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2014-2015 CAFR cJUIVC71H,UI 6 ... .e/e20,4iP City or ybk2execze Chino Hills Fiscal Year Ended June 30, 2015 Chino Hills, California ammi 14250 C�Ipp441 p�it I HIry kij --la , 0 HILLS COMMUNITY CENTER W ggYY ,1��,}I-- F � it a `� - ` _ � P.C't rrt. 11 ' �'� 5n ,..67.,...". ........12...;11y - = 1 ....... ; 7:: � .4,101110 R A` ryryry y ' , r i 1 �,— a logo Ito,ip. - ,-- . -. to , . rte: N ,1, .. . tr. �°1 9 c'it owl+ •_• \ L r µ . rgallin 1 :A tS �� ----gigI IF , =. THIS PAGE INTENTIONALLY LEFT BLANK CITY OF CHINO HILLS, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2015 Prepared by: Department of Finance City of Chino Hills This page intentionally left blank. CITY OF CHINO HILLS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS Page Number INTRODUCTORY SECTION Letter of Transmittal Organizational Chart vi City Officials vii Certificate of Achievement for Excellence in Financial Reporting viii FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1 MANAGEMENT'S DISCUSSION AND ANALYSIS 6 Government—Wide Financial Statements Statement of Net Position 17 Statement of Activities 18 Fund Financial Statements Balance Sheet—Governmental Funds 20 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 23 Statement of Revenues, Expenditures and Changes in Fund Balances—Governmental Funds 24 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 26 Statement of Net Position—Proprietary Funds 27 Statement of Revenues, Expenses and Changes in Fund Net Assets—Proprietary Funds 28 Statement of Cash Flows— Proprietary Funds 29 Statement of Fiduciary Net Position— Fiduciary Funds 30 Notes to Financial Statements 32 REQUIRED SUPPLEMENTARY INFORMATION Notes to Required Supplementary Information 75 Budgetary Comparison Schedule—General Fund 76 Budgetary Comparison Schedule—Landscape and Lighting District 77 Budgetary Comparison Schedule— Existing Infrastructure Fees 78 CITY OF CHINO HILLS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS Page Number Pension Plan Schedule of Proportionate Share of Net Pension Liability 79 Schedule of Plan Contributions 80 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Combining Balance Sheet— Nonmajor Governmental Funds 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances— Nonmajor Governmental Funds 90 Budgetary Comparison Schedules Sleepy Hollow Road Improvement 96 General Facilities Fees 97 Traffic Facilities Fees 98 Storm Drain Facilities Fees 99 Parkland Fees 100 Traffic Signal Fees 101 Gas Tax 102 Air Quality 103 Federal Grants 104 Measure I 105 Solid Waste 106 Street Sweeping 107 Frontline Policing 108 Miscellaneous Grants 109 Affordable Housing Program 110 Water Facilities Fee 111 Sewer Facilities Fee 112 Capital Improvement 113 CFD#9 Rincon Village 114 CFD#10 Fairfield Ranch 115 Combining Statement of Net Position— Internal Service Funds 118 Combining Statement of Revenues, Expenses and Changes in Fund Net Position— Internal Service Funds 119 Combining Statement of Cash Flows— Internal Service Funds 120 Combining Statement of Assets and Liabilities—All Agency Funds 122 Combining Statement of Changes in Assets and Liabilities— All Agency Funds 126 CITY OF CHINO HILLS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS Page Number STATISTICAL SECTION Last Ten Fiscal Years Net Position by Component 134 Changes in Net Position 135 Fund Balances of Governmental Funds 137 Changes in Fund Balances of Governmental Funds 138 Water Revenue—Charges for Services 140 Assessed Value and Estimated Actual Value of Taxable Property 141 Direct and Overlapping Property Tax Rates 142 Principal Property Tax Payers 143 Property Tax Levies and Collections 144 Ratios of Outstanding Debt by Type 146 Ratios of General Bonded Debt Outstanding 147 Direct and Overlapping Governmental Activities Debt 148 Legal Debt Margin Information 149 Pledged—Revenue Coverage 150 Demographic and Economic Statistics 152 Principal Employers 153 Full—Time—Equivalent City Government Employees by Function/Program 156 Operating Indicator by Function/Program 157 Capital Asset Statistics by Function/Program 158 City of Chino Hills This page intentionally left blank. &yin() Hi117 Introductory Section City of Chino Hills This page intentionally left blank. 060/ C41416)", 14000 City Center Drive October 26, 2015 Chino Hills, CA 91709 (909) 364-2600 u/rucd.Ciur.01 . The Honorable Mayor and City Council City of Chino Hills, California State law requires that all general-purpose focal governments publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with auditing standards generally accepted in the United States of America by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report (CAFR) for the City of Chino Hills for the fiscal year ended June 30, 2015. This report consists of management's representations concerning the finances of the City of Chino Hills. Consequently, management assumes full responsibility for the completeness and reliability of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Chino Hills has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse, and to compile sufficient reliable information for the preparation of the City of Chino Hills' financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements are 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. Lance, Soil, & Lunghard, LLP, a firm of licensed certified public accountants, has issued an unmodified ("clean") opinion of the City of Chino Hills' financial statements for the year ended June 30, 2015. The independent auditor's report is located at the front of the financial section of this report. Management's discussion and analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. This letter of transmittal complements the MD&A and the financial statements, and it should be read from that perspective and in conjunction with all other sections of the CAFR. City of Chino Hills Profile The City of Chino Hills was incorporated in December 1991 as a general law City and operates under the Council-Manager form of government. Chino Hills is located in southwestern San Bernardino County and is well known for its beautiful rural atmosphere and high quality of life. A non-partisan five-member council, elected to serve staggered four-year terms, governs the City. Elections are consolidated with the statewide general election held in November of even numbered years. The City Council appoints the City Manager, City Clerk, and City Attorney as well as members of various Cru ' Art Bennett • Ed M. Graham ■ Ray Marquez • Cynthia Moran • Peter J. Rogers commissions and citizen advisory groups ensuring a broad base of citizen input into the City's decision- making process. Chino Hills is a family-friendly community with a diverse population that has climbed to nearly 78,000 people. Residents appreciate the City's ranking as one of the safest cities in the United States. In 2015, Chino Hills was ranked 9th "Safest Place in California" by Value Penguin Data Research (50,000+ population)and 32nd Safest City in California by SafeWise. Residents enjoy a nice balance of quality development and open space, excellent schools, a strong commitment to family values, and access to an active lifestyle. The community is home to 41 parks, 39 miles of trails, and 3,000 acres of community-owned open space. Residents take advantage of the beautiful environment while walking, hiking, and biking throughout the City. The rural atmosphere has been preserved in the rolling hills and canyons throughout the community after years of careful planning. The City's equestrian heritage continues today and is concentrated in the English Road area. Recreation is a priority in Chino Hills and Big League Dreams Chino Hills Sports Park is a destination for recreation. This 33-acre, multi-use sports facility provides adult softball and youth baseball players with an opportunity to play in a "Major League" replica stadium complete with lifelike fans in the bleachers. Chino Hills Community Park is the flagship park in the City. The park features six ball fields for baseball or softball and five overlay soccer fields. Residents are looking forward to the grand opening of the City's first dog park at Vila Borba Park in December of 2015. The City has a variety of venues that enhance the lifestyle that residents treasure. The Chino Hills Community Center opened in 2014. This craftsman style, 17,000-square-foot facility has proven very popular for large banquets and weddings. Recreation classes take advantage of the state-of-the art dance room and exercise room. Art shows, free concerts, and various community presentations are also offered. Next door, the beautiful 20-acre McCoy Equestrian & Recreation Center includes two lighted arenas, covered bleachers, a gazebo, a community building, and trail connections. These places play a role in the strong sense of community that residents enjoy. They provide a place for people to gather and connect with one another at various City-sponsored events including Concerts and Movies in the Park, and the Independence Day celebration. Chino Hills ranks high in the United States with an average household income of $105,478 according to 2015 data from the Nielsen Company. Income levels are often linked to educational levels and the 2015 data indicates that 42% of residents over age 25 have bachelor's degrees or higher, including 10.6% with graduate degrees. Many families are attracted to Chino Hills by high-performing schools with Academic Performance Index (API) scores in the 800's and 900's. Chino Valley Unified School District schools lead the County in API results. The City, the School District, youth sports organizations, the faith community, youth organizations, parents, volunteers, and others all work together to provide a great environment for kids. The City of Chino Hills provides a full range of services including: police protection (via contract with the San Bernardino County Sheriff's Department), solid waste disposal services (via contract with Republic Waste Services of So. California dba-Chino Hills Disposal), the construction and maintenance of streets and infrastructure, economic development, recreational activities, and cultural events. The Chino Valley Fire District, governed by its own independently-elected board of directors, provides fire protection and emergency medical services. The Fire District receives a share of the property tax and secures additional funding through contractual charges and other fees. The City's budget process includes the preparation of a five-year capital improvement plan (CIP). The CIP identifies major construction and equipment needs that are on the horizon. While the five-year CIP is a planning tool that is subject to change, it allows the City to prepare for and plan to fund all necessary infrastructure required for new residential and commercial development. Available funding for the installation of parks, infrastructure, and government facilities, and the maintenance of the City's open space, parks, and landscaped areas, comes from special assessment districts and development fees. The City's budget policy provides for an orderly process that allows for the adoption of the annual budget by June 30 of each year. The City maintains a budget control system to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund, Special Revenue Funds, and Capital Project Funds are included in the annual appropriated budget. See Note 1 of the Notes to Required Supplementary information for additional information on budget procedures. Relevant Financial Policies There were no significant effects in the current year from the application of relevant financial policies. Local Economy The economic condition of the area in which the City is located (in southwestern San Bernardino County) points to future growth for the City of Chino Hills. However, in November 1999, the residents of Chino Hills voted in favor of Proposition "U" that essentially states any new development proposed for a higher density than is allowed per the General Plan requires voter approval. This does not affect projects with densities equal to or lower than allowed per the General Plan or projects that already have approved tract maps. Chino Hills is one of the most desirable cities in the County of San Bernardino, the demand for residential construction will continue due to good schools, low crime, and the City's strong, positive reputation. In the 2014-15 fiscal year, 51 residential units were built as compared to 324 in 2013-14. For fiscal year 2015- 16, the projection for new residential is 1,004 units. The City is reaching build-out and the remaining residential properties are infill, smaller and/or have physical constraints that make them more challenging to build. The City's population continues to grow steadily, rising from 42,691 in 1991 to 77,596 in 2015. The projected population is 84,800 at the end of the current five-year operating plan. Chino Hills' future is projected to maintain continued growth given future development of the vacant land that remains under the General Plan, projects currently under consideration, and the attractiveness of the Chino Hills marketplace. Economic development efforts over the past several years have proven successful in the strengthening of the City's revenue base. "The Shoppes at Chino Hills" Phase I and "The Commons at Chino Hills" projects have continued to add new restaurant and retail tenants and have made a significant impact on the City's sales tax revenues since opening in fiscal year 2008-09. "The Shoppes at Chino Hills" is a lifestyle center that is now the center of the community. The 375,000 square foot open-air lifestyle retail center is part of a 50-acre development. Phase I includes a combination of upscale retail stores, restaurants, and eateries. Major tenants include Barnes & Noble, Trader Joe's, Banana Republic, The Loft, White House Back Market, H&M, XXI Forever, Victoria's Secret, Wood Ranch BBQ &Grill, California Pizza Kitchen, Chipotle Mexican Grill, Panera Bread, and Yard House Restaurant. Recent successful additions to The Shoppes include Smash Burger, Sleep Number by Select Comfort, Afters Ice Cream and Bruxie. "The Commons at Chino Hills" is a 530,000 square foot freeway-oriented development on a 50- acre site. Major tenants include Lowes Home improvement Center, Toys R' Us/Babies R' Us, The Ayers Hotel, Lucille's BBQ, and BJ's Brewhouse. Recent additions to The Commons include Souplantation and a Hobby Lobby which is currently under construction. Development projects under construction are the (i) Avalon Bay (aka Overton Moore), a 331-unit apartment project and 16-acre public park; (ii) Crystal View Townhomes, a 29-unit townhome multi-family residential development; (iii) Capriana at Chino Hills (aka Villagio at Chino Hills), a 286-unit apartment complex; (iv)Vila Borba is a residential and commercial development that will include a 5-acre community iii park that is currently being graded for construction of 183 single-family homes; (v) Canyon Hills a hillside development with 76 luxury single family homes; (vi) Kaiser Regional Laboratory, a major redevelopment of the existing, vacant 133,000-square foot building which was previously constructed and operated as the Great Indoors, into a regional laboratory of approximately 88,238 square feet(and 40,120 square feet of shelled future expansion space. The City also contracts with CBRE, a commercial broker, to assist with staff efforts to bring in successful new retail and restaurant tenants and to monitor upcoming vacancies. Short-Term Outlook Fortunately for the City and in spite of the economic downturn, the overall impacts to the City have not been as severe when compared to other parts of the state and country. Although the City of Chino Hills has been and continues to be strong financially, the potential fiscal impact of a recession could have an adverse impact on Chino Hills in the form of the state of California revenue reductions to local governments_ The City of Chino Hills has maintained its strong financial position through prudent, long-range policy decisions, and sound fiscal management. Thus far, Chino Hills' economic base has enabled the City to weather the economic impact of the housing downturn with minimal impacts to service levels to date. The City will continue to monitor key economic indicators, sources of revenues, and spending levels as part of its sound conservative fiscal approach. Long-Term Goals, Efforts, and Actions The challenges presented by the demands of providing essential municipal services during an economic downturn continue to be a principal challenge for Chino Hills. The development, clarification, and refinement of processes are vital to sustain the organization over the long term. Both the Operating and Capital Improvement budgets reflect the continued focus on maintenance of the City's existing infrastructure. This maintenance effort is critical, on a proactive basis, to minimize our costs over the long term. Major Initiatives The City of Chino Hills prepares a five-year financial projection of its Capital Improvement Program (CIP). The City continues an aggressive CIP effort utilizing staff and consultant resources to implement projects in a timely and cost effective manner. A coordinated approach to the CIP is critical to meet the facility and infrastructure needs of our current residents and businesses as well as the infrastructure needs that the growth in Chino Hills will require. The management and implementation of our CIP merits and will continue to receive the attention of the entire organization. The City's Five Year CIP of $47,405,800 demonstrates its commitment to infrastructure improvements and consists of projects in the following categories: Streets $ 27,559,800 Public Facilities $ 186,000 Parks/Open Space $ 2,162,300 Water $ 11,338.400 Recycled Water $ 3,828,500 Sewer/Storm Drain $ 2,330,800 iV Awards and Acknowledgements The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014. To be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, the contents of which conform to program standards. Such report must also satisfy both U.S. generally accepted accounting principles (GAAP) and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report conforms to the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. The dedication of the Finance Department staff made it possible to prepare this report in a timely manner. We wish to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor and the City Council for their unfailing support for maintaining the highest standards of professionalism in the management of the City of Chino Hills'finances. Respectfully submitted, gl?*-4 —0(e'Konradt Bartlam Ju PS Lartitaster City Manager Fi an a Director V THE CITY OF CHINO HILLS ORGANIZATION OF CITY GOVERNMENT OPERATING SUMMARY Citizens of Chino Hills City Council Various Commissions City Clerk City Manager City Attorney I I I I Commun y Community Engineering Finance Public Works Development Services Department Department Department Department Department Vi City Council Pr Ili t '" vit: ., fra w t Cynthia Moran Art Bennett .Mayor "Vice .Mayor 's, 1 ii lir _ Ti Ed Graham Ray Marquez Peter Rogers Council_Member Council-.Member Council.Member .administrative Personnel" City Manager Konradt Bartlam City .attorney Mark D. Hensley City Clerk Cheryl Balz Finance Director Judy R. Lancaster Community Development Director Joann Lombardo Public "Works Director Nadeem Majaj Community Services Director Jonathan Marshall City Engineer Steven Nix • vii Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Chino Hills California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2014 deAtt.o. Executive Director/CEO viii Cit of .'44111ftl Chino Hills Financial Section City of Chino Hills This page intentionally left blank. •David E.Hale,CPA,CFP ••Deborah A.Harper,CPA S 44:•• •Donald G.Slater,CPA •Gary A.Cates,CPA J •Richard K.Kikuchi,CPA •Michael D.Mangold,CPA •Susan F.Matz,CPA •David S.Myers,CPA CERTIFIED PUBLIC ACCOUNTANTS •Bryan S.Gruber,CPA INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and Members of the City Council City of Chino Hills, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Chino Hills, California, (the City) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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. Lance, Soll & Lunghard, LLP 203 North Brea Boulevard Suite 203 Brea, CA 92821 TEL 714.672.0022 Fax 714.672.0331 www.islcpas.com Orange County Temecula Valley Silicon Valley ••••• •• CERTIFIED PUBLIC ACCOUNTANTS To the Honorable Mayor and Members of the City Council City of Chino Hills, California Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Chino Hills, California, as of June 30, 2015, 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. Change in Accounting Principle As discussed in Note 1 to the financial statements, in 2015 the City adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions — An Amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, the budgetary comparison schedules for General Fund, Landscape and Lighting District Fund, Existing Infrastructure Fees Fund, Schedule of Proportionate Share of the Net Pension Liability, and Schedule of Plan Contributions, 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 schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and the schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. 2 •..• •• CERTIFIED PUBLIC ACCOUNTANTS To the Honorable Mayor and Members of the City Council City of Chino Hills, California The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 13, 2015 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. oelde, Jet ��� Brea California November 13, 2015 3 City of Chino Hills This page intentionally left blank. 4 Chi;10 1-1r1 Management 's Discussion & Analysis City of Chino Hills This page intentionally left blank. 5 11°( City of Chino Hills MANAGEMENT'S DISCUSSION AND ANALYSIS The following Management Discussion and Analysis (MD&A) of the City of Chino Hills' financial performance provides an introduction and overview to the financial activities of the City for the fiscal year ended June 30, 2015. This narrative discussion and analysis focuses on the current year's activities, resulting changes and currently known facts; therefore, the information presented here should be considered in conjunction with additional information furnished in the letter of transmittal and the accompanying basic financial statements. FINANCIAL HIGHLIGHTS • Total assets of the City exceeded its liabilities at June 30, 2015 by$480.3 million (net position). • The City's net position decreased by $10.7 million from $491.0 million to $480.3 million in fiscal year 2014-15 attributable to the implementation of the Governmental Accounting Standards Board (GASB) Statement No. 68, which added a net pension liability to the government wide financial statements in the amount of $22.7 million. This increase in liabilities was offset by a $13.7 million gain on the City's investment in the Chino Basin Desalter Authority Joint Venture. • The City's governmental funds combined ending fund balances increased $3.7 million from $47.4 million to $51.1 million at June 30, 2015 largely due to grant reimbursements received during the year. Of this $51.1 million, $0.5 million was non-spendable, $40.3 million was restricted, $16.3 million was committed, $1.9 million was assigned and ($7.9) million was unrestricted. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Position and Statement of Activities provide information about the activities of the City as a whole, and present a long-term view of the City's finances. Fund financial statements are next. For governmental activities, these fund statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City's operation in more detail than the government-wide statements by providing information about the City's most significant funds and other funds. The remaining fiduciary (Agency) fund statement provides financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government. REPORTING THE CITY AS A WHOLE The Statement of Net Position and the Statement of Activities: The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities. These statements include all assets and liabilities of the City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. 6 These two statements report the City's net position and changes. Net Position is the difference between assets and liabilities, which is one way to measure the City's financial health, or financial position. Over time, increases or decreases in the City's net position is an indication of whether its financial health is improving or deteriorating. However, other non-financial factors such as changes in the economy due to external factors that will cause a decrease in consumer spending also needs to be taken into consideration. In the Statement of Net Position and the Statement of Activities, the City's activities are separated as follows: Governmental activities — Most of the City's basic services are reported in this category, including the general government (city manager, city clerk, and finance), public safety (police protection), public works, community development, community services, and interest on long-term debt. Property taxes, sales tax, motor vehicle in-lieu fees, interest income, franchise fees, state and federal grants, contributions from other agencies, and other revenues finance these activities. Business-type activities—The City charges a fee to customers to cover all or most of the cost of certain services it provides. The City's water and sewer utilities are reported in this category. REPORTING THE CITY'S MOST SIGNIFICANT FUNDS Fund Financial Statements: The fund financial statements provide detailed information about the most significant funds and other funds; not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, management established many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other resources. The City's two types of funds are governmental and proprietary. Governmental funds— Most of the City's basic services are reported in governmental funds, which focus on how money flows in and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. The differences of results in the Governmental Fund financial statements to those in the Government-Wide financial statements are explained in a reconciliation following each Governmental Fund financial statement. Proprietary funds — When the City charges customers for the services it provides, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the City's proprietary funds are the same as the business-type activities that are reported in the government-wide statements but provide more detail and additional information such as a statement of cash flows. The City uses internal service funds (the other component of proprietary funds)to report activities that provide supplies and services for the City's other programs and activities — such as the City's Equipment Maintenance and Information Technology Funds. The internal service funds are reported with governmental activities in the government-wide financial statements. The proprietary fund financial statements can be found in the Basic Financial Statements section of this report. 7 THE CITY AS TRUSTEE Reporting the City's Fiduciary Responsibilities: The City is the trustee, or fiduciary, for certain funds held on behalf of those entities outside of the government. The City's fiduciary activities are reported in a separate Statement of Fiduciary Net Position. These activities are excluded from the City's other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. THE CITY AS A WHOLE This analysis focuses on the City's net position and changes in net position of the governmental and business-type activities for the fiscal year ended June 30, 2015. As noted earlier, the City's net position decreased by$10.7 million from $491.0 million at June 30, 2014 to$480.3 at June 30, 2015. The largest portion $349.6 million, or 72.8% of the City's net position reflects the net investment in capital assets such as land, buildings, machinery and equipment, less any related debt used to acquire those assets that were still outstanding. These are not liquid assets; therefore, they are not available for future spending. An additional portion of $41.4 million or 8.6% of the City's net position represents various resources subject to external restrictions on how they may be used. The remaining balance of unrestricted net position of$89.3 million, or 18.6% may be used to meet the City's ongoing obligations to citizens and creditors. This is the only"discretionary" portion of the City's total net position amount. The following graph demonstrates the components of the City's net position at fiscal year ended June 30, 2015. City of Chino Hills Net Position June 30, 2015 $480.3 Million Restricted for other Restricted for Restricted for other uses Debt Service capital projects $5.3 million 2.4 million $33.7 million 1.1% a 0.5/o 7.0% - Unrestricted $89.3 million 18.6% 11111111P Net investment in capital assets $349.6 million 72.8% 8 The following is an analysis that summarizes the City's net position (Exhibit A) at fiscal year ended June 30, 2015, and 2014, respectively: Exhibit A Net Position(Summarized) As of June 30,2015 and 2014 (in thousands) Governmental Business-Type Activities Activities Totals 2015 2014 2015 2014 2015 2014 Change Current and other assets $ 62,921 $ 59,446 $ 107,156 $ 88,010 $ 170,077 $ 147,456 $ 22,621 Capital&intangible assets 285,334 295,962 117,026 120,820 402,360 416,782 (14,422) Total Assets $ 348,255 $ 355,408 $ 224,182 $ 208,830 $ 572,437 $ 564,238 $ 8,199 Deferred from debt refunding $ - $ - $ 549 $ 691 $ 549 $ 691 $ (142) Deferred pension related items 10,874 - - - 10,874 - 10,874 Total deferred outflows $ 10,874 $ - $ 549 $ 691 $ 11,423 $ 691 $ 10,732 Other liabilities $ 6,383 $ 7,167 $ 5,486 $ 3,300 $ 11,869 $ 10,467 $ 1,402 Long-term liabilities oustanding 64,848 44,376 15,568 19,052 80,416 63,428 16,988 Total Liabilities $ 71,231 $ 51,543 $ 21,054 $ 22,352 $ 92,285 $ 73,895 $ 18,390 Deferred pension related items $ 11,280 $ - $ - $ - $ 11,280 $ - $ 11,280 Total deferred inflows $ 11,280 $ - $ - $ - $ 11,280 $ - $ 11,280 Net Position: Net investment in capital assets $ 249,002 $ 258,323 $ 100,579 $ 107,787 $ 349,581 $ 366,110 $ (16,529) Restricted 40,314 39,057 3,455 4,677 43,769 43,734 35 Unrestricted (12,698) 6,485 99,643 74,705 86,945 81,190 5,755 Total net position $ 276,618 $ 303,865 $ 203,677 $ 187,169 $ 480,295 $ 491,034 $ (10,739) During FY 2014-15, current and other assets increased by $22.6 million. This was principally due to a $13.7 million gain on investment in the Water Utility Fund related to the Chino Basin Desalter Authority joint venture and a $7.6 million increase in cash provided by net operating activities in the Water Utility Fund, a portion of which is dedicated to capital improvement projects. Capital and intangible assets decreased by $14.4 million. This can be attributed to the increase in accumulated depreciation of capital assets for FY 2014-15. The overall result was an increase of $8.2 million in total assets from $564.2 million to $572.4 million in the FY 2014-15. Total liabilities increased by $18.4 million in FY 2014-15 primarily due to the implementation of GASB Statement No. 68 which added a net pension lability in the amount of$22.7 million. This increase coupled with a $2.6 million reduction of developer fee program obligations and a $1.7 million principal reduction of the 2012 Water Revenue Bonds resulted in the net increase to liabilities of $18.4 million. This increase combined with the overall increase in total assets resulted in an overall decrease in net position of $10.7 million from $491.0 million to $480.3 million in the fiscal year 2014-15. The City's programs for governmental activities include general government, public safety, public works, community development, and community services. The programs for the business-type activities include the water and sewer services. 9 The following is a summary of Statements of Activities that records the Changes in Net Position (Exhibit B)for the programs listed above: Exhibit B Changes in Net Position As of June 30,2015 and 2014 (in thousands) Governmental Business-Type Activities Activities Totals 2015 2014 2015 2014 2015 2014 Change Revenues: Program Revenues: Charges for services $ 27,060 $ 22,603 $ 33,731 $ 33,138 $ 60,791 $ 55,741 $ 5,050 Operating contributions and grants 3,725 3,168 - - 3,725 3,168 557 Capital contributions and grants 8,993 17,006 11 - 9,004 17,006 (8,002) General Revenues: P ro perty taxes 11,584 11,009 - - 11584 11,009 575 Sales taxes 7,530 7,003 - - 7,530 7,003 527 Franchise taxes 2,381 2,312 - - 2,381 2,312 69 Other taxes 1,366 1,301 - - 1,366 1,301 65 Intergovernmental,unrestricted 32 34 - - 32 34 (2) Use of money and property 1,542 1,377 774 689 2,316 2,066 250 Other revenues 13 1,177 2,225 2,668 2,238 3,845 (1,607) Total Revenues 64,226 66,990 36,741 36,495 100,967 133,485 (2,518) Expenses: General government 7,457 10,724 - - 7,457 13,724 (3,267) Public safety 11,759 11,233 - - 11,759 11,233 526 Public works 36,612 32,570 - - 36,612 32,570 4,042 Community develo pment 4,211 3,236 - - 4,211 3,236 975 Community services 6,658 4,996 - - 6,658 4,996 1,662 Interest on long-term debt 972 1,077 - - 972 1,077 (135) Water Utility - - 13,932 21,635 10,932 21,635 (10,703) Sewer Utility - - 7,812 7,136 7,812 7,136 676 Total Expenses 67,669 63,836 18,744 28,771 86,413 92,607 (6,194) Increase(decrease)in net position before transfers (3,443) 3,154 17,997 7,724 14,554 10,878 3,676 Transfers 1,489 1,308 (1,489) (1,308) - - - Increase(decrease)in net position $ (1,954) $ 4,462 $ 16,508 $ 6,416 $ 14,554 $ 13,878 $ 3,676 Net position,beginning of year 303,864 298,165 187,169 180,753 491,033 478,918 12,115 Restatement (25,292) 1,237 - - (25,292) 1,237 (26,529) Net postion,end of year $ 276,618 $ 303,864 $ 203,677 $ 187,169 $ 480,295 $ 491,033 $ (10,738) In FY 2014-15 there was a net decrease in total revenues of $2.5 million as compared to FY 2013-14. Charges for services increased by $5.0 million due to a $2.9 million increase in interdepartmental overhead charges related to a new cost allocation study and a $1.4 million increase in Community Development user fees. Additionally, in the current fiscal year there was an increase of $0.6 million in operating contributions and grants which was primarily due to a large reimbursement from the San Bernardino County Flood Control Agency. Capital contributions and grants decreased by $8.0 million due to a $5.1 million decrease in development impact fees contributed by a large development in FY 2013-14 that did not occur in FY 2014-15, a $3.3 million decrease in contributions from the Community Facilities Districts as there were no large Capital Improvement Projects during the year related to these funds, and a $2.4 million decrease related to capital grant reimbursements as capital grant receipts were significantly lower in FY 2014-15 as compared to FY 2013-14. Lastly, Other revenues decreased by $1.6 million primarily due to a one time contribution from a local utility agency received in FY 2013-14 that was not received in FY 2014-15. 10 As for the total expenses in FY 2014-15, overall expenses decreased by$6.2 million as compared to last fiscal year. General government expenses decreased by$3.3 million over the prior year due to GASB 34 reconciliation adjustments related to long term debt and GASB 68 pension obligation expenses. Community services expenses increased by $1.7 million mostly due to an increase in capital related expenses. Public works expenses increased by $4.0 million due to an increase of $2.6 million in capital projects expenditures and a $.9 million increase for the Turf Replacement Program. Water utility expenses in the amount of $23.7 million were offset by a $13.7 million gain on investment with the Chino Basin Desalter Authority which resulted in a net decrease in expenses of$10.7 million. The net effect of the changes in revenues and expenses resulted in an overall increase of$3.7 million for the fiscal year 2014-15. Governmental Activities The following presents the cost of each of the City's six largest programs — general government, public safety, community development, community services, public works and interest on long-term debt — as well as each program's net cost (total cost less revenues generated by the activities). The net cost shows the financial impact by each of these functions. Exhibit C Governmental Activities As of June 30, 2015 and 2014 (in thousands) 2015 2014 Change Total Cost of Services General government $ 7,457 $ 10,724 $ (3,267) Public safety 11,759 11,233 526 Public works 36,612 32,570 4,042 Community development 4,211 3,236 975 Community services 6,658 4,996 1,662 Interest on long-term debt 972 1,077 (105) Total $ 67,669 $ 63,836 $ 3,833 Net Cost of Services 2015 2014 Change General government $ 4,053 $ (2,606) $ 6,659 Public safety (11,049) (10,624) (425) Public works (13,336) (1,613) (11,723) Community development (1,488) (1,457) (31) Community services (5,100) (3,682) (1,418) Interest on long-term debt (972) (1,077) 105 Total $ (27,892) $ (21,059) $ (6,833) 11 The chart below illustrates the total revenues of the governmental activities for the fiscal year ended June 30, 2015 and 2014 respectively. City of Chino Hills Revenue Sources-Two-year Comparison Governmental Activities 30,000 /- 7, 25,000 C '0 20,000 -c Y 15,000 E 10,000 flim' an. 5,000 0 f .� Taxes Charges for Operating Capital Investment Other services contributions contributions earnings &gra nts &gra nts 1 .2015 20141 The chart below illustrates the total expenses of the governmental activities for the fiscal year ended June 30, 2015 and 2014 respectively. City of Chino Hills Expenses-Two-year Comparison Governmental Activities 40,000 -der mss 35,000 -.00M fg c 30,000 - 7 0 IF, 25,000 - Y C c 20,000 - 3 0 a 15,000 - 10,000 - 5,000 - 0 - General Public safety Public works Community Community Interest on government development services long term debt ■2015 ■2014 12 THE CITY'S FUNDS The total fund balance of the governmental funds at June 30, 2015 was $51.1 million. The fund balance includes the General Fund, Major Special Revenue Funds and non-major Other Governmental Funds which accounts for the remainder of governmental fund balances. The General Fund, which has the largest fund balance of the governmental funds at $22.1 million, increased by $1.0 million compared to FY 2013-14. The increase can be primarily attributed to an overall increase in operating revenues in taxes, licenses and permits and charges for services as compared to the related expenditures. The Major Special Revenue Funds accounting for ($3.4) million of the governmental fund balance decreased by $0.8 million compared to FY 2013-14. The decrease in the Special revenue fund balances can be primarily attributed to the Lighting and landscape district operating expenses exceeding revenues. The non-major Other Governmental Funds account for the remainder of governmental fund balances of $32.3 million. The aggregate increase in these funds is $3.5 million which is mainly attributed to grant reimbursements received during the year. The total net position of the Proprietary Funds was $203.6 million. This represents a $16.6 million increase from FY 2013-14. The Proprietary Funds include the Water Utility Fund and the Sewer Utility Fund. The increase in net position is mainly attributable to a $13.7 million gain on investment in the Water utility fund related to the Chino Basin Desalter Authority joint venture and an overall increase in operating activities in the Water Utility Fund. General Fund Budgetary Highlights During the year, the City Council reviewed and revised the City budget as recommended by the City staff. Adjustments were made on a quarterly basis as the City's staff requested additional appropriations to cover the cost of projects that either had change orders for additional work, or the estimated cost at the beginning of the project was underestimated. Adjustments were also made as department heads requested increases or decreases to their budgets to maintain their current level of services. The City Manager has authority to increase or decrease appropriations up to $25,000 per departmental request. Additionally, the City Manager is authorized to transfer appropriations within a department within a fund or between departments within a fund without limitation. All amendments in excess of $25,000 are approved by the City Council. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City of Chino Hills had $402.3 million invested in the capital assets, as compared to $416.8 million in the prior year. Net decrease in the capital assets is approximately $14.4 million. The decrease was primarily due to the increase in Accumulated Depreciation of Capital Assets for FY 2014-15. For more detailed information, see note 5 to the financial statements. 13 Exhibit D Capital Assets at Year-End (Net of Depreciation) For the Year Ended June 30,2015 and 2014 (in thousands) Governmental Business-Type Activities Activities Totals 2015 2014 2015 2014 2015 2014 Change Land and easements $ 26,693 $ 26,693 $ 3,933 $ 3,933 $ 30,626 $ 30,626 $ - Construction-in-progress 8,110 15,337 2,931 2,741 11,041 18,078 (7,037) Structures and improvements 105,311 99,448 602 644 105,913 100,092 5,821 Utility plant in service - - 19,765 20,725 19,765 20,725 (960) Meters - - 3,877 4,311 3,877 4,311 (434) Pipeline in service 159 163 75,252 77,490 75,411 77,653 (2,242) Equipment 2,124 1,576 322 197 2,446 1,773 673 Vehicles 1,064 1,307 - - 1,064 1,307 (243) Infrastructure 141,873 151,438 - - 141,873 151,438 (9,565) Water and capacity rights - - 10,344 10,779 10,344 10,779 (435) Total $ 285,334 $ 295,962 $ 117,026 $ 120,820 $ 402,360 $ 416,782 $ (14,422) Debt At year-end, the City's governmental activities had $64.8 million in long-term debts including net pension liability, development fee related obligations, capital lease obligations, other post-employment benefits obligation, Certificates of participation and compensated absences, as compared to $44.4 million in the prior year, a net increase of $20.4 million during the fiscal year. This increase is due to the implementation of GASB 68 which added the net pension liability of $22.7 million to the City's Government-wide financial statements. Please refer to Note 6 for further details on the City's long-term liabilities. Exhibit E Outstanding Debt at Year-End For Fiscal Year Ended June 30,2015 and 2014 (in thousands) Governmental Business-Type Activities Activities Total 2015 2014 2015 2014 2015 2014 Change Compensated absences $ 879 $ 885 $ 313 $ 290 $ 1,192 $ 1,175 $ 17 Advances from developers 2,045 774 - - 2,045 774 1,271 Development fee program obligations 22,720 24,480 - 3 22,720 24,483 (1,763) Capital lease obligations 21 31 - - 21 31 (10) Other post employment benefits obligation 814 695 - - 814 695 119 Net pension liability 22,704 - - - 22,704 - 22,704 Certificates of participation 14,730 15,295 - - 14,730 15,295 (565) Revenue Bond - 15,430 17,100 15,430 17,100 (1,670) CJPIA General liability retrospective deposit payable 889 2,189 - - 889 2,189 (1,300) CJPIA Worker's comp retrospective deposit payable 20 - - - 20 - 20 Bond premium/discount 26 27 1,566 1,659 1,592 1,686 (94) Total $ 64,848 $ 44,376 $ 17,309 $ 19,052 $ 82,157 $ 63,428 $ 18,729 14 The majority of the obligations under the governmental activities were either pension obligations ($22.7) or development related ($22.7 million). The development obligations are owed to developers who had previously installed major infrastructure throughout the City. For the obligations under the business-type activities, the City had $15.4 million in long-term bonded debts which were recorded in the Water utility fund. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET Although the focus of this Annual Report is the economic condition of the City in the fiscal year ended June 30, 2015, in preparing the budget for FY 2015-16, management considered the possible impact that the State of California and the national economies will have on the City's budget. The State continues to show signs of recovery and in January 2015 the Governor presented his 2015-16 balanced budget which provides for saving money and paying down debts. The overall impacts of the recession to the City have not been as severe when compared to other parts of the state and country. Most notably the City was fortunate to have two new shopping centers open just as the recession hit enabling the City to withstand the effects of the recession and protect the General Fund reserves. Development activity continues to show signs of improvement and staff expects to see a significant increase in development during the next few years. This increase in development will provide for increases in revenue however, these revenue sources will not be recurring to the General Fund. The overall approach in the development of the FY 2015-16 budget was to maintain expenses while continuing to provide Chino Hills' high level of community safety and customer service. The FY 2015-16 Budget was adopted with an estimated General Fund surplus of$867,700. The City of Chino Hills has maintained its strong financial position through prudent, long-range policy decisions and sound fiscal management. The City will continue to monitor key economic indicators, sources of revenues, and spending levels as part of its sound conservative fiscal approach. The success of our City's program and project efforts during the next five years will shape the five-year viability and future of our community. Questions or requests for information regarding the City of Chino Hills' 2015-16 budget should be sent to the Finance Department at the address below. The budget may also be downloaded at the following link: http://www.chinohills.org/DocumentCenter/View/11464. CONTACTING THE CITY'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City of Chino Hills' finances and to show the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City's Finance Department, at the City of Chino Hills, 14000 City Center Drive, Chino Hills, CA 91709. 15 Chino Hill. BASIC Financial Statements City of Chino Hills This page intentionally left blank. 16 CITY OF CHINO HILLS STATEMENT OF NET POSITION JUNE 30, 2015 Primary Government Governmental Business-Type Activities Activities Total Assets: Cash and investments $ 70,474,251 $ 49,597,957 $ 120,072,208 Receivables: Accounts 806,427 3,483,351 4,289,778 Taxes 2,268,997 - 2,268,997 Long-term receivables 14,345 - 14,345 Accrued interest 13,501 12,648 26,149 Special assessments 50,031 - 50,031 Internal balances (18,806,524) 18,806,524 - Due from other agencies 504,517 - 504,517 Due from other governments 1,726,099 40,406 1,766,505 Due from developers 2,262,970 901,584 3,164,554 Investment in joint venture - 30,857,890 30,857,890 Restricted assets: Cash with fiscal agent 3,606,416 3,455,102 7,061,518 Capital assets not being depreciated 34,803,335 6,864,037 41,667,372 Capital assets, net of depreciation 250,530,826 110,162,316 360,693,142 Total Assets 348,255,191 224,181,815 572,437,006 Deferred Outflows of Resources: Deferred charge on refunding - 548,945 548,945 Deferred pension related items 10,873,848 - 10,873,848 Total Deferred Outflows of Resources 10,873,848 548,945 11,422,793 Liabilities: Accounts payable 4,004,328 1,781,709 5,786,037 Accrued liabilities 900,156 180,346 1,080,502 Accrued interest 275,959 40,454 316,413 Retentions payable 89,929 - 89,929 Due to developers 403,927 - 403,927 Unearned revenue 667,315 - 667,315 Deposits payable 41,496 1,741,732 1,783,228 Noncurrent liabilities: Net pension liability 22,704,424 - 22,704,424 Net OPEB obligation 814,172 - 814,172 Due within one year 570,073 1,741,500 2,311,573 Due in more than one year 40,759,569 15,568,076 56,327,645 Total Liabilities 71,231,348 21,053,817 92,285,165 Deferred Inflows of Resources: Deferred pension related items 11,279,598 - 11,279,598 Total Deferred Inflows of Resources 11,279,598 - 11,279,598 Net Position: Net investment in capital assets 249,001,625 100,578,841 349,580,466 Restricted for: Community development projects 661,078 - 661,078 Public safety 55,663 - 55,663 Public works 4,153,015 - 4,153,015 Capital projects 33,711,284 - 33,711,284 Debt service 1,277,390 1,120,375 2,397,765 Line of credit 456,218 - 456,218 Unrestricted (12,698,180) 101,977,727 89,279,547 Total Net Position $ 276,618,093 $ 203,676,943 $ 480,295,036 See Notes to Financial Statements 17 CITY OF CHINO HILLS STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30,2015 Program Revenues Operating Capital Charges for Contributions Contributions Expenses Services and Grants and Grants Functions/Programs Primary Government: Governmental Activities: General government $ 7,456,698 $ 9,328,173 $ 500,473 $ 1,680,818 Public safety 11,759,297 542,578 167,361 - Public works 36,612,361 13,051,322 2,913,687 7,311,776 Community development 4,211,200 2,723,488 - - Community services 6,658,170 1,414,666 143,365 - Interest on long-term debt 971,895 - - - Total Governmental Activities 67,669,621 27,060,227 3,724,886 8,992,594 Business-Type Activities: Water Utility 10,932,290 27,208,741 - 7,143 Sewer Utility 7,812,499 6,522,726 - 3,627 Total Business-Type Activities 18,744,789 33,731,467 - 10,770 Total Primary Government $ 86,414,410 $ 60,791,694 $ 3,724,886 $ 9,003,364 General Revenues: Taxes: Property taxes, levied for general purpose Sales taxes Franchise taxes Other taxes Intergovernmental, unrestricted: Motor vehicle in lieu-unrestricted Use of money and property Other Gain on sale of capital asset Transfers Total General Revenues and Transfers Change in Net Position Net Position at Beginning of Year Restatement of Net Position Net Position at End of Year See Notes to Financial Statements 18 Net(Expenses) Revenues and Changes in Net Position Primary Government Governmental Business-Type Activities Activities Total $ 4,052,766 $ - $ 4,052,766 (11,049,358) - (11,049,358) (13,335,576) - (13,335,576) (1,487,712) - (1,487,712) (5,100,139) - (5,100,139) (971,895) - (971,895) (27,891,914) - (27,891,914) - 16,283,594 16,283,594 - (1,286,146) (1,286,146) - 14,997,448 14,997,448 (27,891,914) 14,997,448 (12,894,466) 11,583,735 - 11,583,735 7,530,159 - 7,530,159 2,381,049 - 2,381,049 1,366,301 - 1,366,301 32,363 - 32,363 1,542,399 774,420 2,316,819 3,923 2,224,992 2,228,915 8,900 - 8,900 1,489,197 (1,489,197) - 25,938,026 1,510,215 27,448,241 (1,953,888) 16,507,663 14,553,775 303,864,262 187,169,280 491,033,542 (25,292,281) - (25,292,281) $ 276,618,093 $ 203,676,943 $ 480,295,036 See Notes to Financial Statements 19 CITY OF CHINO HILLS BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2015 Special Revenue Funds Landscape and Existing Lighting Infrastructure General District Fees Assets: Cash and investments $ 31,482,639 $ 4,515,821 $ 1,248,904 Receivables: Accounts 255,750 14,882 - Taxes 2,069,532 - - Long-term receivables 14,345 - - Accrued interest 7,180 907 203 Special assessments - 47,288 - Due from other agencies 480,489 - - Due from other governments 725,345 - - Due from developers 618,843 - 1,590,999 Due from other funds 540,227 - - Advances to other funds 504,087 - - Restricted assets: Cash and investments with fiscal agents 3,209,847 - - Total Assets $ 39,908,284 $ 4,578,898 $ 2,840,106 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 1,034,453 $ 391,472 $ - Accrued liabilities 790,826 51,215 - Retentions payable 5,761 - - Due to other funds 3,981 18,723 - Due to developers - - 403,927 Unearned revenues 607,587 - - Deposits payable 38,397 - - Advances from other funds 13,702,259 - 9,886,216 Total Liabilities 16,183,264 461,410 10,290,143 Deferred Inflows of Resources: Unavailable revenues 1,613,657 8,452 - Total Deferred Inflows of Resources 1,613,657 8,452 - Fund Balances: Nonspendable 518,432 - - Restricted 3,352,558 4,109,036 - Committed 16,292,529 - - Assigned 1,947,844 - - Unassigned - - (7,450,037) Total Fund Balances 22,111,363 4,109,036 (7,450,037) Total Liabilities, Deferred Inflows of Resources,and Fund Balances $ 39,908,284 $ 4,578,898 $ 2,840,106 See Notes to Financial Statements 20 CITY OF CHINO HILLS BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2015 Capital Projects Funds Other Total Capital Governmental Governmental Improvement Funds Funds Assets: Cash and investments $ 1,066,810 $ 27,990,409 $ 66,304,583 Receivables: Accounts - 535,387 806,019 Taxes - 199,465 2,268,997 Long-term receivables - - 14,345 Accrued interest - 4,476 12,766 Special assessments - 2,743 50,031 Due from other agencies - - 480,489 Due from other governments - 1,000,754 1,726,099 Due from developers - 53,128 2,262,970 Due from other funds - - 540,227 Advances to other funds - 8,778,731 9,282,818 Restricted assets: Cash and investments with fiscal agents - 396,569 3,606,416 Total Assets $ 1,066,810 $ 38,961,662 $ 87,355,760 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 982,642 $ 1,125,550 $ 3,534,117 Accrued liabilities - 25,103 867,144 Retentions payable 84,168 - 89,929 Due to other funds - 549,299 572,003 Due to developers - - 403,927 Unearned revenues - 59,728 667,315 Deposits payable - 3,099 41,496 Advances from other funds - 4,363,089 27,951,564 Total Liabilities 1,066,810 6,125,868 34,127,495 Deferred Inflows of Resources: Unavailable revenues - 503,489 2,125,598 Total Deferred Inflows of Resources - 503,489 2,125,598 Fund Balances: Nonspendable - - 518,432 Restricted - 32,853,054 40,314,648 Committed - - 16,292,529 Assigned - - 1,947,844 Unassigned - (520,749) (7,970,786) Total Fund Balances - 32,332,305 51,102,667 Total Liabilities, Deferred Inflows of Resources,and Fund Balances $ 1,066,810 $ 38,961,662 $ 87,355,760 See Notes to Financial Statements 21 City of Chino Hills This page intentionally left blank. 22 CITY OF CHINO HILLS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2015 Fund balances of governmental funds $ 51,102,667 Amounts reported for governmental activities in the statement of net position are different because: Capital assets net of depreciation have not been included as financial resources in governmental fund activity. Capital Assets $ 487,456,899 Accumulated Depreciation (204,190,691) 283,266,208 Governmental funds report all pension contributions as expenditures. However, the net pension liability has a measurement date of June 30, 2014, and pension contributions subsequent to the measurement date are reclassified as deferred 4,546,047 pension contributions. Adjustment due to the changes in the proportionate share of the pension plan are recorded as deferred outflows of resources and amortized over the remaining service life. 6,327,801 Governmental funds report all OPEB contributions as expenditures, however in the statement of net position any excesses or deficiencies in contributions in relation to the Annual Required Contribution (ARC)are recorded as an asset or liability. (814,172) Long-term debt and compensated absences that have not been included in the governmental fund activity: Long-term liabilities Advances from developers (2,045,626) Development fee program obligation (22,720,193) Certificates of participation (14,730,000) Unamortized premium (25,854) Equestrian center lease (7) CJPIA General liability retrospective payable (888,578) CJPIA Workers'comp liability retrospective payable (19,580) (40,429,838) Compensated absences (842,249) Accrued interest payable for the current portion of interest due on bonds has not been reported in the governmental funds. (275,959) Certain receivables are not available to pay for current period expenditures and therefore, are reported as unavailable revenues in the governmental funds. However, revenues are recorded in the governmental activities. 2,125,598 Governmental funds report all pension contributions as expenditures, however, in the statement of net position, the excess of the plan proportionate share of the total pension liability over the proportionate share of the plan fiduciary net position is reported as a net pension liability. (22,704,424) The difference between the proportionate share of the projected and actual earnings on the pension plan investments is reported as deferred inflows of resources and amortized over the remaining service life. (11,279,598) Internal service funds are used by management to charge the costs of certain activities, such as equipment management and information technology,to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net position. 5,596,012 Net Position of Governmental Activities $ 276,618,093 See Notes to Financial Statements 23 CITY OF CHINO HILLS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2015 Special Revenue Funds Landscape Existing and Lighting Infrastructure General District Fees Revenues: Taxes $ 22,624,279 $ - $ - Special assessments - 5,385,937 - Licenses and permits 1,528,812 - - Intergovernmental 114,062 - - Charges for services 12,813,745 1,333,072 - Developer fees - - 566,724 Contribution from property owners - - - Fines and forfeitures 484,407 - - Contributions 1,310,348 - - Use of money and property 1,057,767 64,907 30,429 Miscellaneous 1,483,956 10,256 - Total Revenues 41,417,376 6,794,172 597,153 Expenditures: Current: General government 9,471,077 - - Public safety 11,333,295 - - Public works 6,410,115 8,203,834 - Community development 4,104,019 - 84,834 Community services 5,032,698 - - Capital outlay 8,170 12,257 - Debt service: Principal retirement 602,807 - 492,046 Interest and fiscal charges 893,667 - 59,950 Total Expenditures 37,855,848 8,216,091 636,830 Excess (Deficiency)of Revenues Over(Under) Expenditures 3,561,528 (1,421,919) (39,677) Other Financing Sources (Uses): Transfers in 103,732 691,338 - Transfers out (2,698,699) (16,802) - Long-term debt issued - - 13,022 Proceeds from sale of capital asset 5,330 3,415 - Total Other Financing Sources (Uses) (2,589,637) 677,951 13,022 Net Change in Fund Balances 971,891 (743,968) (26,655) Fund Balances, Beginning of Year 21,139,472 4,853,004 (7,423,382) Fund Balances, End of Year $ 22,111,363 $ 4,109,036 $ (7,450,037) See Notes to Financial Statements 24 CITY OF CHINO HILLS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2015 Capital Projects Funds Other Total Capital Governmental Governmental Improvement Funds Funds Revenues: Taxes $ - $ - $ 22,624,279 Special assessments - 1,078,613 6,464,550 Licenses and permits - - 1,528,812 Intergovernmental - 6,471,644 6,585,706 Charges for services - 4,753,169 18,899,986 Developer fees - 363,342 930,066 Contribution from property owners 317,330 167,666 484,996 Fines and forfeitures - 49,076 533,483 Contributions 923,698 - 2,234,046 Use of money and property - 339,531 1,492,634 Miscellaneous - 23,012 1,517,224 Total Revenues 1,241,028 13,246,053 63,295,782 Expenditures: Current: General government - 6,073 9,477,150 Public safety - 161,618 11,494,913 Public works 5,025,299 6,909,387 26,548,635 Community development - 4,630 4,193,483 Community services - 115,800 5,148,498 Capital outlay 2,084,668 23,031 2,128,126 Debt service: Principal retirement - - 1,094,853 Interest and fiscal charges - 25,975 979,592 Total Expenditures 7,109,967 7,246,514 61,065,250 Excess (Deficiency)of Revenues Over(Under) Expenditures (5,868,939) 5,999,539 2,230,532 Other Financing Sources (Uses): Transfers in 5,868,939 3,675,672 10,339,681 Transfers out - (6,204,579) (8,920,080) Long-term debt issued - - 13,022 Proceeds from sale of capital asset - - 8,745 Total Other Financing Sources (Uses) 5,868,939 (2,528,907) 1,441,368 Net Change in Fund Balances - 3,470,632 3,671,900 Fund Balances, Beginning of Year - 28,861,673 47,430,767 Fund Balances, End of Year $ - $ 32,332,305 $ 51,102,667 See Notes to Financial Statements 25 CITY OF CHINO HILLS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30,2015 Net change in fund balances-total governmental funds $ 3,671,900 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities,the costs of those assets are allocated over their estimated useful lives as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. Capital outlay $ 2,128,126 Depreciation (13,203,795) Contributed capital assets (31,050) (11,106,719) The issuance of long-term debt provides current financial resources to governmental funds, while repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and similar items when debt is first issued,whereas these amounts are deferred and amortized in the statement of activities. Debt issued or incurred: Development fee program obligations (321,457) Developer advances (1,393,207) CJPIA General liability retrospective payable (74,591) CJPIA Workers'comp liability retrospective payable (105,895) Principal repayments: Certificates of participation 565,000 Equestrian center lease 1 Development fee program obligations 2,080,687 Developer advances 121,337 CJPIA General liability retrospective payable 1,375,238 CJPIA Workers'comp liability retrospective payable 86,315 Bond premium amortization 1,293 2,334,721 Accrued interest for long-term liabilities.This is the net change in accrued interest for the current period. 8,015 Compensated absences expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 3,155 Pension obligation expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 2,182,107 Governmental funds report all contributions in relation to the annual required contribution (ARC)for OPEB as expenditures, however in the statement of activities only the annual OPEB cost is an expense. (118,857) Some revenues recognized in governmental funds in current year were already recognized in governmental activities in prior year. 591,153 Internal service funds are used by management to charge the costs of certain activities, such as equipment management and information technology,to individual funds. The net revenues (expenses)of the internal service funds is reported with governmental activities. 480,637 Change in Net Position of Governmental Activities $ (1,953,888) See Notes to Financial Statements 26 CITY OF CHINO HILLS STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30,2015 Business-Type Activities-Enterprise Funds Governmental Activities- Internal Water Utility Sewer Utility Totals Service Funds Assets: Current: Cash and investments $ 39,858,574 $ 9,739,383 $ 49,597,957 $ 4,169,668 Receivables: Accounts 2,802,965 680,386 3,483,351 408 Accrued interest 7,377 5,271 12,648 735 Due from other agencies 40,406 - 40,406 24,028 Due from developers 901,584 - 901,584 - Due from other funds 29,625 2,268 31,893 - Restricted: Cash with fiscal agent 3,455,102 - 3,455,102 - Total Current Assets 47,095,633 10,427,308 57,522,941 4,194,839 Noncurrent: Advances to other funds - 18,668,746 18,668,746 - Investment in joint venture 30,857,890 - 30,857,890 - Capital assets not being depreciated 6,702,833 161,204 6,864,037 - Capital assets-net of accumulated depreciation 89,476,880 20,685,436 110,162,316 2,067,953 Total Noncurrent Assets 127,037,603 39,515,386 166,552,989 2,067,953 Total Assets 174,133,236 49,942,694 224,075,930 6,262,792 Deferred Outflows of Resources: Deferred charge on refunding 548,945 - 548,945 - Total Deferred Outflows of Resources 548,945 - 548,945 - Total Assets and Deferred Outflows of Resources $ 174,682,181 $ 49,942,694 $ 224,624,875 $ 6,262,792 Liabilities and Net Position: Liabilities: Current: Accounts payable $ 892,681 $ 889,028 $ 1,781,709 $ 470,211 Accrued liabilities 134,755 45,591 180,346 33,012 Accrued interest 40,454 - 40,454 - Deposits payable 1,403,587 338,145 1,741,732 - Due to other funds - 117 117 - Compensated absences 5,000 1,500 6,500 500 Capital leases - - - 11,429 Water revenue bonds 1,735,000 - 1,735,000 - Total Current Liabilities 4,211,477 1,274,381 5,485,858 515,152 Noncurrent: Due to developers - - - - Compensated absences 217,394 89,225 306,619 36,352 Capital leases - - - 9,274 Water revenue bonds 15,261,457 - 15,261,457 - Total Noncurrent Liabilities 15,478,851 89,225 15,568,076 45,626 Total Liabilities 19,690,328 1,363,606 21,053,934 560,778 Net Position: Net investment in capital assets 79,732,201 20,846,640 100,578,841 2,047,250 Restricted for debt service 1,120,375 - 1,120,375 - Unrestricted 74,139,277 27,732,448 101,871,725 3,654,764 Total Net Position 154,991,853 48,579,088 203,570,941 5,702,014 Total Liabilities and Net Position $ 174,682,181 $ 49,942,694 $ 224,624,875 $ 6,262,792 Reconciliation of Net Position to the Statement of Net Position Net Position per Statement of Net Position-Proprietary Funds $ 203,570,941 Prior years'accumulated adjustment to reflect the consolidation of internal service funds activities related to the enterprise funds 197,948 Current years'adjustments to reflect the consolidation of internal service activities related to enterprise funds (91,946) Net Position per Statement of Net Position $ 203,676,943 See Notes to Financial Statements 27 CITY OF CHINO HILLS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS YEAR ENDED JUNE 30,2015 Business-Type Activities-Enterprise Funds Governmental Activities- Internal Water Utility Sewer Utility Totals Service Funds Operating Revenues: Charges for services $ 27,208,741 $ 6,522,726 $ 33,731,467 $ 2,567,025 Meter installation and fees 42,562 - 42,562 - Other 2,113,914 17,796 2,131,710 465 Total Operating Revenues 29,365,217 6,540,522 35,905,739 2,567,490 Operating Expenses: Salaries and benefits 2,935,770 1,002,047 3,937,817 734,350 Professional and contractual services 619,855 4,261,125 4,880,980 489,603 Purchased water 10,500,946 - 10,500,946 - Repair and maintenance 1,035,381 592,475 1,627,856 332,879 Service and supplies 241,086 42,784 283,870 257,529 Administrative and general expenses 3,376,620 770,334 4,146,954 251,358 Utilities 935,460 53,491 988,951 2,373 Depreciation and amortization 4,223,047 1,060,004 5,283,051 518,293 Total Operating Expenses 23,868,165 7,782,260 31,650,425 2,586,385 Operating Income(Loss) 5,497,052 (1,241,738) 4,255,314 (18,895) Nonoperating Revenues(Expenses): Interest revenue 458,977 315,443 774,420 49,765 Interest expense (596,535) - (596,535) (1,611) Gain(loss)on joint venture 13,594,117 - 13,594,117 - Gain(loss)on disposal of capital assets 36,090 - 36,090 8,900 Total Nonoperating Revenues(Expenses) 13,492,649 315,443 13,808,092 57,054 Income(Loss)Before Transfers and Contributions 18,989,701 (926,295) 18,063,406 38,159 Capital contributions 7,143 3,627 10,770 280,936 Contribution from other funds 14,630 - 14,630 - Transfers in 10,652 5,490 16,142 69,596 Transfers out (1,504,815) (524) (1,505,339) - Changes in Net Position 17,517,311 (917,702) 16,599,609 388,691 Net Position: Beginning of Year 137,474,542 49,496,790 186,971,332 5,313,323 End of Fiscal Year $154,991,853 $ 48,579,088 $203,570,941 $ 5,702,014 Reconciliation of Changes in Net Position to the Statement of Activities: Changes in Net Position, per the Statement of Revenues, Expenses and Changes in Fund Net Position-Proprietary Funds $ 16,599,609 Adjustment to reflect the consolidation of current fiscal year internal service funds activities related to enterprise funds (91,946) Changes in Net Position of Business-Type Activities per Statement of Activities $ 16,507,663 See Notes to Financial Statements 28 CITY OF CHINO HILLS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30,2015 Business-Type Activities-Enterprise Funds Governmental Activities- Internal Water Utility Sewer Utility Totals Service Funds Cash Flows from Operating Activities: Cash received from customers and users $ 30,447,236 $ 6,740,651 $ 37,187,887 $ 2,547,690 Cash paid to suppliers for goods and services (13,175,602) (4,926,831) (18,102,433) (694,528) Cash paid to employees for services (6,282,852) (1,764,417) (8,047,269) (987,043) Net Cash Provided(Used)by Operating Activities 10,988,782 49,403 11,038,185 866,119 Cash Flows from Non-Capital Financing Activities: Cash transfers out (1,504,815) (524) (1,505,339) - Cash transfers in 10,652 5,490 16,142 69,596 Cash borrowed due to other funds - (27) (27) - Cash repayment received due from other funds 26,504 60 26,564 - Advance from other funds - 774,085 774,085 - Contributions from other funds 14,630 - 14,630 - Net Cash Provided(Used)by Non-Capital Financing Activities (1,453,029) 779,084 (673,945) 69,596 Cash Flows from Capital and Related Financing Activities: Proceeds from capital asset disposals 36,090 - 36,090 15,000 Capital contributions 7,143 3,627 10,770 280,936 Acquisition and construction of capital assets (1,485,800) (3,626) (1,489,426) (1,003,579) Principal paid on capital debt (1,670,000) - (1,670,000) (10,754) Interest paid on capital debt (552,250) - (552,250) (1,611) Net Cash Provided(Used)by Capital and Related Financing Activities (3,664,817) 1 (3,664,816) (720,008) Cash Flows from Investing Activities: Interest received 459,113 315,825 774,938 49,913 Net Cash Provided(Used)by Investing Activities 459,113 315,825 774,938 49,913 Net Increase(Decrease)in Cash and Cash Equivalents 6,330,049 1,144,313 7,474,362 265,620 Cash and Cash Equivalents at Beginning of Year 36,983,627 8,595,070 45,578,697 3,904,048 Cash and Cash Equivalents at End of Year $ 43,313,676 $ 9,739,383 $ 53,053,059 $ 4,169,668 Reconciliation of Operating Income to Net Cash Provided(Used)by Operating Activities: Operating income(loss) $ 5,497,052 $ (1,241,738) $ 4,255,314 $ (18,895) Adjustments to reconcile operating income(loss) net cash provided(used)by operating activities: Depreciation 4,223,047 1,060,004 5,283,051 518,293 (Increase)decrease in accounts receivable 310,352 (14,070) 296,282 (39) (Increase)decrease in due from other agencies 734,028 - 734,028 (19,761) Increase(decrease)in accounts payable 160,225 214,199 374,424 387,856 Increase(decrease)in accrued liabilities 14,881 5,734 20,615 1,145 Increase(decrease)in deposits payable 37,639 17,310 54,949 - Increase(decrease)in due to developers (3,099) - (3,099) - Increase(decrease)in compensated absences 14,657 7,964 22,621 (2,480) Total Adjustments 5,491,730 1,291,141 6,782,871 885,014 Net Cash Provided(Used)by Operating Activities $ 10,988,782 $ 49,403 $ 11,038,185 $ 866,119 Non-Cash Investing,Capital,and Financing Activities: Gain/(loss)on joint venture $ 13,594,117 $ - $ 13,594,117 $ - Amortization of bond premium (92,145) - (92,145) - Amortization of deferred amount on refunding 141,994 - 141,994 - See Notes to Financial Statements 29 CITY OF CHINO HILLS STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2015 Agency Funds Assets: Pooled cash and investments $ 30,277,761 Receivables: Accrued interest 4,473 Special assessments 72,971 Restricted assets: Cash and investments with fiscal agents 6,535,665 Total Assets $ 36,890,870 Liabilities: Accounts payable $ 80,107 Deposits payable 3,319,533 Funds held for others 30,496,253 Due to Inland Empire Utility Agency 2,994,977 Total Liabilities $ 36,890,870 See Notes to Financial Statements 30 Chinn Notes to the Financial Statements City of Chino Hills This page intentionally left blank. 31 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Note 1: Organization and Summary of Significant Accounting Policies a. Description of the Reporting Entity The City of Chino Hills (the "City") was incorporated December 1, 1991, under the General Laws of the State of California. The City operates under a Council—Manager form of government and provides the following services: contracted police, lighting and landscaping, public improvements, water, sanitation, planning and zoning, general administrative services, contracted animal control, building and safety, community services, and street and highway maintenance. As required by accounting principles generally accepted in the United States of America, these financial statements present the City of Chino Hills and its component units, entities for which the City is considered financially accountable. The inclusion of an organization within the scope of the reporting entity of the City of Chino Hills is based on the provision of GASB Statements No. 14, 39 and 61. The blended component units discussed below, although legally separate entities, are in substance part of the government operation and data from these component units has been combined herein. The City of Chino Hills Financing Authority The Chino Hills Financing Authority (Authority) is a joint exercise of powers authority organized and existing under and by virtue of the Joint Exercise of Powers Act, constituting Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California. The City pursuant to Resolution No. 04R-16 adopted on January 13, 2004, and the former Chino Hills Redevelopment Agency (Agency) pursuant to Resolution No. CHRA 04-05 adopted on January 13, 2004, formed the Authority by the execution of a joint exercise of powers agreement (Joint Powers Agreement). The Authority is governed by a five-member Board which consists of all members of the City Council. Pursuant to the Marks-Roos Local Bond Pooling Act of 1985, as amended, constituting Article 4 (commencing with Section 6584), of Chapter 5, Division 7, Title 1 of the Government Code of the State, the Authority is authorized, among other things, to issue revenue bonds to provide funds to finance public capital facilities. The Authority's primary source of income will be installment sale, loan and lease payments received from the City which will be used to meet the debt service requirements on debt issues. The Authority does not have taxing power. Separate financial statements for the Authority are not prepared. The Agency was activated by the City Council in 2003. In 2011, the State of California Legislature approved a bill, AB X1 26, pursuant to which all California redevelopment agencies, including the Agency, were dissolved as of February 1, 2012, and certain of the Agency's rights and obligations were transferred to the City acting as the successor agency to the Agency on that date. The dissolution of the Agency, and the assignment of the Joint Powers Agreement to the City acting as successor agency to the Agency, will not affect the validity of the Joint Powers Agreement. 32 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) The City of Chino Hills Capital Improvement Corporation The Chino Hills Capital Improvement Corporation, a California non-profit benefit corporation, was established on May 19, 1992 to facilitate the financing of capital improvements on behalf of the City of Chino Hills. There was no financial activity during the fiscal year 2014-2015. b. Government—Wide and Fund Financial Statements The government—wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business—type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government—wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. c. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government—wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 33 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The City reports the following major governmental funds: • The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. • The Landscape and Lighting District Special Revenue Fund accounts for receipts and expenditures of money in the benefit assessment district zones for operating expenditures, maintenance and capital outlay for street lighting, landscaping and parks located within the district. • The Existing Infrastructure Fee Special Revenue Fund accounts for receipts and expenditures of money in the facilities' development programs, which provides for the reimbursement of expenditures to property owners who constructed the facilities in the program. • The Capital Improvement Capital Project Fund accounts for the expenditures of construction of various capital improvements projects throughout the City. The City reports the following major proprietary funds: • The Water Utility Fund accounts for the revenues and expenses for the operation, maintenance, and facilities' improvements of the City's water production, transmission and distribution system. • The Sewer Utility Fund accounts for the revenues and expenses for the collection and treatment (via contract) of the liquid waste generated within the City. Additionally, the City reports the following fund types: • Internal Service Funds account for the financial transactions related to repair, replacement and maintenance of City-owned equipment and City's general information technology systems and telecommunications hardware and software. • Agency Funds used to account for money and property held by the City as trustee or custodian. They are also used to account for various assessment districts and community facilities districts for which the City acts as an agent for debt service activity. As a general rule, the effect of interfund activity has been eliminated from the government—wide financial statements. Exceptions to this general rule are charges between the government's proprietary funds function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 34 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non—operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Enterprise Funds and of the Internal Service Funds are charges to customers for sales and services. Operating expenses for Enterprise Funds and Internal Service Funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non—operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, and then unrestricted resources as they are needed. d. Assets, Liabilities and Net Position or Equity Cash and Investments All cash and investments, except those that are held by fiscal agents, are held in a City pool. These pooled funds are available upon demand, and therefore are considered cash and cash equivalents for purposes of the statement of cash flows. Investments held by fiscal agents with an original maturity of three months or less are also considered cash equivalents. Investments for the City are reported at fair value. The City's policy is generally to hold investments until maturity or until market values equal or exceed cost. The State Treasurer's Investment Pool and Counties Treasurer's Investment Pool operate in accordance with appropriate state laws and regulations. The reported value of the pool is the fair value of the pool shares. Receivables and Payables 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 non—current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business—type activities are reported in the government—wide financial statements as "internal balances." Advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. All trade and property tax receivables are shown net of an allowance for uncollectibles. 35 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) Property tax revenue is recognized on the modified accrual basis, that is, in the fiscal year for which the taxes have been levied providing they become available. Available means then due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. The County of San Bernardino collects property taxes for the City. Tax liens attach annually as of 12:01 A.M. on the first day in January proceeding the fiscal year for which the taxes are levied. Taxes are levied on both real and personal property as it exists on that date. The tax levy covers the fiscal period July 1 to June 30. All secured personal property taxes and one—half of the taxes on real property are due November 1; the second installment is due February 1. All taxes are delinquent if unpaid on December 10 and April 10, respectively. Unsecured personal property taxes become due on the first of March each year and are delinquent if unpaid on August 31. Net position flow assumption Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted — net position and unrestricted — net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government's policy to consider restricted — net position to have been depleted before unrestricted —net position is applied. Functional Classifications Expenditures of the Governmental Funds are classified by function. Functional classifications are defined as follows: • General Government includes legislative activities that have a primary objective of providing legal and policy guidelines for the City. Also included in this classification are those activities that provide management or support services across more than one functional area. • Public Safety includes those activities that involve the protection of people and property. • Public Works includes those activities that involve the maintenance and improvement of City streets, roads and park development and maintenance. • Community Development includes those activities that involve the enhancing of the general quality of life. • Community Services includes those activities that involve recreation. • Capital Outlay includes those activities that involve the acquisition of capital assets. • Debt Service includes those activities that account for the payment of long—term debt principal, interest and fiscal charges. 36 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) Inventories Inventories consist of water pipe, valves, tools and miscellaneous items used in installing, monitoring and repairing these items. Inventories are accounted under the purchases method since the City does not maintain significant amounts of inventories. Restricted Assets Certain proceeds of debt issues, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. In addition, funds have been restricted for future capital improvements by City resolution. Capital Assets Capital assets which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business—type activities columns in the government—wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. In accordance with GASB Statement No. 34, the City has reported its general infrastructure assets which include streets, sidewalks, storm drains, curbs and gutters, handicap ramps, trails and equestrian fencings with a cost of more than $50,000 per location. The City has assigned no value to its rights of way. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business—type activities is included as part of the capitalized value of the assets constructed. Property, plant and equipment of the primary government, as well as the component units, are depreciated using the straight—line method over the following estimated useful lives: Assets Years Equipment 3-12 Vehicles 4-10 Utility Plant in Service 5-100 Meters 15 Pipeline in Service 30-50 Infrastructure 20-60 37 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) Intangible Assets Intangible assets are capitalized at cost, while contributed assets are recorded at fair market value at the time received. Amortization has been provided on a straight—line basis over their estimated useful lives as follows: Assets Years Water Rights 40 Deferred outflows/inflows of resources In addition to assets, the statement of financial position and balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City has two types of items that qualify for reporting in this category. The item, deferred charge on refunding, is reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The other item is deferred pension related items. In addition to liabilities, the statement of financial position and balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two types of items. The item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: taxes and intergovernmental revenues. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The other item is deferred pension related items reported in the government-wide statement of net position. Compensated Absences In accordance with GASB Code Section C60, the City of Chino Hills records a liability for vacation and compensatory leave that is earned and unused at year—end. Sick leave liability recorded has been estimated using the "vesting method," which is calculated " based on the sick leave accumulated at the balance sheet date by those employees who are currently eligible to receive termination payments as well as other employees who are expected to become eligible in the future to receive such payments." Vacation, sick, and compensatory leave liabilities relating to governmental funds that have matured at June 30, 2015, have been recorded in the General Fund as compensated absences payable. The liability for governmental activity that has not matured at June 30, 2015, is reported on the statement of net position under non—current liabilities. Liabilities relating to proprietary funds are recorded within those respective funds. 38 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) Net Pension Liabilities For purposes of measuring the net pension liability, deferred outflows of resources, deferred inflows of resources, and pension expense related to pensions, information about the fiduciary net position of the San Bernardino County Employees' Retirement Association (SBCERA) and additions to/deductions from SBCERA's fiduciary net position have been determined on the same basis as they are reported by SBCERA. For this purpose, employer and employee contributions are recognized in the period the related salaries are earned and become measurable pursuant to formal commitments, statutory or contractual requirements, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms, and investments are reported at fair value. GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used. Valuation Date (VD)June 30, 2013 Measurement Date (MD)June 30, 2014 Measurement Period (MP) July 1, 2013 to June 30, 2014 Long—Term Obligations In the government—wide financial statements and proprietary fund types in the fund financial statements, long—term debt and other long—term obligations are reported as liabilities in the applicable governmental activities, business—type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed in the year they are incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity The City Council adopted resolution 11R-21 in conformity with Governmental Accounting Auditing Standards Board (GASB) Statement 54. In the fund financial statements, governmental funds report the following fund balance classifications: Nonspendable include amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted include amounts that are constrained on the use of resources by either (a) external creditors, grantors, contributors, or laws of regulations of other governments or (b) by law through constitutional provisions or enabling legislation. 39 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 1: Organization and Summary of Significant Accounting Policies (Continued) Committed include amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest authority, City Council. The formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution. Assigned include amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed. The City Manager and/or Finance Director is authorized to assign amounts to a specific purpose, which was established by the governing body in resolution. Unassigned include the residual amounts that have not been restricted, committed, or assigned to specific purposes. The General Fund is the only fund that reports a positive unassigned fund balance amount. An individual governmental fund could include nonspendable resources and amounts that are restricted or unrestricted (committed, assigned, or unassigned) or any combination of those classifications. Restricted or unrestricted amounts are to be considered spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available and committed, assigned, then unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications can be used. Stabilization Arrangements A stabilization arrangement has been established through Resolution No. 11 R-21. The stabilization agreement is to be used specifically for expenses associated with the declaration of a state or federal state of emergency or local emergency as defined in City of Chino Hills municipal code section 2.44.020. Effect of New Accounting Standards During the fiscal year ended June 30, 2015, the City implemented the following Governmental Accounting Standards Board (GASB) standards: GASB Statement No. 68 – Accounting and financial Reporting for Pensions—an Amendment of GASB Statement No. 27 will improve the decision-usefulness of information in local government employer entity financial reports and will enhance its value for assessing accountability and inter-period equity by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. Decision-usefulness and accountability also will be enhanced through new note disclosures and required supplementary information. The requirements of this statement are effective for financial statements for periods beginning after June 15, 2014. GASB Statement No. 71 – Pension Transition for Contributions Made Subsequent to the Measurement Date–an amendment of GASB Statement No. 68. The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a local government employer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. The provisions of GASB Statement No. 71 are effective for financial statements beginning after June 15, 2014. 40 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 II. STEWARDSHIP Note 2: Stewardship, Compliance and Accountability a. Encumbrances Encumbrance accounting is employed as an extension of formal budgetary integration in governmental funds. Encumbrances such as purchase orders, contracts and other commitments for the expenditure of monies, are reported as assignments of fund balances. Outstanding encumbrances at year—end are reappropriated in the following year. b. Deficit Fund Balance At June 30, 2015, the Existing Infrastructure Fees Fund had a deficit fund balance of $7,450,037, the Federal Grants Fund had a deficit fund balance of $16,663, and the Miscellaneous Grants Fund had a deficit fund balance of$504,086. These deficits will be eliminated with future revenue. c. Budget Budget schedules are not presented for the Tree Mitigation Fund and Public Safety Fund. III. DETAILED NOTES ON ALL FUNDS Note 3: Cash and Investments At June 30, 2015, cash and investments were reported in the accompanying financial statements as follows: Governmental activities $ 74,080,667 Business-type activities 53,053,059 Fiduciary funds 36,813,426 Total Cash and Investments $ 163,947,152 Cash and investments as of June 30, 2015, consist of the following: Cash on hand $ 3,200 Deposits with financial institutions 5,901,553 Investments 158,042,399 Total Cash and Investments $ 163,947,152 The City of Chino Hills maintains a cash and investment pool that is available for use for all funds. Each fund type's position in the pool is reported on the combined balance sheet as cash and investments. The City has adopted an investment policy which authorizes it to invest in various investments. 41 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 3: Cash and Investments (Continued) Deposits At June 30, 2015, the carrying amount of the City's deposits was $5,904,754 and the bank balance was $5,832,896. The $71,858 difference represents outstanding checks and other reconciling items. The California Government Code requires California banks and savings and loan associations to secure an Agency's deposits by pledging government securities with a value of 110% of an Agency's deposits. California law also allows financial institutions to secure Agency deposits by pledging first trust deed mortgage notes having a value of 150% of an Agency's total deposits. The City Treasurer may waive the collateral requirement for deposits that are fully insured up to $250,000 by the FDIC. The collateral for deposits in federal and state chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors. Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an "Agent of Depository" has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository is considered to be held for, and in the name of, the local governmental agency. Authorized Investments Under provision of the City's investment policy and in accordance with Section 53601 of the California Government Code, the City may invest in the following types of investments: • Bonds issued by the City • Repurchase Agreements • Registered state warrants or treasury notes or bonds of this State • Bonds, notes or warrants of any local agency within this State • United States treasury notes, bonds, bills or certificates of indebtedness • Obligations of a federal agency or United States government sponsored agency • Negotiable certificates of deposit • Mutual Funds • State and County Investment Pools Investment Pool Oversight State of California Local Agency Investment Fund (LAIF) LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. The State Treasurer's office audits the fund annually. Los Angeles County Investment Pool The investment section of the County Treasurer's office monitors the pool daily for compliance with the government code and investment guidelines. The Auditor-Controller's Office audits it quarterly for compliance. The Board of Supervisors receives an investment report monthly. 42 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 3: Cash and Investments (Continued) Deposits At June 30, 2015, the carrying amount of the City's deposits was $5,904,753 and the bank balance was $5,832,896. The $71,857 difference represents outstanding checks and other reconciling items. The California Government Code requires California banks and savings and loan associations to secure an Agency's deposits by pledging government securities with a value of 110% of an Agency's deposits. California law also allows financial institutions to secure Agency deposits by pledging first trust deed mortgage notes having a value of 150% of an Agency's total deposits. The City Treasurer may waive the collateral requirement for deposits that are fully insured up to $250,000 by the FDIC. The collateral for deposits in federal and state chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors. Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an "Agent of Depository" has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository is considered to be held for, and in the name of, the local governmental agency. Authorized Investments Under provision of the City's investment policy and in accordance with Section 53601 of the California Government Code, the City may invest in the following types of investments: • Bonds issued by the City • Repurchase Agreements • Registered state warrants or treasury notes or bonds of this State • Bonds, notes or warrants of any local agency within this State • United States treasury notes, bonds, bills or certificates of indebtedness • Obligations of a federal agency or United States government sponsored agency • Negotiable certificates of deposit • Mutual Funds • State and County Investment Pools Investment Pool Oversight State of California Local Agency Investment Fund (LAIF) LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. The State Treasurer's office audits the fund annually. Los Angeles County Investment Pool The investment section of the County Treasurer's office monitors the pool daily for compliance with the government code and investment guidelines. The Auditor-Controller's Office audits it quarterly for compliance. The Board of Supervisors receives an investment report monthly. 43 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 3: Cash and Investments (Continued) Concentration of Credit Risk The City's investment policy imposes restrictions for certain types of investments with any one issuer. In accordance with GASB Statement No. 40, if the City has invested more than 5% of its investments in any one issuer, it is exposed to credit risk. Investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement. Investments in any one issuer that represents 5% or more of the City's total investments as of June 30, 2015 are as follows: Reported Percent of Issuer Investment Type Amount Investments Federal National Mortgage Federal Agency $ 16,214,327 11% Association Securities Federal Home Loan Bank Federal Agency 13,285,702 7% Securities Federal Home Loan Mortgage Federal Agency 14,112,023 9% Corp Securities 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 purchases of investments will be restricted to securities with a final stated maturity not to exceed five years. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk. As of June 30, 2015, the City had the following investments and original maturities: Investment Maturities (in Years) 6 months 6 months 1 year 3 year Fair or less to 1 year to 3 years to 5 years Value Investments Los Angeles County Investment Pool $ 32,561,797 $ - $ - $ - $ 32,561,797 California Local Agency Investment Fund 1,060,706 - - - 1,060,706 Money Market Mutual Funds 205,688 - - - 205,688 Certificate of Deposit - 456,218 - - 456,218 US Corporate Notes 2,364,258 1,014,923 19,780,726 13,819,537 36,979,444 Tennessee Valley Authority - - - 1,775,352 1,775,352 US Treasury Notes - - 12,316,631 10,843,724 23,160,355 FHLB - 2,696,605 10,589,097 - 13,285,702 FHLMC - 1,427,157 8,310,110 4,374,756 14,112,023 FFCB 1,021,052 1,397,939 2,214,610 - 4,633,601 FNMA - - 8,009,833 8,204,494 16,214,327 Investment Held by Fiscal Agents Money Market Mutual Funds 13,597,186 - - - 13,597,186 Investment Agreements - - - - - $ 50,810,687 $ 6,992,842 $ 61,221,007 $ 39,017,863 $ 158,042,399 44 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 4: Interfund Receivable, Payable and Transfers The composition of interfund balances as of June 30, 2015 is as follows: Due To/From Other Funds Due From Other Funds Governmental Proprietary Fund Funds Due To Other Funds General Fund Water Utility Sewer Utility Total Governmental Funds General Fund $ - $ 3,981 $ - $ 3,981 Landscape and Lighting District - 18,723 - 18,723 Nonmajor Governmental Funds 540,227 6,804 2,268 549,299 Proprietary Funds Sewer Utility - 117 - 117 Total $ 540,227 $ 29,625 $ 2,268 $ 572,120 Current interfund balances arise in the normal course of business and are cleared shortly after the end of the fiscal year. Advances To/From Other Funds Advances To Other Funds Proprietary Governmental Funds Funds Other General Governmental Sewer Advances From Other Funds Fund Funds Utility Total Governmental Funds General Fund $ - $ - $ 13,702,259 $ 13,702,259 Existing Infrastructure Fees - 8,778,731 1,107,485 9,886,216 Other Governmental Funds 504,087 - 3,859,002 4,363,089 Total $ 504,087 $ 8,778,731 $ 18,668,746 $ 27,951,564 In the current fiscal year, the General Fund advanced Miscellaneous Grants Fund $504,087 to temporarily eliminate a deficit cash balance resulting from grant reimbursement timing differences. Other Governmental Funds advanced the Existing Infrastructure Fees Fund $8,778,731 pertaining to developer agreements. The Sewer Utility Fund advanced $13,702,259 to the General Fund for the Kline/Maloof properties, the Shoppes project and the Lennar sales tax reimbursement agreement. In addition, the Sewer Utility Fund advanced $1,107,485 to the Existing Infrastructure Fees Fund for developer related obligations. Lastly, the Sewer Utility Fund advanced various funds a total of$3,859,002 related to the Chino Hills Community Park, the Monte Vista Water Supply Acquisition, the Interconnect, the Los Serranos Golf Course Conversion, the English Channel, and the Peyton Eucalyptus projects. 45 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 4: Interfund Receivable, Payable and Transfers (Continued) Interfund Transfers Transfers Out Governmental Funds Landscape General and Lighting Nonmajor Transfers In Fund District Governmental Governmental Funds General Fund $ - $ - $ 103,732 Landscape and Lighting District 687,704 - 3,634 Capital Improvement 35,169 16,802 4,311,629 Nonmajor Governmental 1,890,088 - 1,785,584 Proprietary Funds Water Utility Fund 10,652 - - Sewer Utility Fund 5,490 - - Internal Service Funds 69,596 - - Total $ 2,698,699 $ 16,802 $ 6,204,579 Transfers Out Proprietary Funds Water Sewer Transfers In Utility Fund Utility Fund Total Governmental Funds General Fund $ - $ - $ 103,732 Landscape and Lighting District - - 691,338 Capital Improvement 1,504,815 524 5,868,939 Nonmajor Governmental - - 3,675,672 Proprietary Funds Water Utility Fund - - 10,652 Sewer Utility Fund - - 5,490 Internal Service Funds - - 69,596 Total $ 1,504,815 $ 524 $ 10,425,419 The transfers to the General Fund of $103,732 is a transfer from the Miscellaneous Grants Fund for various grant related programs. The transfers to the Lighting and Landscape District total $691,338. This total includes the General Fund's share of costs for parks maintenance in the amount of $244,172, $343,288 for General Fund subsidies to cover operations in various Lighting and Landscape Districts, $100,244 to the Lighting and Landscape Districts for Turf Replacement Program expenditures, and $3,634 from the Miscellaneous Grants Fund to cover grant related expenses. Transfers totaling $5,868,939 to the Capital Improvement Fund were related to various capital improvement projects. The transfer out of the General Fund totaling $1,890,088 can be attributed to a $1,885,000 transfer to the Storm Drain Facilities Fees Fund for the 2007 COP English Channel debt payment and $5,088 transfer to the Gas Tax Fund. Lastly, the transfer of $1,785,584 from the Nonmajor Governmental Funds (Miscellaneous Grants Fund) to Nonmajor Governmental Funds (Gas Tax Fund, Traffic Facilities Fees Fund, and Storm Drain Facilities Fees Fund) was for the San Bernardino Associated Governments' and San Bernardino County Flood Control District related expenditures. 46 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 5: Capital Assets Capital asset activity for the year ended June 30, 2015, was as follows: Beginning Ending Balance Transfers Increases Decreases Balance Governmental activities: Capital assets, not being depreciated: Land $ 26,693,498 $ - $ - $ - $ 26,693,498 Construction-in-progress 15,337,236 (9,304,048) 2,107,699 31,050 8,109,837 Total capital assets, not being depreciated 42,030,734 (9,304,048) 2,107,699 31,050 34,803,335 Capital assets, being depreciated: Buildings 96,145,094 9,095,226 8,170 - 105,248,490 Structures other than buildings 31,943,220 - - - 31,943,220 Equipment 4,248,673 5,909 934,514 79,838 5,109,258 Vehicles 5,350,180 - 84,456 207,444 5,227,192 Pipeline in service 217,375 - - - 217,375 Infrastructure 312,532,188 202,913 - - 312,735,101 Total capital assets, being depreciated 450,436,730 9,304,048 1,027,140 287,282 460,480,636 Less accumulated depreciation: Buildings 16,717,977 - 2,185,755 - 18,903,732 Structures other than buildings 11,922,550 - 1,054,295 - 12,976,845 Equipment 2,673,369 - 382,261 70,605 2,985,025 Vehicles 4,043,703 - 327,067 207,443 4,163,327 Pipeline in service 54,344 - 4,347 - 58,691 Infrastructure 161,093,827 - 9,768,363 - 170,862,190 Total accumulated depreciation 196,505,770 - 13,722,088 278,048 209,949,810 Total capital assets, being depreciated, net 253,930,960 9,304,048 (12,694,948) 9,234 250,530,826 Governmental activities capital assets, net $ 295,961,694 $ - $ (10,587,249) $ 40,284 $ 285,334,161 47 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 5: Capital Assets (Continued) Beginning Ending Balance Transfers Increases Decreases Balance Business-type activities: Capital assets, not being depreciated: Land $ 3,395,256 $ - $ - $ - $ 3,395,256 Easements 537,940 - - - 537,940 Construction-in-progress 2,741,054 (1,278,214) 1,520,701 52,700 2,930,841 Total capital assets, not being depreciated 6,674,250 (1,278,214) 1,520,701 52,700 6,864,037 Capital assets, being depreciated: Buildings and improvements 1,042,550 - - - 1,042,550 Structure other than building 290,234 - - - 290,234 Utility plant in service 36,026,336 - - - 36,026,336 Pipeline in service 137,493,861 1,098,242 - - 138,592,103 Meters 7,093,069 - 33,346 88,427 7,037,988 Equipment 513,725 179,972 6,747 - 700,444 Intangible assets-utility rights 17,410,863 - - 17,410,863 Total capital assets, being depreciated 199,870,638 1,278,214 40,093 88,427 201,100,518 Less accumulated depreciation: Buildings and improvements 561,976 - 32,412 - 594,388 Structure other than building 127,006 - 10,066 - 137,072 Utility plant in service 15,301,305 - 960,253 - 16,261,558 Pipeline in service 60,004,321 - 3,335,462 - 63,339,783 Meters 2,782,240 - 448,775 69,759 3,161,256 Equipment 316,828 - 60,812 - 377,640 Intangible assets-utility rights 6,631,234 - 435,271 - 7,066,505 Total accumulated depreciation 85,724,910 - 5,283,051 69,759 90,938,202 Total capital assets, being depreciated, net 114,145,728 1,278,214 (5,242,958) 18,668 110,162,316 Business-type activities capital assets, net $ 120,819,978 $ - $ (3,722,257) $ 71,368 $ 117,026,353 Depreciation and amortization expense was charged to functions/programs of the primary government as follows: Governmental Activities General government $ 1,367,722 Community services 1,538,280 Community development 2,508 Public safety 265,726 Public works 10,029,559 Equipment maintenance 457,315 Information technology 60,978 $ 13,722,088 Business-Type Activities: Water utility $ 4,223,047 Sewer utility 1,060,004 $ 5,283,051 48 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt a. Governmental Activities The following is a summary of changes in Long-Term Debt for the year ended June 30, 2015: Adjusted Balance at Beginning Balance at Due Within July 1,2014 Adjustments Balance Additions Deletions June 30,2015 One Year Civic Center COP $ 15,295,000 $ - $ 15,295,000 $ - $ 565,000 $ 14,730,000 $ 555,000 Advances from developers 773,756 - 773,756 1,393,207 ** 121,337 2,045,626 - Development fee program obligations 24,479,423 - 24,479,423 321,457 *** 2,080,687 22,720,193 - Capital Lease obligations 31,457 - 31,457 - 10,754 20,703 11,429 Equestrian Center lease 8 - 8 - 1 7 1 Other post employment benefits obligations 695,315 - 695,315 123,842 4,985 814,172 - CJPIA General liability retrospective deposit payable 2,189,225 - 2,189,225 74,591 1,375,238 888,578 - CJPIA Workers'comp retrospective deposit payable - - - 105,895 86,315 19,580 - Net pension liability - 25,292,281 25,292,281 - 2,587,857 22,704,424 - Compensated absences 884,736 - 884,736 2,853 8,488 879,101 3,643 Total 44,348,920 $ 25,292,281 $ 69,641,201 $ 2,021,845 $ 6,840,662 64,822,384 $ 570,073 Unamortized Bond Premium 27,147 $ - $ 27,147 $ - $ 1,293 25,854 Total Long-Term Debt $ 44,376,067 $ 64,848,238 *The adjustment of the net pension liabilities is due to the implementation of GASB Statement No.68. **The addition is not new debt issuance but a reclassification of existing debt at June 30,2015. ***$13,022 is long-term debt issued in the current year,the remaining balance is a reclassification of existing debt at June 30,2015. 49 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt(Continued) Long-term debt repayments per governmental funds financial statements. $ 1,094,853 The City has executed many agreements with outside developers requiring developers to provide up-front funding for the cost of backbone infrastructure. As a result, the City has recorded development fee program obligations. A portion of the development fee program obligation is repaid periodically by the Assessment Districts Agency Fund by giving a building permit fee credit against assessments previously paid to the Assessment District Funds. Amount repaid by the Assessment District Agency Funds for fiscal year 2014-2015. 269,204 Development Fee Program- Reclassification Allocation Adjustment 1,402,967 Other post employment benefits obligations payments. 4,985 Net pension liability 2,587,857 CJPIA general liability restrospective deposit payable. 1,375,238 CJPIA worker's compensation retrospective deposit payable. 86,315 Compensated absences payouts. 8,488 Equestrian Center lease 1 Capital lease obligations reported in the internal service funds. 10,754 Total Deletions per Changes in Long-Term Debt Schedule $ 6,840,662 In June 2007, the City issued $22,040,000 in Certificates of Participation. The certificates consist of $5,005,000 serial certificates maturing in principal amounts of $85,000 to $670,000 beginning September 2008 through September 2017 with interest rates ranging from 3.600% to 4.125%, term certificates of $7,240,000 due September 1, 2026, with an interest rate of 5.000%, and term certificates of$9,795,000 due September 1, 2036, with an interest rate of 5.000%. The Certificates were issued to provide funds to finance a portion of the costs of the construction and installation of a new Civic Center, including a new City Hall complex, a new sheriff substation, a new fire administration facility, a new library, the widening of Peyton Drive and the inlet/outlet English Channel transition at Peyton Drive and related infrastructure. On May 10, 2011, the City Council approved a prepayment of the English Channel portion of this bond. $1,965,000 was paid in full to reduce total debt service payments over the next 25 years by $7,979,887. On January 28, 2014 the City Council approved a principal prepayment in the amount of$2,435,000 related to the Peyton Drive portion of the bond. By prepaying this portion of the Certificates the City will save over $1.6 million in interest costs over the remaining life of the original financing, which matures in 2036. The debt service schedule has been adjusted to reflect this prepayment. $ 14,730,000 50 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt(Continued) The annual requirements to amortize the Certificates of Participation outstanding as of June 30, 2015 were as follows: Year ending June 30, Principal Interest 2016 $ 555,000 $ 711,290 2017 465,000 690,657 2018 500,000 670,813 2019 520,000 647,500 2020 545,000 620,875 2021 -2025 3,245,000 2,647,125 2026-2030 4,135,000 1,725,855 2031 -2035 4,765,000 570,875 Totals $ 14,730,000 $ 8,284,990 Advances From Developers Advances from developers for the Chino Hills Parkway Phasing Plan represent monies owed to developers for development fees collected in advance. Future development fees will be used to reimburse developers for their cost. There is no fixed repayment schedule. $ 2,045,626 Development Fee Program Obligations The City has executed many agreements/programs with outside developers requiring developers to provide funding up-front for the costs of backbone infrastructure (major thoroughfares, water and sewer mains, etc.) concurrent with the development of their residential and commercial projects. These agreements/programs include Facilities Development Fee Program, Facilities Benefit Assessment Program, Existing Infrastructure Fee Reimbursement Agreements, and Assessment District Credit agreements. This up-front funding is generally in the form of the developer constructing the backbone infrastructure. Future development fees will be used to reimburse the developers (either as credits against fees owed or cash reimbursements if not fully credited) for their costs. A liability has been recorded for the project costs incurred to date, including estimated interest payable related to one of the projects. There is no fixed repayment schedule. $ 22,720,193 51 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt(Continued) Capital Lease Obligations The City entered into a five year lease purchase agreement in fiscal year 2011-2012 for copiers. The assets acquired and the related obligation are reported in the Information Technology internal service fund. $ 20,703 Governmental Activities Equipment $ 53,187 Less: accumulated depreciation (37,231) $ 15,956 The future minimum lease obligations and the net present value of these minimum lease payments are as follows: Governmental Year Ending June 30, Activities 2016 $ 12,366 2017 9,516 Total minimum lease payments 21,882 Less: amount representing interest (1,179) Present value of minimum lease payment $ 20,703 Equestrian Center Lease On December 30, 1996, the City entered into a lease with the McCoy Equestrian Center trust to provide property for the equestrian center. The lease is for a period of 25 years for $1 per year with options to renew on an annual basis. $ 7 Other Post Employment Benefits Obligations The City's other post employment benefits obligations are described in Note 8 of the Notes to Financial Statements. This liability will be paid in future years from the General Fund. $ 814,172 California Joint Powers Insurance Authority General Liability and Workers' Comp Retrospective Deposit Payable The City of Chino Hills is a member of the California Joint Powers Insurance Authority (CJPIA). The purpose of CJPIA is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. Retrospective deposits and refunds are cost allocation adjustments to prior coverage 52 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt(Continued) periods. Some claims take many years to resolve and over time their estimated value changes. The retrospective adjustments are calculated annually and take into consideration all the changes in claim values that occurred during the most recent year. The formula is designed to adequately cover the cost of claims brought against members and to ensure the overall financial strength and security of the Authority. The formula was developed to be as equitable as possible by taking into consideration both risk exposure and claims experience of individual members. The City is currently paying the Liability program retrospective deposit due in installments over a 6 year period. In fiscal year 2014-15 the City paid the second year installment in the amount of $345,150. CJPIA has temporarily deferred the payment on retrospective deposits for Workers' Compensation program owed to the Authority by members until July 1, 2015. Retrospective deposit payments are scheduled to resume on these dates. The October 2014 annual retrospective adjustment is included in these balances. Retrospective Balances will Change Annually Retrospective balances will change with each annual computation during the payment deferral period. Member balances may increase or decrease as a result of the most recent year's claim development. More information on the CJPIA retrospective balances can be found on the CJPIA website at CJPIA.org. The balance due for the general liability retrospective deposit payable was $ 888.578 The balance due for the workers' compensation retrospective deposit payable was $ 19.580 Net Pension Liability The City's policies relating to net pension liability are described in Note 7 of the Notes to Financial Statements. The balance as of June 30, 2015 was $ 22,704,424 Compensated Absences The City's policies relating to compensated absences are described in Note 1 of the Notes to Financial Statements. This liability will be paid in future years from the General Fund. $ 879,101 53 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt(Continued) b. Business Type Activities The following is a summary of changes in Proprietary Funds debt for the year ended June 30, 2015: Balance at Balance at Due Within July 1,2014 Additions Deletions June 30,2015 One Year Utility development program obligation $ 3,099 $ - $ 3,099 $ - $ - Revenue bonds 17,100,000 - 1,670,000 15,430,000 1,735,000 Compensated absences 290,498 42,713 20,092 313,119 6,500 Total 17,393,597 $ 42,713 $ 1,693,191 15,743,119 $ 1,741,500 Unamortized bond premium 1,658,601 $ - $ 92,144 1,566,457 Total Long-Term Debt $ 19,052,198 $ 17,309,576 The adjustment was made to transfer the liability to Governmental Activities. Development Program Obligations The City has executed many agreements with outside developers requiring developers to provide funding up-front for the costs of backbone infrastructure (major thoroughfares, water and sewer mains, etc.) concurrent with the development of their residential and commercial projects. This up-front funding is generally in the form of the developer constructing the backbone infrastructure. Future development fees will be used to reimburse the developers for their up-front funding. During the current fiscal year, the balance was transferred to the Water Facilities Fee Fund and recorded as a deposit payable. 54 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt(Continued) Water Revenue Bond On December 18, 2012, the City issued $19,975,000 in Water Revenue Bonds to advance refund the $9,205,000 of outstanding 2002 Certificates of Participation and $8,190,000 of 2003 Certificates of Participation and for acquisition of certain water improvements. The bonds consist of serial bonds maturing in principal amounts ranging from $555,000 to $1,860,000 beginning June 2013 through June 2030, with interest rates ranging from 1.50% to 4.00%. The bonds also include term bonds due June 1, 2032 of $1,430,000 and an interest rate of 3.00%. Proceeds of $17,635,146 were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1984 Series bonds. As a result, the 2002 and 2003 Certificates of Participation are considered to be defeased and the liability for those bonds has been removed from the government-wide statement of net position. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $958,631. This difference, reported in the accompanying financial statements as a deferred charge on refunding, is being charged to operations through the year 2032. The City completed the advance refunding to reduce its total debt service payments over the next 20 years by $4,060,363 and to obtain an economic gain (difference between the present values of the old and new debt service payments)of$3,436,837. $ 15,430,000 The annual requirements to amortize the Water Revenue Bond outstanding as of June 30, 2015 were as follows: Year ending June 30, Principal Interest 2016 $ 1,735,000 $ 485,450 2017 1,790,000 450,750 2018 1,860,000 379,150 2019 905,000 304,750 2020 915,000 291,175 2020 -2025 3,610,000 1,058,950 2025-2030 3,185,000 519,400 2030 -2032 1,430,000 64,650 Totals $ 15,430,000 $ 3,554,275 55 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt(Continued) Compensated Absences The City's policies relating to compensated absences are described in Note 1 of the Notes to Financial Statements. This liability will be paid in future years by the Water Utility Fund and the Sewer Utility Fund. $ 313,119 c. Assessment District and Community Facilities District Bond Issues Excluded from the liabilities are special assessment and special tax bonds related to various special assessment districts and community facilities districts included within the City. The City acts as an agent for the property owners benefited by the projects financed from the bond proceeds in collecting the assessments and taxes, forwarding the collections to bond holders, and initiating foreclosure proceedings, if appropriate. Neither the faith and credit nor the taxing power of the City is pledged to the payment of the bonds, and the City is not legally obligated for payment of the bonds. Total non-obligation debt at June 30, 2015, is $41,580,000. The debt outstanding at June 30, 2015, consists of the following individual issues: 2006 $49,660,000 Community Facilities District Bond Program to finance the Community Facilities share of the Government Center. Serial Series B bonds due in annual installments of $1,050,000 to $4,680,000 through September 1, 2026; interest ranging from 3.625% to 4.375% additionally, $1,295,000 term bonds due September 1, 2030; interest rates varying from 4.400%to 4.5000%. $ 25,335,000 2010 $12,390,000 Community Facilities District No. 10, (Fairfield Ranch) Special Tax Refunding Bonds refunded the 2000 $13,040,000 Community Facilities District No. 10, Special Tax Bonds. The 2010 refunding bonds include serial bonds due in annual installments of $335,000 to $935,000 through September 1, 2030; interest ranging from 2.00%to 5.00%. $ 10,850,000 2011 $4,915,000 Community Facilities District No. 9 (Rincon Village Area) Special Tax Refunding Bonds, refunded the 1998 $14,860,000 Community Facilities District No. 9, Special Tax Bonds. The 2011 refunding bonds include serial bonds due in annual installments of $70,000 to $615,000 through September 2021; interest ranging from 1.250%to 5.125%. $ 3,230,000 Reassessment District No. 10-1; The City issued bonds for$3,505,000 on August 5, 2010 for the refinance of Reassessment District 1995. The serial bonds are due in annual installments of $265,000 to $390,000 through September 21, 2021,with an interest rate of 2.00%to 5.32%. $ 2,165,000 56 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 6: Long-Term Debt(Continued) Community Facilities Districts No. 5 Reimbursement settlement with outside developers for the development of two recycled storage tanks. The settlement provides that future development fees will be used to reimburse the developers for their costs associated with the improvement totaling $472,658. A liability has been recorded for the project costs incurred to date. The repayment was paid in full as of June 30, 2015. Note 7: Pension Plan Defined Benefit Pension Plans a. San Bernardino County Employees' Retirement Association Plan Description The City participates in the San Bernardino County Employees' Retirement Association (SBCERA) pension plan - a cost-sharing multiple-employer defined benefit pension plan (the Plan). SBCERA administers the Plan which provides benefits for two membership classifications, General and Safety, and those benefits are tiered based upon date of SBCERA membership. The City of Chino Hills members are classified as General members. Generally, those who become members prior to January 1, 2013 are Tier 1 members. All other members are Tier 2. An employee who is appointed to a regular position, whose service is greater than fifty percent of the full standard of hours required are members of SBCERA, and are provided with pension benefits pursuant to Plan requirements. Tier 1 is closed to new entrants. The Plan operates under the provisions of the California County Employees' Retirement Law of 1937 (CERL), the California Public Employees' Pension Reform Act of 2013 (PEPRA), and the regulations, procedures and policies adopted by SBCERA's Board of Retirement (Board). The Plan's authority to establish and amend the benefit terms are set by the CERL and PEPRA, and may be amended by the California state legislature and in some cases require approval by the County of San Bernardino Board of Supervisors and/or the SBCERA Board. SBCERA is a tax qualified plan under Section 401 (a)of the Internal Revenue Code. SBCERA is a legally separate entity from the City, not a component unit, and there is no financial interdependency with the County of San Bernardino. For these reasons, the City's comprehensive annual financial report excludes the SBCERA pension plan as of June 30, 2015. SBCERA publishes its own comprehensive annual financial report that includes its financial statements and required supplementary information, that can be obtained by writing SBCERA at, 348 W. Hospitality Lane, Third Floor, San Bernardino, CA 92415-0014 or visiting the website at: www.SBCERA.orq. Benefits Provided SBCERA provides retirement, disability, death and survivor benefits. The CERL and PEPRA establish benefit terms. Retirement benefits are calculated on the basis of age, average final compensation and service credit as follows: 57 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Pension Plan (Continued) General-Tier 1 General-Tier 2 Final Average Compensation Highest 12 months Highest 12 months Normal Retirement Age Age 55 Age 55 Early Retirement:Years of Age 70 any years Age 70 any years service required and/or age 10 years age 50 5 years age 52 eligible for 30 years any age N/A Benefit percent per year of service 2.0%per year of final 3.0% per year of final for normal retirement age average compensation for average compensation for every year of service credit every year of service credit Reduced before age 55, Benefit adjustments increased after 55 up to age Reduce before age 67 65 Final Average Compensation Internal Revenue Code Government Code 7522.10 Limitation section 401(a)(17) Required employee contribution rates 7.07%- 13.52% 6.37%-7.88% Required employer contribution rates 29.91% 25.44% An automatic cost of living adjustment is provided to benefit recipients based on changes in the local region Consumer Price Index (CPI) up to a maximum of 2% per year. Any increase greater than 2% is banked and may be used in years where the CPI is less than 2%. There is a one-time 7% increase at retirement for members hired before August 19, 1975. The Plan also provides disability and death benefits to eligible members and their beneficiaries, respectively. For retired members, the death benefit is determined by the retirement benefit option chosen. For all other members, the beneficiary is entitled to benefits based on the members years of service or if the death was caused by employment. General members are also eligible for survivor benefits which are payable upon a member's death. Contributions The City and active members are required by statute to contribute a percentage of covered salary to the Plan. This requirement is pursuant to Government Code sections 31453.5 and 31454, for participating employers and Government Code sections 31621.6, 31639.25 and 7522.30 for active members. The contribution requirements are established and may be amended by the SBCERA Board pursuant to Article 1 of the CERL, which is consistent with the Plan's actuarial funding policy. The contribution rates are adopted yearly, based on an annual actuarial valuation, conducted by an independent actuary, that requires actuarial assumptions with regard to mortality, expected future service (including age at entry into the Plan, if applicable and tier), and compensation increases of the members and beneficiaries. The combined active member and employer contribution rates are expected to finance the costs of benefits for employees that are allocated during the year, with an additional amount to finance any unfunded accrued liability. The City may pay a 58 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Pension Plan (Continued) portion of the active members' contributions through negotiations and bargaining agreements. The required employer contributions and the amount paid to SBCERA by the City for the year ended June 30, 2015 were $3,326,186. The City's employer contributions were equal to the required employer contributions for the year ended June 30, 2015. Pension Liability At June 30, 2015, City reported a net pension liability of $22,704,424 for its proportionate share of the SBCERA's net pension liability. The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2014. The SBCERA's publicly available financial report provides details on the change in the net pension liability. The City's proportion of the net pension liability was based on the City's contributions received by SBCERA during the measurement period for employer payroll paid dates from July 1, 2013 through June 30, 2014, relative to the total employer contributions received from all of SBCERA's participating employers. At June 30, 2014, the City's proportion was 1.336%. Pension Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2015, the City recognized pension expense of $2,363,940 for its proportionate share of SBCERA's pension expense. At June 30, 2015, the City reported its proportionate share of deferred outflows of resources and deferred inflows of resources related to pensions, from the following sources: 59 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Pension Plan (Continued) Deferred Outflows Deferred Inflows of Resources of Resources Difference between expected and actuarial experience $ - $ - Changes actuarial assumptions 3,686,387 Net difference between projected and actual earning on pension plan investments - 6,953,902 Changes in proportion and difference between employer contributions and proportionate share of contributions 2,641,414 - Difference between projected and actual earnings on pension plan investments - 4,325,696 Employer contributions paid to SBCERA subsequent to the measurement date 4,546,047 - Total $ 10,873,848 $ 11,279,598 The $4,546,047 reported as deferred outflows of resources related to pensions resulting from City contributions to SBCERA subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to SBCERA pensions will be recognized in pension expense as follows: Year ended June 30 2016 $ (1,598,773) 2017 (1,598,773) 2018 (159,877) 2019 (441,632) 2020 250,607 Thereafter 35,547 60 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Pension Plan (Continued) Actuarial assumptions and methods The significant actuarial assumptions and methods used to measure the total pension liability are as follows: Actuarial valuation date June 30, 2014 Actuarial cost method Entry age normal Amortization method Level percent of payroll (3.75% payroll growth assumed) Investment rate of return 7.5% Inflation 3.25% Projected salary increases General: 4.60%to 13.75% Administrative expenses 0.60% of payroll For General and Safety employees post-retirement mortality is based on the RP-2000 Combined Healthy Mortality Tables projected with Scale BB to 2020. The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the three year period of July 1, 2010 —June 30, 2013. Key assumption changes that were reflected in measurement period ending June 30, 2014 related to the investment rate of return from 7.75% to 7.50%, inflation rate from 3.50% to 3.25% and projected salary increases which ranged from 4.75% to 14.00% and changed to a range of 4.60% to 13.75%. The June 30, 2014 actuarial valuation reflected new assumptions compared to the June 30, 2013 actuarial valuation, based on the June 30, 2014 experience study. The long-term expected rate of return on pension plan investments is 7.50%. SBCERA's actuary prepares an analysis of the long-term expected rate of return on a triennial basis using a building-block method in which expected future real rates of return (expected returns, net of inflation) are developed for each major asset class. These returns are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage by adding expected inflation and subtracting expected investment expenses and a risk margin. The target allocations (approved by the SBCERA Board) and projected arithmetic real rates of return for each major asset class, after deducting inflation, but before deducting investment expenses, used in the derivation of the long term expected investment rate of return assumptions are summarized in the following table: 61 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Pension Plan (Continued) SBCERA's Long-Term Expected Real Rate of Return As of June 30, 2014 Valuation Date Long-Term Expected Real Target Rate of Return Asset Class Allocation (Arithmetic) Large Cap U.S. Equity 5.00% 5.94% Small Cap U.S. Equity 2.00% 6.50% Developed International Equity 6.00% 6.87% Emerging Market Equity 6.00% 8.06% U.S. Core Fixed Income 2.00% 0.69% High Yield/Credit Strategies 13.00% 3.10% Global Core Fixed Income 1.00% 0.30% Emerging Market Debt 6.00% 4.16% Real Estate 9.00% 4.96% Cash & Equivalents 2.00% -0.30% International Credit 10.00% 6.76% Absolute Return 13.00% 2.88% Real Assets 6.00% 6.85% Long/Short Equity 3.00% 4.86% Private Equity 16.00% 9.64% Total 100.00% Discount rate The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made based on the actuarially determined rates based on the SBCERA Board's funding policy, which establishes the contractually required rate based on statute. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. For the actuarial valuation date of June 30, 2013, the discount rate used to measure the total pension liability as of the year ended June 30, 2014 was 7.75%. Sensitivity of the City's proportionate share of the SBCERA net pension liability to changes in the discount rate. The following table presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: 62 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 7: Pension Plan (Continued) Sensitivity of Net Pension Liability to Changes in the Discount Rate 1.00% Current 1.00% Decrease Discount Rate Increase June 30, 2015 6.50% 7.50% 8.50% City's proportionate share of net pension liability $ 40,123,981 $ 22,704,424 $ 8,278,090 Pension Plan Fiduciary Net Position Detailed information about the SBCERA's fiduciary net position is available in a separately issued SBCERA comprehensive annual financial report. That report may be obtained on the Internet at www.SBCERA.org; by writing to SBCERA at 348 W. Hospitality Lane, Third Floor, San Bernardino, CA 92415; or by calling (909) 885-7980 or(877) 722-3721. Note 8: Other Post-Employment Employee Benefits Plan Description The City has established the City of Chino Hills Retiree Healthcare Plan, a single-employer defined benefit healthcare plan. The plan provides postretirement healthcare benefits to eligible employees who retire from the City under the San Bernardino County Employee's Retirement Association (SBCERA) and who elect a CaIPERS Health Plan (PEMHCA). The City pays the PEMHCA minimum employer contribution using the unequal method of$101.15 per month for the months in 2014 and $109.80 per month for the months in 2015. The retiree pays the remainder of the PEMHCA premium. The City does not provide contributions for retiree dental, vision, or life insurance benefits. Funding Policy Currently, the City funds retiree healthcare benefits on a pay-as-you-go basis, paying for retiree benefits from the City's General Fund, the Water Utility Fund and the Equipment Maintenance Fund as they are due with no pre-funding for future years. For fiscal year 2014-2015, the City paid $8,033 for benefits of nine retired employees. 63 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8: Other Post-Employment Employee Benefits (Continued) Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC), 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 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: Retiree Healthcare Plan Annual required contribution (ARC) $ 163,587 Interest on net OPEB obligation 9,946 Adjustment to ARC (49,691) Annual OPEB cost(expense) 123,842 Contribution made 4,985 Increase in net OPEB obligation 118,857 Net OPEB obligation -July 1, 2014 695,315 Net OPEB obligation -June 30, 2015 $ 814,172 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the 2014-2015 fiscal year and the two preceding years were as follows: Percentage of Fiscal Year Annual Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed Obligation 06/30/13 $ 98,593 16.28% $ 605,479 06/30/14 94,821 13.64% 695,315 06/30/15 123,842 15.21% 814,172 Funded Status and Funding Progress 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 trends. 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 schedule of funding progress below represents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities or benefits. Only three years are presented since the City implemented the provision of GASB Statement 45 in fiscal year 2009-2010 and performs the actuarial valuation every three years. 64 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 8: Other Post-Employment Employee Benefits (Continued) Schedule of Funding Progress for OPEB (Amount in Thousands) Actuarial Accrued UAAL as Actuarial Actuarial Liability Unfunded a % of Valuation Valuation of (AAL) Entry AAL Funded Covered Covered date Assets Age (UAAL) Ratio Payroll Payroll 01/01/2009 $ - $ 919 $ 919 0.0% $ 9,175 10.0% 06/15/2012 - 1,160 1,160 0.0% 10,595 10.9% 05/01/2015 - 1,498 1,498 0.0% 11,999 12.5% Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and 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. The actuarial valuation dated May 1, 2015, used the Entry Age Normal actuarial cost method, a discount rate of 4.50% which is the long-term expected rate of return on the City's investment fund, an annual general inflation rate of 2.75%, and an annual aggregate payroll increase of 2.75%. The unfunded accrued actuarial liability (UAAL) is being amortized over a fixed 30-year period as a level percentage of payroll beginning with the 2008-2009 fiscal year. The initial UAAL was amortized over a closed 30 years and residual UAAL is amortized over an open 20 years. The PEMHCA medical plans are considered community rated plans for the City. Therefore, no implied subsidy was determined for this valuation. The Plan is assumed to be on going for cost purposes. This does not imply that an obligation to continue the Plan exists. As of the actuarial valuation date, the City had 149 active participants and six retiree receiving benefits. Note 9: Liability, Property and Workers' Compensation Protection a. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City of Chino Hills is a member of the CALIFORNIA JOINT POWERS INSURANCE AUTHORITY (Authority). The Authority is composed of 118 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of selfinsured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee. 65 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Liability, Property and Workers' Compensation Protection (Continued) b. Self-Insurance Programs of the Authority Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Retrospective adjustments are scheduled to continue indefinitely on coverage years 2012-13 and prior, until all claims incurred during those coverage years are closed, on a pool-wide basis. This subsequent cost re-allocation among members, based on actual claim development, can result in adjustments of either refunds or additional deposits required. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for self-insurance programs is estimated using actuarial models and pre-funded through the annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims) relative to other members of the risk-sharing pool. Additional information regarding the cost allocation methodology is provided below. Liability In the liability program claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers. For 2014-15, the Authority's pooled retention is $2 million per occurrence, with reinsurance to $20 million, and excess insurance to $50 million. The Authority's reinsurance contracts are subject to the following additional pooled retentions: (a) 50% of the $2.5 million annual aggregate deductible in the $3 million x/s $2 million layer, (b) 50% quota share of the $3 million x/s $2 million layer, and (c)$3 million annual aggregate deductible in the $5 million x/s $10 million layer. The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Costs of covered claims for subsidence losses have a sub-limit of$30 million per occurrence. Workers' Compensation In the workers' compensation program claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence 66 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Liability, Property and Workers' Compensation Protection (Continued) and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers. For 2014-15 the Authority's pooled retention is $2 million per occurrence, with reinsurance to statutory limits under California Workers' Compensation Law. Employer's Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer's Liability losses from $5 million to $10 million are pooled among members. c. Purchased Insurance Pollution Legal Liability Insurance The City of Chino Hills participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Chino Hills. Coverage is on a claims made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3-year period from July 1, 2014 through July 1, 2017. Each member of the Authority has a $10 million sublimit during the 3-year term of the policy. Property Insurance The City of Chino Hills participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of Chino Hills property is currently insured according to a schedule of covered property submitted by the City of Chino Hills to the Authority. City of Chino Hills property currently has all-risk property insurance protection in the amount of $112,590,596. There is a $5,000 deductible per occurrence except for non-emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Earthquake and Flood Insurance The City of Chino Hills purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. City of Chino Hills property currently has earthquake protection in the amount of$75,483,962. There is a deductible of 5% per unit of value with a minimum deductible of$100,000. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Crime Insurance The City of Chino Hills purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not subject to retrospective adjustments. 67 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 9: Liability, Property and Workers' Compensation Protection (Continued) d. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2014-15. Note 10: Contingencies a. Litigation The City is involved in several pending lawsuits of a nature common to many similar jurisdictions. City management estimates that potential claims against the City not covered by insurance, will not have a material adverse effect on the financial statements of the City. b. Voter Initiatives 1. Proposition 218, which was approved by the voters in November 1996, will regulate the City's ability to impose, increase and extend taxes, assessments and fees. Any new, increased or extended taxes, assessments and fees subject to the provisions of Proposition 218 require voter approval before they can be implemented. Additionally, Proposition 218 provides that these taxes, assessments and fees are subject to the voter initiative process and may be rescinded in the future by the voters. Therefore, the City's ability to finance the services for which the taxes, assessments and fees were imposed may be significantly impaired. The taxes, fees and assessments that are subject to the provisions of Proposition 218 that the City currently imposes for its own benefit or as an agent for a special district, or receives from other governmental agencies, potentially include the County of San Bernardino Measure I taxes, business license fees, community facilities districts, special taxes, landscape and lighting district assessments, street sweeping assessments, water utility fees, sewer utility fees and refuse disposal fees. Certain language in the initiative is unclear as to the scope and impact of the proposition. Future court rulings or state legislation may clarify these issues. At this time it is uncertain how Proposition 218 will affect the City's ability to maintain or increase the revenue it receives from taxes, assessments and fees. 2. A general plan initiative was passed by City residents in November 1999, which removed the City Council's ability to increase residential density zoning except under specific circumstances. An increase in residential zoning density would require a majority voter approval. Current zoning on certain developable residential parcels in the City is of a lower density of units per acre than the density desired by residential developers. This change could slow down development in the City due to the voter approval requirement. 68 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 11: Joint Venture a. Water Facility Authority On February 19, 1980, the Water Facilities Authority (the Authority) was created under a joint exercise of powers agreement between the CSA 70 Zone CH (now part of the City of Chino Hills) and other local entities. It was formed for the acquisition and construction of facilities directly benefiting the participants by supplying water to the inhabitants within the boundaries of its members. Thus, each participant has an ongoing financial interest in the Authority. The governing Board of Directors consists of one member appointed from each participating agency and has approval of all budget and finance activities. The City's investment in the Authority has been recorded under the equity method of accounting and is shown as an investment in joint venture in the Water Enterprise Fund. On September 30, 1997, the Authority issued $24,455,000 in 1997 Refunding Certificates of Participation (COPs) for the purpose of refunding $25,820,000 of the outstanding 1986 COPs. The 1997 Refunding COPs carry interest rates from 4.00% to 5.30% and will be repaid in various principal increments with the final payment due on October 1, 2015. Each participant in the joint venture has pledged gross revenues from its respective Enterprise Fund and has agreed to restrictive covenants that establish rates and charges for each respective water enterprise fund at levels sufficient to maintain net revenues equal to at least 1.25 times the aggregate amount of each respective party's installment payments to the Authority as well as any parity debt that shall become due and payable within the succeeding 12 months. On March 21, 1996, the Board of Directors of Authority approved the prepayment by the City of Chino Hills of its installment payment obligation pursuant to the 1986 Installment Purchase Agreement between the Authority and its participants. As a result of such prepayment and redemption of such 1986 Certificates, the City of Chino Hills has no further obligation for the payment of installment payments to the Authority. The value of the City's investment in the Authority at June 30, 2015 was $3,301,494. 69 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 11: Joint Venture (Continued) Audited financial information of the Authority for the fiscal year ended June 30, 2015 was summarized as follows: Water Facilities Authority Net Position: Total assets $ 31,347,596 Deferred outflow of resources 113,716 Total liabilities (5,632,170) Deferred inflow of resources (226,958) Total Net Position $ 25,602,184 Water Facilities Authority Changes in Net Position: Operating revenues $ 20,741,073 Operating expenses (20,916,240) Operating loss before depreciation and amortization (175,167) Depreciation and amortization (1,077,478) Operating revenue(loss) (1,252,645) Nonoperating revenues (expenses) 683,523 Contributions 503,741 Change in Net Position (65,381) Beginning Net Position, as restated 25,667,565 Ending Net Position $ 25,602,184 The participants and their audited financial contributions through June 30, 2015 were as follows: Amount Percent City of Chino Hills $ 5,361,731 12.90% Monte Vista Water District 6,743,863 16.22% City of Chino 6,634,191 15.96% City of Ontario 14,408,203 34.65% City of Upland 8,313,063 19.99% Non-Participants 117,703 0.28% Total $ 41,578,754 100.00% Financial statements of the Authority can be obtained from the office of Charles Z. Fedak & Co., 6081 Orange Avenue, Cypress, California 90630. b. Chino Basin Desalter Authority On January 15, 2002, the Chino Basin Desalter Authority (the Authority) was created under a joint exercise of powers agreement between the City of Chino Hills and other neighboring government agencies. This agreement was formed to successfully manage the groundwater resources in the Chino Basin. The governing Board of Directors consists of one representative appointed from each participating agency and has the power and responsibility to adopt budgets, operating plans and finance activities to further the purpose of the Authority. The City's investment 70 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 11: Joint Venture (Continued) in the Authority has been recorded under the equity method of accounting and is shown as an investment in joint venture in the Chino Basin Desalter Authority. At June 30, 2015, the value of the City's investment in the Authority was$27,556,396. On June 11, 2009, the Chino Basin Desalter Authority issued the Desalter Refunding Bonds, Series 2008A in the amount of $89,440,000 to refund the 2004 Adjustable Rate Revenue Refunding Bonds, Series 1 and 2. The new revenue refunding bond has various debt payment schedules tailored to each CDA member agency, based on their respective election. This provision affords each member the ability to prepay their share of debt service. Unaudited Financial information of the Authority for the fiscal year ended June 30, 2015 is summarized as follows: Chino Basin Desalter Authority Net Position: Total assets $ 277,123,360 Total liabilities (117,536,232) Total Net Position $ 159,587,128 Chino Basin Desalter Authority Changes in Net Position: Operating revenues $ 35,918,867 Operating expenses (34,630,861) Operating gain before depreciation and amortization 1,288,006 Depreciation and amortization (3,963,376) Operating revenue (loss) (2,675,370) Nonoperating revenues (expenses) 1,429,594 Income (loss) before transfers and contributions (1,245,776) Contributions 58,158,482 Capital grants - Distribution of excess reserves (864,564) Change in Net Position 56,048,142 Beginning Net Position, as restated 103,538,986 Ending Net Position $ 159,587,128 71 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 11: Joint Venture (Continued) The participants' contributions through June 30, 2015 were as follows: Amount Percent JCSD $ 7,357,262 15.43% City of Chino Hills 3,802,367 7.98% City of Chino 4,524,752 9.49% City of Norco 906,083 1.90% City of Ontario 30,000,091 62.93% Santa Ana River Co. 1,084,120 2.27% Total $ 47,674,675 100.00% Financial statements of the Authority can be obtained from the CDA Treasurer's office located at 2151 Haven Avenue, Suite 202, Ontario, CA 91761. Note 12: Other Commitments The City has active construction projects as of June 30, 2015. The projects include streets facilities and water lines and mains. At fiscal year end, the City's encumbrances with contractors were as follows: Remaining Spent-to-date Commitment Streets Facilities $ 1,757,536 $ 5,846,286 Storm Sewer Lines 138,689 216,903 Water Supply Facilities 88,351 68,849 Total $ 1,984,576 $ 6,132,038 Note 13: Net Position Restatement and Fund Balance a. Net Position Restatement Beginning net position of governmental activities on the Statement of Activities has been restated by $(25,292,281) due to the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions — An Amendment of GASB Statement No. 27. 72 CITY OF CHINO HILLS NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 Note 13: Net Position Restatement and Fund Balance (Continued) b. Fund Balance Classifications At June 30, 2015, the City report the following fund balance classifications: Landscape Existing Other Total and Lighting Infrastructure Governmental Governmental General District Fees Funds Funds Fund Balances: Nonspendable Long-term receivables $ 14,345 $ - $ - $ - $ 14,345 Advances to other funds 504,087 - - - 504,087 Restricted Community development projects - - - 661,078 661,078 Public safety - - - 55,663 55,663 Public works - 4,109,036 - 43,979 4,153,015 Capital projects 1,618,950 - - 32,092,334 33,711,284 Debt service 1,277,390 - - - 1,277,390 Line of credit 456,218 - - - 456,218 Committed Emergencies and contingencies 10,392,529 - - - 10,392,529 Cash flow contingency 5,900,000 - - - 5,900,000 Assigned CIP special projects 1,947,844 - - - 1,947,844 Unassigned - - (7,450,037) (520,749) (7,970,786) Total Fund Balances $ 22,111,363 $ 4,109,036 $ (7,450,037) $ 32,332,305 $ 51,102,667 Note 14: Subsequent Events Revenue Bonds On September 8, 2015, the City Council approved the issuance of the 2015 Chino Hills Financing Authority Revenue Bonds Series C to prepay the 2007 Certificates of Deposit and to acquire two series of Special Tax Bonds. Parking Authority The Chino Hills Redevelopment Agency was part of the Joint Exercise of Powers Agreement creating the Chino Hills Financing Authority. As a result of the dissolution of the Chino Hills Redevelopment Agency, on August 11, 2015 the City Council formed the Parking Authority to replace the Redevelopment Agency as the other member of the Financing Authority and the other party to the Joint Powers Agreement to ensure the continued existence of the Financing Authority. This action ensures the continued existence of the Financing Authority. 73 0 u� uo�� PaytiattiAddos vaxtobali City of Chino Hills This page intentionally left blank. 74 CITY OF CHINO HILLS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2015 Note 1: Budget Procedures All financial activities of the General Fund, Special Revenue Funds and Capital Projects Funds are part of the appropriated budget. Appropriated amounts are as originally adopted or as amended by the City Council throughout the year. The following general procedures are followed in establishing the annual budget: 1. The annual budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and estimated revenues. 2. The City Manager is authorized to appropriate from reserves for each expenditure line item or capital improvement project, not exceeding $25,000 per transaction. The total of appropriations by the City Manager from General Fund reserves may not exceed $100,000 in a fiscal year. Any appropriations from reserves for each expenditure line item or capital improvement project exceeding $25,000 per transaction must be approved by the City Council. The City Manager is authorized to transfer appropriations within a department within a fund or between departments within a fund without limitation. All appropriations from reserves and all appropriation transfers are subject to funding eligibility requirements. 3. The budget is formally integrated into the accounting system and employed as a management control device during the year for all funds. 4. The budget is adopted on an annual basis. 5. The budget is adopted on a basis which differs from accounting principles generally accepted in the United States of America in that encumbrances are included as expenditures. The modified accrual basis of accounting is employed in the preparation of the budget. 6. At fiscal year—end, operating budget appropriations lapse; however, incomplete capital improvement project appropriations within Capital Projects Funds, and authorized non—capital appropriations are budgeted in the following fiscal year. 75 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE GENERAL FUND YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $21,139,472 $21,139,472 $21,139,472 $ - Resources (Inflows): Taxes 22,263,900 22,690,800 22,624,279 (66,521) Licenses and permits 1,575,766 1,191,000 1,528,812 337,812 Intergovernmental 33,500 33,500 114,062 80,562 Charges for services 12,409,374 13,526,200 12,813,745 (712,455) Use of money and property 919,100 737,300 1,057,767 320,467 Fines and forfeitures 467,200 467,200 484,407 17,207 Contributions 1,298,916 1,313,500 1,310,348 (3,152) Miscellaneous 634,400 2,073,900 1,483,956 (589,944) Transfers in 521,175 5,274,800 103,732 (5,171,068) Proceeds from sale of capital asset - - 5,330 5,330 Amounts Available for Appropriations 61,262,803 68,447,672 62,665,910 (5,781,762) Charges to Appropriation (Outflow): General government City council 261,400 261,400 251,352 10,048 City manager 1,645,000 2,063,700 1,687,943 375,757 City clerk 999,600 1,151,200 1,151,183 17 City attorney 350,000 350,000 232,924 117,076 Finance 2,357,200 2,436,400 2,193,763 242,637 Risk management 2,563,500 2,591,300 2,538,111 53,189 Human resources 335,500 446,000 371,336 74,664 Non-departmental 56,200 59,500 59,483 17 Emergency preparedness 203,500 320,100 284,920 35,180 Neighborhood services 753,900 220,600 216,553 4,047 Code enforcement 371,100 482,800 483,509 (709) Public safety Law enforcement 11,649,400 11,657,400 11,333,295 324,105 Public works Public works operations 2,878,600 4,909,700 3,699,409 1,210,291 Engineering 2,126,900 1,993,400 1,780,442 212,958 Public works administration 950,000 948,500 930,264 18,236 Community development Community development administration 2,983,600 1,741,800 1,654,506 87,294 Building and safety 2,283,100 1,176,500 1,152,595 23,905 Planning 2,861,000 2,040,700 1,127,640 913,060 Economic development 299,800 230,800 169,278 61,522 Community Services Recreation 8,821,200 4,524,500 4,465,746 58,754 Community services administration 567,600 620,000 566,952 53,048 Capital outlay 90,800 123,800 8,170 115,630 Debt service: Principal retirement 622,000 622,000 602,807 19,193 Interest and fiscal charges 863,500 874,300 893,667 (19,367) Transfers out 8,602,900 8,204,000 2,698,699 5,505,301 Total Charges to Appropriations 55,497,300 50,050,400 40,554,547 9,495,853 Budgetary Fund Balance,June 30 $ 5,765,503 $ 18,397,272 $22,111,363 $ 3,714,091 76 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE LANDSCAPE AND LIGHTING DISTRICT YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 4,853,004 $ 4,853,004 $4,853,004 $ - Resources (Inflows): Special assessments 5,384,000 5,384,000 5,385,937 1,937 Charges for services 1,435,500 1,435,500 1,333,072 (102,428) Use of money and property 58,100 58,100 64,907 6,807 Miscellaneous - - 10,256 10,256 Transfers in 1,789,700 1,800,400 691,338 (1,109,062) Proceeds from sale of capital asset - - 3,415 3,415 Amounts Available for Appropriations 13,520,304 13,531,004 12,341,929 (1,189,075) Charges to Appropriation (Outflow): Public works 8,423,500 8,558,100 8,203,834 354,266 Capital outlay 396,600 470,200 12,257 457,943 Transfers out 1,086,400 1,086,400 16,802 1,069,598 Total Charges to Appropriations 9,906,500 10,114,700 8,232,893 1,881,807 Budgetary Fund Balance,June 30 $ 3,613,804 $ 3,416,304 $4,109,036 $ 692,732 77 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE EXISTING INFRASTRUCTURE FEES YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $(7,423,382) $(7,423,382) $(7,423,382) $ - Resources (Inflows): Developer fees 1,374,000 1,374,000 566,724 (807,276) Use of money and property 7,300 7,300 30,429 23,129 Long-term debt issued 20,100 20,100 13,022 (7,078) Amounts Available for Appropriations (6,021,982) (6,021,982) (6,813,207) (791,225) Charges to Appropriation (Outflow): Community development 270,800 270,800 84,834 185,966 Debt service: Principal retirement 1,110,500 1,110,500 492,046 618,454 Interest and fiscal charges 59,700 59,700 59,950 (250) Total Charges to Appropriations 1,441,000 1,441,000 636,830 804,170 Budgetary Fund Balance,June 30 $(7,462,982) $(7,462,982) $(7,450,037) $ 12,945 78 CITY OF CHINO HILLS SBCERA PENSION PLAN A COST-SHARING, MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY AS OF JUNE 30, 2015 FOR THE LAST TEN FISCAL YEARS (1) 2015 Proportion of the Net Pension Liability 1.336% Proportionate Share of the Net Pension Liability $ 22,704,424 Covered-Employee Payroll $ 11,984,203 Proportionate Share of the Net Pension Liability as Percentage of Covered-Employee Payroll 189.45% Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 71.97% Notes to Schedule: Benefit Chances: All members with membership dates on or after January 1, 2013 enter the new tiers created by the California Public Employees' Pension Reform Act of 2013 (PEPRA). The addition of a new tier of benefits did not result in a change in the net pension liability of participating employers due to changes in benefit terms as of June 30, 2014 and 2013. (1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation, therefore only one year is shown. 79 CITY OF CHINO HILLS SBCERA PENSION PLAN A COST-SHARING, MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN SCHEDULE OF PLAN CONTRIBUTIONS AS OF JUNE 30, 2015 FOR THE LAST TEN FISCAL YEARS (1) 2015 Actuarially Determined Contribution $ 4,546,047 Actuarial Contributions 4,546,047 Contribution Deficiency(Excess) $ Covered-Employee Payroll $ 11,999,151 Contributions as a Percentage of Covered-Employee Payroll 37.89% Note to Schedule: Valuation Date: June 30, 2014 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percent of payroll (3.75% payroll growth assumed) Remaining amortization period 15 years Assets valuation method Market value of assets less unrecognized returns from each of the last five years. Inflation 3.25% Salary Increases 4.5% average, including inflation of 3.0% Investment rate of return 7.5% net of pension plan investment expense, including inflation Retirement age 58 years for General members; 52 years for Safety members Mortality RP-2000 Heath Annuitant Mortality Table (1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation, therefore only one year is shown. 80 NONMAJOR GOVERMENTAL FUNDS Special Revenue Funds Sleepy Hollow Road Improvement — To account for receipts and expenditures of money for landscape and other maintenance in the area of the City formerly designated as County Service Area No. 19. General Facilities Fee — To account for receipts and expenditures of money in the facilities development program for civic facilities such as a civic center, fire stations and community centers. Traffic Facilities Fee — To account for receipts and expenditures of money in the facilities development program for traffic facilities such as streets, sidewalks, curbs and gutters. Storm Drain Facilities Fee — To account for receipts and expenditures of money in the facilities development program for storm drain facilities. Parkland Fee—To account for receipts and expenditures of money in parks & recreation facilities fee and quimby in-lieu fee programs which provide funds for the acquisition of land and construction of parks within the City and is financed from fees collected from the development of residential and commercial properties. Traffic Signal Fee — To account for receipts and expenditures of money in the traffic signal fee program which provides funds for the installation of traffic signals within the City. Gas Tax —To account for receipts and expenditures of money apportioned under the State of California Streets and Highways Code Sections 2103, 2105, 2106, and 2107. Air Quality — To account for receipts and expenditures of money in the State and Federally mandated program to improve air quality within the South Coast Air Quality Management District. Federal Grants — To account for receipts and expenditures of money for certain federal grants received by the City. Measure I —To account for receipts and expenditures of money in providing qualifying street maintenance activities in conformance with provisions of the voter approved Measure I two cent sales tax levy. Solid Waste — To account for receipts and expenditures of money for the collection, transportation, and disposal, via contract, of solid waste materials. Street Sweeping — To account for receipts and expenditures of money in providing street sweeping services as financed through assessment fees collected from residential and commercial property owners. Frontline Policing. — To account for the receipts and expenditures of money for the Frontline Policing Grant received from the State of California for qualifying police activities. Miscellaneous Grants — To account for receipts and expenditures of money for various grants received from Local, State, and Federal agencies. Affordable Housing Program — To account for receipts and expenditures of money in development of affordable housing in the City as financed through affordable housing in-lieu fees collected from new residential development projects. 81 NONMAJOR GOVERMENTAL FUNDS (Continued) Water Facilities Fee — To account for receipts and expenditures of money in the facilities development program for water facilities. Sewer Facilities Fee — To account for receipts and expenditures of money in the facilities development program for sewer facilities. Tree Mitigation Fund — To account for the receipts and expeditures of money for the replacement of proteceted trees within the City. Public Safety Programs Fund - To account for the receipts and expenditures of money for programs which enhance public safety and law enforcement. Capital Projects Funds The following Capital Projects Funds are used to account for resources that are restricted, committed or assigned for the acquisition of capital facilities and other capital assets: CFD #9 Rincon Village—To account for capital projects in the Community Facilities District No. 9 (Rincon Village Area) financed by the issuance of Mello-Roos Community Facilities Bonds as required by the Mello-Roos Community Facilities Act of 1982. CFD #10 Fairfield Ranch — To account for capital projects in the Community Facilities District No. 10 (Fairfield Ranch) financed by the issuance of Mello-Roos Community Facilities Bonds as required by the Mello-Roos Community Facilities Act of 1982. 82 City of Chino Hills This page intentionally left blank. 83 CITY OF CHINO HILLS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Special Revenue Funds Sleepy Hollow Road General Traffic Storm Drain Improvement Facilities Fees Facilities Fees Facilities Fees Assets: Cash and investments $ 83,715 $ 1,107,423 $ 1,778,949 $ 4,263,992 Receivables: Accounts - - - - Taxes - - - - Accrued interest 15 199 279 390 Special assessment 552 - - - Due from other governments - - - - Due from developers - - - 12,719 Advances to other funds - 761,482 140,597 681,655 Restricted assets: Cash and investments with fiscal agents - - - - Total Assets $ 84,282 $ 1,869,104 $ 1,919,825 $ 4,958,756 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 44,530 $ 72 $ 101 $ 141 Accrued liabilities - - - - Due to other funds - - - - Unearned revenues - - - - Deposits payable - - - - Advances from other funds - - - - Total Liabilities 44,530 72 101 141 Deferred Inflows of Resources: Unavailable revenues - - - - Total Deferred Inflows of Resources - - - - Fund Balances: Restricted 39,752 1,869,032 1,919,724 4,958,615 Unassigned - - - - Total Fund Balances 39,752 1,869,032 1,919,724 4,958,615 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 84,282 $ 1,869,104 $ 1,919,825 $ 4,958,756 84 CITY OF CHINO HILLS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 (CONTINUED) Special Revenue Funds Traffic Signal Parkland Fees Fees Gas Tax Air Quality Assets: Cash and investments $ 1,785,476 $ 401,400 $ 4,663,438 $ 252,174 Receivables: Accounts - - 22,132 - Taxes - - - - Accrued interest 328 74 773 46 Special assessment - - - - Due from other governments - - 75 24,785 Due from developers - - - - Advances to other funds - - - - Restricted assets: Cash and investments with fiscal agents - - - - Total Assets $ 1,785,804 $ 401,474 $ 4,686,418 $ 277,005 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 119 $ 27 $ 68,453 $ 17 Accrued liabilities 1,259 - 23,551 - Due to other funds - - - - Unearned revenues - - - - Deposits payable - - - - Advances from other funds 1,385,750 - 1,482,352 - Total Liabilities 1,387,128 27 1,574,356 17 Deferred Inflows of Resources: Unavailable revenues - - - - Total Deferred Inflows of Resources - - - - Fund Balances: Restricted 398,676 401,447 3,112,062 276,988 Unassigned - - - - Total Fund Balances 398,676 401,447 3,112,062 276,988 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 1,785,804 $ 401,474 $ 4,686,418 $ 277,005 85 CITY OF CHINO HILLS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Special Revenue Funds Federal Street Grants Measure I Solid Waste Sweeping Assets: Cash and investments $ - $ 2,331,527 $ 520,091 $ 323,683 Receivables: Accounts - - 509,128 - Taxes - 199,465 - - Accrued interest - 421 - 60 Special assessment - - - 2,191 Due from other governments 32,367 - - - Due from developers - - - - Advances to other funds - - - - Restricted assets: Cash and investments with fiscal agents - - - - Total Assets $ 32,367 $ 2,531,413 $ 1,029,219 $ 325,934 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 16,617 $ 152 $ 947,837 $ 45,902 Accrued liabilities 46 - - - Due to other funds 32,367 - 81,382 - Unearned revenues - - - - Deposits payable - - - - Advances from other funds - - - - Total Liabilities 49,030 152 1,029,219 45,902 Deferred Inflows of Resources: Unavailable revenues - - - - Total Deferred Inflows of Resources - - - - Fund Balances: Restricted - 2,531,261 - 280,032 Unassigned (16,663) - - - Total Fund Balances (16,663) 2,531,261 - 280,032 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 32,367 $ 2,531,413 $ 1,029,219 $ 325,934 86 CITY OF CHINO HILLS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 (CONTINUED) Special Revenue Funds Affordable Frontline Miscellaneous Housing Water Policing Grants Program Facilities Fee Assets: Cash and investments $ 25,637 $ 59,131 $ 661,253 $ 5,014,259 Receivables: Accounts - - - - Taxes - - - - Accrued interest 5 - 113 906 Special assessment - - - - Due from other governments 985 937,835 - - Due from developers - - - 38,544 Advances to other funds - - - 3,560,977 Restricted assets: Cash and investments with fiscal agents - - - - Total Assets $ 26,627 $ 996,966 $ 661,366 $ 8,614,686 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ - $ - $ 41 $ 1,227 Accrued liabilities - - 247 - Due to other funds - 433,748 - - Unearned revenues - 59,728 - - Deposits payable - - - 3,099 Advances from other funds - 504,087 - 990,900 Total Liabilities - 997,563 288 995,226 Deferred Inflows of Resources: Unavailable revenues - 503,489 - - Total Deferred Inflows of Resources - 503,489 - - Fund Balances: Restricted 26,627 - 661,078 7,619,460 Unassigned - (504,086) - - Total Fund Balances 26,627 (504,086) 661,078 7,619,460 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 26,627 $ 996,966 $ 661,366 $ 8,614,686 87 CITY OF CHINO HILLS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Capital Project Special Revenue Funds Funds Tree Public Safety Sewer Mitigation Programs CFD#9 Facilities Fee Fund Fund Rincon Village Assets: Cash and investments $ 408,834 $ 100 $ 24,324 $ 4,285,003 Receivables: Accounts - 4,127 - - Taxes - - - - Accrued interest 74 - 8 785 Special assessment - - - - Due from other governments - - 4,707 - Due from developers 1,865 - - - Advances to other funds 3,634,020 - - - Restricted assets: Cash and investments with fiscal agents - - - - Total Assets $ 4,044,793 $ 4,227 $ 29,039 $ 4,285,788 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 27 $ - $ 3 $ 284 Accrued liabilities - - - - Due to other funds - - - - Unearned revenues - - - - Deposits payable - - - - Advances from other funds - - - - Total Liabilities 27 - 3 284 Deferred Inflows of Resources: Unavailable revenues - - - - Total Deferred Inflows of Resources - - - - Fund Balances: Restricted 4,044,766 4,227 29,036 4,285,504 Unassigned - - - - Total Fund Balances 4,044,766 4,227 29,036 4,285,504 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 4,044,793 $ 4,227 $ 29,039 $ 4,285,788 88 CITY OF CHINO HILLS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Capital Project Funds CFD#10 Total Fairfield Governmental Ranch Funds Assets: Cash and investments $ - $ 27,990,409 Receivables: Accounts - 535,387 Taxes - 199,465 Accrued interest - 4,476 Special assessment - 2,743 Due from other governments - 1,000,754 Due from developers - 53,128 Advances to other funds - 8,778,731 Restricted assets: Cash and investments with fiscal agents 396,569 396,569 Total Assets $ 396,569 $ 38,961,662 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ - $ 1,125,550 Accrued liabilities - 25,103 Due to other funds 1,802 549,299 Unearned revenues - 59,728 Deposits payable - 3,099 Advances from other funds - 4,363,089 Total Liabilities 1,802 6,125,868 Deferred Inflows of Resources: Unavailable revenues - 503,489 Total Deferred Inflows of Resources - 503,489 Fund Balances: Restricted 394,767 32,853,054 Unassigned - (520,749) Total Fund Balances 394,767 32,332,305 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 396,569 $ 38,961,662 89 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Special Revenue Funds Sleepy Hollow Road General Traffic Storm Drain Improvement Facilities Fees Facilities Fees Facilities Fees Revenues: Special assessments $ 10,067 $ - $ - $ - Intergovernmental - - - - Charges for services - - - - Developer fees - 87,759 10,829 61,764 Fines and forfeitures - - - - Contributions from property owners - - - - Use of money and property 997 13,191 11,983 28,051 Miscellaneous - - - - Total Revenues 11,064 100,950 22,812 89,815 Expenditures: Current: General government - - - - Public safety - - - - Public works 44,948 7,368 1,876 6,282 Community development - - - - Community services - - - - Capital outlay - - - - Debt service: Interest and fiscal charges - - - - Total Expenditures 44,948 7,368 1,876 6,282 Excess (Deficiency)of Revenues Over(Under) Expenditures (33,884) 93,582 20,936 83,533 Other Financing Sources (Uses): Transfers in - - 670,356 2,120,250 Transfers out - - - (127,702) Total Other Financing Sources (Uses) - - 670,356 1,992,548 Net Change in Fund Balances (33,884) 93,582 691,292 2,076,081 Fund Balances, Beginning of Year 73,636 1,775,450 1,228,432 2,882,534 Fund Balances, End of Year $ 39,752 $ 1,869,032 $ 1,919,724 $ 4,958,615 90 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 (CONTINUED) Special Revenue Funds Parkland Traffic Signal Fees Fees Gas Tax Air Quality Revenues: Special assessments $ - $ - $ - $ - Intergovernmental - - 1,982,530 94,457 Charges for services - - - - Developer fees 83,394 - - - Fines and forfeitures - - - - Contributions from property owners - - - - Use of money and property 25,866 5,123 54,145 2,349 Miscellaneous - - 23,012 - Total Revenues 109,260 5,123 2,059,687 96,806 Expenditures: Current: General government - - 2,725 152 Public safety - - - - Public works 10,568 303 1,666,532 176 Community development - - - - Community services - - - - Capital outlay - - - - Debt service: Interest and fiscal charges 15,192 - - - Total Expenditures 25,760 303 1,669,257 328 Excess (Deficiency)of Revenues Over(Under) Expenditures 83,500 4,820 390,430 96,478 Other Financing Sources (Uses): Transfers in - - 885,066 - Transfers out - - (1,084,898) - Total Other Financing Sources (Uses) - - (199,832) - Net Change in Fund Balances 83,500 4,820 190,598 96,478 Fund Balances, Beginning of Year 315,176 396,627 2,921,464 180,510 Fund Balances, End of Year $ 398,676 $ 401,447 $ 3,112,062 $ 276,988 91 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Special Revenue Funds Federal Street Grants Measure I Solid Waste Sweeping Revenues: Special assessments $ - $ - $ - $ 198,561 Intergovernmental 118,552 1,221,975 - - Charges for services - - 4,753,169 - Developer fees - - - - Fines and forfeitures - - - - Contributions from property owners - - - - Use of money and property - 33,362 - 4,824 Miscellaneous - - - - Total Revenues 118,552 1,255,337 4,753,169 203,385 Expenditures: Current: General government - - - - Public safety - - - - Public works - 35,253 4,753,169 313,808 Community development - - - - Community services 115,800 - - - Capital outlay 19,415 - - - Debt service: Interest and fiscal charges - - - - Total Expenditures 135,215 35,253 4,753,169 313,808 Excess (Deficiency)of Revenues Over(Under) Expenditures (16,663) 1,220,084 - (110,423) Other Financing Sources (Uses): Transfers in - - - - Transfers out - (1,596,906) - - Total Other Financing Sources (Uses) - (1,596,906) - - Net Change in Fund Balances (16,663) (376,822) - (110,423) Fund Balances, Beginning of Year - 2,908,083 - 390,455 Fund Balances, End of Year $ (16,663) $2,531,261 $ - $ 280,032 92 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 (CONTINUED) Special Revenue Funds Affordable Frontline Miscellaneous Housing Water Policing Grants Program Facilities Fee Revenues: Special assessments $ - $ - $ - $ 822,407 Intergovernmental 127,815 2,926,315 - - Charges for services - - - - Developer fees - - 115,369 - Fines and forfeitures - - - - Contributions from property owners - - - - Use of money and property 1,088 - 7,060 57,740 Miscellaneous - - - - Total Revenues 128,903 2,926,315 122,429 880,147 Expenditures: Current: General government - - - - Public safety 161,600 - - - Public works - - - 67,233 Community development - - 4,630 - Community services - - - - Capital outlay - - - - Debt service: Interest and fiscal charges - - - 10,783 Total Expenditures 161,600 - 4,630 78,016 Excess (Deficiency)of Revenues Over(Under) Expenditures (32,697) 2,926,315 117,799 802,131 Other Financing Sources (Uses): Transfers in - - - - Transfers out - (3,358,962) - (12,258) Total Other Financing Sources (Uses) - (3,358,962) - (12,258) Net Change in Fund Balances (32,697) (432,647) 117,799 789,873 Fund Balances, Beginning of Year 59,324 (71,439) 543,279 6,829,587 Fund Balances, End of Year $ 26,627 $ (504,086) $ 661,078 $ 7,619,460 93 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Capital Projects Special Revenue Funds Funds Tree Public Safety CFD#9 Sewer Mitigation Programs Rincon Facilities Fee Fund Fund Village Revenues: Special assessments $ 47,578 $ - $ - $ - Intergovernmental - - - - Charges for services - - - - Developer fees - 4,227 - - Fines and forfeitures - - 49,076 - Contributions from property owners - - - 167,666 Use of money and property 40,037 - 204 53,511 Miscellaneous - - - - Total Revenues 87,615 4,227 49,280 221,177 Expenditures: Current: General government - - - 3,196 Public safety - - 18 - Public works 1,871 - - - Community development - - - - Community services - - - - Capital outlay - - - - Debt service: Interest and fiscal charges - - - - Total Expenditures 1,871 - 18 3,196 Excess (Deficiency)of Revenues Over(Under) Expenditures 85,744 4,227 49,262 217,981 Other Financing Sources (Uses): Transfers in - - - - Transfers out (3,627) - (20,226) - Total Other Financing Sources (Uses) (3,627) - (20,226) - Net Change in Fund Balances 82,117 4,227 29,036 217,981 Fund Balances, Beginning of Year 3,962,649 - - 4,067,523 Fund Balances, End of Year $ 4,044,766 $ 4,227 $ 29,036 $ 4,285,504 94 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Capital Projects Funds CFD#10 Total Fairfield Governmental Ranch Funds Revenues: Special assessments $ - $ 1,078,613 Intergovernmental - 6,471,644 Charges for services - 4,753,169 Developer fees - 363,342 Fines and forfeitures - 49,076 Contributions from property owners - 167,666 Use of money and property - 339,531 Miscellaneous - 23,012 Total Revenues - 13,246,053 Expenditures: Current: General government - 6,073 Public safety - 161,618 Public works - 6,909,387 Community development - 4,630 Community services - 115,800 Capital outlay 3,616 23,031 Debt service: Interest and fiscal charges - 25,975 Total Expenditures 3,616 7,246,514 Excess (Deficiency)of Revenues Over(Under) Expenditures (3,616) 5,999,539 Other Financing Sources (Uses): Transfers in - 3,675,672 Transfers out - (6,204,579) Total Other Financing Sources (Uses) - (2,528,907) Net Change in Fund Balances (3,616) 3,470,632 Fund Balances, Beginning of Year 398,383 28,861,673 Fund Balances, End of Year $ 394,767 $ 32,332,305 95 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE SLEEPY HOLLOW ROAD IMPROVEMENT YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 73,636 $ 73,636 $ 73,636 $ - Resources (Inflows): Special assessments 10,700 10,700 10,067 (633) Use of money and property 400 400 997 597 Amounts Available for Appropriations 84,736 84,736 84,700 (36) Charges to Appropriation (Outflow): Public works 500 70,500 44,948 25,552 Total Charges to Appropriations 500 70,500 44,948 25,552 Budgetary Fund Balance,June 30 $ 84,236 $ 14,236 $ 39,752 $ 25,516 96 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE GENERAL FACILITIES FEES YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 1,775,450 $ 1,775,450 $ 1,775,450 $ - Resources (Inflows): Developer fees 216,700 216,700 87,759 (128,941) Use of money and property 3,300 3,300 13,191 9,891 Amounts Available for Appropriations 1,995,450 1,995,450 1,876,400 (119,050) Charges to Appropriation (Outflow): Public works 16,600 16,600 7,368 9,232 Total Charges to Appropriations 16,600 16,600 7,368 9,232 Budgetary Fund Balance,June 30 $ 1,978,850 $ 1,978,850 $ 1,869,032 $ (109,818) 97 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE TRAFFIC FACILITIES FEES YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 1,228,432 $ 1,228,432 $ 1,228,432 $ - Resources (Inflows): Developer fees 26,300 26,300 10,829 (15,471) Use of money and property 400 400 11,983 11,583 Transfers in 420,000 670,400 670,356 (44) Amounts Available for Appropriations 1,675,132 1,925,532 1,921,600 (3,932) Charges to Appropriation (Outflow): Public works 2,400 2,400 1,876 524 Transfers out 479,500 - - - Total Charges to Appropriations 481,900 2,400 1,876 524 Budgetary Fund Balance,June 30 $ 1,193,232 $ 1,923,132 $ 1,919,724 $ (3,408) 98 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE STORM DRAIN FACILITIES FEES YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 2,882,534 $ 2,882,534 $2,882,534 $ - Resources (Inflows): Developer fees 149,100 149,100 61,764 (87,336) Use of money and property 16,400 16,400 28,051 11,651 Transfers in - 2,120,300 2,120,250 (50) Amounts Available for Appropriations 3,048,034 5,168,334 5,092,599 (75,735) Charges to Appropriation (Outflow): Public works 12,800 12,800 6,282 6,518 Transfers out 965,300 127,700 127,702 (2) Total Charges to Appropriations 978,100 140,500 133,984 6,516 Budgetary Fund Balance,June 30 $ 2,069,934 $ 5,027,834 $4,958,615 $ (69,219) 99 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE PARKLAND FEES YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 315,176 $ 315,176 $ 315,176 $ - Resources (Inflows): Developer fees 391,400 391,400 83,394 (308,006) Use of money and property 10,700 10,700 25,866 15,166 Amounts Available for Appropriations 717,276 717,276 424,436 (292,840) Charges to Appropriation (Outflow): Public works 30,300 30,300 10,568 19,732 Debt service: Principal retirement 600,000 600,000 - 600,000 Interest and fiscal charges 16,400 16,400 15,192 1,208 Total Charges to Appropriations 646,700 646,700 25,760 620,940 Budgetary Fund Balance,June 30 $ 70,576 $ 70,576 $ 398,676 $ 328,100 100 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE TRAFFIC SIGNAL FEES YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 396,627 $ 396,627 $ 396,627 $ - Resources (Inflows): Use of money and property 3,100 3,100 5,123 2,023 Amounts Available for Appropriations 399,727 399,727 401,750 2,023 Charges to Appropriation (Outflow): Public works 300 300 303 (3) Transfers out 16,700 - - - Total Charges to Appropriations 17,000 300 303 (3) Budgetary Fund Balance,June 30 $ 382,727 $ 399,427 $ 401,447 $ 2,020 101 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE GAS TAX YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 2,921,464 $ 2,921,464 $2,921,464 $ - Resources (Inflows): Intergovernmental 1,905,100 2,045,600 1,982,530 (63,070) Use of money and property 12,800 12,800 54,145 41,345 Miscellaneous - - 23,012 23,012 Transfers in - 875,400 885,066 9,666 Amounts Available for Appropriations 4,839,364 5,855,264 5,866,217 10,953 Charges to Appropriation (Outflow): General government 1,000 1,000 2,725 (1,725) Public works 1,513,200 1,691,700 1,666,532 25,168 Capital outlay 43,500 43,500 - 43,500 Transfers out 2,391,900 2,169,800 1,084,898 1,084,902 Total Charges to Appropriations 3,949,600 3,906,000 2,754,155 1,151,845 Budgetary Fund Balance,June 30 $ 889,764 $ 1,949,264 $3,112,062 $ 1,162,798 102 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE AIR QUALITY YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 180,510 $ 180,510 $ 180,510 $ - Resources (Inflows): Intergovernmental 93,800 93,800 94,457 657 Use of money and property 3,600 3,600 2,349 (1,251) Amounts Available for Appropriations 277,910 277,910 277,316 (594) Charges to Appropriation (Outflow): General government 300 300 152 148 Public works - - 176 (176) Capital outlay - 40,000 - 40,000 Total Charges to Appropriations 300 40,300 328 39,972 Budgetary Fund Balance,June 30 $ 277,610 $ 237,610 $ 276,988 $ 39,378 103 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE FEDERAL GRANTS YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Intergovernmental 434,300 434,300 118,552 (315,748) Amounts Available for Appropriations 434,300 434,300 118,552 (315,748) Charges to Appropriation (Outflow): General government 1,200 1,200 - 1,200 Community services 162,200 162,200 115,800 46,400 Capital outlay 270,900 310,700 19,415 291,285 Total Charges to Appropriations 434,300 474,100 135,215 338,885 Budgetary Fund Balance,June 30 $ - $ (39,800) $ (16,663) $ 23,137 104 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE MEASURE I YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 2,908,083 $ 2,908,083 $2,908,083 $ - Resources (Inflows): Intergovernmental 1,151,100 1,151,100 1,221,975 70,875 Use of money and property 14,200 14,200 33,362 19,162 Amounts Available for Appropriations 4,073,383 4,073,383 4,163,420 90,037 Charges to Appropriation (Outflow): Public works 34,400 34,400 35,253 (853) Transfers out 2,469,100 3,371,700 1,596,906 1,774,794 Total Charges to Appropriations 2,503,500 3,406,100 1,632,159 1,773,941 Budgetary Fund Balance,June 30 $ 1,569,883 $ 667,283 $2,531,261 $ 1,863,978 105 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE SOLID WASTE YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Charges for services 4,720,100 4,720,100 4,753,169 33,069 Amounts Available for Appropriations 4,720,100 4,720,100 4,753,169 33,069 Charges to Appropriation (Outflow): Public works 4,720,100 4,720,100 4,753,169 (33,069) Total Charges to Appropriations 4,720,100 4,720,100 4,753,169 (33,069) Budgetary Fund Balance,June 30 $ - $ - $ - $ - 106 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE STREET SWEEPING YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 390,455 $ 390,455 $ 390,455 $ - Resources (Inflows): Special assessments 201,800 201,800 198,561 (3,239) Use of money and property 4,000 4,000 4,824 824 Amounts Available for Appropriations 596,255 596,255 593,840 (2,415) Charges to Appropriation (Outflow): Public works 315,900 325,400 313,808 11,592 Total Charges to Appropriations 315,900 325,400 313,808 11,592 Budgetary Fund Balance,June 30 $ 280,355 $ 270,855 $ 280,032 $ 9,177 107 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE FRONTLINE POLICING YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 59,324 $ 59,324 $ 59,324 $ - Resources (Inflows): Intergovernmental 100,000 100,000 127,815 27,815 Use of money and property 100 100 1,088 988 Amounts Available for Appropriations 159,424 159,424 188,227 28,803 Charges to Appropriation (Outflow): Public safety 100,400 161,600 161,600 - Total Charges to Appropriations 100,400 161,600 161,600 - Budgetary Fund Balance,June 30 $ 59,024 $ (2,176) $ 26,627 $ 28,803 108 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE MISCELLANEOUS GRANTS YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ (71,439) $ (71,439) $ (71,439) $ - Resources (Inflows): Intergovernmental 6,118,600 7,504,200 2,926,315 (4,577,885) Amounts Available for Appropriations 6,047,161 7,432,761 2,854,876 (4,577,885) Charges to Appropriation (Outflow): Transfers out 6,121,300 9,621,100 3,358,962 6,262,138 Total Charges to Appropriations 6,121,300 9,621,100 3,358,962 6,262,138 Budgetary Fund Balance,June 30 $ (74,139) $(2,188,339) $ (504,086) $ 1,684,253 109 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE AFFORDABLE HOUSING PROGRAM YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 543,279 $ 543,279 $ 543,279 $ - Resources (Inflows): Developer fees 264,000 264,000 115,369 (148,631) Use of money and property 1,600 1,600 7,060 5,460 Amounts Available for Appropriations 808,879 808,879 665,708 (143,171) Charges to Appropriation (Outflow): Community development 200 4,800 4,630 170 Total Charges to Appropriations 200 4,800 4,630 170 Budgetary Fund Balance,June 30 $ 808,679 $ 804,079 $ 661,078 $ (143,001) 110 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE WATER FACILITIES FEE YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 6,829,587 $ 6,829,587 $ 6,829,587 $ - Resources (Inflows): Special assessments 642,600 642,600 822,407 179,807 Use of money and property 27,500 27,500 57,740 30,240 Amounts Available for Appropriations 7,499,687 7,499,687 7,709,734 210,047 Charges to Appropriation (Outflow): Public works 50,200 50,200 67,233 (17,033) Debt service: Principal retirement 330,300 330,300 - 330,300 Interest and fiscal charges 9,100 9,100 10,783 (1,683) Transfers out 501,800 513,700 12,258 501,442 Total Charges to Appropriations 891,400 903,300 90,274 813,026 Budgetary Fund Balance,June 30 $ 6,608,287 $ 6,596,387 $ 7,619,460 $ 1,023,073 111 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE SEWER FACILITIES FEE YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $3,962,649 $ 3,962,649 $3,962,649 $ - Resources (Inflows): Special assessments 53,100 53,100 47,578 (5,522) Use of money and property 30,200 30,200 40,037 9,837 Amounts Available for Appropriations 4,045,949 4,045,949 4,050,264 4,315 Charges to Appropriation (Outflow): Public works 4,100 4,100 1,871 2,229 Transfers out 186,600 182,100 3,627 178,473 Total Charges to Appropriations 190,700 186,200 5,498 180,702 Budgetary Fund Balance,June 30 $3,855,249 $ 3,859,749 $4,044,766 $ 185,017 112 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE CAPITAL IMPROVEMENT YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ - $ - $ - $ - Resources (Inflows): Contributions from property owners 334,700 2,030,300 317,330 (1,712,970) Contributions - 1,236,400 923,698 (312,702) Transfers in 22,682,100 22,179,500 5,868,939 (16,310,561) Amounts Available for Appropriations 23,016,800 25,446,200 7,109,967 (18,336,233) Charges to Appropriation (Outflow): Public works 5,025,299 5,025,299 5,025,299 - Capital outlay 17,991,501 20,420,201 2,084,668 18,335,533 Total Charges to Appropriations 23,016,800 25,445,500 7,109,967 18,335,533 Budgetary Fund Balance,June 30 $ - $ 700 $ - $ (700) 113 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE CFD#9 RINCON VILLAGE YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $4,067,523 $ 4,067,523 $4,067,523 $ - Resources (Inflows): Contributions 185,200 185,200 167,666 (17,534) Use of money and property 30,600 30,600 53,511 22,911 Amounts Available for Appropriations 4,283,323 4,283,323 4,288,700 5,377 Charges to Appropriation (Outflow): General government - - 3,196 (3,196) Total Charges to Appropriations - - 3,196 (3,196) Budgetary Fund Balance,June 30 $4,283,323 $ 4,283,323 $4,285,504 $ 2,181 114 CITY OF CHINO HILLS BUDGETARY COMPARISON SCHEDULE CFD#10 FAIRFIELD RANCH YEAR ENDED JUNE 30,2015 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 398,383 $ 398,383 $ 398,383 $ - Resources (Inflows): Amounts Available for Appropriations 398,383 398,383 398,383 - Charges to Appropriation (Outflow): Capital outlay 351,600 351,600 3,616 347,984 Total Charges to Appropriations 351,600 351,600 3,616 347,984 Budgetary Fund Balance,June 30 $ 46,783 $ 46,783 $ 394,767 $ 347,984 115 City of Chino Hills This page intentionally left blank. 116 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of services provided by one department of a government to another. Internal Service Funds include the followings: Equipment Maintenance Fund — To account for repair, replacement and maintenance of City-owned vehicles and equipment. Information Technoloav Fund — To account for repair, replacement and maintenance of City-owned information technology systems and telecommunications hardware and software. 117 CITY OF CHINO HILLS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2015 Governmental Activities-Internal Service Funds Equipment Information Maintenance Technology Totals Assets: Current: Cash and investments $ 3,957,162 $ 212,506 $ 4,169,668 Receivables: Accounts 408 - 408 Accrued interest 717 18 735 Due from other agencies - 24,028 24,028 Total Current Assets 3,958,287 236,552 4,194,839 Noncurrent: Capital assets-net of accumulated depreciation 1,813,215 254,738 2,067,953 Total Noncurrent Assets 1,813,215 254,738 2,067,953 Total Assets $ 5,771,502 $ 491,290 $ 6,262,792 Liabilities and Net Position: Liabilities: Current: Accounts payable $ 355,206 $ 115,005 $ 470,211 Accrued liabilities 14,418 18,594 33,012 Compensated absences 500 - 500 Capital leases - 11,429 11,429 Total Current Liabilities 370,124 145,028 515,152 Noncurrent: Compensated absences 16,312 20,040 36,352 Capital leases - 9,274 9,274 Total Noncurrent Liabilities 16,312 29,314 45,626 Total Liabilities 386,436 174,342 560,778 Net Position: Net investment in capital assets 1,813,215 234,035 2,047,250 Unrestricted 3,571,851 82,913 3,654,764 Total Net Position 5,385,066 316,948 5,702,014 Total Liabilities and Net Position $ 5,771,502 $ 491,290 $ 6,262,792 118 CITY OF CHINO HILLS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30,2015 Governmental Activities-Internal Service Funds Equipment Information Maintenance Technology Totals Operating Revenues: Charges for services $ 1,155,251 $ 1,411,774 $ 2,567,025 Other 465 - 465 Total Operating Revenues 1,155,716 1,411,774 2,567,490 Operating Expenses: Salaries and benefits 316,341 418,009 734,350 Professional and contractual services 6,481 483,122 489,603 Repairs and maintenance 205,181 127,698 332,879 Service and supplies 218,081 39,448 257,529 Administrative and general expenses 104,518 146,840 251,358 Utility services 888 1,485 2,373 Depreciation and amortization 457,315 60,978 518,293 Total Operating Expenses 1,308,805 1,277,580 2,586,385 Operating Income(Loss) (153,089) 134,194 (18,895) Nonoperating Revenues (Expenses): Interest revenue 48,652 1,113 49,765 Interest expense - (1,611) (1,611) Gain (loss)on disposal of capital assets 15,000 (6,100) 8,900 Total Nonoperating Revenues(Expenses) 63,652 (6,598) 57,054 Income (Loss)Before Transfers and Contributions (89,437) 127,596 38,159 Capital contributions 280,936 - 280,936 Transfers in - 69,596 69,596 Changes in Net Position 191,499 197,192 388,691 Net Position: Beginning of Year 5,193,567 119,756 5,313,323 End of Fiscal Year $ 5,385,066 $ 316,948 $ 5,702,014 119 CITY OF CHINO HILLS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30,2015 Governmental Activities-Internal Service Funds Equipment Information Maintenance Technology Totals Cash Flows from Operating Activities: Cash received from customers and users $ 1,155,677 $ 1,392,013 $ 2,547,690 Cash paid to suppliers for goods and services (104,564) (589,964) (694,528) Cash paid to employees for services (416,347) (570,696) (987,043) Net Cash Provided(Used) by Operating Activities 634,766 231,353 866,119 Cash Flows from Non-Capital Financing Activities: Cash transfers in - 69,596 69,596 Net Cash Provided (Used) by Non-Capital Financing Activities - 69,596 69,596 Cash Flows from Capital and Related Financing Activities: Proceeds from capital asset disposals 15,000 - 15,000 Capital contributions 280,936 - 280,936 Acquisition and construction of capital assets (816,292) (187,287) (1,003,579) Principal paid on capital debt - (10,754) (10,754) Interest paid on capital lease - (1,611) (1,611) Net Cash Provided (Used) by Capital and Related Financing Activities (520,356) (199,652) (720,008) Cash Flows from Investing Activities: Interest received 48,795 1,118 49,913 Net Cash Provided (Used) by Investing Activities 48,795 1,118 49,913 Net Increase(Decrease) in Cash and Cash Equivalents 163,205 102,415 265,620 Cash and Cash Equivalents at Beginning of Year 3,793,957 110,091 3,904,048 Cash and Cash Equivalents at End of Year $ 3,957,162 $ 212,506 $ 4,169,668 Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating income(loss) $ (153,089) $ 134,194 $ (18,895) Adjustments to reconcile operating income(loss) net cash provided (used) by operating activities: Depreciation 457,315 60,978 518,293 (Increase)decrease in accounts receivable (39) - (39) (Increase)decrease in due from other agencies - (19,761) (19,761) Increase(decrease)in accounts payable 326,067 61,789 387,856 Increase(decrease)in accrued liabilities 1,659 (514) 1,145 Increase(decrease)in compensated absences 2,853 (5,333) (2,480) Total Adjustments 787,855 97,159 885,014 Net Cash Provided (Used) by Operating Activities $ 634,766 $ 231,353 $ 866,119 Non-Cash Investing, Capital, and Financing Activities: There was no noncash investing, capital, or financing activities. 120 AGENCY FUNDS Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments and/or funds. Agency Funds include the followings: AD #1994 —To account for the collection of assessments from owners of property within the Assessment District 1994, and for the remittance of such assessments to the bondholders as required by the California 1915 Improvements Act. CFD #1 Rolling Ridge — To account for the collection of assessments from owners of property within the Community Facilities District No. 1 (Rolling Ridge), and for the remittance of such assessments to the bondholders as required by the Mello-Roos Community facilities Act of 1982. CFD #2 Los Ranchos — To account for the collection of assessments from owners of property within the Community Facilities District No. 2 (Los Ranchos), and for the remittance of such assessments to the bondholders as required by the Mello-Roos Community facilities Act of 1982. CFD #4 The Oaks — To account for the collection of assessments from owners of property within the Community Facilities District No. 4 (The Oaks), and for the remittance of such assessments to the bondholders as required by the Mello-Roos Community facilities Act of 1982. CFD #5 Rincon Village —To account for the collection of assessments from owners of property within the Community Facilities District No. 5 (Rincon Village), and for the remittance of such assessments to the bondholders as required by the Mello-Roos Community facilities Act of 1982. CFD #6 Carbon Canyon — To account for the collection of assessments from owners of property within the Community Facilities District No. 6 (Carbon Canyon), and for the remittance of such assessments to the bondholders as required by the Mello-Roos Community facilities Act of 1982. CFD #8 Butterfield — To account for the collection of assessments from owners of property within the Community Facilities District No. 8 (Butterfield), and for the remittance of such assessments to the bondholders as required by the Mello-Roos Community facilities Act of 1982. CFD #9 Rincon Village —To account for the collection of assessments from owners of property within the Community Facilities District No. 9 (Rincon Village), and for the remittance of such assessments to the bondholders as required by the Mello-Roos Community facilities Act of 1982. CFD #10 Fairfield Ranch — To account for the collection of assessments from owners of property within the Community Facilities District No. 10 (Fairfield Ranch), and for the remittance of such assessments to the bondholders as required by the Mello-Roos Community facilities Act of 1982. General Agency Fund — To account for the collection of various fees/deposits from developers for community development projects, and for the remittance of such fees/deposits to the City as costs associated to the projects incurred. RAD 10-1 — To account for the collection of assessments from owners of property within the Reassessment District No. 10-1, and for the remittance of such assessments to the bondholders as required by the California 1915 Improvements Act. 121 CITY OF CHINO HILLS COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS JUNE 30, 2015 CFD#1 CFD#2 Los AD # 1994 Rolling Ridge Ranchos Assets: Pooled cash and investments $ 319,701 $ 360,131 $ 5,157,600 Receivables: Accrued interest 126 68 984 Special assessments - 2,216 19,031 Restricted assets: Cash and investments with fiscal agents - 721,303 1,676,080 Total Assets $ 319,827 $ 1,083,718 $ 6,853,695 Liabilities: Accounts payable $ 45 $ 24 $ 356 Deposits payable - - - Funds held for others 319,782 1,083,694 6,853,339 Due to Inland Empire Utility Agency - - - Total Liabilities $ 319,827 $ 1,083,718 $ 6,853,695 122 CITY OF CHINO HILLS COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS JUNE 30, 2015 (CONTINUED) CFD#6 CFD#4 The CFD#5 Carbon Oaks Rincon Village Canyon Assets: Pooled cash and investments $ 9,892,766 $ 2,708,436 $ 1,241,107 Receivables: Accrued interest 1,816 498 228 Special assessments 277 16,931 4,432 Restricted assets: Cash and investments with fiscal agents 421,614 1,502,976 201,981 Total Assets $ 10,316,473 $ 4,228,841 $ 1,447,748 Liabilities: Accounts payable $ 656 $ 180 $ 82 Deposits payable - - - Funds held for others 10,315,817 4,228,661 1,447,666 Due to Inland Empire Utility Agency - - - Total Liabilities $ 10,316,473 $ 4,228,841 $ 1,447,748 123 CITY OF CHINO HILLS COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS JUNE 30, 2015 CFD#8 CFD#9 CFD#10 Butterfield Rincon Village Fairfield Ranch Assets: Pooled cash and investments $ 2,092,392 $ 716,068 $ 859,263 Receivables: Accrued interest 385 132 158 Special assessments 3,878 17,673 5,127 Restricted assets: Cash and investments with fiscal agents 187,961 491,500 981,750 Total Assets $ 2,284,616 $ 1,225,373 $ 1,846,298 Liabilities: Accounts payable $ 139 $ 57 $ 57 Deposits payable - - - Funds held for others 2,284,477 1,225,316 1,846,241 Due to Inland Empire Utility Agency - - - Total Liabilities $ 2,284,616 $ 1,225,373 $ 1,846,298 124 CITY OF CHINO HILLS COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS JUNE 30, 2015 General Agency Fund RAD 10-1 Totals Assets: Pooled cash and investments $ 6,503,187 $ 427,110 $ 30,277,761 Receivables: Accrued interest - 78 4,473 Special assessments - 3,406 72,971 Restricted assets: Cash and investments with fiscal agents - 350,500 6,535,665 Total Assets $ 6,503,187 $ 781,094 $ 36,890,870 Liabilities: Accounts payable $ 78,473 $ 38 $ 80,107 Deposits payable 3,319,533 - 3,319,533 Funds held for others 110,204 781,056 30,496,253 Due to Inland Empire Utility Agency 2,994,977 - 2,994,977 Total Liabilities $ 6,503,187 $ 781,094 $ 36,890,870 125 CITY OF CHINO HILLS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30,2015 Balance Balance 7/1/2014 Additions Deductions 6/30/2015 AD#1980 Assets: Pooled cash and investments $ 14,486 $ 158 $ 14,644 $ - Receivables: Accrued interest 3 - 3 - Total Assets $ 14,489 $ 158 $ 14,647 $ - Liabilities: Accounts payable $ 1 $ - $ 1 $ - Funds held for others 14,488 158 14,646 - Total Liabilities $ 14,489 $ 158 $ 14,647 $ - AD #1994 Assets: Pooled cash and investments $ 1,228,287 $ 1,251,313 $ 2,159,899 $ 319,701 Receivables: Accrued interest 285 126 285 126 Total Assets $ 1,228,572 $ 1,251,439 $ 2,160,184 $ 319,827 Liabilities: Accounts payable $ 79 $ 45 $ 79 $ 45 Funds held for others 1,228,493 1,251,393 2,160,104 319,782 Total Liabilities $ 1,228,572 $ 1,251,438 $ 2,160,183 $ 319,827 CFD#1 Rolling Ridge Assets: Pooled cash and investments $ 905,255 $ 438,599 $ 983,723 $ 360,131 Receivables: Accrued interest 211 68 211 68 Special assessments 11,030 2,216 11,030 2,216 Restricted assets: Cash and investments with fiscal agents 721,303 704,696 704,696 721,303 Total Assets $ 1,637,799 $ 1,145,579 $ 1,699,660 $ 1,083,718 Liabilities: Accounts payable $ 59 $ 9,719 $ 9,754 $ 24 Funds held for others 1,637,740 1,135,860 1,689,906 1,083,694 Total Liabilities $ 1,637,799 $ 1,145,579 $ 1,699,660 $ 1,083,718 CFD#2 Los Ranchos Assets: Pooled cash and investments $ 5,384,899 $ 2,720,857 $ 2,948,156 $ 5,157,600 Receivables: Accrued interest 1,248 984 1,248 984 Special assessments 32,152 19,031 32,152 19,031 Restricted assets: Cash and investments with fiscal agents 1,676,080 2,172,691 2,172,691 1,676,080 Total Assets $ 7,094,379 $ 4,913,563 $ 5,154,247 $ 6,853,695 Liabilities: Accounts payable $ 348 $ 15,478 $ 15,470 $ 356 Funds held for others 7,094,031 4,898,085 5,138,777 6,853,339 Total Liabilities $ 7,094,379 $ 4,913,563 $ 5,154,247 $ 6,853,695 126 CITY OF CHINO HILLS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30,2015 (CONTINUED) Balance Balance 7/1/2014 Additions Deductions 6/30/2015 CFD#4 The Oaks Assets: Pooled cash and investments $ 10,278,607 $ 424,805 $ 810,646 $ 9,892,766 Receivables: Accrued interest 2,383 1,816 2,383 1,816 Special assessments 8,777 277 8,777 277 Restricted assets: Cash and investments with fiscal agents 421,614 530,933 530,933 421,614 Total Assets $ 10,711,381 $ 957,831 $ 1,352,739 $ 10,316,473 Liabilities: Accounts payable $ 664 $ 8,190 $ 8,198 $ 656 Funds held for others 10,710,717 949,640 1,344,540 10,315,817 Total Liabilities $ 10,711,381 $ 957,830 $ 1,352,738 $ 10,316,473 CFD#5 Rincon Village Assets: Pooled cash and investments $ 2,724,018 $ 2,859,211 $ 2,874,793 $ 2,708,436 Receivables: Accrued interest 633 498 633 498 Special assessments 34,921 16,931 34,921 16,931 Restricted assets: Cash and investments with fiscal agents 1,502,976 1,688,563 1,688,563 1,502,976 Total Assets $ 4,262,548 $ 4,565,203 $ 4,598,910 $ 4,228,841 Liabilities: Accounts payable $ 177 $ 14,215 $ 14,212 $ 180 Funds held for others 4,262,371 4,550,987 4,584,697 4,228,661 Total Liabilities $ 4,262,548 $ 4,565,202 $ 4,598,909 $ 4,228,841 CFD#6 Carbon Canyon Assets: Pooled cash and investments $ 1,179,226 $ 315,012 $ 253,131 $ 1,241,107 Receivables: Accrued interest 273 228 273 228 Special assessments 3,802 4,432 3,802 4,432 Restricted assets: Cash and investments with fiscal agents 203,786 190,513 192,318 201,981 Total Assets $ 1,387,087 $ 510,185 $ 449,524 $ 1,447,748 Liabilities: Accounts payable $ 76 $ 3,520 $ 3,514 $ 82 Funds held for others 1,387,011 506,666 446,011 1,447,666 Total Liabilities $ 1,387,087 $ 510,186 $ 449,525 $ 1,447,748 127 CITY OF CHINO HILLS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30,2015 Balance Balance 7/1/2014 Additions Deductions 6/30/2015 CFD#8 Butterfield Assets: Pooled cash and investments $ 2,143,822 $ 322,543 $ 373,973 $ 2,092,392 Receivables: Accrued interest 497 385 497 385 Special assessments 3,802 3,878 3,802 3,878 Restricted assets: Cash and investments with fiscal agents 284,272 189,877 286,188 187,961 Total Assets $ 2,432,393 $ 516,683 $ 664,460 $ 2,284,616 Liabilities: Accounts payable $ 139 $ 7,670 $ 7,670 $ 139 Funds held for others 2,432,254 509,014 656,791 2,284,477 Total Liabilities $ 2,432,393 $ 516,684 $ 664,461 $ 2,284,616 CFD#9 Rincon Village Assets: Pooled cash and investments $ 700,049 $ 797,561 $ 781,542 $ 716,068 Receivables: Accrued interest 163 132 163 132 Special assessments 9,777 17,673 9,777 17,673 Restricted assets: Cash and investments with fiscal agents 491,500 562,850 562,850 491,500 Total Assets $ 1,201,489 $ 1,378,216 $ 1,354,332 $ 1,225,373 Liabilities: Accounts payable $ 46 $ 12,761 $ 12,750 $ 57 Funds held for others 1,201,443 1,365,454 1,341,581 1,225,316 Total Liabilities $ 1,201,489 $ 1,378,215 $ 1,354,331 $ 1,225,373 CFD#10 Fairfield Ranch Assets: Pooled cash and investments $ 822,037 $ 985,454 $ 948,228 $ 859,263 Receivables: Accrued interest 191 158 191 158 Special assessments 5,254 5,127 5,254 5,127 Restricted assets: Cash and investments with fiscal agents 981,750 896,025 896,025 981,750 Total Assets $ 1,809,232 $ 1,886,764 $ 1,849,698 $ 1,846,298 Liabilities: Accounts payable $ 53 $ 5,774 $ 5,770 $ 57 Funds held for others 1,809,179 1,880,990 1,843,928 1,846,241 Total Liabilities $ 1,809,232 $ 1,886,764 $ 1,849,698 $ 1,846,298 128 CITY OF CHINO HILLS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30,2015 (CONTINUED) Balance Balance 7/1/2014 Additions Deductions 6/30/2015 General Agency Fund Assets: Pooled cash and investments $ 5,669,204 $ 4,186,203 $ 3,352,220 $ 6,503,187 Total Assets $ 5,669,204 $ 4,186,203 $ 3,352,220 $ 6,503,187 Liabilities: Accounts payable $ 1,084,900 $ 595,871 $ 1,602,298 $ 78,473 Deposits payable 1,974,288 4,610,699 3,265,454 3,319,533 Funds held for others - 110,204 - 110,204 Due to Inland Empire Utility Agency 2,610,016 587,139 202,178 2,994,977 Total Liabilities $ 5,669,204 $ 5,903,913 $ 5,069,930 $ 6,503,187 RAD 10-1 Assets: Pooled cash and investments $ 625,671 $ 465,139 $ 663,700 $ 427,110 Receivables: Accrued interest 139 78 139 78 Special assessments 4,979 3,406 4,979 3,406 Restricted assets: Cash and investments with fiscal agents 350,500 626,628 626,628 350,500 Total Assets $ 981,289 $ 1,095,251 $ 1,295,446 $ 781,094 Liabilities: Accounts payable $ 229 $ 14,106 $ 14,297 $ 38 Funds held for others 981,060 1,081,145 1,281,149 781,056 Total Liabilities $ 981,289 $ 1,095,251 $ 1,295,446 $ 781,094 Totals-All Agencv Funds Assets: Pooled cash and investments $ 31,675,561 $ 14,766,855 $16,164,655 $ 30,277,761 Receivables: Accrued interest 6,026 4,473 6,026 4,473 Special assessments 114,494 72,971 114,494 72,971 Restricted assets: Cash and investments with fiscal agents 6,633,781 7,562,776 7,660,892 6,535,665 Total Assets $ 38,429,862 $22,407,075 $23,946,067 $ 36,890,870 Liabilities: Accounts payable $ 1,086,771 $ 687,349 $ 1,694,013 $ 80,107 Deposits payable 1,974,288 4,610,699 3,265,454 3,319,533 Funds held for others 32,758,787 18,239,596 20,502,130 30,496,253 Due to Inland Empire Utility Agency 2,610,016 587,139 202,178 2,994,977 Total Liabilities $ 38,429,862 $24,124,783 $25,663,775 $ 36,890,870 129 City of Chino Hills This page intentionally left blank. 130 &yin() Hi117 Statistical Section City of Chino Hills This page intentionally left blank. 131 Statistical Section This part of the City of Chino Hills'comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Pape Financial Trends - These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. 1 Net Position by Component 134 2 Changes in Net Position 135 3 Fund Balances of Governmental Funds 137 4 Changes in Fund Balances of Governmental Funds 138 Revenue Capacity - These schedules contain information to help the reader assess the factors affecting the City's ability to generate its water revenue,property, and sales taxes. 5 Water Revenue-Charges for Services 140 6 Assessed Value and Estimated Actual Value of Taxable Property 141 7 Direct and Overlapping Property Tax Rates 142 8 Principal Property Tax Payers 143 9 Property Tax Levies and Collections 144 Debt Capacity - These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 10 Ratios of Outstanding Debt by Type 146 11 Ratios of General Bonded Debt Outstanding 147 12 Direct and Overlapping Governmental Activities Debt 148 13 Legal Debt Margin Information 149 14 Pledged-Revenue Coverage 150 Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. 15 Demographic and Economic Statistics 152 16 Principal Employers 153 Operating Information - These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs. 17 Full-Time-Equivalent City Government Employees by Function/Program 156 18 Operating Indicators by Function/Program 157 19 Capital Assets Statistics by Function/Program 158 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented Statement 34 in 2003;schedules presenting government-wide information include information beginning in that year. 132 Financial Trends W W Schedule 1 City of Chino Hills Net Position By Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Government activities Net investment in capital assets $ 196,572,923 $ 244,840,301 $ 276,239,662 $ 281,960,122 $ 269,350,904 $ 260,831,157 $ 261,743,969 $ 255,042,440 $ 258,323,150 $249,001,625 Restricted 26,951,415 71,509,169 32,100,028 25,515,988 29,238,969 28,772,733 29,588,207 26,542,013 39,055,709 40,314,648 Unrestricted 27,534,630 24,688,669 45,419,424 25,998,601 22,734,986 27,033,352 20,099,061 16,580,294 6,485,403 (12,698,1801 Total governmental activities net position $ 251,058,968 $ 341,038,139 $ 353,759,114 $ 333,474,711 $ 321,324,859 $ 316,637,242 $ 311,431,237 $ 298,164,747 $ 303,864,262 $276,618,093 Business-type activities Net investment in capital assets $ 101,715,882 $ 104,474,205 $ 111,270,111 $ 115,321,588 $ 112,236,094 $ 112,137,003 $ 110,459,489 $ 105,233,109 $ 107,786,808 $100,578,841 Restricted 901,348 902,855 895,629 891,908 891,788 891,788 891,788 4,677,531 4,677,531 1,120,375 Unrestricted 54,864,729 61,284,270 76,600,187 75,891,932 77,050,459 61,421,913 65,305,916 70,842,686 74,704,941 101,977,727 Total business-type activities net position $ 157,481,959 $ 166,661,330 $ 188,765,927 $ 192,105,428 $ 190,178,341 $ 174,450,704 $ 176,657,193 $ 180,753,326 $ 187,169,280 $203,676,943 Primary government Net investment in capital assets $ 298,288,805 $ 349,314,506 $ 387,509,773 $ 397,281,710 $ 381,586,998 $ 372,968,160 $ 372,203,458 $ 360,275,549 $ 366,109,958 $349,580,466 Restricted 27,852,763 72,412,024 32,995,657 26,407,896 30,130,757 29,664,521 30,479,995 31,219,544 43,733,240 41,435,023 Unrestricted 82,399,359 85,972,939 122,019,611 101,890,533 99,785,445 88,455,265 85,404,977 87,422,980 81,190,344 89,279,547 Total primary government activities net position $ 408,540,927 $ 507,699,469 $ 542,525,041 $ 525,580,139 $ 511,503,200 $ 491,087,946 $ 488,088,430 $ 478,918,073 $ 491,033,542 $480,295,036 W Schedule 2 City of Chino Hills Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Expenses Governmental Activities: General government $ 5,271,426 $ 6,030,186 $ 7,361,372 $ 10,579,750 $ 9,614,408 $ 8,966,318 $ 10,796,216 $ 12,681,538 $ 10,724,167 $ 7,456,698 Public safety 7,709,721 9,066,406 10,182,888 11,555,310 11,676,798 11,455,829 11,776,645 12,433,463 11,232,499 11,759,297 Public works 23,693,162 31,061,116 29,007,194 34,757,045 28,555,064 40,156,027 30,528,964 31,123,891 32,569,871 36,612,361 Community development 3,077,001 4,233,528 2,818,026 10,683,874 4,211,927 5,057,949 2,097,640 3,241,108 3,235,758 4,211,200 Community services 3,191,791 3,714,175 4,347,447 4,812,362 4,796,904 4,651,993 4,702,555 4,741,588 4,996,597 6,658,170 Interest on long-term debt 994,463 1,567,850 2,264,125 1,928,581 1,329,331 1,272,852 1,090,459 1,080,370 1,077,310 971,895 Total Governmental Activities expenses 43,937,564 55,673,261 55,981,052 74,316,922 60,184,432 71,560,968 60,992,479 65,301,958 63,836,202 67,669,621 Business-Type Activities: Water utility 14,369,015 16,050,154 17,942,005 20,469,370 23,239,765 20,834,162 21,540,857 22,337,387 21,634,599 10,932,290 Sewer utility 4,285,136 4,564,235 4,968,864 5,797,290 5,867,079 6,209,880 6,398,875 6,746,884 7,136,383 7,812,499 Total Business-Type Activities Expenses 18,654,151 20,614,389 22,910,869 26,266,660 29,106,844 27,044,042 27,939,732 29,084,271 28,770,982 18,744,789 Total Primary Government Expenses $ 62,591,715 $ 76,287,650 $ 78,891,921 $ 100,583,582 $ 89,291,276 $ 98,605,010 $ 88,932,211 $ 94,386,229 $ 92,607,184 $ 86,414,410 Program Revenues Governmental Activities: Charges for services: General government $ 5,096,254 $ 5,613,725 $ 5,776,175 $ 5,881,060 $ 5,962,565 $ 4,487,857 $ 4,657,938 $ 5,427,630 $ 6,256,739 $ 9,328,173 Cri Public safety 1,180,499 947,446 672,677 631,906 637,055 600,952 562,197 497,527 504,866 542,578 Ul Public works 4,746,512 4,718,496 4,892,044 4,836,932 4,876,544 6,824,803 6,932,375 7,226,137 13,224,578 13,051,322 Community development 2,070,238 1,946,325 2,058,372 1,071,103 704,708 778,031 619,127 749,902 1,301,891 2,723,488 Community services 975,332 1,071,833 1,125,427 1,204,544 1,079,171 1,191,777 1,163,550 1,216,579 1,314,795 1,414,666 Operating Contributions and Grants 5,599,718 1,656,858 5,607,412 6,508,561 6,599,618 4,706,518 6,283,871 4,460,740 3,167,809 3,724,886 Capital Contributions and Grants 23,623,731 83,790,316 26,719,831 9,217,276 10,147,915 9,252,562 12,766,924 9,032,012 17,006,372 8,992,594 Total Governmental Activities Program Revenues 43,292,284 99,744,999 46,851,938 29,351,382 30,007,576 27,842,500 32,985,982 28,610,527 42,777,050 39,777,707 Business-Type Activities: Charges for services: Water utility 16,341,865 17,568,215 18,170,451 18,865,858 18,155,780 18,068,634 20,922,012 23,942,745 26,896,617 27,208,741 Sewer utility 4,404,840 4,688,511 4,838,131 5,311,713 5,483,049 5,490,532 5,553,029 5,870,168 6,241,264 6,522,726 Capital Contributions and Grants 2,803,533 5,122,942 11,031,613 5,609,994 267,792 - 323,789 27,756 - 10,770 Total Business-Type Activities Program Revenues 23,550,238 27,379,668 34,040,195 29,787,565 23,906,621 23,559,166 26,798,830 29,840,669 33,137,881 33,742,237 Total Primary Government Program Revenues $ 66,842,522 $ 127,124,667 $ 80,892,133 $ 59,138,947 $ 53,914,197 $ 51,401,666 $ 59,784,812 $ 58,451,196 $ 75,914,931 $ 73,519,944 Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Net(Expense)/Revenue Governmental Activities $ (645,280) $ 44,071,738 $ (9,129,114) $ (44,965,540) $ (30,176,856) $ (43,718,468) $ (28,006,497) $ (36,691,431) $ (21,059,152) $ (27,891,914) Business-Type Activities 4,896,087 6,765,279 11,129,326 3,520,905 (5,200,223) (3,484,876) (1,140,902) 756,398 4,366,899 14,997,448 Total primary Government Net Expense $ 4,250,807 $ 50,837,017 $ 2,000,212 $ (41,444,635) $ (35,377,079) $ (47,203,344) $ (29,147,399) $ (35,935,033) $ (16,692,253) $ (12,894,466) General Revenues and Other Charges in Net Position Governmental Activities: Taxes: Property taxes,levied for general purpose $ 7,696,773 $ 9,059,550 $ 9,854,421 $ 10,314,989 $ 10,026,487 $ 10,192,744 $ 10,236,250 $ 10,512,688 $ 11,009,485 $ 11,583,735 Sales taxes 4,991,352 5,396,890 5,458,545 5,984,767 5,907,670 6,422,617 6,670,479 6,875,104 7,002,758 7,530,159 Franchise taxes 2,047,801 2,174,127 2,133,061 2,447,581 2,410,856 2,039,246 2,127,570 2,233,274 2,312,330 2,381,049 Other taxes 645,671 949,884 878,910 720,461 920,207 925,663 966,260 1,092,271 1,301,656 1,366,301 Intergovernmental,unrestricted: Motor Vehicle In Lieu-unrestricted 536,507 421,191 348,740 268,308 231,590 361,339 39,069 40,482 33,503 32,363 Use of money and property 3,528,476 6,722,699 6,929,444 2,753,401 1,598,863 1,454,225 1,324,713 638,787 1,377,025 1,542,399 Gain(loss)on sale of capital assets - 15,421 (4,172,567) - - 5,645 381,015 - 220 3,923 Other revenues and transfers 412,136 411,950 419,535 2,191,630 936,547 1,064,712 - 1,916,363 2,484,754 1,498,097 Total Governmental Activities 19,858,716 25,151,712 21,850,089 24,681,137 22,032,220 22,466,191 21,745,356 23,308,969 25,521,731 25,938,026 Business-Type Activities: Use of money and property 1,653,347 2,598,146 2,636,760 1,510,927 929,857 372,899 311,535 94,366 688,980 774,420 Gain on investment in joint venture - - - - - - - - - - Gain on sale of assets 11,747 7,010 - - - - - - - - Loss in investment in joint venture (390,308) - - - - - - - - - Other revenues and transfers - 47 - (1,692,331) 2,343,279 3,949,000 4,026,926 3,589,823 1,360,075 735,795 Contributions - - - - - - - - - - W Total Business-Type Activities 1,274,786 2,605,203 2,636,760 (181,404) 3,273,136 4,321,899 4,338,461 3,684,189 2,049,055 1,510,215 Total Primary Government $ 21,133,502 $ 27,756,915 $ 24,486,849 $ 24,499,733 $ 25,305,356 $ 26,788,090 $ 26,083,817 26,993,158 27,570,786 27,448,241 Changes in Net Position Governmental Activities $ 19,213,436 $ 69,223,450 $ 12,720,975 $ (20,284,403) $ (8,144,636) $ (21,252,277) $ (6,261,141) (13,382,462) 4,462,579 (1,953,888) Business-Type Activities 6,170,873 9,370,482 13,766,086 3,339,501 (1,927,087) 837,023 3,197,559 4,440,587 6,415,954 16,507,663 Total Primary Government $ 25,384,309 $ 78,593,932 $ 26,487,061 $ (16,944,902) $ (10,071,723) $ (20,415,254) $ (3,063,582) $ (8,941,875) $ 10,878,533 $ 14,553,775 Schedule 3 City of Chino Hills Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Fund Reserved $ 571,579 $ 825,811 $ 764,706 $ 6,349,837 $17,831,272 $ - $ - $ - $ - $ - Unreserved 14,600,992 40,400,164 40,886,532 14,803,786 2,345,226 - - - - - Nonspendable - - - - - - 28,262 216,615 87,933 518,432 Restricted - - - - - 4,998,291 4,996,060 5,452,279 5,269,593 3,352,558 Committed - - - - - 16,050,340 14,424,090 12,932,490 14,164,391 16,292,529 Assigned - - - - - 843,616 1,644,313 1,719,090 1,617,555 1,947,844 Total General Fund $15,172,571 $41,225,975 $41,651,238 $21,153,623 $20,176,498 $21,892,247 $21,092,725 $20,320,474 $ 21,139,472 $ 22,111,363 All other governmental funds Reserved $18,954,928 $70,162,019 $30,945,202 $ 9,248,464 $15,727,160 $ - $ - $ - $ - $ - Unreserved,reported in: Special Revenue Funds 23,735,877 16,470,009 15,685,432 16,629,699 13,297,242 - - - - - Capital Project Fund (6,848,976) (15,861,558) (15,420,655) (1,245,728) (926,552) - - - - - Nonspendable - - - - - 10,219,315 9,646,249 8,715,323 - - Ca Restricted - - - - - 23,774,442 24,592,147 21,089,734 33,786,116 36,962,090 v Committed - - - - - - - - - - Assigned - - - - - - - - - - Unassigned - - - - - (3,811,871) (9,227,775) (8,265,078) (7,494,821) (7,970,786) Total all other governmental funds $35,841,829 $70,770,470 $31,209,979 $24,632,435 $28,097,850 $30,181,886 $25,010,621 $21,539,979 $ 26,291,295 $ 28,991,304 Schedule 4 City of Chino Hills Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenues: Taxes $15,028,374 $16,974,524 $ 17,908,191 $ 18,751,902 $18,888,204 $ 19,487,208 $ 19,964,017 $ 20,730,381 $ 21,686,794 $ 22,624,279 Special Assessments 5,371,287 5,468,821 5,460,976 5,542,087 5,633,526 5,583,774 5,607,189 5,610,517 5,624,722 6,464,550 Licenses and permits 2,440,976 2,136,301 2,058,372 1,071,103 704,708 775,396 616,552 748,552 1,301,564 1,528,812 Intergovernmental 6,043,995 5,799,254 5,708,213 5,180,627 9,200,512 5,139,364 6,278,950 5,433,206 7,918,110 6,585,706 Charges for services 10,678,498 11,411,177 11,680,879 12,074,131 12,089,281 8,045,333 8,025,562 13,235,670 14,778,998 18,899,986 Development fees 4,115,661 5,085,905 3,625,482 1,128,996 490,784 399,643 370,241 387,930 7,018,831 930,066 Contribution from property owners 14,175,866 67,104,258 10,119,918 2,484,988 1,090,164 5,323,963 5,526,955 2,039,554 4,901,472 484,996 Fines and forfeiture 585,743 567,143 660,764 620,764 626,154 590,108 553,343 487,636 497,059 533,483 Contributions 176,417 198,192 416,186 163,876 2,234,046 Use of money and property 3,415,811 6,527,986 6,725,920 2,629,808 1,533,085 1,967,098 5,597,565 642,015 1,329,709 1,492,634 Miscellaneous 1,003,344 1,955,234 1,738,161 1,350,624 2,033,235 1,849,580 999,636 2,001,482 2,084,928 1,517,224 Total revenues 62,859,555 123,030,603 65,686,876 50,835,030 52,289,653 49,337,884 53,738,202 51,733,129 67,306,063 63,295,782 Expenditures: Current: General government 4,614,084 5,485,568 6,818,907 7,915,221 7,923,217 7,312,478 8,040,290 9,814,578 9,213,715 9,484,876 Public safety 7,702,276 9,058,797 10,172,046 11,413,644 11,402,849 11,181,880 11,507,388 12,168,998 10,967,517 11,494,913 W Public works 16,831,468 16,553,751 20,083,124 18,396,664 17,941,401 21,170,100 11,837,707 20,676,443 22,585,727 26,457,085 Community development 3,539,481 4,308,912 5,999,367 16,772,629 4,356,509 10,966,003 11,307,897 3,258,637 3,463,005 4,277,307 Community services 2,397,380 2,918,972 3,235,419 3,381,221 3,317,984 3,151,003 3,390,905 3,262,428 3,586,690 5,148,498 Capital outlay 25,179,789 42,155,326 56,654,818 31,655,842 4,949,091 3,164,855 4,084,866 6,375,854 6,081,977 2,128,126 Debt service: Principal retirement 1,876,929 2,292,970 679,693 679,272 482,925 5,035,722 9,610,034 859,738 6,154,570 1,094,853 Interest and fiscal charges 994,463 1,494,572 2,257,988 1,635,520 1,314,620 1,260,856 1,118,605 1,082,786 1,088,276 979,592 Debt issuance cost - 231,058 - - - - - - Total expenses 63,135,870 84,499,926 105,901,362 91,850,013 51,688,596 63,242,897 60,897,692 57,499,462 63,141,477 61,065,250 Excess(deficiency)of revenues over(under)expenditures (276,315) 38,530,677 (40,214,486) (41,014,983) 601,057 (13,905,013) (7,159,490) (5,766,333) 4,164,586 2,230,532 Other financing sources(uses): Transfers in 13,916,584 16,005,428 11,059,192 22,815,140 7,474,593 10,792,870 10,179,224 6,335,040 7,251,636 10,339,681 Transfers out (13,916,584) (16,010,989) (11,059,192) (21,036,742) (5,895,823) (9,719,760) (9,107,954) (5,142,344) (5,883,060) (8,920,080) Long term debt issued - 22,411,164 1,079,258 12,161,426 308,463 61,383 117,433 24,952 18,361 13,022 Other debt issued 250,581 - - - - - - - - - Bond premium - 45,765 - - - - - - - - Proceeds from sale of capital asset - - - - - 5,645 - - 18,791 8,745 Total other financing sources(uses) 250,581 22,451,368 1,079,258 13,939,824 1,887,233 1,140,138 1,188,703 1,217,648 1,405,728 1,441,368 Net change in fund balances/ net position $ (25,734) $60,982,045 $(39,135,228) $(27,075,159) $ 2,488,290 $(12,764,875) $ (5,970,787) $ (4,548,685) $ 5,570,314 $ 3,671,900 Debt service as a percentage of noncapital expenditures 7.6% 8.3% 6.3% 3.3% 3.8% 10.5% 18.8% 3.8% 12.7% 3.5% V co ca 0 a) W a) Et 139 Schedule 5 City of Chino Hills Water Revenue - Charges for Services Last Ten Fiscal Years Residential Commercial Government Fiscal Service Service Service Other Year Charge Charge Charge Charges Total 2006 $ 11,175,366 $ 2,522,285 $ 1,016,575 $ 1,250,103 $ 15,964,329 2007 11,908,728 3,194,550 1,163,001 220,258 16,486,537 2008 11,757,737 3,236,899 1,171,397 1,619,744 17,785,777 2009 11,989,919 3,434,330 1,165,995 314,977 16,905,221 2010 12,721,619 3,312,889 1,380,924 240,358 17,655,790 2011 13,380,074 3,120,412 1,342,925 225,224 18,068,635 2012 15,008,633 3,759,938 1,921,614 231,829 20,922,014 2013 17,010,320 4,384,772 2,290,266 257,387 23,942,745 0 2014 18,805,819 5,116,387 2,717,016 257,395 26,896,617 2015 19,070,284 5,374,286 2,525,850 238,321 27,208,741 Source: City Finance Department. Note: From FY 2006 - FY 2010 Water Revenue- Charges for Services totals include revenue figures from the Water Facilities Fee Fund. Beginning in FY 2011 the Water Facilities Fee Fund activity was excluded and reported separately as a non-major governmental fund. Schedule 6 City of Chino Hills Assessed Value and Estimated Actual Value of Taxable Property, Last Ten Fiscal Years (in thousands of dollars) Total Total Taxable Direct Fiscal Residential Commercial Other Assessed Tax Year Property Property Property Exemption Value Rate 2006 $ 6,310,533 $ 230,589 $ 228,009 $ 91,672 $ 6,860,803 1.00 2007 7,083,545 340,267 140,436 92,336 7,656,584 1.00 2008 7,810,970 444,779 212,883 91,761 8,560,393 1.00 2009 8,110,237 589,787 239,628 92,559 9,032,211 1.00 2010 7,674,088 729,587 366,581 93,399 8,863,655 1.00 2011 7,700,232 734,768 334,286 94,057 8,863,343 1.00 2012 7,807,774 697,721 326,272 93,738 8,925,505 1.00 2013 7,967,288 657,551 326,670 92,393 9,043,902 1.00 2014 8,305,516 646,364 300,299 90,798 9,342,977 1.00 2015 8,911,568 653,794 302,185 88,716 9,956,263 1.00 Source: HDL Coren &Cone and San Bernardino County Auditor/Controller-Property Tax Division. Schedule 7 City of Chino Hills Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years (rate per$100 of assessed value) City Direct Rates Overlapping Rates General Metropolitan San Fiscal Tax School Water Bernardino Year Levy District District County 2006 1.0000 0.0634 0.0052 - 2007 1.0000 0.0517 0.0047 - 2008 1.0000 0.0497 0.0045 - 2009 1.0000 0.0523 0.0043 - 2010 1.0000 0.0454 0.0043 - 2011 1.0000 0.0486 0.0037 - 2012 1.0000 0.0499 0.0037 - N 2013 1.0000 0.0468 0.0035 - 2014 1.0000 0.0515 0.0035 - 2015 1.0000 0.0440 0.0035 - Source: County of San Bernardino Auditor/Controller-Recorder. Schedule 8 City of Chino Hills Principal Property Tax Payers, Current Year and Nine Years Ago 2014/15 2005/06 Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Chino Hills Mall LLC $ 99,990,095 1 1.00% $ - - NF Chino Hills Associates LP 71,311,570 2 0.72% - - BEXAEW Heights LP 70,643,738 3 0.71% - - CRCH LLC 60,514,485 4 0.61% - - Missions At Chino Hills 49,450,000 5 0.50% - - Standard Pacific Corporation 47,213,080 6 0.47% - - Weingarten Nostat Inc 43,875,524 7 0.44% - - YAH Investments LLC 40,719,821 8 0.41% - - JSP Creekside LP 37,614,147 9 0.38% - - w Chino Hills Corporate Park 32,236,663 10 0.32% - - Chino Crossroads One LLC - - 60,653,640 1 0.88% Cafi Chino Hills LLC - - 36,985,717 2 0.54% Village Oaks Inc. - - 32,468,166 3 0.47% WRI Chino Hills I LLC - - 30,755,685 4 0.45% ERP Operating Limited Partnership - - 20,251,197 5 0.30% Chino Hills Land West LLC - - 19,919,346 6 0.29% Pan Pacific Retail Properties Inc - - 19,344,910 7 0.28% Butterfield Properties LLC - - 17,797,244 8 0.26% Sears Robuck and Company - - 17,080,239 9 0.25% SAF Woodview LLC - - 16,007,977 10 0.23% Total $ 553,569,123 5.56% $271,264,121 3.95% Source: HDL Coren &Cone Schedule 9 City of Chino Hills Property Tax Levies and Collections, Last Ten Fiscal Years Fiscal Collected within the Year Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date Ended for the Percentage in Subsequent Percentage June 30, Fiscal Year Amount of Levy Years Amount of Levy 2006 $ 2,720,557 $ 2,537,125 93.3% $ 89,871 $ 2,626,996 96.6% 2007 3,030,270 2,687,944 88.7% 133,985 2,821,929 93.1% 2008 3,390,298 2,980,778 87.9% 223,347 3,204,125 94.5% 2009 3,571,077 3,194,990 89.5% 206,641 3,401,631 95.3% 2010 3,482,579 3,142,101 90.2% 131,954 3,274,055 94.0% 2011 3,491,579 3,201,176 91.7% 116,818 3,317,994 95.0% 2012 3,517,145 3,233,202 91.9% 110,845 3,344,047 95.1% 2013 3,565,821 3,411,021 95.7% 163,919 3,574,940 100.3% 2014 3,691,033 3,582,627 97.1% 82,773 3,665,400 99.3% 2015 3,932,280 3,794,122 96.5% - 3,794,122 96.5% Sources: County of San Bernadino Auditor/Controller-Recorder. Note: The figures presented are specific to General Fund taxes only. These amounts do not include Community Facilities District Special Taxes or Assessment District assessments. V cts cX ca 0 1.5 W O 145 Schedule 10 City of Chino Hills Ratios of Outstanding Debt by Type, Last Ten Fiscal Years (dollars in thousands, except per capita) Business-type Governmental Activities Activities Certificates Certificates of Total Percentage Fiscal of Capital Participation/ Primary of Personal Per Year Participation Leases Revenue Bonds Government Income a Capita a 2006 $ - 14 $ 23,148 $ 23,162 0.97% 298 2007 22,086 3 22,138 44,227 1.72% 565 2008 22,084 - 21,108 43,192 1.59% 550 2009 21,997 391 20,048 42,436 1.54% 539 2010 21,906 307 18,963 41,176 1.54% 521 2011 21,484 219 17,839 39,542 1.56% 525 2012 18,954 128 16,673 35,755 1.36% 473 2013 18,368 74 19,663 38,105 1.45% 501 2014 15,322 31 18,068 33,421 1.28% 439 2015 14,756 21 16,447 31,224 1.18% 411 Source: City Finance Department Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. a See Demographic and Economic Statistics schedule (schedule 15)for personal income and population data. Schedule 11 City of Chino Hills Ratios of General Bonded Debt Outstanding, Last Ten Fiscal Years (dollars in thousands, except per capita) General Bonded Debt Outstanding Percentage Certificates of Assessed Fiscal of Value of Per Year Participation Property a Capita b 2006 $ - 0.00% - 2007 22,086 0.29% 282 2008 22,084 0.26% 281 2009 21,997 0.24% 279 2010 21,906 0.25% 277 2011 21,484 0.24% 285 2012 18,954 0.21% 251 2013 18,368 0.20% 242 2014 15,322 0.16% 201 2015 14,756 0.15% 194 Source: City Finance Department Notes: General bonded debt is debt payable with governmental fund resources. Details regarding the city's outstanding debt can be found in the notes to the financial statements. a Assessed value has been used because the actual value of taxable property is not readily available. See Schedule 6 for assessed property value data. b See Demographic and Economic Statistics schedule (schedule 15)for personal income and population data. Schedule 12 City of Chino Hills Direct and Overlapping Governmental Activities Debt As of June 30,2015 Fiscal Year 2014-15 Assessed Valuation:$9,956,263,319 Debt % City's Share of Overlapping Tax and Assessment Debt: Outstanding Applicable(1) Debt 6/30/15 Metropolitan Water District $ 110,420,000 0.430% $ 474,806 Chaffey Community College District 153,151,539 11.076% 16,963,064 Chino Valley Unified School District 128,418,434 46.336% 59,503,966 City of Chino Hills 1915 Act Bonds 2,165,000 100.000% 2,165,000 City of Chino Hills-Community Facilities District No. 1 1,530,000 100.000% 1,530,000 City of Chino Hills-Community Facilities District No.2 8,485,000 100.000% 8,485,000 City of Chino Hills-Community Facilities District No.4 410,000 100.000% 410,000 City of Chino Hills-Community Facilities District No.5 13,640,000 100.000% 13,640,000 City of Chino Hills-Community Facilities District No.6 1,110,000 100.000% 1,110,000 City of Chino Hills-Community Facilities District No.8 160,000 100.000% 160,000 City of Chino Hills-Community Facilities District No.9 3,230,000 100.000% 3,230,000 City of Chino Hills-Community Facilities District No.10 10,850,000 100.000% 10,850,000 Total overlapping taxes and assessment debt 118,521,836 0D Overlapping General Fund Obligation Debt: San Bernardino County General Fund Obligations 470,135,000 5.574% 26,205,325 San Bernardino County Pension Obligations 455,796,704 5.574% 25,406,108 San Bernardino County Flood Control District 97,230,000 5.574% 5,419,600 Chaffey Community College District General Fund Obligations 11,515,666 11.076% 1,275,475 Chino Valley Unified School District Certificates of Participation 16,600,000 46.336% 7,691,776 West Valley Vector Control District Certificates of Participation 3,130,000 15.351% 480,486 Total overlapping general fund debt 66,478,770 Subtotal,overlapping debt 185,000,606 City of Chino Hills Direct Debt 39,516,529 (2) Total Direct and Overlapping Debt $ 224,517,135 (3) Source:California Municipal Statistics, Inc.and the City Finance Department Note: (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city. (2) Details regarding the City's direct debt can be found in the notes to the financial statements. (3) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Schedule 13 City of Chino Hills Legal Debt Margin Information, Last Ten Fiscal Years (dollars in thousands) Legal Debt Margin Calculation for Fiscal Year 2015 Assessed value $ 9,956,263 Debt limit(15%of assessed value) 1,493,439 Debt applicable to limit: General obligation bonds Less:Amount set aside for repayment of general obligation debt - Total net debt applicable to limit - Legal debt margin $ 1,493,439 Fiscal Year coo 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Debt Limit $1,029,120 $ 1,148,488 $1,284,059 $1,354,832 $1,329,548 $1,329,501 $1,338,826 $1,356,585 $1,401,447 $ 1,493,439 Total net debt applicable to limit - - - - - - - - - - Legal debt margin $1,029,120 $ 1,148,488 $1,284,059 $1,354,832 $1,329,548 $1,329,501 $1,338,826 $1,356,585 $1,401,447 $ 1,493,439 Total net debt applicable to the limit as a percentage of debt limit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Schedule 14 City of Chino Hills Pledged-Revenue Coverage, Last Ten Fiscal Years (dollars in thousands) Water Certificate of Participation/Revenue Bonds Special Assessment Bonds Utility Less: Net Special Fiscal Service Operating Available Debt Service Assessment Debt Service (2) Year Charges Expenses (1) Revenue Principal Interest Coverage Collections Principal Interest Coverage 2005 $ 17,314 $ 10,546 $ 6,768 $ 1,080 $ 1,042 3.19 $ 10,914 $ 2,937 $ 2,750 1.92 2006 17,075 9,909 7,166 1,100 1,018 3.38 11,627 4,963 2,647 1.53 2007 20,379 13,087 7,292 1,125 996 3.44 13,826 4,019 3,327 1.88 2008 21,262 14,445 6,817 1,145 974 3.22 11,591 4,339 4,051 1.38 2009 18,531 15,982 2,549 1,175 946 1.20 11,192 6,799 3,846 1.05 0 2010 20,931 16,207 4,724 1,200 916 2.23 11,801 4,734 3,579 1.42 2011 19,048 15,364 3,684 1,240 880 1.74 11,348 8,691 3,391 0.94 2012 22,878 16,588 6,290 1,280 839 2.97 11,570 5,535 2,421 1.45 2013 25,537 17,275 8,262 1,230 673 4.34 11,026 5,700 2,234 1.39 2014 28,558 18,180 10,378 1,645 585 4.65 10,335 6,334 2,040 1.23 2015 28,413 19,646 8,767 1,670 552 3.95 8,957 6,293 1,841 1.10 Source: City Finance Department Notes: (1) Operating expenses do not include interest, depreciation, or amortization expenses. (2) Details regarding the city's outstanding debt can be found in the notes to the financial statements. (3) In FY 2011 the refunding of bonds related to Assessment Districts for$19.7 million has been excluded from this presentation. (4) In FY 2013 the 2002 and 2003 Certificates of Participation were refunded and replaced by the 2012 Water Revenue Bonds. Demographic and Economic Information 01 Schedule 15 City of Chino Hills Demographic and Economic Statistics, Last Ten Calendar Years Personal Per Income (2) Capita Calendar (thousands Personal Unemployment Year Population (1) of dollars) Income (2) Rate (3) 2006 77,719 $ 2,387,564 $ 30,737 2.6% 2007 78,307 2,572,676 33,110 2.3% 2008 78,465 2,714,954 34,688 2.7% 2009 78,725 2,749,103 35,053 3.9% 2010 78,971 2,665,244 33,910 6.6% 2011 75,345 2,535,996 32,113 7.3% 2012 75,655 2,633,551 34,810 6.7% 2013 76,033 2,628,461 34,570 4.8% 2014 76,131 2,620,277 34,418 4.1% c—n 2015 76,055 2,640,858 34,723 5.9% N Sources: ( Population - State of California/Department of Finance/Demographic Research Unit ( HDL Coren & Cone ( HDL Coren & Cone Schedule 16 City of Chino Hills Principal Employers, Current Year and Nine Years Ago 2015 2006 Percentage Percentage Number of Total City of Total City Employer of Employeesa Rank Employmentb Employees Rank Employment Chino Valley Unified School District 1,425 1 3.63% n/a n/a n/a Costco 294 2 0.75% n/a n/a n/a City of Chino Hills 239 3 0.61% n/a n/a n/a Boys Republic 228 4 0.58% n/a n/a n/a Albertson's 191 5 4.86% n/a n/a n/a BJ's Brewery 148 6 0.38% n/a n/a n/a Chino Valley (dependent Fire District 132 7 0.34% n/a n/a n/a Lucille's Smokehouse BBQ 122 8 0.31% n/a n/a n/a Lowe's Home Improvement 103 9 0.26% n/a n/a n/a w PMAC-Fairfield 100 10 0.25% n/a n/a n/a Total 2,982 11.97% n/a n/a Source: Finance Department, and California Labor Market. Note: a Includes full-time and part-time employees. b Total city employment 39,300, provided by California Labor Market. ° Data for FY 2006 is not available. City of Chino Hills This page intentionally left blank. 154 Operating Information Schedule 17 City of Chino Hills Full-Time-Equivalent City Government Employees by Function/Program, Full-time Equivalent Employees as of June 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Function/Program General government Legislative 6 6 6 7 7 7 7 7 7 8 City Manager 10 10 11 11 11 11 10 10 8 10 Finance 14 13 16 19 21 21 19 19 18 19 Code Enforcement - - - - - - - - 3 a 4 Neighborhood Services - - - - - - - - 6 a - b Emergency Preparedness - - - - - - - - 1 a 1 Public Safety 7 8 9 9 9 8 7 8 - a - Public Works 36 40 42 42 42 42 43 42 45 41 cn Community Development 20 20 21 23 19 17 16 16 15 16 cn Community Services 36 40 45 48 53 47 50 52 52 a 53 Water Utility 22 24 23 26 24 24 26 26 27 26 Sewer Utilitiy 7 7 7 7 7 7 7 7 7 7 Total 158 168 180 192 193 184 185 187 189 185 Source: City Finance Department. Notes: A full-time employee is scheduled to work 2,080 hours per year(including vacation and sick leave). Full-time-equivalent employment is calculated by dividing total labor hours by 2,080. Full-Time-Equivalent City Government Employees by Function/Program was not calculated prior to 2006. a In fiscal year 2013-2014, Code Enforcement and Neighborhood Services divisions were reclassified from Public Safety to General Government,and Emergency Preparedness division was reclassified from Communtiy Services to General Government to be consistent with financial statement presentation. b In fiscal year 2014-15,the Neighborhood Services division was eliminated and the employees were moved to other divisions within the City. Schedule 18 City of Chino Hills Operating Indicators by Function/Program, Last Ten Fiscal Years Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Function/Program General government Building permits issued 1,799 1,868 1,559 1,047 947 1,097 1,068 1,077 1,483 1,656 Building inspections conducted 10,540 10,001 8,713 6,252 5,081 4,516 3,363 3,240 4,012 5,154 Refuse collection Refuse collected (tons per day) 243 248 186 172 170 171 179 162 140 149 Recyclables collected (tons per day) 73 66 75 75 72 50 52 61 64 59 Other public works Street resurfacing (lane miles) 57 50 41 19 27 20 10 7 13 44 j Potholes repaired 120 50 105 66 50 65 60 140 165 120 Water New connections 104 94 85 36 66 22 9 24 18 39 Water main breaks 24 33 40 24 11 8 10 11 25 15 Average daily consumption (million gallons) 14 16 15 16 16 14 15 16 16 13 Peak daily consumption (million gallons) 25 29 28 27 27 26 26 24 25 26 Sewage System Average daily sewage treatment (million gallons) 7 4 8 3 3 3 5 5 5 4 Sources: Various City departments. Schedule 19 City of Chino Hills Capital Asset Statistics by Function/Program, Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Function/Program Other public works Streets (miles) 175 177 170 170 170 170 170 172 172 172 Traffic signals 42 44 48 49 54 55 55 55 55 55 Parks and recreation Parks 38 40 40 40 40 40 41 41 42 42 Acreage 248 255 255 255 255 255 255 255 263 263 Playgrounds 27 28 28 28 28 28 28 28 28 28 Baseball/softball diamonds 14 8 8 8 8 8 9 9 9 9 Soccer/football fields 7 7 7 7 7 7 12 12 12 12 U, Community centers 5 5 5 5 5 5 5 5 5 5 co Water Water mains (miles) 250 250 250 250 302 302 317 319 302 302 Fire hydrants 2,500 2,564 2,610 1,805 2,137 2,137 2,186 2,186 2,185 2,185 Storage capacity(million gallons) 38 38 38 38 38 38 39 40 39 39 Sewage System Sanitary sewers (miles) 202 202 202 220 189 189 202 202 202 202 Storm drains (miles) 82 104 104 104 104 104 83 83 83 83 Sources: Various city departments. Notes: No capital asset indicators are available for the general government. City of Chino Hills This page intentionally left blank. 159