaranteed Investment Contracts not to exceed $5 million annually
Certificate of Deposit Placement Services
Collateralized Bank Deposits
The City investment policy applies to all financial assets, investment activities and debt issues of the City (including funds which are invested by trustees
appointed under debt trust indentures, with direction from the City Treasurer).
The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of
California. The City's investments with LAIF at June 30, 2013, include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities:
Structured Notes Debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity)
depend upon one or more indices and/ or that have embedded forwards or options.
Asset-Backed Securities Generally mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as
principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.
As of June 30, 2013, the City had $30,263,190 invested in LAIF, which had invested 1.96% of the pool investment funds in Structured Notes and AssetBacked Securities. The LAIF fair value factor of 1.000273207 was used to calculate the fair value of the investments in LAIF.
C.
Deposit and Investment Risk
Credit Risk
The City's investment policy limits investments in medium-term notes (MTN's) to those rated "AA" or higher by Standard and Poor's (S&P) or by Moody's.
As of June 30, 2013, all MTN's were rated "A" or higher by Moody's. As of June 30, 2013, the City's Federal Agency investments were rated "Aaa" by
Moody's and S&P. All securities were investment grade and were in accordance with State and City law. Investments in U.S. government securities are not
considered to have credit risk; therefore, their credit quality is not disclosed. As of June 30, 2013, the City's investments in external investment pools are
unrated.
67
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
3.
CASH AND INVESTMENTS, (Continued)
C.
Deposit and Investment Risk, (Continued)
Custodial Credit Risk
The 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
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 to a transaction, a government will not be able to recover the value of investment or collateral securities
that are in the possession of an outside party.
As of June 30, 2013, none of the City's deposits or investments was exposed to custodial credit risk.
Concentration of Credit Risk
The City's investment policy imposes restrictions on the maximum percentage it can invest in a Single type of investment. Investments in Federal Agencies
have the implied guarantee of the United States government. While all the City's investments are in compliance with the City's investment policy as of June
30, 2013, in accordance with GASB Statement No. 40, if a City has invested more than 5% of its total investments in any one issuer, they are exposed to
concentration of credit risk.
The City has invested more than 5% of the total investment value with the following issuers:
% of Total
Federal National Mortgage Association
$
8,830,400
4,909,390
7%
$
13,739,790
20%
Federal Home Loan Mortgage Corp.
68
Investments
13%
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
3.
CASH AND INVESTMENTS, (Continued)
C.
Deposit and Investment Risk, (Continued)
Interest Rate Risk
The City's investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The
City's investment policy states that at least 50% of the City's portfolio shall mature in three years or less; and at least 25% in one year or less. The only
exception to these maturity limits shall be the investment of the gross proceeds of tax exempt bonds. The City has elected to use the segmented time
distribution method of disclosure for its interest rate risk. As of June 30, 2013, the City had the following investments and remaining maturities:
Investment Maturities
Investment Types
External Investment Pools Local Agency Investment Fund
Time deposits
Negotiable certifiate of deposits
Federal Agencies
Federal Farm Credit Bank
Federal Home Loan Bank
Federal Home Loan Mortgage Corp.
Federal National Mortgage Assoc.
Corporate Bonds
Total Investments
4.
Up to 1 year
$
$
1 to 2 years
30,293,882
1,003,210
31,297,092
$
$
250,000
1,247,728
2,590,205
4,087,933
2 to 3 years
$
$
498,893
5,147,010
5,645,903
3 to 5 years
$
$
Fair value
1,721,967
1,957,560
2,919,710
4,909,390
8,830,400
8,946,510
29,285,537
$
$
30,293,882
250,000
3,468,588
1,957,560
2,919,710
4,909,390
8,830,400
17,686,935
70,316,465
RECEIVABLES
The following is a summary of receivables net of allowances for uncollectible amounts at June 30, 2013:
Accounts receivable
Interest receivable
Taxes receivable
Loans receivable
Total
$
$
Government-Wide
Statement of Net Position
Governmental
Business-Type
Activities
Activities
1,230,402 $
578,024
258,860
58,928
3,871,288
4,381,492
160,792
9,742,042 $
797,744
69
Fiduciary
Funds
Statement of
Net Position
$
125,349
521
$
125,870
$
$
Total
1,933,775
318,309
3,871,288
4,542,284
10,665,656
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
4.
RECEIVABLES, (Continued)
A.
Fund Financial Statements
At June 30, 2013, the Fund Financial Statements show the following receivables:
Accounts Receivable
Accounts receivable consisted of amounts accrued in separate funds in the ordinary course of operations. The total amount of accounts receivable for each
major fund and non-major fund in the aggregate as of June 30, 2013, was as follows:
Governmental Funds:
General Fund
$
Other Governmental Grants - Special Revenue Fund
954,976
125,000
Public Financing Authority - Debt Service Fund
14,501
Non-Major Funds
121,204
Total Governmental Funds
1,215,681
Proprietary Funds:
Harbor Tidelands - Enterprise Fund
220,582
Harbor Uplands - Enterprise Fund
155,827
Wastewater Fund - Enterprise Fund
60,742
Solid Waste - Enterprise Fund
98,340
Transit - Enterprise Fund
42,533
Internal Service Funds
14,721
Total Proprietary Funds
592,745
Fiduciary Funds
Agency Funds
5,469
Redevelopment Obligation Retirement Fund
119,880
Total Fiduciary
125,349
Total Accounts Receivable
$
70
1,933,775
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
4.
RECEIVABLES, (Continued)
B.
Interest Receivable
Interest receivable consists of interest from investments pooled by the City and is distributed among the funds according to their ending cash balances. The
interest receivable as of June 30, 2013, was as follows:
Governmental Funds:
General Fund
$
Other Governmental Grants - Special Revenue Fund
221,851
1,148
Public Financing Authority - Debt Service Fund
99
Non-Major Funds
35,762
Total Governmental Funds
258,860
Proprietary Funds:
Harbor Tidelands - Enterprise Fund
48,187
Harbor Uplands - Enterprise Fund
7,959
Transit - Enterprise Fund
2,782
Total Proprietary Funds
58,928
Fiduciary Funds
Agency Funds
502
Redevelopment Obligation Retirement Fund
19
Total Fiduciary Funds
521
$
Total
71
318,309
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
4.
RECEIVABLES, (Continued)
C.
Taxes Receivable
At June 30, 2013, the City had the following taxes receivable:
Governmental Funds
General
Fund
Type of Taxes:
Property Taxes
$
547,633
Sales Taxes
1,269,600
Transient Occupancy Taxes
358,084
Utility Users Taxes
587,134
Transfer Taxes
160,479
Public Safety Augmentation Fund Taxes
110,493
Triple Flip
837,865
Total taxes
D.
$
3,871,288
Loans Receivable
At June 30, 2013, the City had the following loans receivable:
Proprietary Funds
Governmental Funds
Non-Major
Home Rehabilitation Loans
$
Landlord Program
Senior Housing Program
Computer Program
Harbor Area Business Loans
Total
$
Harbor
General
Governmental
Tidelands
Fund
Funds
Enterprise Fund
-
$
958,622
-
476,563
-
2,924,877
21,430
-
-
-
21,430
$
4,360,062
72
$
-
Total
$
476,563
-
2,924,877
-
21,430
160,792
$
958,622
-
160,792
160,792
$
4,542,284
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
4.
RECEIVABLES, (Continued)
D.
Loans Receivable, (Continued)
Home Rehabilitation Loans
At June 30, 2013, the City was owed, in its Low and Moderate Income Housing Asset Special Revenue Fund, $958,622 for various home rehabilitation loans
made by the City. The terms of repayment vary. Because the notes do not meet the City's availability criteria for revenue recognition, the City has deferred
the revenue related to these loans in the government funds. Revenue is recognized in the year of repayment. All loans are secured by trust deeds.
Housing Assistance Loans
At June 30, 2013, the City was owed, in its Community Development Block Grant Special Revenue Fund, $476,563 for various housing assistance loans
made by the City. The terms of repayment vary. Because the notes do not meet the City's availability criteria for revenue recognition, the City has deferred
the revenue related to these loans. Revenue is recognized in the year of repayment. All loans are secured by trust deeds.
Computer Loan Program
The City has a computer loan program for employees to purchase computers. The maximum loan amount per employee is $1,500 with a repayment term
maximum of two years. Repayments from the employees are made through payroll deductions. At June 30, 2013, the loan receivable balance was $21,430.
Senior Housing Program
On June 21, 1995, the Agency loaned $2,200,000 to the Corporate Fund for Housing (a California non-profit public benefit corporation), the McCandless
senior housing complex. The loan term is for 45 years and bears interest at 2% per annum. Any portion of the Agency loan remaining unpaid upon the 45th
anniversary of completion shall be forgiven. Repayments will be made from residual receipts of the housing complex. The loan is secured by the Agency
Deed of Trust. At June 30, 2013, the loan receivable included accrued interest of $724,877.
73
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
4.
RECEIVABLES, (Continued)
D.
Loans Receivable, (Continued)
Harbor Area Business Loans
At June 30, 2013, the City's Harbor Tidelands Enterprise Fund was owed $160,792 for repairs made on behalf of a harbor area business subsequent to the
storms of 1988. The terms of the twenty-eight year $488,871 contract call for interest at 1.6% per annum. Principal and accrued interest are payable annually.
Included in the $160,792, the City's Harbor Tidelands Enterprise Fund was owed $45,641 for repairs made on behalf of a harbor area business subsequent to
the storms of 1988. The terms of the twenty-seven year $104,844 contract call for interest at 4.7% per annum. Principal and accrued interest are payable
annually.
5.
INTERFUND TRANSACTIONS
A.
Government-Wide Financial Statements
Internal Balances
At June 30, 2013, the City had the following internal receivables and payables for covering cash shortfalls:
Internal Balances
Receivable
Business-Type
Activities
Internal Balances Payable
Governmental Activities
$
74
236,933
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
5.
INTERFUND TRANSACTIONS, (Continued)
Transfers
The City had the following transfers as of June 30, 2013:
Transfers In
Business-Type
Activities
Transfers Out
Governmental Activities
B.
$
1,202,508
Fund Financial Statements
Due to/from Other Funds
The City had the following due to/from other funds as of June 30, 2013:
Due from Other Funds
Harbor
General
Fund
Due to Other Funds
Public Financing Authority
$
30,189
Internal Service Funds
Non-Major Governmental Funds
Total
$
Tidelands
Enterprise Fund
$
236,933
Total
$
267,122
20,993
-
20,993
274,817
-
274,817
325,999
$
236,933
$
562,932
The General Fund has amounts due from the Public Financing Authority Fund of $30,189 for reimbursement of expenditures made on the Public Financing
Authority’s behalf, $20,993 from Internal Services funds for deficit cash reimbursement, and from the Non-Major Governmental Funds of $88,740 for
temporary cash deficits and $191,077 for reimbursement of expenditures made on the Housing Authority’s behalf.
The Harbor Tidelands Enterprise Fund has a due from the Public Financing Authority Fund of $236,933 for Kincaid's Restaurant rental income in excess of
Financing Authority obligations passed through to the Harbor Tidelands Fund.
75
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
5.
INTERFUND TRANSACTIONS, (Continued)
B.
Fund Financial Statements, (Continued)
Advances to Other Funds
The City had the following long-term advance to other funds as of June 30, 2013:
Advance to Other
Funds
Advance from Other Funds
Public Financing Authority
General Fund
$
1,195,660
During the 2009-10 fiscal year, the City made a loan to the Authority for the internal refinancing of the remaining loan principal to repay First California
Bank for the South Bay Bank loan. As of June 30, 2013, the amount owed on the loan was $1,195,660.
Advances to Other Government
During the previous fiscal years, the Financing Authority made loans to the Redevelopment Agency for various bonds. However, due to the dissolution of
the Agency in the current year, the balance of the loans previously made to the redevelopment agency was transferred to the Successor Agency of the
former redevelopment agency, pursuant to ABx1 26 and AB 1484. Therefore, the balance was moved in from an Advance to Other Funds to a Due from
Other Governments in the Public Financing Authority Debt Service Fund. 2001 Pier Refinancing Bond was paid off in the fiscal year 2012-13. The Agency's
remaining balances as of June 30, 2013 was $6,280,000.
During the previous fiscal years, the City made loans to the Agency. These loans bear interest at rates up to 12% per annum depending upon when the loan
was initiated. The City may demand payment of all or a portion of the principal balance at any time as funds become available; however, such demands are
not anticipated within the next fiscal year. As of June 30, 2013, loans and accrued unpaid interest owed on those loans were $7,903,737.
76
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
5.
INTERFUND TRANSACTIONS, (Continued)
B.
Fund Financial Statements, (Continued)
Transfers
The City had the following transfers as of June 30, 2013:
Transfers In
Other
Transfers Out
General Fund
$
Internal
General
Intergovernmental
Non-Major
Enterprise
Fund
Grants
Funds
Funds
-
$
-
$
1,943,237
$
Service
Funds
-
$
-
Total
$
1,943,237
Enterprise Funds:
Harbor Tidelands
82,190
Non-Major Governmental Funds
Internal Service Funds
Total
-
456,175
301,500
$
839,865
-
440,600
$
440,600
-
$
1,943,237
-
1,284,698
$
1,284,698
82,190
312,607
2,494,080
134,239
$
446,846
435,739
$
4,955,246
The General Fund transferred out a total of $1,943,237 to various funds consisting of $1,076,710 to cover expenditures in the Street Landscaping and
Lighting District Non-Major Governmental Fund, $26,527 to Measure R Fund for prior year interest allocation, and $840,000 to Capital Projects Fund for the
new police station pre-development work.
Internal Service Funds transferred $301,500 to the General Fund for Fire Department overtime.
Transfers between the Harbor Tidelands Enterprise Fund and the General Fund of $82,190 were for the property tax in lieu fee.
Transfers from the Non-Major Governmental Funds in the amount of $2,494,080 consisted of a $1,284,698 transfer of a transit subsidy to the Transit Fund,
$456,175 to the General Fund for March, 2013 election and review of AES new power plant application, $440,600 from Capital Projects Fund to Other
Governmental Revenue fund for correction of prior year Proposition 1B revenue, and $312,607 transfer to Internal Service Fund for correction of prior year
revenue from sale of Land Rover property.
77
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
6.
CAPITAL ASSETS
The City elected to use the "Modified Approach" as defined by GASB Statement No. 34 for infrastructure reporting for its street pavement system. As a
result, no accumulated depreciation or depreciation expense has been recorded for this system. A more detailed discussion of the "Modified Approach" is
presented in the Required Supplementary Information section of this report. All other capital assets including other infrastructure systems were reported
using the Basic Approach whereby accumulated depreciation and depreciation expense have been recorded.
A.
Government-Wide Financial Statements
At June 30, 2013, the City's capital assets consisted of the following:
Governmental
Business-Type
Activities
Activities
Total
Non-depreciable assets:
Land
$
16,522,947
$
11,323,255
$
5,717,382
Work in progress
1,003,491
-
1,003,491
54,054,036
-
54,054,036
Infrastructure - streets
Total non-depreciable assets
684,062
27,846,202
Construction in progress
6,401,444
77,297,856
12,007,317
89,305,173
45,979,533
30,708,383
76,687,916
8,179,300
648,679
8,827,979
13,264,780
3,688,786
16,953,566
2,052,274
25,487,615
27,539,889
Depreciable assets:
Buildings and improvements
Furniture and equipment
Automotive equipment
Leased equipment
Infrastructure
72,930,070
Total depreciable assets
-
72,930,070
142,405,957
60,533,463
202,939,420
(32,248,521)
Less accumulated depreciation for:
(16,982,445)
(15,266,076)
Furniture and equipment
Buildings and improvements
(6,554,869)
(645,613)
(7,200,482)
Automotive equipment
(7,382,830)
(2,055,975)
(9,438,805)
(721,477)
(10,769,976)
Leased equipment
Infrastructure
(45,081,415)
Total accumulated depreciation
Total depreciable assets, net
Total capital assets, net
$
(45,081,415)
(76,723,036)
(28,737,640)
(105,460,676)
65,682,921
31,795,823
97,478,744
142,980,777
78
(11,491,453)
-
$
43,803,140
$
186,783,917
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
6.
CAPITAL ASSETS, (Continued)
A.
Government-Wide Financial Statements, (Continued)
The following is a summary of changes in the capital assets for governmental activities during the fiscal year:
Balance at
Balance at
July 1, 2012
Additions
Deletions
Reclassifications
June 30, 2013
Non-depreciable assets:
Land
$
16,522,947
$
-
$
$
$
(3,680,611)
16,522,947
Work in progress
1,003,491
-
-
-
1,003,491
54,054,036
-
-
-
54,054,036
Total non-depreciable assets
-
-
7,230,335
Infrastructure - streets
2,167,658
-
Construction in progress
-
(3,680,611)
5,717,382
78,810,809
2,167,658
77,297,856
45,219,249
93,414
-
8,146,237
48,063
(15,000)
-
8,179,300
11,180,009
2,482,376
(397,605)
-
13,264,780
Depreciable assets:
Buildings and improvements
Furniture and equipment
Automotive equipment
Leased equipment
Infrastructure
Total depreciable assets
666,870
-
45,979,533
1,593,631
458,643
-
72,353,998
177,269
(69,434)
468,237
72,930,070
2,052,274
138,493,124
3,259,765
(482,039)
1,135,107
142,405,957
Less accumulated depreciation for:
Buildings and improvements
(15,991,540)
(990,905)
-
-
(16,982,445)
Furniture and equipment
(6,229,495)
(340,374)
15,000
-
(6,554,869)
Automotive equipment
(6,894,101)
(886,334)
397,605
-
(7,382,830)
Leased equipment
(721,477)
Infrastructure
Total accumulated depreciation
Total depreciable assets, net
Governmental activities capital assets, net
-
-
(721,477)
(43,533,553)
(1,617,296)
-
69,434
-
(45,081,415)
(73,370,166)
(3,834,909)
482,039
-
(76,723,036)
65,122,958
$
143,933,767
(575,144)
$
* Capital asset contribution from governmental fund to proprietary fund
79
1,592,514
$
-
1,135,107
$
(2,545,504) * $
65,682,921
142,980,777
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
6.
CAPITAL ASSETS, (Continued)
A.
Government-Wide Financial Statements, (Continued)
Depreciation expense was charged to functions/programs of governmental activities for the fiscal year ended June 30, 2013 as follows:
Governmental Activities:
General government
$
156,723
Public safety
193,266
Public works
2,202,484
Culture and leisure services
342,102
Housing and community development
2,546
Internal Service Funds:
Vehicle Replacement
785,462
Building Occupancy
2,280
Information Technology
78,775
Emergency Communications
71,271
Total depreciation expense
80
$
3,834,909
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
6.
CAPITAL ASSETS, (Continued)
A.
Government-Wide Financial Statements, (Continued)
The following is a summary of changes in the capital assets for business-type activities for the year ended June 30, 2013:
Balance at
Balance at
July 1, 2012
Additions
Reclassifications
June 30, 2013
Nondepreciable assets:
Land
$
11,323,255
Construction in progress
$
-
Total non-depreciable
-
$
-
$
11,323,255
665,306
18,756
684,062
11,323,255
665,306
18,756
12,007,317
28,006,415
176,335
2,525,633
30,708,383
Depreciable assets:
Buildings and improvements
Furniture and equipment
648,679
Automotive equipment
Infrastructure
Total depreciable assets
-
-
648,679
-
3,688,786
3,402,779
286,007
24,324,980
1,161,520
1,115
25,487,615
56,382,853
1,623,862
2,526,748
60,533,463
Less accumulated depreciation:
Buildings and improvements
Furniture and equipment
Automotive equipment
Infrastructure
Total accumulated depreciation
Total depreciable assets, net
Business-type activities capital assets, net
(14,650,139)
(615,937)
-
(643,126)
(2,487)
-
(645,613)
(1,805,542)
(250,433)
-
(2,055,975)
(10,447,857)
(322,119)
-
(10,769,976)
(27,546,664)
(1,190,976)
28,836,189
$
40,159,444
* Capital asset contribution from governmental fund to proprietary fund
81
(28,737,640)
432,886
$
1,098,192
(15,266,076)
2,526,748
$
2,545,504
31,795,823
* $
43,803,140
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
6.
CAPITAL ASSETS, (Continued)
Depreciation expense for business-type activities for the fiscal year ended June 30, 2013 was charged as follows:
Harbor Tidelands
$
468,007
Harbor Uplands
273,886
Wastewater
202,589
Solid Waste
16,224
Transit
230,270
$
Total depreciation expense
B.
1,190,976
Fund Financial Statements
In the governmental fund financial statements, capital assets are not presented. Consequently, capital assets are a reconciling item and are shown in the
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position.
7.
COMPENSATED ABSENCES PAYABLE
The following is a summary of compensated absences payable transactions for the year ended June 30, 2013:
Classification
Balance
July 1, 2012
Additions
Deletions
Amounts
Amounts
Balance
Due Within
Due in More
June 30, 2013
One Year
than One Year
Governmental Activities:
Compensated absences payable
$
2,672,555
$
2,148,334
$
(2,360,156)
$
2,460,733
$
162,323
$
2,298,410
$
353,349
3,025,904
$
360,430
2,508,764
$
(335,860)
(2,696,016)
$
377,919
2,838,652
$
24,934
187,257
$
352,985
2,651,395
Business-Type Activities
Compensated absences payable
Total
The long-term portion of compensated absences payable has been accrued for the Governmental Activities on the Government-Wide Financial Statement.
Also, compensated absences are generally liquidated by the General Fund. There is no fixed payment schedule to pay these liabilities.
82
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
8.
LONG-TERM DEBT
The following is a summary of long-term debt transactions for the year ended June 30, 2013:
Balance
July 1, 2012
Additions
Deletions
Amounts
Amounts
Balance
Due Within
Due in More
June 30, 2013
One Year
than One Year
Governmental Activities:
PFA 2001 Refunding Revenue Bonds
$
PFA 2008 Refunding Revenue Bonds
Unamortized bond premium
County Deferral Loans
Capital Leases
Total governmental activities
740,000
$
-
$
(740,000)
$
-
$
-
$
-
5,485,000
-
(640,000)
4,845,000
665,000
4,180,000
132,917
-
(18,989)
113,928
18,989
94,939
-
-
$
883,936
7,241,853
$
$
8,735,000
$
458,644
458,644
$
(458,488)
(1,857,477)
$
(235,000)
$
884,092
5,843,020
$
8,500,000
-
-
$
439,198
1,123,187
$
444,894
4,719,833
$
245,000
$
8,255,000
Business-Type Activities:
Wastewater Revenue Bond 2004, Series A
Unamortized bond discount
-
(52,231)
-
2,374
(49,857)
(2,374)
(47,483)
852,791
-
(90,917)
761,874
95,009
666,865
Boating and Waterways
Construction Loan 88-21-84
Boating and Waterways
Construction Loan 89-21-147
Total business-type activities
$
2,082,795
11,618,355
-
$
83
$
(192,815)
(516,358)
$
1,889,980
11,101,997
$
201,491
539,126
$
1,688,489
10,562,871
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
8.
LONG-TERM DEBT, (Continued)
Public Financing Authority 2001 Refunding Revenue Bonds
The Financing Authority issued refunding revenue bonds dated November 1, 2001, totaling $2,965,000. The purpose of the bonds was to fund a loan by the
Financing Authority to the Agency pursuant to a loan agreement (Loan), dated November 1, 2001, by and between the Financing Authority and Agency.
The proceeds of the Loan were used to provide funds to refinance certain redevelopment activities of the Agency within or for the benefit of the Agency’s
Harbor Center Redevelopment Project Area (Project Area) and refund the Agency’s outstanding Tax Allocation and Revenue Bonds issued in 1993. A letter
of credit (LC) was required as part of the financing agreement, and in 2001, Allied Irish Bank (AIB) issued a LC for the full amount.
In 2009, modified policies of AIB prohibited it from renewing the LC. Therefore, the Agency replaced the original LC with a three-year LC provided by
Bank of the West (BOW), under the terms of a LC dated February 1, 2009. Collateral for this LC took the form of a deposit of $1 million in a money
market/demand account with BOW for a corresponding three-year term commencing on March 2, 2009, and maturing March 2, 2012.
As described in Note 18, Dissolution of California Redevelopment Agencies, the State mandated dissolution of all redevelopment agencies effective
February 1, 2012. With this, BOW understandably would not renew the LC with the now dissolved Agency. Also, the Successor Agency was not able to
renew or replace the terms of the LC as the provisions of AB X1 26 were unclear as to the power of the Successor Agency to do so. Pursuant to the terms of
the LC and the 2001 bonds, BOW drew on the full amount of the LC and purchased the outstanding 2001 bonds. BOW became the owner of the 2001 bonds
and required interest-only payments of 10.00% until the bonds could be refinanced. The 2001 Revenue Bond were paid off as of June 30, 2013.
Public Financing Authority 2008 Refunding Revenue Bonds
The Financing Authority issued refunding revenue bonds dated January 2008, totaling $7,645,000. The proceeds of the bonds were used to refund the
Financing Authority's 1996 Revenue Bonds and pay the costs of issuance of the bonds. As of June 30, 2013, the balance outstanding was $4,845,000, with an
unamortized premium of $113,928.
The Bonds shall bear interest at rates between 3.00% and 4.00% and is payable on each January 1 and July 1, commencing July 1, 2008. The bonds are
payable from a pledge of revenues consisting primarily of payments to be made by the City of Redondo Beach under a lease agreement. Principal is due
annually beginning on July 1, 2008, in amounts ranging from $385,000 to $805,000. The bonds mature on July 1, 2019. The bonds are subject to optional and
mandatory early redemption provisions.
84
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
8.
LONG-TERM DEBT, (Continued)
The annual requirements to amortize the outstanding bond indebtedness as of June 30, 2013, including interest, are as follows:
Year Ending
June 30,
2014
Principal
$
Interest
665,000
$
Total
193,800
$
858,800
2015
695,000
167,200
862,200
2016
715,000
139,400
854,400
2017
745,000
110,800
855,800
2018
775,000
81,000
856,000
1,250,000
67,800
1,317,800
2019-2020
Total
$
4,845,000
$
760,000
$
5,605,000
The following is a summary of the 2008 Refunding Revenue unamortized premium outstanding at June 30, 2013:
Balance
Balance
July 1, 2012
$
132,917
Additions
$
Deletions
-
$
85
(18,989)
June 30, 2013
$
113,928
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
8.
LONG-TERM DEBT, (Continued)
Capital Leases
The City has entered into various lease purchase agreements for equipment. These leases have been classified as capital leases. The related assets have been
capitalized in the government-wide financial statements at the initial present value of the lease payments. The balance outstanding at June 30, 2013, was
$884,092.
The total leased assets by major asset class consisted of the following:
June 30, 2013
Equipment under capitalized lease, at cost
2,052,274
Accumulated depreciation
(721,477)
Equipment under capitalized lease, net
$
The annual debt service requirements outstanding at June 30, 2013 were as follows:
For the Years
Total
Ending June 30,
Payments
2014
$
2015
439,198
256,756
2016
92,293
2017
94,866
2018
$
Total
86
979
884,092
1,330,797
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
8.
LONG-TERM DEBT, (Continued)
Wastewater Revenue Bonds, 2004, Series A
The City issued revenue bonds dated May 12, 2004, totaling $10,335,000. The purpose of the bonds was to finance certain improvements and related
facilities that constitute part of the Wastewater Enterprise Fund. The bond proceeds used are capital related. The serial bonds in the amount of $5,230,000
mature through May 1, 2024, and bear a variable interest rate ranging from 2.50% to 5.00% per annum. Term bonds in the amount of $5,105,000 mature
through May 1, 2034, and bear interest at the rate of 5.00%. The serial bonds maturing on or after May 1, 2015, are subject to optional redemption provisions.
The term bonds are subject to optional and mandatory redemption provisions. The bonds are payable solely from and secured by a pledge of and lien upon
the net revenues of the Wastewater Enterprise Fund. As of June 30, 2013, the balance outstanding was $8,500,000, with an unamortized bond discount of
$49,857. Principal and interest paid for the current year and total revenues for the Wastewater Fund were $235,000, $442,050, and $3,764,711, respectively.
The annual requirements to amortize the outstanding bond indebtedness as of June 30, 2013, including interest, are as follows:
Year Ending
June 30,
2014
Principal
$
Interest
245,000
$
Total
417,269
$
662,269
2015
255,000
406,856
661,856
2016
265,000
395,700
660,700
2017
275,000
383,775
658,775
2018
290,000
370,713
660,713
1,680,000
1,630,137
3,310,137
2024-2028
2,130,000
1,170,000
3,300,000
2029-2033
2,730,000
580,000
3,310,000
2019-2023
2034
Total
630,000
$
31,500
8,500,000
$
87
5,385,950
661,500
$
13,885,950
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
8.
LONG-TERM DEBT, (Continued)
The following is a summary of the 2004 Revenue Bond Series A unamortized discount outstanding at June 30, 2013:
Balance
Balance
July 1, 2012
$
(52,231)
Additions
$
Deletions
-
$
June 30, 2013
2,374
$
(49,857)
Boating and Waterways Construction Loan 88-21-84
On July 25, 1988, the City entered into a $2,000,000 loan agreement with the California Department of Boating and Waterways (Contract No. 88-21- 84).
Proceeds of the loan were used to finance harbor dredging, storm recovery repairs and hazard-mitigation projects. The loan bears interest at 4.5%. As of
June 30, 2013, the balance outstanding was $761,874.
The annual debt service requirements for the Boating and Waterways Construction indebtedness outstanding at June 30, 2013, are as follows:
Year Ending
June 30,
2014
Principal
$
2015
Interest
95,009
$
99,284
Total
34,284
$
30,009
129,293
129,293
2016
103,752
25,541
129,293
2017
108,421
20,872
129,293
2018
113,300
15,993
129,293
2019-2021
242,108
16,462
Total
$
761,874
$
88
143,161
258,570
$
905,035
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
8.
LONG-TERM DEBT, (Continued)
Boating and Waterways Construction Loan 89-21-147
In 1989, the City entered into a $4,500,000 construction loan agreement with the California Department of Boating and Waterways (Contract No. 89- 21-147)
at an interest rate of 4.5%. Proceeds of the loan were used to finance the City's cost-sharing obligations in connection with the Federal breakwater
improvement program, storm repairs and hazard-mitigation projects. As of June 30, 2013, the balance outstanding was $1,889,980.
The annual debt service requirements for the Boating and Waterways Construction indebtedness outstanding at June 30, 2013, are as follows:
Year Ending
June 30,
2014
Principal
$
Interest
201,491
$
Total
85,049
$
286,540
2015
210,558
75,982
286,540
2016
220,033
66,507
286,540
2017
229,935
56,605
286,540
2018
240,282
46,258
286,540
2019-2021
Total
787,681
$
71,931
1,889,980
$
89
402,332
859,612
$
2,292,312
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
9.
NON-CITY OBLIGATIONS
The following bond issues are not reported in the City's financial statements because these are special obligations payable solely from and secured by
specific revenue sources described in the resolutions and official statements of the respective issues. Neither the faith and credit nor the taxing power of the
City, the Agency, the State of California or any political subdivision thereof, is pledged for payment of these bonds.
Original
Outstanding
Amount
June 30, 2013
A. Multifamily Housing Revenue Bonds
/Notes Heritage Pointe Project
Series 2004A
$
11,390,000
$
10,890,000
$
6,425,000
$
3,790,196
B. Multifamily Housing Revenue Refunding
Bonds/SEASONS at Redondo Beach
Series 2008A
10.
OPERATING LEASE INCOME
A.
Harbor Tidelands and Uplands Enterprise Operating Leases
The Harbor Tidelands and Harbor Uplands Enterprise Funds were created by to provide small boat harbor facilities to the general public. The Harbor
Tidelands and Harbor Uplands Enterprise Funds operate as landlords, assigning or leasing facilities and land area. Principal sources of income are from
rental of land and facilities.
A major portion of the operating revenue of the Harbor Tidelands and Uplands Enterprise Funds arise from long-term leases of land, pier space, waterways
and other facilities which require the lessees to make substantial investments in leasehold improvements. These leases are accounted for as operating leases.
The total cost of the assets leased was $10,406,895, less accumulated depreciation of $951,746. The balance as of June 30, 2013 was $9,455,149.
90
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
10.
OPERATING LEASE INCOME, (Continued)
A.
Harbor Tidelands and Uplands Enterprise Operating Leases, (Continued)
The following is a schedule, by year, of minimum future lease rentals on non-cancellable operating leases as of June 30, 2013:
Year Ending
Minimum Future
June 30,
Lease Rentals
2014
$
5,466,956
2015
5,713,956
2016
5,623,956
2017
5,623,956
2018
3,608,906
2019-2023
16,753,781
2024-2028
14,488,537
2029-2033
13,548,831
2034-2038
12,836,599
2039-2043
12,933,059
2044-2048
9,978,179
2049-2053
9,822,659
2054-2058
9,822,659
2059-2063
8,382,155
2064-2068
2,807,021
2069
514,767
Totals
$
137,925,977
The above accounts do not include lease rental income based on a percentage of lessee’s gross revenues that may be received under the leases.
91
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
11.
RISK MANAGEMENT
The City is exposed to risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural
disasters; and currently reports all of its risk management activities in its Self-Insurance Program Internal Service Fund.
The City has adopted a self-insurance workers' compensation program, which is administered by a third-party agent, AdminSure. The self-insurance
coverage for each claim is limited to $750,000. Excess coverage of up to $5,000,000 for each claim is provided by the Independent Cities Risk Management
Authority (ICRMA), an insurance pool, in which a consortium of cities has agreed to share risks and losses. As of June 30, 2013, the estimated claims
payable for workers' compensation was $13,827,323, which included claims incurred but not reported (IBNR). The current year's portion of the claims was
$637,563.
For general liability claims, the City is also self-insured up to $500,000 for each occurrence. The self-insurance program is administered by a third-party
agent, AdminSure. Each claim in excess of the self-insured retention of up to $2,000,000 is covered by the ICRMA. There is also excess coverage in the
amount of $18 million.
As of June 30, 2013, the estimated claims payable for general liability was $2,499,971, which included IBNR. The current year's portion was $165,022.
Governmental activities claims and judgments are generally liquidated by the General Fund.
Liability on
June 30, 2013
General Liability
$
Workers' Compensation
2,499,971
13,827,323
Total
$
16,327,294
Settled claims have not exceeded any of the City's coverage amounts in: any of the last three fiscal years and there were no reductions in the City's coverage
during the year.
The estimated claims payable for workers' compensation and general liability is based on estimates provided by the third-party administrator, the City
Attorney, the Risk Management staff, and ICRMA's actuary.
92
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
11.
RISK MANAGEMENT, (Continued)
Changes in the reported liability resulted from the following:
Year Ended
Balance
June 30,
July 01, 2012
2011
$
Additions
13,454,314
$
312,812
Deletions
$
1,137,278
Amounts
Amounts
Balance
Due Within
Due in More
June 30, 2013
One Year
than One Year
$
14,904,404
$
742,843
$
14,161,561
2012
14,904,404
401,768
(477,351)
14,828,821
820,938
14,007,883
2013
14,828,821
608,744
889,729
16,327,294
802,585
15,524,709
Effective July 17, 1990, the City became a member of the Independent Cities Risk Management Authority (ICRMA), a public entity risk pool currently
operating as a common risk management and insurance program for 29 California cities. The City pays an annual premium to the pool for its excess general
liability insurance coverage. The agreement for formation of the ICRMA provides that the pool will be self-sustaining through member premiums. The City
continues to carry insurance from commercial companies for all other risks of loss, including coverage for property, earthquake and flood, automobile,
physical damage and special events.
11.
RISK MANAGEMENT, (Continued)
Condensed Financial Information of the ICRMA
Condensed audited financial information of ICRMA as of June 30, 2012 (most recent information available) is as follows:
Assets
$
Total
64,085,174
Liabilities of member cities
$
28,787,592
Net assets
Total liabilities and net assets
$
35,297,582
64,085,174
Revenues
$
Cost and expenses
19,847,624
18,569,953
Net income
2,507,608
Net assets - July 1, 2011
Net assets - June 30, 2012
$
93
32,789,974
35,297,582
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
12.
EMPLOYEE RETIREMENT PLANS
A.
Pension Plan
Plan Description – The City contributes to the California Public Employees’ Retirement System (PERS), an agent multiple-employer public employee defined
benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and
beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions
and all other requirements are established by State statute and City ordinance. Copies of PERS’ annual financial report may be obtained from their
Executive Office located at 400 P Street, Sacramento, California, 95814. The City has a multiple-tier retirement plan with benefits varying by plan.
Funding Policy – Active plan members are required by State statute to contribute a percentage of their annual covered salary. The following table details the
contribution percentages and the portion of those percentages paid by the City, as employer, on their behalf and for their accounts. The City’s portion
amounted to $2,244,633 for the year ended June 30, 2013.
Pension Plan
Miscellaneous Tier 1
Miscellaneous Tier 2
Miscellaneous Tier 3
Fire Tier 1
Fire Tier 2
Fire Tier 3
Police Tier 1
Police Tier 2
Police Tier 3
Employee
Contribution
Percentage
City
Portion
Employee Portion
7.00%
7.00%
6.50%
9.00%
9.00%
11.25%
9.00%
9.00%
11.25%
7.00%
0.00%
0.00%
9.00%
4.50%
0.00%
9.00%
9.00%
11.25%
0.00%
7.00%
6.50%
0.00%
4.50%
11.25%
0.00%
0.00%
0.00%
[1] Employees hired on or before June 25, 2012
[2] Employees hired after June 25, 2012 and classic members of the PERS system
[3] Employees hired on or after January 1, 2013 and new to the PERS system
94
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
12.
EMPLOYEE RETIREMENT PLANS, (Continued)
B.
Pension Plan, (Continued)
The City is required to contribute for fiscal year 2012-13 at an actuarially determined rate of 14.526% and 40.391% of annual covered payroll for
miscellaneous and safety employees, respectively.
Annual Pension Cost - For 2012-13, the City's annual pension cost of $10,090,495 for PERS was equal to the City's required and actual contributions. The
required contribution was determined as part of the June 30, 2010, actuarial valuation using the entry age normal actuarial cost method. The actuarial
assumptions included (a) 7.75% investment rate of return (net of administrative expenses), (b) projected salary increases ranging from 3.55% to 14.45% for
miscellaneous employees and from 3.55% to 13.15% for safety employees depending on age, service, and type of employment, and (c) 3.25% per year costof-living adjustments. Both (a) and (b) included an inflation component of 3.0%. The actuarial value of PERS assets was determined using techniques that
smooth the effects of short-term volatility in the market value of investments over a three-year period. PERS unfunded actuarial accrued liability (or
surplus) is being amortized as a level percentage of projected payroll on a closed basis. The average remaining amortization period at June 30, 2010, was 21
years for miscellaneous and 30 years for safety employees for prior and current service unfunded liability.
THREE-YEAR TREND INFORMATION FOR PERS
Annual
Fiscal Year
06/30/2011
$
Percentage of
Pension
APC
Net Pension
(APC)
Contributed
Obligation
9,646,142
100%
06/30/2012
10,085,958
100%
-
06/30/2013
10,090,495
100%
-
95
$
-
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
12.
EMPLOYEE RETIREMENT PLANS, (Continued)
A.
Pension Plan, (Continued)
Funding Status as of the Most Recent Actuarial Date:
The amounts reflected herein represent the City's portion as reported by CalPERS.
Safety Plan
(A)
(B)
(C)
(D)
(E)
(F)
Unfunded
Unfunded
Entry Age
(Overfunded)
(Overfunded)
Actuarial
Actuarial
Liability as
Actuarial
Actuarial
Actuarial
Accrued
Funded
Valuation
Asset
Accrued
Liability
Ratio
Covered
Covered Payroll
Date
Value
Liability
(B-A)
(A/B)
Payroll
(C/E)
06/30/2011
$
217,038,991
$
268,946,368
$
51,907,377
80.7%
Percentage of
$
14,954,415
347.1%
Miscellaneous Plan
(A)
(B)
(C)
(D)
(E)
(F)
Unfunded
Unfunded
Entry Age
(Overfunded)
(Overfunded)
Actuarial
Actuarial
Liability as
Actuarial
Actuarial
Actuarial
Accrued
Funded
Valuation
Asset
Accrued
Liability
Ratio
Covered
Covered Payroll
Date
Value
Liability
(B-A)
(A/B)
Payroll
(C/E)
06/30/2011
$
129,874,269
$
148,638,920
$
18,764,651
* Most recent information available
96
87.4%
Percentage of
$
18,657,247
100.6%
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
12.
EMPLOYEE RETIREMENT PLANS, (Continued)
B.
Other Post Employment Benefits
Plan Descriptions and Eligibility. In addition to the pension benefits described above, the City provides certain health insurance benefits, in accordance with
memorandums of understanding, to retired employees through the California Employers' Retiree Benefit Trust (CERBT) Fund, which is an agent multipleemployer plan administered by CaIPERS. The City provides medical insurance for all employees who retire with a minimum of 20 years of full-time public
agency service. The City shall pay the single retiree medical premium rate, for qualified retirees, for a medical insurance plan in which the retiree is enrolled
from among those medical plans provided by the City. These contributions of the City for such medical premiums shall cease on the date the retiree
becomes eligible to enroll in the Federal Medicare program and/or any Medicare supplemental plans. At June 30, 2013, approximately 107 employees are
eligible to receive post-employment benefits.
Funding Policy. The required contribution of the City is based on a percentage of PERSable payroll. For fiscal year 2013, the City contributed $1,354,077 to the
plan.
Annual OPEB Cost and Net OPEB Obligation. The City's annual Other Postemployment Benefit (OPEB) cost (expense) is calculated based on the Annual
Required Contribution (ARC) of the Employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC
represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or
funding excesses) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the
amount actually contributed to the plan, and changes in the City's net OPEB Obligation to the Plan:
Total
Annual required contribution
$
Interest on net OPEB obligation
1,354,000
-
Adjustment to annual required contribution
-
Annual OPEB cost (expense)
1,354,000
Contributions made
(1,354,000)
Increase in net OPEB obligation
-
Net OPEB obligation - beginning of year
-
Net OPEB obligation - end of year
$
97
-
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
12.
EMPLOYEE RETIREMENT PLANS, (Continued)
B.
Other Post Employment Benefits, (Continued)
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 is as follows:
Fiscal
Annual
Year
OPEB
Annual
OPEB Cost
OPEB
Ended
Cost
Contribution
Contributed
Obligation
06/30/2013
$
1,354,000
% of Annual
$
1,354,000
100%
Net
$
-
Funded Status and Funding Progress. As of June 30, 2011, the most recent actuarial valuation date, the plan was 21.1 percent funded. The Actuarial Accrued
Liability for benefits was $20,086,000, and the actuarial value of assets was $4,245,000, resulting in a VAAL of $15,841,000. The actual covered payroll
(annual payroll of active employees covered by the plan) was $30,774,470 and the ratio of VAAL to the covered payroll was 51%.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events
far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend rate. Amounts determined regarding
the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with
past expectations and new estimates are made about the future. The table below shows a one-year analysis of the actuarial value of assets as a percentage of
the actuarial accrual liability and the unfunded actuarial accrued liability as a percentage of the annual covered payroll as of June 30, 2011.
(A)
(B)
(C)
(D)
(E)
(F)
Unfunded
Actuarial
Actuarial
Unfunded
Liability as
Actuarial
Accrued
Actuarial
Actuarial
Asset
Liability
Accrued
Funded
Actual
Covered
Valuation
Value
Entry Age
Liability
Ratio
Covered
Payroll
Date
(A)
(B)
(A-B)
(A/B)
Payroll
(C/E)
06/30/2011
$
4,245,000
$
20,086,000
$
(15,841,000)
98
Percentage of
21.1%
$
30,774,470
-51.47%
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
12.
EMPLOYEE RETIREMENT PLANS, (Continued)
B.
Other Post Employment Benefits, (Continued)
Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit
costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce
the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the
calculations.
In the June 30, 2011 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions include a 7.25% investment rate of return
which is based on the expected return on funds invested by CaIPERS, and an annual healthcare cost trend rate of actual premiums, which is reduced over
eight years to an ultimate rate of 5.0% for 2021 and thereafter. The actuarial assumption for inflation was 3 percent, and the aggregate payroll increases was
3.25 percent used in the actuarial valuation. The initial VAAL from June 30, 2006 valuation is being amortized as level percentage of projected payroll over a
30 year closed period (25 years remaining for fiscal year 2013/2014). Subsequent increases/ decreases in VAAL due to actuarial gains/losses or changes in
assumptions or methods are amortized over 15 year closed periods. The average remaining amortization period may be no more than 30 years.
13.
COMMITMENTS AND CONTINGENCIES
A.
Lawsuits
The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's legal counsel
that resolution of these matters will not have a material adverse effect on the financial condition of the City.
B.
Federal and State Grant Programs
The City participates in Federal and State grant programs. These programs are subject to audit. No cost disallowance is expected as a result of any audits.
Expenditures which may be disallowed, if any, by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be
immaterial.
99
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
13.
COMMITMENTS AND CONTINGENCIES, (Continued)
C.
Commitments
As of June 30, 2013, in the opinion of City management, there were no outstanding matters that would have a significant effect on the financial position of
the funds of the City.
D.
Contingencies
The regional water quality Control Board has filed regulatory notice of violations against the City regarding issues with Seaside Lagoon water quality
discharges to the harbor. The City has appealed the violations to the State Water Board. At this time, potential fines, assessments, and settlements are
estimated as likely not to exceed $51,000.
The City Council approved an Asset Management Plan for the Waterfront on December 18, 2007, and the Harbor Enterprise Business Plan on August 24,
2010. These documents, serve as the blueprint for the City’s waterfront revitalization efforts. One of the central strategies in the Asset Management Plan is
the consolidation of underutilized pier area leaseholds into larger, single leasehold to promote the highest and best use of these properties through new
private sector investment.
In February 2012, the City entered into an agreement for the Pier Plaza Leasehold and financing from Compass Bank is in the form of a Lease, Leaseback
through which the City receives an upfront one-time payment from Compass (lease) in exchange for a regular monthly payment of interest and principal
from the City over twenty years (leaseback), much like a traditional loan. The purchase price for the leasehold is $8.4 million. The money is provided at an
interest rate which is fixed at 4.22% for seven years after which time the rate is variable. The seven year fixed term is arranged through a SWAP agreement
with Compass Bank through which the City pays a slightly higher interest rate 4.22% in exchange for the certainty of the fixed rate for the seven year term.
In April 2012, the City entered into an agreement for the International Boardwalk Leasehold and received financing with Compass Bank in the form of a
Lease, Leaseback through which the City receives an upfront one-time payment from Compass (lease) in exchange for a regular monthly payment of
interest and principal from the City over twenty years (leaseback), much like a traditional loan. The property being leased for this transaction is the Plaza
Parking structure that sits adjacent to the International Boardwalk. The Letter Agreement for Purchase document covers the broader terms of the
transaction. The purchase price for the leasehold is $2.9 million. The money is provided at an interest rate which will be fixed at approximately 4.25% for
seven years after which time the rate is variable. The seven year fixed term is arranged through a SWAP agreement with Compass Bank through which the
City pays a slightly higher interest rate (4.25%) in exchange for the certainty of the fixed rate for the seven year term. The SWAP agreement is laid out in
more detail in the ISDA Master Agreement and Schedule to the ISDA Master Agreement.
100
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
13.
COMMITMENTS AND CONTINGENCIES, (Continued)
The City’s General Fund serves as the backstop in the event the Leaseholds fail to perform according to the terms as set forth in the agreements. The
estimated outstanding balance on the Pier Plaza and International Boardwalk leaseholds as of June 30, 2013, is $8 million, and $2.6 million, respectively.
14.
POLLUTION REMEDIATION OBLIGATIONS
The Department of Toxic Substances Control (DTSC) has filed regulatory Notice of Violations against the City regarding the Redondo Beach Police
Department's gun range concerning issues with lead bullet fragments. Cleanup, potential fines, assessments, and settlements incurred by the City to date
are approximately $282,000. Additional cleanup and settlements currently are estimated to be $150,000. This liability has been accrued in the General Fund.
101
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
15.
CLASSIFICATION OF FUND BALANCES
The City adopted the provisions of GASB Statement No. 54, Fund Balance and Governmental Fund Type Definitions. GASB 54 establishes Fund Balance
classifications based largely upon the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in
governmental funds. The Governmental Fund statements conform to this classification.
Special Revenue
Debt Service
Other
Public
Nonmajor
Total
General
Intergovernmental
Financing
Governmental
Governmental
Fund
Grants
Authority
Funds
Funds
Nonspendable
Prepaid costs
$
Notes and loans receivable
Total nonspendable
99,401
$
-
21,430
120,831
$
-
-
$
-
-
$
-
99,401
21,430
120,831
Restricted
Debt service
-
-
Public safety
-
-
-
1,240,969
1,240,969
Public works
-
-
-
9,055,367
9,055,367
Low and moderate income housing
-
-
-
2,267,794
2,267,794
Housing and community development
-
-
-
3,446,778
3,446,778
-
-
16,010,908
22,829,604
Total restricted
6,818,696
-
6,818,696
6,818,696
Committed
Contingency
5,889,783
-
-
-
5,889,783
5,889,783
-
-
-
5,889,783
Capital improvement projects
124,785
-
-
General government
355,074
-
-
-
355,074
Public safety
56,661
-
-
-
56,661
Housing and community development
95,119
-
-
-
95,119
4,266
-
-
-
4,266
123,624
-
-
-
123,624
Carryover assignments
1,233,888
-
-
-
1,233,888
Compensated absences
607,602
-
-
-
607,602
17,050
-
-
-
17,050
2,650,000
-
-
-
2,650,000
Union Offer Increase
332,381
-
-
-
332,381
Compensation restoration
861,248
-
-
-
861,248
-
-
1,000,000
Total committed
Assigned
Cultural and leisure services
Public works
Petty cash
Self-insurance program
Contingency
1,000,000
CalPERS
Total assigned
-
-
-
-
272,083
Unassigned
Total fund balance
3,813,747
11,275,445
$
17,558,142
(1,044,377)
$
(1,044,377)
102
3,113,179
-
6,818,696
3,813,747
3,113,179
$
3,237,964
14,388,624
$
19,124,087
(772,294)
$
42,456,548
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
16.
DISSOLUTION OF CALIFORNIA REDEVELOPMENT AGENCIES
On December 29, 2011, the California Supreme Court upheld Assembly Bill X1 26 (Bill) that provides for the dissolution of all redevelopment agencies in the
State of California. Most cities in California had established a redevelopment agency that was included in the reporting entity of the City as a blended
component unit (since the City council, in many cases, also served as the governing board for those agencies).
The Bill provides that upon dissolution of a redevelopment agency, either the City or another unit of local government will agree to serve as the “successor
agency” to hold the assets until they are distributed to other units of state and local government. If the City declines to accept the role of successor agency,
other local agencies may elect to perform this role. If no local agency accepts the role of successor agency the Governor is empowered by the Bill to establish
a local “designated local authority" to perform this role. On January 10, 2012 the City Council met and created a Successor Agency in accordance with the
Bill as part of the City’s resolution number 12-01.
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or
commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at
the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).
In future fiscal years, successor agencies will only be allocated tax revenue in the amount that is necessary to pay the estimated annual installment
payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been
paid in full.
The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other
public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the
expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as
the successor agency by the Bill.
In accordance with the timeline set forth in the Bill (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.
Prior to that date, the final seven months of the activity of the redevelopment agency is reported in the governmental funds of the City. After the date of
dissolution, activities of the dissolved redevelopment agency are reported in a fiduciary trust fund (private purpose trust fund) in the fiduciary statements
of the City.
103
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
17.
SUCCESSOR AGENCY LONG-TERM DEBT
In accordance with the provisions of Assembly Bill X1 26 (Bill) and the California Supreme Court’s decision to uphold the Bill, the obligations of the former
redevelopment agency became vested with the funds established for the successor agency upon the date of dissolution, February 1, 2012. Former tax
increment revenues pledged to fund the debts of the former redevelopment agency will be distributed to the Successor Agency subject to the
reapportionment of such revenues as provided by the Bill.
The debt of the Successor Agency as of June 30, 2013 is as follows:
Balance
July 1, 2012
Additions
Deletions
Amounts
Amounts
Balance
Due Within
Due in More
June 30, 2013
One Year
than One Year
Successor Agency:
County Deferral Loan - 1983 tax Increment Deferral
$
County Deferral Loan - 1984 tax Increment Deferral
6,934,419
$
-
7,400,570
Bank of America Loan
$
-
-
693,000
-
$
6,934,419
-
7,400,570
-
693,000
$
-
$
-
6,934,419
7,400,570
99,000
594,000
City Loan - Principal - Harbor Center
4,288,426
-
-
4,288,426
-
4,288,426
City Loan - Interest - Harbor Center
3,590,101
25,208
-
3,615,309
-
3,615,309
City Loan (PFA) - Harbor Center
City Loan - South Bay Center
Total
$
668,885
-
(668,885)
6,765,000
-
(485,000)
29,647,401
$
718,208
104
$
(1,153,885)
-
-
6,280,000
$
29,211,724
-
$
99,000
6,280,000
$
29,112,724
City of Redondo Beach
Notes to the Financial Statements
For the year ended June 30, 2013
17.
SUCCESSOR AGENCY LONG-TERM DEBT, (Continued)
1983 Tax Increment Deferral - On November 15, 1983, the Agency and the County of Los Angeles (County) entered into an agreement for reimbursement of
tax increment funds. It was recognized that the South Bay Center Project Area needed to utilize a substantial portion of the annual tax increment in the early
years to finance its redevelopment activities. Therefore, the County taxing entities agreed to defer receipt of tax increment reimbursement from the Agency.
This deferral is debt of the Agency to be repaid only from the Agency's share of future tax increment. There is no fixed payment schedule to repay this loan
and is non-interest bearing. The balance outstanding at June 30, 2013, was $6,934,419.
1984 Tax Increment Deferral - On February 14, 1984, the Agency and the County entered into an agreement for reimbursement of tax increment funds. It
was recognized that the Aviation High School Project Area needed to utilize a substantial portion of the annual tax increment in the early years to finance its
redevelopment activities. Therefore, the County taxing entities agreed to defer receipt of tax increment reimbursement from the Agency. This deferral is
debt of the Agency to be repaid only from the Agency's share of future tax increment. There is no fixed payment schedule to repay this loan and is noninterest bearing. The balance outstanding at June 30, 2013, was $7,400,570.
Bank of America Loan - On December 1, 2012, the Agency entered into a note payable with Bank of America to pay off the City loan to Public Finance
Agency of $693,000. The note principal balance is payable annually in installments of $99,000, and interest payments are made semi-annually at 5.75%. The
final financing commitment expires September 1, 2019.
18.
RISKS & UNCERTAINTIES
A.
Grants
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies. Any disallowed claims, including amounts
already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be
determined at this time, although the City expects such amounts, if any, to be immaterial.
B.
Successor Agency
Deductions (expenses) incurred by the Successor Agency for the year ended June 30, 2013 (and subsequent years in which the Successor Agency is in
operation) are subject to review by various State agencies and the County in which the Successor Agency resides. If any expenses incurred by the Successor
Agency are disallowed by the State agencies or County, the City, acting as the Successor Agency could be liable for the repayment of the disallowed costs
from either its own funds or by the State withholding remittances normally paid to the City. The amount, if any, of expenses that may be disallowed by the
State agencies or County cannot be determined at this time, although the Successor Agency expects such amounts, if any, to be immaterial.
105
REQUIRED SUPPLEMENTARY INFORMATION
106
City of Redondo Beach
Required Supplementary Information
For the year ended June 30, 2013
1.
BUDGETARY INFORMATION
Through the budget, the City Council sets the direction of the City, allocates its resources and establishes its priorities. The Annual Budget assures the
efficient and effective uses of the City's economic resources, as well as establishing that the highest priority objectives are accomplished.
The Annual Budget serves from July 1 to June 30, and is a vehicle that openly communicates these priorities to the community, businesses, vendors,
employees and other public agencies. Additionally, it establishes the foundation of effective financial planning by providing resource planning,
performance measures and controls that permit the evaluation and adjustment of the City's performance.
The City follows these procedures in establishing the budgetary data reflected in the basic financial statements:
1.
2.
3.
4.
5.
6.
The City Council approves each year's budget submitted by the City Manager prior to the beginning of the new fiscal year.
The City Council's policy is to adopt an annual line-item budget for the general, special revenue, debt service, and capital projects funds.
Public hearings are conducted prior to its adoption by the Council.
Supplemental appropriations, when required during the period, are also approved by the Council. Intradepartmental budget changes are approved
by the City Manager.
Expenditures may not exceed appropriations at the departmental level, which is the legal level of control.
Budgets are created in accordance with GAAP.3.32.
Encumbrance accounting, under which purchase orders, contacts, and other commitments for the expenditure of monies are recorded in order to reserve
that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the general, special revenue, debt service, and
capital projects funds. Unexpended and unencumbered appropriations of these governmental funds automatically lapse at the end of the fiscal year.
Encumbrances outstanding at year-end are reported as a reservation of fund balances. They do not constitute expenditures or estimated liabilities.
The following are the budget comparison schedules for General Fund, Other Intergovernmental Grants Special Revenue Fund, and Public Financing
Authority Debt Service Fund.
107
CITY OF REDONDO BEACH
Required Supplementary Information
For the year ended June 30, 2013
1. BUDGETARY INFORMATION, Continued
Budget Comparison Schedule, General Fund
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Final
13,390,680
$
13,390,680
$
Actual
Positive
Amounts
(Negative)
13,390,680
$
-
RESOURCES (INFLOWS):
Taxes
51,601,000
52,697,837
55,882,844
3,185,007
Interdepartmental
6,249,628
6,656,858
6,656,858
-
Licenses and permits
1,011,620
1,273,620
1,259,505
(14,115)
Intergovernmental
-
Charges for services
-
11,435,447
54,040
12,232,934
54,040
5,216,209
(7,016,725)
(301,765)
Use of money and property
2,193,008
2,181,008
1,879,243
Fines and forfeitures
1,685,400
1,685,400
1,620,958
(64,442)
Miscellaneous
1,066,614
1,067,014
857,815
(209,199)
Transfers in
1,181,854
2,683,354
839,865
(1,843,489)
89,815,251
93,868,705
87,658,017
(6,210,688)
9,555,080
11,004,155
9,285,279
1,718,876
42,423,533
43,157,376
41,945,269
1,212,107
447,809
Amount available for appropriation
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
General government
Public safety
Housing and community development
3,163,711
3,569,859
3,122,050
Public works
5,014,222
5,200,733
5,236,471
(35,738)
Cultural and leisure services
8,628,339
8,742,280
8,567,569
174,711
1,351,138
3,365,076
1,943,237
1,421,839
70,136,023
75,039,479
70,099,875
4,939,604
Transfers out
Total charges to appropriations
FUND BALANCE - ENDING
$
108
19,679,228
$
18,829,226
$
17,558,142
$
(1,271,084)
CITY OF REDONDO BEACH
Required Supplementary Information
For the year ended June 30, 2013
1. BUDGETARY INFORMATION, Continued
Budget Comparison Schedule, Other Intergovernmental Grants Special Revenue Fund
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE (DEFICIT) - BEGINNING
$
Actual
Final
(1,319,919)
$
Positive
Amounts
(1,319,919)
$
(1,319,919)
(Negative)
$
-
RESOURCES (INFLOWS):
Intergovernmental
2,004,799
3,553,714
3,149,452
(404,262)
Miscellaneous
-
-
120,940
120,940
Transfers in
-
-
440,600
440,600
Amount available for appropriation
684,880
2,233,795
2,391,073
157,278
Public safety
71,220
1,100,149
418,617
681,532
Public works
69,745
69,745
69,320
425
1,863,834
11,959,830
2,947,513
9,012,317
2,004,799
13,129,724
3,435,450
9,694,274
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Capital outlay
Total charges to appropriations
FUND BALANCE (DEFICIT) - ENDING
$
(1,319,919)
109
$
(10,895,929)
$
(1,044,377)
$
9,851,552
CITY OF REDONDO BEACH
Required Supplementary Information
Public Financing Authority Debt Service Fund
For the year ended June 30, 2013
1. BUDGETARY INFORMATION, Continued
Budget Comparison Schedule, Public Financing Authority Debt Service Fund
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE (DEFICIT) - BEGINNING
$
Final
7,362,829
$
7,362,829
$
Actual
Positive
Amounts
(Negative)
7,362,829
$
-
RESOURCES (INFLOWS):
Use of money and property
329,337
Miscellaneous
329,337
-
Amount available for appropriation
-
1,225,845
896,508
80
80
7,692,166
7,692,166
8,588,754
896,508
188,222
188,222
119,155
69,067
76,812
76,812
1,380,000
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Housing and community development
Debt Service:
Principal retirement
Interest and fiscal charges
Total charges to appropriations
FUND BALANCE (DEFICIT) - ENDING
$
110
(1,303,188)
64,303
64,303
270,903
(206,600)
329,337
329,337
1,770,058
(1,440,721)
7,362,829
$
7,362,829
$
6,818,696
$
(544,213)
City of Redondo Beach
Required Supplementary Information
For the year ended June 30, 2013
2.
DEFINED PENSION PLAN
A schedule of funding progress for the past three actuarial valuations is presented below.
Safety Plan
(A)
(B)
(C)
(D)
(E)
(F)
Unfunded
Unfunded
(Overfunded)
(Overfunded)
Actuarial
Entry Age
Actuarial
Actuarial
Actuarial
Accrued
Valuation
Asset
Accrued
Liability
Ratio
Covered
Covered Payroll
Date
Value
Liability
(B-A)
(A/B)
Payroll
(C/E)
Actuarial
06/30/2008
$
195,959,373
$
232,567,064
$
Liability as
Funded
Percentage of
36,607,691
84.3%
15,118,770
242.1%
06/30/2009
202,858,694
252,092,246
49,233,552
80.5%
$
16,436,916
299.5%
06/10/2010
209,481,432
259,321,750
49,840,318
80.8%
15,615,232
319.2%
Miscellaneous Plan
(A)
(B)
(C)
(D)
(E)
(F)
Unfunded
Unfunded
(Overfunded)
(Overfunded)
Actuarial
Entry Age
Actuarial
Liability as
Actuarial
Actuarial
Accrued
Valuation
Asset
Accrued
Liability
Ratio
Covered
Covered Payroll
Date
Value
Liability
(B-A)
(A/B)
Payroll
(C/E)
Actuarial
06/30/2008
$
114,865,498
$
124,542,795
$
Funded
Percentage of
9,677,297
92.2%
06/30/2009
119,584,408
135,652,505
16,068,097
88.2%
20,267,353
79.3%
06/30/2010
124,366,166
141,617,233
17,251,067
87.8%
19,612,331
88.0%
*Latest information available
111
$
20,641,265
46.9%
City of Redondo Beach
Required Supplementary Information
For the year ended June 30, 2013
3.
OTHER POST EMPLOYMENT BENEFITS
Schedule of Funding Progress for the City’s Plan
(A)
(B)
(C)
(D)
(E)
(F)
(Unfunded)
(Unfunded)
Overfunded
Entry Age
Overfunded
Actuarial
Actuarial
Actuarial
Actuarial
Actuarial
Asset
Accrued
Accrued
Funded
Valuation
Value
Liability
Liability
Ratio
Covered
Covered Payroll
Date
(A)
(B)
(A-B)
(A/B)
Payroll
(C/E)
06/30/2008
$
-
$
14,474,000
$
Liability as
Percentage of
(14,474,000)
0.0%
36,525,000
39.63%
06/30/2010
1,918,000
17,882,000
(15,964,000)
10.7%
31,700,000
50.36%
06/30/2011
4,245,000
20,086,000
(15,841,000)
21.1%
30,485,000
-51.96%
112
$
City of Redondo Beach
Required Supplementary Information
For the year ended June 30, 2013
4.
MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS
In accordance with GASB Statement No. 34, the City is required to account for and report infrastructure capital assets. GASB Statement No. 34 defines
infrastructure assets as " ... long-lived capital assets that are stationary in nature and normally can be preserved for a significantly greater number of years
than most capital assets ... " Major infrastructure systems include the street system, storm water system, sewer system, and traffic control system. Each
major infrastructure system can be divided into subsystems. For example, the street system can be divided into concrete and asphalt pavements, concrete
curb and gutters, sidewalks, medians, etc. Subsystem detail is not presented in these basic financial statements; however, the City maintains detailed
information on these subsystems.
The City has elected to use the "Modified Approach" as defined by GASB Statement No. 34 for infrastructure reporting for its Streets Pavement System.
Under GASB Statement No. 34, eligible infrastructure capital assets are not required to be depreciated under the following requirements:

The City manages the eligible infrastructure capital assets using an asset management system with characteristics of (1) an up-to-date inventory; (2)
condition assessments which summarize results using a measurement scale; and (3) estimated annual amounts budgeted to maintain and preserve
an established condition assessment level.

The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed
condition assessment level.
The City commissioned a physical assessment of the street conditions as of June 30, 2011. The study assisted the City by providing inspection data used to
evaluate pavement condition. This helped to establish a City-defined target level of pavement performance, while optimizing the expenditure of limited
fiscal resources. The entire pavement network within the City is composed of approximately 125 centerline miles of paved surfaces. The City's street system
can be grouped by function class as follows: 22 centerline miles of arterial, 5 centerline miles of collector and 98 centerline miles of residential.
In June 2013, a visual survey of all pavement segments was conducted to assess the existing surface condition of each of the individual pavement segments.
Upon completion of the study, a Pavement Quality Index (PQI) was calculated for each segment in the City's pavement network to reflect the overall
pavement condition. Rating ranged from 0 and 100. A PQI of 0 would correspond to badly deteriorated pavement with virtually no remaining life; a PQI of
100 would correspond to pavement with proper engineering design and construction at the beginning of its life cycle. During the year, the comprehensive
survey is updated to reflect the pavement's current condition.
113
City of Redondo Beach
Required Supplementary Information
For the year ended June 30, 2013
4.
MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS, (Continued)
The following conditions were defined:
Condition
Very Good
Good
Fair
Poor
Rating
90-100
70-89
50-69
0-49
In line with the capital Improvement Program and as presented to City Council on December 2002, City policy is to achieve an average rating of 80 for all
streets by fiscal year 2008-2009. This rating allows minor cracking and raveling of the pavement along with minor roughness that could be noticeable to
drivers traveling at posted speeds.
The City established the standard of 70 for fiscal years 2007, 2008, and 2009. The condition assessments for the most recent years since implementation are as
follow:
Year
PQI rate
2010
83
Condition
Very Good
40%
Good
47%
Fair
Poor
2011
85
Good
45%
114
3%
33%
Good
54%
Poor
83
5%
Very Good
Fair
2013
7%
47%
Poor
82
6%
Very Good
Fair
2012
% of Streets
7%
6%
Very Good
35%
Good
53%
Fair
7%
Poor
5%
City of Redondo Beach
Required Supplementary Information
For the year ended June 30, 2013
4.
MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS, (Continued)
The City expended $2,656,343 on street improvement projects for the fiscal year ended June 30, 2013. These capital improvements expenditures enhanced
the condition of many streets and delayed deterioration on others. The estimated expenditures required to maintain and improve the overall condition of
the streets from July 1, 2012 through June 30, 2014 is a minimum of $5,200,000.
A schedule of budget verses actual for the most recent years since implementation, which preserved City streets at the current 83 rating is presented below.
Funded by
Fiscal Year
2006-2007
Capital Improvement
Funded by
Total
Project Fund
Other Funds
Expenditures
Final Budget
$
6,493,717
$
1,292,207
$
569,668
$
1,861,875
2007-2008
11,633,589
154,835
2,824,248
2,979,083
2008-2009
10,835,819
1,543,773
2,350,822
3,894,595
2009-2010
11,788,643
1,413,430
3,017,149
4,430,579
2010-2011
9,260,708
688,073
4,607,518
5,295,591
2011-2012
8,874,102
246,152
996,761
1,242,913
2012-2013
10,212,651
496,766
2,159,576
2,656,342
As of June 30, 2013, 22% of City streets were rated below the targeted average condition level of 80. However, as noted above, the City is investing in this
infrastructure assets as part of the five-year Capital Improvement Program and will continue to rehabilitate and maintain its streets in order to achieve this
goal.
115
City of Redondo Beach
Required Supplementary Information
For the year ended June 30, 2013
4.
MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS, (Continued)
Capital Improvement
Project
Project #
Budget
$
367,257
$
Project Fund
Other Fund
Total
Expenditures
Expenditures
Expenditures
Bus Shelters & Benches
40120
Pavement & Sidewalk Repairs
40140
143,432
-
-
$
765
-
$
765
Pavement Management Study
40170
31,700
-
-
Residential Street Rehabilitation
40190
1,098,620
-
10,297
10,297.00
Citywide Curb Ramp Improvements
40399
515,141
17,813
255,262
273,075.00
Target Community Improvements
40460
6,090
-
-
Traffic Calming Project
40470
70,467
49,196
-
Bicycle Trans Plan Implementation
40510
183,740
-
8,684
8,684.00
Catalina/Harbor Advd Traf Sig Mgmt
40600
1,661
-
57,855
57,855.00
Riviera Village Improvements
40640
134,329
36,109
-
36,109.00
PCH/Torrance Blvd Right Hand Turn Lane
40650
90,000
-
-
Grant/Artesia Countdown Ped Signal
40710
33,000
-
18
18.00
8,980.00
-
49,196.00
-
Harbor Dr. Resurfacing - Beryl to Herondo
40720
674,033
-
8,980
North Redondo Beach Bikeway Lighting
40740
180,800
-
7
7.00
190th St Resurfacing - PCH to Prospect
40750
336,247
-
336,247
336,247.00
Artesia/Aviation EB Rt Turn Lane
40770
12,276
-
10,392
10,392.00
Artesia/Aviation NB Rt Turn Lane
40780
840,101
-
1,100
1,100.00
PV Boulevard/PCH WB Rt Turn Lane
40790
318,420
-
269
269.00
PCH Study Recommendations
40800
1,399,750
-
1,108
1,108.00
PCH/Torrance Boulevard NB Rt Turn Lane
40810
578,871
-
37,891
37,891.00
MBB/Inglewood EB Rt Turn Lane
40820
12,873
-
11,271
11,271.00
-
675,816
675,816.00
MBB Resurfacing - RB Ave to Inglewood Ave
40830
689,596
Annual Roadway Maintenance
40840
265,840
Beryl/190th Signal Study
40850
50,000
-
27,273
27,273.00
Beryl St. Improvement - Flagler to 190th
40860
100,000
-
49,367
49,367.00
Camelian/PCH Streetscape Improvements
40870
100,000
-
-
Kingsdale Resurfacing - 182nd to Grant
40880
360,000
-
-
Prospect Resurfacing - Pearl to Emerald
40890
916,974
North Harbor Drive Cycle Track Project
40900
596,433
-
-
-
PCH/Catalina Entryway Prop Acquisition
40910
105,000
-
-
-
$
10,212,651
116
265,840
-
127,808
$
496,766
265,840.00
-
666,974
$
2,159,576
794,782.00
$
2,656,342
SUPPLEMENTARY INFORMATION
117
NON-MAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
State Gas Tax Fund - To account for the City's share of State gas tax allocations. Gasoline taxes must be used for maintenance and improvement of City
streets.
Parks and Recreation Facilities Fund - To account for revenues assessed on the construction of new residential units. Revenue is used solely for the
acquisition, improvement and expansion of public parks and recreational facilities.
Narcotic Seizure/Forfeiture Fund - To account for the City's portion of monies seized during arrests and expenditures for related enforcement activities.
Proposition A Fund - To account for the operations of transit-related projects funded by a voter-approved, one-half cent sales tax levied within Los Angeles
County.
Proposition C Fund - To account for the operations of transit-related projects funded by a voter-approved, one-half cent sales tax levied within Los Angeles
County.
Measure R Fund - To account for monies received from the sales tax approved pursuant to Assembly Bill 2321, Measure R Ordinance of the Los Angeles
County Metropolitan Transportation Authority for public transportation purposes.
Local Transportation Article 3 Fund - To account for the operation of transportation services in the City and the Dial-A-Ride Program which provides
transportation to Redondo Beach and Hermosa Beach residents.
Air Quality Improvement Fund - To account for monies received from the South Coast Air Quality Management District, which are used to reduce air
pollution from motor vehicles.
Storm Drain Improvement Fund - To account for the receipt of the storm drain impact fees and the related National Pollutant Discharge Elimination
System implementation and enforcement costs.
Street Landscaping and Lighting District Fund - To account for the costs of establishing, improving and maintaining street landscaping and lighting in
certain areas of the City. Costs of the projects are estimated and property owners are assessed their proportionate share.
118
NON-MAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS, (continued)
Community Development Block Grant Fund - To account for Community Development Block Grant revenues and expenditures. Such revenues are
restricted to the revitalization of low and moderate income areas within the City.
Disaster Recovery Fund - To account for monies received from agencies of the Federal and State governments for disaster recovery assistance.
Housing Authority Fund - To account for revenues and expenditures relating to low-cost housing for individuals meeting criteria established by the U.S.
Department of Housing and Urban Development (HUD).
Subdivision Park Trust Fund - To account for revenues and expenditures relating to Quimby Fees.
Low-Mod Income Housing Asset Fund - To account for all transferred housing assets of the dissolved Redevelopment Agency and funds generated from
those housing assets.
DEBT SERVICE FUND
Parking Authority Fund - To account for the remaining funds from the matured revenue bonds originally issued to purchase land and finance construction
of a public parking facility and for the cooperation agreement with the Redevelopment Agency in connection with the Aviation High School
Redevelopment Project Area.
CAPITAL PROJECTS FUNDS
Pier Parking Structure Rehabilitation Fund - To account for the costs to rehabilitate the publicly owned pier parking structure.
Capital Improvement Projects Fund - To account for capital improvements of the City.
119
City of Redondo Beach
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2013
Special Revenue
State
Parks and
Narcotic
Gas
Recreation
Seizure /
Proposition
Proposition
Measure
Local Transportation
Tax
Facilities
Forfeiture
A
C
R
Article 3
ASSETS
Pooled cash and invesments
$
1,548,562
$
31,581
$
1,242,965
$
1,332,220
$
3,840,716
$
1,130,243
$
-
Receivables:
Accounts
Interest
Notes and loans
-
-
-
-
-
-
-
6,072
-
5,206
4,655
16,268
2,981
-
-
-
-
-
-
-
-
Due from other governments
-
-
-
-
-
-
Advance to other governments
-
-
-
-
-
-
Total assets
$
1,554,634
$
$
41,537
$
31,581
$
1,248,171
$
-
$
7,202
$
1,336,875
$
3,856,984
$
$
70,197
$
1,133,224
114,091
$
114,091
$
100,292
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable
-
-
Deferred revenue
-
-
-
-
-
-
-
Due to other funds
-
-
-
-
-
-
13,975
41,537
-
7,202
-
70,197
-
114,267
Total liabilities
Fund balances:
Restricted
1,513,097
Assigned
Total fund balances
Total liabilities and fund balances
31,581
1,513,097
$
1,554,634
-
31,581
$
31,581
1,336,875
1,240,969
-
1,240,969
$
1,248,171
120
3,786,787
1,336,875
$
1,336,875
1,133,224
3,786,787
$
3,856,984
(176)
-
-
1,133,224
$
1,133,224
(176)
$
114,091
City of Redondo Beach
Combining Balance Sheet
Non-Major Governmental Funds, Continued
June 30, 2013
Special Revenue
Street
Landscaping
Community
Quality
Air
Storm Drain
and Lighting
Development
Disaster
Housing
Subdivision
Improvement
Improvement
District
Block Grant
Recovery
Authority
Park Trust
ASSETS
Pooled cash and invesments
$
35,190
$
346,829
$
142,415
$
-
$
-
$
1,267,381
$
493,471
Receivables:
Accounts
-
-
241
-
-
-
-
Interest
559
-
-
-
-
-
-
Notes and loans
-
-
-
476,563
-
-
-
21,165
-
55,274
5,064
-
-
-
-
-
-
-
-
-
-
Due from other governments
Advance to other governments
Total assets
$
56,914
$
$
2,172
$
346,829
$
197,930
$
$
203,889
$
481,627
$
-
$
1,267,381
$
493,471
150,285
$
-
$
2,327
$
122,879
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable
-
Deferred revenue
-
-
-
476,566
-
Due to other funds
-
-
-
52,291
3,644
191,077
2,172
-
679,142
3,644
193,404
122,879
(197,515)
(3,644)
1,073,977
370,592
Total liabilities
203,889
-
-
Fund balances:
Restricted
54,742
Assigned
-
Total fund balances
Total liabilities and fund balances
346,829
54,742
$
56,914
(5,959)
-
-
346,829
$
346,829
-
(5,959)
$
121
197,930
-
(197,515)
$
481,627
-
(3,644)
$
-
-
1,073,977
$
1,267,381
370,592
$
493,471
City of Redondo Beach
Combining Balance Sheet
Non-Major Governmental Funds, Continued
June 30, 2013
Special Revenue
Capital Projects
Debt Service
Pier
Parking
Capital
Total
Low-Mod Income
Parking
Structure
Improvement
Non-Major
Housing Asset
Authority
Rehabilitation
Projects
Funds
ASSETS
Pooled cash and invesments
$
-
$
5,678
$
823
$
5,108,849
$
16,526,923
Receivables:
Accounts
-
Interest
-
Notes and loans
-
3,883,499
Due from other governments
535,731
Total assets
$
4,419,230
120,963
4
-
-
Advance to other governments
17
-
121,204
-
35,762
-
4,360,062
-
-
-
195,594
-
-
-
535,731
$
5,695
$
827
$
5,229,812
$
$
-
$
-
$
240,404
$
21,775,276
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable
$
-
941,184
Deferred revenue
958,622
-
-
-
1,435,188
Due to other funds
13,830
-
-
-
274,817
972,452
-
-
Total liabilities
240,404
2,651,189
827
1,876,229
16,010,908
-
3,113,179
3,113,179
827
4,989,408
19,124,087
Fund balances:
Restricted
3,446,778
Assigned
Total fund balances
Total liabilities and fund balances
5,695
-
-
3,446,778
$
4,419,230
5,695
$
5,695
122
$
827
$
5,229,812
$
21,775,276
City of Redondo Beach
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Non-Major Governmental Funds
For the year ended June 30, 2013
Special Revenue
State
Parks and
Narcotic
Gas
Recreation
Seizure /
Proposition
Proposition
Measure
Local Transportation
Tax
Facilities
Forfeiture
A
C
R
Article 3
REVENUES:
Use of money and property
$
Intergovernmental
6,266
$
1,396,982
-
$
-
5,430
$
-
3,735
$
1,052,390
17,350
$
874,446
9,215
$
653,912
114,091
Charges for services
-
16,000
-
-
-
-
-
Fines and forfeitures
-
-
43,008
-
-
-
-
Miscellaneous
548
-
-
-
-
-
-
16,000
48,438
-
99,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,393
-
-
(1,535)
11,253
-
966,495
18,981
114,091
(1,535)
111,134
-
994,888
18,981
114,091
17,535
(62,696)
(103,092)
644,146
-
1,403,796
Total revenues
1,056,125
891,796
663,127
114,091
EXPENDITURES:
Current:
Public safety
-
Public works
1,169,478
Housing and community development
Capital outlay
1,169,478
Total expenditures
-
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
234,318
1,056,125
OTHER FINANCING SOURCES (USES):
Transfers in
-
-
-
-
26,527
-
Transfers out
-
-
-
(1,284,698)
-
-
-
-
-
-
(1,284,698)
-
26,527
-
234,318
17,535
(62,696)
670,673
-
1,278,779
14,046
Total other financing sources (uses)
Net change in fund balances
-
(228,573)
(103,092)
Fund Balances:
Beginning of year
End of year
$
1,513,097
$
31,581
1,303,665
$
1,240,969
123
1,565,448
$
1,336,875
3,889,879
$
3,786,787
462,551
$
1,133,224
(176)
$
(176)
City of Redondo Beach
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Non-Major Governmental Funds, Continued
For the year ended June 30, 2013
Special Revenue
Street
Landscaping
Community
Quality
Air
Storm Drain
and Lighting
Development
Disaster
Housing
Subdivision
Improvement
Improvement
District
Block Grant
Recovery
Authority
Park Trust
REVENUES:
Use of money and property
$
Intergovernmental
1,456
$
-
$
-
$
$
150,466
-
$
$
5,934,309
-
Charges for services
80,832
60,960
Fines and forfeitures
-
-
Miscellaneous
-
-
82,288
60,960
Public safety
-
-
Public works
-
-
58,520
-
-
130,718
-
162,394
12,186
-
141,171
-
220,914
12,186
2,626,064
271,889
17,195
(138,626)
48,774
(1,077,785)
(121,423)
(55,979)
39,000
(35,279)
1,076,710
-
-
-
-
-
-
-
-
-
-
-
-
39,000
(35,279)
1,540,164
-
538
-
Total revenues
-
-
-
-
-
2,120
-
-
-
-
-
-
8,115
-
(40,904)
-
93,091
1,548,279
150,466
(38,784)
-
5,934,847
93,091
EXPENDITURES:
Current:
Housing and community development
Capital outlay
Total expenditures
2,626,064
-
17,195
-
-
-
-
-
5,895,847
5,410
-
122,960
5,895,847
128,370
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
-
-
Transfers out
-
-
-
-
Total other financing sources (uses)
Net change in fund balances
1,076,710
(138,626)
48,774
(1,075)
(121,423)
(55,979)
193,368
298,055
(4,884)
(76,092)
52,335
Fund Balances:
Beginning of year
End of year
$
54,742
$
346,829
$
(5,959)
124
$
(197,515)
$
(3,644)
1,034,977
$
1,073,977
405,871
$
370,592
City of Redondo Beach
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Non-Major Governmental Funds, Continued
For the year ended June 30, 2013
Special Revenue
Capital Projects
Debt Service
Pier
Parking
Capital
Total
Low-Mod Income
Parking
Structure
Improvement
Non-Major
Housing Asset
Authority
Rehabilitation
Projects
Funds
REVENUES:
Use of money and property
$
Intergovernmental
(2,145)
$
-
16
$
-
5
$
-
-
$
-
41,866
10,176,596
Charges for services
-
-
-
Fines and forfeitures
-
-
-
-
43,008
14,958
-
-
7,500
83,308
552,857
12,590,211
Miscellaneous
12,813
Total revenues
16
545,357
5
2,245,433
EXPENDITURES:
Current:
Public safety
-
-
-
Public works
-
-
-
Housing and community development
Capital outlay
Total expenditures
-
117,076
111,496
3,907,038
-
-
-
-
-
-
1,862,152
-
3,410,148
6,118,888
-
-
-
1,973,648
13,553,150
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
12,813
16
5
(1,420,791)
(962,939)
OTHER FINANCING SOURCES (USES):
Transfers in
-
-
-
Transfers out
-
-
-
(1,209,382)
(2,494,080)
-
-
-
(369,382)
(550,843)
(1,790,173)
(1,513,782)
6,779,581
20,637,869
Total other financing sources (uses)
Net change in fund balances
840,000
12,813
16
5
3,433,965
5,679
822
1,943,237
Fund Balances:
Beginning of year
End of year
$
3,446,778
$
5,695
125
$
827
$
4,989,408
$
19,124,087
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
State Gas Tax Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Use of money and property
Intergovernmental
Miscellaneous
Amount available for appropriation
Final
1,278,779
$
1,278,779
$
Actual
Positive
Amounts
(Negative)
1,278,779
$
-
2,500
2,500
6,266
1,757,871
1,757,871
1,396,982
(360,889)
3,766
4,000
4,000
548
(3,452)
3,043,150
3,043,150
2,682,575
(360,575)
1,422,423
1,535,192
1,169,478
365,714
1,422,423
1,535,192
1,169,478
365,714
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Public works
Total charges to appropriations
FUND BALANCE - ENDING
$
126
1,620,727
$
1,507,958
$
1,513,097
$
5,139
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Parks and Recreation Facilities Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Final
14,046
Charges for services
Amount available for appropriation
$
14,046
$
Actual
Positive
Amounts
(Negative)
14,046
$
-
15,000
15,000
16,000
1,000
29,046
29,046
30,046
1,000
-
1,200
(1,535)
2,735
-
1,200
(1,535)
2,735
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Capital Outlay
Total charges to appropriations
FUND BALANCE - ENDING
$
29,046
127
$
27,846
$
31,581
$
3,735
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Narcotic Seizure/Forfeiture Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Final
1,303,665
Use of money and property
Fines and forfeitures
Amount available for appropriation
$
1,303,665
$
Actual
Positive
Amounts
(Negative)
1,303,665
$
-
3,400
3,400
5,430
2,030
103,000
41,000
43,008
2,008
1,410,065
1,348,065
1,352,103
4,038
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Public safety
Capital outlay
Total charges to appropriations
FUND BALANCE - ENDING
$
64,890
269,820
99,881
169,939
129,542
160,709
11,253
149,456
194,432
430,529
111,134
319,395
1,215,633
128
$
917,536
$
1,240,969
$
323,433
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Proposition A Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Use of money and property
Intergovernmental
Amount available for appropriation
Final
1,565,448
$
1,565,448
$
Actual
Positive
Amounts
(Negative)
1,565,448
$
-
11,100
11,100
3,735
974,895
974,895
1,052,390
77,495
(7,365)
2,551,443
2,551,443
2,621,573
70,130
1,262,243
1,262,243
1,284,698
(22,455)
1,262,243
1,262,243
1,284,698
(22,455)
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Transfers out
Total charges to appropriations
FUND BALANCE - ENDING
$
129
1,289,200
$
1,289,200
$
1,336,875
$
47,675
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Proposition C Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Final
3,889,879
Use of money and property
Intergovernmental
Amount available for appropriation
$
3,889,879
$
Actual
Positive
Amounts
(Negative)
3,889,879
$
-
17,100
17,100
17,350
250
808,649
808,649
874,446
65,797
4,715,628
4,715,628
4,781,675
66,047
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Housing and community development
Capital outlay
Total charges to appropriations
FUND BALANCE - ENDING
$
1,640
1,764
28,393
510,000
4,453,967
966,495
3,487,472
511,640
4,455,731
994,888
3,460,843
4,203,988
130
$
259,897
$
3,786,787
(26,629)
$
3,526,890
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Measure R Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Final
462,551
Use of money and property
$
-
Intergovernmental
Positive
Amounts
(Negative)
462,551
$
9,215
1,106,032
-
Amount available for appropriation
$
-
560,000
Transfer in
462,551
Actual
-
9,215
653,912
(452,120)
26,527
26,527
1,022,551
1,568,583
1,152,205
(416,378)
560,000
1,106,032
18,981
1,087,051
560,000
1,106,032
18,981
1,087,051
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Capital outlay
Total charges to appropriations
FUND BALANCE - ENDING
$
462,551
131
$
462,551
$
1,133,224
$
670,673
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Local Transportation Article 3 Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE (DEFICIT) - BEGINNING
$
Final
(176)
Intergovernmental
Amount available for appropriation
$
(176)
$
Actual
Positive
Amounts
(Negative)
(176)
$
-
90,859
90,859
114,091
23,232
90,683
90,683
113,915
23,232
80,000
114,091
114,091
-
80,000
114,091
114,091
-
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Capital outlay
Total charges to appropriations
FUND BALANCE (DEFICIT) - ENDING
$
10,683
132
$
(23,408)
$
(176)
$
23,232
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Air Quality Improvement Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Final
193,368
Use of money and property
Charges for services
Amount available for appropriation
$
193,368
$
Actual
Positive
Amounts
(Negative)
193,368
$
-
800
800
1,456
656
78,000
78,000
80,832
2,832
272,168
272,168
275,656
3,488
8,246
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Housing and community development
Capital outlay
Total charges to appropriations
FUND BALANCE - ENDING
$
65,314
66,766
58,520
-
162,394
162,394
-
65,314
229,160
220,914
8,246
206,854
133
$
43,008
$
54,742
$
11,734
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Storm Drain Improvement Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Final
298,055
Charges for services
Amount available for appropriation
$
298,055
$
Actual
Positive
Amounts
(Negative)
298,055
$
-
35,000
35,000
60,960
25,960
333,055
333,055
359,015
25,960
30,000
292,936
12,186
280,750
30,000
292,936
12,186
280,750
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Capital outlay
Total charges to appropriations
FUND BALANCE - ENDING
$
303,055
134
$
40,119
$
346,829
$
306,710
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Street Landscaping and Lighting District Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE (DEFICIT) - BEGINNING
$
Final
(4,884)
Charges for services
Miscellaneous
Transfers in
Amount available for appropriation
$
(4,884)
$
Actual
Positive
Amounts
(Negative)
(4,884)
$
-
1,564,500
1,564,500
1,540,164
(24,336)
35,000
109,000
8,115
(100,885)
957,649
957,649
1,076,710
2,552,265
2,626,265
2,620,105
119,061
(6,160)
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Public works
Total charges to appropriations
FUND BALANCE (DEFICIT) - ENDING
$
2,557,149
2,635,008
2,626,064
8,944
2,557,149
2,635,008
2,626,064
8,944
(4,884)
135
$
(8,743)
$
(5,959)
$
2,784
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Community Development Block Grant Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE (DEFICIT) - BEGINNING
$
(76,092)
Intergovernmental
Amount available for appropriation
Final
$
(76,092)
$
Actual
Positive
Amounts
(Negative)
(76,092)
$
-
266,341
439,606
150,466
(289,140)
190,249
363,514
74,374
(289,140)
143,219
145,864
130,718
15,146
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Housing and community development
Capital outlay
Total charges to appropriations
FUND BALANCE (DEFICIT) - ENDING
$
130,430
351,050
141,171
209,879
273,649
496,914
271,889
225,025
(83,400)
136
$
(133,400)
$
(197,515)
$
(64,115)
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Disaster Recovery Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Final
52,335
Charges for services
Miscellaneous
Amount available for appropriation
$
52,335
$
Actual
Positive
Amounts
(Negative)
52,335
$
-
1,200
1,920
2,120
20,000
-
(40,904)
(40,904)
200
73,535
54,255
13,551
(40,704)
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Public Safety
Total charges to appropriations
FUND BALANCE (DEFICIT) - ENDING
$
17,060
17,060
17,195
(135)
17,060
17,060
17,195
(135)
56,475
137
$
37,195
$
(3,644)
$
(40,839)
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Housing Authority Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Use of money and property
Final
1,034,977
$
-
Intergovernmental
Amount available for appropriation
1,034,977
$
-
Actual
Positive
Amounts
(Negative)
1,034,977
$
538
538
6,088,509
6,088,509
5,934,309
(154,200)
7,123,486
7,123,486
6,969,824
(153,662)
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Housing and community development
Total charges to appropriations
FUND BALANCE - ENDING
$
138
6,065,130
6,065,130
5,895,847
169,283
6,065,130
6,065,130
5,895,847
169,283
1,058,356
$
1,058,356
$
1,073,977
$
15,621
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Subdivision Park Trust Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Miscellaneous
Amount available for appropriation
Final
405,871
$
405,871
$
Actual
Positive
Amounts
(Negative)
405,871
$
-
150,000
150,000
93,091
(56,909)
555,871
555,871
498,962
(56,909)
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Housing and community development
-
Capital outlay
Total charges to appropriations
FUND BALANCE - ENDING
$
-
5,410
(5,410)
164,000
342,161
122,960
219,201
164,000
342,161
128,370
213,791
391,871
139
$
213,710
$
370,592
$
156,882
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Low-Mod Income Housing Asset Special Revenue Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
$
Final
3,433,965
$
3,433,965
$
Actual
Positive
Amounts
(Negative)
3,433,965
$
-
FUND BALANCE - BEGINNING
Use of money and property
-
-
(2,145)
(2,145)
Miscellaneous
-
-
14,958
14,958
3,446,778
12,813
Amount available for appropriation
FUND BALANCE - ENDING
3,433,965
$
3,433,965
140
3,433,965
$
3,433,965
$
3,446,778
$
12,813
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Parking Authority Debt Service Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
5,679
Use of money and property
Amount available for appropriation
FUND BALANCE - ENDING
Final
$
5,679
-
-
5,679
5,679
5,679
141
$
$
5,679
$
$
Actual
Positive
Amounts
(Negative)
5,679
$
-
16
16
5,695
16
5,695
$
16
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Pier Parking Structure Rehabilitation Capital Projects Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
822
Use of money and property
Amount available for appropriation
FUND BALANCE - ENDING
Final
$
822
-
-
822
822
822
142
$
$
822
$
$
Actual
Positive
Amounts
(Negative)
822
$
-
5
5
827
5
827
$
5
CITY OF REDONDO BEACH
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Capital Improvement Projects Capital Projects Fund
For the year ended June 30, 2013
Variance with
Final Budget
Budget Amounts
Original
FUND BALANCE - BEGINNING
$
Charges for services
Final
6,779,581
$
394,150
Miscellaneous
Transfers in
Amount available for appropriation
6,779,581
$
394,150
Actual
Positive
Amounts
(Negative)
6,779,581
$
545,357
151,207
34,000
34,000
7,500
-
800,000
840,000
40,000
8,007,731
8,172,438
164,707
7,207,731
(26,500)
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current
Public works
Capital outlay
Transfers out
123,549
123,736
111,496
12,240
1,857,000
5,752,308
1,862,152
3,890,156
456,175
456,175
1,209,382
2,436,724
6,332,219
3,183,030
(753,207)
Total charges to appropriations
FUND BALANCE - ENDING
$
143
4,771,007
$
1,675,512
$
4,989,408
3,149,189
$
3,313,896
INTERNAL SERVICE FUNDS
Vehicle Replacement Fund - To account for the cost of maintaining and replacing City vehicles. Such costs are billed to City departments at a rate that
which provides the future acquisition and operating costs of City vehicles.
Building Occupancy Fund - To account for the cost of maintaining and improving City buildings. Such costs are billed to City departments at a rate which
provides for the annual maintenance and improvement costs.
Information Technology Fund - To account for the cost of maintaining and replacing City computer and telecommunications equipment. Such costs are
billed to City departments at a rate which provides for the annual maintenance and replacement costs.
Self-Insurance Program Fund - To account for the costs of providing liability, workers' compensation and unemployment insurance to all City
departments. Such costs are billed to City departments at a rate which provides for the annual insurance costs.
Printing and Graphics Fund - To account for the costs of providing printing and graphics services to all City departments. Such costs are billed to City
departments at a rate which provides for the annual printing costs. Printing and Graphic Fund was closed out at June 30, 2013 and transferred remaining
balance to Information Technology Fund.
Emergency Communications Fund - To account for the cost of maintaining and replacing various City communication equipment, primarily for Public
Safety. Such costs are billed to the City's designated departments at a rate that provides for the annual maintenance and replacement costs.
Major Facilities Repair Fund - To account for monies received from user departments within the City for major facilities repair costs.
144
CITY OF REDONDO BEACH
Combining Statement of Net Position
All Internal Service Funds
June 30, 2013
Vehicle
Replacement
Building
Occupancy
Information
Technology
Self-Insurance
Program
Printing and
Graphics
Emergency
Communications
Major
Facilities Repair
576,373
-
$ 13,446,975
1,033
-
$
$
$
576,373
13,448,008
Total
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable
Prepaid costs
$
Total current assets
Noncurrent assets:
Capital assets - net of accumulated depreciation
Total noncurrent assets
Total assets
5,935,189
13,688
-
$
-
$
5,948,877
-
2,923,207
12,803
1,476,119
2,923,207
12,803
1,476,119
8,872,084
12,803
2,052,492
13,448,008
219,058
1,281
-
210,023
3,245
20,993
-
385,963
6,108
439,198
220,339
234,261
18,136
-
-
931,384
86
439,620
-
$
439,620
21,329,541
14,721
86
-
931,470
21,344,348
-
-
366,458
-
-
366,458
-
1,297,928
486,615
920
802,585
-
-
12,366
6,859
-
-
1,314,025
18,413
20,993
802,585
439,198
831,269
1,290,120
-
19,225
-
2,595,214
45,948
-
86,480
444,894
13,037
15,524,709
-
-
97,112
-
-
260,713
15,524,709
444,894
18,136
45,948
531,374
15,537,746
-
97,112
-
16,230,316
238,475
280,209
1,362,643
16,827,866
-
116,337
-
18,825,530
(3,379,858)
-
366,458
815,133
-
4,778,587
-
4,778,587
439,620
26,122,935
LIABILITIES
Current liabilities:
Accounts payable
Accrued compensated absences
Due to other funds
Accrued claims and judgments
Bonds, notes, and capital leases
Total current liabilities
Noncurrent liabilities:
Accrued compensated absences
Accrued claims and judgments
Bonds, notes, and capital leases
Total noncurrent liabilities
Total liabilities
NET POSITION
Net investment in capital assets
Unrestricted
Total net position
2,923,207
5,710,402
$
8,633,609
12,803
(280,209)
$
(267,406)
592,027
97,822
$
689,849
145
$
(3,379,858)
$
-
$
1,181,591
439,620
$
439,620
3,894,495
3,402,910
$
7,297,405
CITY OF REDONDO BEACH
Combining Statement of Revenues, Expenditures and Change in Net Position
All Internal Service Funds
For the year ended June 30, 2013
Vehicle
Replacement
Building
Occupancy
Information
Technology
Self-Insurance
Program
Printing and
Graphics
Emergency
Communications
Major
Facilities Repair
$
$
$
$
Total
OPERATING REVENUES:
Sales and service charges
Miscellaneous
$
Total operating revenues
OPERATING EXPENSES:
Administrative and general expenses
Personnel services
Contractual services
Depreciation
Total operating expenses
OPERATING INCOME (LOSS)
2,951,629
78,919
$
Total nonoperating revenues (expenses)
INCOME (LOSS) BEFORE TRANSFERS
5,093,360
-
-
2,588,681
-
113,987
-
$
5,093,360
-
2,588,681
209,061
1,176,380
194,022
603,699
1,142,179
939,464
413,345
2,280
692,069
717,360
881,307
78,775
685,173
531,122
5,484,018
-
230
-
207,604
1,960,183
509,245
71,271
-
2,936,316
5,324,509
7,481,937
756,025
2,183,162
2,497,268
2,369,511
6,700,313
230
2,748,303
-
16,498,787
(1,606,953)
(230)
(270,461)
(51,081)
113,987
15,289,813
82,000
2,318,430
(159,622)
15,371,813
113,987
(1,126,974)
35,811
-
-
-
-
-
-
35,811
35,811
-
-
-
-
-
-
35,811
(270,461)
-
Change in net position
2,315,349
3,081
2,226,807
883,197
Transfers in
Transfers out
$
3,030,548
847,386
NONOPERATING REVENUES AND EXPENSES:
Gain on sale of capital assets
2,226,807
-
-
883,197
(270,461)
(51,081)
(1,606,953)
(230)
126,313
(7,926)
312,607
(301,500)
7,926
(126,313)
(1,595,846)
(118,617)
67,306
(159,622)
113,987
-
(1,091,163)
-
(159,622)
446,846
(435,739)
113,987
(1,080,056)
NET POSITION
Beginning of year
End of year
3,055
7,750,412
$
8,633,609
$
(267,406)
$
622,543
(1,784,012)
689,849
$ (3,379,858)
146
118,617
$
-
1,341,213
$
1,181,591
325,633
$
439,620
8,377,461
$
7,297,405
CITY OF REDONDO BEACH
Combining Statement of Cash Flows
All Internal Serivce Funds
For the year ended June 30, 2013
Vehicle
Replacement
Building
Occupancy
Information
Technology
Self-Insurance
Program
Printing and
Graphics
Emergency
Communications
Major
Facilities Repair
Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users
Cash payments to suppliers for goods and services
Cash payments to employees for services
$
3,033,167
(389,585)
(1,175,854)
$
1,467,728
Net cash provided (used) by operating activities
2,226,807
(1,486,517)
(954,254)
$
2,320,146
(1,240,498)
(719,701)
(213,964)
$
5,092,329
(4,636,518)
(536,458)
$
(685)
-
359,947
(80,647)
(685)
$
2,588,595
(724,837)
(1,934,140)
$
(70,382)
113,987
-
$
113,987
15,375,031
(8,478,640)
(5,320,407)
1,575,984
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in
Transfers out
Net cash provided (used) by noncapital financing activities
-
-
126,313
(7,926)
312,607
(301,500)
7,926
(126,313)
-
-
446,846
(435,739)
-
-
118,387
11,107
(118,387)
-
-
11,107
(606,380)
35,811
-
(530,466)
474,473
(450,560)
-
-
-
-
-
(1,136,846)
474,473
(450,560)
35,811
(570,569)
-
(506,553)
-
-
-
-
(1,077,122)
(28,219)
(69,540)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition and construction of capital assets
Proceeds from new capital leases
Principal paid on capital debt
Proceeds from sales of capital assets
Net cash used by capital and related financing activities
897,159
Net increase (decrease) in cash and cash equivalents
(213,964)
(119,072)
(70,382)
113,987
509,969
CASH AND CASH EQUIVALENTS:
Beginning of year
End of year
5,038,030
$
5,935,189
213,964
$
897,159
-
604,592
$
576,373
(213,964)
13,516,515
$
(28,219)
13,446,975
119,072
$
(69,540)
-
1,001,766
$
(119,072)
931,384
325,633
$
(70,382)
439,620
20,819,572
$
21,329,541
$
(1,126,974)
113,987
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss)
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation expense
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(Increase) decrease in prepaid expenses
Increase (decrease) in accounts payable
Increase (decrease) in accrued liabilities
Increase (decrease) in compensated absences
$
$
$
(270,461)
$
(51,081)
603,699
2,280
78,775
2,619
13,498
526
69,006
(14,789)
1,716
332,878
(2,341)
620,342
Total adjustments
Net cash provided (used) by operating activities
847,386
1,467,728
56,497
$
(213,964)
$
359,947
147
$
-
(80,647)
$
230
(685)
-
1,526,306
$
(230)
-
(1,033)
2
34,200
1,498,473
(5,336)
411,028
$
(1,606,953)
(455)
$
(685)
(159,622)
$
71,271
-
756,025
(86)
(7,988)
26,043
-
1,586
1,862
440,909
1,498,473
4,103
89,240
$
113,987
(70,382)
$
113,987
2,702,958
$
1,575,984
FIDUCIARY FUNDS
AGENCY FUNDS
The agency funds are used to account for assets held by the City as an agent. Agency funds include the following:
Deposits Fund - To account for monies received and disbursed by the City in its capacity as an agent, including refundable deposits and payroll.
Assessment District 92-1 Fund - To account for monies held for debt service transactions of the Manhattan Beach Boulevard Assessment District (District
92-1) Bonds for which the City is not obligated.
148
City of Redondo Beach
Combining Statement of Fiduciary Net Position
Agency Funds
June 30, 2013
Assessment
District 92-1
Deposits
Total
Agency Funds
ASSETS:
Pooled cash and investments
Receivables:
Accounts
Interest
$
519,094
$
5,469
502
Total Assets
178,012
$
-
$
525,065
$
$
323,043
$
178,012
697,106
5,469
502
$
703,077
$
323,043
LIABILITIES:
Accounts payable
Deposits payable
202,022
Total Liabilities
$
149
525,065
178,012
$
178,012
380,034
$
703,077
City of Redondo Beach
Combining Statement of Changes in Fiduciary Net Position
Agency Funds
For the year ended June 30, 2013
Balance at
June 30, 2012
Additions
Balance at
June 30, 2013
Deletions
Deposits
ASSETS:
Pooled cash and investments
Receivables:
Accounts
Interest
Prepaid Expense
Total Assets
$
132,036
$
19,213
579
825,390
$
4,517,711
$
535,505
502
-
977,218
$
Accounts payable
77,373
$
Deposits payable
899,845
(4,130,653)
$
(549,249)
(579)
(825,390)
5,053,718
$
3,094,076
$
519,094
5,469
502
-
(5,505,871)
$
(2,848,406)
$
525,065
LIABILITIES:
Total Liabilities
4,044,049
7,138,125
(4,741,872)
$
977,218
$
$
$
178,012
$
-
$
$
178,012
$
-
$
178,012
$
$
178,012
$
(7,590,278)
323,043
202,022
$
525,065
-
$
178,012
$
-
$
178,012
-
$
-
-
$
-
Assessment District 92-1
ASSETS:
Pooled cash and investments
Total Assets
LIABILITIES:
Deposits payable
Total Liabilities
150
178,012
$
178,012
City of Redondo Beach
Combining Statement of Changes in Fiduciary Net Position
Agency Funds
For the year ended June 30, 2013
Balance at
June 30, 2012
Additions
Balance at
June 30, 2013
Deletions
Total - All Agency Funds
ASSETS:
Pooled cash and investments
Receivables:
Accounts
Interest
Prepaid Expense
Total Assets
$
310,048
$
19,213
579
825,390
4,517,711
$
535,505
502
-
(4,130,653)
$
(549,249)
(579)
(825,390)
697,106
5,469
502
-
$
1,155,230
$
5,053,718
$
(5,505,871)
$
703,077
$
77,373
$
3,094,076
$
(2,848,406)
$
323,043
LIABILITIES:
Accounts payable
Deposits payable
Total Liabilities
1,077,857
$
1,155,230
151
4,044,049
$
7,138,125
(4,741,872)
$
(7,590,278)
380,034
$
703,077
Honorable Mayor and Members of the City Council
of the City of Redondo Beach
Redondo Beach, California
Page 2
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of
deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be
prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all
deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify
any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly we do not express such an opinion. The results of our tests disclosed no instance of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide
an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
December 13, 2013
153
Overview of the Five Categories Presented in the City's Statistical Section
Contents
Page
Financial Trends
Presented are schedules containing trend information to assist in the reader's understanding of
how the City's financial performance has changed over time.
155
Revenue Capacity
Presented are schedules to assist the reader's assessment of the factors affecting the City's
ability to generate revenue through property taxes.
161
Debt Capacity
Presented are schedules to assist the reader's understanding of the City's current level of
outstanding debt and it's ability to issue additional debt in the future.
165
Demographic and Economic Information
Presented are schedules to assist the reader's understanding of the socioeconomic environment
within which the City operates and to help make comparisons over time and with other
governments.
169
Operating & Other Information
Presented are schedules to assist the reader's understanding of how the City's financial
information relates to the services provided by the City and the activities it performs.
154
171
City of Redondo Beach
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
2004
Governmental Activities:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total governmental activities net position
$
131,553,186
18,585,387
(3,642,292)
146,496,281
2005
$
131,738,853
32,636,751
(22,641,897)
141,733,707
2006
$
131,382,820
29,022,856
(15,492,009)
144,913,667
Fiscal Year
2008
2007
$
135,153,851
34,504,525
(16,364,199)
153,294,177
$
134,543,764
34,884,364
(14,805,067)
154,623,061
$
2009
135,170,376
17,828,013
876,969
153,875,358
2010
$
137,743,367
16,803,437
(766,752)
153,780,052
2011
$
140,306,635
29,890,049
(12,443,192)
157,753,492
2012
$
143,049,830
17,861,803
21,623,137
182,534,770
2013
$
142,096,683
17,703,725
24,173,012
183,973,420
Business-type activities:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total business-type activities net position
25,572,316
30,464,219
56,036,535
39,409,701
19,380,216
58,789,917
39,151,202
20,013,129
59,164,331
38,139,435
22,770,297
60,909,732
36,923,208
25,271,647
62,194,855
35,414,035
25,564,850
60,978,885
35,985,952
25,550,889
61,536,841
34,790,325
27,481,003
62,271,328
34,957,595
24,616,381
59,573,976
38,936,171
28,210,687
67,146,858
Primary government:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total primary government net position
157,125,502
18,585,387
26,821,927
202,532,816
171,148,554
32,636,751
(3,261,681)
200,523,624
170,534,022
29,022,856
4,521,120
204,077,998
173,293,286
34,504,525
6,406,098
214,203,909
171,466,972
34,884,364
10,466,580
216,817,916
170,584,411
17,828,013
26,441,819
214,854,243
173,729,319
16,803,437
24,784,137
215,316,893
175,096,960
29,890,049
15,037,811
220,024,820
178,007,425
17,861,803
46,239,518
242,108,746
181,032,854
17,703,725
52,383,699
251,120,278
$
$
$
$
Source: City of Redondo Beach Comprehensive Annual Financial Report, Government-Wide Financial Statements
155
$
$
$
$
$
$
City of Redondo Beach
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
2004
Expenses
Government activities:
General government
Public Safety
Housing and community development
Cultural and leisure services
Public works
Interest on long-term debt
AB 1484 demand payment
Total governmental activities expenses
Business-type activities:
Harbor Tidelands
Harbor Uplands
Solid Waste
Transit
Wastewater
Total business-type activities expenses
Total primary government expenses
$
8,182,895
28,889,848
11,746,765
7,673,578
14,478,369
1,377,259
72,348,714
2005
$
10,427,561
32,490,257
11,797,139
8,204,892
14,212,509
1,956,707
79,089,065
2006
$
10,638,910
35,772,948
11,749,944
8,812,584
12,936,637
2,122,317
82,033,340
2007
$
10,019,467
38,269,521
12,194,088
9,499,827
14,986,259
1,696,368
86,665,530
$
Fiscal Year
2008
2009
10,234,450
40,835,961
14,063,015
10,143,340
13,601,505
2,419,799
91,298,070
9,234,672
42,293,976
17,696,101
7,586,649
12,538,423
1,747,427
91,097,248
$
2010
$
7,618,055
40,737,832
16,227,602
6,543,884
17,930,811
1,077,588
90,135,772
2011
$
7,951,800
41,849,863
13,159,622
7,002,619
12,381,276
1,014,572
83,359,752
2012
$
8,560,957
43,020,839
13,822,831
7,389,274
10,589,076
637,624
9,914,969
93,935,570
2013
$
11,974,780
43,141,036
10,085,882
10,933,176
11,588,895
266,651
87,990,420
4,474,733
4,682,845
2,901,712
886,466
12,945,756
85,294,470
5,142,991
4,071,680
3,001,525
1,350,156
13,566,352
92,655,417
4,447,965
4,466,239
3,225,121
2,686,646
14,825,971
96,859,311
4,902,841
4,503,160
3,493,852
2,122,793
15,022,646
101,688,176
5,075,571
5,416,019
3,129,337
1,853,206
15,474,133
106,772,203
5,360,523
5,288,345
3,228,498
2,092,245
15,969,611
107,066,859
5,372,721
4,441,227
3,364,549
2,207,319
15,385,816
105,521,588
5,415,810
4,571,399
3,574,516
3,102,333
2,476,972
19,141,030
102,500,782
7,689,071
3,952,061
3,431,017
3,113,076
3,196,442
21,381,667
115,317,237
4,998,098
3,657,127
3,610,925
3,288,696
1,880,835
17,435,681
105,426,101
176,191
1,226,777
5,233,846
1,462,232
1,746,110
13,548,374
507,063
23,900,593
218,476
1,357,045
5,091,922
1,743,838
1,866,308
14,385,755
715,672
25,379,016
4,732,359
1,353,696
5,425,840
1,864,303
1,879,095
11,403,631
2,856,548
29,515,472
6,434,951
1,290,081
4,989,531
1,842,631
1,771,922
12,366,720
4,916,505
33,612,341
6,337,391
1,437,688
5,186,896
1,747,849
1,733,379
14,480,137
4,863,545
35,786,885
4,798,599
2,669,185
4,056,523
1,219,916
4,518,076
9,137,687
3,486,113
29,886,099
6,804,342
2,097,003
4,556,546
1,211,155
1,923,289
8,715,661
6,605,139
31,913,135
6,941,477
4,133,005
2,613,104
1,553,477
1,834,052
8,928,050
6,976,620
32,979,785
10,416,465
4,448,833
1,743,286
1,615,347
2,127,381
8,590,969
4,582,744
33,525,025
11,315,431
4,466,605
2,246,976
1,770,757
2,170,823
9,925,853
705,357
32,601,802
Component Units:
Program Revenues
P
R
Governmental activities:
Charges for Services:
General government
Public Safety
Housing and community development
Cultural and leisure services
Public works
Operating grants and contributions
Capital grants and contributions
Total governmental activities program revenues
156
City of Redondo Beach
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
2004
2005
2006
2007
Fiscal Year
2008
2009
4,938,355
3,554,528
2,464,184
236,675
36,362
11,230,104
35,130,697
4,976,742
3,526,424
2,462,684
2,487,868
49,717
13,503,435
38,882,451
4,797,346
3,858,007
3,184,481
2,135,108
73,035
14,047,977
43,563,449
5,067,315
4,103,636
3,481,133
1,842,479
68,841
14,563,404
48,175,745
6,084,834
4,400,815
2,845,736
1,739,468
70,150
15,141,003
50,927,888
5,270,090
4,038,226
2,992,476
2,293,090
162,512
14,756,394
44,642,493
5,408,349
3,935,048
3,356,843
2,437,816
17,769
15,155,825
47,068,960
5,475,085
3,672,769
3,454,839
519,082
2,444,086
1,231,111
16,796,972
49,776,757
5,290,706
4,009,954
3,312,471
676,020
2,575,279
1,395,363
17,259,793
50,784,818
5,572,625
3,760,715
3,396,353
349,454
3,764,711
1,672,668
2,545,504
21,062,030
53,663,832
(48,448,121)
(1,715,652)
(50,163,773)
(53,710,049)
(62,917)
(53,772,966)
(52,517,868)
(777,994)
(53,295,862)
(53,053,189)
(459,242)
(53,512,431)
(55,511,185)
(333,130)
(55,844,315)
(61,211,149)
(1,213,217)
(62,424,366)
(58,222,637)
(229,991)
(58,452,628)
(50,379,967)
(2,344,058)
(52,724,025)
(60,410,545)
(4,121,874)
(64,532,419)
(55,388,618)
3,626,349
(51,762,269)
General Revenues and Other Changes in Net Position
Governmental Activities
Taxes
Property taxes, levied for general purpose
Transient occupancy taxes
Sales taxes
Franchise taxes
Business licenses taxes
Utility users taxes
Other taxes
Motor vehicle in lieu
Investment earnings
Other revenues
Gain (loss) on sale of capital assets
Transfers
Gain (loss) on dissolution of Redevelopment Agency
Total governmental activities
18,058,184
2,439,439
8,544,764
1,842,050
1,302,614
6,841,854
2,959,364
1,729,697
1,248,023
(12,125)
(5,308,676)
39,645,188
19,524,448
2,648,323
9,408,574
1,761,441
1,323,345
7,184,530
5,653,644
2,595,528
1,980,160
473,040
52,553,033
25,617,618
3,354,138
9,906,235
1,767,452
1,376,117
7,398,984
453,645
3,349,037
1,340,746
54,563,972
27,136,137
3,738,839
10,205,436
1,685,711
1,289,608
7,878,429
429,612
4,687,909
1,626,971
58,678,652
27,311,112
3,933,009
9,635,626
1,807,308
1,385,726
8,018,564
293,685
4,264,527
443,706
34,735
(146,710)
56,981,288
28,612,395
3,485,290
9,329,872
1,970,548
1,293,056
7,848,157
205,403
4,948,736
1,599,388
28,288
1,142,313
60,463,446
29,598,821
3,204,045
7,839,179
1,673,632
1,256,462
8,043,207
11,200
198,745
5,118,217
1,078,427
26,396
79,000
58,127,331
28,320,076
3,267,209
8,902,151
1,816,314
1,240,024
7,667,130
310,907
3,585,902
1,601,333
54,076
(758,345)
56,006,777
28,335,561
3,533,501
9,594,901
1,950,934
1,203,591
7,422,089
33,693
3,371,724
2,831,748
73,574
(1,017,605)
27,858,112
85,191,823
30,728,698
3,693,144
10,228,355
1,796,606
1,018,677
7,711,580
8,703
34,912
1,212,032
1,499,306
35,578
(1,202,508)
56,765,083
Business-type activities:
Investment earnings
Loss on disposal of capital assets
Other revenues
Transfers
Total business-type activities
Total primary government
295,611
760,920
5,308,676
6,365,207
46,010,395
810,422
1,032,553
(473,040)
1,369,935
53,922,968
839,082
204,761
1,043,843
55,607,815
1,439,428
138,877
1,578,305
60,256,957
1,329,922
141,621
146,710
1,618,253
58,599,541
944,480
195,080
(1,142,313)
(2,753)
60,460,693
801,184
(16,398)
176,052
(79,000)
881,838
59,009,169
408,915
307,915
758,345
1,475,175
57,481,952
241,958
181,532
1,017,605
1,441,095
86,632,918
69,851
2,674,174
1,202,508
3,946,533
60,711,616
Business-type activities:
Charges for services:
Harbor Tidelands
Harbor Uplands
Solid Waste
Transit
Wastewater
Operating grants and contributions
Capital grants and contributions
Total business-type activities program revenues
Total primary government program revenues
Net (expense)/revenue
Governmental activities
Business-type activities
Total primary government net expense
Change in Net Position
157
2010
2011
2012
2013
City of Redondo Beach
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Governmental activities
Business-type activities
Totally primary government
$
2004
(8,802,933)
4,649,555
(4,153,378)
$
2005
(1,157,016)
1,307,018
150,002
$
2006
2,046,104
265,849
2,311,953
$
Source: City of Redondo Beach Comprehensive Annual Financial Report, Government-Wide Financial Statements
158
2007
5,625,463
1,119,063
6,744,526
$
Fiscal Year
2008
1,470,103
1,285,123
2,755,226 $
2009
(747,703)
(1,215,970)
(1,963,673)
$
2010
(95,306)
651,847
556,541
$
2011
5,626,810
(868,883)
4,757,927
$
2012
24,781,278
(2,680,779)
22,100,499
$
2013
1,376,465
7,572,882
8,949,347
City of Redondo Beach
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
2004
General fund
Reserved
Unreserved:
Designated
Undesignated
Nonspendable
Committed
Assigned
Unassigned
Total general fund
All other governmental funds
Reserved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Debt service funds
Designated, reported in:
Special revenue funds
Capital projects funds
Undesignated, reported in:
Special revenue funds
Capital projects funds
Debt service funds
Nonspendable
Nonspendable, reported in:
Special revenue funds
Restricted
Restricted, reported in:
Special revenue funds
Debt service funds
Committed
Assigned
Assigned, reported in:
Capital projects funds
Special revenue funds
Unassigned
Unassigned, reported in:
Special revenue funds
Capital projects funds
Debt service funds
Total all other governmental funds
$
$
2005
532,612
$
2006
1,229,239
$
2007
759,733
$
Fiscal Year
2009
2008
781,710
$
902,881
$
2010
634,743
11,942,979
3,692
12,479,283
9,144,315
1,028,448
11,402,002
9,383,713
2,680,196
12,823,642
10,143,013
214,115
11,138,838
11,363,952
314,926
12,581,759
9,353,252
37,327
10,025,322
5,770,495
3,156,012
7,519,312
21,109,217
21,158,335
15,551,248
5,089,794
2,284,886
4,822
5,941,612
2,085,674
4,819
4,485,135
1,763,987
5,021
8,108,628
1,581,516
5,028
7,429,282
1,614,077
5,028
3,010,610
8,142,187
5,233,040
2,070,751
6,250,116
2,948,322
6,326,050
(1,670,397)
4,400,944
(2 620 107)
(2,620,107)
-
3,215,250
2,629,467
(3 278 401)
(3,278,401)
-
218
1,424,414
(3 714 945)
(3,714,945)
-
(2,831,086)
4,050,994
(13 958 851)
(13,958,851)
-
$
2011 *
514,549
$
9,321,572
(75,211)
9,760,910
2012 *
-
$
2013 *
-
$
-
167,035
5,595,596
7,891,828
13,654,459
76,547
5,712,942
7,601,191
13,390,680
120,831
5,889,783
11,275,445
272,083
17,558,142
13,938,764
-
-
-
4,494,765
5,052
1,222,686
5,265,375
5,054
1,165,476
-
-
-
3,567,481
8,926,207
2,696,956
9,891,290
2,043,237
-
-
-
-
(2,368,822)
3,414,086
(12 990 180)
(12,990,180)
-
5,803,471
2,317,151
(14 007 225)
(14,007,225)
-
7,103,415
5,365,603
(15 428 315)
(15,428,315)
-
1,012
57,995
-
-
-
-
-
-
-
-
8,524,280
2,898,234
10,472,386
16,010,908
-
-
-
-
-
-
-
13,257,981
8,107,706
-
7,362,829
3,503,086
6,818,696
3,113,179
-
-
-
-
-
-
-
1,645,977
841,689
535,731
3,170,437
-
24,413,234
18,987,473
19,804,009
27,339,818
30,755,494
27,975,394
19,458,609
(3,027,926)
3,040,646
(15,046,266)
17,345,099
(1,319,919)
26,680,779
$
$
$
$
NOTE: *The change of fund balance descriptions is due to the implementation of GASB 54 in fiscal year 2010/2011.
Source: City of Redondo Beach Comprehensive Annual Financial Report, Governmental Fund Financial Statements
159
$
$
$
$
$
(1,044,377)
24,898,406
City of Redondo Beach
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
2004
Revenues:
Taxes
Interdepartmental
Licenses and permits
Intergovernmental
Charges for services
Use of money and property
Fines and forfeitures
Other revenues
$
Total Revenues
Expenditures:
Current:
General government
Public safety
Housing and community development
Cultural and leisure services
Public works
AB 1484 demand payment
Capital outlay
Debt service:
Principal
Interest
Debt issuance costs
Total Expenditures
E
Excess
off R
Revenues O
Over (U
(Under)
d ) Expenditures
E
dit
Other Financing Sources (Uses):
Transfers in
Transfers out
Refunding bonds issued
Other debts issued
Bond premium
Refunding bonds redeemed
Gain (loss) on Redevelopment Agency dissolution
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Debt service as a percentage of noncapital expenditures
2005
39,678,946
1,513,226
16,208,575
7,193,850
2,178,640
1,069,909
784,325
$
47,416,940
1,713,598
13,322,228
7,738,642
3,834,831
942,598
697,856
$
2007
49,809,201
4,298,260
2,006,686
14,196,236
8,673,373
3,458,204
889,437
760,816
$
2008
52,569,593
6,314,753
1,660,339
15,771,721
7,627,197
5,228,621
1,117,196
787,722
$
Fiscal Year
53,052,490
6,314,750
1,306,025
16,660,368
6,814,267
6,279,652
1,984,683
559,093
$
2009
2010
52,330,017
6,655,458
1,006,075
13,991,411
6,947,073
5,680,333
1,845,838
1,703,984
$
2011
49,946,499
6,681,277
930,523
15,619,990
7,279,164
4,929,845
1,875,287
999,916
$
2012
51,768,825
6,383,731
1,248,916
14,545,341
7,485,670
3,512,619
1,785,067
1,447,680
$
2013
51,875,943
6,249,628
1,343,422
16,339,864
7,486,013
3,760,501
1,634,786
2,948,048
$
55,882,844
6,656,858
1,259,505
13,380,088
7,461,642
3,146,954
1,663,966
1,062,143
68,627,471
75,666,693
84,092,213
91,077,142
92,971,328
90,160,189
88,262,501
88,177,849
91,638,205
90,514,000
8,134,136
28,548,022
11,753,095
7,565,264
11,866,239
1,884,946
10,291,155
31,357,941
11,134,350
7,446,505
7,404,995
10,024,176
10,531,849
35,109,834
11,341,953
8,658,356
9,409,898
3,356,314
9,878,387
38,254,942
11,960,230
9,120,765
10,218,116
5,318,230
9,033,018
40,909,913
13,970,479
9,780,910
11,046,771
4,121,712
8,693,889
42,869,798
17,569,049
7,372,691
9,554,993
5,683,727
7,901,358
41,964,634
16,392,441
7,427,423
8,787,700
11,562,615
7,582,969
41,450,374
12,882,944
6,671,934
9,450,771
8,384,700
8,085,175
42,244,015
13,549,748
5,282,197
7,395,866
9,914,969
5,491,358
9,285,279
42,480,962
9,360,093
8,567,569
9,212,829
6,357,661
395,046
1,389,640
71,536,388
420,069
1,958,332
80,037,523
1,984,826
2,130,871
82,523,901
757,671
1,698,884
87,207,225
1,526,811
2,902,761
93,292,375
3,448,829
1,738,532
96,931,508
2,492,055
1,069,040
97,597,266
777,554
1,017,824
88,219,070
1,750,000
641,376
94,354,704
1,380,000
270,903
86,915,296
(2 908 917)
(2,908,917)
(4 370 830)
(4,370,830)
1 568 312
1,568,312
3 869 917
3,869,917
(321 047)
(321,047)
(6 771 319)
(6,771,319)
(9 334 765)
(9,334,765)
(41 221)
(41,221)
(2 716 499)
(2,716,499)
3 598 704
3,598,704
3,548,964
(4,194,424)
655,879
-
3,194,254
(6,007,674)
926,685
-
3,296,665
(4,496,995)
736,338
-
6,611,051
(7,853,397)
476,292
-
11,074,552
(6,630,271)
7,645,000
648,720
227,862
(7,645,000)
-
5,482,661
(4,595,668)
700,000
547,789
(700,000)
-
2,707,679
(2,743,425)
589,314
-
17,341,414
(15,834,081)
301,197
-
11,497,255
(13,478,178)
246,200
13,523,123
3,223,702
(4,437,317)
-
10,419
$
2006
(2,898,498)
2.63%
(1,886,735)
$
(6,257,565)
3.52%
.
(463,992)
$
1,104,320
5.48%
(766,054)
$
3,103,863
3.09%
Source: City of Redondo Beach Comprehensive Annual Financial Report, Government-Wide Financial Statements
160
5,320,863
$
4,999,816
5.23%
1,434,782
$
(5,336,537)
6.03%
553,568
$
(8,781,197)
4.32%
1,808,530
$
1,767,309
2.30%
11,788,400
$
9,071,901
2.77%
(1,213,615)
$
2,385,089
2.09%
City of Redondo Beach
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
City
Fiscal Year
Ended
June 30
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Secured
7,506,186,983
7,919,761,315
8,791,344,602
9,681,892,573
10,414,844,031
10,967,218,597
11,070,789,692
11,088,815,868
11,385,441,715
11,606,153,109
Unsecured
361,472,965
349,465,981
347,996,542
375,435,811
363,370,583
377,551,863
362,332,212
609,276,121
432,094,319
503,602,130
Redevelopment
Less:
Exemptions
(60,856,425)
(43,088,228)
(69,771,516)
(47,879,656)
(75,561,247)
(67,013,974)
(66,883,744)
(82,655,891)
(56,430,405)
(59,615,627)
Taxable
Assessed
Value
Secured
7,806,803,523
8,226,139,068
9,069,569,628
10,009,448,728
10,702,653,367
11,277,756,486
11,366,238,160
11,615,436,098
11,761,105,629
12,050,139,612
253,975,182
277,594,347
272,239,842
347,940,107
371,338,622
371,987,381
409,520,646
397,519,636
389,564,455
441,667,976
Unsecured
66,824,277
59,467,281
58,002,148
55,919,195
62,307,947
64,908,544
55,988,588
31,015,873
54,640,221
37,592,938
Exemptions
(332,518)
(537,132)
(547,874)
(771,134)
(158,162)
(866,778)
(864,841)
(658,821)
(671,996)
Taxable
Assessed
Value
320,466,941
337,061,628
329,704,858
403,311,428
432,875,435
436,737,763
464,642,456
427,670,668
443,545,855
478,588,918
Total
Direct Tax
Rate
0.222%
0.228%
0.273%
0.261%
0.245%
0.244%
0.250%
0.235%
0.232%
0.245%
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.
Source: HdL Coren & Cone, Los Angeles County Auditor-Controller/Tax Division 2012-13 Combined Tax Rolls
161
City of Redondo Beach
Direct and Overlapping Property Tax Rates
(Rate per $100 of taxable value)
Last Ten Fiscal Years
Fiscal Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
City basic rate
0.16617
0.16617
0.16617
0.16617
0.16617
0.16539
0.16539
0.16539
0.16539
0.16539
Redevelopment agency
1.00755
1.00697
1.00604
1.00541
1.00450
1.00430
1.00430
1.00370
1.00370
-
Los Angeles County
0.00099
0.00092
0.00080
0.00066
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
Flood Control
0.00047
0.00024
0.00005
0.00005
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
Metropolitan Water District
0.00610
0.00580
0.00520
0.00470
0.00450
0.00430
0.00430
0.00370
0.00370
0.00350
Community College
0.01903
0.01656
0.01838
0.03570
0.01647
0.01703
0.01487
0.01614
0.01688
0.01849
Unified School District
0.00866
0.02765
0.03336
0.02970
0.02844
0.04714
0.05519
0.06977
0.08610
0.08162
0.18360
0.18176
0.18234
0.21166
0.18715
0.18608
0.18774
0.18818
0.18575
0.18746
Overlapping Rates:
Total Direct Rate
Notes: General fund tax rates are representative and based upon the direct and overlapping rates for the largest general fund tax rate area (TRA) by net taxable value.
Total Direct Rate is the weighted average of all individual direct rates applied by the City of Redondo Beach.
RDA rate is based on the largest RDA tax rate area(TRA) and includes only rate(s) from indebtedness adopted prior to 1969 per California State statute.
RDA direct and overlapping rates are applied only to the incremental property values.
In 1978, California voters passed Proposition 13 which set 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 to assessed property values for the payment of any voter approved bonds.
Source: HdL Coren & Cone, Los Angeles County Assessor 2012/2013 Tax Rate Table
162
City of Redondo Beach
Principal Property Taxpayers
Current Year and Nine Years Ago
2013
Taxpayer
Northrop Gruman Space and Mission (formerly TRW Inc.)
$
2004
Percent of
Percent of
Total City
Total City
Taxable
Taxable
Taxable
Taxable
Assessed
Assessed
Assessed
Assessed
Value
Value
Value
Value
537,576,380
4.29%
230,804,300
2.84%
South Bay Center SPE LLC
194,003,848
1.55%
$
153,748,572
1.89%
AES Redondo Beach, LLC
173,035,658
1.38%
-
The Kobe Group INC
64,753,938
0.52%
-
Noble House Recp Hotel Venture LLC
60,522,561
0.48%
-
LPF Redondo Beach INC
54,444,365
0.43%
-
HPT IHG 2 Properties Trust
43,657,882
0.35%
-
MKEG P LLC
37,731,773
0.30%
-
AMB AMS Spinnaker LLC
33,942,467
0.27%
-
616 Esplanade Street LLC
33,290,133
0.27%
-
TRW, INC
-
-
179,119,748
2.20%
Portofino Partners
-
-
31,432,340
0.39%
Intercontinental Hotels Group
-
-
27,513,825
0.34%
Haagen Redondo LLC
-
-
23,268,546
0.29%
Metropolitan Investments LLC
-
-
22,561,311
0.28%
Avalonbay Communities INC
-
-
18,611,160
0.23%
88 Palos Verdes Inn Limited
-
-
17,670,747
0.22%
Allen H. Ginsburg, Et. Al.
-
-
16,957,675
0.21%
721,688,224
8.88%
$
1,232,959,005
NOTE: The amounts shown above include assessed value date for both the City and the Redevelopment Agency.
Source: HdL Coren & Cone, Los Angeles County Assessor 2012/2013 Combined Tax Rolls
163
9.84%
$
City of Redondo Beach
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the
Fiscal Year
Total Tax
Ended
Levy for
June 30
Fiscal Year
Fiscal Year of the Levy
Amount
Collections
Percentage of
in Subsequent
Levy
Years
Total Collections to Date
Percentage
Amount
of Levy
2004
16,229,288
15,968,858
98.40%
506,977
16,475,835
101.52%
2005
19,327,612
18,856,789
97.56%
459,220
19,316,009
99.94%
2006
19,954,589
19,442,404
97.43%
455,758
19,898,162
99.72%
2007
21,893,557
21,130,547
96.51%
477,535
21,608,082
98.70%
2008
23,253,318
22,214,291
95.53%
646,294
22,860,585
98.31%
2009
24,948,068
23,904,011
95.82%
1,156,615
25,060,626
100.45%
2010
25,278,747
24,462,121
96.77%
1,204,949
25,667,070
101.54%
2011
25,809,271
25,195,837
97.62%
1,083,378
26,279,214
101.82%
2012
26,025,500
25,493,811
97.96%
799,155
26,292,966
101.03%
2013
27,652,911
27,193,269
98.34%
789,478
27,982,747
101.19%
Source: County of Los Angeles Auditor-Controller
164
City of Redondo Beach
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
Tax
Business-type Activities
Refunding
Fiscal
Allocation
Revenue
Revenue
Year
Bonds
Bonds
Bonds
Wastewater
Loans
Total
Percentage
Capital
County
Revenue
Construction
Capital
Primary
of Personal
Per
Leases
AB 1484
Bonds
Loans
Leases
Government
Income *
Capita
2004
4,385,000
9,325,000
2,730,000
12,805,278
36,364
-
10,263,776
4,607,531
-
44,152,949
13.42%
664
2005
4,285,000
9,150,000
2,615,000
13,701,886
26,295
-
10,086,150
4,399,037
-
44,263,368
12.78%
657
2006
3,085,000
8,965,000
2,500,000
13,953,397
12,961
-
9,903,524
4,399,037
-
42,818,919
11.60%
638
2007
3,010,000
8,765,000
2,380,000
14,067,018
919
-
9,715,898
4,181,161
-
42,119,996
10.79%
624
2008
2,930,000
-
10,113,873
14,508,927
45,219
-
9,523,272
3,953,480
-
41,074,771
9.94%
609
2009
-
-
9,759,884
14,872,887
33,169
-
9,325,646
3,715,553
-
37,707,139
9.37%
557
2010
-
-
8,870,895
13,840,146
20,686
-
9,118,020
3,466,920
-
35,316,667
8.76%
519
2011
-
-
8,126,906
14,088,789
887,204
-
8,905,394
3,207,098
-
35,215,391
8.37%
526
2012
-
-
6,357,917
-
883,933
7,700,000
8,682,769
2,935,586
-
26,560,205
6.00%
396
2013
-
-
4,958,928
-
884,094
-
8,450,143
2,651,854
-
16,945,019
-
251
NOTES: * Personal income data was not available from the California Department of Finance subsequent to fiscal year 2011/2012. Percentages reflected are calculated using personal income of the County of Los
Angeles.
Source: Note 8 of the Notes to Financial Statements
California Department of Finance
165
City of Redondo Beach
Direct and Overlapping Governmental Activities Debt
June 30, 2013
City Assessed Valuation
Incremental Valuation
Total Assessed Valuation
$
$
Percentage
Applicable
Direct Debt:
Boating & Waterways Construction Loan 89-21-147
PFA Refunding Bank Loan
Boating & Waterways Construction Loan 88-21-84
PFA 2008 Refunding Revenue Bonds
Capital Leases
Wastewater Revenue Bond 2004 Ser A
Estimated
Share of
Overlapping
Debt
Outstanding
Debt 6/30/13
100%
100%
100%
100%
100%
100%
Total direct debt
1,889,981
693,000
761,874
4,958,928
515,558
8,445,395
$
Overlapping Debt:
Redondo Beach Unified School District DS 2000 Ser E
Redondo Beach Unified School District DS 2008 Ser A
Redondo Beach Unified School District DS 2008 Ser B
Redondo Beach Unified School District DS 2008 Ser D BABS
Redondo Beach Unified School District 2010 Refunding Series 2000AB
Redondo Beach Unified School District 2010 Refund 2000CDE
Redondo Beach Unified School District 2008 Series E
Redondo Beach Unified School District 2008 Series F QSCB
Redondo Beach Unified School District 2012 Ref Bond
* Metropolitan Water District
El Camino CCS DS 2002 S-2003A
El Camino CCD DS 2005 REF BONDS
12,528,728,530
444,160,015
12,084,568,515
100%
100%
100%
100%
100%
100%
100%
100%
100%
1.369%
15.305%
15.305%
17,264,736
1,889,981
693,000
761,874
4,958,928
515,558
8,445,395
$
17,264,736
360,000
47,574,958
26,329,850
22,765,000
13,830,000
11,415,000
45,002,644
24,000,000
18,055,000
79,696,126
1,790,000
69,346,609
360,000
47,574,958
26,329,850
22,765,000
13,830,000
11,415,000
45,002,644
24,000,000
18,055,000
1,091,023
273,962
10,613,588
El Camino CCD DS 2002 SERIES 2006B
15.305%
88,880,000
13,603,199
El Camino CCD DS 2002 SERIES 2012C
15.305%
180,812,882
27,673,646
Total overlapping debt
$
Total direct and overlapping debt
NOTE: * This fund is a portion of a larger agency and is responsible for debt in areas outside the city.
Source: HdL Coren & Cone, Los Angeles County Assessor and Auditor Combined 2012/2013 Lien Date Tax Rolls
166
629,858,069
$
262,587,870
$
279,852,606
City of Redondo Beach
Legal Debt Margin Information
Last Ten Fiscal Years
Legal Debt Margin Calculation for Fiscal Year 2013
Assessed value
$
Debt Limit (15% of assessed value)
12,528,728,530
1,879,309,280
Debt applicable to limit
-
Legal debt margin
$
1,879,309,280
Fiscal Year
Debt limit
2004
2005
2006
2007
2008
2009
2010
2011
$ 1,219,090,570
$ 1,284,480,104
$ 1,409,891,173
$ 1,561,914,023
$ 1,670,329,320
$ 1,757,174,137
$ 1,774,632,092
$ 1,775,420,369
-
-
-
-
-
-
-
-
-
-
1,219,090,570
1,284,480,104
1,409,891,173
1,561,914,023
1,757,174,137
1,757,174,137
1,774,632,092
1,775,420,369
1,830,697,723
1,879,309,280
Total net debt applicable to limit
Legal debt margin
2012
$
2013
1,830,697,723
$
1,879,309,280
Total net debt applicable to the limit
as a percentage of debt limit
0%
0%
0%
0%
0%
Source: County of Los Angeles Auditor-Controller
167
0%
0%
0%
0%
0%
City of Redondo Beach
Pledged-Revenue Coverage
Last Nine Fiscal Years
Wastewater Revenue Bonds
Less
Net
Fiscal Year Ended
Wastewater
Operating
Available
June 30,
Revenue
Expenses
Revenue
2004
$
5,919,446
$
664,166
$
5,255,280
Debt Service
Principal
$
Interest
-
$
Coverage
-
0%
2005*
2,258,072
723,265
1,534,806
180,000
462,798
2.39
2006*
1,739,414
783,193
956,221
185,000
478,063
1.44
2007
1,609,643
798,094
811,549
190,000
472,513
1.22
2008
1,632,533
841,186
791,347
195,000
466,813
1.20
2009
2,238,654
1,036,836
1,201,818
200,000
476,050
1.78
2010
2,371,716
1,106,781
1,264,934
210,000
468,050
1.87
2011
2,376,530
1,023,182
1,353,348
215,000
459,650
2.01
2012
2,469,073
1,241,772
1,227,301
225,000
451,050
1.82
2013
3,469,675
1,201,797
2,267,878
235,000
442,050
3.35
NOTE: * Calculation of coverage was revised to reflect the proper coverage calculation under the bond convenant. The Redondo Beach Public Financing Authority issued the Wastewater System
Financing Project Revenue Bonds in fiscal year 2003/2004.
168
City of Redondo Beach
Demographic and Economic Statistics
June 30, 2013
Per
Calendar
Personal
Capita
Income *
Personal
Unemployment
(in millions)
Income *
Rate **
Year
Population
2004
66,545
329,048
49,447
6.3%
2005
67,325
346,423
51,455
5.0%
2006
67,112
369,174
55,009
4.4%
2007
67,495
390,296
57,826
4.7%
2008
67,488
413,317
61,243
6.6%
2009
67,646
402,281
40,867
10.8%
2010
68,105
403,014
41,025
11.5%
2011
66,970
420,803
42,564
11.9%
2012
67,007
443,006
44,474
11.2%
2013
67,396
-
9.6%
-
NOTES: * Personal income data was not available from the California Department of Finance subsequent to fiscal year 2011/2012. Per Capita Personal Income is based on the metropolitan area of Los
Angeles-Long Beach-Santa Ana, CA. Statistics not available subsequent to fiscal year 2011/2012. ** Unemployment rate is based on the metropolitan area of Los Angeles-Long Beach-Santa Ana, CA.
Source:
California Department of Finance, Demographic Research Unit
California Department of Finance, Economic Research Unit
U.S. Department of Labor
169
City of Redondo Beach
Principal Employers
Current Year and Nine Years Ago
2013
2004
Percentage
of Total City
Employer
Employees
Northrop Grumman (TRW)
Employment
Employees
5,645
16.33%
Redondo Beach Unified School District
995
2.88%
5,461
416
City of Redondo Beach
431
1.25%
513
Crown Plaza (Holiday Inn)
339
0.98%
-
The Cheesecake Factory
261
0.76%
243
United States Post Office
260
0.75%
230
Nordstrom, Inc.
254
0.73%
393
Target Store
217
0.63%
-
D H L Global Forwarding
207
0.60%
-
Macy's (Robinson's May)
206
0.60%
258
Imperial Bank
-
0.00%
253
Web Service Company
-
0.00%
236
Beach Cities Health District
-
0.00%
215
Source: City of Redondo Beach
170
City of Redondo Beach
Full-Time City Government Employees by Function
Last Ten Fiscal Years
Fiscal Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
59
56
56
59
60
58
52
52
49
50
Officers
107
105
105
105
105
105
99
96
96
96
Civilians
58
57
57
58
58
59
58
59
59
59
Firefighters and Officers
68
65
65
64
64
63
60
60
60
60
Civilians
6
5
5
6
6
5
5
3
3
3
Public Works
105
102
102
104
105
105
106
100
95
111
Cultural and Leisure Services
61
59
58
57
54
45
40
37
37
34
Housing & Community Development
44
33
33
34
35
38
30
31
30
15
Harbor, Business, & Transit
5
7
7
9
9
9
8
6
3
3
513
489
488
496
496
487
458
444
432
431
Function
General Government
Public Safety
Police
Fire
TOTAL
Source: City of Redondo Beach
171
City of Redondo Beach
Operating Indicators by Function
Last Ten Fiscal Years
Fiscal Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Public Safety
Police
Physical arrests
3,235
3,229
3,402
3,923
2,702
2,641
2,586
2,464
2,200
-*
Traffic citations issued
7,419
7,532
9,683
12,339
10,955
10,786
10,658
12,217
4,490
-*
Number of runs - rescues
3,351
3,386
3,551
3,779
3,932
3,942
4,007
4,016
4,313
-*
Number of runs - structures & other
1,075
868
1,087
1,672
1,676
1,495
1,552
1,315
1,743
-*
Fire
Public Works
Street rehabilitation (miles)
17.8
13.3
3.2
3.7
2.3
4.6
1.9
3.5
-
1.5
Culture and Leisure Services
Library
Number of items borrowed
845,496
845,569
852,750
844,947
831,354
Number of visitors
436,714
438,310
439,060
445,056
446,346
81,487
86,562
90,966
82,071
76,578
82,921
558
579
409
382
395
Number of permits issued
4,591
4,544
3,763
3,951
Number of plan checks issued
1,950
1,667
1,566
1,296
16,817
20,236
19,378
1,370
1,342
1,051
94,087
70,458
172,358
122,814
858,934
920,941
933,939
806,890
437,529
455,030
370,357
63,056
63,799
80,381
70,935
415
416
412
352
376
3,270
1,952
2,257
2,832
3,088
- ***
1,101
898
990
1,177
1,036
- ***
19,916
17,634
12,755
8,605
6,848
8,514
- ***
883
630
577
769
702
737
- ***
169,519
298,206
365,701
393,534
404,983
378,326
403,041
401,827
232,692
416,435
487,203
452,467
472,604
474,564
475,754
474,140
436,347 **
809,968
* 398,583**
*
Recreation and Community Services
Admissions - Seaside Lagoon
Number of facility rentals - Seaside Lagoon
Housing & Community Development
Number of inspections
Number of real estate reports
Number of bus boardings - Transit
Revenue miles - Transit
NOTE: * Data not available.
** The number of visitors decreased significantly due to the closure for construction at the North Branch Library for 5 months in fiscal year 2008-09 and then for all of fiscal year 2009-10.
*** The data was unavailable for FY 2012-13.
Source: City of Redondo Beach - Financial Services Department
172
City of Redondo Beach
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Stations
1
1
1
1
1
1
1
1
1
1
Sub-station
1
1
1
1
1
1
1
1
1
1
Fire Stations
3
3
3
3
3
3
3
3
3
3
Function
Public Safety
Police:
Public Works
Streets (miles)
127
127
127
127
127
127
127
127
127
127
Streetlights
5120
1892 *
1892*
1892*
1892*
1892*
1892*
1892*
1892*
1892*
Street Traffic Controllers
84
84
84
84
84
84
84
84
84
84
Sanitary sewers (miles)
150
150
112
112
112
112
112
112
112
112
Parks
15
15
15
15
15
15
15
15
15
15
Parkettes
13
13
13
13
13
13
13
13
13
13
143.26
143.26
143.26
143.26
143.26
143.26
143.26
143.26
143.26
143.26
1509
1509
1509
1509
1509
1509
1509
1509
1509
1509
Total water area (exclusive of the pier)
107
107
107
107
107
107
107
107
107
107
Total land area
Culture and Leisure Services
Total Park Acreage
Boat Slips
Harbor acreage:
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
Libraries
2
2
2
2
2
2
2
2
2
2
Community Centers
5
5
5
5
5
5
5
5
5
5
NOTE: * Methodology modification in fiscal year 2004/2005 to reflect city-owned street lights only.
Source: City of Redondo Beach
173
City of Redondo Beach
Certification of Continuing Disclosure
Redondo Beach Public Financing Authority 2008 Revenue Bonds
(South Bay Center Redevelopment Project)
June 30, 2013
This Certification of Continuing Disclosure is provided by the Successor Agency to the former Redevelopment Agency of the City of Redondo Beach and the Redondo
Beach Public Financing Authority through US Bank, as Dissemination Agent pursuant to a Continuing Disclosure Certificate dated February 13, 2008 executed and
delivered by the former Redevelopment Agency and the Public Financing Authority and the Dissemination Agent in connection with the issuance of $7,645,000 Revenue
Bonds, South Bay Center Redevelopment Project Bonds ("the Bonds"). The Bonds were issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, constituting
Article 4 (commencing with Section 6584) of the Act, and an Indenture of Trust dated as of February 1, 2008 between the Financing Authority and US Bank. The proceeds
of the Bonds were issued to provide funds to (i) refund the Authority’s Redondo Beach Public Financing Authority 1996 Revenue Bonds (South Bay Center
Redevelopment Project), originally issued in the principal amount of $10,330,000 of which $8,550,000 remained outstanding, (ii) fund a reserve fund for the Bonds, and (iii)
pay the costs of issuance of the Bonds.
This Certification is made pursuant to the requirements of Section 3(a) of the Continuing Disclosure Certificate with respect to the 2012-13 fiscal year.
The Successor Agency and the Public Financing Authority hereby report the following:
1. The audited financial statements of the Successor Agency and the Public Financing Authority for the fiscal year ended June 30, 2013 comprise the book in which
this report is included. As such, they contain the amount of all Successor Agency debt outstanding secured by a pledge of tax revenues.
2.
During the fiscal year ended June 30, 2013, neither the Successor Agency nor the Public Financing Authority has issued any parity or subordinate debt.
3.
During the fiscal year ended June 30, 2013, neither the Successor Agency nor the Public Financing Authority has given or caused to be given notice of the
occurrence of any of the following events:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
4.
Principal and interest payment delinquencies;
Non-payment related defaults;
Unscheduled draws on debt service reserves reflecting financial difficulties;
Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
Adverse tax opinions or events affecting the tax-exempt status of the security;
Modifications to rights of security holders;
Bond calls;
Defeasances;
Release, substitution, or sale of property securing repayment of the securities; or
Rating changes.
The South Bay Center Redevelopment Plan stipulates the Project Area will not receive more than a cumulative limit of $65,000,000 in gross tax increment over its
life. According to the records of the Los Angeles County Auditor Controller, as of June 30, 2013 the Agency had been apportioned $44,498,769 in gross tax
increment.
By projecting the current tax increment levels using only a two percent inflationary growth rate, the tax increment limit is reached in the final year of the bond
issue repayment period.
174
City of Redondo Beach
Redondo Beach Successor Agency
South Bay Center Redevelopment Project
Historical Project Area Valuations
June 30, 2013
Base Year
Secured *
Land
$
Impts
9,772,776
16,977,265
Pers Prop
Exemptions
Total Secured
2004-05
2003-04
1983-84
-
26,750,041
$
26,567,906
$
2005-06
26,977,212
$
2006-07
27,424,247
$
2007-08
51,658,838
159,503,456
162,122,684
164,634,061
178,831,940
597,793
-
572,459
-
1,617
-
1,514
-
186,669,155
189,672,355
192,059,925
230,492,292
$
2008-09
52,688,442
182,405,613
-
235,094,055
$
2009-10
53,742,204
185,761,187
-
239,503,391
$
2010-11
56,292,008
202,649,015
-
258,941,023
$
2011-12
55,363,042
191,933,851
-
247,296,893
$
2012-13
63,866,252
182,264,908
-
246,131,160
$
65,121,571
230,445,447
-
295,567,018
Unsecured
Land
-
-
-
-
-
-
-
-
-
-
-
Impts
3,023,006
13,074,302
12,287,632
12,261,701
11,408,416
13,236,695
13,336,333
12,530,739
13,273,687
13,028,973
14,769,340
Pers Prop
Exemptions
1,848,954
-
13,786,344
-
13,128,156
-
13,217,135
-
12,577,271
-
13,515,052
-
14,189,166
-
12,550,901
(50,000)
12,457,717
(50,000)
10,906,075
-
15,379,059
-
Total Unsecured
4,871,960
26,860,646
25,415,788
25,478,836
23,985,687
26,751,747
27,525,499
25,031,640
25,681,404
23,935,048
30,148,399
GRAND TOTAL
31,622,001
213,529,801
215,088,143
217,538,761
254,477,979
261,845,802
267,028,890
283,972,663
272,978,297
270,066,208
325,715,417
Incremental Value:
181,907,800
183,466,142
185,916,760
222,855,978
230,223,801
235,406,889
252,350,662
241,356,296
238,444,207
294,093,416
1,558,342
2,450,618
36,939,218
7,367,823
5,183,088
16,943,773
(10,994,366)
(2,912,089)
-4.36%
-1.21%
Incremental Value Change:
(7,127,194)
% Change:
-3.77%
0.86%
1.34%
19.87%
NOTE: Secured values include state assessed non-unitary utility property.
Source: HdL Coren & Cone
175
3.31%
2.25%
7.20%
55,649,209
23.34%
City of Redondo Beach
Redondo Beach Successor Agency
South Bay Center Redevelopment Project
Revenue vs. Levy Analysis
June 30, 2013
Original Charge Secured Value
Adjustments to Original Charge
Base Year Secured Value
Incremental Secured Value
Tax Rate
Adjusted Levy
Unitary Revenue
Total Secured/Unitary Levy
$
Original Charge Unsecured Value
Adjustments to Original Charge
Base Year Unsecured Value
Incremental Unsecured Value
Tax Rate
Unsecured Adjusted Levy
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
186,669,155 $
(26,750,041)
159,919,114
0.0100755
1,611,271
29,747
1,641,018
189,672,355 $
(26,750,041)
162,922,314
0.0100697
1,640,576
31,324
1,671,899
192,059,925 $
50,417,882
(26,750,040)
215,727,767
0.0100604
2,170,316
27,782
2,198,098
230,492,292 $
(26,750,040)
203,742,252
0.0100542
2,048,455
27,587
2,076,043
235,094,055 $
(26,750,041)
208,344,014
0.0100450
2,092,816
28,887
2,121,703
239,503,391 $ 258,941,015 $
(2,894,618)
(26,750,041)
(26,750,041)
212,753,350
229,296,356
0.0100430
0.0100430
2,136,682
2,302,823
31,263
30,311
2,167,945
2,333,134
2010-11
2011-12
2012-13
247,296,893 $
(26,750,041)
220,546,852
0.0100370
2,213,629
30,206
2,243,835
246,131,160 $
(26,750,041)
219,381,119
0.0100000
2,193,811
31,724
2,225,536
297,200,307
(26,750,041)
270,450,266
0.0100000
2,704,503
31,898
2,736,401
26,860,646
77,266,839
(4,871,960)
99,255,525
0.0100861
1,001,105
25,415,788
2,878,283
(4,871,960)
23,422,111
0.0100755
235,990
25,478,836
200,319
(4,871,959)
20,807,196
0.0100697
209,522
23,985,683
848,749
(4,871,959)
19,962,473
0.0100604
200,831
26,751,747
2,200,114
(4,871,960)
24,079,901
0.0100542
242,103
27,525,499
549,859
(4,871,960)
23,203,398
0.0100450
233,078
25,031,637
2,168,472
(4,871,960)
22,328,149
0.0100430
224,242
25,681,404
240,106
(4,871,960)
21,049,550
0.0100430
211,401
23,935,048
(4,871,960)
19,063,088
0.0100000
190,631
30,466,133
(4,871,960)
25,594,173
0.0100000
255,942
Net Total Revenue
2,642,124
1,907,890
2,407,620
2,276,874
2,363,806
2,401,023
2,557,376
2,455,236
2,416,166
2,992,343
Remittance to Agency
Secured/Unitary Remitted
Unsecured Remitted
HOX Payments
1,640,962
220,615
-
1,667,891
230,164
-
2,197,703
207,367
-
2,075,997
183,272
-
2,122,507
239,176
-
2,167,741
224,182
-
2,333,113
219,123
-
2,243,814
206,749
-
2,380,477
-
2,704,482
252,935
-
Total Remittance to Agency:
1,861,577
1,898,055
2,405,070
2,259,268
2,361,683
2,391,923
2,552,236
2,450,563
2,380,477
2,957,417
% of Collection to Levy
70.46%
99.48%
99.89%
99.23%
99.91%
99.62%
99.80%
99.81%
Grand Total Revenue:
Secured and Unsecured Revenue
SB 813 Supplemental Payments
Redemptions/Open Roll Corrections
Taxpayer Refunds
Deferral Payments/Adjustments
1,861,577
4,262
(60,249)
-
1,898,055
2,225
(42)
129,927
2,405,070
(17,379)
(5,534)
(23,253)
(46,423)
2,259,268
117,362
4,532
5
(355,390)
2,361,683
(2,883)
12,925
(86)
(186,859)
2,391,923
177,804
1,325
(628)
(122,005)
2,552,236
(51,122)
36
(83,212)
(155,747)
2,450,563
13
(1,476)
(52,554)
2,380,477
125,288
351
30,658
-
2,957,417
-
Total Paid to Agency:
SB 2557 Charges (1)
Housing Set Aside
Tax Sharing Payments
Negative Balance from Prior Year
1,805,590
(34,524)
(354,655)
(772,023)
-
2,030,165
(31,324)
(406,033)
(813,388)
-
2,312,481
(28,308)
(517,064)
(1,011,111)
-
2,025,778
(29,423)
(405,156)
(716,814)
-
2,184,780
(31,971)
(436,956)
(880,699)
-
2,448,419
(31,959)
(489,684)
(1,103,678)
-
2,262,190
(38,139)
(452,438)
(1,140,974)
-
2,396,546
(39,350)
(479,309)
(1,021,920)
-
2,536,774
(37,125)
(1,367,321)
-
2,957,417
(43,844)
(1,594,048)
-
Net Grand Total Revenue:
$
644,388
$
779,420
$
755,998
$
874,385
Source: HdL Coren & Cone
176
$
835,154
$
823,098
$
630,639
$
855,966
98.52%
$
1,132,328
98.83%
$
1,319,525
City of Redondo Beach
Redondo Beach Successor Agency
South Bay Center Redevelopment Project
Top Ten Taxable Property Owners
June 30, 2013
Secured
South Bay Associates SPE LLC
$
Total
Percent of
Secured
Unsecured
Parcels
Inc. Value
Parcels
Inc. Value
193,363,865
3
71.93%
54,444,365
1
17,727,489
Value
639,983
1
2.53%
20.25%
-
0
1
6.59%
-
17,541,847
1
6.53%
6,686,110
7
-
Percent of
Total
Inc.Value
Use Code
194,003,848
65.97%
Commercial
0.00%
54,444,365
18.51%
Commercial
0
0.00%
17,727,489
6.03%
Commercial
-
0
0.00%
17,541,847
5.96%
Commercial
2.49%
266,639
1
1.05%
6,952,749
2.36%
Commercial
0
0.00%
6,740,815
2
26.67%
6,740,815
2.29%
Unsecured
5,799,205
1
2.16%
-
0
0.00%
5,799,205
1.97%
Commercial
-
0
0.00%
2,480,106
1
9.81%
2,480,106
0.84%
Unsecured
-
0
0.00%
1,841,724
1
7.29%
1,841,724
0.63%
Unsecured
-
0
0.00%
1,713,281
1
6.78%
1,713,281
0.58%
Unsecured
$295,562,881
14
109.95%
$13,682,548
7
54.13%
$309,245,429
Value
1.
Unsecured
Percent of
$
Value
$
Pending Appeals on Parcel
2.
LPF Redondo Beach Inc.
Pending Appeals on Parcel
3.
KHS South Bay LLC
Pending Appeals on Parcel
4.
1519 Hawthorne Blvd. LLC
Pending Appeals on Parcel
5.
Walgreen
6.
Nordstrom Inc.
7.
Outparcel Investment Partners V LLP
8.
SFM
9.
Kohl's Department Store
Pending Appeals on Parcel
10. American Multi-Cinema Inc.
Pending Appeals on Parcel
Project Area Incremental Value:
$268,816,977
$25,276,439
Source: HdL Coren & Cone
177
$294,093,416
105.15%
City of Redondo Beach
Redondo Beach Successor Agency
South Bay Center Redevelopment Project
Recent Appeals History
Owner
APN
Appeal Type
Appeal Status
Original Value
Updated or Owner's
Proposed
Proposed
Opinion Value
Change
% Change
Currently Pending Appeals
FY 2009-10
Macy's Department Stores Inc.
u
Unsecured
Pending
2,543,455
1,681,900
(861,555)
-33.87%
Guess? Retail Inc. #5622
u
Unsecured
Pending
220,219
110,000
(110,219)
-50.05%
Express LLC #917
4082-018-005
Secured
Pending
21,924,618
100,000
(21,824,618)
-99.54%
South Bay Center Spe LLC - Macys Inc.
4082-018-004
Secured
Pending
27,082,027
8,027,470
(19,054,557)
-70.36%
u
Unsecured
Pending
(1,053,337)
-100.00%
(645,131)
-50.79%
Macy's Department Stores, Inc. dba Macy's
1,053,337
-
52,823,656
9,919,370
1,270,131
625,000
1,270,131
625,000
FY 2010-11
American Multi-Cinema Inc/AMC Galleria South
u
Unsecured
Pending
178
City of Redondo Beach
Redondo Beach Successor Agency
South Bay Center Redevelopment Project
Recent Appeals History
FY 2011-12
Debbie Smethers
u
Unsecured
Pending
1,382,690
1,032,090
(350,600)
James Kurtzman
4082-018-005
Secured
Pending
17,510,000
8,000,000
(9,510,000)
-54.31%
u
Unsecured
Pending
1,860,985
930,493
(930,492)
-50.00%
Erin Stache
-25.36%
Panda Express Inc.
u
Unsecured
Pending
138,598
-
(138,598)
-100.00%
Living Spaces Furniture LLC
u
Unsecured
Pending
576,279
220,000
(356,279)
-61.82%
1519 Hawthorne Blvd LLC
4082-019-042
Secured
Pending
17,197,890
8,000,000
(9,197,890)
-53.48%
Scott B. Brown
4082-018-004
Secured
Pending
24,799,955
20,000,000
(4,799,955)
-19.35%
LPF Redondo Beach Inc.
4082-019-047
Secured
Pending
54,090,359
30,000,000
(24,090,359)
-44.54%
117,556,756
68,182,583
FY 2012-13
Brandon Carver
Lpf Redondo Beach Inc
Erin Stache
James Kurtzman
u
Unsecured
Pending
1,713,281
748,058
(965,223)
-56.34%
4082-019-047
Secured
Pending
54,444,365
34,997,000
(19,447,365)
-35.72%
u
Unsecured
Pending
1,841,724
409,996
(1,431,728)
-77.74%
4082-018-005
Secured
Pending
17,510,000
8,000,000
(9,510,000)
-54.31%
-16.91%
Kendall Lees
4082-018-006
Secured
Pending
17,727,489
14,729,748
(2,997,741)
Scott B. Brown
4082-018-004
Secured
Pending
25,295,953
12,000,000
(13,295,953)
-52.56%
Living Spaces Furniture Company
4082-018-042
Secured
Pending
17,541,847
12,700,000
(4,841,847)
-27.60%
136,074,659
83,584,802
Most Recently Resolved Appeals Among Owners with Pending Appeals
Owner
APN
Appeal Type
Appeal Status
Original Value
Board Value
Change
% Change
u
Unsecured
Denied
1,279,949
1,279,949
-
FY 2009-10
American Multi-Cinema Inc/AMC Galleria South
0.00%
FY 2010-11
4082-018-005
Secured
Allowed
17,510,000
16,200,000
(1,310,000)
-7.48%
Macy's West Stores Inc.
James Kurtzman
u
Unsecured
Allowed
2,531,639
1,834,336
(697,303)
-27.54%
Guess Inc.
u
Unsecured
Allowed
203,843
196,449
(7,394)
-3.63%
179
City of Redondo Beach
Redondo Beach Successor Agency
South Bay Center Redevelopment Project
Recent Appeals History
2011-12
James Kurtzman
Macy S West Stores Inc
4082-018-005
Secured
Allowed
17,510,000
16,200,000
(1,310,000)
-7.48%
u
Unsecured
Allowed
2,163,988
1,605,833
(558,155)
-25.79%
Source: HdL Coren & Cone
180
City of Redondo Beach
Certification of Continuing Disclosure
Redondo Beach Public Financing Authority 2004 Series A Revenue Bonds
(Wastewater System Financing Project)
June 30, 2013
This Certification of Continuing Disclosure is provided by the City of Redondo Beach (“the City”) and the Redondo Beach Public Financing Authority through US Bank,
as Dissemination Agent pursuant to a Continuing Disclosure Certificate dated May 27, 2004 executed and delivered by the City of Redondo Beach and the Public
Financing Authority and the Dissemination Agent in connection with the issuance of $10,335,000 Series A Revenue Bonds, City of Redondo Beach Wastewater System
Financing Project Bonds (“the Bonds”). The Bonds were issued pursuant to an Indenture of Trust dated as of May 1, 2004 between the Financing Authority and US Bank.
The proceeds of the Bonds were issued to provide funds to (a) finance the Improvements and related facilities which constitute part of the Wastewater Enterprise of the
City, (b) fund capitalized interest on the Bonds through November 1, 2004, (c) fund a reserve fund for the Bonds, and (d) pay the cost of issuance for the Bonds.
This Certification is made pursuant to the requirements of Section 3(a) of the Continuing Disclosure Certificate with respect to the 2012-13 fiscal year.
The City and the Public Financing Authority hereby report the following:
1.
The audited financial statements of the City, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental
entities from time to time by the Governmental Accounting Standards Board, for the fiscal year ended June 30, 2012 comprise the book in which this report is
included.
2.
During the fiscal year ended June 30, 2013, neither the City nor the Public Financing Authority has given or caused to be given notice of the occurrence of any of
the following events:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
Principal and interest payment delinquencies;
Non-payment related defaults;
Unscheduled draws on debt service reserves reflecting financial difficulties;
Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
Adverse tax opinions or events affecting the tax-exempt status of the security;
Modifications to rights of security holders;
Contingent or unscheduled bond calls;
Defeasances;
Resale, substitution, or sale of property securing repayment of the securities; or
Rating changes
181
City of Redondo Beach
Sewer Rates Per Month
Last Nine Fiscal Years
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Use Classification
Each single family dwelling unit
$
5.00
$
5.00
$
5.00
$
5.00
$
5.00
$
7.00
$
7.12
$
7.12
$
7.25
$
10.25
Each unit in a 2-3 unit condo structure
5.00
5.00
5.00
5.00
5.00
7.00
7.12
7.12
7.25
10.25
Each unit in a 2-3 unit apartment structure
3.89
3.89
3.89
3.89
3.89
5.45
5.55
5.55
5.65
7.97
Each unit in a 4 or more unit condo structure
Each unit in a 4 or more unit apartment structure
3.89
2.68
3.89
2.68
3.89
2.68
3.89
2.68
3.89
2.68
5.45
3.75
5.55
3.82
5.55
3.82
5.65
3.88
7.97
5.49
Commercial/Industrial/Institutional parcels
0.43
0.43
0.43
0.43
0.43
0.60
0.61
0.61
0.62
0.88 *
NOTE: The Redondo Beach Public Financing Authority issued the Wastewater System Financing Project Revenue Bonds in fiscal year 2003/2004.
* Per 100 cubic feet of average monthly water usage. 100 cubic feet of water is equal to 748 gallons, average monthly water usage is established based on the latest actual annual water
usage record available to the City. On an annual basis, the city will recalculate the monthly charge by using the latest available annual water usage record of each non-residential user at
the same $.88 per 100 cubic feet rate to set a new monthly rate. Any water proven to be used for boilers, cooling towers or similar devises that will not be discharged into the sewer system
may be deducted from the annual water usage record for rate calculation purposes.
Source: City of Redondo Beach
182
City of Redondo Beach
Sewer Connections by Type of Customer
Last Nine Fiscal Years
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Type of Customer
Residential
13,039
13,211
13,211
13,211
13,108
13,102
13,107
13,109
13,105
78
74
74
74
68
66
61
56
61
61
Commercial
575
510
510
510
451
464
462
466
457
463
Institutional
71
44
64
44
64
44
64
44
62
42
89
43
61
43
58
42
61
43
59
43
13,807
13,903
13,903
13,903
13,731
13,764
13,734
13,731
13,727
13,732
Industrial
Mixed use
Total
NOTE: The Redondo Beach Public Financing Authority issued the Wastewater System Financing Project Revenue Bonds in fiscal year 2003/2004.
Source: City of Redondo Beach
183
13,106
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS
The following includes summaries of certain provisions of the Installment Sale Agreement and
the Indenture which are not described elsewhere in this Official Statement. These summaries do not
purport to be comprehensive and are qualified in their entirety by reference to the full terms of the
documents.
DEFINITIONS OF CERTAIN TERMS
The following are definitions of certain of the terms used in this Official Statement. Certain
capitalized terms used in the Official Statement are either defined elsewhere in the Official Statement or
in the Installment Sale Agreement or Indenture, to which reference is hereby made. Unless the context
otherwise requires, the terms defined in this Official Statement will have the meanings defined herein, the
following definitions to be equally applicable to both the singular and plural forms of any of the terms
defined herein:
Additional Payments means the payments so designated and required to be paid by the City
pursuant to the Installment Sale Agreement.
Additional Revenues means, with respect to the issuance of any Parity Obligations, any or all of
the following amounts:
A.
An allowance for Net Revenues from any additions or improvements to or extensions of
the Wastewater Enterprise to be financed from the proceeds of such Parity Obligations or
from any other source, all in an amount equal to seventy-five percent (75%) of the
estimated additional Net Revenues to be derived from such additions, improvements and
extensions for the first twelve (12) month period in which each addition, improvement or
extension is respectively to be in operation, all as shown by the certificate or opinion of a
qualified independent engineer employed by the City.
B.
An allowance for Net Revenues arising from any increase in the charges made for service
from the Wastewater Enterprise which have been approved prior to the incurring of such
Parity Obligations, in an amount equal to the total amount by which the Net Revenues
would have been increased if such increase in charges had been in effect during the
whole of the most recent completed Fiscal Year or during any more recent twelve (12)
month period selected by the City, all as shown by the certificate or opinion of an
Independent Accountant or independent consultant.
Agency means the former Redevelopment Agency of the City of Redondo Beach.
Authority means the Redondo Beach Public Financing Authority, a public body corporate and
politic duly organized and existing pursuant to a Joint Exercise of Powers Agreement, dated July 2, 1996,
amended and restated on December 7, 2004, between the City and the Agency.
Authorized Investments means any securities in which the City may legally invest funds subject
to its control.
C-1
Authorized Representative means: (a) with respect to the Financing Authority, its Chairperson,
Vice Chairperson, Executive Director, Treasurer, Controller, Secretary or any other person designated as
an Authorized Representative of the Financing Authority by a Written Certificate of the Financing
Authority signed by its Chairperson, Vice Chairperson, Executive Director, Treasurer, Controller or
Secretary and filed with the City and the Trustee; and (b) with respect to the City, its Mayor, Mayor Pro
Tem, City Manager, Finance Director, City Clerk or any other person designated as an Authorized
Representative of the City by a Written Certificate of the City signed by its Mayor, Mayor Pro Tem, City
Manager, Finance Director or City Clerk and filed with the Trustee.
Bond Counsel means (a) Fulbright & Jaworski LLP, or (b) any other attorney or firm of attorneys
appointed by or acceptable to the City of nationally recognized experience in the issuance of obligations
the interest on which is excludable from gross income for federal income tax purposes under the Tax
Code.
Bond Law means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4
(commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the
State, as in existence on the Closing Date or as thereafter amended from time to time.
Bond Service Fund means the fund by that name established and held by the Trustee pursuant to
the Indenture.
Bond Year means any twelve-month period commencing on May 2 in a year and ending on the
next succeeding May 1, both dates inclusive; except that the first Bond Year will commence on the
Closing Date and end on May 1, 2014.
Bonds means the Redondo Beach Community Financing Authority Wastewater Revenue
Refunding Bonds, 2014 Series A, issued and at any time Outstanding pursuant to the Bond Law and the
Indenture.
Business Day means a day (other than a Saturday or a Sunday) on which banks are not required
or authorized to remain closed in the city in which the Office of the Trustee is located.
City means the City of Redondo Beach, a charter city and municipal corporation duly organized
and existing under the Constitution and the laws of the State of California.
Closing Date means the date of delivery of the Bonds to the Original Purchaser.
Continuing Disclosure Agreement means that certain Continuing Disclosure Agreement by and
between the City and U.S. Bank National Association, as dissemination agent, dated as of April 1, 2014,
as originally executed and as it may from time to time be supplemented, modified or amended in
accordance with the terms thereof.
Costs of Issuance means all items of expense directly or indirectly relating to the authorization,
issuance, sale and delivery of the Bonds, including but not limited to printing expenses, rating agency
fees, filing and recording fees, fees, expenses and charges of the City, the Financing Authority, the
Trustee, and their respective counsel, including the Trustee’s first annual administrative fee, costs of
obtaining a Permitted Investment for monies held in the funds and accounts created and held under the
Indenture, fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants
and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds and any
other cost, charge or fee in connection with the original issuance of the Bonds and the execution and
delivery of the Installment Sale Agreement.
C-2
Costs of Issuance Fund means the fund by that name established and held by the Trustee pursuant
to the Indenture.
Depository means DTC and its successors and assigns or if (a) the then Depository resigns from
its functions as securities depository of the Bonds, or (b) the Financing Authority discontinues use of the
Depository pursuant to the Indenture, any other securities depository which agrees to follow the
procedures requested to be followed by a securities depository in connection with the Bonds and which is
selected by the Financing Authority with the consent of the Trustee.
Depository Participant means a member of, or participant in, the Depository.
DTC means The Depository Trust Company, New York, New York, and its successors and
assigns.
Escrow Agent means U.S. Bank National Association, as escrow agent and 2004 Bonds Trustee,
under the Escrow Agreement.
Escrow Agreement means that certain Escrow Deposit and Trust Agreement, by and among the
Authority, the City and the Escrow Agent, dated as of April 1, 2014, relating to the refunding and
defeasance of the 2004 Bonds.
Escrow Fund means the fund by that name established under the Escrow Agreement.
Event of Default means any of the events described as events of default in the Indenture or the
Installment Sale Agreement, respectively.
Fair Market Value means the price at which a willing buyer would purchase the investment from
a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase
or sell the investment becomes binding) if the investment is traded on an established securities market
(within the meaning of section 1273 of the Tax Code) and, otherwise, the term fair market value means
the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a
certificate of deposit the value of which is determined in accordance with applicable regulations under the
Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment
provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a
forward supply contract or other investment agreement) the value of which is determined in accordance
with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury SecurityState and Local Government Series that is acquired in accordance with applicable regulations of the
United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the
State of California, but only if at all times during which the investment is held its yield is reasonably
expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the
United States.
Federal Securities means: (a) any direct general obligations of the United States of America
(including obligations issued or held in book entry form on the books of the Department of the Treasury
of the United States of America), for which the full faith and credit of the United States of America are
pledged; or (b) obligations of any agency, department or instrumentality of the United States of America,
the timely payment of principal and interest on which are secured or guaranteed by the full faith and
credit of the United States of America.
C-3
Financing Authority means the Redondo Beach Community Financing Authority, a public body
corporate and politic duly organized and existing pursuant to a Joint Exercise of Powers Agreement, dated
January 31, 2012, between the City and the Redondo Beach Parking Authority.
Gross Revenues means all income, rents, rates, fees, charges and other moneys derived from the
ownership or operation of the Wastewater Enterprise, including, without limiting the generality of the
foregoing, (1) all income, rents, rates, fees, charges, business interruption insurance proceeds or other
moneys derived by the City from the sale, furnishing and supplying of wastewater treatment or other
services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct
or operation of the business of the Wastewater Enterprise, plus (2) the earnings on and income derived
from the investment of such income, rents, rates, fees, charges, or other moneys, including City reserves
for the Wastewater Enterprise, and the Rate Stabilization Fund, but excluding in all cases customer
deposits or any other deposits or advances subject to refund until such deposits or advances have become
the property of the City and excluding any proceeds of taxes required by law to be used by the City to pay
bonds hereafter issued. If interest on any Parity Obligations is being reimbursed to the City by the United
States of America pursuant to Section 54AA of the Code, or any future similar program, then Gross
Revenues shall include such interest being paid or reimbursed by the United States of America.
Improvements means the capital improvements to the Wastewater Enterprise financed with
proceeds of the 2004 Bonds as described in Exhibit B attached to the Installment Sale Agreement.
Indenture means the Indenture of Trust, as originally executed or as it may from time to time be
supplemented, modified or amended by any Supplemental Indenture pursuant to the provisions hereof.
Independent Accountant means any accountant or firm of such accountants appointed and paid by
the City or the Financing Authority, and who, or each of whom (a) is in fact independent and not under
domination of the City or the Financing Authority; (b) does not have any substantial interest, direct or
indirect, with the City or the Financing Authority; and (c) is not connected with the City or the Financing
Authority as an officer or employee of the City or the Financing Authority, but who may be regularly
retained to make annual or other audits of the books of or reports to the City or the Financing Authority.
Information Services means Electronic Municipal Market Access system (referred to as EMMA),
a facility of the Municipal Securities Rulemaking Board, at www.emma.msrb.org; and, in accordance
with then-current guidelines of the Securities and Exchange Commission, such other addresses and/or
such other services providing information with respect to called bonds, or no such services, as the
Financing Authority may designate in a Written Request of the Financing Authority delivered to the
Trustee.
Installment Payment Date means the twenty-fifth (25th) day of each April and October during the
Term of the Installment Sale Agreement, commencing October 25, 2014.
Installment Payments means the payments required to be paid by the City pursuant to the
Installment Sale Agreement, including all prepayments thereof.
Installment Sale Agreement means that certain Installment Sale Agreement by and between the
Financing Authority and the City, with respect to the sale and purchase of the Improvements, dated as of
April 1, 2014, as originally executed and as it may from time to time be supplemented, modified or
amended in accordance with the terms thereof and of the Indenture.
Interest Payment Date means May 1 and November 1 in each year, beginning November 1, 2014,
and continuing so long as any Bonds remain Outstanding.
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Maximum Annual Debt Service means, with respect to the Bonds, the largest of the sums
obtained for any Bond Year after totaling the following for each such Bond Year:
A.
The principal amount of all Outstanding Bonds maturing or required to be redeemed by
mandatory sinking account redemption in such year; and
B.
The interest which would be due during such year on the aggregate principal amount of
Bonds which would be Outstanding in such year if the Bonds Outstanding on the date of
such computation were to mature or be redeemed in accordance with the applicable
maturity or mandatory sinking account redemption schedule. At the time and for the
purpose of making such computation, the amount of Bonds already retired in advance of
the above mentioned schedule or schedules shall be deducted pro rata from the remaining
amounts thereon;
and means, as of the date of any calculation with respect to the Installment Payments or any Parity
Obligations, as the case may be, the maximum sum obtained for the current or any future Fiscal Year
during the Term of the Installment Sale Agreement by totaling the following amounts for such Fiscal
Year:
A.
the aggregate amount of the Installment Payments coming due and payable in such Fiscal
Year pursuant hereto, except to the extent payable from any security deposit pursuant to
the Installment Sale Agreement;
B.
the principal amount of all outstanding Parity Obligations, if any, coming due and
payable by their terms in such Fiscal Year; and
C.
the amount of interest which would be due during such Fiscal Year on the aggregate
principal amount of all outstanding Parity Obligations, if any, which would be
outstanding in such Fiscal Year if such Parity Obligations are retired as scheduled;
provided, however, that with respect to any Parity Obligations which bear interest at a
variable rate, such interest shall be calculated at an assumed rate equal to the average rate
of interest per annum for each of the five previous whole calendar years as shown by the
SIFMA Index (or, in the event and to the extent such index is not maintained for all or
any portion of such period, any similar index of variable rate interest for municipal
obligations as may be selected by the City in its sole discretion). If interest on any Parity
Obligations is reasonably anticipated to be reimbursed to the City by the United States of
America pursuant to Section 54AA of the Code, or any future similar program, then
interest payments with respect to such Parity Obligations shall be reduced by the amount
of such interest reasonably anticipated to be paid or reimbursed by the United States of
America;
but excluding any Installment Payments coming due or principal or interest amounts of
outstanding Parity Obligations held in an escrow or other account irrevocably dedicated therefor,
including interest payments that are to be paid from the proceeds of Parity Obligations held by the
Trustee.
Moody’s means Moody’s Investors Service, a corporation organized and existing under the laws
of the State of Delaware, its successors and their assigns, or, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating agency, any other nationally
recognized securities rating agency designated by the Financing Authority.
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Net Revenues means, for any period, an amount equal to all of the Gross Revenues received
during such period minus the amount required to pay all Operation and Maintenance Costs becoming
payable during such period.
Nominee means the nominee of the Depository, which may be the Depository, as determined
from time to time pursuant hereto.
Office means the corporate trust office of the Trustee in Los Angeles, California, or at such other
or additional offices as may be specified in writing to the Financing Authority and the City.
Operation and Maintenance Costs means the reasonable and necessary costs and expenses paid by
the City for maintaining and operating the Wastewater Enterprise, including but not limited to (a) the cost
of utilities, including electricity and other forms of energy supplied to the Wastewater Enterprise, (b) the
reasonable expenses of management and repair and other costs and expenses necessary to maintain and
preserve the Wastewater Enterprise in good repair and working and (c) the reasonable administrative
costs of the City attributable to the operation and maintenance of the Wastewater Enterprise, including
insurance and other costs described in the Installment Sale Agreement, but in all cases excluding (i) debt
service payable on obligations incurred by the City with respect to the Wastewater Enterprise, including
but not limited to the Installment Payments and debt service payments on any Parity Obligations,
(ii) depreciation, replacement and obsolescence charges or reserves therefor and (iii) amortization of
intangibles or other bookkeeping entries of a similar nature.
Original Purchaser means Stifel, Nicolaus & Company, Incorporated, as the original purchaser of
the Bonds upon their delivery by the Trustee on the Closing Date.
Outstanding, when used as of any particular time with reference to Bonds, means all Bonds
theretofore, or thereupon being, authenticated and delivered by the Trustee under the Indenture except: (a)
Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with
respect to which all liability of the Financing Authority shall have been discharged in accordance with the
Indenture; and (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other
Bonds shall have been authenticated and delivered by the Trustee pursuant to the Indenture.
Owner, when used with respect to any Bond, means the person in whose name the ownership of
such Bond shall be registered on the Registration Books.
Parity Obligations means any leases, loan agreements, installment sale agreements, bonds, notes
or other obligations of the City payable from and secured by a pledge of and lien upon any of the Net
Revenues on a parity with the Installment Payments, entered into or issued pursuant to and in accordance
with the Installment Sale Agreement.
Permitted Investments means any of the following which at the time of investment are legal
investments under the laws of the State for the moneys proposed to be invested therein (the Trustee is
entitled to conclusively rely upon a Request of the City directing investments as a certification to the
Trustee that such investments are legal investment), but only to the extent that the same are acquired at
Fair Market Value:
A.
Direct obligations of the United States of America (including obligations issued or held in bookentry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations
the principal of and interest on which are unconditionally guaranteed by the United States of
America.
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B.
Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the
following federal agencies and provided such obligations are backed by the full faith and credit of
the United States of America (stripped securities are only permitted if they have been stripped by
the agency itself):
1. U.S. Export-Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
2. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
3. Federal Financing Bank
4. Federal Housing Administration Debentures (FHA)
5. General Services Administration
Participation certificates
6. Government National Mortgage Association (GNMA or “Ginnie Mae”)
GNMA - guaranteed mortgage-backed bonds
GNMA - guaranteed pass-through obligations
(not acceptable for certain cash-flow sensitive issues.)
7. U.S. Maritime Administration
Guaranteed Title XI financing
8. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed public
housing notes and Bonds
C.
Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the
following non-full faith and credit U.S. government agencies (stripped securities are only
permitted if they have been stripped by the agency itself):
1. Federal Home Loan Bank System
Senior debt obligations
2. Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”)
Participation Certificates
Senior debt obligations
3. Federal National Mortgage Association (FNMA or “Fannie Mae”)
Mortgage-backed securities and senior debt obligations
4. Student Loan Marketing Association (SLMA or “Sallie Mae”)
Senior debt obligations
5. Resolution Funding Corp. (REFCORP) obligations
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6. Farm Credit System
Consolidated systemwide bonds and notes
D.
Money market funds registered under the Federal Investment Company Act of 1940, whose
shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of
AAAm-G; AAA-m; or AA-m and if rated by Moody’s rated Aaa, Aa1 or Aa2, including funds
for which the Trustee or any affiliate of the Trustee provides investment advisory or other
management services.
E.
Certificates of deposit secured at all times by collateral described in (A) and/or (B) above or
collateral that may be used by a national bank purposes of satisfying its obligations to
collateralize pursuant to the federal law. Such certificates must be issued by commercial banks,
savings and loan associations or mutual savings banks. The collateral must be held by a third
party and the Trustee or bondholders must have a perfected first security interest in the collateral.
F.
Certificates of deposit, savings accounts, deposit accounts or money market deposits which are
fully insured by FDIC, including BIF and SAIF, including those of the Trustee or any affiliate of
the Trustee.
G.
Investment Agreements, including GICs, Forward Purchase Agreements and Reserve Fund Put
Agreements.
H.
Commercial paper rated, at the time of purchase, “Prime - 1” by Moody’s and “A-1” or better by
S&P.
I.
Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in one
of the two highest rating categories assigned by such agencies.
J.
Deposit accounts, money-market deposits, federal funds or bankers acceptances with a
maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed
obligation rating of “Prime - 1” or “A3” or better by Moody’s and “A-1” or “A” or better by
S&P.
K.
Repurchase Agreements (“repos”) for 30 days or less must follow the following criteria.
Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm
(seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee to the
dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay
the cash plus a yield to the Trustee in exchange for the securities at a specified date.
1
Repos must be between the Trustee and a dealer bank or securities firm
a.
Primary dealers on the Federal Reserve reporting dealer list which are rated A or
better by Standard & Poor’s Corporation and Moody’s Investors Services, or
b.
Banks rated “A” or above by Standard & Poor’s Corporation and Moody’s
Investor Services.
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2.
The written repo contract must include the following:
a.
Securities which are acceptable for transfer are:
(1)
Direct U.S. governments, or
(2)
Federal agencies backed by the full faith and credit of the U.S.
government (and FNMA & FHLMC)
b.
The term of the repo may be up to 30 days
c.
The collateral must be delivered to the Trustee (if Trustee is not supplying the
collateral) or third party acting as agent for the Trustee (if the Trustee is
supplying the collateral) before/simultaneous with payment (perfection by
possession of certificated securities).
d.
Valuation of Collateral
(1)
The securities must be valued weekly, marked-to-market at the current
market price plus accrued interest
(a)
3.
Legal opinion which must be delivered to the Financing Authority and to the Trustee:
a.
L.
The value of collateral must be equal to 104% of the amount of
cash transferred by the Trustee to the dealer bank or security
firm under the repo plus accrued interest. If the value of
securities held as collateral slips below 104% of the value of the
cash transferred by the Trustee, then additional cash/or
acceptable securities must be transferred. If, however, the
securities used as collateral are FNMA or FHLMC, then the
value of collateral must equal 105%.
Repo meets guidelines under state law for legal investment of public funds.
Local Agency Investment Fund of the State of California (“LAIF”), created pursuant to Section
16429.1 of the California Government Code.
Purchase Price means the amount to be paid by the City as the purchase price of the
Improvements, being equal to the aggregate principal amount of the Bonds.
Rate Stabilization Fund means the fund by that name established in the Installment Sale
Agreement.
Record Date means, with respect to any Interest Payment Date, the fifteenth (15th) calendar day
of the month preceding such Interest Payment Date.
Redemption Fund means the fund by that name established and held by the Trustee pursuant to
the Indenture.
Registration Books means the books maintained by the Trustee for the registration and transfer of
ownership of the Bonds.
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Reserve Funds means all reserve funds, if any, established to secure the interest on and principal
of all Parity Obligations.
Responsible Officer means any Vice President, Assistant Vice President or Trust Officer or any
other officer of the Trustee having regular responsibility for corporate trust matters related to the
Indenture.
Revenue Fund means the fund by that name established and held by the Trustee pursuant to the
Indenture.
Revenues means (a) all amounts received by the Financing Authority or the Trustee pursuant or
with respect to the Installment Sale Agreement, including, without limiting the generality of the
foregoing, all of the Installment Payments (including both timely and delinquent payments, any late
charges, and whether paid from any source), prepayments, insurance proceeds, condemnation proceeds,
but excluding any Additional Payments; (b) all moneys and amounts held in the funds and accounts
established under the Indenture; and (c) investment income with respect to any moneys held by the
Trustee under the Indenture.
S&P means Standard & Poor’s, a division of McGraw-Hill, Inc., a corporation organized and
existing under the laws of the State of New York, its successors and their assigns, or, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any
other nationally recognized securities rating agency designated by the Financing Authority.
SIFMA Index means Securities Industry and Financial Markets Association Municipal Swap
Index announced by Municipal Market Data on the rate determination date and based upon the weekly
interest rate resets of tax-exempt variable rate issues included in a database maintained by Municipal
Market Data which meets specified criteria established by the Securities Industry and Financial Markets
Association or, if such index is no longer published such other equivalent index selected by the City and
approved by the Trustee.
Securities Depositories means The Depository Trust Company, 55 Water Street, New York, New
York 10041, Fax-(212) 855-1000 or 7320; and, in accordance with then current guidelines of the
Securities and Exchange Commission, such other addresses and/or such other securities depositories as
the Financing Authority may designate in a Written Request of the Financing Authority delivered to the
Trustee.
State means the State of California.
Supplemental Indenture means any indenture, agreement, resolution or other instrument hereafter
duly adopted or executed in accordance with the provisions of the Indenture.
Tax Code means the Internal Revenue Code of 1986 as in effect on the date of issuance of the
Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on
the date of issuance of the Bond, together with applicable proposed, temporary and final regulations
promulgated, and applicable official public guidance published, under the Code.
Tax Regulations means temporary and permanent regulations promulgated under or with respect
to Section 103 of the Tax Code.
Term of the Installment Sale Agreement means the time during which the Installment Sale
Agreement is in effect, as provided in the Installment Sale Agreement.
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Trustee means U.S. Bank National Association, appointed by the Financing Authority to act as
trustee under the Indenture, and its assigns or any other corporation or association which may at any time
be substituted in its place, as provided in the Indenture.
2004 Bonds means the $10,335,000 Redondo Beach Public Financing Authority Revenue Bonds,
2004 Series A (City of Redondo Beach Wastewater System Financing Project issued by the Authority
pursuant to the 2004 Indenture.
2004 Indenture means the Indenture of Trust, dated as of May 1, 2004, by and between the
Authority and the Trustee relating to the 2004 Bonds.
2004 Trustee means U.S. Bank National Association, as trustee under the 2004 Indenture.
Wastewater Enterprise means the entire wastewater system of the City, including all facilities,
properties and improvements at any time owned, controlled or operated by the City for the treatment of
wastewater, and any necessary lands, rights, entitlements and other property useful in connection
therewith, together with all extensions thereof and improvements thereto at any time acquired,
constructed or installed by the City, including the Improvements.
Wastewater Enterprise Fund means the fund by that name held by the City.
Written Certificate, Written Request and Written Requisition of the Financing Authority or the
City mean, respectively, a written certificate, request or requisition signed in the name of the Financing
Authority or the City by its Authorized Representative. Any such instrument and supporting opinions or
representations, if any, may, but need not, be combined in a single instrument with any other instrument,
opinion or representation, and the two or more so combined shall be read and construed as a single
instrument.
SUMMARY OF CERTAIN PROVISIONS OF THE INSTALLMENT SALE AGREEMENT
The Installment Sale Agreement provides the terms of the sale and purchase of the Improvements
by the City and the payment of the Installment Payments from the sources and to the extent required
under the Installment Sale Agreement. Certain of the provisions of the Installment Sale Agreement are
summarized below. This summary does not purport to be complete or definitive and is qualified in its
entirety by reference to the full terms of the Installment Sale Agreement.
Installment Purchase and Sale of the Improvements
Pursuant to the Installment Sale Agreement, in consideration for the issuance of the Bonds, the
City agrees to sell, transfer and convey to the Financing Authority all of the City’s right, title and interest
in and to the Improvements, and the Financing Authority agrees to purchase the Improvements from the
City. In consideration for the Installment Payments and other consideration set forth in the Installment
Sale Agreement, the Financing Authority agrees to sell, transfer and convey to the City all of the
Financing Authority’s right, title and interest in and to the Improvements, and the City agrees to purchase
the Improvements from the Financing Authority, upon the terms and conditions set forth in the
Installment Sale Agreement. Subject to provisions of the Installment Sale Agreement, the City and the
Financing Authority agree that title to the Improvements shall be deemed conveyed to and vested in the
City.
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Effective Date; Duration
The Installment Sale Agreement shall commence on the Closing Date, and shall end on the date
on which the City shall have paid all of the Installment Payments and all other amounts due and payable
thereunder.
Purchase Price; Installment Payments
The City agrees to pay to the Financing Authority, its successors and assigns, but solely from the
Net Revenues and other funds pledged under the Installment Sale Agreement, the Purchase Price, together
with interest on the unpaid principal balance, payable in Installment Payments coming due and payable in
the respective amounts and on the respective Installment Payment Dates specified in Exhibit A to the
Installment Sale Agreement. The Installment Payments will be paid by the City to the Trustee, as
assignee of the Financing Authority pursuant to the Indenture, in the amounts and at the times as set forth
in the Installment Sale Agreement. The City will receive a credit against any Installment Payment due to
the extent of any monies on deposit in the Bond Service Fund on the applicable Installment Payment
Date.
In the event that the City prepays all remaining Installment Payments in full, the City’s
obligations under the Installment Sale Agreement will cease and terminate; provided, however, that the
City’s obligations to compensate and indemnify the Trustee will survive such prepayment. In the event
that the City prepays the Installment Payments in part but not in whole, the principal component of each
succeeding Installment Payment will be reduced as determined by the City in writing, and the interest
component of each remaining Installment Payment shall be reduced by the aggregate corresponding
amount of interest which would otherwise be payable on the Bonds thereby redeemed pursuant to the
Indenture. In any event, the remaining Installment Payments will equal in time and amount the remaining
debt service on the Bonds.
In the event the City should fail to make any of the payments required under the Installment Sale
Agreement, the payment in default will continue as an obligation of the City until the amount in default
has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to
the date of payment, at a rate of interest per annum equal to the rate borne by the Outstanding Bonds. The
City understands and agrees that all Installment Payments have been assigned by the Financing Authority
to the Trustee in trust, pursuant to the Indenture, for the benefit of the Owners of the Bonds, and the City
assents to such assignment.
Obligations of the City Unconditional
The City’s obligation to pay the Installment Payments, the Additional Payments and any other
amounts coming due and payable under the Installment Sale Agreement is a special obligation of the City
limited solely to the Net Revenues. Under no circumstances is the City required to advance moneys
derived from any source of income other than the Net Revenues and other sources specifically identified
in the Installment Sale Agreement for the payment of the Installment Payments and the Additional
Payments, nor is any other funds or property of the City liable for the payment of the Installment
Payments and the Additional Payments and any other amounts coming due and payable under the
Installment Sale Agreement.
The obligations of the City to make the Installment Payments and the Additional Payments from
the Net Revenues and to perform and observe the other agreements contained is absolute and
unconditional and is not subject to any defense or any right of setoff, counterclaim or recoupment arising
out of any breach of the City, the Financing Authority or the Trustee of any obligation to the City or
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otherwise with respect to the Wastewater Enterprise. Until such time as all of the Installment Payments,
all of the Additional Payments and all other amounts coming due and payable under the Installment Sale
Agreement have been fully paid or prepaid, the City (a) will not suspend or discontinue payment of any
Installment Payments, Additional Payments or such other amounts, (b) will perform and observe all other
agreements contained in the Installment Sale Agreement, and (c) will not terminate the Term of the
Installment Sale Agreement for any cause, including, without limiting the generality of the foregoing, the
occurrence of any acts or circumstances that may constitute failure of consideration, eviction or
constructive eviction, destruction of or damage to the Wastewater Enterprise, sale of the Wastewater
Enterprise, the taking by eminent domain of title to or temporary use of any component of the Wastewater
Enterprise, commercial frustration of purpose, any change in the tax or law other laws of the United
States of America or the State or any political subdivision of either thereof or any failure of the Financing
Authority or the Trustee to perform and observe any agreement, whether express or implied, or any duty,
liability or obligation arising out of or connected with the Indenture or the Installment Sale Agreement.
Pledge of Net Revenues
All of the Net Revenues, and all moneys on deposit in the Revenue Fund, are irrevocably
pledged, charged and assigned to the punctual payment of the Installment Payments and any Parity
Obligations, and except as otherwise provided in the Installment Sale Agreement the Net Revenues and
such other funds will not be used for any other purpose so long as any of the Installment Payments remain
unpaid. Such pledge, charge and assignment constitutes a first lien on the Net Revenues and such other
moneys for the payment of the Installment Payments and any Parity Obligations in accordance with the
terms of the Installment Sale Agreement.
Allocation of Net Revenues
All of the Gross Revenues will be deposited by the City immediately upon receipt in the
Wastewater Enterprise Fund. Operation and Maintenance Costs will be paid out of the Wastewater
Enterprise Fund as such payments become due and payable. On or before each Installment Payment
Date, the City will withdraw from the Wastewater Enterprise Fund, and transfer to the Trustee first, (on a
parity with the transfers for the payment of principal of or interest on any Parity Obligations), without
preference or priority as to any Parity Obligations, for deposit in the Revenue Fund, an amount of Net
Revenues which, together with the balance then on deposit in the Bond Service Fund for the Bonds (other
than amounts resulting from the prepayment of the Installment Payments and other than amounts required
for payment of principal of or interest on any Bonds which have matured or been called for redemption
but which have not been presented for payment), is equal to the aggregate amount of the Installment
Payments coming due and payable on the next succeeding Interest Payment Date, and second, any
amounts required to restore the balance in a Parity Obligation Reserve Fund, if any, to its reserve
requirement, without preference or priority as to any Parity Obligations, and ratably among Parity
Obligation Reserve Funds, if insufficient funds to restore all Parity Obligation Reserve Funds.
If prior to an Installment Payment Date, the City has determined that Net Revenues will be
insufficient in amount to pay in full the Installment Payments next coming due under the Installment Sale
Agreement and other principal and interest payments next coming due for any Parity Obligations, then
amounts transferred to the Trustee from the Wastewater Enterprise Fund to the Revenue Fund and to the
trustees for the Parity Obligations will be made ratably without preference or priority among the
Installment Payments and such other principal and interest payments for any Parity Obligations.
The City will manage, conserve and apply the Gross Revenues on deposit in the Wastewater
Enterprise Fund in such a manner that all deposits required to be made above will be made at the times
and in the amounts so required. Subject to the foregoing sentence, so long as no Event of Default has
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occurred and is continuing under the Installment Sale Agreement or under any documents governing the
Parity Obligations, the City may use and apply Net Revenues in the Wastewater Enterprise Fund for (i)
deposits to the Rate Stabilization Fund, (ii) the payment of Additional Payments, (iii) the payment of any
subordinate obligations or any unsecured obligations, (iv) the acquisition and construction of extensions
and betterments to the Wastewater Enterprise, (v) the prepayment of any obligations of the City relating
to the Wastewater Enterprise, or (vi) any other lawful purposes of the Wastewater Enterprise Fund.
Additional Payments
In addition to the Installment Payments, the City shall pay when due all costs and expenses
incurred by the Financing Authority to comply with the provisions of the Indenture, including without
limitation all Costs of Issuance (to the extent not paid from amounts on deposit in the Costs of Issuance
Fund), and shall pay to the Trustee upon request therefor all compensation for fees due to the Trustee and
all of its costs and expenses payable as a result of the performance of and compliance with its duties
under the Installment Sale Agreement or under the Indenture or any related documents, together with all
amounts required to indemnify the Trustee pursuant to the Indenture, and all costs and expenses of
attorneys, auditors, engineers and accountants, but only to the extent permitted by law.
Superior and Subordinate Obligations
The City will not issue or incur any additional bonds or other obligations during the Term of the
Installment Sale Agreement having any priority in payment of principal or interest out of the Net
Revenues over the Installment Payments. Nothing is intended or will be construed to limit or affect the
ability of the City to issue or incur (a) Parity Obligations pursuant to the Installment Sale Agreement, or
(b) obligations which are either unsecured or which are secured by an interest in the Net Revenues which
is junior and subordinate to the pledge of and lien upon the Net Revenues established under the
Installment Sale Agreement.
Issuance of Parity Obligations
In addition to the Installment Payments, the City may issue or incur other bonds, notes, loans,
advances or indebtedness payable from Net Revenues on a parity with the Installment Payments to
provide financing for the Wastewater Enterprise in such principal amount as will be determined by the
City. The City may issue or incur any such Parity Obligations subject to the following specific conditions
which are made conditions precedent to the issuance and delivery of such Parity Obligations:
(a)
No Event of Default has occurred and is continuing, and the City will deliver a certificate
to that effect to the Trustee;
(b)
The Net Revenues, calculated in accordance with accounting principles consistently
applied, as shown by the books of the City for the latest Fiscal Year or as shown by the books of
the City for any more recent twelve (12) month period selected by the City, in either case verified
by a certificate or opinion of an Independent Accountant employed by the City, plus (at the
option of the City) the Additional Revenues, will be at least equal to one hundred twenty percent
(120%) of the amount of the Maximum Annual Debt Service; and
(c)
The trustee or fiscal agent for such Parity Obligations will be the same entity performing
the functions of Trustee under the Indenture.
Notwithstanding the foregoing provisions, there are no limitations on the ability of the City to
issue any Parity Obligations at any time to refund any outstanding Bonds or any outstanding Parity
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Obligations provided such issuance of Parity Obligations produces annual debt service savings to the
City. The provisions of subsection (b) will not apply to the portion of Parity Obligations to the extent the
proceeds of such Parity Obligations will be deposited in an irrevocable escrow for the purpose of paying
the principal of and interest and premium (if any) on such Parity Obligations.
Investments
All monies in the Wastewater Enterprise Fund may be invested by the City from time to time in
any Authorized Investment.
Covenants
Rates and Charges. The City will fix, prescribe, revise and collect rates, fees and charges for the
services and facilities furnished by the Wastewater Enterprise during each Fiscal Year, which are at least
sufficient, after making allowances for contingencies and error in the estimates, to yield Gross Revenues
sufficient to pay the following amounts in the following order of priority:
(a)
All Operation and Maintenance Costs estimated by the City to become due and
payable in such Fiscal Year;
(b)
All Installment Payments and payments of principal of and interest on any Parity
Obligations as they become due and payable during such Fiscal Year, without preference or
priority, except to the extent Installment Payments or interest on any Parity Obligations are
payable from proceeds of the Bonds or Parity Obligations deposited for such purpose; provided,
however, if interest on any Parity Obligations is reasonably anticipated to be reimbursed to the
City by the United States of America pursuant to Section 54AA of the Code, or any future similar
program, then interest payments with respect to such Parity Obligations will be reduced by the
amount of such interest reasonably anticipated to be paid or reimbursed by the United States of
America;
(c)
All amounts, if any, required to restore the balance in any Parity Obligation
Reserve Fund, if any, to the full amount of its reserve requirement; and
(d)
All payments required to meet any other obligations of the City which are
charges, liens, encumbrances upon, or which are otherwise payable from, the Net Revenues
during such Fiscal Year.
In addition, the City will fix, prescribe, revise and collect rates, fees and charges for the services and
facilities furnished by the Wastewater Enterprise during each Fiscal Year which are sufficient to yield Net
Revenues which are at least equal to one hundred twenty percent (120%) of the amount described in the
preceding clauses (b) and (c) for such Fiscal Year.
Wastewater Enterprise. The City covenants that the Wastewater Enterprise will not be
encumbered, sold, leased, pledged, any charge placed thereon, or otherwise disposed of, as a whole or
substantially as a whole unless and until the Trustee receives a written opinion of Bond Counsel to the
effect that such sale, lease or disposition will not adversely affect the exclusion of the interest on any
Bond from the gross income of the owner thereof for federal income tax purposes. Neither the Net
Revenues nor any other funds pledged or otherwise made available to secure payment of the Installment
Payments will be mortgaged, encumbered, sold, leased, pledged, any charge placed thereon, or disposed
or used except as authorized by the terms of the Installment Sale Agreement. The City will not enter into
any agreement which impairs the operation of the Wastewater Enterprise or any part of it necessary to
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secure adequate Net Revenues to pay the Installment Payments, or which otherwise would impair the
rights of the Bond Owners and the owners of any Parity Obligations with respect to the Net Revenues. If
any substantial part of the Wastewater Enterprise is sold, the payment therefor will either (a) be used for
the acquisition or construction of improvements, extensions or replacements of facilities constituting part
of the Wastewater Enterprise, or (b) to the extent not so used, be paid to the Trustee to be applied to pay
or prepay the Installment Payments or any Parity Obligations, in accordance with written instructions of
the City filed with the Trustee.
Insurance. The City will maintain or cause to be maintained, throughout the Term of the
Installment Sale Agreement, but only if and to the extent available at reasonable cost from reputable
insurers, a standard comprehensive general insurance policy or policies in protection of the Financing
Authority, the City and their respective members, officers, agents and employees. Said policy or policies
will provide for indemnification of said parties against direct or contingent loss or liability for damages
for bodily and personal injury, death or property damage occasioned by reason of the operation of the
Wastewater Enterprise. The City will procure and maintain, or cause to be procured and maintained,
throughout the Term of the Installment Sale Agreement, but only in the event and to the extent available
from reputable insurers at reasonable cost, casualty insurance against loss or damage to any
improvements constituting any part of the Wastewater Enterprise, covering such hazards as are
customarily covered with respect to works and property of like character.
Said policy or policies will provide coverage in the such limits and shall be subject to such
deductibles as is customary with respect to works and property of a like character. Such liability
insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the
City, and may be maintained in whole or in part in the form of self-insurance by the City, subject to the
provisions of the Installment Sale Agreement, or in the form of the participation by the City in a joint
powers agency or other program providing pooled insurance. The proceeds of such liability insurance
will be applied toward extinguishment or satisfaction of the liability with respect to which such proceeds
will have been paid. All amounts collected from insurance against accident to or destruction of any
portion of the Wastewater Enterprise will be used to repair, rebuild or replace such damaged or destroyed
portion of the Wastewater Enterprise, and to the extent not so applied, will be paid to the Trustee to be
applied to pay or prepay the Installment Payments (and the Bonds, under the Indenture) or any Parity
Obligations, in accordance with written instructions of the City filed with the Trustee.
Eminent Domain. Any amounts received as awards as a result of the taking of all or any part of
the Wastewater Enterprise by the lawful exercise of eminent domain, at the election of the City
(evidenced by a Written Certificate of the City filed with the Trustee and the Financing Authority) will
either (a) be used for the acquisition or construction of improvements and extension of the Wastewater
Enterprise, or (b) be paid to the Trustee to be applied to pay or prepay the Installment Payments (and the
Bonds, under the Indenture) or any Parity Obligations, in accordance with written instructions of the City
filed with the Trustee.
Against Competitive Facilities. To the extent that it can so legally obligate itself, the City
covenants that it will not acquire, construct, maintain or operate and will not, to the extent permitted by
law and within the scope of its powers, permit any other public or private agency, corporation, district or
political subdivision or any person whomsoever to acquire, construct, maintain or operate within the
territory of the City any wastewater system competitive with the Wastewater Enterprise.
Tax Covenants. The City and the Financing Authority covenant not to take any action, or fail to
take any action, if such action or failure to take action would adversely affect the exclusion from gross
income of the interest payable on the Bonds under Section 103 of the Code. The City and the Financing
Authority will not use or permit the use of any of the funds provided from the sale of the Bonds by the
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Trustee or any other funds of the City, directly or indirectly, or direct the Trustee to invest any funds held
by it under the Indenture or the Installment Sale Agreement, in such manner as would, or enter into, or
allow any “related person” (as defined in Section 144(a)(3) of the Code) to enter into, any arrangement,
formal or informal, for the purchase of the Bonds that would, or take or omit to take any other action that
would, cause any Bond to be an “arbitrage bond” within the meaning of Section 148 of the Code. The
City covenants not use or permit the use of the Improvements by any Person in such manner or to such
extent as would result in loss of the exclusion from gross income of the interest component of the
Installment Payments under Section 103 of the Code.
Continuing Disclosure. The City will comply with the continuing disclosure requirements
promulgated under Securities and Exchange Commission Rule 15c2-12(b)(5) and comply with the terms
and provisions of the Continuing Disclosure Agreement.
Amendments
The City and the Financing Authority have the right to modify or amend the Installment
Agreement, without the consent of the Trustee or any of the Bond Owners or any of the owners of Parity
Obligations, but only if such amendment or modification (a) does not cause interest represented by the
Bonds to be includable in gross income for federal income tax purposes in the opinion of Bond Counsel,
(b) does not materially adversely affect the interests of the Owners of the Bonds or the owners of any
Parity Obligations in the opinion of Bond Counsel, (c) does not modify any of the rights or obligations of
the Trustee without the Trustee’s written consent, and (d) only is for any one or more of the following
purposes (i) to provide for the issuance of Parity Obligations, (ii) to add to the covenants and agreements
of the City contained in the Installment Sale Agreement, other covenants and agreements thereafter to be
observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City, (iii)
to cure any ambiguity, or to cure, correct or supplement any defective provision contained therein, or in
any other respect whatsoever as the Financing Authority and the City may deem necessary or desirable, or
(iv) to amend any provision thereof for the purpose of complying with the applicable requirements of the
Tax Code.
Prepayment
The City may exercise its option to prepay the principal components of the Installment Payments
in whole or in part (in integral multiples of $5,000) to the extent the Financing Authority has the ability to
effect an optional redemption of the Bonds under the Indenture or from insurance or eminent domain
proceeds. The City will give the Trustee and the Financing Authority written notice of its intention to
exercise its option not less than sixty (60) days in advance of the date of exercise (or such lesser period of
time as will be consented to by the Trustee and the Financing Authority). Any such prepayment price will
be deposited by the Trustee in the Redemption Fund to be applied to the redemption of Bonds pursuant to
the Indenture.
Rate Stabilization Fund
From time to time the City may deposit in the Rate Stabilization Fund from Net Revenues
remaining, after making the allocation for Installment Payments and parity payments for Parity
Obligations, such amounts as the City shall determine, provided that deposits with respect to any Fiscal
Year may be made at any time during such Fiscal Year and until (but not after) the day which is 180 days
following the end of such Fiscal Year. The City may withdraw amounts from the Rate Stabilization Fund
for inclusion in Gross Revenues for any Fiscal Year, or for any other lawful purpose of the Wastewater
Enterprise, such withdrawals to be made at any time during such Fiscal Year and until (but not after) the
day which is 180 days after the end of such Fiscal Year. All interest or other earnings upon deposits in
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the Rate Stabilization Fund may be withdrawn therefrom and accounted for as Gross Revenues. Amounts
on deposit in the Rate Stabilization Fund do not constitute Gross Revenues until withdrawn and returned
to the Wastewater Enterprise Fund.
Events of Default
Events of Default and Acceleration of Maturities. The following events shall be Events of
Default under the Installment Sale Agreement: (a) failure by the City to pay any Installment Payment
when and as the same become due and payable under the Installment Sale Agreement; (b) failure by the
City to pay any Additional Payment when due and payable thereunder, and the continuation of such
failure for a period of thirty (30) days, (c) failure by the City to observe and perform any covenant,
condition or agreement on its part to be observed or performed, other than as referred to in the preceding
causes (a) or (b), for a period of ninety (90) days after written notice specifying such failure and
requesting that it be remedied has been given to the City by the Financing Authority or the Trustee;
provided, however, that if the City will notify the Financing Authority and the Trustee that in its
reasonable opinion the failure stated in the notice can be corrected, but not within such 90-day period,
such failure will not constitute an event of default thereunder if the City commences to cure such failure
within such ninety (90) day period and thereafter diligently and in good faith cures such failure in a
reasonable period of time, (d) the filing by the City of a voluntary petition in bankruptcy, or failure by the
City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt,
or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of
composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to
the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended,
or under any similar acts which may thereafter be enacted.
Whenever any Event of Default has happened and is continuing, the Trustee as assignee of the
Financing Authority will have the right, at its option and without any further demand or notice, but
subject in all respects to the provisions of the Indenture, to: (a) declare all principal components of the
unpaid Installment Payments, together with accrued interest thereon at the net effective rate of interest per
annum then borne by the Outstanding Bonds from the immediately preceding Interest Payment Date on
which payment was made, to be immediately due and payable, whereupon the same will immediately
become due and payable; (b) take whatever action at law or in equity may appear necessary or desirable
to collect the Installment Payments then due or thereafter to become due during the Term of the
Installment Sale Agreement, or enforce performance and observance of any obligation, agreement or
covenant of the City under the Installment Sale Agreement; and (c) as a matter of right, in connection
with the filing of a suit or other commencement of judicial proceedings to enforce the rights of the
Trustee and the Bond Owners under the Indenture, cause the appointment of a receiver or receivers of the
Net Revenues and other amounts pledged thereunder, with such powers as the court making such
appointment shall confer.
The provisions of the preceding clause (a), however, are subject to the condition that if, at any
time after the principal components of the unpaid Installment Payments have been so declared due and
payable pursuant to the preceding clause (a), and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered, the City will deposit with the Trustee a sum sufficient to
pay all principal components of the Installment Payments coming due prior to such declaration and all
matured interest components (if any) of the Installment Payments, with interest on such overdue principal
and interest components calculated at the net effective rate of interest per annum then borne by the
Outstanding Bonds, and the reasonable fees and expenses of the Trustee (including any fees and expenses
of its attorneys), and any and all other defaults known to the Trustee (other than in the payment of the
principal and interest components of the Installment Payments due and payable solely by reason of such
declaration) will have been made good, then, and in every such case, with the written consent of the
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Financing Authority, the Trustee will rescind and annul such declaration and its consequences. However,
no such rescission and annulment will extend to or will affect any subsequent default, or will impair or
exhaust any right or power consequent thereon. The Trustee shall be required to exercise the remedies
provided herein in accordance with the Indenture.
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
The Indenture sets forth the terms of the Bonds, the nature and extent of their security, various
rights of the Owners of the Bonds, rights, duties and immunities of the Trustee and the rights and
obligations of the City and the Financing Authority. Certain provisions of the Indenture are summarized
below. Other provisions are summarized in this Official Statement under the captions “THE BONDS”
and “SECURITY FOR THE BONDS.” This summary does not purport to be complete or definitive and is
qualified in its entirety by reference to the full terms of the Indenture.
Transfer and Exchange of Bonds
The registration of any Bond may, in accordance with its terms, be transferred upon the
Registration Books by the person in whose name it is registered, in person or by his duly authorized
attorney, upon surrender of such Bond for cancellation at the Office of the Trustee, accompanied by
delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. Whenever
any Bond or Bonds is surrendered for registration of transfer, the Trustee will execute and deliver a new
Bond or Bonds of the same maturity, interest rate and aggregate principal amount, in any authorized
denominations. The Financing Authority will pay all costs of the Trustee incurred in connection with any
such transfer, except that the Trustee may require the payment by the Bond Owner of any tax or other
governmental charge required to be paid with respect to such transfer. Bonds may be exchanged at the
Office of the Trustee, for a like aggregate principal amount of Bonds of other authorized denominations
of the same interest rate and maturity. The Financing Authority will pay all costs of the Trustee incurred
in connection with any such exchange, except that the Trustee may require the payment by the Bond
Owner requesting such exchange of any tax or other governmental charge required to be paid with respect
to such exchange. The Trustee may refuse to transfer or exchange either (i) any Bond during the period
established by the Trustee for the selection of Bonds for redemption or (ii) the portion of any Bond which
the Trustee has selected for redemption.
Pledge and Assignment
All Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the
Trustee in any fund or account established under the Indenture are irrevocably pledged to the payment of
the interest and premium, if any, on and principal of the Bonds as provided in the Indenture, and the
Revenues will not be used for any other purpose while any Bonds remain Outstanding; provided,
however, that out of the Revenues and other moneys of the Wastewater Enterprise there may be applied
such sums for such purposes as are permitted under the Indenture. Such pledge constitutes a first pledge
of and charge and lien upon the Revenues and all other moneys on deposit in the funds and accounts
established under the Indenture for the payment of the interest on and principal of the Bonds, in
accordance with their terms and the terms of the Indenture.
To carry out and effectuate the pledge, charge and lien on the Revenues of the Wastewater
Enterprise provided in the Indenture, the Financing Authority agrees and covenants that, with respect to
the Wastewater Enterprise, all Revenues when and as received shall be received by the Financing
Authority in trust for the benefit of the holders of the Bonds and will be deposited when and as received
by the Financing Authority in the Revenue Fund created under the Indenture and which funds the
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Financing Authority agrees and covenants to maintain with the Trustee so long as any Bonds are
Outstanding. All Revenues will be accounted for through and held in trust in the Revenue Fund, and the
Financing Authority has no beneficial right or interest in any of the Revenues except only as provided in
the Indenture.
The Financing Authority assigns to the Trustee, on behalf of the Owners, all of the Financing
Authority’s right, title and interest to and in the Revenues. This assignment is an assignment of all of the
Financing Authority’s right, title and interest in and to the Revenues, and such right, title and interest, and
the Revenues constitute property of the Trustee on behalf of the Owners of the Bonds. Subject to the
Indenture, all Revenues the Trustee collects and receives will be applied to the payment of principal of
and interest and premium (if any) on the Bonds equally, without priority for series, issue, number or
maturity date, in accordance with the terms hereof. So long as any of the Bonds are Outstanding, the
Revenues and such moneys will not be used for any other purpose; except that a portion of the Revenues
may be used for purposes as expressly permitted by the Indenture.
Fund and Accounts
Cost of Issuance Fund. The Trustee will establish, maintain and hold in trust a separate fund to
be known as the “Costs of Issuance Fund.” Except as otherwise provided in the Indenture, moneys in the
Costs of Issuance Fund will be used solely for the payment of the Costs of Issuance. The Trustee will
disburse moneys in the Costs of Issuance Fund from time to time to pay Costs of Issuance (or to
reimburse the Financing Authority for payment of Costs of Issuance) upon receipt by the Trustee of a
Written Request of the Financing Authority, substantially in the form of the first such request delivered
by the Financing Authority to the Trustee on the Closing Date, which: (a) states with respect to each
disbursement to be made (i) the requisition number, (ii) the name and address of the person, firm or
corporation to whom payment will be made, (iii) the amount to be disbursed, (iv) that each obligation
mentioned therein is a proper charge against the Costs of Issuance Fund and has not previously been
disbursed by the Trustee from amounts in the Costs of Issuance Fund, and (v) that the amount of such
disbursement is for payment of Costs of Issuance incurred and payable by the Financing Authority;
(b) specifies in reasonable detail the nature of the obligation; and (c) is accompanied by a bill or statement
of account (if any) for each obligation. Upon the earlier of 90 days from the Closing Date, or the filing
with the Trustee of a Written Certificate of the Financing Authority stating that all Costs of Issuance have
been paid, the Trustee will withdraw all amounts then on deposit in the Costs of Issuance Fund and
transfer such amounts to the Bond Service Fund and the Trustee will close the Costs of Issuance Fund.
Revenue Fund.. Except with regard to the deposit of earnings on investments, all of the Revenues
shall be deposited by the Trustee immediately upon receipt in the Revenue Fund (which the Trustee will
establish and hold in trust). Amounts in the Revenue Fund will be applied solely for the uses and
purposes set forth in the Indenture. The Trustee will withdraw amounts on deposit in the Revenue Fund
and apply such amounts at the times and for the purposes, and in the following priority, first to the Bond
Service Fund, and second to the Redemption Fund.
Bond Service Fund. On or before the twenty-fifth (25th) calendar day of the month preceding
each Interest Payment Date, so long as any Bonds remain Outstanding, the Trustee will withdraw from
the Revenue Fund and deposit into the Bond Service Fund (which the Trustee will establish and hold in
trust) an amount which, together with other available amounts then on deposit in the Bond Service Fund,
is at least equal to the sum of (i) the aggregate amount of principal of and interest coming due and payable
on the Bonds on such Interest Payment Date, and (ii) the redemption price of the Term Bonds coming due
and payable on such Interest Payment Date by operation of mandatory sinking fund redemption.
Amounts in the Bond Service Fund will be applied by the Trustee solely for the purpose of paying the
principal of and interest on the Outstanding Bonds when and as such principal and interest becomes due
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and payable (including accrued interest on any Bonds purchased or redeemed), and for the purpose of
paying the principal of the Term Bonds at the maturity thereof or upon the mandatory sinking fund
redemption. If after all of the Bonds have been paid or deemed to have been paid, there are moneys
remaining in the Bond Service Fund, such moneys will be transferred by the Trustee to the City, after the
payment of any outstanding fees and expenses of the Trustee.
Redemption Fund. The Trustee will deposit into the Redemption Fund all amounts required to
redeem any Bonds which are subject to optional redemption when and as such amounts become available.
Amounts in the Redemption Fund will be applied by the Trustee solely for the purpose of paying the
redemption price of Bonds to be optionally redeemed. Following any such redemption of all of the
Bonds, any moneys remaining in the Redemption Fund will be transferred by the Trustee to the City.
Investment of Moneys
All moneys in any of the funds or accounts established with the Trustee pursuant to the Indenture
will be invested by the Trustee solely in Permitted Investments, as directed pursuant to the Written
Request of the City filed with the Trustee at least two (2) Business Days in advance of the making of such
investments. In the absence of any such directions from the City, the Trustee will invest any such moneys
in Permitted Investments described in paragraph (D) of the definition thereof. Obligations purchased as
an investment of moneys in any fund will be deemed to be part of such fund or account. All interest or
gain derived from the investment of amounts in any of the funds or accounts established under the
Indenture will be deposited in the fund or account from which such investment was made; except that all
interest or gain derived from the investment of amounts in the Reserve Fund will be deposited in the
Bond Service Fund.
Covenants
Tax Covenants. Under the provisions of the Installment Sale Agreement, the City and the
Financing Authority have undertaken certain covenants with respect to the exclusion of the interest
component of Installment Payments from the gross income of the owner thereof for federal income tax
purposes. Said provision also restricts assignment of the Installment Sale Agreement by the Financing
Authority unless the assignee, other than the Trustee, will have assumed and undertaken the obligations of
the Financing Authority.
Accounting Records and Reports. The Trustee will at all times keep, or cause to be kept, proper
books of record and account, prepared in accordance with corporate trust industry standards, in which
accurate entries will be made of all transactions made by it relating to the proceeds of Bonds, the
Revenues, the Installment Sale Agreement, and all funds and accounts held by the Trustee under the
Indenture. Such books of record and account shall be available for inspection by the Financing Authority
and the City, during business hours and under reasonable circumstances upon reasonable prior notice to
the Trustee.
Additional Obligations. The Financing Authority covenants that no additional bonds, notes or
other indebtedness will be issued or incurred which are payable out of the Revenues in whole or in part,
unless the Installment Sale Agreement is amended to provide for an increase in the amount of Installment
Payments, such increase complies with and constitutes a Parity Obligation, and a Supplemental Indenture
is entered into providing for the issuance of the additional bonds, notes or other indebtedness.
Compliance with Contracts. The Trustee will promptly collect all amounts due from the City
pursuant to the Installment Sale Agreement. Subject to the provisions of the Indenture, the Trustee will
enforce, and take all steps, actions and proceedings which the Trustee determines to be reasonably
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necessary for the enforcement of all of its rights thereunder as assignee of the Financing Authority and for
the enforcement of all of the obligations of the City under the Installment Sale Agreement.
Events of Default
Events of Default and Acceleration. The following events are Events of Default under the
Indenture (a) default in the due and punctual payment of the principal of any Bond when and as the same
will become due and payable, whether at maturity as therein expressed, by proceedings for mandatory
sinking fund redemption, by declaration or otherwise, (b) default in the due and punctual payment of any
installment of interest on any Bond when and as such interest installment will become due and payable,
(c) default by the Financing Authority in the observance of any of the other covenants, agreements or
conditions on its part in the Indenture or in the Bonds contained, if such default will have continued for a
period of thirty (30) days after written notice thereof, specifying such default and requiring the same to be
remedied, will have been given to the City and the Financing Authority by the Trustee; provided,
however, that if in the reasonable opinion of the Financing Authority the default stated in the notice (other
than a default in the payment of any fees and expenses owing to the Trustee) can be corrected, but not
within such thirty (30) day period, such default will not constitute an Event of Default if the Financing
Authority will commence to cure such default within such thirty (30) day period and thereafter diligently
and in good faith cure such failure in a reasonable period of time, (d) the filing by the Financing Authority
of a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any
other applicable law of the United States of America, or if a court of competent jurisdiction will approve a
petition, filed with or without the consent of the Financing Authority, seeking reorganization under the
Federal bankruptcy laws or any other applicable law of the United States of America, or if, under the
provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will
assume custody or control of the Financing Authority or of the whole or any substantial part of its
property, and (e) the occurrence and continuation of an Event of Default under and as defined in the
Installment Sale Agreement.
Upon the occurrence and during the continuance of any Event of Default the Trustee may, and at
the written direction of the Owners of a majority in aggregate principal amount of the Bonds at the time
Outstanding, the Trustee will, declare the principal of all of the Bonds then Outstanding, and the interest
accrued thereon, to be due and payable immediately, and upon any such declaration the same will become
and will be immediately due and payable, anything in the Indenture or in the Bonds contained to the
contrary notwithstanding. This provision, however, is subject to the condition that if, at any time after the
principal of the Bonds will have been so declared due and payable and before any judgment or decree for
the payment of the moneys due will have been obtained or entered, the Financing Authority will deposit
with the Trustee a sum sufficient to pay all of the principal of and interest on the Bonds having come due
prior to such declaration, with interest on such overdue principal and interest calculated at the net
effective rate of interest per annum then borne by the Outstanding Bonds, and the reasonable fees and
expenses of the Trustee, together with interest thereon at the prime rate of the Trustee then in effect, and
any and all other defaults known to the Trustee (other than in the payment of the principal of and interest
on the Bonds having come due and payable solely by reason of such declaration) will have been made
good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate will
have been made therefor, then, and in every such case, the Trustee or the Owners of a majority in
aggregate principal amount of the Bonds at the time Outstanding may, by written notice to the Financing
Authority and to the Trustee, on behalf of the Owners of all of the Outstanding Bonds, rescind and annul
such declaration and its consequences. However, no such rescission and annulment will extend to or shall
affect any subsequent default, or will impair or exhaust any right or power consequent thereon.
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Application of Funds Upon Acceleration. All amounts received by the Trustee pursuant to any
right given or action taken by the Trustee under the provisions of the Indenture will be applied by the
Trustee in the following order upon presentation of the several Bonds, and the stamping thereon of the
amount of the payment if only partially paid, or upon the surrender thereof if fully paid:
First, to the payment of reasonable fees, charges and expenses of the Trustee (including
reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and
duties under the Indenture; and
Second, to the payment of the whole amount then owing and unpaid upon the Bonds for interest
and principal, with interest on such overdue amounts to the extent permitted by law at the net effective
rate of interest then borne by the Outstanding Bonds, and in case such moneys will be insufficient to pay
in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest,
principal and interest on overdue amounts without preference or priority among such interest, principal
and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on
overdue amounts.
Other Remedies; Rights of Bond Owners. Upon the occurrence of an Event of Default, the
Trustee may pursue any available remedy, at law or in equity to enforce the payment of the principal of,
premium, if any, and interest on the Outstanding Bonds, and to enforce any rights of the Trustee under or
with respect to the Indenture. If an Event of Default will have occurred and be continuing and if
requested so to do by the Owners of a majority in aggregate principal amount of Outstanding Bonds and
indemnified as provided in the Indenture, the Trustee will be obligated to exercise such one or more of the
rights and powers conferred by the Indenture, as the Trustee, being advised by counsel, will deem most
expedient in the interests of the Bond Owners. No remedy by the terms of the Indenture conferred upon
or reserved to the Trustee (or to the Bond Owners) is intended to be exclusive of any other remedy, but
each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the
Trustee or to the Bond Owners thereunder or now or thereafter existing at law or in equity. No delay or
omission to exercise any right or power accruing upon any Event of Default will impair any such right or
power or will be construed to be a waiver of any such Event of Default or acquiescence therein; such right
or power may be exercised from time to time as often as may be deemed expedient.
Power of Trustee to Control Proceeding. In the event that the Trustee, upon the happening of an
Event of Default, will have taken any action, by judicial proceedings or otherwise, pursuant to its duties
under the Indenture, whether upon its own discretion or upon the request of the Owners of a majority in
principal amount of the Bonds then Outstanding, it will have full power, in the exercise of its discretion
for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance,
withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee
will not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or
settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed
with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds
opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
Any suit, action or proceeding which any Owner of Bonds will have the right to bring to enforce any right
or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all
Owners of Bonds similarly situated and the Trustee is appointed (and the successive respective Owners of
the Bonds, by taking and holding the same, will be conclusively deemed so to have appointed it) the true
and lawful attorney-in-fact of the respective Owners of the Bonds for the purpose of bringing any such
suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the
respective Owners of the Bonds as a class or classes, as may be necessary or advisable in the opinion of
the Trustee as such attorney-in-fact.
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Non-Waiver. Nothing in the Indenture, or in the Bonds, will affect or impair the obligation of the
Financing Authority, which is absolute and unconditional, to pay the interest on and principal of the
Bonds to the respective Owners of the Bonds at the respective dates of maturity, as provided in the
Indenture, out of the Revenues and other moneys pledged for such payment. A waiver of any default or
breach of duty or contract by the Trustee or any Bond Owners will not affect any subsequent default or
breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No
delay or omission of the Trustee or any Owner of any of the Bonds to exercise any right or power
accruing upon any default will impair any such right or power or will be construed to be a waiver of any
such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or Bond
Owners by the Bond Law or by the Indenture may be enforced and exercised from time to time and as
often as will be deemed expedient by the Trustee or the Bond Owners, as the case may be.
Rights and Remedies of Bond Owners. No Owner of any Bond will have the right to institute any
suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture, or the
Installment Sale Agreement, unless (a) such Owner will have previously given to the Trustee written
notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal
amount of all the Bonds then Outstanding will have made written request upon the Trustee to exercise the
powers granted or to institute such action, suit or proceeding in its own name; (c) said Owners will have
tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request; (d) the Trustee will have refused or omitted to
comply with such request for a period of sixty (60) days after such written request will have been received
by, and said tender of indemnity will have been made to, the Trustee; and (e) the Trustee has not received
any inconsistent direction during such 60-day period from the Owners of a majority in aggregate principal
amount of the Outstanding Bonds. Such notification, request, tender of indemnity and refusal or omission
are declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any
remedy under the Indenture; it being understood and intended that no one or more Owners of Bonds will
have any right in any manner whatever by his or their action to enforce any right under the Indenture, or
the Installment Sale Agreement, except in the manner therein provided, and that all proceedings at law or
in equity to enforce any provision of the Indenture will be instituted, had and maintained in the manner
therein provided and for the equal benefit of all Owners of the Outstanding Bonds.
Amendments Permitted
The Indenture and the rights and obligations of the Financing Authority and of the Owners of the
Bonds may be modified or amended at any time by a Supplemental Indenture which will become binding
when the written consents of the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding, exclusive of Bonds disqualified, are filed with the Trustee. No such modification or
amendment will (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or
impair the obligation of the Financing Authority to pay the principal, interest or redemption premiums at
the time and place and at the rate and in the currency provided therein of any Bond without the express
written consent of the Owner of such Bond, (b) reduce the percentage of Bonds required for the written
consent to any such amendment or modification, or (c) without its written consent thereto, modify any of
the rights or obligations of the Trustee. The Indenture and the rights and obligations of the Financing
Authority and of the Owners of the Bonds may also be modified or amended at any time by a
Supplemental Indenture which will become binding upon adoption, without the consent of any Bond
Owners, but only to the extent permitted by law and only for any one or more of the following purposes:
(i) to add to the covenants and agreements of the Financing Authority in the Indenture, other covenants
and agreements thereafter to be observed, or to limit or surrender any rights or power therein reserved to
or conferred upon the Financing Authority; (ii) to provide for the issuance of Parity Obligations, as
increased Installment Payments under the Installment Sale Agreement; (iii) to make such provisions for
the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision
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contained in the Indenture, or in any other respect whatsoever as the Financing Authority may deem
necessary or desirable, provided under any circumstances that such modifications or amendments will not
materially adversely affect the interests of the Owners of the Bonds, in the opinion of Bond Counsel; or
(iv) to make such additions, deletions or modifications as may be necessary or desirable to assure
exemption from federal income taxation of interest on the Bonds.
Discharge of Indenture
If the Financing Authority will pay and discharge each Outstanding Bond in any one or more of
the following ways: (a) by well and truly paying or causing to be paid the principal of and interest and
premium (if any) on such Bonds, as and when the same become due and payable; (b) by irrevocably
depositing with the Trustee, in trust, at or before maturity, money which, together with the available
amounts then on deposit in the funds and accounts established pursuant to the Indenture, is fully sufficient
to pay such Bonds, including all principal, interest and redemption premiums; (c) by irrevocably
depositing with the Trustee, in trust, Federal Securities in such amount as Bond Counsel or an
Independent Accountant shall determine will, together with the interest to accrue thereon and available
moneys then on deposit in the funds and accounts established pursuant to the Indenture, be fully sufficient
to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption
premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the
maturity thereof notice of such redemption will have been mailed or provision satisfactory to the Trustee
shall have been made for the mailing of such notice; or (d) by delivering such Bonds to the Trustee for
cancellation; then, at the election of the Financing Authority, and notwithstanding that any of such Bonds
will not have been surrendered for payment, the pledge of the Revenues and other funds provided for in
the Indenture with respect to such Bonds, and all other pecuniary obligations of the Financing Authority
under the Indenture with respect to all such Bonds, will cease and terminate, except only the obligation of
the Financing Authority to pay or cause to be paid to the Owners of such Bonds not so surrendered and
paid all sums due thereon from amounts set aside for such purpose as aforesaid, and all fees, expenses and
costs of the Trustee. Notice of such election will be filed with the Trustee. Any funds thereafter held by
the Trustee, which are not required for said purposes, will be paid over to the City.
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APPENDIX D
BOOK-ENTRY SYSTEM
The information in this Appendix D concerning DTC and its book-entry system has been obtained
from sources that the Financing Authority and the City believe to be reliable, but the Financing Authority
and the City take no responsibility for the accuracy thereof.
General
The information in this Appendix F concerning DTC and its book-entry system has been obtained
from sources that the Financing Authority and the City believe to be reliable, but the Financing Authority
and the City take no responsibility for the accuracy thereof.
General
The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the
Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co.
(DTC’s partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully-registered bond certificate will be issued for each maturity of the Bonds, in the aggregate
principal amount of such maturity, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a
“banking organization” within the meaning of the New York Banking Law, a member of the federal
Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial
Code, and a “clearing agency” registered pursuant to the provisions of section 17A of the Securities
Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and
non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over
100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the
post-trade settlement among Direct Participants of sales and other securities transactions in deposited
securities through electronic computerized book-entry transfers and pledges between Direct Participants’
accounts. This eliminates the need for physical movement of securities certificates. Direct Participants
include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust
& Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities
Clearing Corporation, and Fixed Income Clearing Corporation, all of which are registered clearing
agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also
available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies,
and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The
DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com and www.dtc.org. The information set forth on
these websites is not incorporated by reference herein.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual
purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
D-1
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being
redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts
Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to
credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information
from the Financing Authority or the Trustee, on a payable date in accordance with their respective
holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in “street name,” and will be the responsibility of such Participant
and not of DTC nor its nominee, the Trustee, or the Financing Authority, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any,
and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized
representative of DTC) is the responsibility of the Financing Authority or the Trustee, disbursement of
such payments to Direct Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the Financing Authority or the Trustee. Under such circumstances, in the
event that a successor depository is not obtained, Bond certificates are required to be printed and
delivered.
The City or the Financing Authority may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event, Bond certificates will be
printed and delivered.
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APPENDIX E
PROPOSED FORM OF BOND COUNSEL OPINION
[Dated the date of closing]
Redondo Beach Community Financing Authority
415 Diamond Avenue
Redondo Beach, California 90277
City of Redondo Beach
415 Diamond Avenue
Redondo Beach, California 90277
$7,230,000
Redondo Beach Community Financing Authority
Wastewater Revenue Refunding Bonds, 2014 Series A
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance by the Redondo Beach Community
Financing Authority (the “Financing Authority”) of $7,230,000 aggregate principal amount of the bonds
of the Financing Authority designated the “Redondo Beach Community Financing Authority Wastewater
Revenue Refunding Bonds, 2014 Series A” (the “Bonds”), pursuant to the provisions of Article 4 of
Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Bond Law”),
and pursuant to an Indenture of Trust, dated as of April 1, 2014 (the “Indenture”), by and among the
Financing Authority, the City of Redondo Beach (the “City”) and U.S. Bank National Association, as
trustee (the “Trustee”), and a resolution of the governing body of the Financing Authority adopted on
March 18, 2014 (the “Resolution”). The proceeds of the Bonds will be applied by the Financing
Authority to refund all of the $10,335,000 Redondo Beach Public Financing Authority Revenue Bonds,
2004 Series A (City of Redondo Beach Wastewater System Financing Project), currently outstanding in
the principal amount of $8,500,000 (the “2004 Bonds”), as well as pay the costs of issuing the Bonds.
The Bonds are special limited obligations of the Financing Authority, payable from Revenues which
consist primarily of Installment Payments to be made by the City under an Installment Sale Agreement,
dated as of April 1, 2014 (the “Installment Sale Agreement”), by and between the Financing Authority
and the City. The City’s obligation to make Installment Payments is secured by a pledge of Net Revenues
of the City’s Wastewater Enterprise. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Indenture and the Installment Sale Agreement, as applicable.
We have examined the Bond Law and other statutes and such certified proceedings and other papers as
we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied
upon representations of the Financing Authority, the City, the Trustee and others,. contained in the
Indenture, the Installment Sale Agreement and in the certified proceedings, opinions of counsel to the
Financing Authority, the City and the Trustee, and such other documents, opinions and instruments as we
deemed necessary to render the opinions set forth herein, without undertaking to verify the same by
independent investigation.
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Based upon our examination we are of the opinion, under existing law, that:
1.
The Bonds have been duly authorized, executed and delivered by the Financing Authority in
accordance with the Bond Law, the Resolution and the Indenture and constitute valid and binding limited
obligations of the Financing Authority enforceable in accordance with their terms and payable solely from
the sources provided therefor in the Indenture.
2.
The Indenture has been duly authorized, executed and delivered by the Financing Authority and
the City and, assuming the enforceability thereof against the Trustee, constitutes a legal, valid and binding
obligation of the Financing Authority and the City enforceable against the Financing Authority and the
City in accordance with its terms. The Indenture establishes a valid pledge of the Revenues (as such term
is defined in the Indenture) and other funds pledged thereby for the security of the Bonds, in accordance
with the terms of the Indenture.
3.
The Installment Sale Agreement has been duly authorized, executed and delivered by the City
and the Financing Authority and constitutes a legal, valid and binding obligation of the City and the
Financing Authority enforceable against the City in accordance with its terms. The Installment Sale
Agreement establishes a valid pledge of the Net Revenues (as such term is defined in the Installment Sale
Agreement) in accordance with the terms of the Installment Sale Agreement.
4.
Under existing statutes, regulations, rulings and court decisions, interest on the Bonds is exempt
from personal income taxes of the State of California and, assuming compliance with the covenants
mentioned herein, interest on the Bonds is excluded pursuant to section 103(a) of the Code from the gross
income of the owners thereof for federal income tax purposes. In the further opinion of Bond Counsel,
under existing statutes, regulations, rulings and court decisions, the Bonds are not “specified private
activity bonds” within the meaning of section 57(a)(5) of the Code and, therefore, interest on the Bonds
will not be treated as an item of tax preference for purposes of computing the alternative minimum tax
imposed by section 55 of the Code. Receipt or accrual of interest on Bonds owned by a corporation may
affect the computation of the alternative minimum taxable income. A corporation’s alternative minimum
taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code will
be computed.
The Code imposes certain requirements that must be met subsequent to the issuance and delivery of the
Bonds for interest thereon to be and remain excluded pursuant to section 103(a) of the Code from the
gross income of the owners thereof for federal income tax purposes. Non-compliance with such
requirements could cause the interest on the Bonds to fail to be excluded from the gross income of the
owners thereof retroactive to the date of issuance of the Bonds. Pursuant to the Indenture and in the Tax
Certificate the Financing Authority in connection with the issuance of the Bonds, the Financing Authority
is making representations relevant to the determination of, and is undertaking certain covenants regarding
or affecting, the exclusion of interest on the Bonds from the gross income of the owners thereof for
federal income tax purposes. In reaching our opinions described in the immediately preceding paragraph,
we have assumed the accuracy of such representations and the present and future compliance by the
Financing Authority with such covenants. Further, except as stated in the preceding paragraph, we
express no opinion as to any federal or state tax consequence of the receipt of interest on, or the
ownership or disposition of, the Bonds. Furthermore, we express no opinion as to any federal, state or
local tax law consequence with respect to the Bonds, or the interest thereon, if any action is taken with
respect to the Bonds or the proceeds thereof predicated or permitted upon the advice or approval of other
counsel.
E-2
The opinions expressed in paragraphs 1 through 3 above are qualified to the extent the enforceability of
the Bonds, the Indenture and the Installment Sale Agreement may be limited by applicable bankruptcy,
insolvency, debt adjustment, reorganization, moratorium or similar laws or equitable principles relating to
or limiting creditors’ rights generally or as to the availability of any particular remedy. The enforceability
of the Bonds, the Indenture and the Installment Sale Agreement is subject to the effect of general
principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and
fair dealing, to the possible unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or at law, and to the limitations on legal remedies against
governmental entities in California.
Our opinions are based on existing law, which is subject to change. Such opinions are further based on
our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to
reflect any facts or circumstances that may hereafter come to our attention or to reflect any changes in any
law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of results
and are not binding on the Internal Revenue Service; rather, such opinions represent our legal judgment
based upon our review of existing law that we deem relevant to such opinions and in reliance upon the
representations and covenants referenced above.
No opinion is expressed herein on the accuracy, completeness or fairness of the Official Statement or
other offering material relating to the Bonds.
This opinion is limited to the laws of the State of California and the federal laws of the United States.
Very truly yours,
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APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
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APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated as of April 1, 2014,
is executed and delivered by the City of Redondo Beach (the “City”) and U.S. Bank National Association,
as Dissemination Agent (the “Dissemination Agent”), in connection with the issuance of $7,230,000
aggregate principal amount of Redondo Beach Community Financing Authority Wastewater Revenue
Refunding Bonds, 2014 Series A (the “Bonds”). The Bonds are being issued pursuant to an Indenture of
Trust, dated as of April 1, 2014 (the “Indenture”), among the Redondo Beach Community Financing
Authority (the “Financing Authority”), the City and U.S. Bank National Association, as trustee (the
“Trustee”). The Bonds are secured by and payable from Revenues, which primarily consist of installment
payments to be made by the City under the Installment Sale Agreement dated as of April 1, 2014 (the
“Installment Sale Agreement”) between the Financing Authority as seller and the City as purchaser. In
connection therewith the City covenants and agrees as follows:
Section 1.
Purpose of this Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the City and the Dissemination Agent for the benefit of the Bondholders and
Beneficial Owners of the Bonds and in order to assist the Participating Underwriters (as defined herein) in
complying with Securities and Exchange Commission Rule 15c2-12(b)(5).
Section 2.
Definitions. In addition to the definitions set forth above and in the Indenture,
which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this
section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person who (a) has the power, directly or indirectly, to vote
or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds
through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for
federal income tax purposes.
“Disclosure Representative” shall mean the Finance Director of the City or his or her designee, or
such other officer or employee as the City shall designate in writing to the Trustee from time to time.
“Dissemination Agent” shall mean U.S. Bank National Association, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the City
and which has filed with the Trustee a written acceptance of such designation.
“Holder” shall mean either the registered owners of the Bonds or, if the Bonds are registered in
the name of The Depository Trust Company or another recognized depository, any applicable participant
in such depository system.
“Listed Event” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
“MSRB” shall mean the Municipal Securities Rulemaking Board established pursuant to Section
15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the
Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated
F-1
by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through
the Electronic Municipal Marketplace Access (EMMA) website of the MSRB, currently located at
http://emma.msrb.org.
“Official Statement” shall mean the Official Statement for the Bonds dated March 25, 2014.
“Participating Underwriter” shall mean any of the original underwriter of the Bonds listed in the
Official Statement required to comply with the Rule in connection with offering of the Bonds.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of
1934, as the same may be amended from time to time.
“SEC” shall mean the United States Securities and Exchange Commission.
“State” shall mean the State of California.
Section 3.
Provision of Annual Reports.
(a)
The City shall, or shall cause the Dissemination Agent to, not later than March 31
following the end of the City’s Fiscal Year (currently ending June 30), commencing with the Fiscal Year
ending June 30, 2014, provide to the MSRB an Annual Report which is consistent with the requirements
of Section 4 of this Disclosure Agreement. The Annual Report must be submitted in electronic format,
accompanied by such identifying information as prescribed by the MSRB. The Annual Report may be
submitted as a single document or as separate documents comprising a package, and may cross-reference
other information as provided in Section 4 of this Disclosure Agreement; provided that if the audited
financial statements of the City are not available by the date required above for the filing of the Annual
Report, the City shall submit the audited financial statements as soon as available. If the City’s Fiscal
Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section
5(f).
(b)
If the City is unable to provide (or cause the Dissemination Agent to provide) to
the MSRB an Annual Report by the date required in subsection (a), the Dissemination shall send to the
MSRB a notice in substantially the form attached hereto as Exhibit A.
(c)
The Dissemination Agent shall:
(i)
determine the electronic filing address of, and then-current procedures
for submitting Annual Reports to, the MSRB each year prior to the date
for providing the Annual Report; and
(ii)
file a report with the City and (if the Dissemination Agent is not the
Trustee) the Trustee certifying that the Annual Report has been provided
to the MSRB pursuant to this Disclosure Agreement, and stating the date
it was provided.
Section 4.
Content of Annual Reports. The City’s Annual Report shall contain or include
by reference the following categories or similar categories of information updated to incorporate
information for the most recent fiscal or calendar year, as applicable (the tables referred to below are
those appearing in the Official Statement relating to the Bonds):
F-2
(a)
The audited financial statements of the City for the prior Fiscal Year, prepared in
accordance with Generally Accepted Accounting Principles as promulgated to apply to governmental
entities from time to time by the Governmental Accounting Standards Board. If the City’s audited
financial statements are not available by the time the Annual Report is required to be filed pursuant to
Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the
financial statements contained in the final Official Statement, and the audited financial statements shall be
filed in the same manner as the Annual Report when they become available;
(b)
Unless otherwise provided in the audited financial statements filed pursuant to
Section 3(a), financial information and operating data with respect to the City for the preceding fiscal
year, substantially similar to that provided in the tables 4 and 7 in the Official Statement, and a
description of any additional indebtedness incurred during the most recently-completed fiscal year
payable from Net Revenues on a parity with the Installment Payments.
(c)
In addition to any information expressly required to be provided under this
Disclosure Agreement, the City shall provide such further material information, if any, as may be
necessary to make the specifically required statements in the light of the circumstances under which they
are made, not misleading.
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the City or related public entities, which have been
submitted to the MSRB or the SEC. If any document included by reference is a final official statement, it
must be available from the MSRB. The City shall clearly identify each such other document so included
by reference.
Section 5.
Reporting of Listed Events.
(a)
Pursuant to the provisions of this section, upon the occurrence of any of the
following events (in each case to the extent applicable) with respect to the Bonds, the City shall give, or
cause to be given by so notifying the Dissemination Agent in writing and instructing the Dissemination
Agent to give, notice of the occurrence of such event, in each case, pursuant to Section 5(c) hereof:
1.
principal or interest payment delinquencies;
2.
non-payment related defaults, if material;
3.
modifications to the rights of the Bondholders, if material;
4.
optional, contingent or unscheduled calls, if material, and tender offers;
5.
defeasances;
6.
rating changes;
7.
adverse tax opinions or the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701TEB) or other material notices or determinations with respect to the tax status of
the Bonds or other material events affecting the tax status of the Bonds;
8.
unscheduled draws on the debt service reserves reflecting financial difficulties;
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9.
unscheduled draws on the credit enhancements reflecting financial difficulties;
10.
substitution of the credit or liquidity providers or their failure to perform;
11.
release, substitution or sale of property securing repayment of the Bonds, if
material;
12.
bankruptcy, insolvency, receivership or similar proceedings of the City, which
shall occur as described below;
13.
appointment of a successor or additional trustee or the change of name of a
trustee, if material, or;
14.
the consummation of a merger, consolidation, or acquisition involving the City or
the sale of all or substantially all of the assets of the City other than in the
ordinary course of business, the entry into a definitive agreement to undertake
such an action or the termination of a definitive agreement relating to any such
actions, other than pursuant to its terms, if material.
For these purposes, any event described in item 12 of this Section 5(a) is considered to occur
when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the
City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or
federal law in which a court or governmental authority has assumed jurisdiction over substantially all of
the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing
governing body and officials or officers in possession but subject to the supervision and orders of a court
or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or
liquidation by a court or governmental authority having supervision or jurisdiction over substantially all
of the assets or business of the City.
(b)
Upon receipt of notice from the City and instruction by the City to report the
occurrence of any Listed Event, the Dissemination Agent shall provide notice thereof to the MSRB in
accordance with Section 5(c) hereof. In the event the Dissemination Agent shall obtain actual knowledge
of the occurrence of any of the Listed Events, the Dissemination Agent shall, immediately after obtaining
such knowledge, contact the Disclosure Representative, inform such person of the event, and request that
the City promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to
Section 5(c). For purposes of this Disclosure Agreement, “actual knowledge” of the occurrence of such
Listed Event shall mean actual knowledge by the Dissemination Agent, if other than the Trustee, and if
the Dissemination Agent is the Trustee, then by the officer at the corporate trust office of the Trustee with
regular responsibility for the administration of matters related to the Indenture. The Dissemination Agent
shall have no responsibility to determine the materiality, if applicable, of any of the Listed Events.
(c)
The City, or the Dissemination Agent, if the Dissemination Agent has been
instructed by the City to report the occurrence of a Listed Event, shall file a notice of such occurrence
with the MSRB in a timely manner not more than ten business days after the occurrence of the event.
Section 6.
Termination of Reporting Obligation. The City’s obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give
notice of such termination in the same manner as for a Listed Event under Section 5(f).
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Section 7.
Dissemination Agent. The City may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may
discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If
at any time there is not any other designated Dissemination Agent, Urban Futures, Inc., upon notice from
the City, shall be the Dissemination Agent. The initial Dissemination Agent shall be U.S. Bank National
Association. The Dissemination Agent shall not be responsible in any manner for the content of any
notice or report prepared by the City pursuant to this Disclosure Agreement. The Dissemination Agent
shall receive compensation for the services provided pursuant to this Disclosure Agreement. The
Dissemination Agent may resign by providing thirty days written notice to the City and the Trustee.
Section 8.
Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the City, the Trustee and the Dissemination Agent may amend this Disclosure Agreement
provided, the Dissemination Agent shall not be obligated to enter into any such amendment that modifies
or increases its duties or obligations hereunder, and any provision of this Disclosure Agreement may be
waived, provided that in the opinion of nationally recognized bond counsel, such amendment or waiver is
permitted by the Rule. In the event of any amendment or waiver of a provision of this Disclosure
Agreement, the City shall describe such amendment in the next Annual Report, and shall include, as
applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type
(or, in the case of a change of accounting principles, on the presentation) of financial information or
operating data being presented by the City.
Section 9.
Filings with the MSRB. All information, operating data, financial statements,
notices and other documents provided to the MSRB in accordance with this Disclosure Agreement shall
be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying
information as prescribed by the MSRB.
Section 10.
Additional Information. Nothing in this Disclosure Agreement shall be deemed
to prevent the City from disseminating any other information, using the means of dissemination set forth
in this Disclosure Agreement or any other means of communication, or including any other information in
any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this
Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of
occurrence of a Listed Event in addition to that which is specifically required by this Disclosure
Agreement, the City shall have no obligation under this Disclosure Agreement to update such information
or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11.
Default. In the event of a failure of the City or the Dissemination Agent to
comply with any provision of this Disclosure Agreement, the Trustee, at the written request of any
Participating Underwriter or the Holders of at least 25% of the aggregate principal amount of Outstanding
Bonds and upon provision of indemnification satisfactory to the Trustee, shall, or any Holder or
Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including
seeking mandate or specific performance by court order, to cause the City or the Dissemination Agent, as
the case may be, to comply with its obligations under this Disclosure Agreement. A default under this
Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy
under this Disclosure Agreement in the event of any failure of the City or the Dissemination Agent to
comply with this Disclosure Agreement shall be an action to compel performance hereunder.
Section 12.
Duties, Immunities and Liabilities of the Dissemination Agent. Article VIII of
the Indenture is hereby made applicable to this Disclosure Agreement as if the Disclosure Agreement
were (solely for this purpose) contained in the Indenture. The Dissemination Agent shall be entitled to
the protections and limitations on liability afforded to the Trustee thereunder. The Dissemination Agent
shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees
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to indemnify and save the Dissemination Agent, their officers, directors, employees and agents, harmless
against any loss, expense and liabilities which it may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including attorneys
fees) of defending against any claim of liability, but excluding any loss, expense and liabilities due to the
Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section
12 shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 13.
Notices. Any notices or communications to be given under this Disclosure
Agreement may be given as follows:
To the City:
City of Redondo Beach
415 Diamond Avenue
Redondo Beach, California 90277
Attention: City Manager
Tel: (310) 372-1171
Fax: (310) 379-9268
To the Dissemination Agent:
U.S. Bank National Association
633 W. Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust Services
Tel: (213) 615-6023
Fax: (213) 615-6197
Section 14.
Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
City, the Trustee, the Dissemination Agent, the Participating Underwriter and the Holders and Beneficial
Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 15.
Counterparts.
This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, this Disclosure Agreement has been executed on behalf of the City
and agreed to and accepted on behalf of the Dissemination Agent by their duly authorized representatives
as of April 1, 2014.
CITY OF REDONDO BEACH
By:
Finance Director
AGREED AND ACCEPTED:
U.S. BANK NATIONAL ASSOCIATION,
as Dissemination Agent
By:_____________________________________
Authorized Officer
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EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Person:
City of Redondo Beach
Name of Bond Issue:
Redondo Beach Community Financing Authority Wastewater Revenue
Refunding Bonds, 2014 Series A
Date of Issuance:
April ___, 2014
NOTICE IS HEREBY GIVEN that the City of Redondo Beach (the “City”) has not provided an
Annual Report with respect to the above-named Bonds as required by Section 3(a) of the Continuing
Disclosure Agreement, dated as of April 1, 2014, by and between the City and U.S. Bank National
Association, as dissemination agent (the “Dissemination Agent”). The City anticipates that the Annual
Report will be filed by ___________, 20__.
Dated: ______________, 20__
U.S. BANK NATIONAL ASSOCIATION, as
Dissemination Agent on behalf of the City
By:____________________________________
Authorized Officer
cc: City of Redondo Beach
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