Pomona Public Financing Authority

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or filing under the securities laws of any such jurisdiction. * Preliminary, subjecttochange. Dated: September __, 2016 on oraboutOctober__,2016. Rothschild LLP, Los Angeles, California. It is anticipated that the Bonds will be available for delivery through the facilities of DTC in New York, New York the CitybyOrrick,Herrington&Sutcliffe LLP,asDisclosureCounsel.Certainlegalmatterswillbepassed uponfortheUnderwriterbyitscounsel,Fox Sutcliffe LLP,BondCounsel.Certain legalmatterswillbepasseduponfortheAuthorityandCitybyAlvarez-Glasman &Colvin,CityAttorney,andfor to obtaininformationessentialmakinganinformedinvestment decision. OF ANYCONSTITUTIONALORSTATUTORYDEBTLIMITATION ORRESTRICTION. OF THEAUTHORITY,CITY,COUNTY,STATE,OR ANYPOLITICALSUBDIVISIONOFTHESTATEWITHINMEANING NEITHER THEBONDSNOROBLIGATIONOFCITYTO MAKEINSTALLMENTPAYMENTSCONSTITUTESANINDEBTEDNESS IS PLEDGEDTOTHEPAYMENTOFPRINCIPALORINTEREST ONTHEBONDS.AUTHORITYHASNOTAXINGPOWER. OF THE STATE NORTHE TAXING POWEROFTHECITY, THE COUNTY, THE STATE, OR ANYPOLITICALSUBDIVISIONOFTHE STATE THE COUNTYOFLOSANGELES(THE“COUNTY”),STATE OFCALIFORNIA(THE“STATE”),ORANYPOLITICALSUBDIVISION CITY HASLEVIEDORPLEDGEDANYFORMOFTAXATION.NEITHER THEFULLFAITHANDCREDITOFAUTHORITY,CITY, OBLIGATION OFTHECITYFORWHICHISOBLIGATED TOLEVYORPLEDGEANYFORMOFTAXATIONFORWHICHTHE OF THECITYTOMAKEINSTALLMENTPAYMENTSUNDER THE INSTALLMENTSALEAGREEMENTDOESNOTCONSTITUTEAN PLEDGED THEREFORANDAMOUNTSONDEPOSITINTHEBOND FUNDESTABLISHEDUNDERTHEINDENTURE.OBLIGATION BOOK-ENTRY ONLYSYSTEM.” principal, theredemptionpremium,ifany,andinterestonBondswillbemadeasdescribedinAPPENDIXF–“INFORMATIONREGARDING THE the Bonds.OwnershipinterestsinBondsmaybepurchasedbook-entryformonly.SolongasDTCoritsnomineeisOwnerof Bonds,the in thenameofCede&Co.,asnomineeTheDepositoryTrustCompany,NewYork,York(“DTC”).DTCwillactsecuritiesdepository for BONDS –General”andAPPENDIXC“DEFINITIONSANDSUMMARYOFPRINCIPALLEGALDOCUMENTS.” commencing onJune1,2017.TheBondswillbearinterestattherespectiveratessetforthinsidecoverpagehereof.See“DESCRIPTION OFTHE to the Indenture. TheBondswillaccrue interest from their dateofdelivery,andinterestthereonwillbe payable on June1and December 1of each year, Indenture. TheInstallmentPaymentsandcertainrightsundertheSaleAgreementwillbeassignedbyAuthoritytoTrustee pursuant Pomona, California(the“City”)totheAuthorityunderInstallmentSaleAgreement(asdefinedherein)andotherassetspledgedtherefore underthe “DEFINITIONS ANDSUMMARYOFPRINCIPALLEGALDOCUMENTS–Indenture”and“–InstallmentSaleAgreement.” used onthiscoverpageandnototherwisedefinedshallhavethemeaningsascribedtothemelsewhereinOfficialStatement.SeeAPPENDIX C– or financeaninitialreserveaccountfortheBonds,and(iii)paycostsofissuancewithrespecttoBonds.See“REFUNDINGPLAN.”Capitalized terms proceeds of the Bonds, together with other available funds, will be used to (i) refund the outstanding 2002 Series AF Bonds (as defined herein), (ii) fund October 1,2016(the“Indenture”),byandbetweentheAuthorityTheBankofNewYorkMellonTrustCompany,N.A.,astrustee“Trustee”). The Article 11(commencingwithSection53580)ofChapter3Part1Division2Title5theGovernmentCode,andanIndentureTrust, datedasof 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Government Code”), together withtheBBBonds,“Bonds”)arebeingissuedbyPomonaPublicFinancingAuthority(the“Authority”)pursuanttoArticles 1through the $3,655,000*PomonaPublicFinancingAuthority2016TaxableRevenueRefundingBonds,SeriesBD(SewerProjectsRefunding)(the“BD Bonds” and Dated: DateofDelivery ownership ordispositionof,theamount,accrualreceiptofintereston,Bonds.See“TAXMATTERS.” federal incometaxpurposesunderSection103oftheCode.BondCounselexpressesnoopinionregardinganyotherconsequencesrelatedto is exemptfromStateofCaliforniapersonalincometaxes.BondCounselobservesthatinterestontheBDBondsnotexcludedgrossfor current earningswhencalculatingcorporatealternativeminimumtaxableincome.BondCounselisalsooftheopinionthatinterestonBDBonds purposes ofthefederalindividualorcorporatealternativeminimumtaxes,althoughBondCounselobservesthatsuchinterestisincludedinadjusted from StateofCaliforniapersonalincometaxes.InthefurtheropinionBondCounsel,interestonBBBondsisnotaspecificpreferenceitemfor the BB Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, and is exempt and courtdecisions,assuming,amongothermatters,theaccuracyofcertainrepresentationscompliancewithcovenants,intereston NEW ISSUE–BOOK-ENTRYONLY The Bondsareofferedwhen,as,and ifdeliveredtoandreceivedbytheUnderwriter,subjectapproval oflegalitybyOrrick,Herrington& This coverpagecontainsinformationforgeneralreferenceonly. PotentialpurchasersareadvisedtoreadtheentireOfficialStatement THE BONDSARELIMITEDOBLIGATIONSOFAUTHORITY PAYABLE SOLELYFROMANDSECUREDBYTHEREVENUES The Bondswillbesubjecttooptionalredemptionasdescribedherein.See“DESCRIPTIONOFTHEBONDS–RedemptionofBonds.” The Bondswillbeissuedonlyinfully-registeredformdenominationsof$5,000andanyintegralmultiplethereofand,whenissued,registered The BondswillbelimitedobligationsoftheAuthoritysecuredbyRevenuesconsistingprimarilyInstallmentPaymentstomadeCity of The $8,930,000*PomonaPublicFinancingAuthority2016RevenueRefundingBonds,SeriesBB(SewerProjectsRefunding)(the“BBBonds”) and In theopinionofOrrick,Herrington&SutcliffeLLP,BondCounseltoAuthority,baseduponananalysisexistinglaws,regulations,rulings 2016 REVENUEREFUNDINGBONDS

PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 29, 2016 $8,930,000* SERIES BB POMONA PUBLIC FINANCING AUTHORITY

2016 REVENUEREFUNDINGBONDS (SEWER PROJECTSREFUNDING) See InsideCoverPage $12,585,000* Maturity Schedules consisting of 2016 TAXABLEREVENUEREFUNDINGBONDS Due: December1,asshownontheinsidecover RATINGS: S&P:“AA-”(stableoutlook) $3,655,000* SERIES BD See “RATINGS.” MATURITY SCHEDULE

POMONA PUBLIC FINANCING AUTHORITY 2016 REVENUE REFUNDING BONDS, SERIES BB

Base CUSIP No.† ______$______Serial Bonds Maturity Date Principal Interest Price or (December 1,) Amount Rate Yield CUSIP†

$______% Series BB Term Bonds due December 1, 20__ - Yield: ____% CUSIP No. ______† $______% Series BB Term Bonds due December 1, 2042 - Yield: ____% CUSIP No. ______†

POMONA PUBLIC FINANCING AUTHORITY 2016 TAXABLE REVENUE REFUNDING BONDS, SERIES BD

Base CUSIP No.† ______$______Serial Bonds Maturity Date Principal Interest Price or (December 1,) Amount Rate Yield CUSIP† 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

$______% Series BD Term Bonds due December 1, 20__ - Yield: ____% CUSIP No. ______†

Preliminary, subject to change. † Copyright 2016, American Bankers Association. CUSIP data are provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. (“CUSIP Service Bureau”). Such CUSIP data are provided only for the convenience of the reader and are not intended to create a database and do not serve in any way as a substitute for the services and information provided by the CUSIP Service Bureau. CUSIP is a registered trademark of the American Bankers Association. The City, the Authority and the Underwriter do not assume any responsibility for the accuracy of any CUSIP data set forth herein or for any changes or errors in such data. No dealer, broker, salesperson, or other person has been authorized by the City or the Authority to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Authority. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make an offer, solicitation, or sale.

This Official Statement is not a contract with the purchasers of the Bonds. Statements contained in this Official Statement that involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts.

The information set forth herein has been furnished by the City and by other sources that are believed to be reliable including, without limitation, the Los Angeles County Sanitation Districts. The Underwriter has provided the following sentence for inclusion in this Official Statement: the Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the Authority, or any other parties described herein since the date hereof. All summaries of the Bonds, the Indenture, the Installment Sale Agreement, and other documents summarized herein are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions.

This Official Statement is submitted in connection with the issuance of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE INSIDE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

CUSIP data included herein are provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. (“CUSIP Service Bureau”). Such CUSIP data are provided only for the convenience of the reader and are not intended to create a database and do not serve in any way as a substitute for the services and information provided by the CUSIP Service Bureau. CUSIP is a registered trademark of the American Bankers Association. The City, the Authority and the Underwriter do not assume any responsibility for the accuracy of any CUSIP data set forth herein or for any changes or errors in such data.

The City maintains a website. However, the information presented at such website is not part of this Official Statement, is not incorporated by reference herein, and should not be relied upon in making an investment decision with respect to the Bonds. CITY OF POMONA (County of Los Angeles, California) City Council Elliott Rothman, Mayor Ginna E. Escobar, Vice Mayor Paula Lantz, Councilmember John Nolte, Councilmember Adriana Robledo, Councilmember Cristina Carrizosa, Councilmember Debra Martin, Councilmember

POMONA PUBLIC FINANCING AUTHORITY Board of Directors Linda Lowry, Chairperson/City Manager Onyx Jones, Vice Chairperson/Finance Director/City Treasurer Kirk Pelser, Board Member/Deputy City Manager Arnold M. Alvarez-Glasman, Board Member/Authority Counsel/City Attorney Linda Poliakon, Board Member/Accounting Manager

AUTHORITY/CITY STAFF Linda Lowry, Authority Chairperson/City Manager Arnold M. Alvarez-Glasman, Authority Counsel/City Attorney Onyx Jones, Authority Treasurer/Finance Director/City Treasurer Meg McWade, Deputy Public Works Director Darron Poulsen, Water and Wastewater Operations Director Eva M. Buice, MMC, Authority Secretary/City Clerk

SPECIAL SERVICES Municipal Advisor Urban Futures, Inc. Orange, California

Bond Counsel and Disclosure Counsel Orrick, Herrington & Sutcliffe LLP Los Angeles, California

Trustee and Prior Trustee for 2002 Series AF Bonds The Bank of New York Mellon Trust Company, N.A. Los Angeles, California

Verification Agent for 2002 Series AF Bonds Grant Thornton LLP Minneapolis, Minnesota TABLE OF CONTENTS

Page

INTRODUCTION ...... 1 REFUNDING PLAN ...... 6 ESTIMATED SOURCES AND USES OF FUNDS ...... 7 DESCRIPTION OF THE BONDS ...... 7 General ...... 7 Redemption of Bonds ...... 8 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ...... 10 Pledge of Revenues ...... 10 Installment Sale Agreement/Pledge of Net Revenues ...... 11 Reserve Account of the Bond Fund ...... 14 No Superior Obligations ...... 15 Issuance of Additional Obligations Under the Installment Sale Agreement...... 15 Rate Covenant...... 16 DEBT SERVICE SCHEDULE ...... 16 CITY OF POMONA FINANCES ...... 17 WATER AND WASTEWATER OPERATIONS DEPARTMENT ...... 18 Governance and Management of Sewer Enterprise ...... 18 Service Area ...... 18 Existing Wastewater Facilities...... 20 Growth ...... 21 Sewer Enterprise Rates and Charges ...... 21 Collection Procedures ...... 24 Historic Sewer Enterprise Gross Revenues ...... 25 Historic Operating Results ...... 26 Utility Fund Reserves ...... 28 Rate Stabilization Fund...... 29 Insurance for the Sewer Enterprise ...... 29 Utility Costs ...... 30 City Investment Policy ...... 30 Self-Insurance ...... 31 Retirement System ...... 32 Other Post Employment Benefits ...... 37 Collateral Benefits Plan ...... 37 Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan ...... 38 Long-Term Debt ...... 38 Outstanding Sewer Enterprise Indebtedness ...... 38 Capital Improvement Program...... 38 No Currently Anticipated Additional Obligations ...... 39 WATER SUPPLY ...... 39 Current Water Supply ...... 39 ENTERPRISE REGULATORY REQUIREMENTS ...... 41 General ...... 41 State Regulations ...... 41 Proposed Regulations ...... 41 THE AUTHORITY ...... 42 RISK FACTORS ...... 42

i TABLE OF CONTENTS (continued) Page

Limited Obligations ...... 42 Rate Covenant Not a Guarantee...... 43 Rate-Setting Process Under Proposition 218 ...... 43 Constitutional Limit on Fees and Charges ...... 43 Statutory and Regulatory Impact ...... 44 Earthquake or Other Natural Disasters ...... 44 Sewer Enterprise Demand and Growth...... 45 Sewer Enterprise Expenses and Collections ...... 45 Limited Recourse on Default ...... 45 Limitations on Remedies ...... 46 No Obligation to Tax ...... 46 Bankruptcy ...... 46 State Budget ...... 47 Statutory and Regulatory Compliance ...... 47 Risks Relating to the Water Supply ...... 47 Acceleration; Limitations on Remedies ...... 48 Future Legislation ...... 49 Potential Impact of Climatic Change ...... 49 Secondary Market ...... 50 Loss of Tax Exemption ...... 50 Audit by State and Federal Auditors and of IRS Audits of Tax-Exempt Bond Issues ...... 50 No Liability of Authority to the Owners...... 51 Economic, Political, Social, and Environmental Conditions ...... 51 CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES ...... 51 Article XIIIA ...... 51 Article XIIIB...... 52 Article XIIIC...... 52 Article XIIID ...... 53 Proposition 26 ...... 54 Initiative, Referendum and Charter Amendments ...... 54 TAX MATTERS ...... 54 BB Bonds ...... 54 BD Bonds ...... 56 LITIGATION ...... 58 CERTAIN LEGAL MATTERS ...... 59 MUNICIPAL ADVISOR ...... 59 VERIFICATION ...... 59 RATINGS ...... 59 UNDERWRITING ...... 60 FINANCIAL STATEMENTS ...... 60 CONTINUING DISCLOSURE ...... 61 MISCELLANEOUS ...... 61 APPENDIX A - CITY FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION ...... A-1 APPENDIX B - CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 ...... B-1 APPENDIX C - DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ...... C-1 APPENDIX D - FORM OF BOND COUNSEL OPINION ...... D-1 APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE ...... E-1 APPENDIX F - INFORMATION REGARDING THE BOOK-ENTRY ONLY SYSTEM ...... F-1 APPENDIX G - FORM OF CITY INVESTMENT POLICY ...... G-1

ii OFFICIAL STATEMENT

$12,585,000 POMONA PUBLIC FINANCING AUTHORITY 2016 REVENUE REFUNDING BONDS (SEWER PROJECTS REFUNDING) consisting of $8,930,000* $3,655,000* 2016 REVENUE REFUNDING BONDS 2016 TAXABLE REVENUE REFUNDING BONDS SERIES BB SERIES BD

INTRODUCTION

This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, the inside cover page and appendices hereto and the documents described herein. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. References to and summaries of the laws of the State of California and any documents, reports, and other instruments referred to herein do not purport to be complete and such references are qualified in their entirety by reference to each such law, document, report, or instrument. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Indenture or the Installment Sale Agreement, each as defined herein. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Indenture” and “– Installment Sale Agreement.”

General

The $8,930,000* Pomona Public Financing Authority 2016 Revenue Refunding Bonds, Series BB (Sewer Projects Refunding) (the “BB Bonds”) and the $3,655,000* Pomona Public Financing Authority 2016 Taxable Revenue Refunding Bonds, Series BD (Sewer Projects Refunding) (the “BD Bonds” and together with the BB Bonds, the “Bonds”) are being issued by the Pomona Public Financing Authority (the “Authority”) pursuant to Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Government Code”), Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code, and an Indenture of Trust, dated as of October 1, 2016 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

The proceeds of the Bonds, together with other available funds, will be used to (i) refund the outstanding 2002 Series AF Bonds (as defined herein), (ii) fund or finance an initial reserve account for the Bonds, and (iii) pay costs of issuance with respect to the Bonds. See “Reserve Account for the Bonds” below and “REFUNDING PLAN.”

The Bonds

The Bonds will accrue interest from their date of delivery, and interest thereon will be payable on June 1 and December 1 of each year, commencing on June 1, 2017 (each, an “Interest Payment Date”). The Bonds will bear interest at the rates set forth on the inside cover page hereof. See “DESCRIPTION OF THE BONDS – General.” The Bonds are being issued only in fully-registered form in denominations of $5,000 and any integral multiple thereof and, when issued, will be registered in the name of Cede & Co., as the nominee of The Depository

Preliminary, subject to change. Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only. So long as DTC or its nominee is the Owner of the Bonds, the principal, the redemption premium, if any, and interest on the Bonds will be made as described in APPENDIX F – “INFORMATION REGARDING THE BOOK-ENTRY ONLY SYSTEM.”

Security and Sources of Payment for the Bonds

The Bonds will be limited obligations of the Authority secured by Revenues (as defined herein) and other assets pledged therefore under the Indenture. The Revenues will consist primarily of Installment Payments (as defined herein) to be made by the City of Pomona, California (the “City”) to the Authority under the Installment Sale Agreement, dated as of October 1, 2016 (the “Installment Sale Agreement”), by and between the City and the Authority. Such Installment Payments will be payable from Net Revenues on a parity with the City’s installment payment obligations under the 2007 Installment Sale Agreement (each as defined herein). The City will covenant and agree in the Installment Sale Agreement that all Net Revenues will be held by the City in the “Utility Fund” (as defined therein and meaning the Sewer Enterprise Fund as referred to in the City’s financial statements) in trust for the benefit of the Trustee (as assignee of the rights of the Authority hereunder) and the Bond Owners, and for the benefit of the owners of any Parity Obligations. The Installment Payments and certain rights under the Installment Sale Agreement will be assigned by the Authority to the Trustee pursuant to the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.”

The net proceeds of the Bonds, together with other available funds, will be used to current refund the outstanding 2002 Series AF Bonds. As of the date of issuance of the Bonds, the only indebtedness secured by Net Revenues will be the Bonds and the outstanding Pomona Public Financing Authority 2007 Revenue Bonds, Series BA (Sewer Projects), originally issued in the aggregate principal amount of $15,575,000 of which $14,540,000 is currently outstanding (the “2007 Series BA Bonds”). The 2007 Series BA Bonds were issued pursuant to an Indenture of Trust, dated as of January 1, 2007 (the “Series BA Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, payable from installment payments payable by the City under an Installment Payment Agreement, dated as of January 1, 2007, by and between the Authority and the City (the “2007 Installment Sale Agreement”).

The Installment Sale Agreement provides for the payment by the City of semi-annual installment payments (the “Installment Payments”) in amounts sufficient to make payments of the principal of and interest on the Bonds. The Installment Payments securing payment of the Bonds will be payable from Net Revenues under the Installment Sale Agreement and on parity with the 2007 Series BA Bonds. The Installment Sale Agreement permits the City to enter into Parity Obligations payable from Net Revenues on a parity with the City’s installment payment obligations under the Installment Sale Agreement. “Parity Obligations” means the 2007 Installment Sale Agreement and any other leases, loan agreements, installment sale agreements, bonds, notes or other obligations of the City payable from and secured by a pledge of and lien upon any of the Net Revenues on a parity with the Installment Payments, entered into or issued pursuant to and in accordance with the Installment Sale Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Issuance of Additional Obligations Under the Installment Sale Agreement.”

Pursuant to the Installment Sale Agreement, the City may incur additional obligations, payments with respect to which will be senior to, or on parity with, the City’s obligation to make Installment Payments, subject to satisfaction of the conditions specified in the Installment Sale Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Issuance of Additional Obligations Under the Installment Sale Agreement,” “WATER AND WASTEWATER OPERATIONS DEPARTMENT – Capital Improvement Program,” “Capital Improvement Financing Plan” and “– Anticipated Additional Obligations.”

THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED SOLELY BY THE REVENUES PLEDGED THEREFOR AND AMOUNTS ON

2 DEPOSIT IN THE BOND FUND ESTABLISHED UNDER THE INDENTURE. THE OBLIGATION OF THE CITY TO MAKE INSTALLMENT PAYMENTS UNDER THE INSTALLMENT SALE AGREEMENT DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE FULL FAITH AND CREDIT OF THE AUTHORITY, THE CITY, THE COUNTY OF LOS ANGELES (THE “COUNTY”), THE STATE OF CALIFORNIA (THE “STATE”), OR ANY POLITICAL SUBDIVISION OF THE STATE NOR THE TAXING POWER OF THE CITY, THE COUNTY, THE STATE, OR ANY POLITICAL SUBDIVISION OF THE STATE IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS. THE AUTHORITY HAS NO TAXING POWER. NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO MAKE INSTALLMENT PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE COUNTY, THE STATE, OR ANY POLITICAL SUBDIVISION OF THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

Redemption of the Bonds

The Bonds will be subject to optional redemption prior to maturity as described herein. See “DESCRIPTION OF THE BONDS – Redemption of Bonds.”

Rate Covenant

The City has covenanted in the Installment Sale Agreement, to the extent permitted by law, fix, prescribe, revise and collect rates, fees and charges for the services and improvements furnished by the Sewer Enterprise during each Fiscal Year which are sufficient to yield Net Revenues at least equal to the sum of (i) one hundred percent (100%) of the total Installment Payments and payments with respect to all Parity Obligations coming due and payable in such Fiscal Year, plus (b) the amount by which the amount on deposit in the Utility Fund (including available reserves) on the last day of the immediately preceding Fiscal Year was less than one hundred ten percent (110%) of Maximum Annual Debt Service calculated as of the last day of such Fiscal Year. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Rate Covenant” and “WATER AND WASTEWATER OPERATIONS DEPARTMENT – Rate Stabilization Fund.” In addition, for information on the possible limitation on the City’s ability to comply with the rate covenant as a consequence of Proposition 218 (as defined herein), see “RISK FACTORS – Rate-Setting Process Under Proposition 218” and “CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES – Article XIIIC” and “– Article XIIID.”

“Debt Service” means, during any period of computation, the amount obtained for such period by totaling the following amounts: (a) the principal amount of all Outstanding Serial Bonds coming due and payable by their terms in such period; (b) the minimum principal amount of all Outstanding Term Bonds scheduled to be redeemed by operation of mandatory sinking fund deposits in such period; and (c) the interest which would be due during such period on the aggregate principal amount of Bonds which would be Outstanding in such period if the Bonds are retired as scheduled, but deducting and excluding from such aggregate amount the amount of Bonds no longer Outstanding.

As defined in the Installment Sale Agreement, the term “Maximum Annual Debt Service” means, as of the date of any calculation and with respect to the Installment Payments or any Parity Obligations, as the case may be, the maximum sum obtained for the current or any future Bond Year during the Term of the Installment Sale Agreement by totaling the following amounts for such Bond Year:

(a) the aggregate amount of the Installment Payments coming due and payable in such Bond Year pursuant to the Installment Sale Agreement, except to the extent payable from any security deposit pursuant to the Installment Sale Agreement;

3 (b) the principal amount of all outstanding Parity Obligations, if any, coming due and payable by their terms in such Bond Year;

(c) the amount of interest which would be due during such Bond Year on the aggregate principal amount of all outstanding Parity Obligations, if any, which would be outstanding in such Bond Year if such Parity Obligations are retired as scheduled; provided, however, that with respect to any Parity Obligations which bear interest at a variable rate, such interest will be calculated at an assumed rate equal to the average rate of interest per annum for each of the five previous whole calendar years as shown by the J. J. Kinney Index (or, in the event and to the extent such index is not maintained for all or any portion of such period, any similar index of variable rate interest for tax-exempt obligations as may be selected by the City; and

(d) Maximum Annual Debt Service for purposes of establishing the amount required to be funded in a reserve fund for Parity Obligations as required under the Installment Sale Agreement will be calculated solely with respect to the principal and interest which would be due on such proposed Parity Obligations during such Bond Year.

Reserve Account for the Bonds

The Authority

The Authority was established pursuant to a Joint Exercise of Powers Agreement dated October 27, 1988, by and among the City, the Redevelopment Agency of the City of West Covina and the Redevelopment Agency of the City of Pomona (the “Members”). The Authority was created for the purpose of providing financing for public capital improvements for the Members or other local agencies in the State of California, the acquisition by the Authority of such capital improvements and the purchase by the Authority of local obligations within the meaning of the JPA Act. The Authority is authorized pursuant to Article 4 of the JPA Act to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to, any Members or such other local agencies to provide financing for public improvements of such Members. See “THE AUTHORITY.”

City of Pomona

The City was incorporated in January 1888, and became a charter city in 1911. The City now encompasses approximately 22.9 square miles, and currently has an estimated 2016 population of 155,604 (as estimated by the State Department of Finance). The City is located approximately 30 miles east of downtown Los Angeles, in the eastern portion of the County of Los Angeles (the “County”), adjacent to Orange and San Bernardino counties.

The City Charter provides for a council-manager form of government, with an elected council of seven members including a mayor. City Councilmembers are elected by district for overlapping four-year terms. The Mayor is the presiding officer of the Council and is elected at large for a four-year term. The City Manager appoints department heads on the basis of specialized knowledge, experience and education in their area of responsibility. The City provides police protection, fire safety services (by contract with the Consolidated Fire Protection District of Los Angeles County), sewer maintenance, street sweeping, park maintenance, building

4 inspection, library, water, and sanitation services. See APPENDIX A – “CITY FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION.”

City of Pomona Water and Wastewater Operations Department

The City's Water and Wastewater Operations Department is under the direction of the Water and Wastewater Operations Director, Darron Poulsen, who directs or provides oversight to a staff of 88 employees, of which 20 are assigned to the Public Works Department and support Business Services and Customer Service sections for the City’s water and sewer enterprises.

The Sewer Enterprise

The City’s existing Sewer Enterprise consists of interceptors and pump stations for the conveyance of wastewater within the City. The City’s interceptor system consists of approximately 300 miles of pipeline ranging from 4” to 42” inches in diameter, 4 pump stations and facilities for emergency power and odor control, including 3 on-site stationary back-up generators. Although portions of the Sewer Enterprise are dated, based on operating results and materials used and assuming completion of the Project, the City estimates that the interceptor system should last in excess of 50 years. The City provides sewer service throughout the City, which encompasses approximately 14,676 acres (23 square miles), and 6 acres of land outside the City served by the Sewer Enterprise.

Sewage collected by the Sewer Enterprise is treated and disposed of by the Los Angeles County Sanitation Districts (“LACSD”). The City is one of seventy-eight (78) cities and unincorporated territories located in Los Angeles County that is served by the LACSD. The LACSD was formed under authority provided by the County Sanitation District Act of 1923. The LACSD consists of 24 separate districts, of which the City is located within District No. 21. The LACSD’s Internet home page is located at www.lacsd.com, and information on LACSD’s activities are included at this Internet address. This Internet address is included for reference only and the information on such Internet site is not a part of this Official Statement or incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on any Internet site.

Sewage generated within the City is directed into the LACSD’s Pomona Water Reclamation Plant (the “PWRP”). Sewer effluent from the neighboring cities of La Verne and Claremont is also treated at PWRP. The current flow into PWRP is 13 MGD, and the ultimate capacity of PWRP is rated at 15 MGD. Excess flow over capacity of the PWRP is diverted to the LACSD’s San Jose Water Reclamation Plant, and then to its Joint Water Pollution Control Plant in Carson. The City believes that the LACSD system has sufficient capacity to handle any future City growth. Sewer connection fees are established by the LACSD, and are based on a sliding scale according to use. The current connection fee for a single family home is $4,320. The LACSD is authorized to assess individual properties within their boundaries for the cost of treatment of the sewage. The City has no role in setting or collecting the treatment fees. Treatment fees are collected on the property tax bill of properties within the jurisdiction of the LACSD.

Forward-Looking Statements

Certain statements contained in this Official Statement reflect not historical facts but forecasts and “forward-looking statements.” All forward-looking statements are predictions and are subject to known and unknown risks and uncertainties. No assurance can be given that the future results discussed herein will be achieved, and actual results may differ materially from the forecasts described herein. In this respect, the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe” and similar expressions are intended to identify forward-looking statements. All projections, forecasts, assumptions, expressions of opinions, estimates and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement. The achievement of certain results or other expectations contained in such forward-looking

5 statements involves known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements described to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. No updates or revisions to these forward- looking statements are expected to be issued if or when the expectations, events, conditions, or circumstances on which such statements are based change. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.

Miscellaneous

Copies of the Indenture, the Installment Sale Agreement, and the other financing documents may be obtained upon request from the Trustee at The Bank of New York Mellon Trust Company, N.A., 700 South Flower Street, Suite 500, Los Angeles, California 90017.

REFUNDING PLAN

The net proceeds of the Bonds, together with other available funds, will be applied to currently refund the Pomona Public Financing Authority 2002 Revenue Refunding Bonds, Series AF (Sewer Projects), originally issued in the aggregate principal amount of $15,205,000 of which $12,320,000 is currently outstanding (the “2002 Series AF Bonds”). The 2002 Series AF Bonds were issued pursuant to an Indenture of Trust, dated as of October 1, 2002 (the “Series AF Indenture”), by and between the Authority and BNY Western Trust Company (currently known as The Bank of New York Mellon Trust Company, N.A.), as trustee, payable from installment payments payable by the City under the First Amended and Restated Installment Payment Agreement, dated as of October 1, 2002, by and between the Authority and the City (the “First Amended and Restated Installment Sale Agreement”).

On the date of issuance of the Bonds, a portion of the proceeds of the sale of the Bonds, will be deposited in an account for the 2002 Series AF Bonds to be established under those Irrevocable Refunding Instructions, dated as of October __, 2016 (the “Refunding Instructions”), among the Authority, the City and the Trustee. Such amounts held under Refunding Instructions, will be held in escrow (the “Escrow Fund”) and used to redeem the related series of 2002 Series AF Bonds on October __, 2016. Grant Thornton LLP will verify the accuracy of the mathematical computation concerning the adequacy of amounts held in the Escrow Fund. See “VERIFICATION.”

6 ESTIMATED SOURCES AND USES OF FUNDS

The following table details the estimated sources and uses of the proceeds of the sale of the Bonds and other available funds.

BB Bonds BD Bonds Total Estimated Sources:

Principal Amount of the Bonds Net Original Issue Premium Amounts released from the Series AF Indenture Total Sources

Estimated Uses:

Escrow Fund (1) Reserve Account Costs of Issuance Fund (2) Total Uses ______(1) The Trustee will transfer to the Prior Trustee for deposit into the Escrow Account established under the Escrow Agreement for the 2002 Series AF Bonds. See “REFUNDING PLAN.” (2) Costs of Issuance for the Bonds to cover all eligible costs, including underwriter’s discount.

DESCRIPTION OF THE BONDS

General

The Bonds will accrue interest from their date of delivery, and interest thereon will be payable on June 1 and December 1 of each year, commencing on June 1, 2017 (each, an Interest Payment Date as defined herein). The Bonds will bear interest at the respective rates set forth on the inside cover page hereof. Interest on the Bonds will be payable semi-annually calculated based on a 360-day year of twelve (12) thirty-day months on each Interest Payment Date to the person whose name appears on the Registration Books as the Owner thereof as of the Record Date immediately preceding each such Interest Payment Date in accordance with the Indenture. Principal of any Bond and any premium upon redemption will be paid by check or draft of the Trustee upon presentation and surrender thereof at the Trust Office. Principal of and interest and premium (if any) on the Bonds will be payable in lawful money of the United States of America. The term “Record Date” means, with respect to any Interest Payment Date, the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day. Interest coming due on a date that is not a Business Day will be payable on the immediately following Business Day.

The Bonds will be issued as fully-registered bonds in denominations of $5,000 and any integral multiple thereof and, when issued, will be registered in the name of Cede & Co., as the nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only. So long as DTC or its nominee is the Owner of the Bonds, principal of, redemption premium, if any, and interest on the Bonds will be made as described in APPENDIX F – “INFORMATION REGARDING THE BOOK-ENTRY ONLY SYSTEM.”

Each Bond will be dated as of the Closing Date and will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date, or (b) unless

7 it is authenticated on or before November 15, 2016, in which event it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

Redemption of Bonds

Optional Redemption. The Bonds maturing on or after December 1, 20__, will be subject to redemption at the option of the Authority as a whole or in part by such maturity or maturities as will be determined by the Authority, on any date on or after December 1, 20__, from any available source of funds, at a redemption price equal to the principal amount of the Bonds to be redeemed, without premium, together with accrued interest thereon to the date fixed for redemption.

Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Bonds will also be subject to redemption as a whole or in part on any date, to the extent of insurance or condemnation proceeds not used to repair, rebuild or replace the Sewer Enterprise pursuant to the Installment Sale Agreement, or condemnation proceeds received with respect to the Sewer Enterprise and elected by the City to be used for such purpose pursuant to the Installment Sale Agreement, at a redemption price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

Sinking Account Redemption. The Term Bonds maturing December 1, 20__, are subject to mandatory redemption, in part by lot, from Sinking Account payments set forth in the following schedule on December 1, 20__, and on December 1 in each year thereafter to and including December 1, 20__, at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

Term Bonds Maturing December 1, 20__

Redemption Date (December 1) Principal Amount

______* Maturity.

The Term Bonds maturing December 1, 20__, are subject to mandatory redemption, in part by lot, from Sinking Account payments set forth in the following schedule on December 1, 20__, to and including December 1, 20__, at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

8 Term Bonds Maturing December 1, 20__

Redemption Date (December 1) Principal Amount

______* Maturity.

As provided in the Indenture, if some but not all of the Bonds have been redeemed pursuant to the terms for optional redemption or special mandatory redemption from insurance or condemnation proceeds described above, the total amount of Sinking Account payments to be made subsequent to such redemption will be reduced in an amount equal to the principal amount of the Bonds so redeemed by reducing each such future Sinking Account payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as will be designated pursuant to written notice filed by the Authority with the Trustee.

Selection of Bonds for Redemption. Whenever provision is made for the redemption of less than all of the Bonds, the Trustee will select the Bonds to be redeemed from all Bonds or such given portion thereof not previously called for redemption, on a pro rata basis among maturities (unless otherwise directed by the Authority pursuant to the terms for optional redemption of Bonds and by lot within a maturity in any manner which the Trustee in its sole discretion will deem appropriate and fair. For purposes of such selection, the Trustee will treat each Bond as consisting of separate $5,000 portions and each such portion will be subject to redemption as if such portion were a separate Bond.

Notice of Redemption; Rescission. So long as DTC is acting as securities depository for the Bonds, notice of redemption, containing the information required by the Indenture, will be mailed by first class mail, postage prepaid, by the Trustee to DTC (not to the Beneficial Owners of any Bonds designated for redemption), not less than 30 nor more than 60 days prior to the redemption date to the respective Owners of Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee. The Trustee will also provide such additional notice of redemption of Bonds at the time and as may be required by the MSRB (as defined herein). Each notice of redemption will state the date of such notice, the Bonds to be prepaid, the Series and date of issue of such Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity are to be prepaid, the distinctive certificate numbers of the Bonds of such maturity to be prepaid and, in the case of Bonds to be prepaid in part only, the respective portions of the principal amount thereof to be prepaid. Each such notice will also state that such redemption may be rescinded by the Authority and that, unless such redemption is so rescinded, and provided that on said date funds are available for payment in full of the Bonds then called for redemption, on said date there will become due and payable on each of such Bonds the redemption price thereof or of said specified portion of the principal amount thereof in the case of a Bond to be prepaid in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon will cease to accrue, and will require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice.

Failure by the Trustee to give notice as required to any one or more of the information services or securities depositories, or the insufficiency of any such notice will not affect the sufficiency of the proceedings for redemption. The failure of any Owner to receive any redemption notice mailed to such Owner and any defect in the notice so mailed will not affect the sufficiency of the proceedings for redemption.

9 The Authority will have the right to rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption will be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default under the Indenture. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.

Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered.

Effect of Redemption. If notice of redemption has been duly given as provided in the Indenture, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, the Bonds (or portions thereof) so called for redemption is being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption will become due and payable, interest on the Bonds so called for redemption will cease to accrue, said Bonds (or portions thereof) will cease to be entitled to any benefit or security under the Indenture, and the Owners of said Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

Pledge of Revenues

Pursuant to the Indenture, the Bonds are limited obligations of the Authority payable solely from the Revenues and amounts on deposit in the Bond Fund established under the Indenture. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Revenues and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Indenture will be pledged to secure the payment of the principal of and interest on the Bonds in accordance with their terms and the provisions of the Indenture. Said pledge shall constitute a lien on and security interest in such assets and shall attach, be perfected and be valid and binding from and after the Closing Date, without any physical delivery thereof or further act.

Subject to the terms of the Indenture, all Revenues shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which the Trustee shall establish, maintain and hold in trust; except that all moneys received by the Trustee and required under the Indenture or under the Installment Sale Agreement to be deposited in the Redemption Fund shall be promptly deposited therein. All Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the Trustee only as provided in the Indenture.

Revenues consist primarily of Installment Payments to be made by the City to the Authority under the Installment Sale Agreement. As defined in the Indenture, the term “Revenues” means (a) all amounts received by the Authority or the Trustee pursuant or with respect to the Installment Sale Agreement, including, without limiting the generality of the foregoing, all of the Installment Payments (including both timely and delinquent payments, any late charges, and whether paid from any source), prepayments, insurance proceeds, condemnation proceeds, and (b) all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to the Indenture; but excluding any Additional Payments.

As provided in the Indenture, the Authority will transfer in trust, grant a security interest in and assign to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues and certain administrative and enforcement rights of the Authority (but none of its duties or obligations) in the Installment

10 Sale Agreement. The Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the Trustee. The Trustee also shall be entitled to and shall, subject to the provisions of Article VIII, take all steps, actions and proceedings which the Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the City under the Installment Sale Agreement. The assignment of the Installment Sale Agreement to the Trustee is solely in its capacity as Trustee under the Indenture and the duties, powers and liabilities of the Trustee in acting thereunder shall be subject to the provisions of the Indenture. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Indenture.”

The Authority shall not be required to advance any moneys derived from any source other than the Revenues and other assets pledged under the Indenture, whether for the payment of the principal of or interest on the Bonds or for any other purpose of the Indenture.

Installment Sale Agreement/Pledge of Net Revenues

General. The Installment Sale Agreement provides for the payment by the City of Installment Payments in amounts sufficient to make payments of the principal of and interest on the Bonds. The Installment Payments securing payment of the Bonds are payable from Net Revenues. Under the Installment Sale Agreement, the City will agree to pay to the Installment Payments to the Authority, its successors and assigns, but solely from the Net Revenues and other funds pledged under the Installment Sale Agreement, representing the purchase price of the Refinanced Improvements, together with interest on the unpaid principal balance. The Installment Payments shall be paid by the City to the Trustee, as assignee of the Authority pursuant to the Indenture on the fifteenth (15th) day of each May and November during the term of the Installment Sale Agreement, commencing November 15, 2016 (each, an “Installment Payment Date”).

The City accounts for its sewer system operations and maintenance through an enterprise fund known as the “Sewer Enterprise Fund” which fund is defined in the Installment Agreement as the Utility Fund (the “Utility Fund”). As provided in the Installment Sale Agreement, all of the Gross Revenues shall be deposited by the City immediately upon receipt in the Utility Fund. the City will covenant and agree that all Net Revenues will be held by the City in the Utility Fund in trust for the benefit of the Trustee (as assignee of the rights of the Authority hereunder) and the Bond Owners, and for the benefit of the owners of any Parity Obligations.

Separately, the City accounts for its water system operations and maintenance through an enterprise fund known as the “Water Enterprise Fund” or “Water Fund.” The City has, and will have, obligations of the Water Fund outstanding from time to time. There is no cross-collateralization of obligations of the Utility Fund and the Water Fund. The City’s Comprehensive Annual Financial Report (“CAFR”) also includes information relating to the Water Fund. Neither the Installment Payments nor the Bonds are secured by any amounts from the Water Fund.

The Installment Sale Agreement permits the City to enter into Parity Obligations payable from Net Revenues on a parity with the City’s installment payment obligations under the Installment Sale Agreement, which may include leases, loan agreements, installment sale agreements, bonds, notes or other obligations of the City payable from and secured by a pledge of and lien upon any of the Net Revenues on a parity with the Installment Payments, entered into or issued pursuant to and in accordance with the Installment Sale Agreement.

As defined in the Installment Sale Agreement, the term “Net Revenues” means, for any period, an amount equal to all of the Gross Revenues received during such period minus the amount required to pay all Operation and Maintenance Costs becoming payable during such period.

11 “Gross Revenues” means all gross charges received for, and all other gross income and receipts derived by the City from, the ownership and operation of the Sewer Enterprise or otherwise arising from the Sewer Enterprise, including but not limited to investment earnings thereon; but excluding (a) connection charges, (b) the proceeds of any ad valorem property taxes levied for the purpose of paying general obligation bonds of the City relating to the Sewer Enterprise, and (c) the proceeds of any special assessments or special taxes levied upon real property within any improvement district served by the City levied for the purpose of paying special assessment bonds or special tax obligations of the City relating to the Sewer Enterprise.

“Sewer Enterprise” means the entire sewage collection, treatment and disposal system owned or operated by the City, including but not limited to all facilities, properties and improvements at any time owned or operated by the City for the collection, treatment and disposal of sewage, whether within or without the City and any other systems or facilities resulting in the deposits of fees or charges therefor into the Utility Fund; together with any necessary lands, rights, entitlements and other property useful in connection with all of the foregoing, together with all extensions thereof and improvements thereto hereafter acquired, constructed or installed by the City, all as provided in Chapter 12 of the Pomona City Code.

“Operation and Maintenance Costs” means the reasonable and necessary costs and expenses paid by the City for maintaining and operating the Sewer Enterprise, including but not limited to (a) costs of acquisition of water to be supplied to the Sewer Enterprise, (b) costs of electricity and other forms of energy supplied to the Sewer Enterprise, (c) the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the Sewer Enterprise in good repair and working order and (d) the reasonable administrative costs of the City attributable to the operation and maintenance of the Sewer Enterprise, but in all cases excluding (i) debt service payable on obligations incurred by the City with respect to the Sewer Enterprise, including but not limited to the Installment Payments and any Parity Obligations, (ii) depreciation, replacement and obsolescence charges or reserves therefor, and (iii) amortization of intangibles or other bookkeeping entries of a similar nature.

Pledge of Net Revenues. All of the Net Revenues and all moneys on deposit in any of the funds and accounts established under the Indenture will be irrevocably pledged, charged and assigned to the punctual payment of the Installment Payments and, except as otherwise provided in the Indenture, the Net Revenues and such other funds shall not be used for any other purpose so long as any of the Installment Payments remain unpaid. Such pledge, charge and assignment shall constitute a first lien on the Net Revenues and such other moneys for the payment of the Installment Payments in accordance with the terms of the Indenture. Notwithstanding the foregoing, the pledge of and lien on the Net Revenues for the payment of Installment Payments contained in the Installment Sale Agreement is on a parity with the pledge of and lien on Net Revenues for the payment of any Parity Obligations.

Deposits into Utility Fund; Transfers to Make Installment Payments. All of the Gross Revenues shall be deposited by the City immediately upon receipt in the Utility Fund. The City will covenant and agree that all Net Revenues will be held by the City in the Utility Fund in trust for the benefit of the Trustee (as assignee of the rights of the Authority hereunder) and the Bond Owners, and for the benefit of the owners of any Parity Obligations. On or before each Installment Payment Date, the City shall withdraw from the Utility Fund and transfer to the Trustee, for deposit in the Bond Fund, an amount which, together with the balance then on deposit in the Bond Fund, the Interest Account, the Sinking Account and the Principal Account (other than amounts resulting from the prepayment of the Installment Payments pursuant to Article IX and other than amounts required for payment of principal of or interest on any Bonds which have matured or been called for redemption but which have not been presented for payment), is equal to the aggregate amount of the Installment Payment coming due and payable on the next succeeding Interest Payment Date.

12 on any Parity Obligations and otherwise comply with the provisions of the instruments authorizing the issuance of any Parity Obligations; (iii) pay on or before the next Interest Payment Date to the Trustee the amount of any deficiency in the Reserve Account, the notice of which deficiency shall have been given by the Trustee to the City pursuant to the Indenture; and (iv) pay all other amounts when and as due and payable hereunder.

Other Uses of Net Revenues Permitted. The City shall manage, conserve and apply the Net Revenues on deposit in the Utility Fund in such a manner that all deposits required to be made pursuant to the as described immediately above under the caption “Deposits into Utility Fund; Transfers to Make Installment Payments,” will be made at the times and in the amounts so required. Subject to the foregoing sentence, so long as no Event of Default shall have occurred and be continuing hereunder, the City may use and apply moneys in the Utility Fund for (i) the payment of Additional Payments, (ii) the payment of any subordinate obligations or any unsecured obligations, (iii) the acquisition and construction of extensions and betterments to the Sewer Enterprise, (iv) the prepayment of any obligations of the City relating to the Sewer Enterprise, or (v) any other lawful purposes of the City.

Rate Stabilization Fund Deposit. In accordance with the Installment Sale Agreement, the City will establish and maintain a Sewer Rate Stabilization Fund, referred to herein as the “Sewer Rate Stabilization Fund.” From time to time the City may deposit in the Sewer Rate Stabilization Fund from remaining Gross Revenues such amounts as the City shall determine, provided that deposits for each Fiscal Year may be made until (but not after) one hundred eighty (180) days following the end of such Fiscal Year and the amount of current and available Gross Revenues shall be reduced by the amount so deposited for the Fiscal Year with respect to which such deposit is made. The City may withdraw amounts from the Rate Stabilization Fund only for inclusion in Gross Revenues for any Fiscal Year, such withdrawals to be made until (but not after) one hundred eighty (180) days after the end of such Fiscal Year. All interest or other earnings upon deposits in the Rate Stabilization Fund shall either be retained therein or withdrawn therefrom and accounted for as Gross Revenues.

Budget and Appropriation of Installment Payments. During the term of the Installment Sale Agreement, the City shall adopt and make all necessary budgets and appropriations of the Installment Payments from the Net Revenues, and shall, upon written request by the Authority or the Trustee, furnish to the Trustee a Written Certificate stating that the Installment Payments have been included in the final budget of the City for the current Fiscal Year. In the event any Installment Payment requires the adoption by the City of any supplemental budget or appropriation, the City shall promptly adopt the same. The covenants on the part of the City contained in this subsection shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this subsection.

Rate on Overdue Payments. In the event the City should fail to make any of the Installment Payments and Additional Payments as required, the payment in default shall continue as an obligation of the City until the amount in default shall have been fully paid, and the City will agree to pay the same with interest thereon, from the date of default to the date of payment, at the rate of ten percent (10%) per annum.

Prepayment. The City may exercise its option to prepay the principal components of the Installment Payments in whole, or in part among Installment Payment Dates on a pro rata basis in integral multiples of $5,000, on any date on or after December 1, 20__, by paying a prepayment price equal to the aggregate principal components of the Installment Payments to be prepaid, together with the interest component of the Installment Payment required to be paid on or accrued to such date and together with the premium (if any) then required to be paid upon the corresponding redemption of the Bonds pursuant to the Indenture. Such prepayment price shall be deposited by the Trustee in the Redemption Fund to be applied to the optional redemption of Bonds pursuant to the Indenture.

13 In the event that the City prepays all remaining Installment Payments in full pursuant to the Installment Sale Agreement, the City’s obligations under the Installment Sale Agreement shall thereupon cease and terminate, subject to the terms with respect to the City’s obligations to compensate and indemnify the Trustee. In the event that the City prepays the Installment Payments in part but not in whole, the principal component of each succeeding Installment Payment shall be reduced as provided in the Installment Sale Agreement, and the interest component of each remaining Installment Payment shall be reduced by the aggregate corresponding amount of interest which would otherwise be payable on the Bonds thereby redeemed pursuant to the applicable provisions of the Indenture.

Reserve Account of the Bond Fund

The Indenture specifies the creation of a Reserve Account of the Bond Fund in connection with the issuance of the Bonds and such Reserve Account is required under the Indenture to be funded, so long as the 2007 Series BA Bonds remain outstanding, and maintained in an amount equal to the Reserve Requirement. Once the 2007 Series BA Bonds are no longer outstanding, the City will be permitted to determine, without the consent of Owners or holders of the Bonds, whether the Reserve Account will be liquidated and amounts therein applied to capital projects of the Sewer Enterprise. Upon the issuance of the Bonds, an initial deposit to the Reserve Account will be made in an amount equal to initial the Reserve Requirement as shown under the caption “ESTIMATED SOURCES AND USES OF FUNDS.” As defined in the Indenture, the term “Reserve Requirement” means (i) prior to the defeasance of the 2007 Series BA Bonds pursuant to Article X of the Series BA Indenture (the “2007 Bond Defeasance Date”), as of the date of calculation, an amount equal to the maximum amount of annual Debt Service coming due and payable in the current or any future Bond Year and (ii) following the 2007 Defeasance Date, such amount, if any, as the Authority, in its sole discretion, shall determine by execution of a Supplemental Indenture for such purpose.

All amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of (a) paying interest on or principal of the Bonds, when due and payable to the extent that moneys deposited in the Interest Account or Principal Account, respectively, are not sufficient for such purpose, (b) paying the redemption price of any Term Bonds subject to mandatory sinking fund redemption in the event that amounts on deposit in the Sinking Fund are not sufficient for such purpose, and (c) making the final payments of principal of and interest on the Bonds. If as of the first (1st) day of the month preceding any Interest Payment Date there shall be any deficiency in the Reserve Account (whether due to a payment therefrom or due to the fluctuation in market value of securities credited thereto, or otherwise), the Trustee shall promptly notify the City in writing of the amount of such deficiency and the City shall pay to the Trustee the amount of such deficiency as provided in the Installment Sale Agreement. Any amounts on deposit in the Reserve Account at any time in excess of the Reserve Requirement shall be transferred to the Bond Fund.

If following the 2007 Bond Defeasance Date the Reserve Requirement is reduced or the City exercises its option to substitute a Reserve Account Credit Facility for all or a portion of the moneys held by the Trustee in the Reserve Account, then such moneys, on or after the date of such reduction or the date that the Reserve Account Credit Facility becomes effective, at the option of the City, shall be transferred (A) to the Bond Fund and on each subsequent Principal Payment Date, to the Principal Account and used to pay the principal of the Bonds due on such Principal Payment Date, or (B) to a construction fund to be held by the City and used for capital projects of the City in accordance with the Tax Certificate.

The Indenture provides that earnings on the investment of amounts in the Reserve Account shall be retained therein to the extent required to maintain the Reserve Requirement.

14 No Superior Obligations

The City shall not issue or incur any additional bonds or other obligations during the term of the Installment Sale Agreement having any priority in payment of principal or interest out of the Gross Revenues (other than Operation and Maintenance Costs) on the Net Revenues over the Installment Payments. Nothing herein is intended or shall be construed to limit or affect the ability of the City to issue or incur (a) Parity Obligations pursuant as provided below, or (b) obligations which are either unsecured or which are secured by an interest in the Net Revenues which is junior and subordinate to the pledge of and lien upon the Net Revenues established hereunder. See “Issuance of Additional Obligations Under the Installment Sale Agreement” below.

Issuance of Additional Obligations Under the Installment Sale Agreement

The City shall have the right from time to time to issue Parity Obligations, upon such terms and conditions as the City shall deem advisable, but only upon compliance with the following conditions which are conditions precedent to the issuance of Parity Obligations:

(a) No Event of Default shall have occurred and be continuing;

(b) The Net Revenues, calculated in accordance with sound accounting principles, as shown by the books of the City for the most recent completed Fiscal Year for which audited financial statements are available, or for any more recent consecutive twelve (12) month period selected by the City at its option, in either case verified by a certificate or opinion of an Independent Accountant or Fiscal Consultant, plus the Additional Revenues, at least equal one hundred ten percent (110%) and, without the Additional Revenues, at least equal one hundred percent (100%) of the amount of Maximum Annual Debt Service with respect to the Installment Payments and all Parity Obligations then outstanding (including the Parity Obligations then proposed to be issued);

(c) So long as the 2007 Series BA Bonds are Outstanding, upon the issuance of such Parity Obligations a reserve fund shall be established for such Parity Obligations in an amount at least equal to the lesser of (i) Maximum Annual Debt Service on such Parity Obligations proposed to be issued, or (ii) the maximum amount then permitted under the Code. Following discharge of the liability on 2007 Series BA Bonds pursuant to Article X of the Series BA Indenture, at the option of the City, Parity Obligations may be issued without establishing a reserve fund for such Parity Obligations; and

(d) The City shall deliver to the Trustee a Written Certificate certifying that the foregoing conditions have been met.

As defined in the Installment Sale Agreement, the term “Additional Revenues” means, with respect to the issuance of any Parity Obligations, an allowance for Net Revenues arising from any increase in the charges made for service from the Sewer Enterprise which has become effective (or adopted but not yet effective) prior to the incurring of such Parity Obligations but which, during all or any part of the latest Fiscal Year or for any more recent consecutive twelve (12) month period selected by the City, was not in effect, in an amount equal to the total amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year or twelve (12) month period, all as shown by the certificate or opinion of an Accountant or Fiscal Consultant employed by the City.

Nothing contained in the Installment Sale Agreement limits the ability of the City to grant a lien on and pledge of the Net Revenues that is subordinate to any liens on and pledges of Net Revenues for the benefit of the Installment Payments. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

15 Rate Covenant

The City has covenanted in the Installment Sale Agreement, to the extent permitted by law, fix, prescribe, revise and collect rates, fees and charges for the services and improvements furnished by the Sewer Enterprise during each Fiscal Year which are sufficient to yield Net Revenues at least equal to the sum of (i) one hundred percent (100%) of the total Installment Payments and payments with respect to all Parity Obligations coming due and payable in such Fiscal Year, plus (b) the amount by which the amount on deposit in the Utility Fund (including available reserves) on the last day of the immediately preceding Fiscal Year was less than one hundred ten percent (110%) of Maximum Annual Debt Service calculated as of the last day of such Fiscal Year. For information on the possible limitation on the City’s ability to comply with the rate covenant described above as a consequence of Proposition 218, see “RISK FACTORS – Rate-Setting Process Under Proposition 218” and “CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES – Article XIIIC” and “– Article XIIID.” For a description of the reserve funds established by the City within the Utility Fund, see “WATER AND WASTEWATER OPERATIONS DEPARTMENT – Rate Stabilization Fund.”

DEBT SERVICE SCHEDULE

The following table sets forth the amounts required in each Fiscal Year for the payment of principal of and interest on the Bonds, current obligations payable from the Utility Fund including the 2007 Series BA Bonds, after giving effect to the issuance of the Bonds and the refunding of the 2002 Series AF Bonds. See “REFUNDING PLAN.”

16 TABLE 1 DEBT SERVICE ON ALL OUTSTANDING OBLIGATIONS(1)

2016 Revenue Refunding Bonds, Series BB and Series BD(3) 2007 Combined Fiscal Series BA BB Bonds BB Bonds BD Bonds BD Bonds BB and BD Total Debt Year Bonds(2) Principal nterest Principal Interest Debt Service Service(3) 2017 $ 813,593.13 $ -- $ 193,338.02 $ -- $ 52,387.73 $ 245,725.75 $ 1,059,318.88 2018 816,998.76 -- 303,937.50 330,000.00 80,706.26 714,643.76 1,531,642.52 2019 814,966.26 -- 303,937.50 340,000.00 76,506.26 720,443.76 1,535,410.02 2020 812,553.76 -- 303,937.50 345,000.00 70,937.51 719,875.01 1,532,428.77 2021 814,651.26 -- 303,937.50 350,000.00 64,418.76 718,356.26 1,533,007.52 2022 811,351.26 -- 303,937.50 355,000.00 56,925.01 715,862.51 1,527,213.77 2023 812,751.26 -- 303,937.50 365,000.00 48,596.88 717,534.38 1,530,285.64 2024 813,636.26 -- 303,937.50 375,000.00 39,575.00 718,512.50 1,532,148.76 2025 809,074.38 -- 303,937.50 385,000.00 29,593.75 718,531.25 1,527,605.63 2026 809,082.50 -- 303,937.50 400,000.00 18,300.00 722,237.50 1,531,320.00 2027 808,518.75 -- 303,937.50 410,000.00 6,150.00 720,087.50 1,528,606.25 2028 812,362.50 420,000.00 295,537.50 -- -- 715,537.50 1,527,900.00 2029 810,325.00 440,000.00 278,337.50 -- -- 718,337.50 1,528,662.50 2030 812,387.50 455,000.00 260,437.50 -- -- 715,437.50 1,527,825.00 2031 813,775.00 475,000.00 241,837.50 -- -- 716,837.50 1,530,612.50 2032 814,487.50 495,000.00 222,437.50 -- -- 717,437.50 1,531,925.00 2033 814,525.00 510,000.00 204,568.75 -- -- 714,568.75 1,529,093.75 2034 813,887.50 530,000.00 188,318.75 -- -- 718,318.75 1,532,206.25 2035 812,575.00 550,000.00 171,443.75 -- -- 721,443.75 1,534,018.75 2036 815,475.00 565,000.00 154,021.88 -- -- 719,021.88 1,534,496.88 2037 812,587.50 585,000.00 136,053.13 -- -- 721,053.13 1,533,640.63 2038 813,912.50 600,000.00 117,162.50 -- -- 717,162.50 1,531,075.00 2039 814,337.50 620,000.00 97,337.50 -- -- 717,337.50 1,531,675.00 2040 818,750.00 640,000.00 76,862.50 -- -- 716,862.50 1,535,612.50 2041 822,037.50 660,000.00 55,737.50 -- -- 715,737.50 1,537,775.00 2042 819,312.50 680,000.00 33,962.50 -- -- 713,962.50 1,533,275.00 2043 820,575.00 705,000.00 11,456.25 -- -- 716,456.25 1,537,031.25 2044 1,627,150.00 ------1,627,150.00 2045 1,628,137.50 ------1,628,137.50 2046 1,631,087.50 ------1,631,087.50 2047 1,630,887.50 ------1,630,887.50 Total: $28,495,752.58 $8,930,000.00 $5,778,225.53 $3,655,000.00 $544,097.16 $18,907,322.69 $47,403,075.27 ______(1) Includes current debt service on Outstanding Obligations; does not include any Additional Obligations or potential indebtedness discussed herein. Table assumes the refunding and defeasance of the 2002 Series AF Bonds. See “REFUNDING PLAN.” (2) Debt service on the 2007 Series BA Bonds. (3) Preliminary, subject to change. Source: Water and Wastewater Operations Department, City of Pomona.

CITY OF POMONA FINANCES

This Official Statement includes selected financial information provides a brief overview of the City’s finances including in APPENDIX A – “GENERAL ECONOMIC AND DEMOGRAPHIC REGARDING THE CITY OF POMONA.” This financial information has been extracted from the City’s audited financial statements and, in some cases, from unaudited information provided by the City’s Finance Department. The most recent audited financial statements of the City with an unqualified auditor’s opinion is included as Appendix B hereto. See APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

17 Accompanying the Independent Auditor’s Report in Appendix B is the City Management Discussion and Analysis, which is not audited, but is supplementary information required by the Government Accounting Standards Board. The Management Discussion and Analysis presents a summary and overview of the City’s financial condition. Such Management Discussion and Analysis should be reviewed in conjunction with the information presented below to obtain an understanding of the City’s financial condition.

For additional information, see APPENDIX A – “CITY FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION.”

WATER AND WASTEWATER OPERATIONS DEPARTMENT

Governance and Management of Sewer Enterprise

The City's Water and Wastewater Operations Department is under the direction of the Water and Wastewater Operations Director, Darron Poulsen. Mr. Poulsen received his Bachelor of Science in Business Administration and Management as well as his Masters of Arts in Management and Human Resources from the University of Redlands. He has been in municipal government since 1987, and has managed water and wastewater systems in southern California since 1988. He is a member of the American Water Works Association.

The Water and Wastewater Operations Department is operated by a staff of 88 employees, of which 20 are assigned to the Public Works Department and support Business Services and Customer Service sections for the Water and Sewer Enterprises.

Service Area

The City provides sewer service throughout the City, which encompasses approximately 14,676 acres (23 square miles), and 6 acres of land outside the City served by the Sewer Enterprise (the “Wastewater Service Area”). Approximately 2,000 acres in the City drain to other serving entities or currently produce no sewage. There are approximately 28,500 service connections, including approximately 5,850 business accounts. The number of service connections has grown by approximately one percent (1%) in the past five Fiscal Years. Other than as described herein, within the territory of the City, it is the sole provider of Sewer Service to residents and commercial/industrial enterprises.

18 19 Existing Wastewater Facilities

The City’s existing Sewer Enterprise consists of interceptors and pump stations for the conveyance of wastewater within the City. The City’s interceptor system consists of approximately 300 miles of pipeline ranging from 4” to 42” inches in diameter, 4 pump stations, 1.4 miles of force mains, and 4,600 manholes, and facilities for emergency power and odor control, including 3 on-site stationary back-up generators. Although portions of the Sewer Enterprise are dated, based on operating results and materials used, the City estimates that the interceptor system should last in excess of 50 years.

The City collects and conveys wastewater from the Wastewater Service Area for treatment by the Los Angeles County Sanitation Districts (the LACSD herein). LACSD trunk sewers cross the City in several locations, and the City’s collection system connects to these trunk sewers at multiple points. None of the City’s connection points is metered to determine the volume of wastewater being transported to the LACSD system.

The City is one of seventy-eight (78) cities and unincorporated territories located in Los Angeles County that is served by the LACSD. LACSD consists of 26 separate districts, of which the City is located in District No. 21.

As previously noted, approximately 6 acres outside of the City limits are served by the City’s sanitary sewer collection system. These areas are listed below.

Approximately 303 accounts within the City of Claremont. The City of Claremont connects at two locations to an 8-inch City sewer line before being discharged into a 10-inch county trunk sewer.

Two Towne Avenue properties in the City of Claremont.

Approximately 11 commercial/industrial properties located in the City of Chino. The Mills/Philadelphia Section within the City of Chino is located on the City’s southern border. The City has provided sewer service to these 11 properties since their occupation.

Approximately 62 properties in the Fox Park area connect to a LACSD sewer line that ties into the City’s sanitary sewer collection system. The City bills the County of Los Angeles for these properties.

For geographic reasons, certain properties within the City cannot be connected to the City’s sewer system. The following lists the developed properties that are served by other wastewater utilities.

Rolling Ridge Estates (Scenic Ridge Drive and Rock Crest Lane). City of Chino Hills sewers serve approximately 31 developed and 10 undeveloped properties. The City of Chino Hills bills the City quarterly for sanitary sewer collection and annually for wastewater treatment.

Certain City properties are connected to the City’s sanitary sewer collection system, but are not connected to the water distribution system. These properties are listed below.

Walnut Valley Water District. Approximately 16 accounts, 13 commercial accounts and 3 residential trailer parks, are within the City and are connected to the City’s sewer system, but receive water service from the Walnut Valley Water District. The Walnut Valley Water District provides water consumption data to the City for sewer billing by the City. Additionally, there are 2 irrigation only accounts which are not included as part of the 16 since the accounts do not contribute to the sewer system.

20 Wastewater collected by the City’s sewer system is treated and disposed of by the LACSD at the Pomona Water Reclamation Plant (PWRP). The PWRP is located at 295 Humane Way near the western edge of the City, just east of State Route 57 and just north of the Phillips Ranch development area. Wastewater from the neighboring cities of La Verne and Claremont is also treated at PWRP. Because the PWRP lacks sufficient capacity, wastewater also may flow to other LACSD facilities.

The LACSD was formed under authority provided by the County Sanitation District Act of 1923. The LACSD consists of 24 separate districts, of which the City is located within District No. 21. The LACSD’s Internet home page is located at www.lacsd.com, and information on LACSD’s activities are included at this Internet address. This Internet address is included for reference only and the information on such Internet site is not a part of this Official Statement or incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on any Internet site.

The current flow into PWRP is 13 million gallons per day (“mgd”), and the ultimate capacity of PWRP is rated at 15. Excess flow over capacity of the PWRP is diverted to the LACSD’ San Jose Water Reclamation Plant, and then to its Joint Water Pollution Control Plant in Carson. The City believes that the LACSD system has sufficient capacity to handle any future City growth. Sewer connection fees are established by the LACSD, and are based on a sliding scale according to use. The current connection fee for a single family home is $4,320.

The LACSD are authorized to assess individual properties within their boundaries for the cost of treatment of the sewage. The City has no role in setting or collecting the treatment fees. Treatment fees are collected on the property tax bill of properties within the jurisdiction of the LACSD. The annual treatment fee is based on a sliding scale according to use, with the current fee for a single family residence set at $163.

Growth

Residential population, non-residential square footage, and water billing data for major water users provide the basis for estimating wastewater flows. The majority of the City’s wastewater flow is generated from residential uses, as residential land uses comprise more area in the City than any other land use type. The Water and Wastewater Operations Department’s most recent water management plan, the 2015 Urban Water Management Plan, projects 1% growth annually. Since the City is largely built out, the projected growth is expected to occur either through in-fill developments or re-development of currently unused or inefficiently used parcels.

Sewer Enterprise Rates and Charges

General. The City sets the Sewer Enterprise service charges to recover Operation and Maintenance Costs for the Sewer Enterprise, to pay debt service on the Bonds and Parity Obligations, to provide funds to replace the Sewer Enterprise’s facilities and to finance capital costs related to the acquisition of equipment for, and the improvement of, the Sewer Enterprise. In accordance with California law, the City may, from time to time, fix, alter or change charges and other fees related to the Sewer Enterprise. Consequently, the City periodically reviews sewer rates. In accordance with California law, the City reviews such charges and fees to determine if they are sufficient to cover operation and maintenance costs, capital improvement expenditures and debt service requirements. Such charges and fees are set by the City for the services provided by the Sewer Enterprise after a public hearing is held, generally at the time of adoption of the annual budget. The City is not subject to the jurisdiction of, or regulation by, the California Public Utilities Commission or any other regulatory body. The City sets Sewer Enterprise service charges to recover Operation and Maintenance Costs for the Sewer Enterprise, to pay debt service on the Bonds and Parity Obligations, to provide funds to replace the Sewer Enterprise’s facilities, and to finance capital costs related to the acquisition of equipment for, and the improvement of, the Sewer Enterprise. The City is authorized under Chapter 62 of the Pomona City Code to levy sewer fees and

21 charges. See “RISK FACTORS – Rate-Setting Process Under Proposition 218” herein for a discussion of the treatment of the City’s rates and charges in light of Proposition 218.

The City staff annually determines the adequacy of the rate structure after full consideration of expected operations, maintenance and capital costs. In accordance with City policy, operating surpluses may be added to reserves or returned to ratepayers through mitigation of future rate increases. The current rates of the Sewer Enterprise include an annual CPI rate increase which is implemented each January 1 without further approval by City Council. The City is in the process of completing an updated rate study that was done years ago.

Levy of the Rates and Charges. The service charges for the Sewer Enterprise are roughly apportioned relative to the amount of domestic water consumed. The amount of water consumed is measured at the water meter for each City water user. The City has determined that the more water consumed by the user, the more need for the Sewer Enterprise. The amount of water consumed is measured at the water meter for each City water user. All users are charged based on the water meter reads. If a parcel of land benefits from the Sewer Enterprise but is not connected to the City’s Water System, then that parcel is apportioned by an average consumption rate determined by historical records for its particular land use. One exception to the consumption methods is for parcels outside the City boundaries. For some of these parcels, Chapter 62 of the Pomona City Code sets an “annual” sewer maintenance fee of $60.

Any parcel which the City determines is producing and discharging industrial waste sewerage is charged an additional twenty-five percent (25%) for sewer maintenance due to the additional demand on the Sewer Enterprise.

The table below presents the immediate prior, current, and pending sewer service charges of the Sewer Enterprise. The increases in the table below reflect only annual CPI adjustments to current rates. The City’s last review and approval of increased sewer service charges was in 2007. The City has been evaluating its rate structure and the management of the Enterprise expects to present revised sewer service charges to the City Council soon after January 1, 2017. The City Council has approved the development of a rate study for the Sewer Enterprise by an outside consultant and expects to review potential rate increases at that time.

22 TABLE 2 CITY OF POMONA SEWER SYSTEM SEWER SERVICE CHARGES

Effective: Effective: Effective: 01/01/2015 01/01/2016 01/01/2017 Section 62-400. Sewer Service Charge(1) Service Charge Bi-monthly Fixed Service Charge (FSC): $5.92 $6.00 $6.09

Usage Charge (Volume Charge $/HCF)(2) Residential Multi-Family 0.52 0.53 0.53 Multi-Family 0.52 0.53 0.53 Trailer Park 0.52 0.53 0.53 Non-Residential Commercial 0.52 0.53 0.53 Industrial 0.52 0.53 0.53

Section 62-424. Fees (Sewer Service Outside of City) Service Charge Bi-monthly Fixed Service Charge (FSC) 5.92 6.00 6.09 Usage Charge (Volume Charge $/HCF) 0.52 0.53 0.53

(1) A fixed minimum dollar amount of $6.00 is set for each bi-monthly bill. The applicable fixed service charge plus the volume charge $/HCF must exceed the fixed minimum dollar amount, and if it does not, then the fixed minimum dollar amount of $6.00 will be charged to the account holder. (2) For sewer service both in and outside of the City. Source: City of Pomona.

The City’s average bi-monthly minimum residential bill for sewer service during the most recently completed Fiscal Year was $22.96, consisting of a fixed service charge plus a volume charge $/HCF. The maximum bi-monthly residential bill for sewer service varies, dependent on usage. The City’s connection fee for sewer service during the most recently completed Fiscal Year was $30.00 per foot, and an additional $500 per acre in excess of 150 foot depth. The total number of sewer service connections within the Sewer Enterprise was 28,500.

The table below sets forth a comparison of average monthly bill for a single family residential unit in the City to those of surrounding communities:

23 TABLE 3 CITY OF POMONA SEWER SYSTEM MONTHLY BILL COMPARISON (As of June 30, 2016)

Monthly Community Residential Bill (1) City of Ontario $13.50 City of Chino 11.78 City of Montclair 7.59 City of Chino Hills 8.45

(1) Excludes treatment charges collected by agency but paid to another entity. (2) Includes monthly service fee and consumption charge. Source: City of Pomona.

Comparisons with other jurisdictions can be useful, but they do not in themselves explain why utility rates are set at the levels they are. Each utility is unique and has its own set of circumstances that influence rate setting.

The following table presents certain information relating to the ten entities with the largest Sewer Enterprise payment for Fiscal Year 2014-15. The ten largest entities accounted for approximately 11.56% of Gross Revenues in Fiscal Year 2014-15.

TABLE 4 CITY OF POMONA SEWER SYSTEM LARGEST ENTERPRISE PAYMENT (As of June 30, 2015)

Total Sewer Enterprise Percent Name Payment of Total(1) Pomona Unified School District $166,994 3.49% L A County Fair 86,825 1.81 Cal Poly Pomona 74,170 1.55 Ripon Cogeneration LLC 59,302 1.24 Pomona Valley Community Hospital 46,961 0.98 Lanterman State Hospital 31,663 0.66 Crest Financing, LP 25,599 0.53 Village Gate Homeowners Association 22,505 0.47 Nijar Realty/PAMA Management 21,594 0.45 Cal Poly Foundation Inc. 18,215 0.38 Total $553,828 11.56%

(1) Based on total of $4,788,219 Gross Revenues received in Fiscal Year 2014-15. Source: City of Pomona.

Collection Procedures

The City is on a bi-monthly billing cycle. Bills are sent out every day of each cycle, and thus there is no uniform due date. Payment is due within thirty (30) days, and is considered delinquent if not paid by that date. If

24 payment is not received, a forty-eight hour payment notice is sent, after which time water utilities are disconnected. Currently 9% of the accounts, which provide 1% of Gross Revenues, are delinquent.

The following table sets forth information related to accounts receivable and number of shut-offs.

TABLE 5 CITY OF POMONA SEWER SYSTEM SEWER CUSTOMER ACCOUNTS RECEIVABLE AND SHUT-OFFS BY FISCAL YEAR Fiscal Years 2010-11 through 2014-15 (Unaudited, except as otherwise noted)

2010-11 2011-12 2012-13 2013-14 2014-15 Sewer Charges for Service(1) $4,345,699 $4,528,346 $4,491,233 $4,481,934 $4,788,219 Accounts Receivable - Sewer(2) $1,104,966 $1,224,646 $1,148,405 $1,216,402 $1,129,785 Accounts Receivable – Sewer Over 120 Days(2) 44,672 31,032 12,880 12,226 5,664 % of Total Sewer Charges Revenues(3) 4.04% 2.53% 1.12% 1.01% 0.50% ______(1) Audited. (2) Amounts are as of June 30 and represent the receivable portion of billed customer accounts as of the end of each Fiscal Year. (3) Percentage of Accounts Receivable over 120 days as compared to Total Accounts Receivable. Source: Water and Wastewater Operations Department.

Historic Sewer Enterprise Gross Revenues

The following table shows the City’s annual Sewer Enterprise Gross Revenues for the ten most recent Fiscal Years, excerpted from the City’s audited financial statements.

TABLE 6 CITY OF POMONA SEWER SYSTEM HISTORIC GROSS REVENUES(1) (As of June 30)

Year Gross Revenues % Change 2006 $2,853,610 9.7% 2007 3,384,966 18.62 2008 4,008,291 18.41 2009 4,189,672 4.53 2010 4,271,176 1.95 2011 4,342,683 1.67 2012 4,521,702 4.12 2013 4,516,713 0.11 2014 4,684,934 3.72 2015 4,733,661 1.04

(1) Excludes connection fees (also referred to as development impact fees). Source: City of Pomona.

Not included in the table above but accounted for as miscellaneous revenues for those Fiscal Years shown in Table 7 below, are development impact fees as follows: $4,946 in Fiscal Year 2011-12, $19,180 in Fiscal Year 2012-13, $114,766 in Fiscal Year 2013-14, $54,293 in Fiscal Year 2014-15, and $64,782 in Fiscal Year 2015-16.

25 Historic Operating Results

The following selected financial information provides a brief overview of the City’s finances. This financial information has been extracted from the City’s audited financial statements and, in some cases, from unaudited information provided by the City’s Finance Department. Certain of the following information in connection with the financial condition and results of operations of the Utility Fund for Fiscal Year 2015-16, is unaudited and should be read in conjunction with certain of the information contained in the City’s CAFR for Fiscal Year 2014-15, and specifically the portion of the basic financial statements relating to the operation of the Utility Fund. See “FINANCIAL STATEMENTS” herein. The most recent audited financial statements of the City with an unqualified auditor’s opinion is included as APPENDIX B hereto. See APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.”

Accompanying the Independent Auditor’s Report in APPENDIX B is the City Management Discussion and Analysis, which is not audited, but is supplementary information required by the Government Accounting Standards Board. The Management Discussion and Analysis presents a summary and overview of the City’s financial condition. Such Management Discussion and Analysis should be reviewed in conjunction with the information presented below to obtain an understanding of the City’s financial condition.

The following table is a summary of operating results of the Sewer Enterprise for the last four Fiscal Years audited, and the most current Fiscal Year (unaudited).

26 TABLE 7 STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE UTILITY FUND Fiscal Years 2011-12 through 2014-15 (Audited) and 2015-16 (Unaudited)

2011-12 2012-13 2013-14 2014-15 2015-16(4)

OPERATING REVENUES(1) Charges for Services $ 4,521,702 $ 4,461,575 $ 4,684,934 $ 4,733,661 $ 4,385,594 Miscellaneous 6,644 29,658 117,000 54,558 64,911 TOTAL OPERATING REVENUES 4,528,346 4,491,233 4,801,934 4,788,219 4,450,505 OPERATING EXPENSES(2) Personnel services 989,246 970,472 1,007,978 1,067,952 1,087,068 Operations 1,752,161 186,664 1,037,867 1,051,538 1,297,864 Claims expense 51,094 108,346 114,127 50,442 45,000 Insurance 23,601 25,633 27,667 33,686 36,319 Amortization of deferred loss on refunding 72,158 72,158 58,195 58,195 58,195 Depreciation 673,011 1,073,284 590,260 580,345 580,345 TOTAL OPERATING EXPENSES 3,561,271 2,436,557 2,836,094 2,842,158 3,104,791 OPERATING INCOME (LOSS) 967,075 2,054,676 1,965,840 1,946,061 1,345,715 NONOPERATING REVENUES (EXPENSES) Interest revenue 52,868 36,159 52,122 50,097 65,411 Interest expense (1,290,216) (1,277,020) (1,262,289) (1,246,550) (1,247,875) Gain (Loss) on disposal of capital assets (355,494) (4,853,345) (114,093) (84,691) -- TOTAL NON OPERATING REVENUES (EXPENSES) (1,592,842) (6,094,206) (1,324,260) (1,281,144) (1,182,464) INCOME (LOSS) BEFORE TRANSFERS (625,767) (4,039,530) 641,580 664,917 163,251 Transfers in 292,944 12,440 403,520 231,526 392,899 Transfers out (417,061) (481,440) (439,373) (448,251) (527,000) CHANGES IN NET POSITION (749,884) (4,508,530) 605,727 448,192 29,150 NET POSITION: Beginning of year, as originally reported 23,075,275 22,325,391 17,816,861 18,024,656 16,573,574 Restatements -- -- (397,932) (1,899,274) (748,278)(5) Beginning of year, as restated(3) -- -- 17,418,929 16,125,382 -- Changes in Net Position -- -- 605,727 448,192 29,150 END OF YEAR $22,325,391 $17,816,861 $18,024,656 $16,573,574 $15,854,446 ______(1) Operating Revenues represent charges to customers for sales and services. Charges for services excludes sewer connection fees (also referred to as development impact fees), which are included in Miscellaneous. (2) Operating Expenses include cost of sales and services, administrative expenses, and depreciation on capital assets. (3) Beginning balance restated due to the implementation of GASB 68 which recognized the unfunded pension liability thus decreasing the beginning net position. (4) Fiscal Year 2015-16 revenues and expenses are through June 2016 and the City’s estimate for year-end position. The decline in operating revenues is attributable in substantial part to conservation of water usage. As discussed in this Official Statement, there is a general corollary between water use, including conservation of use, which can impact operations of the Sewer Enterprise. These numbers are unaudited and subject to change. (5) Restatement of $(748,278) for Fiscal Year 2015-16 is due to an understatement of operations expense in Fiscal Year 2012-13. This statement is a summary statement only. The complete Comprehensive Annual Financial Report of the City, including the Notes to the Financial Statements therein, is an integral part of this statement. For Fiscal Year 2014-15 results, see APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.” Sources: The City’s Comprehensive Annual Financial Reports for Fiscal Years 2011-12 through 2014-15. Water and Wastewater Operations Department for Fiscal Year 2015-16.

27 As of June 30, 2015, the Utility Fund reported $4.8 million in operating revenues and operating expenses of $2.8 million resulting in operating income of $2 million. After consideration of non-operating revenues, nonoperating expenses and transfers, the total change in net position is $0.4 million with total revenues in excess of expenses. The beginning net position of $18 million was restated to $16.1 due to the implementation of GASB 68 which recognized the unfunded pension liability thus decreasing the beginning net position. As of June 30, 2015, the Utility Fund was made up of $17.1 million in current assets, $28.3 in non-current assets, $0.7 million in deferred outflows of resources, $0.7 million in current liabilities, $28.4 in non-current liabilities and $0.5 million in deferred inflow of resources resulting in net position of $16.5 million.

The following table is a summary statement of debt service coverage for the Sewer Enterprise for Fiscal Years 2011-12 through 2015-16. Connection fees were $4,945.75 in Fiscal Year 2011-12, $19,180.00 in Fiscal Year 2012-13, $114,766.14 in Fiscal Year 2013-14, $54,293.13 in Fiscal Year 2014-15, and $64,782.00 in Fiscal Year 2015-16. The footnotes below include important explanatory information.

TABLE 8 CALCULATION OF HISTORIC DEBT SERVICE COVERAGE Fiscal Years 2011-12 through 2015-16 (Unaudited)

2011-12 2012-13 2012-14 2014-15 2015-16(4)

Operating Income (Loss)(1) $ 967,075 $2,054,676 $1,965,840 $1,946,061 $1,345,715 Less: Connection Fees (4,946) (19,180) (114,766) (54,293) (64,782) Add: Amortization of Deferred 72,158 72,158 58,195 58,195 58,195 Loss on Refunding Add: Depreciation 673,011 1,073,284 590,260 580,345 580,345 Add: Interest Revenue 52,868 36,159 52,122 50,097 65,411 Less: Restatement(2) -- (748,278) ------Operating Income (Adjusted) $1,760,166 $2,468,819 $2,551,651 $2,580,405 $1,984,884

Debt Service(3) $1,628,938 $1,626,456 $1,627,405 $1,631,938 $1,625,721

Debt Service Coverage 1.08x 1.52x 1.57x 1.58x 1.22x ______(1) Based on the City’s Comprehensive Annual Financial Reports for Fiscal Years 2011-12 through 2014-15. Fiscal Year 2015-16 information is provided by the Water and Wastewater Operations Department. (2) Debit is the result of an understatement of operations expense in Fiscal Year 2012-13, resulting in a Restatement of $(748,278) for Fiscal Year 2015- 16. See Table 7 above. (3) Payments on Series AF and Series BA Bonds. (4) Fiscal Year 2015-16 revenues and expenses are through June 2016. These numbers are unaudited and subject to change. Source: City of Pomona.

See APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.”

Utility Fund Reserves

The City currently has approximately $8.3 million on deposit in Utility Fund of which approximately $6.3 million represents working capital. This amount is well in excess the City’s current operating reserve policy for the Utility Fund, which is intended to be used in the event of a catastrophe that prevents the Sewer Enterprise from operating in its normal course of business, but otherwise consistent with the City’s conservative financial practices. The Water and Wastewater Operations Department intends to review for presentation to the City

28 Council before the end of the current Fiscal Year minimum and maximum reserve levels, and a schedule of uses for available amounts.

For information on the possible limitation on the City’s ability to set rates and charges at levels that would permit the City to make deposits into the Rate Stabilization Fund as a consequence of Proposition 218, see “RISK FACTORS – Rate-Setting Process Under Proposition 218” and “CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES – Article XIIIC” and “– Article XIIID.”

Rate Stabilization Fund

The Installment Sale Agreement provides for the establishment, at the election of the City, of a Sewer Rate Stabilization Fund. There are currently no funds on deposit in the Sewer Rate Stabilization Fund. From time to time the City may deposit in the Sewer Rate Stabilization Fund from Gross Revenues such amounts as the City shall determine, provided that deposits for each Fiscal Year may be made until (but not after) one hundred eighty (180) days following the end of such Fiscal Year and the amount of current and available Gross Revenues shall be reduced by the amount so deposited for the Fiscal Year with respect to which such deposit is made.

Insurance for the Sewer Enterprise

Public Liability and Property Damage Insurance. The Installment Sale Agreement provides that the City shall maintain or cause to be maintained, throughout the Term of the Installment Sale Agreement, but only if and to the extent available at reasonable cost from reputable insurers, a standard comprehensive general insurance policy or policies in protection of the Authority, the City, and their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Sewer Enterprise. Said policy or policies shall provide coverage in such liability limits and shall be subject to such deductibles as shall be customary with respect to works and property of a like character. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, subject to the Installment Sale Agreement, or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance. The proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which such proceeds shall have been paid.

Casualty Insurance. The Installment Sale Agreement provides that the City shall procure and maintain, or cause to be procured and maintained, throughout the Term of the Installment Sale Agreement, but only in the event and to the extent available from reputable insurers at reasonable cost, casualty insurance against loss or damage to any improvements constituting any part of the Sewer Enterprise, covering such hazards as are customarily covered with respect to works and property of like character. Such insurance may be subject to deductible clauses which are customary for works and property of a like character. Such insurance may be maintained as part of or in conjunction with any other casualty insurance carried by the City and may be maintained in whole or in part in the form of self-insurance by the City, subject to the Installment Sale Agreement, or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance. All amounts collected from insurance against accident to or destruction of any portion of the Sewer Enterprise shall be used to repair, rebuild or replace such damaged or destroyed portion of the) Sewer Enterprise, and to the extent not so applied, shall be paid to the Trustee to be applied to prepay the Installment Payments or any Parity Obligations in accordance with written instructions of the City filed with the Trustee.

In the event that any insurance required pursuant to the paragraphs above is provided in the form of self- insurance, the City shall file with the Trustee annually, within ninety (90) days following the close of each Fiscal Year, a statement of an independent actuarial consultant identifying the extent of such self-insurance and stating the determination that the City maintains sufficient reserves with respect thereto. In the event that any such

29 insurance shall be provided in the form of self-insurance by the City, the City shall not be obligated to make any payment with respect to any insured event except from Net Revenues or from such reserves.

Alliant Property Insurance Program (APIP) Pooled Coverage. The City participates in the purchase of property coverage that includes earthquake and flood coverage through the Alliant Property Insurance Program (“APIP”) administered by Alliant Insurance Services. Coverage for both flood and earthquake is included for all scheduled City locations, including bond financed locations of the Sewer Enterprise. Alliant Insurance Services is one of the largest insurance brokers in the United States and provides coverage to over 70% of the cities in the State. Furthermore, Alliant also provides coverage to 54 of the 58 California counties, and to the State. Alliant has created the APIP pool to enable public entities access to greater levels of property coverage than what would be available in the insurance marketplace.

The City maintains casualty insurance on many of the assets of the Sewer Enterprise, including, among other assets, treatment plants, pump stations, administration buildings, garages, and warehouses. The City does not maintain any property insurance for the pipelines of the Sewer Enterprise because such insurance is not available at commercially reasonable rates. The City is not obligated under the Installment Sale Agreement to procure and maintain, or cause to be procured and maintained, earthquake insurance on the Sewer Enterprise.

As of June 30, 2015, estimated claims payable amounted to $12,101,548. Of this, the amount allocable to the Sewer Enterprise is $289,226.

See APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.”

Utility Costs

The Sewer Enterprise is supplied with gas by Southern California Gas Company and electricity by Southern California Edison (“SCE”). Although SCE’s electric rates have increased slightly more than 12% per year since 2006, the Water and Wastewater Operations Department’s overall gas and electric expenses have remained consistent at approximately 1% of total operating expenditures. Over the past few years the Sewer Enterprise has transferred ownership and operation of four sewer lift stations to the LACSD. The transfer has resulted in a 98% decrease in the cost of electricity for the Sewer Enterprise. The remaining 2% (approximately $1,200) is attributed to the shared cost of electricity for the Water Yard facility which is headquarters for the Water and Wastewater Operations Department.

City Investment Policy

The City may invest public funds until such time as the funds are needed to pay the obligations of the City. The City maintains an Investment Policy adopted in 2016, which sets forth guidelines of the City Treasurer’s investment of such funds. The Treasurer is a trustee and therefore a fiduciary subject to the prudent investor standards, and the primary objective shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet liquidity needs, and the third objective shall be to achieve a market rate of return.

The City matches its investments with anticipated cash flow requirements. Pursuant to the California Government Code, maximum maturities shall not exceed five (5) years, without specific approval of the City Council. The City’s current investment policy is attached hereto as APPENDIX G – “FORM OF CITY INVESTMENT POLICY.”

The Treasurer renders a quarterly report to the City Council, providing the type of investment, financial institution from which the investment was purchased, the date of maturity, the date upon which the investment

30 becomes subject to redemption provisions, amount (to include both par and book value) of the investment, and the current market value of all investments. Additionally, the report includes the rate of interest, accrued interest earned and other data so required by the City Council. The report also includes a statement denoting the City’s ability to meet its expenditure requirements for the following six month period, or an explanation as to why sufficient moneys will not be available. The City only transacts business with banks, savings and loan institutions, and registered investment securities dealers.

Collateralization is required for investments in certificates of deposit (in excess of the FDIC insured amount) and all repurchase agreements, with a collateral level of at least 102% of market value of principal and accrued interest of eligible securities for certificates of deposit and repurchase agreements.

The City may not invest any funds in inverse floaters, range notes, or interest only strips that are derived from a pool of mortgages. The City may hold previously permitted but currently prohibited investments until their maturity dates.

From time to time, the City Council may authorize the issuance of debt in accordance with State and Federal laws. Given the special requirements of such debt-repayment schedules and arbitrage/rebate requirements, the Treasurer may choose to place the investment of these funds with the City’s fiscal agent or trustee. In such instances, the policy, objectives and investment restrictions shall be established by the Council by separate action and investment of such funds shall be governed by the indenture of trust or other bond documents.

The City’s investment portfolio accounted for investments of approximately $217 million (of which approximately $92 million were held by various fiscal agents in connection with outstanding bonded indebtedness). With respect to funds not held by various fiscal agents, the following table presents a breakdown of the City’s investment portfolio by type of security as of June 30, 2016.

Percentage of Investments Total Market Value LAIF 66.37% FHLB 2.40 FHLMC 4.79

Source: City Finance Department

The Underwriter has not made an independent investigation of the City’s investments and has made no assessment of the current Investment Policy.

Self-Insurance

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and others; and natural disasters. The City’s Self-Insurance Internal Service Fund is part of the City’s self-insurance program for general liability, workers compensation, and unemployment insurance. The City is a member of the California State Association of Counties Excess Insurance Authority (CSAC-EIA). Through CSAC-EIA, the City has a program limit of $25 million dollars with a self- insured retention of $1 million for its excess liability program and its worker’s compensation program. Additionally, the City purchases catastrophic excess liability coverage that provides an additional $25 million in coverage.

CSAC-EIA is a governmental joint powers authority created by certain California counties and cities to provide a pooled approach to the members’ liability and excess workers’ compensation coverage as allowed under

31 the California Government Code. The authority manages various types of pooled coverage programs for participating members.

Retirement System

The City contributes to the State of California Public Employees’ Retirement System (CalPERS), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for cities in the State. CalPERS provides retirement and disability benefits, annual cost-of living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of CalPERS annual financial report may be obtained from their executive office: 400 P Street, Sacramento, CA, 95814 or on their website: www.calpers.ca.gov. The information on such website is not incorporated herein by such reference or otherwise. See Note 5 in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

The Water and Wastewater Operations Department is considered to be part of the City’s CalPERS pension plan, therefore all related information included in this Official Statement and in Note 11 in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015” refers to the City as a whole unless specifically indicated otherwise. All full-time City employees and part- time City employees who have worked over 1,000 hours during a fiscal year are eligible to participate in CalPERS, with benefits vesting after 5 years of service. Employees are designated as safety (police officers and others designated as safety by law) or miscellaneous (all others). The City’s payroll for employees covered by CalPERS for the year ended June 30, 2015 was $27,707,165. Total payroll for the City for the year ended June 30, 2016 is projected to be $37,760,278. For the year ended June 30, 2015, the employer contributions recognized as a reduction to the net pension liability for all the Miscellaneous Plan and Safety Plan were $2,691,762 and $6,210,220 respectively. The total amount paid by employees towards retirement was $3,153,786, or 21% of the total cost of retirement contributions, in Fiscal Year 2015-16. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS.

The Sewer Enterprise is obligated to contribute amounts necessary to provide for normal and unfunded liability allocated as its portion of the City’s required contribution to the Miscellaneous Plan as determined by CalPERS actuaries. All Sewer Enterprise employees are members of the City’s Miscellaneous Plan. The Utility Fund contributed 100% of its allocated required contribution of $129,898 to CalPERS for the fiscal years ended June 30, 2016. See Note 11 in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015” for information about the City’s Miscellaneous Plan liabilities and funding.

The City makes two types of contributions for covered employees. The first contribution represents the amount the City is required to make (the employer rate). The second represents an amount, which is made by the employee, and not reimbursed to the employee by the City (the member rate). The member rate is set by contract and normally remains unchanged. The employer rate is an actuarially established rate, is set by CalPERS, and changes from year to year.

A menu of benefit provisions as well as other requirements are established by State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance.

The defined pension benefit is payable monthly for life, in an amount that varies. See Note 11: “Defined Benefit Pension Plan Obligations” in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL

32 FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.” The Plan also provides death and disability benefits.

The City and miscellaneous employees agreed to create a second tier benefit for those hired on or after August 14, 2011, and City and safety employees agreed to create a second tier benefit for those hired on or after November 21, 2010, in each case through those hired before January 1, 2013, which are subject to PEPRA (as described below). Safety employees are not applicable to costs of the Sewer Enterprise.

The Governor, in September 2012, signed AB 340 and AB 197, two bills which enacted the California Public Employees’ Pension Reform Act of 2013 (PEPRA). AB 340 made several changes to the pension benefits that may be offered to employees hired on or after January 1, 2013, including setting a new maximum benefit, a lower-cost pension formula for safety and non-safety employees with requirements to work longer in order to reach full retirement age and a cap on the amount used to calculate a pension. Among other things, AB 340 also enacted pension spiking reform for new and existing employees, required three-year averaging of final compensation for new employees, and provided employers with new authority to negotiate cost-sharing agreements with current employees. AB 340 also contained limitations on the use of retired annuitants, requiring that an annuitant have a six-month break in service prior to returning to work.

The legislation created mandatory benefits tiers for new employees who have not worked for another CalPERS agency hired beginning January 1, 2013 ranging from 2.0% at age 50 to a maximum of 2.7% at age 57 for police safety and fire safety employees and 1.1% at age 50 to a maximum of 2.4% at age 62 for miscellaneous employees.

CalPERS also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute and City ordinance.

For Fiscal Years 2013-14 and 2014-15, employer contribution rates are as follows for the Miscellaneous Plan:

Miscellaneous Annual Rate Components 2013-14 2014-15 Normal cost rate 8.201% 7.994% Unfunded liability $46,890,137 $61,102,094 Total Required $ 3,850,865 $ 4,294,696

Pension Funding Information. The staff actuaries at CalPERS prepare annually an actuarial valuation which covers a Fiscal Year ending approximately 15 months before the actuarial valuation is delivered (thus, the actuarial valuation delivered to the City in October 2015 (the “2015 CalPERS Report”) covered CalPERS’ Fiscal Year ended June 30, 2014). The actuarial valuations express the City’s required contribution rates in percentages of covered payroll, which percentages the City must contribute in the Fiscal Year immediately following the Fiscal Year in which the actuarial valuation is prepared (thus, the City’s contribution rate derived from the actuarial valuation as of June 30, 2014, that was delivered in October 2015, will affect the City’s Fiscal Year 2016-17 required contribution rate). CalPERS rules require the City to implement the actuary’s recommended rates.

In calculating the annual actuarially recommended contribution rates, the CalPERS actuary calculates, on the basis of certain assumptions, the actuarial present value of benefits that CalPERS will fund under the CalPERS Plans, which includes two components, the normal cost and the Unfunded Actuarial Accrued Liability (the “UAAL”). The normal cost represents the actuarial present value of benefits that CalPERS will fund under the CalPERS Plans that are attributed to the current year, and the actuarial accrued liability (the “AAL”) represents

33 the actuarial present value of benefits that CalPERS will fund that are attributed to past years. The UAAL represents an estimate of the actuarial shortfall between actuarial value of assets on deposit at CalPERS and the present value of the benefits that CalPERS will pay under the CalPERS Plans to retirees and active employees upon their retirement. The UAAL is based on several assumptions such as, among others, the rate of investment return, average life expectancy, average age of retirement, inflation, salary increases and occurrences of disabilities. In addition, the UAAL includes certain actuarial adjustments such as, among others, the actuarial practice of smoothing losses and gains over multiple years (which is described in more detail below). As a result, the UAAL may be considered an estimate of the unfunded actuarial present value of the benefits that CalPERS will fund under the CalPERS Plans to retirees and active employees upon their retirement and not as a fixed expression of the liability the City owes to CalPERS under its CalPERS Plans.

The actuarial funding method used is the Entry Age Normal Cost Method. Under this method, projected benefits are determined for all members and the associated liabilities are spread in a manner that produces level annual cost as a percent of pay in each year from the age of hire (entry age) to the assumed retirement age. The cost allocated to the current fiscal year is called the normal cost.

The actuarial accrued liability for active members is then calculated as the portion of the total cost of the plan allocated to prior years. The actuarial accrued liability for members currently receiving benefits, for active members beyond the assumed retirement age, and for members entitled to deferred benefits, is equal to the present value of the benefits expected to be paid. No normal costs are applicable for these participants.

The excess of the total actuarial accrued liability over the actuarial value of plan assets is called the unfunded actuarial accrued liability. Funding requirements are determined by adding the normal cost and an amortization of the unfunded liability as a level percentage of assumed future payrolls. Commencing with the June 30, 2013 valuation all new gains or losses are tracked and amortized over a fixed 30-year period with a 5 year ramp up at the beginning and a 5 year ramp down at the end of the amortization period. All changes in liability due to plan amendments (other than golden handshakes), changes in actuarial assumptions, or changes in actuarial methodology are amortized separately over a 20-year period with a 5 year ramp up at the beginning and a 5 year ramp down at the end of the amortization period. Changes in unfunded accrued liability due to a Golden Handshake will be amortized over a period of 5 years. If a plan’s accrued liability exceeds the market value of assets, the annual contribution with respect to the total unfunded liability may not be less than the amount produced by a 30-year amortization of the unfunded liability. An exception has been made for the change in asset value from actuarial to market value in this valuation. The CalPERS Board approved a 30-year amortization with a 5- year ramp-up/ramp-down for only this change in method.

Additional contributions will be required for any plan or pool if their cash flows hamper adequate funding progress by preventing the expected funded status on a market value of assets basis to either:

• Increase by at least 15% by June 30, 2043; or

• Reach a level of 75% funded by June 30, 2043

The necessary additional contribution will be obtained by changing the amortization period of the gains and losses, except for those occurring in the fiscal years 2008-09, 2009-10, and 2010-11 to a period, which will result in the satisfaction of the above criteria. CalPERS actuaries will reassess the criteria above when performing each future valuation to determine whether or not additional contributions are necessary.

An exception to the funding rules above is used whenever the application of such rules results in inconsistencies. In these cases, a “fresh start” approach is used. This simply means that the current unfunded actuarial liability is projected and amortized over a set number of years. As mentioned above, if the annual contribution on the total unfunded liability was less than the amount produced by a 30-year amortization of the

34 unfunded liability, the plan actuary would implement a 30-year fresh start. However, in the case of a 30-year fresh start, just the unfunded liability not already in the (gain)/loss base (which is already amortized over 30 years), will go into the new fresh start base. In addition, a fresh start is needed in the following situations:

1) When a positive payment would be required on a negative unfunded actuarial liability (or conversely a negative payment on a positive unfunded actuarial liability); or

2) When there are excess assets, rather than an unfunded liability. In this situation, a 30-year fresh start is used, unless a longer fresh start is needed to avoid a negative total rate.

It should be noted that the actuary may choose to use a fresh start under other circumstances. In all cases, the fresh start period is set by the actuary at what is deemed appropriate; however, the period will not be less than five years, nor greater than 30 years.

In each actuarial valuation, the CalPERS actuary estimates the actuarial value of the assets (the “Actuarial Value”) of the CalPERS Plans at the end of the fiscal year (which assumes, among other things, that the rate of return during that fiscal year equaled the assumed rate of return of 7.75%). The CalPERS actuary uses a smoothing technique to determine Actuarial Value that is calculated based on certain policies. As described below, these policies changed significantly in recent years.

On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the 2015- 16 rates, CalPERS will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period.

On January 1, 2013, PEPRA took effect. The impact of the PEPRA changes are included in the rates and the benefit provision listings of the June 30, 2013 valuation for the 2015-16 rates. On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the 2015-16 rates, CalPERS will no longer use an actuarial value of assets and will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period.

In 2014 CalPERS completed a 2-year asset liability management study incorporating actuarial assumptions and strategic asset allocation. On February 19, 2014 the CalPERS Board of Administration adopted relatively modest changes to the current asset allocation that is expected to reduce the expected volatility of returns. The adopted asset allocation is expected to have a long- term blended return that continues to support a discount rate assumption of 7.5%. The newly adopted asset allocation has a lower expected investment volatility which will result in better risk characteristics than an equivalent margin for adverse deviation. The previous asset allocation had an expected standard deviation of 12.45% while the current asset allocation has a lower expected standard deviation of 11.76%.

The investment return for Fiscal Year 2014-15 was announced July 13, 2015. The investment return in Fiscal Year 2014-15 is 2.4% before administrative expenses. This year, there will be no adjustment for real estate and private equities. For purposes of projecting future employer rates, CalPERS is assuming a 2.4% investment return for Fiscal Year 2014-15.

The investment return realized during a fiscal year first affects the contribution rate for the fiscal year two years later. Specifically, the investment return for 2014-15 will first be reflected in the June 30, 2015 actuarial valuation that will be used to set the 2017-18 employer contribution rates. The 2015-16 investment return will first be reflected in the June 30, 2016 actuarial valuation that will be used to set the 2018-19 employer contribution rates and so forth.

35 Based on a 2.4% investment return for Fiscal Year 2014-15, the April 17, 2013 CalPERS Board-approved amortization and rate smoothing method change, the February 18, 2014 new demographic assumptions including 20-year mortality improvement using Scale BB and assuming that all other actuarial assumptions will be realized, and that no further changes to assumptions, contributions, benefits, or funding will occur between now and the beginning of the Fiscal Year 2017-18.

Projected Future Employer Contribution Rates. The projected future employer contribution rates for the City are as set forth in the table below. The estimated rate for 2017-18 is based on a projection of the most recent information available to CalPERS, including an estimated 2.4% investment return for Fiscal Year 2014-15.

The table below shows projected employer contribution rates (before cost sharing) for the next five fiscal years, assuming CalPERS earns 2.4% for Fiscal Year 2014-15 and 7.5% every fiscal year thereafter, and assuming that all other actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projected contribution rates do not reflect that the plan’s normal cost will decline over time as new employees are hired into PEPRA and other lower cost benefit tiers.

Miscellaneous Plan Projected Future Employer Contribution Rates*

Fiscal Year Miscellaneous 2016-17 21.586% 2017-18 23.6 2018-19 25.6 2019-20 27.6 2020-21 27.8 2021-22 28.5 ______* CalPERS projected. Source: City of Pomona Finance Department and 2015 CalPERS Report.

See also “Notes to Financial Statements” in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

Funding History. The City’s Pension Plan includes separate valuations for Miscellaneous Members and Safety Members. Safety Members are not applicable to costs of the Sewer Enterprise. The funded status of the Miscellaneous Plan for the actuarial valuations performed as of June 30, 2009 through 2014 are set forth in the table below. Underfunded liability is primarily the result of a significant decline in the value of the plan assets, less than anticipated investment returns by CalPERS and an increase in benefits for miscellaneous employees. As described below, the City has addressed the underfunded liability through significant changes to its compensation structure including a second tier of reduced retirement benefits for new miscellaneous employees. The City cannot predict the level of future contributions to CalPERS which may be required by CalPERS but such amounts may increase significantly over current levels.

The funding history below shows the recent history of the actuarial accrued liability, actuarial value of assets, market value of assets, funded ratios and covered payroll for Miscellaneous Members. Safety Members are not applicable to costs of the Sewer Enterprise.

36 Miscellaneous Members

Entry Age Market Valuation Normal Actuarial Market Underfunded Actuarial Value Annual UAAL as a Date Accrued Value of Value of Liability Funded Funded Covered Percentage (June 30) Liability Assets Assets (UAAL) Ratio Ratio Payroll of Payroll $29,964,63 2009 $208,855,695 $137,596,384 $137,596,384 $71,259,311 65.9% 65.9% 3 42% 2010 213,632,193 151,890,461 151,890,461 61,741,732 71.1 71.1 25,564,336 41 2011 224,309,938 177,419,801 177,419,801 46,890,137 79.1 79.1 23,667,462 50 2012 231,289,438 170,187,344 170,187,344 61,102,094 73.6 73.6 23,046,877 38 2013 235,600,974 183,795,478 183,795,478 51,805,496 78.0 78.0 21,207,342 41 2014 251,305,918 207,630,193 207,630,193 43,675,725 82.6 82.6 21,134,245 48 ______* Beginning with the June 30, 2013 CalPERS valuation, Actuarial Value of Assets as reported by CalPERS equals Market Value of Assets as a result of CalPERS Direct Rate Smoothing Policy. Source: City of Pomona Finance Department and 2015 CalPERS Report.

The City plans to continue to prepay its contributions to CalPERS as it has done at the beginning of each year since Fiscal Year 2007-08, and to set aside the discount received from such prepayments for future pension costs or further pay downs of unfunded liability. Despite these mitigating steps taken by the City, CalPERS has made a number of changes to actuarial demographic assumptions that have increased contribution rates. It is important for the City to continue to work with its employees to identify measures that will ensure that increases in ongoing compensation costs do not outstrip those of revenue growth. The passage of PEPRA in September 2012 is working to further control cost increases in the future, as new employees are receiving reduced retirement benefits and cities will be encouraged to increase employees’ share of contribution costs.

Other Post Employment Benefits

In addition to providing pension benefits through CalPERS, the City, in accordance with agreements with various bargaining units and groups, provides medical insurance benefits that are considered other postemployment benefits (OPEB) to certain retired employees under a single employer benefit plan. The City has funded the OPEB on a pay-as-you-go basis. While the annual required contribution in Fiscal Year 2014-15 was $5,508,998, the City paid $3,345,170, which represents the value of the current year’s retiree payments. The annual OPEB cost is reported as expenses in the non-departmental governmental activities program.

All Sewer Enterprise employees are eligible to vest in the City’s OPEB. The Sewer Enterprise is allocated its portion of the City’s required annual OPEB cost contribution. The Utility Fund contributed 100% of its allocated required contribution of $64,774 for the fiscal year ended June 30, 2016. See Note 12 in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015” for information about the City’s OPEB liabilities and funding.

Collateral Benefits Plan

The Collateral Benefits Plan provides a supplemental retirement benefit to City employees upon resigning from the City and concurrently retiring with CalPERS. For the year ending June 30, 2015, the City’s annual pension cost for the Collateral Benefits Plan of $110,032 was equal to the actuarial required contribution. See Note 12 in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

37 Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan

Employees of the City who retire through CalPERS, their spouses, and eligible dependents, may receive health plan coverage through the Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan (Plan). The Plan is a single employer defined benefit plan which provides the retirees a monthly medical contribution that is not to exceed the cost of the plan selected, with the maximum contribution limited for individual retirees based on bargaining groups. There are 489 employees eligible to receive or are receiving post-employment benefits at June 30, 2015. See Note 12 in APPENDIX B – CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

Long-Term Debt

The City may issue general obligation bonds for the acquisition and improvement of real property, subject to the approval of two-thirds of the voters voting on the bond proposition. A tax on all real property within the City to pay principal of and interest on general obligation bonds is levied by the City and collected by the County on the secured and unsecured property tax bills.

The City has no general obligation bonds outstanding. By law, general obligation bonded indebtedness to 15.0% of the total assessed valuation of property within the City.

Outstanding Sewer Enterprise Indebtedness

As of the date of issuance of the Bonds, the only indebtedness secured by Net Revenues will be the Bonds and the $14,540,000 is currently outstanding 2007 Series BA Bonds.

The City has no general obligation bonds outstanding (for wastewater purposes) and has no immediate plans to issue such indebtedness.

As concerns the 2007 Series BA Bonds, the financial statements erroneously note that the City has pledged certain tax revenue to the repayment of the 2007 Series BA Bonds. See Note 9 in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.”

Capital Improvement Program

The City of Pomona 2005 Sewer System Master Plan (the “Master Plan”) presents an assessment of the hydraulic capacity of the City’s major sewers, an evaluation of the City’s four pump stations, and a prioritized set of capital improvement projects to address existing and projected future capacity requirements and pump station condition limitations.

The Master Plan calls for approximately $8 million in capital improvements to be phased in over a twenty year period. Regular and systematic inspection and assessment of wastewater collection system infrastructure and easements provides a basis for identifying and scheduling capital improvements as well as identifying needed maintenance activities. The results of the overall assessment are then used to determine the funding required to repair, rehabilitate, and replace an aging collection system and to prioritize how the funds should be allocated. Recommendations for capital improvements will optimize the expenditure and efforts to operate a sewer collection system.

The City employs CCTV technology for the inspection of pipelines. With the use of the City's one (1) CCTV truck, the City began performing inspections of select sewer pipelines of the City's wastewater collection system. The City's efforts were initiated in March 2004 and include inspection of existing sewer pipelines as

38 determined necessary and all new and rehabilitated pipelines to ensure contractor compliance with City design and construction standards. The city also contracted out CCTV inspection and assessment services of the entire wastewater collection system, including manholes, in 2008 and completed in 2009.

The City has considered long-term rehabilitation or replacement of aging pipes or pipes in poor condition, including the rehabilitation or replacement of 6 miles of pipeline and manholes per year at an estimated annual cost of $4.8 million for 20 years. At this rate, rehabilitation or replacement of pipes currently over 50 years old would take approximately 13 to 22 years, depending on the length of pipe with unknown ages that are actually over 50 years old. However, pipeline rehabilitation or replacement should not be based primarily on pipe condition, and thus this goal will need to be revised as the City gains more information about pipe condition through videotaping and additional hydraulic modelling. Depending on the condition of the City’s pipes and on the City’s financial capabilities, the goal could potentially be adjusted higher or lower.

The City expects to fund certain of the capital improvement projects in its Master Plan on a pay-go basis, identifying and prioritizing projects annually. The City is currently working on a strategic plan for its Sewer Enterprise, which is expected to be completed in the near term and implemented next year.

No Currently Anticipated Additional Obligations

Pursuant to the Installment Sale Agreement, the City may incur additional Obligations, payments with respect to which will be on parity with, the City’s obligation to make Installment Payments, subject to satisfaction of the conditions specified in the Installment Sale Agreement. The City does not currently anticipate the issuance of debt to finance the current capital improvement plan.

WATER SUPPLY

Certain of the information set forth under this caption has been obtained from publicly available sources other than the City and the Water and Wastewater Operations Department, which the City and the Authority have no reason to believe is not accurate, including, without limitation, the CAFRs and other public financial documents of the Three Valley Municipal Water District and The Metropolitan Water District of Southern California. Such information necessarily represents abbreviated and summarized forms of such other sources of information. Such information is not guaranteed by the City or the Authority as to its accuracy or completeness and no representation is made as to the sufficiency of such information for all purposes or the absence of material adverse changes in such information subsequent to the date of the respective publicly available source document. Neither the Three Valley Municipal Water District nor The Metropolitan Water District of Southern California has participated in the preparation of this Official Statement. Neither is obligated in any way to the owners or Beneficial Owners of any Bonds and neither has pledged any of its moneys, funds or assets toward the payment of any amount due in connection with the Bonds. There is no cross-collateralization of obligations of the Utility Fund and the Water Fund. Neither the Installment Payments nor the Bonds are secured by any amounts from the Water Fund.

Current Water Supply

As discussed in this Official Statement, the City has determined that the more water consumed by the user, the more need for the Sewer Enterprise. Because of this general corollary, water availability and use, including conservation of use, impact operations of the Sewer Enterprise. The City obtains water from four principal sources: groundwater, surface water, imported water and recycled wastewater. Groundwater has historically been the primary source of supply. Historical production from each water source is summarized in Table 9 below. The total production capacity of all water facilities, groundwater and surface water, is currently 15.1 million gallons per day (“mgd”) for Fiscal Year 2014-15. This is approximately 75% of the current daily usage for the City, based upon Fiscal Year 2014-15 data from the 2015 Urban Water Management Plan. In Fiscal

39 Year 2014-15, the City satisfied approximately 71% of its annual domestic water demands from groundwater supplies. It obtained 4% from surface supplies and 18% from imported supplies. In addition, the City produced 1,593 acre feet (“af”) from recycled wastewater for nonpotable uses.

TABLE 9 CITY OF POMONA WATER SYSTEM SUMMARY OF WATER PRODUCTION BY SOURCE(1)

Surface Imported Total Total Fiscal Year Wells Water (MWD) Domestic Recycled Production 2010-11 14,533 3,237 3,219 20,989 1,347 22,336 2011-12 15,440 2,941 3,085 21,466 1,561 23,027 2012-13 16,166 1,424 5,153 22,743 1,670 24,413 2013-14 16,748 894 5,929 23,571 793 24,634 2014-15 15,987 976 4,063 21,026 1,593 22,619

(1) In acre-feet. Source: City of Pomona.

The City has 37 wells that utilize groundwater from four separate basins; the Chino, Pomona, Claremont Heights and Spadra groundwater basins. Total water production capacity of all wells is approximately 31 mgd, based on average groundwater elevation in the various basins. The only adjudicated groundwater basin from which the City produces water is the Chino Basin. The Pomona and Claremont Heights basins are not adjudicated but are managed by a protective association. Spadra Basin is neither adjudicated nor formally managed. The water production capacity of the wells is somewhat dependent on the groundwater levels. The Claremont Heights Basin wells show the greatest sensitivity to water levels with capacities being the greatest when water levels are high following wet years.

The City’s surface water supplies are obtained from San Antonio Canyon and Evey Canyon. The former supply is the larger of the two and the annual quantity of water is based on stipulated rights secured by predecessor agencies. The City’s water rights from San Antonio Canyon are based on its ownership of 99.32% of the Canon Water Company (“CWC”) stock. The City is the only CWC stockowner taking delivery of water based on such ownership. In addition, the City owns all the rights to water from Evey Canyon. The City’s Pedley Filtration Plant treats local surface runoff from San Antonio Canyon and Evey Canyon. The design capacity of the plant is 4 mgd. In 1997 the plant underwent a modification to bring it to current technology standards for treatment, including filtration and disinfection. After filtration the treated water is stored in an onsite reservoir.

The City obtains imported water from the Three Valley Municipal Water District (“TVMWD”) which is a member agency of The Metropolitan Water District of Southern California (“MWD”). MWD is a public corporation organized in 1928 under the authority of the Metropolitan Water District Act. This Act provides a means whereby groups of cities and certain other governmental subdivisions such as municipal water districts, not necessarily contiguous, may join together for the development of a water supply. The TVMWD was formed in 1950 (originally named the “Pomona Valley Municipal Water District,” it changed its name in 1986) for the purpose of transporting state water project (“SWP”) and Colorado River water to supplement the local water supply.

The primary source of supply of imported water is MWD’s Weymouth Treatment Plant in La Verne, which currently produces a blend of Northern California and Colorado River water. The water is conveyed through the Orange County Feeder and the Pomona-Walnut-Rowland (“PWR”) Joint Water Line. Water from the TVMWD Miramar Plant is 100% SWP water. The City’s imported supply connections have a total capacity of

40 49.7 mgd. Water production from imported sources has generally increased over the last few years and this growth is expected to continue.

MWD has many ongoing projects and programs aimed at increasing water supply reliability and reducing the vulnerability of droughts. Such programs include funding for local reclaimed and groundwater recovery projects, water transfer projects, conservation projects, and off-river, groundwater, and regional storage projects. MWD faces various serious challenges in the continued supply of imported water to its customers, including the City. A description of these challenges as well as a variety of other operating information with respect to MWD is included in certain disclosure documents prepared by MWD. MWD has entered into certain continuing disclosure agreements pursuant to which it is contractually obligated, for the benefit of owners of certain of its outstanding obligations, to file certain annual reports, notices of certain material events as defined under Rule 15c2-12 of the Exchange Act (“Rule 15c2-12”) and annual audited financial statements with certain information repositories. MWD has not entered into any contractual commitment with the Authority, the City, the Trustee or the Owners of the Bonds to provide information. MWD has not reviewed this Official Statement and has not made any representations or warranties with respect to the accuracy or completeness of the information contained or incorporated herein, including information with regard to MWD.

ENTERPRISE REGULATORY REQUIREMENTS

General

As part of routine operations and maintenance activities, the Water and Wastewater Operations Department transfers treated water between storage facilities and discharges water to the environment. These transfers and discharges are regulated under the Federal Clean Water Act through general and facility-specific National Pollutant Discharge Elimination System (“NPDES”) permits issued by the State Water Resources Control Board (“SWRCB”). Such permits contain numerical effluent limitations, monitoring, reporting, and notification requirements for water discharges from the facilities and pipelines of the Sewer Enterprise.

The wastewater treatment plants’ operations are regulated by the Clean Water Act under the direction of the United States Environmental Protection Agency (the “EPA”). The EPA has delegated permitting authority to the State Department of Environmental Conservation, which administers the State Pollution Discharge Elimination System (“SPDES”).

The City is operating and maintaining the water treatment and transmission facilities in compliance with the NPDES permit requirements.

State Regulations

As an operator of a municipal wastewater system, the City is responsible for complying with various State requirements, including the California Environmental Quality Act, as amended (Division 13 of the California Public Resources Code) (“CEQA”), with respect to the operational requirements, design and construction standards for its operators. Failure to meet these standards may subject the City to civil or criminal sanctions. The City is currently in compliance with all applicable State regulations.

Proposed Regulations

Other regulations, including regulations that are in effect but whose compliance are not yet mandated and regulations that are currently proposed, will continue to impact the operation of the Sewer Enterprise and its associated costs. Also, the costs of proposed new regulations are currently unknown. See “RISK FACTORS – Statutory and Regulatory Compliance.”

41 THE AUTHORITY

The Authority has no financial liability to the Owners of the Bonds with respect to the payment of Installment Payments by the City or with respect to the performance by the City of the other agreements and covenants it is required to perform.

The Authority is governed by its own Board of Directors consisting of City staff. The Authority is dependent upon the officers and employees of the City to administer its programs.

RISK FACTORS

Investment in the Bonds involves risks that may not be appropriate for certain investors. The following is a discussion of certain risk factors that should be considered, in addition to other matters set forth herein, in evaluating the Bonds for investment. The information set forth below does not purport to be an exhaustive listing of the risks and other considerations that may be relevant to an investment in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks.

Limited Obligations

The obligation of the City to pay the Installment Payments securing the Bonds is a limited obligation of the City and is not secured by a legal or equitable pledge or charge or lien upon any property of the City or any of its income or receipts, except the Net Revenues under the Installment Sale Agreement. The obligation of the City to make the Installment Payments does not constitute an obligation of the City to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. No assurance can be made that Net Revenues, estimated or otherwise, will be realized by the City in amounts sufficient to pay the Installment Payments. Among other matters, drought, general and local economic conditions, and changes in law and government regulations (including initiatives and moratoriums on growth) could adversely affect the amount of Net Revenues realized by the City. In addition, the realization of future Net Revenues is subject to, among other things, the capabilities of management of the City, the ability of the City to provide water to its customers, and related wastewater services, and the ability of the City to meet its covenant to the extent permitted by law, fix, prescribe, revise and collect rates, fees and charges for the services and improvements furnished by the Sewer Enterprise during each Fiscal Year which are sufficient to yield Net Revenues at least equal to the sum of (i) one hundred percent (100%) of the total Installment Payments and payments with respect to all Parity Obligations coming due and payable in such Fiscal Year, plus (b) the amount by which the amount on deposit in the Utility Fund (including available reserves) on the last day of the immediately preceding Fiscal Year was less than one hundred ten percent (110%) of Maximum Annual Debt Service calculated as of the last day of such Fiscal Year. See “WATER AND WASTEWATER OPERATIONS DEPARTMENT – Establishment of Water Service Charges.”

42 The Bonds are limited obligations of the Authority payable solely from and secured solely by the Revenues pledged therefor and amounts on deposit in the Bond Fund established under the Indenture. Funds for the payment of the principal of and the interest on the Bonds are derived solely from the Installment Payments. The Authority has no other source of revenues from which to pay debt service on the Bonds. The Authority has no taxing power. In the event of a default under the Indenture, the owners of the Bonds have, in certain circumstances, the right to accelerate the entire principal amount of the Bonds. See “Acceleration; Limitations on Remedies” below. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

Rate Covenant Not a Guarantee

The ability of the City to make the Installment Payments and any other payments required to be made by it under the Installment Sale Agreement depends on the ability of the City to generate Net Revenues at the levels required by the Installment Sale Agreement. The City’s projected operating results, as set forth herein, contemplate that even with a reduction in service charges on residential and commercial users, the City will be able to make all of its required Installment Payments. There can be no assurance, however, that such imposition of such fees and charges will result in the generation of Net Revenues in the amounts sufficient to pay Installment Payments. As a result, the City may be unable to comply with the covenants under the Installment Sale Agreement regarding generation of revenues and the City’s covenant does not constitute a guarantee that sufficient Net Revenues will be available to pay the Installment Payments. Failure by the City to make its Installment Payments under the Installment Sale Agreement could materially affect the Authority’s ability to timely pay debt service on the Bonds.

Rate-Setting Process Under Proposition 218

Proposition 218, which added Articles XIIIC and XIIID to the State Constitution, affects the City’s ability to impose future rate increases and no assurance can be given that future rate increases will not encounter majority protest opposition or be challenged by initiative action authorized under Proposition 218. In the event that future proposed rate increases cannot be imposed as a result of majority protest or initiative, the City might thereafter be unable to generate Net Revenues in the amounts required by the Installment Sale Agreement to pay the Installment Payments, which could in turn adversely impact the Authority’s ability to make payments of the principal of and interest on the Bonds. See “CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES – Article XIIIC” and “– Article XIIID.”

Notwithstanding the foregoing, the City has covenanted, to the extent permitted by law, fix, prescribe, revise and collect rates, fees and charges for the services and improvements furnished by the Sewer Enterprise sufficient to yield Net Revenues at least equal to the sum of the total Installment Payments and payments with respect to all Parity Obligations coming due and payable in such Fiscal Year, plus the amount by which the amount on deposit in the Utility Fund (including available reserves) on the last day of the immediately preceding Fiscal Year was less than one hundred ten percent (110%) of Maximum Annual Debt Service calculated as of the last day of such Fiscal Year, as set forth under “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Rate Covenant,” and to use its best efforts to effect Water Service rate increases in compliance with Proposition 218. The current Sewer Enterprise service charges approved by the City Council have been imposed in compliance with Proposition 218. See “CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES – Article XIIIC” and “– Article XIIID.”

Constitutional Limit on Fees and Charges

If a portion of the Sewer Enterprise rates or connection charges were determined by a court to exceed the reasonable costs of providing service, any fee which the City charges may be considered to be a “special tax,” which under Article XIIIA of the California Constitution must be authorized by a two-thirds vote of the affected electorate. This limitation is applicable to the City’s rates for service provided by the Sewer Enterprise. The

43 reasonable cost of service provided by the Sewer Enterprise has been determined by the State Controller to include depreciation and allowance for the cost of capital improvements. In addition, the California courts have determined that fees such as connection fees (capacity charges) will not be special taxes if they approximate the reasonable cost of constructing Sewer Enterprise improvements contemplated by the local agency imposing the fee. Such court determinations have been codified in the Government Code of the State of California (Section 66000 et seq.).

Under Article XIIIB of the California Constitution, state and local government entities have an annual “appropriations limit” which limits their ability to spend certain moneys called “appropriations subject to limitation,” which consists of tax revenues, certain state subventions and certain other moneys, including user charges to the extent they exceed the costs reasonably borne by the entity in providing the service for which it is levying the charge. In general terms, the “appropriations limit” is to be based on certain fiscal year 1978-79 expenditures, and is to be adjusted annually to reflect changes in the consumer price index, population and services provided by these entities. Among other provisions of Article XIIIB, if an entity’s revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.

See “CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES – Article XIIIA” and “– Article XIIIB.”

The City is of the opinion that the rates and use charges imposed by the City in connection with the Sewer Enterprise do not exceed the costs it reasonably bears in providing such services.

Statutory and Regulatory Impact

Laws and regulations governing wastewater management are enacted and promulgated by government agencies on the federal, state and local levels. Compliance with these laws and regulations may be costly, and, as more stringent standards are developed to protect the environment, these costs will likely increase. Claims against the City with respect to its wastewater facilities and services could be significant. Such claims are payable from assets of the City or from other legally available sources.

Although rates are the major source of funding for regulatory costs and the City has covenanted in the Installment Sale Agreement to establish such rates as are necessary to enable the City to make all payments required to be made pursuant to the Installment Sale Agreement, no assurance can be given that the cost of remediation of identified environmental conditions or compliance with such laws and regulations will not materially adversely affect the ability of the City to generate Net Revenues in the amounts sufficient to pay Installment Payments.

Earthquake or Other Natural Disasters

The financial stability of the City can be adversely affected by a variety of factors, particularly those which may affect infrastructure and other public improvements and private improvements and the continued habitability and enjoyment of such improvements. Such additional factors include, without limitation, geologic conditions (such as earthquakes), topographic conditions (such as earth movements, wildfires and floods) and climatic conditions (such as droughts and tornadoes).

The area encompassed by the City, like that in much of California, may be subject to unpredictable seismic activity. The City is located within a regional network of several active and potentially active faults. The San Jacinto Fault, the Glen Helen Fault and the Lytle Creek Fault are all located within the vicinity of the City. Although the City believes that no active or inactive fault lines pass through, or near, the City, if there were to be an occurrence of severe seismic activity in the City, there could be an impact on the cost or the ability to supply

44 and deliver water until repairs could be made, possibly diminishing Net Revenues. Building codes require that some of these factors be taken into account, to a limited extent, in the design of improvements, including the Sewer Enterprise. Some of these factors may also be taken into account, to a limited extent, in the design of other infrastructure and public improvements neither designed nor subject to design approval by the City. Design criteria in any of these circumstances are established upon the basis of a variety of considerations and may change, leaving previously-designed improvements unaffected by more stringent subsequently established criteria. In general, design criteria reflect a balance at the time of protection and the future costs of lack of protection, based in part upon a present perception of the probability that the condition will occur and the seriousness of the condition should it occur. Conditions may occur and may result in damage to improvements of varying seriousness, such that the damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances, the actual value of public and private improvements within the City in general may well depreciate or disappear, notwithstanding the establishment of design criteria for any such condition.

Sewer Enterprise Demand and Growth

There can be no assurance that the local demand for the services provided by the Sewer Enterprise will be maintained at levels described in this Official Statement. Because of changes in demographics within the boundaries of the City, it is possible for the demand for services of the Sewer Enterprise decline over the term of the Bonds. A significant decline in demand might create a situation in which the City could not increase rates sufficiently to offset the decrease in customers or usage. This would reduce the City’s ability to make the Installment Payments, which could in turn adversely impact the Authority’s ability to make payments of the principal of and interest on the Bonds as and when due.

Reduction in the level of demand could require an increase in rates or charges in order to produce Net Revenues sufficient to comply with the City’s rate covenant in the Installment Sale Agreement. For information on the possible limitation on the City’s ability to comply with the rate covenant as a consequence of Proposition 218 (as defined herein), see “RISK FACTORS – Rate-Setting Process Under Proposition 218” and “CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES – Article XIIIC” and “– Article XIIID.” There can be no assurance that any other entity with regulatory authority over the Sewer Enterprise will not adopt further restrictions on operation of the Sewer Enterprise.

Sewer Enterprise Expenses and Collections

The operation and maintenance expenditures related to the Sewer Enterprise are expected to increase in the next five years. However, there can be no assurance that the City’s projected future Operation and Maintenance Costs of the Sewer Enterprise will actually be as projected by the Water and Wastewater Operations Department and described in this Official Statement. Changes in technology, new regulatory requirements, increases in the cost of energy or other expenses would reduce Net Revenues, and could require substantial increases in rates or charges in order to comply with the rate covenant. Such rate increases could increase the likelihood of nonpayment, and could also decrease demand. Also, any such rate increases could increase the likelihood of nonpayment by customers from the City and could also decrease demand from such purchasers and may impact the City’s ability to make the Installment Payments, which could in turn adversely impact the Authority’s ability to make payments of the principal of and interest on the Bonds as and when due.

Limited Recourse on Default

If the City defaults on its obligation to make payments under the Installment Sale Agreement, the Trustee has the right to accelerate the total unpaid principal amount of the Bonds. However, in the event of a default and

45 such acceleration there can be no assurance that the City will have sufficient Net Revenues to pay the accelerated Installment Payments.

Limitations on Remedies

The rights of the Bondholders are subject to the limitations on legal remedies against cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Additionally, enforceability of the rights and remedies of the Bondholders, and the obligations incurred by the City, may become subject to the federal bankruptcy code (Title 11, United States Code) (the “Bankruptcy Code”) and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the U.S. Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against cities in the State. Bankruptcy proceedings, or the exercise of powers by the Federal or State government, if initiated, could subject the Bondholders to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights. Under Chapter 9 of the Bankruptcy Code, which governs the bankruptcy proceedings for public agencies such as the City, there are no involuntary petitions in bankruptcy. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Bondholders, the Trustee and the Authority could be prohibited from taking any steps to enforce their rights under the Installment Sale Agreement, and from taking any steps to collect amounts due from the City under the Installment Sale Agreement.

No Obligation to Tax

The obligation of the Authority to pay the principal of and interest on the Bonds does not constitute an obligation of the Authority for which the Authority is obligated to levy or pledge any form of taxation or for which the Authority has levied or pledged any form of taxation. The Authority has no taxing power. The obligation of the Authority to pay principal of and interest on the Bonds does not constitute a debt or indebtedness of any Authority, the City, the State of California or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation or restriction.

The obligation of the City to make Installment Payments under the Installment Sale Agreement does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation.

Neither the Bonds nor the obligation of the City to make Installment Payments constitutes an indebtedness of the Authority, the City, the County, the State, or any political subdivision of the State within the meaning of any constitutional or statutory debt limitation or restriction.

Bankruptcy

In addition to the limitation on remedies contained in the Indenture, the rights and remedies provided in the Indenture and the Installment Sale Agreement may be limited by and are subject to the provisions of federal bankruptcy laws and to other laws or equitable principles that may affect the enforcement of creditors’ rights. Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the bankruptcy proceedings for public agencies such as the City, there are no involuntary petitions in bankruptcy. Bankruptcy proceedings, if initiated, could subject the Bondholders to judicial discretion and interpretation of their rights in bankruptcy proceedings or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.

46 State Budget

The State of California is experiencing significant financial and budgetary stress due to national and statewide economic conditions and other factors over which the City has no control. The State’s financial condition and budget policies affect communities and local public agencies throughout California, including the City. To the extent that the State budget process results in reduced revenues to the City, the City will be required to make adjustments to its budget.

Certain information about the State budgeting process and the State Budget is available through several State of California sources. A convenient source of information is the State’s website, where recent official statements for State bonds are posted. The references to internet websites shown below are shown for reference and convenience only; the information contained within the websites has not been reviewed by the City or the Authority and is not incorporated in this Official Statement by reference.

The California State Treasurer’s Internet home page at www.treasurer.ca.gov, under the heading “Financial Information,” posts the State’s audited financial statements. In addition, the “Financial Information” section includes the State’s filings required by Rule 15c2-12(b)(5), as amended, adopted by the Securities and Exchange Commission in compliance with the Securities and Exchange of 1934 (the “Rule”) for State bond issues. The “Financial Information” section also includes the “Overview of the State Economy and Government, State Finances, State Indebtedness, Litigation” from the State’s most current Official Statement, which discusses the State budget and its impact on local governments.

The California Department of Finance’s Internet home page at www.dof.ca.gov, under the heading “California Budget,” includes the text of proposed and adopted State Budgets. The State Legislative Analyst’s Office the (“LAO”) prepares analyses of the proposed and adopted State budgets. The analyses are accessible on the Legislative Analyst’s Internet home page at www.lao.ca.gov under the heading “Products.”

Statutory and Regulatory Compliance

The Sewer Enterprise is subject to a variety of federal and State statutory and regulatory requirements. Laws and regulations governing wastewater treatment and the delivery of water are enacted and promulgated by federal, state and local government agencies.

No assurance can be given that the cost of compliance with such laws, regulations, and orders would not adversely affect the ability of the Sewer Enterprise to generate Net Revenues sufficient to pay the debt service on account of any Obligation senior to or on a parity with the Installment Payments including, without limitation, the Installment Payments, which could in turn adversely impact the Authority’s ability to make payments of the principal of and interest on the Bonds.

Risks Relating to the Water Supply

General. There are a variety of factors that can adversely affect the supply of water available to The Metropolitan Water District of Southern California, the Three Valley Municipal Water District and the City. See “WATER SUPPLY.” Further, among other factors affecting demand, water use is affected by economic conditions. Economic recession and its associated impacts such as job losses, income losses, and housing foreclosures or vacancies affect aggregate levels of water use and the City’s water sales. Among other matters, water supply and demand, general and southern California economic conditions and changes in law and government regulations could adversely affect the amount of operating revenues that the Water and Wastewater Operations Department receives.

47 Drought Risks. The ability of the Sewer Enterprise to operate effectively can be affected by the water supply available to the City, which is situated in an arid and semi-desert environment. If the water supply decreases significantly, whether by operation of mandatory supply restrictions, prohibitively high water costs or otherwise, Sewer Enterprise service charges will diminish and Net Revenues available to pay the Installment Payments may be adversely affected. Suppliers of water to the City, including the Three Valley Municipal Water District and The Metropolitan Water District of Southern California, have planned and managed reserve supplies to account for normal occurrences of drought conditions. See “WATER SUPPLY.”

Earthquakes, Wildfires, and Other Natural Disasters. Although the City has not experienced any significant damage from seismic activities, the geographic area in which the City is located is subject to unpredictable seismic activity. Southern California is characterized by a number of geotechnical conditions that represent potential safety hazards, including expansive soils and areas of potential liquefaction and landslide. Water conveyance and distribution facilities maintained by California Department of Water Resources, The Metropolitan Water District of Southern California and the Three Valley Municipal Water District are all subject to the risk of earthquakes and other natural disasters which could interrupt deliveries to the City.

Acceleration; Limitations on Remedies

The Indenture provides that, upon and during the continuance of an Event of Default thereunder, the Trustee may, subject to certain conditions, declare the principal of all Bonds then Outstanding and the interest accrued thereon to be due and payable immediately. The foregoing notwithstanding, the remedy of acceleration is subject to the limitations on legal remedies against public entities in the State, including a limitation on enforcement obligations against funds needed to serve the public welfare and interest. Also, any remedies available to the Owners of the Bonds upon the occurrence of an Event of Default under the Indenture are in many respects dependent upon judicial actions, which are often subject to discretion and delay and could prove both expensive and time consuming to obtain.

Further, enforceability of the rights and remedies of the Owners of the Bonds, and the obligations incurred by the City, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, receivership, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditor’s rights generally, now or hereafter in effect, equity principles that may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose, and the limitations on remedies against counties in the State. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. The opinions to be delivered by Bond Counsel, concurrently with the issuance of the Bonds, that the Bonds constitute valid and binding limited obligations of the City and the Indenture constitutes a valid and binding obligation of the City will be subject to such limitations and the various other legal opinions to be delivered concurrently with the issuance of the Bonds will be similarly qualified. See APPENDIX D – “FORM OF BOND COUNSEL OPINION.”

If the City fails to comply with its covenants under the Installment Sale Agreement to pay the Installment Payments, there can be no assurance of the availability of remedies adequate to protect the interests of the holders of Senior Bonds and, accordingly, the Bonds.

48 Future Legislation

The City is subject to various laws, rules and regulations adopted by the local, State and federal governments and their agencies. The City is unable to predict the adoption or amendment of any such laws, rules or regulations, or their effect on the operations of the Sewer Enterprise or financial condition of the Utility Fund.

Potential Impact of Climatic Change

The lack of rainfall has short and long-term impacts on the City’s water supply. The lack of substantial or prolonged rainfall can be immediately seen in the water conveyed down the San Antonio Channel. The City’s Canon water pipeline takes water from this Creek, north of the San Antonio Dam, and diverts it to the Pedley Treatment Plant. This is good quality water and does not involve a purchase cost. To the extent that the City can treat this water, and deliver it to the northern part of the City system, mitigates the need to boost water up from the lower pressure zones. Also, an increase in spreading water does help to offset the declining groundwater levels in the Six Basins and the Chino Basins.

The City is currently in a Water Shortage Allocation Plan mode from MWD because their supplies are not being replenished by the drought. In the Six Basins, the Sewer Enterprise uses the water to blend down nitrates and perchlorate to some of the City’s wells in the Six Basins; however, the amount of imported water is not guaranteed. That fact, coupled with the knowledge that the prices per AF of imported water is getting more expensive by about 5% a year.

The issue of climate change has become an important factor in water resources planning in the State, and it is being considered during planning for water supplies and systems. Many studies cite evidence that increasing concentrations of greenhouse gases have caused and will continue to cause a rise in temperatures around the world, which will result in a wide range of changes in climate patterns. Moreover, they cite evidence that a warming trend occurred during the latter part of the 20th century and will likely continue through the 21st century. These changes could have a direct effect on water resources in the State, and numerous studies on climate and water in the State have been conducted to determine the potential impacts. Based on these studies, global warming could result in the following types of water resources impacts in the State, including impacts on water supplies and systems:

• Sea level rise and an increase in saltwater intrusion,

• Changes in the timing, intensity, and variability of precipitation, and an increased amount of precipitation falling as rain instead of as snow,

• Reductions in the average annual snowpack due to a rise in the snowline and a shallower snowpack in the low- and medium-elevation zones, and a shift in snowmelt runoff to earlier in the year,

• Long-term changes in watershed vegetation and increased incidence of wildfires that could affect water quality,

• Increased water temperatures with accompanying adverse effects on some fisheries,

• Increases in evaporation and concomitant increased irrigation need, and

• Changes in urban and agricultural water demand.

49 However, other than the general trends listed above, there is no clear scientific consensus on exactly how global warming will quantitatively affect State water supplies, and current models of State water systems generally do not reflect the potential effects of global warming.

Water System operations may be impacted the most by the need to coordinate local surface and groundwater storage operations and developments with shifting imported water supply availability due to changes in the timing, intensity, and variability of precipitation, and an increased amount of precipitation falling as rain instead of as snow in the watersheds for imported water. City water resource specialists and engineers are involved in ongoing monitoring and research regarding climate change trends and will continue to monitor the changes and predictions, particularly as these changes relate to Sewer Enterprise operations and management of water supplies and systems.

Secondary Market

There can be no guarantee that there will be a secondary market for the Bonds, or, if a secondary market exists, that the Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Loss of Tax Exemption

As discussed under the heading “TAX MATTERS,” the interest on the BB Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the BB Bonds, as a result of acts or omissions of the City in violation of its covenants in the Installment Sale Agreement or of the Authority in violation of its covenants in the Indenture. Should such an event of taxability occur, the BB Bonds would not be subject to a special redemption and would remain outstanding until maturity or until redeemed under the redemption provisions contained in the Indenture.

Audit by State and Federal Auditors and of IRS Audits of Tax-Exempt Bond Issues

The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the BB Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the BB Bonds might be affected as a result of such an audit of the BB Bonds (or by an audit of similar bonds or securities).

The City is current the subject of an audit by the Internal Revenue Service in connection with the treatment as income of certain remunerations made to City Council members. The City is cooperating with the audit and will made adjustments and any amended filings as deemed appropriate.

The City is currently the subject of an audit by the State Controller’s office with respect to agreements between the City and the Fairplex, and between the Successor Agency and the Fairplex (LACFA). The audit was, in part, the result of an investigation by the LA Times following Live Nation’s HARD music festival at Fairplex in October 2015 and the drug overdose deaths of two attendees at the two-day event. The investigation by the Times questioned the festival being held on county property (LACFA is a 501(C)(5)) and escalated to include published salaries of executive staff culminating in a County and State audit of the Fairplex. The audit as concerns the City and the Successor Agency has generally focused on City and Successor Agency practices to ensure that any grant or loan of public funds was predicated on sufficient financial and performance covenants and the monitoring of compliance thereafter. The City is cooperating with State Controller in responding to the audit requests.

50 The City through its Housing Authority is currently the subject of an audit by the United States Department of Housing and Urban Development. There, the Office of Inspector General questioned the City’s use of grants for low- and moderate-income housing. That audit is pending.

No Liability of Authority to the Owners

Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to the Bondholders with respect to the payment when due of the Installment Payments payable by the City from Net Revenues, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Installment Sale Agreement, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indenture.

Economic, Political, Social, and Environmental Conditions

Prospective investors are encouraged to evaluate current and prospective economic, political, social, and environmental conditions as part of an informed investment decision. Changes in economic, political, social, or environmental conditions on a local, state, federal, and/or international level may adversely affect investment risk generally. Such conditional changes may include (but are not limited to) the reduction or elimination of previously available State of federal revenues, fluctuations in business production, consumer prices, or financial markets, unemployment rates, technological advancements, shortages or surpluses in natural resources or energy supplies, changes in law, social unrest, fluctuations in the crime rate, political conflict, acts of war or terrorism, environmental damage, and natural disasters.

CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES

Article XIIIA

Article XIIIA of the State Constitution provides that the maximum ad valorem tax on real property cannot exceed 1% of the “full cash value,” which is defined as “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment,” subject to exceptions for certain circumstances of transfer or reconstruction and except with respect to certain voter approved debt. The “full cash value” is subject to annual adjustment to reflect increases, not to exceed 2% per year, or decreases in the consumer price index or comparable local data, or to reflect reduction in property value caused by damage, destruction or other factors.

Article XIIIA requires a vote of two-thirds of the qualified electorate to impose special taxes, while generally precluding the imposition of any additional ad valorem, sales or transaction tax on real property. As amended, Article XIIIA exempts from the 1% tax limitation any taxes above that level required to pay debt service on certain voter-approved general obligation bonds for the acquisition or improvement of real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the State Legislature to change any State laws resulting in increased tax revenues.

Under California law, any fee that exceeds the reasonable cost of providing the service for which the fee is charged is a “special tax,” which under Article XIIIA must be authorized by a two-thirds vote of the electorate. Under Article XIIID, fees and charges for water, sewer, and refuse collection services are subject to majority protest, but are not subject to the two-third vote requirement of Article XIIIA. The reasonable cost of providing services of the sanitation enterprise of the City has been determined by the State Controller to include depreciation and allowance for the cost of capital improvements. In addition, the California courts have determined to date that fees such as capacity fees will not be special taxes if they approximate the reasonable cost of constructing the

51 water or wastewater capital improvements contemplated by the local agency imposing the fee. See “WATER AND WASTEWATER OPERATIONS DEPARTMENT – Historic Sewer Enterprise Gross Revenues.”

Article XIIIB

Article XIIIB of the California Constitution limits the annual appropriations of proceeds of taxes by State and local government entities to the amount of appropriations of the entity for the prior fiscal year, as adjusted for changes in the cost of living, changes in population, and changes in services rendered by the entity. User fees and charges are considered proceeds of taxes only to the extent they exceed the reasonable costs incurred by a governmental entity in supplying the goods and services for which such fees and charges are imposed.

To the extent that assessments, fees, and charges collected by the City are used to pay the costs of maintaining and operating the Sewer Enterprise and payments due on the Bonds, and including the funding of the Reserve Fund to the Reserve Requirement, the City believes as of the date hereof that such moneys should not be subject to the annual appropriations limit of Article XIIIB.

Article XIIIC

On November 5, 1996, the voters of the State approved Proposition 218, a constitutional initiative, entitled the “Right to Vote on Taxes Act” (“Proposition 218”). Proposition 218 added Articles XIIIC and XIIID to the California Constitution and contained a number of interrelated provisions affecting the ability of local governments, including the City, to levy and collect both existing and future taxes, assessments, fees, and charges. Proposition 218 became effective on November 6, 1996. Senate Bill 919 was enacted to provide certain implementing provisions for Proposition 218 and became effective July 1, 1997. As described below, Proposition 218 provides for broad initiative powers to reduce or repeal any local tax, assessment, fee, or charge. This initiative power is not limited by the terms of Proposition 218 to fees imposed after November 6, 1996 and absent other legal authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. However, other than an impact resulting from the exercise of this initiative power or the majority protest provisions of Proposition 218, as described below, the City does not believe that the potential financial impact of Proposition 218 will adversely affect its ability to make Installment Payments as and when due.

Section 1 of Article XIIIC requires majority voter approval for the imposition, extension, or increase of general taxes and Section 2 thereof requires two-thirds voter approval for the imposition, extension, or increase of special taxes. These voter approval requirements of Article XIIIC reduce the flexibility of the City to raise revenues by the levy of general or special taxes and, given such voter approval requirements, no assurance can be given that the City will be able to enact, impose, extend, or increase any such taxes in the future to meet increased expenditure requirements. The City has not enacted, imposed, extended, or increased any tax since the effective date of Proposition 218.

Section 3 of Article XIIIC expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees, and charges, regardless of the date such taxes, assessments, fees, or charges were imposed. Section 3 expands the initiative power to include reducing or repealing assessments, fees, and charges, which had previously been considered administrative rather than legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996, the effective date of Proposition 218, and absent other legal authority could result in the reduction in any existing taxes, assessments, or fees and charges imposed prior to November 6, 1996.

“Fees” and “charges” are not expressly defined in Article XIIIC or in SB 919, the Proposition 218 Omnibus Implementation Act enacted in 1997 to prescribe specific procedures and parameters for local jurisdictions in complying with Article XIIIC and Article XIIID (“SB 919”). Such terms are, however, defined in Article XIIID, discussed below. On July 24, 2006, the California Supreme Court ruled in Bighorn-Desert View

52 Water Agency v. Virjil (Kelley) (the “Bighorn Decision”) that charges for ongoing water delivery are property- related fees and charges within the meaning of Article XIIID and are also fees or charges within the meaning of Section 3 of Article XIIIC. The California Supreme Court held that such water service charges may, therefore, be reduced or repealed through a local voter initiative pursuant to Section 3 of Article XIIIC.

In the Bighorn Decision, the Supreme Court did state that nothing in Section 3 of Article XIIIC authorizes initiative measures that impose voter-approval requirements for future increases in fees or charges for water delivery. The Supreme Court stated that water providers may determine rates and charges upon proper action of the governing body and that the governing body may increase a charge which was not affected by a prior initiative or impose an entirely new charge.

The Supreme Court further stated in the Bighorn Decision that it was not holding that the initiative power is free of all limitations and was not determining whether the initiative power is subject to the statutory provision requiring that water service charges be set at a level that will pay debt service on bonded debt and operating expenses. Such initiative power could be subject to the limitations imposed on the impairment of contracts under the contract clause of the United States Constitution.

Pursuant to the Installment Sale Agreement, the City has covenanted to impose rates and charge at specified levels. No assurance can be provided that the City will be able to meet such covenant if any proposed increased service charges cannot be imposed as a result of a majority protest under Proposition 218.

Article XIIID

Article XIIID defines a “fee” or “charge” as any levy other than an ad valorem tax, special tax, or assessment, imposed upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property-related service. A “property-related service” is defined as “a public service having a direct relationship to a property ownership.” As discussed above, in the Bighorn Decision, the California Supreme Court held that a public water agency’s charges for ongoing water delivery are fees and charges within the meaning of Article XIIID. Article XIIID requires that any agency imposing or increasing any property-related fee or charge must provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of owners of the identified parcels file written protests against it. As a result, the local government’s ability to increase such fee or charge may be limited by a majority protest.

In addition, Article XIIID also includes a number of limitations applicable to existing, new, or increased fees and charges, including provisions to the effect that (i) revenues derived from the fee or charge shall not exceed the funds required to provide the property-related service; (ii) such revenues shall not be used for any purpose other than that for which the fee or charge was imposed; (iii) the amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel; and (iv) no such fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Property-related fees or charges based on potential or future use of a service are not permitted.

Article XIIID establishes procedural requirements for the imposition of assessments, which are defined as any charge upon real property for a special benefit conferred upon the real property. Standby charges are classified as assessments. Procedural requirements for assessments under Article XIIID include conducting a public hearing and mailed protest procedure, with notice to the record owner of each parcel subject to the assessment. The assessment may not be imposed if a majority of the ballots returned oppose the assessment, with each ballot weighted according to the proportional financial obligation of the affected parcel. The City and the City Attorney believe that as of the date of this Official Statement that current Sewer Enterprise service charges that are subject to Proposition 218 materially comply with the provisions thereof. Should it become necessary to

53 increase the Sewer Enterprise service charges above current levels, the City would be required to comply with the requirements of Article XIIID in connection with such proposed increase.

The interpretation and application of Proposition 218 will ultimately be determined by the courts or through implementing legislation with respect to a number of the matters described above, and it is not possible at this time to predict with certainty the outcome of such determination or the nature or scope of any such legislation.

Proposition 26

Proposition 26, a State ballot initiative aimed at restricting regulatory fees and charges, was approved by the California voters on November 2, 2010. Proposition 26 broadens the definition of “tax” in Article XIIIC of the California Constitution to include levies, charges and exactions imposed by local governments, except for charges imposed for benefits or privileges or for services or products granted to the payor (and not provided to those not charged) that do not exceed their reasonable cost; regulatory fees that do not exceed the cost of regulation; fees for the use of local governmental property; fines and penalties imposed for violations of law; real property development fees; and assessments and property-related fees imposed under Article XIIID of the California Constitution. California local taxes are subject to approval by two-thirds of the voters voting on the ballot measure for authorization. Proposition 26 applies to charges imposed or increased by local governments after the date of its approval. The City believes that Proposition 26 does not apply to its sewer rates and charges because such fees and charges are within various exceptions to Proposition 26.

Initiative, Referendum and Charter Amendments

Under the State Constitution, the voters of the State have the ability to initiate legislation and require a public vote on legislation passed by the State Legislature through the powers of initiative and referendum, respectively. For example, Article XIIIA, Article XIIIB and Articles XIIIC and XIIID and Proposition 26 were adopted pursuant to the State’s constitutional initiative process. Under the City Charter, the voters of the City can restrict or revise the powers of the City through the approval of a charter amendment. From time to time, other initiative measures could be adopted or legislative measures could be approved by the Legislature, which may place limitations on the ability of the City to increase revenues or to increase appropriations. Such measures may further affect the City’s ability to collect taxes, assessments or fees and charges, which could have an effect on the Water and Wastewater Operations Department’s revenues. The City is unable to predict whether any such initiatives or charter amendments might be submitted to or approved by the voters, the nature of such initiatives or charter amendments, or their potential impact on the City or the Sewer Enterprise. See “CONSTITUTIONAL LIMITATIONS ON TAXES AND RATES AND CHARGES – Initiative, Referendum and Charter Amendments.”

TAX MATTERS

BB Bonds

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the BB Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”), and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the BB Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX D attached hereto.

54 To the extent the issue price of any maturity of the BB Bonds is less than the amount to be paid at maturity of such BB Bonds (excluding amounts stated to be interest and payable at least annually over the term of such BB Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the BB Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the BB Bonds is the first price at which a substantial amount of such maturity of the BB Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the BB Bonds accrues daily over the term to maturity of such BB Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such BB Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such BB Bonds. Beneficial Owners of the BB Bonds should consult their own tax advisors with respect to the tax consequences of ownership of BB Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such BB Bonds in the original offering to the public at the first price at which a substantial amount of such BB Bonds is sold to the public.

BB Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the BB Bonds. The Authority and the City have made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the BB Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the BB Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the BB Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the BB Bonds may adversely affect the value of, or the tax status of interest on, the BB Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.

Although Bond Counsel is of the opinion that interest on the BB Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the BB Bonds may otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the BB Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. For example, the Obama Administration’s budget proposals in recent years have proposed legislation that would limit the exclusion from gross income of

55 interest on the BB Bonds to some extent for high-income individuals. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the BB Bonds. Prospective purchasers of the BB Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion.

The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the BB Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Authority or the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Authority and the City have covenanted, however, to comply with the requirements of the Code.

Bond Counsel’s engagement with respect to the BB Bonds ends with the issuance of the BB Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority, the City or the Beneficial Owners regarding the tax-exempt status of the BB Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Authority, the City and their appointed counsel, including the Beneficial Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority or the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the BB Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the BB Bonds, and may cause the Authority, the City or the Beneficial Owners to incur significant expense.

BD Bonds

In the opinion of Bond Counsel, interest on the BD Bonds is exempt from State of California personal income taxes. Bond Counsel observes that interest on the BD Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Code. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual, or receipt of interest on, the BD Bonds. Investors are urged to obtain independent tax advice regarding the BD Bonds based upon their particular circumstances. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX D attached hereto.

The following discussion summarizes certain U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of the BD Bonds that acquire their BD Bonds in the initial offering. The discussion below is based upon laws, regulations, rulings, and decisions in effect and available on the date hereof, all of which are subject to change, possibly with retroactive effect. Prospective investors should note that no rulings have been or are expected to be sought from the IRS with respect to any of the U.S. federal income tax considerations discussed below, and no assurance can be given that the IRS will not take contrary positions. Further, the following discussion does not deal with U.S. tax consequences applicable to any given investor, nor does it address the U.S. tax considerations applicable to all categories of investors, some of which may be subject to special taxing rules (regardless of whether or not such investors constitute U.S. Holders), such as certain U.S. expatriates, banks, REITs, RICs, insurance companies, tax-exempt organizations, dealers or traders in securities or currencies, partnerships, S corporations, estates and trusts, investors that hold their BD Bonds as part of a hedge, straddle or an integrated or conversion transaction, or investors whose “functional currency” is not the U.S. dollar. Furthermore, it does not address (i) alternative minimum tax consequences, (ii) the net investment income tax imposed under Section 1411 of the Code, or (iii) the indirect effects on persons who hold equity interests in a holder. This summary also does not consider the taxation of the BD Bonds under state, local or non-U.S. tax laws.

56 In addition, this summary generally is limited to U.S. tax considerations applicable to investors that acquire their BD Bonds pursuant to this offering for the issue price that is applicable to such BD Bonds (i.e., the price at which a substantial amount of the BD Bonds are sold to the public) and who will hold their BD Bonds as “capital assets” within the meaning of Section 1221 of the Code. The following discussion does not address tax considerations applicable to any investors in the BD Bonds other than investors that are U.S. Holders.

As used herein, “U.S. Holder” means a beneficial owner of a BD Bond that for U.S. federal income tax purposes is an individual citizen or resident of the United States, a corporation or other entity taxable as a corporation created or organized in or under the laws of the United States or any state thereof (including the District of Columbia), an estate the income of which is subject to U.S. federal income taxation regardless of its source or a trust where a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the Code) have the authority to control all substantial decisions of the trust (or a trust that has made a valid election under U.S. Treasury Regulations to be treated as a domestic trust). If a partnership holds BD Bonds, the tax treatment of such partnership or a partner in such partnership generally will depend upon the status of the partner and upon the activities of the partnership. Partnerships holding BD Bonds, and partners in such partnerships, should consult their own tax advisors regarding the tax consequences of an investment in the BD Bonds (including their status as U.S. Holders).

Prospective investors should consult their own tax advisors in determining the U.S. federal, state, local or non-U.S. tax consequences to them from the purchase, ownership and disposition of the BD Bonds in light of their particular circumstances.

Interest. Interest on the BD Bonds generally will be taxable to a U.S. Holder as ordinary interest income at the time such amounts are accrued or received, in accordance with the U.S. Holder’s method of accounting for U.S. federal income tax purposes.

To the extent that the issue price of any maturity of the BD Bonds is less than the amount to be paid at maturity of such BD Bonds (excluding amounts stated to be interest and payable at least annually over the term of such BD Bonds) by more than a de minimis amount, the difference may constitute original issue discount (“OID”). U.S. Holders of BD Bonds will be required to include OID in income for U.S. federal income tax purposes as it accrues, in accordance with a constant yield method based on a compounding of interest (which may be before the receipt of cash payments attributable to such income). Under this method, U.S. Holders generally will be required to include in income increasingly greater amounts of OID in successive accrual periods.

BD Bonds purchased for an amount in excess of the principal amount payable at maturity (or, in some cases, at their earlier call date) will be treated as issued at a premium. A U.S. Holder of a BD Bond issued at a premium may make an election, applicable to all debt securities purchased at a premium by such U.S. Holder, to amortize such premium, using a constant yield method over the term of such BD Bond.

Sale or Other Taxable Disposition of the BD Bonds. Unless a nonrecognition provision of the Code applies, the sale, exchange, redemption, retirement (including pursuant to an offer by the Authority) or other disposition of a BD Bond will be a taxable event for U.S. federal income tax purposes. In such event, in general, a U.S. Holder of a BD Bond will recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of property received (except to the extent attributable to accrued but unpaid interest on the BD Bond, which will be taxed in the manner described above) and (ii) the U.S. Holder’s adjusted U.S. federal income tax basis in the BD Bond (generally, the purchase price paid by the U.S. Holder for the BD Bond, decreased by any amortized premium, and increased by the amount of any OID previously included in income by such U.S. Holder with respect to such BD Bond). Any such gain or loss generally will be capital gain or loss. In the case of a non-corporate U.S. Holder of the BD Bonds, the maximum marginal U.S. federal income tax rate applicable to any such gain will be lower than the maximum marginal U.S. federal income tax rate applicable to

57 ordinary income if such U.S. holder’s holding period for the BD Bonds exceeds one year. The deductibility of capital losses is subject to limitations.

Defeasance of the BD Bonds. If the Authority defeases any BD Bond, such BD Bond may be deemed to be retired and “reissued” for federal income tax purposes as a result of the defeasance. In that event, in general, a U.S. Holder will recognize taxable gain or loss equal to the difference between (i) the amount realized from the deemed sale, exchange or retirement (less any accrued qualified stated interest which will be taxable as such) and (ii) the U.S. Holder’s adjusted tax basis in the BD Bond.

Information Reporting and Backup Withholding. Payments on the BD Bonds generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non-corporate U.S. Holder of the BD Bonds may be subject to backup withholding at the current rate of 28% with respect to “reportable payments,” which include interest paid on the BD Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the BD Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against the U.S. Holder’s federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain U.S. holders (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. A holder’s failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.

Foreign Account Tax Compliance Act (“FATCA”). Sections 1471 through 1474 of the Code impose a 30% withholding tax on certain types of payments made to foreign financial institutions, unless the foreign financial institution enters into an agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain U.S. persons or U.S.-owned entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these and other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements. In addition, FATCA imposes a 30% withholding tax on the same types of payments to a non- financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or the entity furnishes identifying information regarding each substantial U.S. owner. Failure to comply with the additional certification, information reporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments of interest and principal under the BD Bonds and sales proceeds of BD Bonds held by or through a foreign entity. In general, withholding under FATCA currently applies to payments of U.S. source interest (including OID) and, under current guidance, will apply to (i) gross proceeds from the sale, exchange or retirement of debt obligations paid after December 31, 2018 and (ii) certain “passthru” payments no earlier than January 1, 2019. Prospective investors should consult their own tax advisors regarding FATCA and its effect on them.

The foregoing summary is included herein for general information only and does not discuss all aspects of U.S. federal taxation that may be relevant to a particular holder of BD Bonds in light of the holder’s particular circumstances and income tax situation. Prospective investors are urged to consult their own tax advisors as to any tax consequences to them from the purchase, ownership and disposition of BD Bonds, including the application and effect of state, local, non-U.S., and other tax laws.

LITIGATION

As of the date of this Official Statement, there is no litigation pending against the City or the Authority or, to the knowledge of its respective executive officers, threatened, seeking to restrain or enjoin the issuance,

58 sale, execution, or delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or the authorizations or any proceedings of the City or the Authority taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or security provided for the payment of the Bonds or the use of the proceeds of the Bonds. There are no pending lawsuits that, in the opinion of the City Attorney, challenge the corporate existence of the City or the Authority, or the title of the executive officers thereof to their respective offices.

In the opinion of the City and the City Attorney, there are no lawsuits or claims pending against the City which will materially affect the City’s finances so as to impair its ability to pay Installment Payments from Net Revenues when due.

CERTAIN LEGAL MATTERS

The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX D hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel, will provide certain other legal services for the Authority. Certain legal matters will be passed upon for the Authority and the City by Alvarez-Glasman & Colvin, City Attorney, and for the Underwriter by its counsel, Fox Rothschild LLP, Los Angeles, California. Orrick, Herrington & Sutcliffe LLP will receive compensation from the City contingent upon the sale and delivery of the Bonds.

MUNICIPAL ADVISOR

Urban Futures, Inc., Orange, California (the “Municipal Advisor”) has assisted the Authority and the City in matters relating to the planning, structuring, and sale of the Bonds and the preparation of this Official Statement, and has provided general financial advisory services to the Authority and the City with respect to the sale of the Bonds. The Municipal Advisor provides financial advisory services only and does not engage in the underwriting, marketing, or trading of municipal securities or other negotiable instruments. The payment of fees of the Municipal Advisor is contingent upon the closing and delivery of the Bonds.

VERIFICATION

Grant Thornton LLP will deliver its report verifying the accuracy of the mathematical computation concerning the adequacy of the moneys to be placed in the Escrow Fund to pay when due, pursuant to a call for redemption, the principal of and interest on the 2002 Series AF Bonds. The report of Grant Thornton LLP will include the statement that the scope of their engagement was limited to verifying the mathematical accuracy of the computations contained in such schedules provided to them and that they have no obligation to update their report because of events occurring, or data or information coming to their attention, subsequent to the date of their report.

RATINGS

S&P Global Ratings (“S&P”) has assigned to the Bonds its municipal Bond rating of “AA-” (stable outlook). Such rating reflects only the views of S&P, and an explanation of the significance of the rating may be obtained by contacting S&P Global Ratings, 55 Water Street, New York, New York 10041. Such rating is not a recommendation to buy, sell or hold the Bonds. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds. Neither the City nor the Authority undertakes any obligation to oppose any downward revision, suspension or withdrawal.

59 UNDERWRITING

The Bonds are being purchased by B.C. Ziegler and Company (the “Underwriter”) pursuant to a Bond Purchase Agreement (the “Purchase Agreement”), by and among the Authority, the City and the Underwriter. The Underwriter has agreed, subject to certain conditions, to purchase the BB Bonds at a purchase price of $______(equal to the original principal amount thereof, plus a net original issue premium of $______, less an underwriter’s discount of $______) and to purchase the BD Bonds at a purchase price of $______(equal to the original principal amount thereof, plus a net original issue premium of $______, less an underwriter’s discount of $______). The Underwriter is committed to purchase all of the Bonds if any are purchased. The Purchase Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in the Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions.

The initial public offering prices stated on the inside front cover page of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing bonds into investment trusts), dealer banks, banks acting as agents and others at prices lower than said public offering prices.

The Underwriter and its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriter and its affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Authority and the City, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority and/or the City.

FINANCIAL STATEMENTS

The City prepares financial statements annually in conformity with generally accepted accounting principles for governmental entities, which are audited by an independent certified public accountant. The City’s most recent financial statements, for the Fiscal Year ended June 30, 2015, were audited by Lance, Soll & Lunghard, LLP (the “Independent Auditor”), independent certified public accountants, as stated in their report. The City’s basic financial statements contained in the City’s CAFRs include the financial statements of the Utility Fund. See APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.”

Accompanying the Independent Auditor’s Report in APPENDIX B is the City Management Discussion and Analysis, which is not audited, but is supplementary information required by the Government Accounting Standards Board. The Management Discussion and Analysis presents a summary and overview of the City’s financial condition. Such Management Discussion and Analysis should be reviewed in conjunction with the audited information in order to obtain an understanding of the City’s financial condition.

Investors are encouraged to read the entire Official Statement including such financial statements in order to obtain information essential to the making of an informed investment decision.

60 The Independent Auditor did not review this Official Statement. The City did not request the consent of the independent auditors to append the City’s financial statements to this Official Statement. Accordingly, the independent auditors did not perform any procedures relating to any of the information in this Official Statement.

CONTINUING DISCLOSURE

Pursuant to the Continuing Disclosure Certificate of the City (the “Disclosure Certificate”), the City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board in the manner prescribed by the SEC certain annual financial information and operating data and notice of certain Notice Events (as described in the Continuing Disclosure Certificate). The form of the Disclosure Certificate is attached hereto as APPENDIX E – “FORM OF CONTINUING DISCLOSURE CERTIFICATE. The annual report to be filed by the City is to be filed not later than 270 days following the end of the City’s Fiscal Year (which currently would be June 30), commencing with the report for the Fiscal Year ended June 30, 2016 (the “Annual Report”), and is to include audited financial statements of the City. The City’s covenants in the Continuing Disclosure Certificate have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934 (the “Rule”). A failure by the City to comply with any of the covenants therein is not an event of default under the Installment Sale Agreement or the Indenture.

In the past five years, the City once filed its annual report five days late, on March 31, 2012, as concerned the City’s continuing disclosure obligations with respect to the Authority’s 2005 Lease Revenue Bonds, Series AN, 2005 Taxable Lease Revenue Bonds, Series AP, 2006 Lease Revenue Bonds, Series AU, and 2006 Taxable Lease Revenue Bonds, Series AV, and once failed to provide notice of a ratings downgrade with respect to these bonds.

With respect to the Sewer Enterprise and the undertakings relating to obligations of the City's Water and Wastewater Operations Department, and the 2002 Series AF Bonds and the 2007 Series BA Bonds, the City once filed its annual report five days late, on March 31, 2012. The City also twice timely filed an annual report, however, certain required information was later determined by the City to not have been adequately included, and a corrective filing was made 49 days later (with respect to its annual report due in March 2013) and 11 days later (with respect to its annual report due in March 2015).

The City has procedures in place designed to ensure timely and complete compliance with its current undertakings under the Rule.

MISCELLANEOUS

This Official Statement has been duly approved, executed and delivered by the Authority and the City.

There are appended to this Official Statement a summary of certain provisions of the principal and legal documents, the proposed form of opinion of Bond Counsel, and a general description of the City and a description of the Book-Entry Only System. The Appendices are integral parts of this Official Statement and must be read together with all other parts of this Official Statement.

61 This Official Statement is not to be construed as a contract or agreement between the Authority or the City and the purchasers or holders of any of the Bonds. Any statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as an opinion and not as representations of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the financial condition, results of operations, or any other affairs of the City or the Authority since the date hereof.

POMONA PUBLIC FINANCING AUTHORITY

By: Chairperson, Board of Directors

CITY OF POMONA

By: City Manager

62 APPENDIX A

CITY FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION

The information herein is subject to change without notice, and neither delivery of this Official Statement nor any sale thereafter of the Bonds shall under any circumstances imply that there has not been any change in the affairs of the City or in any other information contained herein since the date of the Official Statement. The Bonds are payable solely from the Net Revenues and amounts on deposit in the Indenture as described herein (see “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS”). The taxing power of the City of Pomona, the County of Los Angeles, the State of California or any political subdivision thereof is not pledged to the payment of the Bonds.

General

The City of Pomona was incorporated in January 1888, and became a charter city in 1911. The City now encompasses approximately 22.9 square miles, and currently has an estimated 2016 population of 155,604 (as estimated by the State Department of Finance). The City is located approximately 30 miles east of downtown Los Angeles, in the eastern portion of the County of Los Angeles (the “County”), adjacent to Orange and San Bernardino counties.

The coming election includes contests for a majority of the City Council seats and Mayor.

Budgeted authorized City full-time employees number 546 for Fiscal Year 2015-16, of which 163 sworn officers and 107 civilian personnel are assigned to the Police Department.

Climate

The City of Pomona has a dry subtropical climate with temperatures averaging 73 degrees and humidity of about 43%. Air quality is similar to that in the rest of the Los Angeles Basin, with seasonally fluctuating levels of secondary air pollutants.

Services and Facilities

The City provides police protection, sewer maintenance, street sweeping, park maintenance, building inspection, library, water, and sanitation services. The City’s Police Department is responsible for the protection of life and property and traffic enforcement within the City, and currently employs 163 sworn employees. The City transferred the responsibility for fire safety services to the Consolidated Fire Protection District of Los Angeles County, which currently employs 31.7 full-time equivalent (29 fire suppression and 2.7 fire prevention) sworn fire personnel in the City. The City cooperates with Los Angeles County in the provision of flood control protection. Numerous hospitals and health care facilities are located in and near Pomona.

Cultural and recreational facilities within the City include numerous churches, 27 parks, 14 community centers, four museums, one performing arts center, one public library, and one golf course. Additional outdoor recreational opportunities are available at the San Gabriel Mountains and the Angeles

A-1 National Forest. Also, Pomona’s proximity to the San Bernardino and Pomona Freeways brings the cultural and recreational advantages of Los Angeles, San Bernardino and Orange counties within convenient driving distance.

The City is home to the Los Angeles County Fair, which takes place in a 487-acre facility known as the Fairplex. The Los Angeles County Fair attracts over one million people annually.

City Employees

The following table presents the number of authorized full-time City employees for Fiscal Years 2006-07 through 2015-16. City of Pomona Authorized Full-Time City Employees (Fiscal Years 2006-07 through 2015-16) Number of Authorized Full-Time Fiscal Year Employees 2006-07 760 2007-08 771 2008-09 741 2009-10 666 2010-11 580 2011-12 567 2012-13 539 2013-14 539 2014-15 538 2015-16 546 ______Source: City of Pomona Finance Department.

Labor Relations

In accordance with the Meyers-Milias-Brown Act, the City has adopted an Ordinance, which establishes the procedures for the administration of employer-employee relations. This includes the procedure by which the City meets and confers with representatives of recognized employee organizations (i.e., unions and associations) regarding matters within the scope of representation, including wages, hours and other terms and conditions of employment within the appropriate unit.

Approximately 94.5% of regular City employees are represented by the following four employee organizations: the Pomona Police Officers’ Association, the Pomona Police Managers’ Association, the Pomona City Employees’ Association and the Pomona Mid-Management City Employees Association. These employee organizations are designated representatives under the Meyers-Millias-Brown Act (Sections 3510 et seq. of the California Government Code).

The City’s labor relations have historically been amicable, although the City is currently in negotiation with all four of the organizations. The City has experienced no major strikes, work stoppages or other related incidents. The following table provides a list of employee bargaining units in the City and

A-2 the number of employees they represent as of June 2016. In addition, the Management Executive Group, which is not a bargaining unit, includes 28 employees.

City of Pomona Bargaining Units

Number of Bargaining Unit Employees Term From To Pomona Police Officers Association 149 July 1, 2014 June 30, 2016 Pomona Police Management Assoc. 9 July 1, 2014 June 30, 2016 Pomona City Employees Assoc. 268 July 1, 2014 June 30, 2016 Pomona Mid-Management City Employees Assoc. 64 July 1, 2014 June 30, 2016 ______Source: City of Pomona. Note: All MOUs are valid until superseded by new MOU.

Population

The following table sets forth population data for the City of Pomona.

City of Pomona Population

Year Population 1970 87,384 1980 92,742 1990 130,100 2000 148,725 2005 152,106 2006 152,166 2007 150,513 2008 150,865 2009 149,935 2010 149,311 2011 149,959 2012 151,672 2013 153,410 2014 154,140 2015 154,712 2016 155,604 ______Source: 1970-2000 data from US Census Bureau; 2001-2016 data from State of California Department of Finance.

General Fund

The City General Fund finances the legally authorized activities of the City not provided for in other restricted funds. General Fund revenues are derived from such sources as taxes; licenses and permits, fines, forfeits and penalties; use of money and property; aid from other governmental agencies; charges for

A-3 current services; and other revenue. General Fund expenditures and encumbrances are classified by the functions of public safety, public works, community development, and general government.

Budgetary Process

The City operates on an annual budget cycle. The one-year operating budget is adopted each June and becomes effective July 1. The City Council reviews and revises the Five-Year Capital Improvement Program annually. This approach to financial planning gives the City Council the opportunity to set policy and provide direction for operational and capital budgets in an efficient and productive manner.

Sections 1002 through 1011 of the Pomona City Charter sets forth the legal requirements for the preparation and adoption of the City budget and Capital Improvement Program. The Charter requires that the City Manager submit to the City Council a proposed budget at least 45 days prior to the beginning of the fiscal year. It further requires that the Council set a time for a public hearing and that a notice of such hearing be published in a local newspaper no less than ten days prior to the hearing date. In the event the budget is not adopted prior to the first day of the fiscal year (July 1) the amounts appropriated for current operations for the prior fiscal year will be deemed adopted for the current fiscal year on a month-to-month basis, until such time as the new budget is adopted.

The City Manager is additionally required to submit to the City Council the Five-Year Capital Improvement Program at the same time or prior to submission of the operating budget.

The City uses a combined program and line-item budget format. This is designed to provide for a comprehensive management control and fiscal planning system and is aimed at achieving goals and objectives at operational levels which are consistent with the needs and wants of the community. The budgeting process is generally an incremental one which starts with a historical base budget. Requests for more or fewer appropriations are made at the departmental level. Throughout the entire budget process, staff continues to remain cognizant of public safety and legal requirements, as well as providing the most efficient and economical service levels possible.

Altogether, budget preparation takes approximately nine months. Work typically begins in November (in the year prior to the first fiscal year of the budget) when the City Council adopts the Budget Calendar and culminates in August with the publication of the adopted budget document. The following schedule outlines the major steps and dates involved in preparing and processing the annual budget and covers one complete budget cycle.

November – City Council adopts the Budget Calendar for the upcoming fiscal year.

December – The Budget Manual and related material are distributed and reviewed in a training session. The budget team establishes program goals and objectives.

January – Preliminary revenue estimates are projected and departments submit preliminary expenditure budget requests to the Finance Department.

February & March – Budget requests are analyzed by the Finance Department and preliminary revenue estimates are reviewed and adjusted as appropriate. Finance staff and the City Manager meet with each department to review budget estimates. Revenues are compared with expenditures to determine the budget planning direction. Under the direction of the City Manager, the Executive Budget Team and Finance staff prepare the proposed budget. Department directors are then briefed on the Proposed Budget. The Five-Year Capital Improvement Program Budget is also prepared during this same period.

A-4 April – The Proposed Budget is printed and distributed to the Mayor, Council, and City departments. City Council study sessions are held.

May – The City Council makes final recommendations to the City Manager. Revisions are made to the final budget document per City Council direction.

June – The public hearing notice for the proposed budget is posted in the newspaper. The final proposed budget documents are prepared and submitted to the Council.

The public hearing of the budget is conducted and the budget is adopted. The GANN calculation is prepared and submitted to the City Council for adoption.

August – The final Adopted Budget is published and distributed.

Once the budget is adopted by the City Council, the responsibility of implementing each departmental budget lies with each department head, with ultimate responsibility resting with the City Manager. Department directors are expected to operate their departments within the appropriations established in the budget. Budget transfers or budget amendments should be the exception rather than the rule and are discouraged. In certain cases, however, requests are considered where unforeseen events have occurred. In such cases, the department head and Finance Director may approve transfers within the same division and expenditure category. Transfers moving funds from one division or department to another or one category to another requires the approval of the department head, Finance Director, and City Manager. To amend or supplement the budget by the transfer of all or any part of unused and unencumbered balances appropriated for one purpose to another purpose, to appropriate available funds not included in the budget, or to cancel in whole or in part any appropriation not expended or encumbered requires an affirmative vote of the City Council.

Amending the Capital Improvement Program budget requires City Council action which is usually sought at time of bid award for the new or revised capital project.

Industry and Employment

The major employers within the City boundaries and the number of persons employed by each organization are shown below:

A-5 City of Pomona Major Employers As of June 30, 2015

2015 Percentage Number of of Total City Employer Employees Rank Employment

Pomona Valley Hospital 3,078 1 4.9% Pomona Unified School District 2,902 2 4.6 California State Polytechnic University 2,612 3 4.2 Fairplex 954 4 1.5 Casa Colina Rehabilitation Center 817 5 1.3 City of Pomona 689 6 1.1 Verizon 596 7 1.0 County of Los Angeles Department of Social Services 400 8 0.6 First Transit 348 9 0.6 Inland Valley Care & Rehab 339 10 0.5 Kittrich Corporation 250 11 0.4 Torn & Glasser Inc. 250 12 0.4 Hayward Industries Inc. 230 13 0.4 Walmart Stores Inc. 218 14 0.3 Anheuser Busch Sales Pomona 212 15 0.3 ______Source: City of Pomona Comprehensive Annual Financial Report as of June 30, 2015. Total Employment: Department, Labor Market Information Division

The following chart provides a comparison, for the years indicated, of the average annual unemployment rates in the City of Pomona, the City of Los Angeles, the County of Los Angeles, the State of California and the United States. The City’s monthly unemployment rate for March 2016 was 5.6%.

A-6 City of Pomona Annual Average Unemployment Rates For Years 2006 through 2015

City of City of County of State of Year Pomona Los Angeles Los Angeles California United States 2006 4.8% 5.5% 4.8% 4.9% 4.6% 2007 5.8 8.0 5.1 5.4 4.6 2008 5.8 12.8 7.6 7.3 5.8 2009 8.4 13.7 11.6 11.2 9.3 2010 12.9 13.2 12.5 12.2 9.6 2011 13.5 12.9 12.2 11.7 8.9 2012 12.1 11.5 10.9 10.4 8.1 2013 10.8 10.3 9.7 8.9 7.4 2014 9.2 8.7 8.2 7.5 6.2 2015 7.5 7.1 6.7 6.2 5.3 ______Source: State of California, Employment Development Department, Labor Market Information Division and U.S. Department of Labor, Bureau of Labor Statistics.

Per Capita Income

Pomona is situated on the eastern border of the Los Angeles-Long Beach Labor Market Area, and is immediately adjacent to the Los Angeles-San Bernardino-Ontario Labor Market Area, which encompasses Los Angeles and San Bernardino Counties. The following table summarizes per capita personal income for the Los Angeles-Long Beach-Anaheim Metropolitan Statistical Area, California and the United States for the years 2005 through 2015:

Los Angeles-Long Beach-Anaheim Metropolitan Year Statistical Area California United States 2005 $39,314 $39,046 $35,904 2006 42,549 41,693 38,144 2007 44,073 43,182 39,821 2008 45,194 43,786 41,082 2009 42,932 41,588 39,376 2010 43,824 42,411 40,277 2011 46,023 44,852 42,453 2012 49,056 47,614 44,266 2013 48,895 48,125 44,438 2014 50,751 49,985 46,049 2015 --(1) 52,651 47,669 ______(1) Data not available. Source: U.S. Department of Commerce, Bureau of Economic Analysis.

A-7 Effective Buying Income

“Effective buying income” (“EBI”) is a classification developed exclusively by Sales & Marketing Management magazine to distinguish it from other sources reporting income statistics. EBI is defined as “money income” less personal tax and nontax payments - a number often referred to as “disposable” or “after-tax” income. Money income is the aggregate of wages and salaries, net farm and nonfarm self- employment income, interest, dividends, net rental and royalty income, Social Security and railroad retirement income, other retirement and disability income, public assistance income, unemployment compensation, Veterans Administration payments, alimony and child support, military family allotments, net winnings from gambling and other periodic income. Money income does not include money received from the sale of property (unless the recipient is engaged in the business of selling property); the value of “in-kind” income such as food stamps, public housing subsidies, medical care, employer contributions for persons, etc.; withdrawal of bank deposits; money borrowed; tax refunds; exchange of money between relatives living in the same household; gifts and lump-sum inheritances, insurance payments, and other types of lump-sum receipts. EBI is computed by deducting from money income all personal income taxes (federal, state and local), personal contributions to social insurance (Social Security and federal retirement payroll deductions), and taxes on owner-occupied nonbusiness real estate.

The following table presents the latest available total effective buying income and median household effective buying income for the City, the State of California and the nation for the calendar years 2012 through 2016.

Employment

Pomona is situated on the eastern border of the Los Angeles-Long Beach Labor Market Area, and is immediately adjacent to the Los Angeles-San Bernardino-Ontario Labor Market Area, which encompasses Los Angeles and San Bernardino Counties. The following table summarizes the labor force, employment and unemployment figures from 2012 through March of 2016 for Los Angeles County, and compares the unemployment rate for the County with that of the State.

Los Angeles County Employment, Unemployment and Labor Force Averages for each of the Calendar Years 2012-2016(1) (Not Seasonally Adjusted) 2012 2013 2014 2015 2016(1) Employed 4,385,300 4,494,400 4,611,500 4,674,800 4,756,400 Unemployed 536,500 484,600 414,300 336,900 251,000 Total(2) 4,921,800 4,979,000 5,025,900 5,011,700 5,007,500 Unemployment Rate 10.9% 9.7% 8.2% 6.7% 5.0% State Unemployment Rate 10.4% 8.9% 7.5% 6.2% 5.6% ______(1) As of March 2016. (2) Total, Civilian Labor Force. Source: State Employment Development Department.

Assessed Valuation

The assessed valuation of property in the City is established by the Los Angeles County Assessor, except for public utility property, which is assessed by the State Board of Equalization. Assessed valuations

A-8 are reported at 100% of the full cash value of the property, as defined in Article XIIIA of the California Constitution.

Fiscal Total Year Less: Tax Taxable Ended Residential Commercial Industrial Unitary Unsecured Exempt Assessed June 30 Property Property Property Other Values Property Property(1) Value 2006 $4,871,752 $ 753,876 $ 875,823 $548,455 $7,077 $383,627 $359,681 $7,080,929 2007 5,555,560 850,046 927,732 619,284 5,880 376,178 274,419 8,060,261 2008 6,175,439 946,442 1,012,035 690,821 790 372,791 429,662 8,768,656 2009 6,486,480 1,019,941 1,104,778 754,630 790 384,081 447,378 9,303,322 2010 5,759,284 1,039,418 1,197,842 830,321 788 381,397 459,461 8,749,589 2011 5,441,493 1,034,597 1,244,142 885,973 788 352,403 538,120 8,421,276 2012 5,571,482 998,040 1,226,077 905,772 655 360,777 652,301 8,410,502 2013 5,679,812 1,019,770 1,178,211 884,418 655 350,896 678,279 8,435,483 2014 5,932,623 1,059,762 1,233,924 869,787 374 372,621 647,264 8,821,827 2015 6,396,012 1,070,267 1,261,918 942,134 -- 379,640 814,565 9,235,406 ______(1) Exemptions are exclusive of homeowner exemption. The City is reimbursed by the State for taxes lost because of these exemptions. Source: Los Angeles County Assessor data. MuniServices, LLC.

Education

The Pomona Unified School District is composed of 25 elementary, 4 junior high and 8 high schools, including continuing education programs; in addition, several parochial and private schools are located within a five-mile radius of Pomona. Historical total enrollment within the Pomona Unified School District is shown below.

Pomona Unified School District Total Enrollment (Fiscal Years 2010-11 through 2014-15)

Total Average Daily Fiscal Year Enrollment Attendance 2010-11 28,295 26,625 2011-12 27,732 26,405 2012-13 27,186 25,828 2013-14 26,264 24,753 2014-15 25,311 23,901 ______Source: Pomona Unified School District.

Colleges and universities within a five-mile radius of the City include the 6 Claremont Colleges, California State Polytechnic University at Pomona, De Vry Institute of Technology, the University of La Verne, Westech College and the Western University of Health Services.

Culture and Recreation

The City established its Cultural Arts Commission in 1972. The Pomona Arts Colony was founded in 1994 and established its Second Saturday Art Walks in 1998. Currently, Second Saturdays draw about 5000 visitors each month. An estimated 500,000 people annually participate in the nightlife of downtown Pomona; the Arts Colony is one of the primary draws.

A-9 In addition to its downtown arts scene, Pomona also boasts 27 city parks, six historic sites, four museums, two universities, 200 places of worship, the Pomona Youth Orchestra, the Pomona Concert Band and the Repertory Opera Company. The Cultural Alliance of Pomona was established in 1999 and has brought professional musical performances to the City. The Aztlan Cultural Art Exhibit, an annual exhibition of Latino arts and culture, has in seven years become nationally recognized. Residents and visitors also participate in numerous cultural festivals, among them the Chalk Festival, the Christmas Parade, the Tet Festival, Cinco de Mayo, Juneteenth and the Smogdance Film Festival.

In 2010, the City of Pomona was selected to join four other municipalities throughout Los Angeles County to receive support from the Los Angeles County Arts Commission and the National Endowment for the Arts to develop a Cultural Plan for the City. This plan articulates the vision, a series of goals, objectives and strategies for the future of arts and culture in the City.

Utilities

Southern California Gas Company and Southern California Edison Company (“SCE”) provide gas and electricity service within the City, respectively. Over 100 telecommunications companies provide long- distance and wireless service. The City provides water and wastewater service.

A-10 APPENDIX B

CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 (THIS PAGE INTENTIONALLY LEFT BLANK)

CITY OF POMONA, CALIFORNIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2015 B-1 CITY OF POMONA, CALIFORNIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2015 B-2 This page intentionally left blank. CITY OF POMONA, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT

Year Ended June 30, 2015

Elliott Rothman Mayor

John Nolte Councilmember, District 1

Adriana Robledo Councilmember, District 2 B-3 This page intentionally left blank. Cristina Carrizosa Councilmember, District 3

Paula Lantz Councilmember, District 4

Ginna E. Escobar Councilmember, District 5

Debra Martin Councilmember, District 6

Prepared by the City of Pomona Finance Department Paula Chamberlain, Finance Director CITY OF POMONA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

JUNE 30, 2015 TABLE OF CONTENTS

Page Number INTRODUCTORY SECTION

Letter of Transmittal ...... i Certificate of Achievement for Excellence in Financial Reporting ...... vii Organizational Chart ...... viii Directory of City Officials ...... ix

FINANCIAL SECTION

INDEPENDENT AUDITORS’ REPORT ...... 1

MANAGEMENT DISCUSSION AND ANALYSIS...... 5

BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements: Statement of Net Position ...... 19

B-4 Statement of Activities ...... 20

This page intentionally left blank. Governmental Fund Financial Statements: Balance Sheet - Governmental Funds ...... 26

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ...... 29

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ...... 30

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ...... 32

Proprietary Fund Financial Statements: Statement of Net Position – Proprietary Funds ...... 34

Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds ...... 38

Statement of Cash Flows – Proprietary Funds ...... 40

Fiduciary Fund Financial Statements: Statement of Fiduciary Net Position – Fiduciary Funds ...... 47

Statement of Changes in Fiduciary Net Position – Fiduciary Funds ...... 48

CITY OF POMONA CITY OF POMONA

COMPREHENSIVE ANNUAL FINANCIAL REPORT COMPREHENSIVE ANNUAL FINANCIAL REPORT

JUNE 30, 2015 JUNE 30, 2015 TABLE OF CONTENTS TABLE OF CONTENTS

Page Page Number Number

FINANCIAL SECTION (CONTINUED) COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES (CONTINUED)

Index to Notes to Financial Statements...... 51 Internal Service Funds: Combining Statement of Net Position – Internal Service Funds...... 168 Notes to Financial Statements...... 55 Combining Statement of Revenues, Expenses, and Changes in REQUIRED SUPPLEMENTARY INFORMATION in Net Position – Internal Service Funds...... 170

Budgetary Information ...... 133 Combining Statement of Cash Flows – Internal Service Funds ...... 172 Budgetary Comparison Schedule – General Fund ...... 134 Budgetary Comparison Schedule – Housing Authority...... 135 Fiduciary Funds: Budgetary Comparison Schedule – Miscellaneous Grants ...... 136 Combining Balance Sheet – Agency Funds ...... 176

Schedule of Changes in Net Pension Liability and Related Ratios Combining Statement of Changes in Assets and Liabilities – Miscellaneous Plan ...... 137 Agency Funds ...... 178 Safety Plan ...... 138

B-5 STATISTICAL SECTION Schedule of Plan Contributions ...... 139 Net Position by Component...... 182 Changes in Net Position ...... 184 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Fund Balances - Governmental Funds...... 188 Changes in Fund Balances - Governmental Funds ...... 190 Combining Balance Sheet – Nonmajor Governmental Funds...... 144 Governmental Activities Tax Revenue by Source ...... 193 Assessed Value and Estimated Actual Value of Taxable Property...... 194 Combining Statement of Revenues, Expenditures, and Property Tax Rates - Direct and Overlapping Governments...... 196 Changes in Fund Balances – Nonmajor Governmental Funds...... 148 Principal Property Taxpayers...... 197 Top 25 Sales Tax Generators...... 198 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Property Tax Levies and Collections ...... 199 General Debt Service...... 152 Ratios of Outstanding Debt by Type...... 200 Public Financing Authority Debt Service...... 153 Ratios of General Bonded Debt Outstanding ...... 202 Community Development Block Grant...... 154 Direct and Overlapping Debt ...... 203 State Gas Tax ...... 155 Legal Debt Margin Information ...... 204 Proposition A ...... 156 Pledged Revenue Coverage - Water...... 206 Proposition C...... 157 Pledged Revenue Coverage - Sewer ...... 207 Vehicle Parking District ...... 158 Demographic and Economic Statistics ...... 208 Air Quality Improvement...... 159 Principal Employers ...... 209 Landscape Maintenance District...... 160 Authorized Full-Time City Employees by Function...... 211 Asset Forfeiture ...... 161 Taxable Sales by Category...... 212 Traffic Offender ...... 162 Operating Indicators by Function...... 214 Measure R...... 163 Capital Asset Statistics by Function ...... 215 General Sanitation Fees Operations...... 164 Capital Outlay...... 165 PAULA CHAMBERLAIN THE CITY OF Finance7 Director POMONA Finance Department

December 16, 2015

Honorable Mayor and City Council and Citizens of the City of Pomona Pomona, California

The audited Comprehensive Annual Financial Report (CAFR) of the City of Pomona, California (City) for the fiscal year ended June 30, 2015 is hereby submitted.

An independent certified public accounting firm audits the basic financial statements. The purpose of the audit is to ensure that the basic financial statements present fairly, in all material respects, the financial position and the results of operations of the City. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. Lance, Soll & Lunghard, LLP, Certified Public Accountants, have issued an unmodified opinion of the City of Pomona’s financial statements for the year ended June 30, 2015. The financial statements have been prepared in accordance with generally accepted accounting principles in the United States. This means that the statements have been prepared using guidelines designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds. The independent auditor’s report is located on page 1 of the Financial Section. All disclosures necessary to B-6 enable the reader to gain the maximum understanding of the City’s financial activities have been This page intentionally left blank. included.

Generally accepted accounting principles require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors.

In addition to the comprehensive audit, the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 as amended and U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Information related to this single audit, including a schedule of federal financial assistance, findings and recommendations and auditor’s report on the internal control structure and compliance with applicable laws and regulations, is provided in a separate single audit report.

REPORTING ENTITY

The primary unit of the government is the City, and includes component units all of which are described below:

The Primary Government The City was founded on January 6, 1888 and became a charter city in 1911. The City operates under a Council-Manager form of municipal government.

The accompanying Comprehensive Annual Financial Report includes the activities of the City, the primary government, and its component units, which are the Pomona Public Financing Authority, the City of Pomona Housing Authority, and the Canon Water Company. Financial information for the City and these component units is accounted for in the accompanying financial statements in accordance with principles

i defining the reporting entity adopted by the Governmental Accounting Standards Board. The City Council Target store. As a regional healthcare hub, Pomona boasts a premier facility in the Pomona Valley serves as the governing board of the Housing Authority. The City Manager, City Attorney, Finance Hospital Medical Center and the non-profit Casa Colina Centers for Rehabilitation. Director/City Treasurer, Senior Accountant, and the Deputy City Manager serve as the governing board for the Pomona Public Financing Authority. The Public Works Director, Deputy Public Works Director, Per 2015 estimates published by the Labor Market Information Division of the California Employment Water/Wastewater Manager, Supervising Water Resources Engineer, and Water Treatment and Quality Development Department (the most recent such data available), the City’s employed civilian labor force Supervisor for the City serve as the governing board of the Canon Water Company. All of these presently stands at approximately 62,700 workers. component units are presented on a blended basis. Retail Sales and Use Tax remains an extremely significant source of revenue, and activity now is still on The former Redevelopment Agency, now Successor Agency, is a separate legal entity, which was formed the rebound from levels depressed by the so-called “Great Recession,” with annual taxable retail sales of to hold the assets of the former Redevelopment Agency pursuant to City Council action taken on more than $1.57 billion dollars during Fiscal Year 2014-15 based on actual revenues received. The City January 9, 2012 with members of the City Council, sitting as the Successor Agency to the of Pomona remains central to the region’s building and construction industry, while other business-to- Redevelopment Agency. The activity of the Successor Agency is overseen by an Oversight Board which business sales represent a notable share of local sales tax receipts. is comprised of individuals appointed by various government agencies including the City of Pomona. Current assessed valuation for the City of Pomona including redevelopment areas is $9,840,105,629 The Pomona Public Financing Authority (the Authority) is a joint exercise of powers agreement according to the Office of the Los Angeles County Auditor-Controller. Based on the City assessed organized under Section 6500 of the California Government Code on October 27, 1988 between the City, valuation (excluding redevelopment areas) of $5,539,772,104, overall property tax receipts (secured, the Redevelopment Agency, and the Redevelopment Agency of the City of West Covina. The purpose of unsecured, transfer tax, in-lieu, etc.) were 31.5% of the 2014-15 General Fund revenues, while sales tax the Authority is to act as a vehicle for various financing activities of the City and the Agency. The funds of and related line items were 20.4% of that same total. the Authority have been included in the governmental activities in the financial statements. Separate audited statements are also issued for the Authority and are available for review in the Pomona Public LONG-TERM FINANCIAL PLANNING Library. Pomona’s vigilant ongoing review and control over expenditure growth has been, and will continue as, a The Housing Authority of the City of Pomona (the Housing Authority) was organized pursuant to the critical factor in maintaining and improving the City’s overall financial health. To ensure its fiscal health, State of California Health and Safety Code, Section 34242. The Authority exists pursuant to adopted on May 2, 2011, the City Council adopted resolution number 2011-49 approving the City’s Fiscal resolution No. 93-114 adopted June 7, 1993. Its purpose is to prepare and carry out plans to ensure Sustainability Policy. This policy established guidelines for the City’s overall fiscal planning and

B-7 sanitary and safe housing exists in the City of Pomona and that such housing is available to persons of management and is intended to foster and support continued financial strength and stability of the City. low income at affordable rental rates. The City provides management assistance to the Housing The policy is quite comprehensive and covers areas of Budget, Economic Development, Risk Authority, and the members of the City Council also act as the governing body of the Housing Authority. Management, Accounting-Auditing-Financial Reporting, Cash Management and Investments, and Debt The Housing Authority’s financial data and transactions are blended with the major governmental funds. Management. The policy also required a separate Fund Balance Policy to ensure fiscal health of the City. Separate audited statements are also issued for the Housing Authority and are available for review in the Part of the Fund Balance Policy adopted by the City Council on June 20, 2011, requires the General Fund Pomona Public Library. to have a ‘Committed Fund Balance’ of 17% of operating expenditures by June 30, 2020. The policy provides a scale for reaching the 17% starting with 8% as of June 2012 and ending with the 17% in 2020. This report includes all funds of the City of Pomona, California, and each of its component units. Based on 2014-15 General Fund expenditure and fund balance numbers, the General Fund has already Component units are legally separate entities for which the primary government is financially accountable. exceeded the final goal of 17%. The City provides full services to its residents including public safety, land use planning and zoning, housing and economic development, building and safety regulation and inspection, water, sewer and OUTLOOK FOR THE FUTURE refuse services, maintenance of parks, streets and related infrastructure, recreational activities and library services. As the City looks ahead to 2015-16, staff is encouraged by indicators that a modest recovery is finally underway. How long the recovery will last is unknown, but the City appears to have turned the corner for THE CITY OF POMONA now, and prospects for the future are much improved. All tax categories, as well as construction related categories, are reflecting a recovering economy. The adopted 2015-16 General Fund budget is balanced The City is located at the southeast end of Los Angeles County and borders San Bernardino County’s and reflects estimated revenues of $91.3 million which is a 3.2% increase from the previous fiscal year western boundary and is just five miles north of Orange County. The City has a population of 152,419 receipts. and covers an area of approximately 23 square miles. The City is a charter city and is governed by a mayor and six council members. Council members are elected by district with the mayor elected from the FINANCIAL INFORMATION City at large. Each member of the Council is elected to a term of four years. Management of the City is responsible for establishing and maintaining an internal control structure LOCAL ECONOMY designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity The City of Pomona continues to enjoy a broadly based diverse economy, albeit one with an emphasis with accounting principles generally accepted in the United States of America. The internal control upon government, healthcare, and other service-oriented industries. Among Pomona’s large employers structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. are the school district (Pomona USD), the City of Pomona itself, California State Polytechnic University, The concept of reasonable assurance recognizes that: (1) the cost of control should not exceed the and the Department of Social Services. Notable private sector employers include Anheuser Busch, benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments Consolidated Foundries, First Transit, Hayward Industries, Inland Valley Care and Rehab, Kittich by management. Corporation, Verizon, Walmart, Los Angeles County Fair Association (Fairplex) and the newly opened

ii iii Single Audit. As a recipient of federal and state financial assistance, the City is also responsible for assistance in the preparation of this year’s report. ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation In closing, without the leadership and support of the City Council, preparation of this report would not by management and the staff of the City. The City is required to undergo an annual single audit in have been possible. conformity with the provisions of the Single Audit Act as amended in 1996 and the United States Office of Management and Budget Circular A-133. The results of the City’s single audit for the fiscal year ended Respectfully submitted, June 30, 2015 are published under separate cover.

Budgetary Controls. The City maintains budgetary controls to ensure compliance with legal provisions Paula Chamberlain embodied in the annual adopted budget approved by the City’s governing body. The legal level of Finance Director budgetary control (that is, the level at which expenditures cannot exceed the appropriated amount) is at the department level in the General Fund and by fund total for all other funds. For budgeting purposes, the General Fund is composed of several departments while all other budgeted funds are each considered to be a single department. The City maintains an encumbrance accounting system as one technique of accomplishing budgetary control, however all operating encumbrances lapse at year-end unless specifically approved by City Council resolution per the City Charter.

OTHER INFORMATION

Risk Management. The City maintains a self-insurance program to provide for the general liability, workers compensation and unemployment benefits claims.

Independent Audit. The accounting firm of Lance, Soll & Lunghard, LLP was selected to perform the annual independent audit. The annual audit is designed to meet the requirements of generally accepted auditing standards in the United States, the standards applicable to financial audits contained in

B-8 Government Auditing Standards, issued by the Comptroller General of the United States, and the Federal Single Audit Act of 1996, as amended and related OMB Circular A-133. The auditors’ report on the basic financial statements is included in the financial section of this report. The auditors’ report related specifically to the single audit is included in a separate Single Audit Report.

Certificate of Achievement. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Pomona for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014. The City of Pomona has received a Certificate of Achievement for the last twenty-two consecutive years (1993-2014). The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports.

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles in the United States and applicable legal requirements.

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

Additional Information. For additional information, please refer to the Management’s Discussion and Analysis in the Introductory Section of this report. This discussion and analysis of the City’s financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2015. Please read it in conjunction with the basic financial statements and the accompanying notes to the basic financial statements.

Acknowledgments. The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated services of the entire Finance Department staff. Special recognition is given to all the Accounting division staff and the City’s audit firm for their services in the coordination and

iv v CITY OF POMONA Certificate of Achievement

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Pomona for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of a state and local government financial reports.

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and

B-9 efficiently organized comprehensive This page intentionally left blank. annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. The City of Pomona has received a Certificate of Achievement for the last twenty-two consecutive years (fiscal years ended 1993-2014).

We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA for consideration.

vi vii CITY OF POMONA CITY OF POMONA Organizational Chart DIRECTORY OF CITY OFFICIALS at June 30, 2015

CITY COUNCIL

Elliott Rothman Mayor

John Nolte Adriana Robledo Cristina Carrizosa Councilmember Councilmember Councilmember District 1 District 2 District 3

Paula Lantz Ginna E. Escobar Debra Martin Councilmember Councilmember Councilmember District 4 District 5 District 6

B-10 APPOINTED ADMINISTRATIVE OFFICIALS

City Manager ...... Linda Lowry City Attorney ...... Arnold Alvarez-Glasman City Clerk ...... Eva M. Buice City Treasurer ...... Paula Chamberlain

DEPARTMENT DIRECTORS

Finance ...... Paula Chamberlain Fire Chief (Los Angeles County) ...... Daryl L. Osby Human Resources ...... Linda Matthews Information Technology ...... John DePolis Library ...... Mark Gluba Community Development/Community Services ...... Mark Lazzaretto Police Chief ...... Paul Capraro Public Works ...... Rene Salas Water/Wastewater (effective 7/1/15) ...... Darron Poulsen

viii ix INDEPENDENT AUDITORS’ REPORT

To the Honorable Mayor and Members of the City Council City of Pomona, 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 Pomona, 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. B-11 Auditor’s Responsibility This page intentionally left blank. 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.

To the Honorable Mayor and Members of the City Council To the Honorable Mayor and Members of the City Council City of Pomona, California City of Pomona, California

Opinions 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 In our opinion, the financial statements referred to above present fairly, in all material respects, the assurance on them. respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Pomona, California, as of June 30, 2015, and Other Reporting Required by Government Auditing Standards 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. In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2015 on our consideration of the City’s internal control over financial reporting and on our Change in Accounting Principle 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 As discussed in Note 1 to the financial statements, in 2015 the City adopted new accounting guidance, financial reporting and compliance and the results of that testing, and not to provide an opinion on internal GASB Statement No. 68, Accounting and Financial Reporting for Pensions – An Amendment of GASB control over financial reporting or on compliance. That report is an integral part of an audit performed in Statement No. 27 as amended by GASB Statement No. 71, Pension Transition for Contributions Made accordance with Government Auditing Standards in considering the City’s internal control over Subsequent to the Measurement Date. financial reporting and compliance.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s Brea California discussion and analysis, the budgetary comparison schedules for the General Fund, Housing Authority December 16, 2015

B-12 and Miscellaneous Grant Fund, the schedules of changes in net pension liability and related ratios, and the schedules of plan contributions 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 schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.

2 3 PAULA CHAMBERLAIN THE CITY OF Finance Director POMONA Finance Department

MANAGEMENT’S DISCUSSION AND ANALYSIS

Fiscal Year Ended June 30, 2015

The following Management’s Discussion and Analysis (MD&A) of the City of Pomona’s 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 fiscal year 2014-15 activities, resulting changes and current known facts; therefore, the information presented here should be considered in conjunction with additional information furnished in the transmittal letter and the accompanying basic financial statements.

FINANCIAL HIGHLIGHTS

! The assets of the City exceeded its liabilities at the close of the fiscal year by $202 million. ! As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $95.8 million. ! At the end of the current fiscal year, committed fund balance for fiscal sustainability in the General Fund was $14.5 million, which is 17% of total general fund expenditures, including transfers out.

B-13 OVERVIEW OF THE FINANCIAL STATEMENTS This page intentionally left blank. This discussion and analysis portion of the annual financial report is intended to serve as an introduction to, and provide the reader with a fundamental understanding of, the Comprehensive Annual Financial Report (CAFR) for the City of Pomona. The CAFR is divided into four main sections. First is the Introductory Section which provides the letter of transmittal, an organizational chart, and a list of City officials. The Introductory Section is followed by the Financial Section, which contains the independent auditor’s report, the management’s discussion and analysis, and finally the basic financial statements. These statements contain the “core” financial information for the City of Pomona. The basic financial statements include the government-wide financial statements, followed by the fund financial statements, and finally, the notes to the financial statements. The Financial Section is followed by the Supplemental Data portion of the report, which provides individual fund and combining information that rolls up into the amounts shown in the basic financial statements. The final portion of the CAFR is the Statistical Section. This section presents selected financial and demographic information, generally presented on a multi-year basis.

Government-wide financial statements. The government-wide financial statements are designed to provide the reader with a broad overview of the City of Pomona’s finances, in a manner similar to a private sector business. Information contained within the government-wide statements includes the entire City government (except fiduciary funds) and the City’s component units. These statements use the accrual basis of accounting with the measurement focus on that of economic resources. All assets and liabilities, both financial and capital, short-term and long-term, are included. All revenues and expenses during the year, regardless of when cash is received or disbursed, are reported. The government-wide financial statements include the Statement of Net Position and the Statement of Activities.

The Statement of Net Position presents information on all of the City of Pomona’s assets and liabilities, with the difference between the two reported as “net position”. Increases or decreases in net position may serve as a useful indicator as to whether the financial condition of the City of Pomona is improving or deteriorating over time.

The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event causing the change occurs, regardless of when cash is actually received or disbursed. This means that revenues and expenses in

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Management’s Discussion and Analysis, Continued Management’s Discussion and Analysis, Continued Year Ended June 30, 2015 Year Ended June 30, 2015

this statement are recorded when earned or a liability is incurred. Thus, items such as the value of earned but Proprietary funds use the accrual basis of accounting and focus on the accumulation and use of economic unused vacation leave will be recorded as an expense of the current period, even though the actual use of the resources. Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, vacation time may not be until subsequent periods. Expenses, and Changes in Net Position, and a Statement of Cash Flows. All assets and liabilities, both financial and capital, short and long-term are included within these statements. All revenues earned and expenses Both of the government-wide statements distinguish between functions of the City of Pomona that are principally incurred during the year are also included, regardless of when cash is actually received or paid. supported by taxes or intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. activities). The governmental activities of the City of Pomona include general government, public safety, urban Fiduciary funds are not reflected in the government-wide financial statements because the funds are custodial in development, neighborhood services, and interest and fiscal charges. The business-type activities of the City of nature, and therefore, these resources are not available to fund the City of Pomona programs. Pomona include water, sewer, refuse and Canon Water Company operations. Notes to the financial statements. The notes to the financial statements provide additional information that is Fund financial statements. A “fund” is a grouping of related accounts that is used to maintain control over essential to a full understanding of the information contained in the government-wide and fund financial resources that have been segregated for specific activities or objectives. The City of Pomona, like other state statements. and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. The fund financial statements provide more detailed information about the City’s most significant The combining statements referred to earlier in connection with non-major governmental funds and internal funds, not the City as a whole. All of the funds of the City of Pomona can be divided into three categories: service funds are presented immediately following the notes to the financial statements. governmental funds, proprietary funds, and fiduciary funds. GOVERNMENT-WIDE FINANCIAL ANALYSIS Governmental funds include activities of the City that are not proprietary or fiduciary. These funds are used to account for, essentially, the same functions reported as “governmental activities” in the government-wide Net position. As mentioned earlier, net position may serve over time as a useful indicator of a government’s financial statements. Unlike the government-wide financial statements, however, governmental fund financial financial position. Total net position has decreased when compared to the prior year. Below is a summary statements use the modified accrual basis of accounting and focus on near-term inflows and outflows of schedule showing the components that make up the City’s net position (in millions) at June 30, 2015 and 2014. spendable resources, as well as the balances of spendable resources available at the end of the fiscal year. Only assets expected to be used and liabilities that come due during the year or soon thereafter are reported on Governmental Business-Type B-14 the Balance Sheet. No capital assets are included. Revenues for which cash is received during or soon after Activities Activities Total the end of the year, and expenditures for goods and services that have actually been received during the year, 2015 2014 2015 2014 2015 2014 are included within the Statement of Revenues, Expenditures, and Changes in Fund Balance. Current and other assets $ 117.4 $ 137.6 $ 88.2 $ 89.3 205.6$ $ 226.9 Capital assets 273.5 277.8 156.5 155.8 430.0 433.6 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it Total assets 390.9 415.4 244.7 245.1 635.6 660.5 is useful to compare the information presented for governmental funds in the fund financial statements with Deferred outflows of resources similar information presented for “governmental activities” in the government-wide financial statements. By doing Deferred charge 0.1 0.1 1.7 1.8 1.8 1.9 so, the reader may better understand the long-term impact of the City’s near-term financing decisions. Both the Deferred pension related items 7.9 - 1.1 - 9.0 - Governmental Fund Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Total deferred outflows of resources 8.0 0.1 2.8 1.8 10.8 1.9 Balance provide a reconciliation to facilitate this comparison. Current and other liabilities 7.4 9.6 6.8 8.4 14.2 18.0 The City of Pomona maintains 20 individual governmental funds. Individual fund information is presented for the Long-term liabilities outstanding 248.6 141.4 150.0 138.8 398.6 280.2 “major” funds in the governmental fund balance sheet and in the governmental fund statement of revenues, Total liabilities 256.0 151.0 156.8 147.2 412.8 298.2 expenditures, and changes in fund balance. The major funds presented include the General Fund, the Housing Authority Fund, the Miscellaneous Grants Fund, the General Debt Service Fund, and the Public Financing Deferred inflows of resources Authority Debt Service Fund. Information for the remaining governmental funds is combined into a single “other Deferred pension related items 27.3 - 4.2 - 31.5 - governmental funds” column on the face of the financial statements. Individual fund data for each of these Total deferred inflows of resources 27.3 - 4.2 - 31.5 - non-major governmental funds is provided in the form of “combining statements” presented in the Supplemental Data portion of the report. Net Position:

Proprietary funds are used to report two types of funds: enterprise funds and internal service funds. Enterprise Net Investment in capital assets 236.5 239.9 42.1 43.8 278.6 283.7 funds report the same functions presented as “business-type” activities in the government-wide financial Restricted 102.5 91.1 28.9 32.7 131.4 123.8 Unrestricted (223.4) (66.5) 15.6 23.2 (207.8) (43.3) statements. These include activities that the City operates similar to a private business. The City of Pomona Total net position $ 115.6 $ 264.5 $ 86.6 $ 99.7 202.2$ $ 364.2 uses enterprise funds to account for the operations of the City and Canon Water Company all of which are considered “major” funds. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City of Pomona uses internal service funds to account for its self-insurance activities, equipment maintenance activities, information technology activities, and For the City of Pomona, total assets exceeded total liabilities by $202 million at June 30, 2015. As the table printing/mail service activities. Because these four services predominately benefit governmental rather than above shows, an amount of $274.3 million is reported as net investment in capital assets. This amount business-type functions, the activity has have been included within “governmental activities” in the represents those capital assets (land, buildings, improvements, equipment, and work in progress), some of government-wide financial statements. All internal service funds are combined into a single aggregated column which have been acquired over time and financed by the issuance of long-term debt. The City of Pomona uses presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is these capital assets to provide services to the citizens of the City, and the assets are therefore not available for provided in the form of combining statements presented in the Supplemental Data portion of the report. meeting current financial obligations. Although net investment in capital assets is reported net of related debt, it

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CITY OF POMONA CITY OF POMONA

Management’s Discussion and Analysis, Continued Management’s Discussion and Analysis, Continued Year Ended June 30, 2015 Year Ended June 30, 2015

should be noted that the resources needed to repay the debt must come from other operating sources, since the capital assets themselves cannot be used to make debt service payments. Expenses: General government $ 5.6 5.6$ -$ -$ $ 5.6 $ 5.6 An additional portion of net position, in the amount of $131.4 million, reported as restricted net position Public safety 67.6 66.6 - - 67.6 66.6 represents resources that are subject to external restrictions on how it may be used. Restrictions include assets Urban development 42.1 47.9 - - 42.1 47.9 that are legally set aside for future capital development, capital projects, housing-related activities, debt service Community services 6.2 6.2 - - 6.2 6.2 reserves, and other legally restricted amounts. The remaining balance is unrestricted net position of Interest on long-term debt 5.2 5.4 - - 5.2 5.4 Water - - 27.1 29.5 27.1 29.5 $(207.8 million). Sewer - - 3.9 4.1 3.9 4.1 Refuse - - 8.5 8.6 8.5 8.6 Changes in net position. The statement of net position provides a snapshot at a given point in time of the Canon Water Company ------assets and liabilities of the City. The other citywide statement provided is the Statement of Activities. This Total expenses 126.7 131.7 39.5 42.2 166.2 173.9 statement provides the reader with information regarding the revenues, expenses, and changes in net position over the fiscal year. Generally, all changes to the City’s net position from one fiscal year to the next flow Increase in net position before transfers 4.9 (5.6) 4.9 3.9 9.8 (1.7) through the statement of activities. The City’s programs for governmental activities include legislative and Transfers 1.0 0.5 (1.0) (0.5) - - support services, Police, Fire, Public Works, Urban Development, Community Services, and Library. The Increase (decrease) in net position 5.9 (5.1) 3.9 3.4 9.8 (1.7) programs for the business-type activities include water utilities, sewer, and residential refuse operations. The Net position at beginning of year 264.5 269.6 99.7 96.3 364.2 365.9 following is a summary schedule showing the components that make up the City’s changes in net position Restatement of Net Position (154.8) - (17.0) (171.8) - (in millions) for the years ended June 30, 2015 and 2014. Net position at end of year $ 115.6 $ 264.5 $ 86.6 99.7$ $ 202.2 $ 364.2

Governmental Business-Type Governmental Activities - The City had a $5.9 million increase in net position from governmental activities Activities Activities Total 2015 2014 2015 2014 2015 2014 (see Financial Analysis of the City’s Funds – General Fund for explanation) in 2014-15. The cost of all Revenues: governmental activities this year was $126.7 million. However, as shown above in the changes in net position, Program Revenues: the amount taxpayers ultimately financed for these activities was $82.2 million since some of the cost was paid by those who directly benefited from the programs ($14.3 million), or by other governments and organizations B-15 Charges for services $ 14.3 13.5$ $ 14.3 13.5$ Water - - $ 29.9 $ 31.6 29.9 31.6 that subsidized certain programs with operating contributions and grants ($17.6 million), and capital Sewer - - 4.7 4.7 4.7 4.7 contributions and grants ($12.6 million). Overall, the City’s program revenues were $44.5 million. The City paid Refuse - - 9.6 9.6 9.6 9.6 for the remaining “public benefit” portion of governmental activities with $80.6 million in taxes (some of which is Operating contributions and grants 17.6 19.5 - - 17.6 19.5 restricted for certain programs). Capital contributions and grants 12.6 12.8 - - 12.6 12.8 Business Type Activities - The cost of all business-type activities in 2014-15 was $39.5 million. As shown above General Revenues: in the changes in net position, the amount of revenue received was $44.4 million. Total resources available Taxes: during the year to finance business-type activities were $127.1 million consisting of Net Position at July 1, 2014 Property taxes 36.4 33.6 - - 36.4 33.6 of $82.7 million, after a restatement of $(17 million) due to implementation of GASB 68, revenues of Sales taxes 13.5 12.0 - - 13.5 12.0 $44.4 million, expenditures of $39.5 million and consideration of $(1 million) in transfers; thus net position Motor vehicle licenses 0.1 - - - 0.1 - Transient occupancy taxes 1.6 1.6 - - 1.6 1.6 increased by $3.9 million. The increase was primarily due to the reduction in expenses in the Water Fund Property transfer taxes 1.6 1.4 - - 1.6 1.4 primarily due to the decrease in purchase of water when compared to the prior year. The City and its residents Franchises taxes 6.5 6.0 - - 6.5 6.0 made a conscious effort to reduce water usage due to the drought and imposed water restrictions. Utility users taxes 17.5 17.3 - - 17.5 17.3 Business licenses (nonregulatory) 3.3 3.2 - - 3.3 3.2 FINANCIAL ANALYSIS OF THE CITY’S FUNDS Other taxes 0.1 - - - 0.1 - Interest and rentals 2.1 2.3 0.1 0.1 2.2 2.4 The City uses governmental fund accounting to ensure compliance with budgetary allocations and to maintain Miscellaneous 3.5 2.9 0.1 0.1 3.6 3.0 control over resources that are legally, or otherwise, restricted for specific purposes. Following is a discussion Gain on sale of capital assets ------of the individual “major” funds as shown on the Balance Sheet for Governmental Funds in the basic financial Extraordinary gain (loss) on RDA dissolution 0.8 - - - 0.8 - statements. Total revenues $ 131.5 $4126.1 $ 4.4$ 46.1 $ 175.9 $ 172.2 General Fund - The General Fund is used to account for the general operations of the City. It is used to account for all financial resources, except those required to be accounted for in another fund. The General Fund is always reported as a “major fund”. The General Fund reported $90.0 million in revenues and $80.5 million in expenditures resulting in revenues over expenditures in the amount of $9.5 million before accounting for net other financing uses of $4.6 million, resulting in the General Fund fund balance to increase by $4.9 million for the fiscal year. Total fund balance at June 30, 2015 was $17.3 million, composed of $22.5 million in assets combined with $2.9 million in liabilities and $2.3 million in deferred inflows and resources. Total fund balance includes $0.1 million in nonspendable fund balance, which represents that portion of fund balance that is not available for appropriation. Committed fund balance totals $14.5 million for fiscal sustainability. The City has a

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CITY OF POMONA CITY OF POMONA

Management’s Discussion and Analysis, Continued Management’s Discussion and Analysis, Continued Year Ended June 30, 2015 Year Ended June 30, 2015

fiscal sustainability policy that was adopted by resolution 2011-49 for the purpose of guiding the City’s financial Sewer Fund – The Sewer Fund is used to account for the operation and maintenance of the City’s sewer planning to meet financial obligations while providing high quality services. The policy states that 17% of the network. The Sewer Fund reported $4.8 million in operating revenues and operating expenses of $2.8 million general fund operating expenditures including transfers out is to be committed for fiscal sustainability. The resulting in operating income of $2 million. After consideration of non-operating revenues, non-operating committed portion of fund balance can only be used for specific purposes pursuant to constraints imposed by expenses and transfers the total change in net position is $0.4 million with total revenues in excess of expenses. formal action of the City Council, and remains in-place unless removed in the same manner. The remaining The beginning net position of $18 million was restated to $16.1 due to the implementation of GASB 68 which portion of fund balance is considered unassigned. General fund revenues increased $5.2 million in the fiscal recognized the unfunded pension liability thus decreasing the beginning net position. The Sewer Fund is made year when compared to the prior year which was due to an increase in tax revenues. All tax revenues increased up of $17.1 million in current assets, $28.3 in non-current assets, $0.7 million in deferred outflows of resources, across the board due to the economic upturn during the fiscal year. General fund expenditures increased by $0.7 million in current liabilities, $28.4 in non-current liabilities and $0.5 million in deferred inflow of resources $4.2 million mainly due to the City ending employee furloughs which increased personnel costs. resulting in net position of $16.5 million.

Housing Authority Fund – The Housing Authority Fund accounts for grant revenues for housing assistance Refuse Fund – The Refuse Fund is used to account for all activities associated with residential refuse collection, program payments and acquisition, rehabilitation, and administration of properties used to provide affordable and curbside collection of recycling materials. The Refuse Fund reported $9.6 million in operating revenues and rental housing. The Housing Authority fund has historically been a “major” fund based on criterion set forth by operating expenses of $8.5 million resulting in operating income of $1 million. After consideration of GASB 34. For the fiscal year the Housing Authority reported $9.9 million in revenues and $13.1 million in non-operating revenues, non-operating expenses and transfers the total change in net position is $1 million with expenditures, resulting in a net change in fund balance in the amount of $(3.1 million). Although the net change total revenues in excess of expenses. The beginning net position of $5.5 million was restated to $2.8 million due in fund balance was negative, the fund balance for the fiscal year increased to $27.3 million due to an $8 million to the implementation of GASB 68 which recognized the unfunded pension liability thus decreasing the dollar restatement. The restatement was due to the implementation of GASB 65. The Housing Authority fund is beginning net position. The Refuse Fund is made up of $6.1 million in current assets, $4.1 in non-current assets, made up of $28.9 million in assets, combined with $0.2 million in liabilities and $1.4 million in deferred inflows $0.2 million in deferred outflows of resources, $1.2 million in current liabilities, $4.6 in non-current liabilities and and resources resulting in $27.3 million in fund balance. Of the $27.3 million in fund balance, $19.7 million is $0.7 million in deferred inflow of resources resulting in net position of $3.9 million. nonspendable relating to prepaid cost, land held for resale, notes and loans and advances. The remaining portion of fund balance is restricted for Urban Development. Housing Authority fund revenues decreased by Canon Water Company – The Canon Water Company Fund is used to account for the activities of the Canon $2.6 million in the fiscal year when compared to the prior year due to decreased funding from the Department of Water Company. The Canon Water Company was elected as a major fund by the City. The fund reported Housing and Urban Development. Housing Authority expenditures decreased 2% when compared to the prior $0.07 million in operating revenues and operating expenses of $0.03 million resulting in operating income of year. $0.04 million. After consideration of non-operating revenues the total change in net position is $0.04 million with B-16 total revenues in excess of expenses. The Canon Water Company Fund is made up of $0.35 million in current Miscellaneous Grants Fund – The Miscellaneous Grants fund accounts for the revenues received and assets and $0.03 in non-current assets resulting in net position of $0.38 million. expenditures made for federal, state and or county approved programs and projects. The Miscellaneous Grants fund has historically been a “major” fund based on criterion set forth by GASB 34. For the fiscal year, the GENERAL FUND BUDGETARY INFORMATION Miscellaneous Grants fund reported $6.8 million in revenues and $6.9 in expenditures resulting in a deficiency of revenues under expenditures of $0.1 million. After a total other financing sources of $0.2 million, the resulting The originally adopted General Fund budget contained $86.2 million in appropriations to fund operations and net change in fund balance totals $0.1 million. The fund is made up of $22 million in assets combined with services. This amount increased to $88.6 million by the end of the fiscal year through City Council approved $0.7 million in liabilities and $2.9 million in deferred inflows and resources resulting in $18.4 million in fund budget amendments. This increase in the amount of $2.4 million consisted primarily of: balance. The nonspendable portion of fund balance amounts to $19.3 million which offsets the notes and loans receivables with the remaining portion being negative unassigned fund balance. Miscellaneous Grants revenue ! $1.745 million for increased personnel costs due to changes in Memorandums of Understanding and expenditures decreased 9% and 10% respectively. (MOU’s). ! $330,245 for providing police services for the LA County Fair Association “Hard Day of the Dead 14 Non-Major Funds - The Non-Major Governmental Funds show a net increase of $0.4 million in fund balance event”. which was the result of a restatement increasing fund balance of $1.9 million due to the requirement of reclassing unavailable revenue to fund balance (see footnote 16) and a decrease in fund balance of $1.5 due to General Fund expenditures were under budget at the completion of the fiscal year. All General Fund revenue revenues being less than expenditures. The primary reason for the decrease in fund balance was due to the budget category estimates were exceeded by the actual revenues except for License and Permits, Charges for increased level of construction costs relating to citywide Major Street Rehabilitation project funded by the services, and miscellaneous revenues. Proposition C fund.

The following funds were reported as “major” funds on the Statement of Net Position for Proprietary Funds in the basic financial statements:

Water Fund – The Water Fund is used to account for all activities associated with the distribution and transmission of potable water as well as reclaimed water to users. The Water Fund reported $29 million in operating revenues and operating expenses of $22.3 million resulting in operating income of $6.7 million. After consideration of non-operating revenues, expenses and transfers the total change in net position is $1.8 million with total revenues in excess of expenses. The beginning net position was $75.4 million but there was a restatement in the amount of $(12.4 million) due to the implementation of GASB 68 which recognized the unfunded pension liability thus decreasing the beginning net position to $63 million. The Water Fund is made up of $58.8 million in current assets, $128.9 in non-current assets, $1.9 million in deferred outflows of resources, $8.2 million in current liabilities, $113.6 in non-current liabilities and $3 million in deferred inflow of resources resulting in net position of $64.8 million.

10 11 CITY OF POMONA CITY OF POMONA

Management’s Discussion and Analysis, Continued Management’s Discussion and Analysis, Continued Year Ended June 30, 2015 Year Ended June 30, 2015

DEBT ADMINISTRATION Original Accumulated Book Description Cost Depreciation Value At the end of the fiscal year, the City and its component units (Pomona Public Financing Authority and Pomona Capital Assets - Business -Type Activities Housing Authority) had total long-term debt outstanding of $398.6 million. Land $ 9,089,782 $ - $ 9,089,782 Construction in progress 19,965,564 - 19,965,564 Governmental Business-Type Buildings and improvements 3,482,783 3,291,986 190,797 Activities Activities Total Improvements other than buildings 286,638 119,452 167,186 Pollution remediation obligations $ 960,809 $ - $ 960,809 Machinery and equipment 200,002,139 77,715,074 122,287,065 Obligations under capital leases 586,295 3,004,393 3,590,688 Furniture and fixtures 5,105 5,105 - Notes payable 655,000 - 655,000 Autos and trucks 4,510,802 3,165,780 1,345,022 Revenue bonds 39,564,000 132,086,644 171,650,644 Equipment under capital leases 4,257,381 851,476 3,405,905 Total $ 241,600,194 $ 85,148,873 $ 156,451,321 Pension obligation refunding bonds 44,333,953 - 44,333,953 Certificates of participation 11,336,191 - 11,336,191 Compensated absences 7,118,226 1,302,207 8,420,433 Additional information on the City of Pomona’s capital assets may be found in Note 7 in the Notes to the Basic Claims payable 12,101,548 - 12,101,548 Financial Statements. Net pension liability 112,127,525 13,618,760 125,746,285 OPEB obligations 19,802,228 - 19,802,228 ECONOMIC FACTORS

Total $ 248,585,775 $ 150,012,004 $ 398,597,779 The City of Pomona’s total Fiscal Year 2014-15 General Fund revenues grew by $5.2 million (approximately

6.09%) versus prior year actuals. That being said, there were both increases and decreases across all Additional information on the City’s long-term debt may be found in Note 9 in the Notes to the Basic Financial revenues, with several in particular worth noting. All property tax related revenue grew by $1.99 million as a Statements. reflection of continued improvement in the local real estate market. Sales and Use Tax increased $1.6 million also as a reflection of the continued improvement of the local economy in the City. Business License B-17 CASH MANAGEMENT receipts – which partially reflect retail activity – increased slightly. Finally, healthy across-the-board growth in construction related receipts (Building Permits, Job Fees, New Construction Tax, et al) point to a firm foundation To obtain flexibility in cash management, the City employs a pooled cash system (Reference Note 2 in the for future economic growth. Notes to the Basic Financial Statements). Under the pooled cash concept, the City invests the cash of all funds with maturities planned to coincide with cash needs. Idle cash is invested in certain eligible securities as constrained by law and further limited by the City’s Investment Policy. The goals of the City’s Investment Policy CONTACTING THE CITY’S FINANCIAL MANAGEMENT are safety, liquidity and yield. This financial report is designed to provide Pomona residents, taxpayers, customers, investors and creditors CAPITAL ASSETS with a general overview of the City’s finances and to show the City’s accountability for the money it receives. Questions about this report, separate reports of the City’s component units, or need any additional financial The capital assets of the City are those assets, which are used in the performance of the City’s functions information, should be directed to the City of Pomona Finance Department at 505 S. Garey Avenue including infrastructure assets. At June 30, 2015, net capital assets of the governmental activities totaled (P.O. Box 660), Pomona, California, 91769. $273.6 million and the net capital assets of the business-type activities totaled $156.5 million. Depreciation on capital assets is recognized in the government-wide financial statements.

Original Accumulated Book Description Cost Depreciation Value Capital Assets - Governmental Activities Land $ 81,168,660 $ - $ 81,168,660 Construction in progress 22,682,709 - 22,682,709 Buildings and improvements 14,941,552 11,968,419 2,973,133 Improvements other than buildings 60,003,395 24,683,385 35,320,010 Machinery and equipment 20,754,160 16,466,672 4,287,488 Furniture and fixtures 1,014,456 812,785 201,671 Autos and trucks 10,756,126 8,283,866 2,472,260 Equipment under capital leases 1,037,970 288,588 749,382 Infrastructure 380,805,974 257,167,573 123,638,401 Total $ 593,165,002 $ 319,671,288 $ 273,493,714

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BASIC FINANCIAL STATEMENTS B-18

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14 15 GOVERNMENT-WIDE FINANCIAL STATEMENTS B-19

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16 17 CITY OF POMONA

STATEMENT OF NET POSITION JUNE 30, 2015

Primary Government Governmental Business-Type Activities Activities Total Assets: Cash and investments $ 51,716,498 $ 43,045,107 $ 94,761,605 Receivables (net): Accounts 4,029,051 10,114,942 14,143,993 Notes and loans 32,519,927 - 32,519,927 Interest 44,598 15,251 59,849 Internal balances (5,953,677) 5,953,677 - Prepaid costs 45,100 15,025 60,125 Due from other governments 6,852,944 - 6,852,944 Inventories 470,309 218,824 689,133 Land held for resale 4,503,277 - 4,503,277 Advances to Successor Agency 4,000,000 - 4,000,000 Restricted assets: Cash 18,587,051 28,900,238 47,487,289 Other investments 600,000 9,000 609,000 Capital assets, not being depreciated 103,851,369 29,055,346 132,906,715 Capital assets, net of depreciation 169,642,345 127,395,975 297,038,320 Total Assets 390,908,792 244,723,385 635,632,177 Deferred Outflows of Resources: Deferred charge on refunding 126,560 1,654,520 1,781,080 Deferred pension related items 7,869,167 1,105,399 8,974,566 Total Deferred Outflows B-20 of Resources 7,995,727 2,759,919 10,755,646 This page intentionally left blank. Liabilities: Accounts payable 3,371,786 1,833,842 5,205,628 Payroll payable 1,579,337 311,094 1,890,431 Accrued liabilities 220,170 99,888 320,058 Interest payable 1,762,319 992,143 2,754,462 Unearned revenues 405,556 - 405,556 Deposits payable 24,301 3,502,810 3,527,111 Due to other governments 115 - 115 Noncurrent liabilities: Due within one year 10,214,550 3,353,408 13,567,958 Due in more than one year 106,441,472 133,039,836 239,481,308 Net pension liability 112,127,525 13,618,760 125,746,285 Other post employment benefits liability 19,802,228 - 19,802,228 Total Liabilities 255,949,359 156,751,781 412,701,140 Deferred Inflows of Resources: Deferred pension related items 27,318,103 4,179,097 31,497,200 Total Deferred Inflows of Resources 27,318,103 4,179,097 31,497,200 Net Position: Net investment in capital assets 236,554,708 42,085,623 278,640,331 Restricted for: Community development projects 35,830,906 - 35,830,906 Special projects 3,697,200 - 3,697,200 Capital projects 15,102,380 19,071,352 34,173,732 Debt service 47,845,352 9,828,886 57,674,238 Unrestricted (223,393,489) 15,566,565 (207,826,924) Total Net Position $ 115,637,057 $ 86,552,426 $ 202,189,483

18 See Notes to Financial Statements 19 CITY OF POMONA

STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2015

Net (Expenses) Revenues and Changes in Net Position Program Revenues Primary Government Operating Capital Charges for Contributions Contributions Governmental Business-Type Expenses Services and Grants and Grants Activities Activities Total Functions/Programs Primary Government: Governmental Activities: General government $ 5,555,565 $ 1,825,171 $ 51,581 $ - $ (3,678,813) $ - $ (3,678,813) Public safety 67,614,849 4,124,878 1,873,236 - (61,616,735) - (61,616,735) Urban development 42,139,207 7,830,415 15,375,775 12,627,464 (6,305,553) - (6,305,553) Neighborhood services 6,151,817 712,551 264,214 - (5,175,052) - (5,175,052) Interest on long-term debt 5,252,517 - - - (5,252,517) - (5,252,517) Total Governmental Activities 126,713,955 14,493,015 17,564,806 12,627,464 (82,028,670) - (82,028,670)

Business-Type Activities: Water 27,125,628 29,888,243 - - - 2,762,615 2,762,615 Sewer 3,962,091 4,733,661 - - - 771,570 771,570 Refuse 8,467,884 9,523,134 42,052 - - 1,097,302 1,097,302 Canon Water Company - February 28, 2015 26,747 64,221 - - - 37,474 37,474 Total Business-Type Activities 39,582,350 44,209,259 42,052 - - 4,668,961 4,668,961 Total Primary Government $ 166,296,305 $ 58,702,274 $ 17,606,858 $ 12,627,464 (82,028,670) 4,668,961 (77,359,709)

General Revenues:

B-21 Taxes: Property taxes 36,408,806 - 36,408,806 Sales taxes 13,544,946 - 13,544,946 Motor vehicle licenses 67,079 - 67,079 Transient occupancy taxes 1,568,387 - 1,568,387 Property transfer taxes 1,581,039 - 1,581,039 Franchise taxes 6,563,245 - 6,563,245 Utility users taxes 17,465,816 - 17,465,816 Business licenses (nonregulatory) 3,346,851 - 3,346,851 Other taxes 59,221 - 59,221 Interest and rentals 2,109,735 92,349 2,202,084 Miscellaneous 3,461,354 121,408 3,582,762 Gain on sale of capital assets - 1,965 1,965 Extraordinary gain/(loss) on dissolution of Redevelopment Agency 808,340 - 808,340 Transfers 1,011,800 (1,011,800) - Total General Revenues, Extraordinary Items and Transfers 87,996,619 (796,078) 87,200,541

Change in Net Position 5,967,949 3,872,883 9,840,832

Net Position, Beginning of Year 264,487,631 99,695,060 364,182,691

Restatement of Net Position (154,818,523) (17,015,517) (171,834,040)

Net Position, End of Year $ 115,637,057 $ 86,552,426 $ 202,189,483

See Notes to Financial Statements 20 See Notes to Financial Statements 21 FUND FINANCIAL STATEMENTS

Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements B-22

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22 23 GOVERNMENTAL FUND FINANCIAL STATEMENTS

The City has determined the following funds to be major funds:

The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Housing Authority Fund accounts for grant revenues for acquisition, rehabilitation, and administration of properties used to provide affordable rental housing.

The Miscellaneous Grants Fund accounts for revenues received and expenditures made for Federal and/or State approved programs/projects.

The General Debt Service Fund accounts for the payment of interest and principal on debt incurred by the City.

The Public Financing Authority Debt Service Fund accounts for the payment of interest and principal on the local agency revenue bonds, notes payable and other debt of the Public Financing Authority. B-23

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24 25 CITY OF POMONA CITY OF POMONA

BALANCE SHEET BALANCE SHEET GOVERNMENTAL FUNDS GOVERNMENTAL FUNDS JUNE 30, 2015 JUNE 30, 2015 Debt Service Debt Service Special Revenue Funds Fund Fund Public Financing Non-Major Total Housing Miscellaneous General Debt Authority Debt Governmental Governmental General Authority Grants Service Service Funds Funds Assets: Assets: Cash and investments $ 12,482,973 $ 2,014,616 $ 1,937,878 $ 1,419,204 Cash and investments $ 97,366 $ 20,182,328 $ 38,134,365 Receivables (net): Receivables (net): Accounts 3,446,859 - 30,936 - Accounts - 551,165 4,028,960 Notes and loans - 11,237,230 19,260,274 - Notes and loans - 2,022,423 32,519,927 Interest 14,649 2,371 1,760 1,416 Interest 82 17,757 38,035 Prepaid costs 16,089 640 - - Prepaid costs - 23,891 40,620 Due from other governments 4,710,463 217,393 780,778 - Due from other governments - 1,144,310 6,852,944 Due from other funds 1,736,087 - - - Due from other funds - - 1,736,087 Advances to other funds - - - - Advances to other funds 43,045,000 304,435 43,349,435 Advances to Successor Agency - 4,000,000 - - Advances to Successor Agency - - 4,000,000 Inventories 86,191 - - - Inventories - - 86,191 Land held for resale - 4,503,277 - - Land held for resale - - 4,503,277 Other investments - 600,000 - - Other investments - - 600,000 Restricted assets: Restricted assets: Cash 41,258 6,337,683 - 4,507,465 Cash 4,627,120 3,073,525 18,587,051 Total Assets $ 22,534,569 $ 28,913,210 $ 22,011,626 $ 5,928,085 Total Assets $ 47,769,568 $ 27,319,834 $ 154,476,892

Liabilities, Deferred Inflow of Liabilities, Deferred Inflow of Resources, and Fund Balances: Resources, and Fund Balances: Liabilities: Liabilities:

B-24 Accounts payable $ 1,323,928 $ 23,931 $ 208,822 $ 7,400 Accounts payable $ - $ 1,426,662 $ 2,990,743 Payroll payable 1,254,742 40,575 42,621 - Payroll payable 1,057 162,019 1,501,014 Accrued liabilities 12,915 145,715 - - Accrued liabilities - 61,540 220,170 Unearned revenues - - 405,556 - Unearned revenues - - 405,556 Deposits payable - 10,000 - - Deposits payable - 14,301 24,301 Due to other governments - - - - Due to other governments - 115 115 Due to other funds - - - 1,664,620 Due to other funds - 67,980 1,732,600 Interest payable - - - 1,294,255 Interest payable - - 1,294,255 Advances from other funds 304,435 - - 43,045,000 Advances from other funds - - 43,349,435 Total Liabilities 2,896,020 220,221 656,999 46,011,275 Total Liabilities 1,057 1,732,617 51,518,189 Deferred Inflows of Resources: Deferred Inflows of Resources: Unavailable revenues 2,350,446 1,367,626 2,908,450 - Unavailable revenues - 496,407 7,122,929 Total Deferred Inflows of Resources 2,350,446 1,367,626 2,908,450 - Total Deferred Inflows of Resources - 496,407 7,122,929 Fund Balances: Fund Balances: Nonspendable Nonspendable Inventories 86,191 - - - Inventories - - 86,191 Prepaid costs 16,089 640 - - Prepaid costs - 23,891 40,620 Land held for resale - 4,503,277 - - Land held for resale - - 4,503,277 Notes and loans - 11,237,230 19,260,274 - Notes and loans - 2,022,423 32,519,927 Advances to other funds - - - - Advances to other funds 43,045,000 304,435 43,349,435 Advances to Successor Agency - 4,000,000 - - Advances to Successor Agency - - 4,000,000 Restricted Restricted Urban development - 7,584,216 1,921,664 - Urban development - 15,471,932 24,977,812 Public safety - - 244,524 - Public safety - 2,533,164 2,777,688 Neighborhood services - - - - Neighborhood services - 1,075,440 1,075,440 Capital projects - - - - Capital projects - 3,402,033 3,402,033 Assessment district improvement - - - - Assessment district improvement - 257,492 257,492 Debt service - - - - Debt service 4,723,511 - 4,723,511 Committed Committed Fiscal sustainability 14,467,914 - - - Fiscal sustainability - - 14,467,914 Unassigned 2,717,909 - (2,980,285) (40,083,190) Unassigned - - (40,345,566) Total Fund Balances 17,288,103 27,325,363 18,446,177 (40,083,190) Total Fund Balances 47,768,511 25,090,810 95,835,774

Total Liabilities, Deferred Inflow of Total Liabilities, Deferred Inflow of Resources and Fund Balances $ 22,534,569 $ 28,913,210 $ 22,011,626 $ 5,928,085 Resources and Fund Balances $ 47,769,568 $ 27,319,834 $ 154,476,892

See Notes to Financial Statements 26 See Notes to Financial Statements 27 CITY OF POMONA

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2015

Fund Balances of Governmental Funds $ 95,835,774

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. Therefore, they are not reported in governmental funds. 273,106,225

Deferred outflows related to pension related items are not included in the governmental fund activity: Contributions made after the measurement date 7,869,167

Deferred inflows related to pension related items are not included in the governmental fund activity: Difference between projected and actual earnings on pension plans investments (27,318,103)

Long-term debt and compensated absences that have not been included in the governmental fund activity: Pollution remediation $ (960,809) Obligation under capital leases (586,295) Notes payable (655,000) Revenue bonds (39,564,000) Deferred charges on refunding 126,560 Pension obligation refunding bonds (44,333,953) B-25 Certificates of participation (11,336,191) This page intentionally left blank. Compensated absences (6,886,111) Net pension liability (112,127,525) (216,323,324)

Governmental funds report all OPEB contributions as expenditures, however, in the statement of net position any excess or deficiencies in contributions in relation to the Annual Required Contribution (ARC) are recorded as an asset or liability. (19,802,228)

Accrued interest payable for the current portion of interest due on bonds has not been reported in the governmental funds. (468,064)

Revenues reported as unavailable in the governmental funds and recognized in the statement of activities. These are included in the intergovernmental revenues in the governmental fund activity. 7,122,929

Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net position. (4,385,319)

Net Position of Governmental Activities $ 115,637,057

28 See Notes to Financial Statements 29 CITY OF POMONA CITY OF POMONA

STATEMENT OF REVENUES, STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Debt Service Debt Service Special Revenue Funds Fund Fund Public Financing Non-Major Total Housing Miscellaneous General Debt Authority Debt Governmental Governmental General Authority Grants Service Service Funds Funds Revenues: Revenues: Taxes $ 78,607,713 $ - $ - $ 642,854 Taxes $ - $ 74,651 $ 79,325,218 Special assessments - - - - Special assessments - 1,213,093 1,213,093 Licenses and permits 4,566,429 - - - Licenses and permits - 2,003,018 6,569,447 Intergovernmental 352,160 9,387,818 6,174,869 - Intergovernmental - 14,372,902 30,287,749 Charges for services 3,246,764 43,580 50,952 - Charges for services - 668,330 4,009,626 Interest and rentals 447,838 429,594 229,564 2,758 Interest and rentals 314,326 675,036 2,099,116 Fines and forfeitures 2,051,647 - - - Fines and forfeitures - 11,770 2,063,417 Contributions 51,581 - - - Contributions - - 51,581 Miscellaneous 663,195 124,948 361,890 335,448 Miscellaneous 8,628 1,680,937 3,175,046 Total Revenues 89,987,327 9,985,940 6,817,275 981,060 Total Revenues 322,954 20,699,737 128,794,293

Expenditures: Expenditures: Current: Current: General government 3,978,320 - - 38,352 General government 8,055 12,725 4,037,452 Public safety 65,116,912 - 1,378,650 - Public safety - 1,904,872 68,400,434

B-26 Urban development 7,809,025 13,106,038 4,966,659 - Urban development - 15,172,966 41,054,688 Neighborhood services 3,160,848 - 336,929 - Neighborhood services - 1,205,018 4,702,795 Capital outlay 105,557 18,182 246,813 - Capital outlay - 3,427,012 3,797,564 Debt service: Debt service: Principal retirement 292,945 - - 881,000 Principal retirement 1,500,000 220,045 2,893,990 Interest and fiscal charges 20,136 - - 4,641,092 Interest and fiscal charges 202,289 13,704 4,877,221

Total Expenditures 80,483,743 13,124,220 6,929,051 5,560,444 Total Expenditures 1,710,344 21,956,342 129,764,144 Excess (Deficiency) of Revenues Excess (Deficiency) of Revenues Over (Under) Expenditures 9,503,584 (3,138,280) (111,776) (4,579,384) Over (Under) Expenditures (1,387,390) (1,256,605) (969,851)

Other Financing Sources (Uses): Other Financing Sources (Uses): Transfers in 80 - 284,123 5,631,162 Transfers in - 3,484,886 9,400,251 Transfers out (4,621,636) - (80) - Transfers out - (3,766,735) (8,388,451) Proceeds from sale of capital assets 32,830 - - - Proceeds from sale of capital assets - 2,700 35,530 Total Other Financing Sources Total Other Financing Sources (Uses) (4,588,726) - 284,043 5,631,162 (Uses) - (279,149) 1,047,330 Net Change in Fund Balances $ 4,914,858 $ (3,138,280) $ 172,267 $ 1,051,778 Net Change in Fund Balances $ (1,387,390) $ (1,535,754) $ 77,479

Fund Balances: Fund Balances: Beginning of year, as originally reported $ 12,373,245 $ 22,425,665 $ 1,836,888 $ (41,134,968) Beginning of year, as originally reported $ 49,155,901 $ 24,697,718 $ 69,354,449 Restatements - 8,037,978 16,437,022 - Restatements - 1,928,846 26,403,846 Beginning of year, as restated 12,373,245 30,463,643 18,273,910 (41,134,968) Beginning of year, as restated 49,155,901 26,626,564 95,758,295 Net change in fund balances 4,914,858 (3,138,280) 172,267 1,051,778 Net change in fund balances (1,387,390) (1,535,754) 77,479 End of Year $ 17,288,103 $ 27,325,363 $ 18,446,177 $ (40,083,190) End of Year $ 47,768,511 $ 25,090,810 $ 95,835,774

See Notes to Financial Statements 30 See Notes to Financial Statements 31 CITY OF POMONA

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, PROPRIETARY FUND AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2015

Net Change in Fund Balances - Total Governmental Funds $ 77,479 The City has determined the following funds to be major funds:

Amounts reported for governmental activities in the statement of activities are The Water Utility Enterprise Fund accounts for activities associated with the distribution and transmission of different because: potable water to users. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives The Sewer Enterprise Fund accounts for the operation and maintenance of the City's sewer network. as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. The Refuse Enterprise Fund accounts for activities associated with refuse collection, and curbside collection of Capital outlay $ 7,820,754 recycling materials. Depreciation (12,932,510) Disposition of capital assets (217,613) (5,329,369) The Canon Water Company Enterprise Fund accounts for the activities of the Canon Water Company. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Principal repayments Pollution remediation 619,554 Obligation under capital leases 292,990 Notes payable 220,000 Revenue bonds 1,538,969 Pension obligation refunding bonds 520,000 Certificates of participation 345,622 Accreted interest on pension obligation bonds (439,913) 3,097,222 Accrued interest for long-term liabilities. This is the net change in accrued interest

B-27 for the current period. 41,353 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. (104,997) 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 ARC is an expense. (2,133,976) Pension obligation expenses is an expenditure in the governmental funds, but reduce the Net Pension Liability in the statement of net position. (301,968) Revenues reported as unavailable revenue in the governmental funds and recognized in the statement of activities. These are included in the intergovernmental revenues in the governmental fund activity. 2,056,852 Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The net revenues (expenses) of the internal service funds is reported with governmental activities. 7,757,013 Extraordinary gains and losses relating to land transferred to the Successor Agency are reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported in the governmental funds. Land 808,340 Change in Net Position of Governmental Activities $ 5,967,949

See Notes to Financial Statements 32 33 CITY OF POMONA CITY OF POMONA

STATEMENT OF NET POSITION STATEMENT OF NET POSITION PROPRIETARY FUNDS PROPRIETARY FUNDS JUNE 30, 2015 JUNE 30, 2015

Business-Type Activities Business-Type Activities Governmental Enterprise Funds Enterprise Funds Activities

Canon Water Company - Internal Water Sewer Refuse February 28, 2015 Total Service Funds Assets: Assets: Current: Current: Cash and investments $ 30,665,542 $ 8,328,451 $ 3,772,365 Cash and investments $ 278,749 $ 43,045,107 $ 13,582,133 Receivables (net): Receivables (net): Accounts 6,601,690 1,129,785 2,319,246 Accounts 64,221 10,114,942 91 Interest 4,577 7,567 3,107 Interest - 15,251 6,563 Prepaid costs 11,355 - - Prepaid costs 3,670 15,025 4,480 Inventories 218,824 - - Inventories - 218,824 384,118 Restricted: Restricted: Cash 21,258,852 7,641,386 - Cash - 28,900,238 - Total Current Assets 58,760,840 17,107,189 6,094,718 Total Current Assets 346,640 82,309,387 13,977,385 Noncurrent: Noncurrent: Advances to other funds 5,000,000 - - Advances to other funds - 5,000,000 - Other Investments 9,000 - - Other Investments - 9,000 - Capital assets, not being depreciated 27,223,490 1,831,856 - Capital assets, not being depreciated - 29,055,346 - Capital assets, net of depreciation 96,735,496 26,491,941 4,142,494 Capital assets, net of depreciation 26,044 127,395,975 387,489 Total Noncurrent Assets 128,967,986 28,323,797 4,142,494 Total Noncurrent Assets 26,044 161,460,321 387,489 B-28 Total Assets 187,728,826 45,430,986 10,237,212 Total Assets 372,684 243,769,708 14,364,874 Deferred Outflows of Resources: Deferred Outflows of Resources: Deferred charges on refunding 1,101,665 552,855 - Deferred charges on refunding - 1,654,520 - Deferred pension related items 803,686 123,385 178,328 Deferred pension related items - 1,105,399 201,452

Total Deferred Outflows of Resources 1,905,351 676,240 178,328 Total Deferred Outflows of Resources - 2,759,919 201,452

Total Assets and Deferred Total Assets and Deferred Outflows of Resources $ 189,634,177 $ 46,107,226 $ 10,415,540 Outflows of Resources $ 372,684 $ 246,529,627 $ 14,566,326

See Notes to Financial Statements 34 See Notes to Financial Statements 35 CITY OF POMONA CITY OF POMONA

STATEMENT OF NET POSITION STATEMENT OF NET POSITION PROPRIETARY FUNDS PROPRIETARY FUNDS JUNE 30, 2015 JUNE 30, 2015

Business-Type Activities Business-Type Activities Governmental Enterprise Funds Enterprise Funds Activities

Canon Water Company - Internal Water Sewer Refuse February 28, 2015 Total Service Funds Liabilities, Deferred Inflows Liabilities, Deferred Inflows of Resources and Net Position: of Resources and Net Position: Liabilities: Liabilities: Current: Current: Accounts payable $ 1,485,238 $ 23,503 $ 325,101 Accounts payable $ - $ 1,833,842 $ 381,043 Payroll payable 226,441 31,264 53,389 Payroll payable - 311,094 78,323 Accrued liabilities 99,888 - - Accrued liabilities - 99,888 - Interest payable 827,345 101,622 63,176 Interest payable - 992,143 - Deposits payable 3,502,810 - - Deposits payable - 3,502,810 - Due to other funds - - - Due to other funds - - 3,487 Compensated absences 749,000 118,000 163,000 Compensated absences - 1,030,000 115,000 Claims and judgments - - - Claims and judgments - - 1,805,000 Bonds, notes, and capital leases 1,350,000 400,000 573,408 Bonds, notes, and capital leases - 2,323,408 - Total Current Liabilities 8,240,722 674,389 1,178,074 Total Current Liabilities - 10,093,185 2,382,853

Noncurrent: Noncurrent: Advances from other funds - - - Advances from other funds - - 5,000,000

B-29 Compensated absences 208,559 12,665 50,983 Compensated absences - 272,207 117,115 Claims and judgments - - - Claims and judgments - - 10,296,548 Net pension liability 9,901,595 1,520,127 2,197,038 Net pension liability - 13,618,760 2,481,935 Bonds, notes, and capital leases 103,476,644 26,860,000 2,430,985 Bonds, notes, and capital leases - 132,767,629 - Total Noncurrent Liabilities 113,586,798 28,392,792 4,679,006 Total Noncurrent Liabilities - 146,658,596 17,895,598

Total Liabilities 121,827,520 29,067,181 5,857,080 Total Liabilities - 156,751,781 20,278,451

Deferred Inflows of Resources: Deferred Inflows of Resources: Deferred pension related items 3,038,436 466,471 674,190 Deferred pension related items - 4,179,097 761,614

Total Deferred Inflows of Resources 3,038,436 466,471 674,190 Total Deferred Inflows of Resources - 4,179,097 761,614

Net Position: Net Position: Net Investment in capital assets 34,561,369 6,360,109 1,138,101 Net Investment in capital assets 26,044 42,085,623 387,489 Restricted for capital projects 14,327,814 4,743,538 - Restricted for capital projects - 19,071,352 - Restricted for debt service 6,931,038 2,897,848 - Restricted for debt service - 9,828,886 - Unrestricted 8,948,000 2,572,079 2,746,169 Unrestricted 346,640 14,612,888 (6,861,228)

Total Net Position 64,768,221 16,573,574 3,884,270 Total Net Position 372,684 85,598,749 (6,473,739)

Total Liabilities, Deferred Inflows Total Liabilities, Deferred Inflows of Resources and Net Position $ 189,634,177 $ 46,107,226 $ 10,415,540 of Resources and Net Position $ 372,684 $ 246,529,627 $ 14,566,326

Reconciliation of Net Position to the Statement of Net Position Net Position per Statement of Net Position - Proprietary Funds $ 85,598,749 Prior years' accumulated adjustment to reflect the consolidation of internal service funds activities related to the enterprise funds 413,774 Current years' adjustments to reflect the consolidation of internal service activities related to enterprise funds 539,903 Net Position per Statement of Net Position $ 86,552,426

See Notes to Financial Statements 36 See Notes to Financial Statements 37 CITY OF POMONA CITY OF POMONA

STATEMENT OF REVENUES, EXPENSES, STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION AND CHANGES IN NET POSITION PROPRIETARY FUNDS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Business-Type Activities Business-Type Activities Governmental Enterprise Funds Enterprise Funds Activities

Canon Water Company - Internal Water Sewer Refuse February 28, 2015 Total Service Funds Operating Revenues: Operating Revenues: Charges for services $ 29,076,093 $ 4,733,661 $ 9,522,122 Charges for services $ 64,221 $ 43,396,097 $ 10,178,573 Miscellaneous - 54,558 67,862 Miscellaneous - 122,420 3,641,013 Total Operating Revenues 29,076,093 4,788,219 9,589,984 Total Operating Revenues 64,221 43,518,517 13,819,586

Operating Expenses: Operating Expenses: Personnel services 7,151,904 1,067,952 1,817,744 Personnel services - 10,037,600 1,531,947 Operations 12,241,670 1,051,538 5,459,960 Operations 24,076 18,777,244 3,318,752 Claims expense 16,297 50,442 157,154 Claims expense - 223,893 619,061 Insurance 216,658 33,686 62,477 Insurance - 312,821 40,476 Amortization of deferred loss on refunding 78,691 58,195 - Amortization of deferred loss on refunding - 136,886 - Franchise Fees - - 478,528 Franchise Fees - 478,528 - Depreciation 2,605,803 580,345 565,974 Depreciation 2,671 3,754,793 23,053 Total Operating Expenses 22,311,023 2,842,158 8,541,837 Total Operating Expenses 26,747 33,721,765 5,533,289

Operating Income (Loss) 6,765,070 1,946,061 1,048,147 Operating Income (Loss) 37,474 9,796,752 8,286,297 B-30 Nonoperating Revenues (Expenses): Nonoperating Revenues (Expenses): Intergovernmental - - 42,052 Intergovernmental - 42,052 - Interest revenue 37,258 50,097 4,987 Interest revenue 7 92,349 10,619 Interest expense (4,888,375) (1,246,550) (79,859) Interest expense - (6,214,784) - Sale of surplus water 812,150 - - Sale of surplus water - 812,150 - Gain (loss) on disposal of capital assets (99,548) (84,691) 500 Gain (loss) on disposal of capital assets - (183,739) - Total Nonoperating Total Nonoperating Revenues (Expenses) (4,138,515) (1,281,144) (32,320) Revenues (Expenses) 7 (5,451,972) 10,619 Income (Loss) Before Transfers 2,626,555 664,917 1,015,827 Income (Loss) Before Transfers 37,481 4,344,780 8,296,916

Transfers in 37,455 231,526 85,000 Transfers in - 353,981 - Transfers out (917,530) (448,251) - Transfers out - (1,365,781) - Changes in Net Position $ 1,746,480 $ 448,192 $ 1,100,827 Changes in Net Position $ 37,481 $ 3,332,980 $ 8,296,916

Net Position: Net Position: Beginning of year, as originally reported $ 75,392,966 $ 18,024,656 $ 5,528,461 Beginning of year, as originally reported $ 335,203 $ 99,281,286 $ (11,669,683) Restatements (12,371,225) (1,899,274) (2,745,018) Restatements - (17,015,517) (3,100,972) Beginning of year, as restated 63,021,741 16,125,382 2,783,443 Beginning of year, as restated 335,203 82,265,769 (14,770,655) Changes in Net Position 1,746,480 448,192 1,100,827 Changes in Net Position 37,481 3,332,980 8,296,916

End of Year $ 64,768,221 $ 16,573,574 $ 3,884,270 End of Year $ 372,684 $ 85,598,749 $ (6,473,739)

Reconciliation of Changes in Net Position to the Statement of Activities: Changes in Net Position, per the Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds $ 3,332,980 Adjustment to reflect the consolidation of current fiscal year internal service funds activities related to enterprise funds 539,903

Changes in Net Position of Business-Type Activities per Statement of Activities $ 3,872,883

See Notes to Financial Statements 38 See Notes to Financial Statements 39 CITY OF POMONA CITY OF POMONA

STATEMENT OF CASH FLOWS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015 Business-Type Activities Business-Type Activities Enterprise Funds Enterprise Funds

Water Sewer Refuse Water Sewer Refuse Cash Flows from Operating Activities: Cash received from customers and users $ 30,309,096 $ 4,820,278 $ 9,594,998 Reconciliation of Operating Income to Net Cash Cash received from/(paid for) other - 54,558 67,862 Provided (Used) by Operating Activities: Cash paid to suppliers for goods and services (13,121,422) (1,820,942) (6,079,912) Operating income (loss) $ 6,765,070 $ 1,946,061 $ 1,048,147 Cash paid for general and administrative expenses (7,615,262) (1,117,751) (1,911,138) Adjustments to reconcile operating income (loss) Net Cash Provided (Used) by Operating Activities 9,572,412 1,936,143 1,671,810 net cash provided (used) by operating activities: Depreciation 2,605,803 580,345 565,974 Cash Flows from Non-Capital Amortization 78,691 58,195 - Financing Activities: (Increase) decrease in accounts receivable 1,233,003 86,617 72,876 Cash transfers in 37,455 231,526 85,000 (Increase) decrease in prepaid expense (2,355) - - Cash transfers out (917,530) (448,251) - (Increase) decrease in inventory 86,841 - - Amounts received from other funds - - - (Increase) decrease in deferred outflows (159,496) (24,487) (35,390) Proceeds from sale of surplus water 812,150 - - Increase (decrease) in accounts payable (953,856) (690,947) 15,730 Grant subsidy - - 81,626 Increase (decrease) in payroll payable 51,992 4,945 12,239 Increase (decrease) in accrued liabilities (52,116) (28,015) - Net Cash Provided (Used) by Increase (decrease) in deposits payable 58,031 - - Non-Capital Financing Activities (67,925) (216,725) 166,626 Increase (decrease) in compensated absences (63,812) 15,003 8,962 Increase (decrease) in claims and judgments - - - Cash Flows from Capital Increase (decrease) in net pension liability (3,113,820) (478,045) (690,918) B-31 and Related Financing Activities: Increase (decrease) in deferred inflows 3,038,436 466,471 674,190 Acquisition and construction of capital assets (3,644,869) (986,420) - Total Adjustments 2,807,342 (9,918) 623,663 Principal paid on capital debt (1,295,000) (385,000) (560,296) Interest paid on capital debt (5,046,289) (1,247,876) (83,414) Net Cash Provided (Used) by Proceeds from sales of capital assets - - 500 Operating Activities $ 9,572,412 $ 1,936,143 $ 1,671,810 Net Cash Provided (Used) by Non-Cash Investing, Capital, and Financing Activities: Capital and Related Financing Activities (9,986,158) (2,619,296) (643,210) Amortization of bond premium/discount $ 148,782 $ - $ - Amortization of deferred charges on refunding 78,692 58,195 - Cash Flows from Investing Activities: Loss (Gain) on disposal of capital assets 99,547 84,691 - Interest received 58,236 48,908 3,886 Net Cash Provided (Used) by Investing Activities 58,236 48,908 3,886

Net Increase (Decrease) in Cash and Cash Equivalents (423,435) (850,970) 1,199,112

Cash and Cash Equivalents, Beginning of Year 52,347,829 16,820,807 2,573,253 Cash and Cash Equivalents, End of Year $ 51,924,394 $ 15,969,837 $ 3,772,365

See Notes to Financial Statements 40 See Notes to Financial Statements 41 CITY OF POMONA CITY OF POMONA

STATEMENT OF CASH FLOWS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015 Business-Type Activities Governmental Business-Type Activities Governmental Enterprise Funds Activities Enterprise Funds Activities Canon Water Canon Water Company - Internal Company - Internal February 28, 2015 Total Service Funds February 28, 2015 Total Service Funds Cash Flows from Operating Activities: Cash received from customers and users $ 64,221 $ 44,788,593 $ 10,178,482 Reconciliation of Operating Income to Net Cash Cash received from/(paid for) other - 122,420 3,641,013 Provided (Used) by Operating Activities: Cash paid to suppliers for goods and services (30,038) (21,052,314) (9,501,917) Operating income (loss) $ 37,474 $ 9,796,752 $ 8,286,297 Cash paid for general and administrative expenses - (10,644,151) (1,538,595) Adjustments to reconcile operating income (loss) Net Cash Provided (Used) by Operating Activities 34,183 13,214,548 2,778,983 net cash provided (used) by operating activities: Depreciation 2,671 3,754,793 23,053 Cash Flows from Non-Capital Amortization - 136,886 - Financing Activities: (Increase) decrease in accounts receivable - 1,392,496 (91) Cash transfers in - 353,981 - (Increase) decrease in prepaid expense (3,670) (6,025) (4,480) Cash transfers out - (1,365,781) - (Increase) decrease in inventory - 86,841 (24,425) Amounts received from other funds - - 3,487 (Increase) decrease in deferred outflows - (219,373) (39,980) Proceeds from sale of surplus water - 812,150 - Increase (decrease) in accounts payable (2,292) (1,631,365) (1,417,580) Grant subsidy - 81,626 - Increase (decrease) in payroll payable - 69,176 34,324 Increase (decrease) in accrued liabilities - (80,131) - Net Cash Provided (Used) by Increase (decrease) in deposits payable - 58,031 - Non-Capital Financing Activities - (118,024) 3,487 Increase (decrease) in compensated absences - (39,847) 18,656 Increase (decrease) in claims and judgments - - (4,077,896) Cash Flows from Capital Increase (decrease) in net pension liability - (4,282,783) (780,509) B-32 and Related Financing Activities: Increase (decrease) in deferred inflows - 4,179,097 761,614 Acquisition and construction of capital assets - (4,631,289) (263,265) Total Adjustments (3,291) 3,417,796 (5,507,314) Principal paid on capital debt - (2,240,296) - Interest paid on capital debt - (6,377,579) - Net Cash Provided (Used) by Proceeds from sales of capital assets - 500 - Operating Activities $ 34,183 $ 13,214,548 $ 2,778,983 Net Cash Provided (Used) by Non-Cash Investing, Capital, and Financing Activities: Capital and Related Financing Activities - (13,248,664) (263,265) Amortization of bond premium/discount $ - $ 148,782 $ - Amortization of deferred charges on refunding - 136,887 - Cash Flows from Investing Activities: Loss (Gain) on disposal of capital assets - 184,238 - Interest received 8 111,038 8,353 Net Cash Provided (Used) by Investing Activities 8 111,038 8,353

Net Increase (Decrease) in Cash and Cash Equivalents 34,191 (41,102) 2,527,558

Cash and Cash Equivalents, Beginning of Year 244,558 71,986,447 11,054,575 Cash and Cash Equivalents, End of Year $ 278,749 $ 71,945,345 $ 13,582,133

See Notes to Financial Statements 42 See Notes to Financial Statements 43 FIDUCIARY FUND FINANCIAL STATEMENTS

The City’s fiduciary funds consist of agency funds and one private purpose trust fund. Fiduciary fund types are accounted for according to the nature of the fund.

Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations.

Private-Purpose Trust Fund is used by the City to account for the assets and liabilities of the former Redevelopment Agency and the receipt of funds to make estimated installment payments of enforceable obligations until the obligations of the former Redevelopment Agency are paid in full and assets have been liquidated. B-33

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44 45 CITY OF POMONA

STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2015 Private- Purpose Trust Fund Successor Agency Agency of the Funds Former RDA Assets: Cash and investments $ 4,296,285 $ 10,397,238 Receivables (net): Accounts 10,037 695,163 Notes and loans - 9,099,660 Interest 515 4,531 Deposits - 600 Due from other governments 41,223 - Land held for resale - 19,648,669 Restricted assets: Cash - 52,764,660 Capital assets: Capital assets, not being depreciated - 125,423 Capital assets, net of depreciation - 73,077

Total Assets $ 4,348,060 92,809,021

Deferred Outflows of Resources: B-34 Deferred charge on refunding 850,063 This page intentionally left blank. Total Deferred Outflows of Resources 850,063

Liabilities: Accounts payable $ 1,922,980 149,044 Payroll payable - 6,963 Interest payable - 3,438,206 Deposits payable 2,201,435 190,040 Due to external parties/other agencies 223,645 - Long-term liabilities: Due within one year - 8,373,163 Due in more than one year - 211,959,912

Total Liabilities $ 4,348,060 224,117,328

Net Position: Held in trust for other purposes (130,458,244)

Total Net Position $ (130,458,244)

46 See Notes to Financial Statements 47 CITY OF POMONA

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2015 NOTES TO FINANCIAL STATEMENTS

Private-Purpose Trust Fund Successor Agency of the Former RDA Additions: Taxes $ 16,537,691 Intergovernmental 336,999 Interest and rentals 887,039 Miscellaneous 363,831 Gain on sale of capital assets 20,000

Total Additions 18,145,560

Deductions: Personnel services 406,004 Operations 3,222,671 Interest and fiscal charges 11,805,698 Contributions to other governments 6,280

Total Deductions 15,440,653

Extraordinary (loss) on dissolution B-35 of Redevelopment Agency (808,340)

Changes in Net Position $ 1,896,567

Net Position: Beginning of year, as originally reported $ (136,406,471) Restatement 4,051,660 Beginning of year, as restated (132,354,811) Changes in Net Position 1,896,567 End of year $ (130,458,244)

See Notes to Financial Statements 48 49 CITY OF POMONA

INDEX TO NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015

Page Number

Note 1 – Summary of Significant Accounting Policies ...... 55 Financial Reporting Entity...... 55 City of Pomona Housing Authority ...... 55 City of Pomona Public Financing Authority...... 56 Canon Water Company...... 56 Basis of Accounting and Measurement Focus ...... 56 Government-Wide and Fund Financial Statements ...... 56 Governmental Fund Financial Statements...... 57 Proprietary Fund Financial Statements...... 58 Fiduciary Fund Financial Statements...... 59 Assets, Liabilities and Net Position or Equity ...... 60 Cash, Cash Equivalents and Investments...... 60 Interfund Transactions...... 60 Inventories and Prepaid Items...... 61 Capital Assets...... 61 Land Held for Resale...... 62 Long-Term Debt ...... 62 Compensated Absences ...... 62 Claims Payable...... 62 Unearned and Unavailable Revenue ...... 63 Deferred Outflows/Inflows of Resources ...... 63 B-36 Net Pension Liability...... 63 This page intentionally left blank. Net Position ...... 64 Fund Balances...... 64 Property Taxes ...... 65 Use of Estimates ...... 65 Effect of New Accounting Standards...... 66

Note 2 – Cash and Investments ...... 66 Summary of Cash and Investments ...... 66 Deposits...... 67 Investments...... 67 Investment in Local Agency Investment Funds...... 68 Interest Rate Risk ...... 68 Credit Risk ...... 69 Custodial Credit Risk ...... 69 Concentration of Credit Risk...... 69 Investment in Bonds ...... 70

Note 3 – Loans Receivable (Net)...... 70

Note 4 – Interfund Transactions ...... 70 Government-Wide Financial Statements Internal Balances...... 70 Transfers ...... 71 Fund Financial Statements Due To/Due From ...... 71 Long-Term Advances...... 71 Transfers ...... 72

Note 5 – Due from Other Governments...... 72

50 51 CITY OF POMONA CITY OF POMONA

INDEX TO NOTES TO FINANCIAL STATEMENTS (CONTINUED) INDEX TO NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Page Page Number Number

Note 6 – Land Held for Resale ...... 72 Note 12 – Other Post Employment Benefits (Continued)...... 101 Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan...... 101 Note 7 – Capital Assets ...... 73 Plan Description ...... 101 Government-Wide Financial Statements ...... 73 Eligibility...... 101 Governmental Activities ...... 74 Funding Policy...... 101 Business-Type Activities ...... 75 Annual OPEB Cost and Net OPEB Obligation...... 101 Funded Status and Funding Progress...... 102 Note 8 – Other Investments...... 75 Actuarial Methods and Assumptions ...... 103

Note 9 – Long-Term Debt ...... 76 Note 13 – Joint Powers Agreements...... 103 Governmental Activities Long-Term Debt ...... 76 Alameda Corridor-East Construction Authority...... 103 Pollution Remediation Obligations ...... 76 CSAC – Excess Insurance Authority ...... 104 Obligations under Capital Leases ...... 76 Foothill Air Support Team ...... 104 Notes Payable ...... 77 Foothill Transit ...... 104 Revenue Bonds ...... 78 Gold Line Phase II Construction Authority...... 105 Pension Obligation Refunding Bonds ...... 82 Interagency Communications Interoperability System ...... 105 Certificates of Participation ...... 83 Los Angeles County Disaster Management Area D...... 105 Compensated Absences ...... 84 Los Angeles Interagency Metropolitan Police Apprehensive Crime Task Force ...... 105 Claims Payable ...... 85 Pomona Valley Transportation Authority ...... 106 Business-Type Activities ...... 85 Pomona-Walnut-Rowland (PWR) Joint Water Line Commission...... 106 Obligations under Capital Leases ...... 85 San Gabriel Valley Council of Governments ...... 107 B-37 Revenue Bonds ...... 86 Tri-City Mental Health Center ...... 108 Compensated Absences ...... 90 Pledged Revenue ...... 90 Note 14 – Risk Management...... 108 Outstanding Principal on Capital-Related Debt ...... 91 Governmental Activities ...... 91 Note 15 – Commitments and Contingencies...... 109 Business-Type Activities ...... 91 Agency Participation Agreement ...... 109 Contractual Commitments ...... 109 Note 10 – Non-City Obligations ...... 92 Lawsuits...... 110

Note 11 – Defined Benefits Pension Plan Obligations ...... 92 Note 16 – Net Position and Fund Balance ...... 110 General Information about the Pension Plan ...... 92 Government-Wide Financial Statements...... 110 Plan Description ...... 92 Net Investment in Capital Assets ...... 110 Benefits Provided ...... 92 Unrestricted Net Position...... 110 Employees Covered ...... 93 Fund Financial Statements...... 110 Contribution Description ...... 94 Net Investment in Capital Assets ...... 110 Net Pension Liability ...... 94 Deficit Fund Balance ...... 111 Actuarial Methods and Assumptions used to Determine Total Pension Liabilities ...... 94 Net Position and Fund Balances Restatement...... 111 Discount Rate ...... 95 Changes in Net Pension Liabilities ...... 96 Note 17 – Successor Agency Trust for Assets of Former Redevelopment Agency ...... 112 Sensitivity of Net Pension Liability to Changes in the Discount Rate ...... 97 Cash and Investments ...... 113 Pension Plan Fiduciary Net Position ...... 97 Loans Receivable (Net) ...... 113 Pension Expense and deferred Outflows and Deferred Inflows of Resources Land Held for Resale ...... 113 Related to Pensions ...... 98 Capital Assets...... 114

Note 12 – Other Post Employment Benefits Collateral Benefits Plan ...... 99 Plan Description ...... 99 Eligibility ...... 99 Funding Policy ...... 99 Annual Pension Cost ...... 99 Funded Status and Funding Progress ...... 100

52 53 CITY OF POMONA CITY OF POMONA

INDEX TO NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 JUNE 30, 2015

Page Note 1: Summary of Significant Accounting Policies Number The basic financial statements of the City of Pomona, California (City), have been prepared in Note 17 – Successor Agency Trust for Assets of Former conformity with generally accepted accounting principles (GAAP) as applied to governmental Redevelopment Agency (Continued)...... 114 agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard Long-Term Debt...... 114 setting body for establishing governmental accounting and financial reporting principles. The Pollution Remediation Obligations ...... 115 more significant of the City’s accounting policies are described below. County Deferred Tax Loans ...... 115 ERAF Loan ...... 115 Financial Reporting Entity Notes Payable ...... 116 Tax Allocation Bonds...... 117 The City was incorporated in 1888 and became a “Charter Law” City in 1911 under the Advances from the Public Financing Authority...... 119 laws of the State of California. The City operates under the Council-Manager form of Advances from the Housing Authority...... 125 governments. The City principally provides general administrative services, public safety Compensated Absences ...... 125 services, library, recreational services, street, highway and bridge repairs and Pledged Tax Revenues ...... 126 maintenance, and water and sanitation services. Insurance ...... 126 Commitments and Contingencies...... 127 As required by GAAP, these basic financial statements present the City and its Agreement for Allocation of Tax Increment Funds...... 127 component units, entities for which the City is considered to be financially accountable. The following blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with the data of the City. They are reported as blended for the following reasons: (1) the governing board is substantively the same as the primary government and there is a financial benefit or burden relationship between the primary government and the component unit; (2) the component unit provides services entirely, or almost entirely, to B-38 the primary government or otherwise exclusively, or almost exclusively, benefits the primary government even though it does not provide services directly to it; and (3) the component unit’s total debt outstanding, including leases, is expected to be repaid entirely or almost entirely with the resources of the primary government.

Management determined that the following component units should be blended based on the criteria above:

! City of Pomona Housing Authority ! City of Pomona Public Financing Authority ! Canon Water Company

These component units are included in the primary government because of the significance of their financial or operational relationship. Each of the blended component units in the accompanying basic financial statements of the City are described below:

City of Pomona Housing Authority

The City of Pomona Housing Authority (Housing Authority) was organized in 1993 under the California Health and Safety Code. The objectives of the Housing Authority are to aid low-income families in obtaining decent, safe and sanitary housing through Federal assistance programs and low/moderate income housing programs. The Housing Authority was included within the scope of the reporting entity of the City because its governing body is composed in its entirety of City Council members of the City.

54 55 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 1: Summary of Significant Accounting Policies (Continued) Note 1: Summary of Significant Accounting Policies (Continued)

City of Pomona Public Financing Authority accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the The City of Pomona Public Financing Authority (Authority) is a joint exercise of period in which they are earned and expenses are recognized in the period in which the powers authority created by a joint powers agreement between the City, the former liability is incurred. Redevelopment Agency of the City of Pomona (Agency) and the former Redevelopment Agency of the City of West Covina, dated October 27, 1988. The Certain types of transactions are reported as program revenues for the City in three purpose of the Authority is to provide, through the issuance of debt, financing categories: necessary for the construction of public improvements. The Authority is not subject to federal or state income taxes. The Authority was included within the scope of the ! Charges for services reporting entity of the City because its governing body is composed in its entirety of ! City staff. Operating grants and contributions ! Capital grants and contributions Canon Water Company Certain eliminations have been made in regard to interfund activities. All internal The Canon Water Company of Pomona (Company) was incorporated on balances in the Statement of Net Position have been eliminated except those August 6, 1897. The Company owns and maintains a pipeline which transports water representing balances between the governmental activities and the business-type to the City. The Company was included within the scope of the reporting entity of the activities, which are presented as internal balances and eliminated in the total primary City because it provides services almost entirely to the City and its governing body is government column, if any. In the Statement of Activities, internal service fund composed of City staff. transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities All component units had a fiscal year ended June 30, 2015, except for Canon Water have been eliminated: Company, which had a fiscal year ended February 28, 2015.

B-39 Since the governing boards for these entities were composed of either City Council ! Due to and from other funds members or City employees, they are considered blended component units. Blended ! Advances to and from other funds component units, although legally separate entities, are in substance, part of the City’s ! Transfers in and out operations and so data from these units are reported with the interfund data of the primary government. The component units listed above issue separate financial Governmental Fund Financial Statements statements which can be obtained at City Hall and on line at www.ci.pomona.us. Governmental fund financial statements include a Balance Sheet and a Statement of Basis of Accounting and Measurement Focus Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to The accounting policies of the City conform to accounting principles generally accepted in reconcile and explain the differences in fund balance as presented in these statements to the United States of America for local governmental units. The accounts of the City are the net position presented in the government-wide financial statements. The City has organized on the basis of funds, each of which is considered a separate accounting presented all major funds that met the applicable criteria. entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues and The City reports the following major governmental funds: expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purpose of which they are to be spent ! The General Fund is the City's primary operating fund. It accounts for all and means by which spending activities are controlled. financial resources of the general government, except those required to be Government – Wide and Fund Financial Statements accounted for in another fund.

The City’s government-wide financial statements include a Statement of Net Position and ! The Housing Authority Fund accounts for grant revenues received for the a Statement of Activities and Changes in Net Position. These statements present acquisition, rehabilitation and administration of properties used to provide summaries of governmental and business-type activities for the City accompanied by a affordable rental housing and the low and moderate income housing total column. Fiduciary activities of the City are not included in these statements. functions of the former Redevelopment Agency.

These basic financial statements are presented on an “economic resources” ! The Miscellaneous Grants Fund accounts for revenues received and measurement focus and the accrual basis of accounting. Economic resources expenditures made for Federal and/or State approved programs/projects. measurement focus considers all of the assets available for the purpose of providing goods and services and reports all inflows, outflows, and balances affecting or reflecting ! The General Debt Service Fund accounts for the payment of interest and an entity’s net position. Accordingly, all of the City’s assets and liabilities, including capital principal on debt incurred by the City. assets, as well as infrastructure assets and long-term liabilities, are included in the

56 57 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 1: Summary of Significant Accounting Policies (Continued) Note 1: Summary of Significant Accounting Policies (Continued)

! The Public Financing Authority Debt Service Fund accounts for the payment ! The Refuse Enterprise Fund accounts for activities associated with residential of interest and principal on the local agency revenue bonds and other debt of refuse collection, curbside collection of recycling materials, and various related the Authority. programs.

All governmental funds are accounted for on a spending or “current financial resources” ! The Canon Water Company Enterprise Fund accounts for the activities of the measurement focus and the modified accrual basis of accounting. Accordingly, only Canon Water Company. current assets and current liabilities are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues The Internal Service Funds account for the maintenance and repair of City vehicles and and other financing sources) and decreases (expenditures and other financing uses) in equipment, risk management (general liability, workers’ compensation and net current assets. Under the modified accrual basis of accounting, revenues are unemployment), information technology and printing/mail service provided to other recognized in the accounting period in which they become both measurable and available departments or agencies of the City. Internal service balances and activities have been to finance expenditures of the current period. combined with the governmental activities in the government-wide financial statements.

Revenues are considered to be available when it is collectible within the current period or Proprietary funds are accounted for using the “economic resources” measurement focus soon enough thereafter to pay liabilities of the current period. For this purpose, the and the accrual basis of accounting. Accordingly, all assets and liabilities (whether government considers revenues to be available if it is collected within 60 days of the end current or noncurrent) are included on the Statement of Net Position. The Statement of of the current fiscal period except for grant revenue where the government considers Revenues, Expenses and Changes in Net Position presents increases (revenues) and revenue to be available if collected within 120 days of the end of current fiscal year. The decreases (expenses) in total net position. Under the accrual basis of accounting, primary revenue sources, which have been treated as susceptible to accrual by the City, revenues are recognized in the period in which they are earned while expenses are are real and personal property tax, other local taxes, franchise fees, forfeitures and recognized in the period in which the liability is incurred. penalties, rents and concessions, interest revenue, and state and federal grants. Expenditures are recorded in the accounting period in which the related fund liability is Operating revenues in the proprietary funds are those revenues that are generated from B-40 incurred. the primary operations of the fund. All other revenues are reported as nonoperating revenues. Operating expenses are those expenses that are essential to the primary Unavailable revenue arises when potential revenues do not meet both the “measurable” operations of the fund. All other expenses are reported as nonoperating expenses. and “available” criteria for recognition in the current period. Unearned revenue arises when the government receives resources before it has a legal claim to it, as when grant Fiduciary Fund Financial Statements monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim Fiduciary fund financial statements include a Statement of Fiduciary Net Position and a to the resources, the unavailable revenue and unearned revenue are removed from the Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds consist of balance sheet and revenue is recognized. agency funds and one private purpose trust fund. Fiduciary fund types are accounted for according to the nature of the fund. The reconciliations of the Fund Financial Statements to the Government-Wide Financial Statements are provided to explain the differences created by the integrated approach of Agency funds are custodial in nature (assets equal liabilities) and do not involve GASB Statement No. 34. measurement of results of operations. The Agency Funds account for assets held by the City for governments or individuals. These funds include receipts and disbursements of Proprietary Fund Financial Statements funds for the debt service activity of the 1911 Act assessment districts, cash deposits collected for street and sidewalk encroachment permits, debt services activity, cash Proprietary fund financial statements include a Statement of Net Position, a Statement of guarantees (deposits) collected by the City for various construction improvement Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows for projects, payment of various employee benefits and deductions, including, but not limited all proprietary funds. to, health and dental insurance premiums, federal and state withholding taxes, life insurance and other withholdings from regular compensation. The City reports the following major proprietary funds: The Private-purpose trust fund is accounted for using the “economic resources” ! The Water Utility Enterprise Fund accounts for activities associated with the measurement focus and the accrual basis of accounting. Under the accrual basis of distribution and transmission of potable water to users and recycled water. accounting, revenues are recognized in the period in which the revenue is earned, while expenses are recognized in the period in which the liability is incurred. The City uses its ! The Sewer Enterprise Fund accounts for the operation and maintenance of the private-purpose trust fund to account for the assets and liabilities of the former City's sewer network. Redevelopment Agency and the receipt of funds to make installment payments of enforceable obligations until the obligations of the former Redevelopment Agency are paid in full and assets have been liquidated.

58 59 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 1: Summary of Significant Accounting Policies (Continued) Note 1: Summary of Significant Accounting Policies (Continued)

Assets, Liabilities and Net Position or Equity Inventories and Prepaid Items

Cash, Cash Equivalents and Investments Inventories within the various fund types consist of materials and supplies which are valued at cost on a first-in, first-out basis. Reported expenditures reflecting the The City pools its available cash for investment purposes. The City’s cash and cash purchase of supplies have been restated to reflect the consumption method of equivalents are considered to be cash on hand, demand deposits, and short-term recognizing inventory-related expenditures. investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and displayed as Cash Certain payments to vendors reflect costs applicable to future accounting periods and and Investments. are recorded as prepaid items in both government-wide and fund financial statements. Highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Capital Assets Market value is used as fair value for those securities which approximated fair value for which market quotations are readily available. Capital assets, which include land, construction in progress, buildings and improvements, improvements other than buildings, machinery and equipment, autos The City participates in an investment pool managed by the State of California titled and trucks, equipment under capitalized lease and infrastructure assets (e.g. roads, Local Agency Investment Fund (LAIF) which has invested a portion of the pool funds bridges, traffic signals, and similar items), are reported in the applicable in structured notes and asset-backed securities. LAIF’s investments are subject to governmental or business-type activities in the Government-Wide Financial credit risk with the full faith and credit of the State of California collateralizing these Statements. City policy has set the capitalization threshold for reporting capital assets investments. In addition, these structured notes and asset-backed securities are at $5,000 and capital projects at $250,000. subject to market risk as to changes in interest rates. Capital assets are valued at historical cost or estimated historical cost if actual B-41 In accordance with GASB Statement No. 40, Deposit and Investment Risk historical cost was not available. Donated assets are valued at its estimated fair Disclosures (an amendment of GASB No. 3), certain disclosure requirements, if market value on the date donated. applicable, are provided for deposit and investment risk in the following areas: Depreciation is recorded on a straight-line basis over estimated useful lives of the ! Interest Rate Risk assets as follows: ! Credit Risk ! Overall Assets Years ! Custodial Credit Risk Buildings and building improvements 10-50 ! Concentration of Credit Risk Improvements other than buildings 10-75 ! Foreign Currency Risk Machinery and equipment 5-100 Furniture and fixtures 5-10 For purposes of the statement of cash flows of the proprietary fund types, cash and Autos and trucks 5-10 cash equivalents include all investments, as the City operates an internal cash Equipment under capitalized lease 5-15 management pool which maintains the general characteristics of a demand deposit Infrastructure 25-75 account. For infrastructure systems, the City elected to use the “Basic Approach” as defined Interfund Transactions by GASB Statement No. 34 for infrastructure reporting.

Activity between funds that are representative of lending/borrowing arrangements The City defines infrastructure as the basic physical assets that allow the City to outstanding at the end of the fiscal year are referred to as “due to/from other funds” function. The assets include streets, bridges, sidewalks, drainage systems, and (i.e., current portion of interfund loans) or “advances to/from other funds” lighting systems, etc. Each major infrastructure system can be divided into (i.e., noncurrent portion of interfund loans). Any residual balances outstanding subsystems. For example, the street system can be subdivided into pavement, curb between the governmental activities and business-type activities are reported in the and gutters, sidewalks, medians, streetlights, landscaping and land. These governmental-wide financial statements as “internal balances.” subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest on construction-related debt incurred during the period of construction is capitalized as a cost of the constructed assets.

60 61 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 1: Summary of Significant Accounting Policies (Continued) Note 1: Summary of Significant Accounting Policies (Continued)

The long-term principal portion of debt on non-proprietary capital assets acquired Unearned and Unavailable Revenue through lease purchase contracts is accounted for in the government-wide financial statements as “capital lease obligations”. Capital assets acquired under capital Unearned revenue is recognized for transactions for which revenue has not yet been leases are capitalized at the net present value of the total lease payments in the earned. Unearned revenue includes monies received in advance from the fiscal government-wide financial statements. agents on the amounts deposited in the reserve funds for various bonds and prepaid charges for services. Land Held for Resale Unavailable revenue represents money received during the current or previous years Land purchased for resale is capitalized as inventory at acquisition costs. that has not been earned or is not considered available to finance expenditures of the current period. Long-Term Debt Deferred Outflows/Inflows of Resources 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 In addition to assets, the Statement of Financial Position and the Governmental Fund liabilities in the applicable governmental activities, business-type activities or Balance Sheet report a separate section for deferred outflows of resources. This proprietary fund type statement of net position. Bond premiums and discounts are separate financial statement element, deferred outflows of resources, represents a deferred and amortized over the life of the bonds using the effective interest method. consumption of net position or fund balance that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Bonds payable are reported net of the applicable bond premium or discount. government reports deferred outflows of resources for pension contributions made Issuance costs, whether or not withheld from the actual debt proceeds received, are after the actuarial measurement date. The government also reports deferred outflows reported as debt service expenses when incurred. for charges on debt refunding. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This

B-42 In the fund financial statements, governmental fund types recognize bond premiums amount is deferred and amortized over the shorter of the life of the refunded or and discounts, as well as bond issuance costs, during the current period. The face refunding debt. 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 In addition to liabilities, the Statement of Financial Position and Governmental Fund issuances are reported as other financing uses. Issuance costs, whether or not Balance Sheet report a separate section for deferred inflows of resources. This withheld from the actual debt proceeds received, are reported as debt service separate financial statement element, deferred inflows of resources, represents an expenditures. acquisition of net position or fund balance that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The Compensated Absences government has one item, which arises only under the modified accrual basis of accounting that qualifies for reporting in this category. The item, unavailable revenue, In governmental funds, compensated absences are recorded as expenditures in the is reported only in the governmental funds balance sheet. The governmental funds years paid, as it is the City’s policy to liquidate any unpaid compensated absences at report unavailable revenues from two sources: taxes and grant revenues. These June 30 from future resources, rather than currently available financial resources. In amounts are deferred and recognized as an inflow of resources in the period when proprietary funds, compensated absences are expensed to the various funds in the the amounts become available. In addition, the government has deferred inflows of period they are earned, and such fund’s share of the unpaid liability is recorded as a resources relating to the net pension obligation reported in the government-wide long-term liability of the fund. Vested or accumulated compensated absences in statement of net position and the proprietary funds. These deferred inflows of proprietary funds are recorded as an expense and liability of those funds as the resources are the result of the net difference between projected and actual earnings benefits accrue to employees. The compensated absences liability will be liquidated on pension plan investments. These amounts are deferred and amortized over a through the General Fund for governmental activities and through the proprietary five year period on a straight-line basis. funds for the business-type activities. Net Pension Liability Claims Payable For purposes of measuring the net pension liability, deferred outflows and inflows of The City records a liability to reflect an actuarial estimate of ultimate uninsured losses resources related to pensions, and pension expense, information about the fiduciary for both general liability claims (including property damage claims) and workers’ net position and additions to/deductions from the fiduciary net position have been compensation claims. The estimated liability for workers’ compensation claims and determined on the same basis as they are reported by the CalPERS Financial Office. general liability claims includes “incurred but not reported” (IBNR) claims. There is no For this purpose, benefit payments (including refunds of employee contributions) are fixed payment schedule to pay these liabilities. recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

62 63 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 1: Summary of Significant Accounting Policies (Continued) Note 1: Summary of Significant Accounting Policies (Continued)

Net Position The City Council, as the City's highest level of decision-making authority, may commit fund balance for specific purposes pursuant to constraints imposed by In the government-wide financial statements, net position is classified in the following: resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use through the same type of Net Investment in Capital Assets – This amount consists of capital assets net of formal action taken to establish the commitment. City Council action to commit fund accumulated depreciation and reduced by outstanding debt that is attributed to balance needs to occur within the fiscal reporting period; however the amount can be the acquisition, construction, or improvement of the assets. determined subsequently. Restricted Net Position – This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. Fund balance flow assumptions

Unrestricted Net Position – This amount is all net position that does not meet the Sometimes the government will fund outlays for a particular purpose from both definition of “net investment in capital assets” or “restricted net position.” restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as Net position flow assumption restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about Sometimes the government will fund outlays for a particular purpose from both the order in which the resources are considered to be applied. restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and An individual governmental fund could include non-spendable resources and unrestricted – net position in the government-wide and proprietary fund financial amounts that are restricted or unrestricted (committed, assigned, or unassigned) statements, a flow assumption must be made about the order in which the or any combination of those classifications. Restricted amounts are to be resources are considered to be applied. It is the government’s policy to consider considered spent when an expenditure is incurred for purposes for which both restricted – net position to have been depleted before unrestricted – net position restricted and unrestricted fund balance is available and committed, assigned, B-43 is applied. then unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those Fund Balances unrestricted fund balance classifications can be used.

In the fund financial statements, government funds report the following fund balance Property Taxes classification: Property taxes attach a legal enforceable lien on property as of January 1. Taxes are Non-spendable Fund Balance – This includes amounts that cannot be spent levied on July 1 and are payable in two installments on December 10 and April 10. because they are either (a) not in spendable form or (b) legally or contractually The County of Los Angeles (County) bills and collects the property taxes and remits it required to be maintained intact. to the City in installments during the year. The City’s property tax revenues are recognized when an enforceable legal lien is attached to the property. The County is Restricted Fund Balance – This includes amounts that are constrained on the permitted by State Law (Proposition 13) to levy taxes at 1% of full market value use of resources by either (a) external creditors, grantors, contributors, or laws of (at time of purchase) and can increase the property tax base not more than 2% per regulations of other governments or (b) by law through constitutional provisions year. The City receives a share of this basic levy proportionate to the amount or enabling legislation. received prior to the passage of Proposition 13 in 1978.

Committed Fund Balance – This includes amounts that can only be used for Use of Estimates specific purposes pursuant to constraints imposed by formal action of the government’s highest authority. The preparation of the basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of Assigned Fund Balance – This includes amounts that are constrained by the certain assets and liabilities and the disclosure of contingent assets and liabilities at government’s intent to be used for specific purposes, but are neither restricted the date of the basic financial statements and the related reported amounts of nor committed. The governing board by Resolution No. 2011-63A gave the revenues and expenses, if applicable, during the reporting period. Actual results authority to assign amounts for specific purposes to the Finance Director. could differ from those estimates.

Unassigned Fund Balance – This is the residual amounts that have not been restricted, committed, or assigned to specific purposes. Only the General Fund can report positive unassigned fund balance. All other funds fund balance have been restricted, committed or assigned for the purpose of that particular fund.

64 65 CITY OF POMONA CITY OF POMONA

Effect of New Accounting Standards Cash and investments is comprised of the following at June 30, 2015:

During the fiscal year ended June 30, 2015, the City implemented the following Cash and cash equivalents: Governmental Accounting Standards Board (GASB) standards: Petty cash and change funds $ 8,679 Demand deposit 2,535,853 GASB Statement No. 68 – Accounting and Financial Reporting for Pensions—an Total cash and cash equivalents 2,544,532 Amendment of GASB Statement No. 27 improve the decision-usefulness of Investments: information in local government employer entity financial reports and enhance its Local Agency Investment Fund 98,857,825 value for assessing accountability and inter-period equity by requiring recognition of US Government Securities 8,052,771 the entire net pension liability and a more comprehensive measure of pension Total investments 106,910,596 expense. Decision-usefulness and accountability are also enhanced through new note disclosures and required supplementary information. The requirements of this $ 109,455,128 statement are effective for financial statements for periods beginning after June 15, 2014. Deposits

GASB Statement No. 71 – Pension Transition for Contributions Made Subsequent to The carrying amounts of the City’s cash deposits were $2,544,532 at June 30, 2015. the Measurement Date – an Amendment of GASB Statement No. 68. The objective Bank balances at June 30, 2015, were $3,522,628 which were fully insured or of this Statement is to address an issue regarding application of the transition collateralized with securities held by the pledging financial institutions in the City’s name provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. as discussed below. The $978,096 difference represents outstanding checks and other The issue relates to amounts associated with contributions, if any, made by a local reconciling items. government employer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. The provisions The California Government Code requires California banks and savings and loan B-44 of GASB Statement No. 71 are effective for financial statements beginning after associations to secure the City’s cash deposits by pledging securities as collateral. This June 15, 2014. Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral Note 2: Cash and Investments for cash deposits is considered to be held in the City's name. The market value of pledged securities must equal at least 110% of the City's cash deposits. California law The City maintains a cash and investment pool, which includes cash balances and authorized also allows institutions to secure City deposits by pledging first trust deed mortgage notes investments of all funds. This pooled cash is invested by the City Treasurer to enhance having a value of 150% of the City’s total cash deposits. The City may waive collateral earnings. The pooled interest earned is allocated to the funds based on average quarter-end requirements for cash deposits, which are fully insured up to $250,000 by the Federal cash balances of the various funds. Deposit Insurance Corporation (FDIC). The City has waived the collateralization requirements. Summary of Cash and Investments The City follows the practice of pooling cash and investments of all funds, except for The following is a summary of cash and investments at June 30, 2015: funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting Governmental Business-Type Fiduciary period basis to the various funds based on the quarter-end cash and investment Activities Activities Funds Total balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. Cash and investments $ 51,716,498 $ 43,045,107 $ 14,693,523 $ 109,455,128 Restricted cash 18,587,051 28,900,238 52,764,660 100,251,949 Investments Total $ 70,303,549 $ 71,945,345 $ 67,458,183 $ 209,707,077 Under the provisions of the City’s investment policy, and in accordance with California Government Code Section 53601, the City is authorized to invest or deposit in the following:

! Securities issued or guaranteed by the federal government or its agencies ! Bankers’ acceptances that are eligible for purchase by the Federal Reserve System ! Commercial paper, rated A-1/P-1, secured by an irrevocable line of credit or government securities

66 67 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 2: Cash and Investments (Continued) Note 2: Cash and Investments (Continued)

! Certificates of deposits with national and state licensed or chartered banks, Credit Risk federal or state savings and loans associations ! Medium-term corporate notes, rated AAA or AA The City’s Policy limits investments in commercial paper to the highest grade of stand ! Money market funds alone or enhanced (prime) commercial paper as rated by Moody’s Investor Service, ! Local Agency Investment Fund (LAIF) Standard & Poor’s Corporation, or Fitch Financial Services and requires that the management company of mutual funds must have attained the highest ranking or the In accordance with GASB Statement No, 31, Accounting and Financial Reporting for highest letter and numerical rating provided by not less than two nationally recognized Certain Investments and for External Investment Pools, investments are stated at fair statistical rating organizations. value at the year end. Investments in U.S. Treasury securities are not considered to have credit risk; therefore, Investment in Local Agency Investment Funds their credit quality is not disclosed. As of June 30, 2015, the City's investments in external investment pools and money market mutual funds are unrated. The City is a participant in LAIF which is regulated by California Government Code Standard & Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2015, included a portion of the pool funds invested in Moody's Poor's Structured Notes and Asset-Backed Securities: Local Agency Investment Fund Not Rated Not Rated Federal Home Loan Bank Aaa AA+ Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. Custodial Credit Risk

For deposits, custodial credit risk is the risk that, in the event of the failure of a deposit Asset-Backed Securities: generally mortgage-backed securities that entitle their B-45 financial institution, a government will not be able to recover its deposits or will not be purchasers to receive a share of the cash flows from a pool of assets such as able to recover collateral securities that are in the possession of an outside party. For an principal and interest repayments from a pool of mortgages (for example, investment, custodial credit risk is the risk that, in the event of the failure of the Collateralized Mortgage Obligations) or credit card receivables. counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s investment policy As of June 30, 2015, the City had $98,857,825 invested in LAIF, which had invested does not contain legal or policy requirements that would limit the exposure to custodial 2.08% of the pool investment funds in Structured Notes and Asset-Backed Securities. credit risk for deposits or investments, other than the provision for deposits stated in the The LAIF fair value factor of 1.000375979 was used to calculate the fair value of the California Government Code. Bank balances of $3,272,628 net of FDIC insurance, which investments in LAIF. LAIF is overseen by the Local Agency Investment Advisory Board, was in excess of federal depository insurance limits, was held in collateralized accounts. which consists of five members, in accordance with State statute. Of the City’s investments held by trustees and fiscal agents, $100,251,949 of securities was held by the counterparty’s trust department, the trustee for the bonds, not in the Interest Rate Risk name of the City as of June 30, 2015.

As a means of limiting its exposure to fair value losses arising from rising interest rates, Concentration of Credit Risk the City’s investment policy (Policy) limits investments to a maximum maturity of five years. The weighted average days to maturity of the total portfolio shall not exceed The City’s Policy states that not more than 20% of the portfolio shall be invested in any the City’s anticipated liquidity needs for the next six (6) months. The City is in compliance one entity or any one instrument to protect the City from concentration of credit risk, with with this provision of the Policy. the following exceptions: U.S. Treasury Obligations, governmental agencies (i.e. GNMA, FFCB, FHLB, FHLMC, FNMA, etc.), and investment pools (LAIF). In addition, purchases At June 30, 2015, the City had the following investment maturities: of commercial paper from U.S. corporations must not exceed 15% of the value of the portfolio at any time and single issuer holdings to no more than 10 percent per issuer. 1 Year 1 to 3 3 to 5 The City is in compliance with these provisions of the Policy. or Less Years Years Total Investments In accordance with GASB Statement No. 40, if the City has invested more than 5% of its Local Agency Investment Fund$ 98,857,825 $ - $ - $ 98,857,825 Federal Home Loan Bank - 2,054,544 5,998,227 8,052,771 investments in any one issuer, it is exposed to credit risk. As of June 30, 2015, none of the City’s deposits or investments was exposed to credit risk. $ 98,857,825 $ 2,054,544 $ 5,998,227 $ 106,910,596 Investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement.

68 69 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 2: Cash and Investments (Continued) Note 4: Interfund Transactions (Continued)

Investment in Bonds Transfers - At June 30, 2015, the City had the following transfers. The purpose of the transfers was for debt service payments and to reimburse a construction project. On February 1, 2005, the Public Financing Authority issued $11,370,000 2005 Revenue Bonds, Series AL, to purchase the City’s 2005 Reassessment and Refunding Revenue Transfers Out Bonds, Series AM (Series AM Bonds). The Authority holds the Series AM Bonds in the Business-Type amount of $3,389,000 as an investment at June 30, 2015. The investment is held by the Transfers In Activities fiscal agent. Governmental Activities $ 1,011,800 Note 3: Loans Receivable (Net)

At June 30, 2015, the City’s net loans receivable consisted of the following: Fund Financial Statements

Balance Balance Due To/Due From - At June 30, 2015, the City had the following short-term interfund July 1, 2014 Additions Deletions June 30, 2015 receivables and payables. Section 108 Loans $ 575,000 $ - $ 135,000 $ 440,000 Due to Other Funds Deferred Home Improvement Loans 8,040,772 - 177,416 7,863,356 Non Major Prototype Loans 1,203,892 28,423 - 1,232,315 General Debt Governmental Internal Service ADDI Loans 62,628 - 62,628 - Service Funds Funds Total Rental Rehabilitation Loans 483,955 7,538 - 491,493 CHDO 942,145 - - 942,145 Due from Other Funds HOPE 3 Loans 360,378 - 7,638 352,740 Governmental Funds:

B-46 Shield of Faith 4,424,827 111,450 36,854 4,499,423 General Fund $ 1,664,620 $ 67,980 $ 3,487 $ 1,736,087 Manufactured Housing Rehabilitation Loans 2,113,801 49,980 25,000 2,138,781 Occupied Rehabilitation Loans 994,741 462,914 16,518 1,441,137 MAP Loans, net 5,343,892 1,143,975 68,373 6,419,494 Due from other funds to the General Fund was for Series AR debt service payment in the NIP Loans 3,141,085 64,038 194,734 3,010,389 General Debt Service Fund. Owner Participation Agreement (OPA) 278,244 80,000 181,528 176,716 First Time Home Buyer Program 52,450 - - 52,450 Due to the General Fund from the Non-Major Funds was to cover negative cash deficit at Multi-Family 720,000 - - 720,000 Holt Ave. Housing Partners LP Loans - 1,906,142 - 1,906,142 the end of the fiscal year. Telacu 796,581 36,765 - 833,346 Long-Term Advances - At June 30, 2015, the City had the following interfund long-term Total $ 29,534,391 $ 3,891,225 $ 905,689 $ 32,519,927 advances:

Advance from Other Funds Note 4: Interfund Transactions Governmental Funds Proprietary Government-Wide Financial Statements General General Debt Internal Internal Balances - At June 30, 2015, the City had the following internal receivable and Fund Service Service Funds Total payable. Advances to Other Funds Governmental Funds: Internal Receivable Public Financing Authority $ - $ 43,045,000 $ - $ 43,045,000 Business-Type Non-Major Governmental Funds 304,435 - - 304,435 Internal Payable Activities Proprietary Funds: Water - - 5,000,000 5,000,000 Governmental Activities $ 5,953,677 Total $ 304,435 $ 43,045,000 $ 5,000,000 $ 48,349,435

The purpose of the internal balance was a $5.0 million advance to the Internal Service Long-term advances between the Public Financing Authority and the General Debt Fund to establish the Self-Insurance Fund and the accumulation of $953,677 to Service Fund are loan proceeds used to fund projects. consolidate the internal service funds activities related to the enterprise funds. The Water Utility advanced $5,000,000 to the Internal Service Fund to establish the Self-Insurance Fund in 2010.

70 71 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 4: Interfund Transactions (Continued) Note 7: Capital Assets

Transfers - At June 30, 2015, the City had the following transfers: Government-Wide Financial Statements

Transfer In At June 30, 2015, the City’s capital assets consisted of the following: Governmental Funds Proprietary Funds Non-Major Governmental Business-Type General Miscellaneous General debt Governmental Fund Grants Service Funds Water Sewer Refuse Total Activities Activities Total Non-depreciable assets Governmental Fund General Fund $ - $ 72,714 $ 4,396,786 $ 152,136 $ - $ - $ - $ 4,621,636 Land $ 81,168,660 $ 9,089,782 $ 90,258,442 Miscellaneous Grants 80 ------80 Construction in process 22,682,709 19,965,564 42,648,273 Non-Major Governmental Funds - 211,409 217,376 3,015,220 6,204 231,526 85,000 3,766,735 Total non-depreciable assets 103,851,369 29,055,346 132,906,715 Total Governmental Funds 80 284,123 4,614,162 3,167,356 6,204 231,526 85,000 8,388,451 Proprietary Funds Depreciable assets: Water - - 600,000 317,530 - - - 917,530 Buildings and building improvements 14,941,552 3,482,783 18,424,335 Sewer - - 417,000 - 31,251 - - 448,251 Improvements other than buildings 60,003,395 286,638 60,290,033 Total Proprietary Funds - - 1,017,000 317,530 31,251 - - 1,365,781 Machinery and equipment 20,754,160 200,002,139 220,756,299 Furniture and fixtures 1,014,456 5,105 1,019,561 Total $ 80 $ 284,123 $ 5,631,162 $ 3,484,886 $ 37,455 $ 231,526 $ 85,000 $ 9,754,232 Autos and trucks 10,756,126 4,510,802 15,266,928 Equipment under capitalized leases 1,037,970 4,257,381 5,295,351 The transfer of $4,396,786 between the General Fund and the General Debt Service Infrastructure 380,805,974 - 380,805,974 Fund was for Series AG, AN / AP, AU / AV, and AR debt service payments. Total depreciable assets, at cost 489,313,633 212,544,848 701,858,481 All other General Fund transfers were in the normal course of the City’s business. Less accumulated depreciation:

B-47 Buildings and building improvements 11,968,419 3,291,986 15,260,405 Note 5: Due from Other Governments Improvements other than buildings 24,683,385 119,452 24,802,837 Machinery and equipment 16,466,672 77,715,074 94,181,746 At June 30, 2015, the City’s due from other governments consisted of the following: Furniture and fixtures 812,785 5,105 817,890 Autos and trucks 8,283,866 3,165,780 11,449,646 Governmental Equipment under capitalized leases 288,588 851,476 1,140,064 Activities Infrastructure 257,167,573 - 257,167,573 Federal government $ 1,268,647 Total accumulated depreciation 319,671,288 85,148,873 404,820,161 State of California 4,298,861 Total depreciable assets, net 169,642,345 127,395,975 297,038,320 County of Los Angeles 1,186,492 Local government entities 98,944 Total capital assets $ 273,493,714 $ 156,451,321 $ 429,945,035 Total $ 6,852,944

Note 6: Land Held for Resale

At June 30, 2015, land held for resale in the amount of $4,503,277 is recorded at cost in the Housing Authority Fund.

72 73 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 7: Capital Assets (Continued) Note 7: Capital Assets (Continued)

The following is a summary of capital assets for governmental activities: The following is a summary of capital assets for business-type activities:

Balance Balance Balance Balance July 1, 2014 Additions Deletions Transfers June 30, 2015 July 1, 2014 Additions Deletions Transfers June 30, 2015 Non-depreciable assets: Non-depreciable assets: Land $ 80,360,320 $ 808,340 $ - $ - $ 81,168,660 Land $ 9,089,782 $ - $ - $ - $ 9,089,782 Construction in process 19,004,938 6,799,860 147,541 (2,974,548) 22,682,709 Construction in process 18,241,815 4,583,427 - (2,859,678) 19,965,564 Total non-depreciable assets 99,365,258 7,608,200 147,541 (2,974,548) 103,851,369 Total non-depreciable assets 27,331,597 4,583,427 - (2,859,678) 29,055,346

Depreciable assets: Depreciable assets: Buildings and building improvements 14,941,552 - - - 14,941,552 Buildings and building improvements 3,482,783 - - - 3,482,783 Improvements other than buildings 60,003,395 - - - 60,003,395 Improvements other than buildings 286,638 - - - 286,638 Machinery and equipment 20,020,840 721,070 - 12,250 20,754,160 Machinery and equipment 197,417,808 49,942 325,289 2,859,678 200,002,139 Furniture and fixtures 1,014,456 - - - 1,014,456 Furniture and fixtures 5,105 - - - 5,105 Autos and trucks 10,894,922 563,089 701,885 - 10,756,126 Autos and trucks 4,554,565 - 43,763 - 4,510,802 Equipment under capitalized leases 1,037,970 - - - 1,037,970 Equipment under capitalized leases 4,257,381 - - - 4,257,381 Infrastructure 379,331,983 - 1,488,307 2,962,298 380,805,974 Total depreciable assets, at cost 210,004,280 49,942 369,052 2,859,678 212,544,848 Total depreciable assets, at cost 487,245,118 1,284,159 2,190,192 2,974,548 489,313,633 Less accumulated depreciation: Less accumulated depreciation: Buildings and building improvements 3,282,309 9,677 - - 3,291,986 Buildings and building improvements 11,642,514 325,905 - - 11,968,419 Improvements other than buildings 108,742 10,710 - - 119,452 Improvements other than buildings 23,130,649 1,552,736 - - 24,683,385 Machinery and equipment 74,764,708 3,089,336 138,970 - 77,715,074

B-48 Machinery and equipment 15,235,202 1,231,470 - - 16,466,672 Furniture and fixtures 5,105 - - - 5,105 Furniture and fixtures 764,827 47,958 - - 812,785 Autos and trucks 2,990,211 219,332 43,763 - 3,165,780 Autos and trucks 8,448,734 537,017 701,885 - 8,283,866 Equipment under capitalized lease 425,738 425,738 - - 851,476 Equipment under capitalized leases 107,056 181,532 - - 288,588 Total accumulated depreciation 81,576,813 3,754,793 182,733 - 85,148,873 Infrastructure 249,506,863 9,078,945 1,418,235 - 257,167,573 Total depreciable assets, net 128,427,467 (3,704,851) 186,319 2,859,678 127,395,975 Total accumulated depreciation 308,835,845 12,955,563 2,120,120 - 319,671,288 Total capital assets $ 155,759,064 $ 878,576 $ 186,319 $ - $ 156,451,321 Total depreciable assets, net 178,409,273 (11,671,404) 70,072 2,974,548 169,642,345 Total capital assets $ 277,774,531 $ (4,063,204) $ 217,613 $ - $ 273,493,714 Depreciation expense for capital assets of the business-type activities for the year ended June 30, 2015, is as follows: Depreciation expense for capital assets of the governmental activities for the year ended June 30, 2015, is as follows: Water $ 2,605,803 Sewer 580,345 General Government $ 212,024 Refuse 565,974 Public safety 1,815,313 Canon Water Company 2,671 Urban development 9,744,894 Community Services 1,160,279 Total $ 3,754,793 Internal service funds 23,053 Total $ 12,955,563 Note 8: Other Investments

In November 2006, the Housing Authority of the City Pomona acquired a 29.846% membership interest in Mission Promenade I from a member interest holder for a purchase price of $600,000.

Other investments in the Water Enterprise fund represent one-quarter of share of the San Antonio Water Company for a cost of $9,000.

74 75 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 9: Long-Term Debt Note 9: Long-Term Debt (Continued)

The following is a summary of long-term debt for the year ended June 30, 2015: The total leased assets by major asset class consisted of the following:

Accreted/ June 30, 2015 Balance Accrued Balance Due Within July 1, 2014 Interest Additions Deletions June 30, 2015 One Year Machinery and equipment $ 260,616 Governmental Activities Autos and trucks 777,354 Pollution remediation obligations $ 1,580,363 $ - $ - $ 619,554 $ 960,809 $ 960,809 Obligation under capital leases 879,285 - - 292,990 586,295 215,741 Equipment under capitalized leases, at cost 1,037,970 Notes payable 875,000 - - 220,000 655,000 220,000 Accumulated depreciation (288,588) Revenue bonds 41,110,000 - - 1,546,000 39,564,000 1,626,000 Pension obligation refunding bonds 44,414,040 439,913 - 520,000 44,333,953 615,000 Equipment under capitalized leases, net $ 749,382 Certificates of participation 11,681,813 - - 345,622 11,336,191 335,000

Subtotal 100,540,501 439,913 - 3,544,166 97,436,248 3,972,550 The depreciation expense for equipment under capitalized leases was $181,533 for the Compensated absences 6,994,573 - 4,437,032 4,313,379 7,118,226 4,437,000 year ended June 30, 2015. Claims payable 16,179,444 - 2,029,341 6,107,237 12,101,548 1,805,000 Total governmental activities $ 123,714,518 $ 439,913 $ 6,466,373 $ 13,964,782 $ 116,656,022 $ 10,214,550 The rates of interest on the lease purchase agreements range from 2.19% to 3.30% per annum. The annual debt service requirement outstanding at June 30, 2015, is as follows: Business-Type Activities Obligations under capital leases $ 3,564,689 $ - $ - $ 560,296 $ 3,004,393 $ 573,408 Revenue bonds 133,915,426 - - 1,828,782 132,086,644 1,750,000 Principal Interest Total Subtotal 137,480,115 - - 2,389,078 135,091,037 2,323,408 2015-2016 $ 215,741 $ 16,334 $ 232,075 - 2016-2017 222,272 9,803 232,075 Compensated absences 1,342,054 - 1,029,412 1,069,259 1,302,207 1,030,000 2017-2018 148,282 3,071 151,353 Total business-type activities $ 138,822,169 $ - $ 1,029,412 $ 3,458,337 $ 136,393,244 $ 3,353,408 B-49 Total $ 586,295 $ 29,208 $ 615,503

Governmental Activities Long-Term Debt

Pollution Remediation Obligations Notes Payable

The City acquired properties which were determined to have soil and groundwater At June 30, 2015, notes payable consisted of the following: contamination. The City is responsible for the investigation, characterization and remediation of the soil and groundwater from the contamination. The City had a remediation study performed to determine any potential harm to the surrounding areas. Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year The pollution remediation costs were estimated at $1,781,262. During the current fiscal HUD Section 108 Loan $ 575,000 -$ $ 145,000 $ 430,000 $ 145,000 year, the City spent $619,554 on clean-up cost. The remaining outstanding cost to complete the clean-up is estimated at $960,809 at June 30, 2015. City of Claremont 300,000 - 75,000 225,000 75,000 $ 875,000 -$ $ 220,000 $ 655,000 $ 220,000 Obligations under Capital Leases

At June 30, 2015, obligations under capital leases consisted of the following: HUD Section 108 Loan

Balance Balance Due Within The City has three notes guaranteed by the United States Department of Housing July 1, 2014 Additions Deletions June 30, 2015 One Year and Urban Development (HUD) under Section 108 of the Community Development Act and are payable from future Community Development Block Grant (CDBG) PPF #1 $ 230,718 $ - $ 75,045 $ 155,673 $ 76,891 entitlements. The notes were made to Casa Herrera ($2,375,000) on PPF #2 83,584 - 83,584 - - February 1, 1998; Village Car Wash ($100,000) on September 17, 2012; and HCC #2 564,983 - 134,361 430,622 138,850 Freddie’s Auto Repair ($100,000) on August 20, 2012. On June 30, 2010, the Total $ 879,285 $ - $ 292,990 $ 586,295 $ 215,741 balance of the original loan for Casa Herrera was defeased to refinance the loan at a lower interest rate. The new interest rate for Casa Herrera ranges from 4.96% to The City has entered into numerous equipment lease-purchase agreements with a 5.77%, with new loan terms beginning on February 1, 2011 and maturing leasing company whereby the lessor acquired certain equipment and leased it to the City August 1, 2016. The interest rate for both Village Car Wash and Freddie’s Auto with an option to purchase. The related assets have been capitalized as capital assets. Repair is variable and equal to 20 basis points (0.2%) above the applicable London Interbank Offered Rates (LIBOR), currently at 2.5%, with loan terms beginning on

76 77 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 9: Long-Term Debt (Continued) Note 9: Long-Term Debt (Continued)

July 1, 2013 and maturing on August 1, 2023. Casa Herrera is responsible for the 2005 Subordinate Revenue Bonds, Series AL – Original Issuance $11,370,000 principal payment on its note and the City is responsible for the interest payment. Village Car Wash and Freddie’s Auto Repair are responsible for principal and interest On February 1, 2005, the Public Financing Authority issued $11,370,000 in payments on its notes. Again, all notes are guaranteed by CDBG funds; thus, in the 2005 Subordinate Revenue Bonds, Series AL to purchase the 2005 Reassessment event of default, the City’s CDBG entitlement funds may be used to cover any and Refunding Revenue Bonds, Series AM, to finance certain capital improvements outstanding debt. in the City and to fund a reserve account for the Bonds.

The annual debt service requirement at June 30, 2015, is as follows: Interest on the bonds is payable semiannually on each September 2 and March 2, commencing September 2, 2005. The rates of interest range from 2.50% to Principal Interest Total 5.10% per annum. Principal on the subordinate revenue bonds is payable in annual installments ranging from $275,000 to $955,000. 2015-2016 $ 145,000 $ 9,200 $ 154,200 2016-2017 145,000 5,663 150,663 During 2008, the bonds in the amount of $1,975,000 were called. 2017-2018 20,000 3,500 23,500 2018-2019 20,000 3,000 23,000 The annual debt service requirement for the 2005 Subordinate Revenue Bonds, 2019-2020 20,000 3,000 23,000 Series AL outstanding at June 30, 2015, is as follows: 2020-2024 80,000 6,000 86,000 Principal Interest Total Total $ 430,000 $ 30,363 $ 460,363 2015-2016 $ 480,000 $ 180,659 $ 660,659 2016-2017 505,000 157,385 662,385 City of Claremont 2017-2018 530,000 132,672 662,672

B-50 2018-2019 555,000 106,424 661,424 On July 2, 2013, the City entered into a loan agreement with the City of Claremont for $300,000 to improve storm drain facilities within the City of Pomona. The loan 2019-2020 585,000 78,270 663,270 requires repayment with 2% interest over a period of four (4) years. 2020-2022 1,260,000 64,718 1,324,718 Total $ 3,915,000 $ 720,128 $ 4,635,128 The annual debt service requirement at June 30, 2015, is as follows:

Principal Interest Total 2005 Reassessment and Refunding Revenue Bonds, Series AM – Original Issuance 2015-2016 $ 75,000 $ 3,750 $ 78,750 $9,524,000 2016-2017 75,000 3,750 78,750 On February 1, 2005, the City issued $9,524,000 in 2005 Reassessment and 2017-2018 75,000 3,750 78,750 Refunding Revenue Bonds, Series AM, to provide funds to refund the refunding Total $ 225,000 $ 11,250 $ 236,250 Improvement Bonds, Assessment District No. 294. Interest on the bonds is payable semiannually on each September 2 and March 2. The rate of interest is 7.22% per Revenue Bonds annum.

At June 30, 2015, revenue bonds consisted of the following: During 2008, the bonds in the amount of $1,920,000 were called. Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year The annual debt service requirement for the 2005 Reassessment and Refunding Revenue Bonds, Series AM outstanding at June 30, 2015, is as follows: 2005 Subordinate Revenue Bonds, Series AL $ 4,375,000 $ - $ 460,000 $ 3,915,000 $ 480,000 2005 Reassessment and Refunding Bonds, Series AM 3,750,000 - 361,000 3,389,000 386,000 Principal Interest Total 2005 Lease Revenue Bonds, Series AN 19,485,000 - 65,000 19,420,000 65,000 2005 Taxable Lease Revenue Bonds, Series AP 1,025,000 - 500,000 525,000 525,000 2015-2016 $ 386,000 $ 230,751 $ 616,751 2006 Lease Revenue Bonds, Series AU 2,340,000 - 30,000 2,310,000 35,000 2016-2017 415,000 201,835 616,835 2006 Taxable Lease Revenue Bonds, Series AV 10,135,000 - 130,000 10,005,000 135,000 2017-2018 449,000 170,645 619,645 Total $ 41,110,000 $ - $ 1,546,000 $ 39,564,000 $ 1,626,000 2018-2019 482,000 137,036 619,036 Unamortized Deferred Loss on Refunding 2019-2020 516,000 101,008 617,008 2006 Taxable Lease Revenue Bonds, Series AV $ (133,591) $ - $ (7,031) $ (126,560) 2020-2022 1,141,000 83,933 1,224,933 Total $ 3,389,000 $ 925,208 $ 4,314,208

78 79 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 9: Long-Term Debt (Continued) Note 9: Long-Term Debt (Continued)

2005 Lease Revenue Bonds, Series AN – Original Issuance $19,910,000 2006 Lease Revenue Bonds, Series AU – Original Issuance $2,540,000

On May 1, 2005, the Public Financing Authority issued $19,910,000 in 2005 Lease On December 6, 2006, the Public Financing Authority issued $2,540,000 in Revenue Bonds, Series AN, to refinance certain obligations of the City in connection 2006 Lease Revenue Bonds, Series AU to finance certain public improvements of the with the Authority’s 1995 Lease Revenue Bonds, Series P (now retired) and finance City. certain public improvements of the City. Interest on the bonds is payable semiannually on each June 1 and December 1. The Interest on the bonds is payable semiannually on each October 1 and April 1. The rates of interest range from 3.250% to 4.375% per annum. Principal is payable in rates of interest range from 3.00% to 4.375% per annum. Principal is payable in annual installments ranging from $25,000 to $310,000. The bonds are secured by annual installments ranging from $45,000 to $1,460,000. The bonds are secured by certain revenues consisting of certain Lease Payments with respect to the leased certain revenues consisting of certain Lease Payments with respect to the leased property by the City. property by the City. The annual debt service requirement for the 2006 Lease Revenue Bonds, Series AU The annual debt service requirement for the 2005 Lease Revenue Bonds, Series AN outstanding at June 30, 2015, is as follows: outstanding at June 30, 2015, is as follows: Principal Interest Total Principal Interest Total 2015-2016 $ 35,000 $ 98,340 $ 133,340 2015-2016 $ 65,000 $ 906,800 $ 971,800 2016-2017 30,000 97,115 127,115 2016-2017 625,000 893,723 1,518,723 2017-2018 35,000 96,035 131,035 2017-2018 650,000 869,173 1,519,173 2018-2019 35,000 94,740 129,740 2018-2019 675,000 842,998 1,517,998 2019-2020 35,000 93,410 128,410 B-51 2019-2020 700,000 815,060 1,515,060 2020-2025 215,000 443,379 658,379 2020-2025 3,980,000 3,613,849 7,593,849 2025-2030 255,000 396,195 651,195 2025-2030 4,950,000 2,583,438 7,533,438 2030-2035 385,000 332,468 717,468 2030-2035 6,315,000 1,185,625 7,500,625 2035-2040 495,000 239,688 734,688 2035-2036 1,460,000 36,500 1,496,500 2040-2045 790,000 121,107 911,107 Total $ 19,420,000 $ 11,747,166 $ 31,167,166 Total $ 2,310,000 $ 2,012,477 $ 4,322,477

2005 Taxable Lease Revenue Bonds, Series AP – Original Issuance $4,385,000 2006 Taxable Lease Revenue Bonds, Series AV – Original Issuance $10,790,000 On May 1, 2005, the Public Financing Authority issued $4,385,000 in 2005 Taxable Lease Revenue Bonds, Series AP, to refinance certain obligations of the City in On December 6, 2006, the Public Financing Authority issued $10,790,000 in connection with the Authority’s 1995 Lease Revenue Bonds, Series P (now retired) 2006 Taxable Lease Revenue Bonds, Series AV, to refinance certain obligations of and finance certain public improvements of the City. the City in connection with the City’s Certificates of Participation, 2002 Series AE (Mission Promenade Project) and finance certain public improvements of the City. Interest on the bonds is payable semiannually on each October 1 and April 1. The rates of interest range from 4.120% to 4.300% per annum. Principal is payable in Interest on the bonds is payable semiannually on each June 1 and December 1. The annual installments ranging from $370,000 to $525,000. The bonds are secured by rates of interest range from 5.00% to 5.70% per annum. Principal is payable in certain revenues consisting of certain Lease Payments with respect to the leased annual installments ranging from $95,000 to $665,000. The bonds are secured by property by the City. certain revenues consisting of certain Lease Payments with respect to the leased property by the City. The annual debt service requirement for the 2005 Taxable Lease Revenue Bonds, Series AP outstanding at June 30, 2015, is as follows:

Principal Interest Total 2015-2016$ 525,000 $ 12,797 $ 537,797

80 81 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 9: Long-Term Debt (Continued) Note 9: Long-Term Debt (Continued)

The annual debt service requirement for the 2006 Taxable Lease Revenue Bonds, principal amount of $36,205,000 and as capital appreciation bonds in the original Series AV outstanding at June 30, 2015, is as follows: issuance amount of $6,075,684.

Principal Interest Total Interest on the current interest bonds is payable semiannually on each January 1 and 2015-2016 $ 135,000 $ 564,920 $ 699,920 July 1. The rates of interest vary and range from 5.24% to 5.832% per annum. Principal is payable in annual installments ranging from $71,302 to $5,140,000. The 2016-2017 145,000 558,170 703,170 capital appreciation bonds are payable only at maturity and will not bear interest on a 2017-2018 150,000 550,920 700,920 current basis. The accreted value of each capital appreciation bond is equal to its 2018-2019 160,000 542,520 702,520 accreted value upon the maturity thereof, being comprised of its initial purchase price 2019-2020 170,000 533,560 703,560 and the accreted interest between the delivery date and its respective maturity date. The obligation of the City to make payments with respect to the Bonds is an absolute 2020-2025 990,000 2,515,760 3,505,760 and unconditional obligation of the City imposed upon the City by the Retirement Law 2025-2030 1,305,000 2,204,680 3,509,680 and is not limited to any special source of funds. The City’s obligation for the Bonds is 2030-2035 1,710,000 1,795,400 3,505,400 any money available in the City’s General Fund. The Bonds are not secured or 2035-2040 2,260,000 1,250,010 3,510,010 limited as to payment by any special source of funds of the City. The current interest bonds are subject to redemption prior to maturity. The capital appreciation bonds are 2040-2045 2,980,000 528,960 3,508,960 not subject to redemption prior to maturity. Total $ 10,005,000 $ 11,044,900 $ 21,049,900 The annual debt service requirement outstanding at June 30, 2015, is as follows: The following is a summary of unamortized deferred loss on refunding outstanding at June 30, 2015: Accreted Principal Interest Interest Total B-52 Balance Balance 2015-2016$ 615,000 $ 2,099,240 $ - $ 2,714,240 July 1, 2014 Additions Deletions June 30, 2015 2016-2017 695,721 2,089,629 19,279 2,804,629 $ (133,591) $ - $ (7,031) $ (126,560) 2017-2018 790,996 2,068,759 44,005 2,903,760 Amortization expense was $7,031 for June 30, 2015. 2018-2019 888,650 2,044,732 76,350 3,009,732 2019-2020 987,475 2,017,272 112,525 3,117,272 Pension Obligation Refunding Bonds 2020-2025 6,466,380 9,521,325 1,318,620 17,306,325 Balance Accreted Balance Due Within 2025-2030 9,284,731 8,116,181 3,140,267 20,541,179 July 1, 2014 Interest Deletions June 30, 2015 One Year 2030-2035 19,465,000 4,559,603 - 24,024,603 2006 Pension Obligation 2035-2036 5,140,000 149,882 - 5,289,882 Bonds, Series AR $ 44,414,040 $ 439,913 $ 520,000 $ 44,333,953 $ 615,000 Total $ 44,333,953 $ 32,666,623 $ 4,711,046 $ 81,711,622

The City is a member of the California Public Employees’ Retirement System Certificates of Participation (PERS), a public employees’ defined benefits retirement program. In 2004, the City issued $32,300,000 and $5,700,000 in Pension Obligation Bonds, in order to fund the City’s unamortized, unfunded actuarial accrued liability and fund the current year Balance Balance Due Within general fund contribution with PERS (see Note 10 for more information on the PERS July 1, 2014 Additions Deletions June 30, 2015 One Year pension plan). In 2006, the City issued $42,280,684 in Pension Obligation Refunding 2003 Certificate of Participation, Bonds, Series AR to refinance the City’s outstanding Pension Obligation Refunding Series AG $ 11,100,000 $ - $ 315,000 $ 10,785,000 $ 335,000 Bonds, Series 2004 AJ and Series 2004 AK. The refunding achieved net present Unamortized Bond Premium 581,813 - 30,622 551,191 - value savings of $868,932, or 2.3% of refunded par and changed the debt structure from variable rate to fixed rate. Total $ 11,681,813 $ - $ 345,622 $ 11,336,191 $ 335,000

2006 Pension Obligation Refunding Bonds, Series AR – Original Issuance $42,280,684 2003 Certificates of Participation, Series AG – Original Issuance $13,985,000 On February 1, 2006, the City issued $42,280,684 Pension Obligations Refunding Bonds, Series 2006 AR (Bonds) to refinance the City’s outstanding Pension On July 1, 2003, the City issued $13,985,000 Certificates of Participation, Obligation Refunding Bonds, Series 2004 AJ and its Pension Obligation Refunding 2003 Series AG, to provide funds to finance certain public improvements, including Bonds, Series 2004 AK, to capitalize certain interest on the Bonds and to pay the street improvements throughout the City. Principal payments are made once a year costs of issuing the Bonds. The Bonds were issued as current interest bonds in the on June 1. The bonds are set to mature on June 1, 2034. The Authority realized an

82 83 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 9: Long-Term Debt (Continued) Note 9: Long-Term Debt (Continued)

original premium of approximately $918,655 and incurred cost of issuance of Claims Payable approximately $725,000. The following is a summary of the claims payable outstanding as of June 30, 2015: Interest on the bonds is payable semiannually on each June 1 and December 1. The rates of interest range from 2.800% to 10.000% per annum. Principal is payable in Balance Balance Due Within annual installments ranging from $210,000 to $880,000. July 1, 2014 Additions Deletions June 30, 2015 One Year

The annual debt service requirement outstanding at June 30, 2015, is as follows: $ 16,179,444 $ 2,029,341 $ 6,107,237 $ 12,101,548 $ 1,805,000

Principal Interest Total Claims payable will be liquidated from the Self-Insurance Fund. 2015-2016 $ 335,000 $ 593,175 $ 928,175 2016-2017 355,000 574,750 929,750 Business-Type Activities 2017-2018 375,000 555,225 930,225 2018-2019 395,000 534,600 929,600 Obligations under Capital Leases 2019-2020 415,000 512,875 927,875 Balance Balance Due Within 2020-2025 2,450,000 2,195,325 4,645,325 July 1, 2014 Additions Deletions June 30, 2015 One Year 2025-2030 3,205,000 1,442,650 4,647,650 HCC #1$ 3,564,689 $ - $ 560,297 $ 3,004,392 $ 573,408 2030-2034 3,255,000 459,525 3,714,525 Total $ 10,785,000 $ 6,868,125 $ 17,653,125

B-53 The City has entered into numerous equipment lease-purchase agreements with a leasing company whereby the lessor acquired certain equipment and leased it to the City with an option to purchase. The related assets have been capitalized in the The following is a summary of the 2003 Certificate of Participation, Series AG capital assets account. unamortized premium outstanding at June 30, 2015: The total leased assets by major asset class consisted of the following: Balance Balance July 1, 2014 Additions Deletions June 30, 2015 June 30, 2015

$ 581,813 $ - $ 30,622 $ 551,191 Equipment $ 4,257,381 Equipment under capitalized lease, at cost 4,257,381 Accumulated depreciation (851,476) Compensated Absences Equipment under capitalized lease, net $ 3,405,905 The following is a summary of compensated absences outstanding as of June 30, 2015: The depreciation expense for equipment under capitalized leases was $425,738 for the year ended June 30, 2015. Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year The annual debt service requirement outstanding at June 30, 2015, is as follows: $ 6,994,573 $ 4,437,032 $ 4,313,379 $ 7,118,226 $ 4,437,000 Principal Interest Total

2015-2016 $ 573,408 $ 70,303 $ 643,711 For the governmental activities, the majority of the liability will be paid by the General Fund. 2016-2017 586,826 56,886 643,712 2017-2018 600,558 43,154 643,712 2018-2019 614,610 29,100 643,710 2019-2020 628,990 14,717 643,707 Total $ 3,004,392 $ 214,160 $ 3,218,552

84 85 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 9: Long-Term Debt (Continued) Note 9: Long-Term Debt (Continued)

Revenue Bonds The following is a summary of unamortized deferred loss on refunding outstanding at June 30, 2015: Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year Balance Balance 2002 Refunding Revenue Bonds, Series AF $ 12,765,000 $ - $ 220,000 $ 12,545,000 $ 225,000 July 1, 2014 Additions Deletions June 30, 2015 2007 Revenue Bonds, Series AY 95,615,000 - 1,035,000 94,580,000 1,075,000 $ (611,050) $ - $ (58,195) $ (552,855) Unamortized Bond Premium 4,835,426 - 148,782 4,686,644 - 2007 Taxable Revenue Refunding Bonds, Series AZ 5,820,000 - 260,000 5,560,000 275,000 2007 Revenue Bonds, Series BA 14,880,000 - 165,000 14,715,000 175,000 Amortization expense was $58,195 for June 30, 2015. Total $ 133,915,426 $ - $ 1,828,782 $ 132,086,644 $ 1,750,000 2007 Revenue Bonds, Series AY – Original Issuance $99,370,000 Unamortized Deferred Loss on Refunding 2002 Refunding Revenue Bonds, Series AF $ (611,050) $ - $ (58,195) $ (552,855) On January 1, 2007, the Public Financing Authority issued $99,370,000 in 2007 Revenue Bonds, Series AY (1,180,357) - (78,692) (1,101,665) 2007 Revenue Bonds, Series AY, to provide funds to partially refund the Authority’s Total $ (1,791,407) $ - $ (136,887) $ (1,654,520) 1999 Refunding Revenue Bonds, Series AA and the 1999 Revenue Bonds, Series AC, and to finance the acquisition and construction of certain improvements to 2002 Refunding Revenue Bonds, Series AF – Original Issuance $15,205,000 the Water Enterprise of the City.

On October 1, 2002, the Public Financing Authority issued $15,205,000 in Interest on the bonds is payable semiannually on each November 1 and May 1. The 2002 Sewer Refunding Revenue Bonds, Series AF, for the purpose of making an rates of interest range from 4.00% to 5.00% per annum. Principal is payable in advance to the City’s Sewer Fund for refunding the 1996 Revenue Bonds, Series Q, annual installments ranging from $885,000 to $6,040,000. The bonds are secured by as well as provide funds to refinance certain sewer obligations of the City of Pomona an Installment Sale Agreement, dated as of January 1, 2007 between the City and B-54 and to finance certain improvements to the City’s sewer enterprise project. the Authority. The Installment Payments are a special limited obligation of the City, payable from and secured by a pledge of and first lien on all Net Revenues, subject Interest is payable on June 1 and December 1 of each year. Interest rates range from to the parity lien, if any, of any additional obligations as provided for in the Installment 2.0% to 4.2% on serial bonds of $3,900,000. Principal is payable in annual Sale Agreement, in the Utility Fund of the City in trust under the Installment Sale installments ranging from $165,000 to $790,000 through December 2043. Term Agreement. bonds of $1,210,000, $1,075,000, $2,620,000, $2,815,000 and $3,585,000 mature The annual debt service requirement outstanding at June 30, 2015, is as follows: on December 1, 2023, 2026, 2032, 2037, and December 1, 2042, respectively.

The annual debt service requirement outstanding at June 30, 2015, is as follows: Principal Interest Total 2015-2016 $ 1,075,000 $ 4,679,200 $ 5,754,200 Principal Interest Total 2016-2017 1,130,000 4,625,450 5,755,450 2015-2016 $ 225,000 $ 585,988 $ 810,988 2017-2018 1,175,000 4,580,250 5,755,250 2016-2017 240,000 577,175 817,175 2018-2019 1,235,000 4,521,500 5,756,500 2017-2018 245,000 567,625 812,625 2019-2020 1,280,000 4,472,100 5,752,100 2018-2019 260,000 557,395 817,395 2020-2025 7,315,000 21,460,400 28,775,400 2019-2020 270,000 546,395 816,395 2025-2030 9,900,000 19,456,500 29,356,500 2020-2025 1,550,000 2,536,000 4,086,000 2030-2035 15,290,000 16,413,500 31,703,500 2025-2030 1,960,000 2,141,800 4,101,800 2035-2040 19,500,000 12,190,000 31,690,000 2030-2035 2,440,000 1,644,338 4,084,338 2035-2040 3,100,000 966,250 4,066,250 2040-2045 24,890,000 6,802,250 31,692,250 2040-2043 2,255,000 172,875 2,427,875 2045-2047 11,790,000 891,500 12,681,500 Total $ 12,545,000 $ 10,295,841 $ 22,840,841 Total $ 94,580,000 $ 100,092,650 $ 194,672,650

This advance refunding has increased the aggregate debt service payments that were required for the Refunded Bonds by approximately $1,588,000 and provided an economic loss (difference between the present value of the new and old debt service payments) of approximately $1,500,000.

86 87 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 9: Long-Term Debt (Continued) Note 9: Long-Term Debt (Continued)

The following is a summary of the 2007 Revenue Bonds, Series AY unamortized The annual debt service requirement outstanding at June 30, 2015, is as follows: premium outstanding at June 30, 2015: Principal Interest Total Balance Balance 2015-2016 $ 275,000 $ 311,996 $ 586,996 July 1, 2014 Additions Deletions June 30, 2015 2016-2017 285,000 297,510 582,510 $ 4,835,426 $ - $ 148,782 $ 4,686,644 2017-2018 300,000 282,500 582,500 2018-2019 320,000 265,550 585,550 Amortization expense was $148,782 for June 30, 2015. 2019-2020 340,000 247,470 587,470 2020-2025 1,995,000 928,578 2,923,578 The advance refunding resulted in a difference between the reacquisition price 2025-2029 2,045,000 296,908 2,341,908 (Series AY & AZ) and the net carrying amount of the bonds (Series AA & AC) of $1,809,884. This difference is considered to be a deferred loss on refunding. The Total $ 5,560,000 $ 2,630,512 $ 8,190,512 deferred loss on refunding, reported in the basic financial statements as a deduction from long-term debt, is amortized on a straight-line method over 23 years. The 2007 Revenue Bonds, Series BA – Original Issuance $15,575,000 following is a summary of unamortized deferred loss on refunding outstanding at June 30, 2015: On January 1, 2007, the Public Financing Authority issued $15,575,000 in 2007 Revenue Bonds, Series BA, to provide funds to finance certain improvements Balance Balance to the City’s Sewer Enterprise. Interest on the bonds is payable semiannually on July 1, 2014 Additions Deletions June 30, 2015 each June 1 and December 1. The rates of interest range from 3.625% to 5.000% $ (1,180,357) $ - $ (78,692) $ (1,101,665) per annum. Principal is payable in annual installments ranging from $110,000 to B-55 $1,595,000. The bonds are secured by an Installment Sale Agreement, dated as of January 1, 2007 between the City and the Authority. The Installment Payments are a Amortization expense was $78,692 for June 30, 2015. special limited obligation of the City, payable from and secured by a pledge of and first lien on all Net Revenues, subject to the parity lien securing the Authority’s 2007 Taxable Revenue Refunding Bonds, Series AZ – Original Issuance $6,930,000 2002 Refunding Revenue Bonds, Series AF, and of any additional obligations as provided for in the Installment Sale Agreement, in the Sewer Enterprise Fund held by On January 1, 2007, the Public Financing Authority issued $6,930,000 in the City in trust under the Installment Sale Agreement. 2007 Taxable Revenue Refunding Bonds, Series AZ, to provide funds to partially refund the Authority’s 1999 Refunding Revenue Bonds, Series AA (now retired) and The annual debt service requirement outstanding at June 30, 2015, is as follows: 1999 Revenue Bonds, Series AC (now retired), and to finance the acquisition and construction of certain improvements to the Water Enterprise of the City. Principal Interest Total 2015-2016 $ 175,000 $ 649,734 $ 824,734 Interest on the bonds is payable semiannually on each November 1 and May 1. The 2016-2017 175,000 642,148 817,148 rates of interest range from 5.267% to 5.650% per annum. Principal is payable in annual installments ranging from $200,000 to $555,000. The bonds are secured by 2017-2018 185,000 365,296 550,296 an Installment Sale Agreement, dated as of January 1, 2007 between the City and 2018-2019 190,000 628,483 818,483 the Authority. The Installment Payments are a special limited obligation of the City, 2019-2020 195,000 621,260 816,260 payable from and secured by a pledge of and first lien on all Net Revenues, subject to the parity lien, if any, of any additional obligations as provided for in the Installment 2020-2025 1,100,000 2,983,204 4,083,204 Sale Agreement, in the Water Enterprise Fund of the City in trust under the 2025-2030 1,345,000 2,736,020 4,081,020 Installment Sale Agreement. 2030-2035 1,700,000 2,406,656 4,106,656 2035-2040 2,135,000 1,986,975 4,121,975 2040-2045 4,395,000 1,410,019 5,805,019 2045-2047 3,120,000 228,544 3,348,544 Total $ 14,715,000 $ 14,658,339 $ 29,373,339

88 89 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 9: Long-Term Debt (Continued) Note 9: Long-Term Debt (Continued)

Compensated Absences Outstanding Principal on Capital-Related Debt

In the enterprise funds, the liability for vested and unpaid compensated absences The City has acquired capital assets through the issuance of bonds and capital lease (accrued vacation, sick pay, executive leave, and comp time) is reported in the fund obligations. Following is the outstanding balance at June 30, 2015, of capital assets as the benefits are earned and vest. The compensated absences accrued in the related debt. enterprise funds amounted to $1,302,208 at June 30, 2015. Governmental Activities: Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year Outstanding Principal on Capital Related $ 1,342,054 $ 1,029,413 $ 1,069,260 $ 1,302,207 $ 1,030,000 Debt

2003 Certificates of Participation, Series AG $ 11,201,659 For the business-type activities, the liabilities will be paid in future years from the 2005 Lease Revenue Bonds, Series AN 18,146,779 propriety funds. 2005 Taxable Lease Revenue Bonds, Series AP 525,000 Pledged Revenue 2006 Lease Revenue Bonds, Series AU 2,112,496 2006 Taxable Lease Revenue Bonds, Series AV 4,366,777 The City has pledged certain tax revenue to the repayment of its Water and Sewer Capital Lease Obligations 586,295 Enterprise Fund bonds through final maturity on May 1, 2047, or earlier. These bonds Total $ 36,939,006 were issued to refinance Series Q, Series AA/AC and finance certain public improvements of the City. All net available revenues are irrevocably pledged by the City

B-56 to the repayment of the bond’s debt services. In 2015, the Water and Sewer Enterprise Business-Type Activities: Funds have net available revenues of $9,156,656 and total debt service paid was $7,974,164. The bonds required 87% of net revenue. Annual principal and interest Outstanding Principal payments on the bonds are expected to require roughly 92% of future net revenue. The on Capital Related total principal and interest remaining to be paid at June 30, 2015, on the Bonds is as Debt follows: Water 2007 Revenue Bonds, Series AY $ 84,939,283 Debt Issue Remaining Balance 2007 Taxable Revenue Refunding Bonds, Series AZ 4,458,334 Subtotal 89,397,617 2002 Series AF Bonds $ 22,840,841 Sewer 2007 Series AY Bonds 194,672,650 2002 Refunding Revenue Bonds. Series AF 10,001,177 2007 Series AZ Bonds 8,190,512 2007 Revenue Bonds, Series BA 11,962,511 2007 Series BA Bonds 29,373,339 Subtotal 21,963,688 Total $ 255,077,342 Refuse Capital Lease Obligation 3,004,393 Total $ 114,365,698 2014-2015 Revenue Revenue Net available revenues; excluding debt service $ 9,156,656

90 91 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 10: Non-City Obligations Note 11: Defined Benefit Pension Plan Obligations (Continued)

The following bond issues are not reflected as City long-term debt because these debts are Miscellaneous Plan solely payable from and secured by specific revenue sources described in the official Tier 1 * Tier 2* PEPRA statements of the respective issues. Neither the faith and credit nor the taxing power of the On or after Prior to August 14, 2011 but On or after City, the Successor Agency, the State of California or any political subdivision thereof, is Hire date pledged for payment of these bonds. Accordingly, since this debt does not constitute an August 14, 2011 prior to January 1, January 1, 2013 obligation of the City, it is not reflected as long-term debt in the accompanying basic financial 2013 statements. The City is acting only as an agent. Benefit formula 2.0% @ 55 2.0% @ 60 2.0% @ 62 Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Mortgage Revenue Bonds Retirement age minimum 50 yrs minimum 50 yrs minimum 52 yrs 1.426% - 2.418%, 1.092% - 2.418%, 1.000% - 2.500%, Single family and multifamily housing revenue bonds were issued to provide construction Monthly benefits, as a % of 50 yrs - 63+ yrs, 50 yrs - 63+ yrs, 52 yrs - 67+ yrs, and permanent financing to developers of multifamily residential rental projects located in eligible compensation the City to be partially occupied by persons of low and moderate income. These bonds respectively respectively respectively are secured by first trust deeds and private mortgage insurance. The bonds, together Required employee 7.000% 7.000% 6.250% with interest thereon, are payable solely from bond proceeds, revenues and other contribution rates amounts derived solely from home mortgage and developer loans secured by first deeds Required employer 17.053% 17.053% 17.053% of trust, irrevocable letters of credit and irrevocable surety bonds. The mortgage revenue contribution rates bonds outstanding at June 30, 2015, is as follows: * Plan is closed to new entrants

Balance Safety Plan Mortage Revenue Bonds June 30, 2015 Tier 1 * Tier 2 * PEPRA On or after B-57 Single Family, Series 1983 A (Southwest Project Bonds) $ 700,000 Prior to November 21, 2010 On or after Single Family Mortgage Refunding Bonds 90A 29,305,000 Hire date November 21, 2010 but prior to January January 1, 2013 Single Family Mortgage Refunding Bonds 90B 12,745,000 1, 2013 $ 42,750,000 Benefit formula 3.0% @ 50 3.0% @ 55 2.7% @ 57 Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Note 11: Defined Benefit Pension Plan Obligations Retirement age minimum 50 yrs minimum 50 yrs minimum 50 yrs 2.400% - 3.000%, 2.000% - 2.700%, General Information about the Pension Plan Monthly benefits, as a % of 3.000%, 50+ yrs 50 yrs - 55+ yrs, 50 yrs - 57+ yrs, eligible compensation respectively respectively Plan Description Required employee 9.000% 9.000% 12.750% The City contributes to the California Public Employees Retirement System (PERS), contribution rates Required employer an agent multiple-employer public employee defined benefit pension plan. PERS 40.523% 40.523% 40.523% provides retirement and disability benefits, annual cost-of-living adjustments, and contribution rates death benefits to plan members and beneficiaries. PERS acts as a common * Plan is closed to new entrants investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State Employees Covered statute and City ordinance. Copies of PERS’ annual financial report may be obtained from its Executive Office located at 400 P Street, Sacramento, California 95814. At June 30, 2014, the following employees were covered by the benefit terms of the plan: Benefits Provided Number of members CalPERS provides service retirement and disability benefits, annual cost of living Description Miscellaneous Safety Plan adjustments and death benefits to plan members, who must be public employees and Active members 351 153 beneficiaries. Benefits are based on years of credited service, equal to one year of Transferred members 319 22 full time employment. Members with five years of total service are eligible to retire at Terminated members 195 15 age 50 with statutorily reduced benefits. All members are eligible for non-duty Retired members and beneficiaries 805 377 disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement Total 1,670 567 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

92 93 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 11: Defined Benefit Pension Plan Obligations (Continued) Note 11: Defined Benefit Pension Plan Obligations (Continued)

Contribution Description All other actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from 1997 to 2011, Section 20814(c) of the California Public Employees’ Retirement Law (PERL) including updates to salary increase, mortality and retirement rates. The Experience requires that the employer contribution rates for all public employers be determined Study report can be obtained at CalPERS’ website under Forms and Publications. on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through Discount Rate CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees The discount rate used to measure the total pension liability was 7.50 percent. To during the year, with an additional amount to finance any unfunded accrued liability. determine whether the municipal bond rate should be used in the calculation of a The employer is required to contribute the difference between the actuarially discount rate for each plan, CalPERS stress tested plans that would most likely result determined rate and the contribution rate of employees. in a discount rate that would be different from the actuarially assumed discount rate.

For the year ended June 30, 2015, the employer contributions recognized as a Based on the testing, none of the tested plans run out of assets. Therefore, the reduction to the net pension liability for all the Miscellaneous Plan and Safety Plan current 7.50 percent discount rate is adequate and the use of the municipal bond rate were $2,691,762 and $6,210,220 respectively. calculation is not necessary. The long-term expected discount rate of 7.50 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results Net Pension Liability are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB 68 section. The City’s net pension liability is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as According to Paragraph 30 of Statement 68, the long-term discount rate should be of June 30, 2014, using an annual actuarial valuation as of June 30, 2013 rolled forward determined without reduction for pension plan administrative expense. The to June 30, 2014 using standard update procedures. A summary of principal assumptions 7.50 percent investment return assumption used in this accounting valuation is net of B-58 and methods used to determine the net pension liability is shown below. administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been Actuarial Methods and Assumptions Used to Determine Total Pension Liability 7.65 percent. Using this lower discount rate has resulted in a slightly higher total pension liability and net pension liability. CalPERS determined this difference was For the measurement period ended June 30, 2014 (the measurement date), the total deemed immaterial to the Agent Multiple-Employer Defined Benefit Pension Plan. pension liability was determined by rolling forward the June 30, 2013 total pension More information can be found on the CalPERS website. liability. The June 30, 2013 and the June 30, 2014 total pension liabilities were based on the following actuarial methods and assumptions: CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management review cycle that is scheduled to be completed in Miscellaneous Plan Safety Plan February 2018. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a Actuarial Cost Method Entry Age Normal in accordance with the Entry Age Normal in accordance with the requirements requirements of GASB Statement No. 68 of GASB Statement No. 68 discount rate net of administrative expenses for GASB 67 and 68 calculations Actuarial Assumptions through at least the 2017-18 fiscal year. CalPERS will continue to check the Discount Rate 7.50% 7.50% materiality of the difference in calculation until such time as they have changed their Inflation 2.75% 2.75% methodology. Salary Increases Varies by Entry Age and Service Varies by Entry Age and Service Investment Rate of 7.50% Net of Pension Plan Investment and 7.50% Net of Pension Plan Investment and The long-term expected rate of return on pension plan investments was determined Return Administrative Expenses; includes Inflation Administrative Expenses; includes Inflation using a building-block method in which best-estimate ranges of expected future real Mortality Rate Table (1) Derived using CalPERS’ Membership Data Derived using CalPERS’ Membership Data for all rates of return (expected returns, net of pension plan investment expense and for all Funds Funds inflation) are developed for each major asset class. Post Retirement Benefit Contract COLA up to 2.75% until Purchasing Contract COLA up to 2.75% until Purchasing Power Increase Power Protection Allowance Floor on Protection Allowance Floor on Purchasing Power In determining the long-term expected rate of return, CalPERS took into account both Purchasing Power applies, 2.75% thereafter applies, 2.75% thereafter short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and (1) The mortality table used was developed based on CalPERS’ specific data. The table includes 20 years of mortality improvements using employers will make their required contributions on time and as scheduled in all Society of Actuaries Scale BB. For more details on this table, please refer to the 2014 experience study report. future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected

nominal returns for both short-term and long-term, the present value of benefits was

94 95 CITY OF POMONA CITY OF POMONA

calculated for each fund. The expected rate of return was set by calculating the single Increase (Decrease) equivalent expected return that arrived at the same present value of benefits for cash Total Pension Plan Fiduciary Net Pension flows as the one calculated using both short-term and long-term returns. The Liability Net Position Liability/(Assets) expected rate of return was then set equivalent to the single equivalent rate Safety Plan (a) (b) (c)=(a)-(b) calculated above and rounded down to the nearest one quarter of one percent. Balance at: 6/30/2013 (Valuation Date) (1) $ 313,905,458 $ 219,628,065 $ 94,277,393 Changes Recognized for the Measurement Period: The table below reflects long-term expected real rate of return by asset class. The Service Cost 4,880,486 - 4,880,486 rate of return was calculated using the capital market assumptions applied to Interest on the Total Pension Liability 23,069,282 - 23,069,282 determine the discount rate and asset allocation. These geometric rates of return are Changes of Benefit Terms - - - net of administrative expenses. Difference between Expected and Actual Experience - - - New Startegic Real Return Real Return Changes of Assumptions - - - Assets Class Allocation Years 1 - 10 (1) Years 11+ (2) Contribution from the Employer - 4,480,201 (4,480,201) Global Equity 47.00% 5.25% 5.71% Contributions from Employees - 1,402,077 (1,402,077) Global Fixed Income 19.00 0.99 2.43 Net Investment Income (2) - 37,455,889 (37,455,889) Inflation Sensitive 6.00 0.45 3.36 Benefit Payments including Refunds of Employee Private Eqauity 12.00 6.83 6.95 Contributions (17,510,572) (17,510,572) - Real Estate 11.00 4.50 5.13 Net Changes During 2013-14 10,439,196 25,827,595 (15,388,399) Infrastructure and Forestland 3.00 4.50 5.09 Balance at: 6/30/2014 (Measurement Date) (1) $ 324,344,654 $ 245,455,660 $ 78,888,994 Liquidity 2.00 (0.55) (1.05)

(1) An expected inflation of 2.5% used for this period (1) The fiduciary net position includes receivables for employee service buybacks, (2) An expected inflation of 3.0% used for this period B-59 deficiency reserves, fiduciary self-insurance and OPEB expense. This may differ from the plan assets reported in the funding actuarial valuation report. Changes in the Net Pension Liability (2) Net of administrative expenses.

The following table shows the changes in net pension liability recognized over the measurement period. Sensitivity of the Net Pension Liability to Changes in the Discount Rate

Increase (Decrease) The following presents the net pension liability of the Plan as of the measurement Total Pension Plan Fiduciary Net Pension date, calculated using the discount rate of 7.50 percent, as well as what the net Liability Net Position Liability/(Assets) pension liability would be if it were calculated using a discount rate that is Miscellaneous Plan (a) (b) (c)=(a)-(b) 1 percentage-point lower (6.50 percent) or 1 percentage-point higher (8.50 percent) Balance at: 6/30/2013 (Valuation Date) (1) $ 245,736,775 $ 184,143,961 $ 61,592,814 than the current rate: Changes Recognized for the Measurement Period: Service Cost 3,310,829 - 3,310,829 Discount Rate - 1% Current Discount Rate Discount Rate +1% Interest on the Total Pension Liability 18,086,982 - 18,086,982 (6.50%) (7.5%) (8.5%) Changes of Benefit Terms - - - Miscellaneous Plan's $ 79,162,664 $ 46,857,291 $ 19,798,294 Net Pension Liability/(Assets) Difference between Expected and Actual Experience - - - Safety Plan's Changes of Assumptions - - - Net Pension Liability/(Assets) Contribution from the Employer - 3,048,502 (3,048,502) 118,234,605 78,888,994 44,111,975 Contributions from Employees - 1,640,223 (1,640,223) Total Plans $ 197,397,269 $ 125,746,285 $ 63,910,269 Net Investment Income (2) - 31,444,609 (31,444,609) Benefit Payments including Refunds of Employee Contributions (12,464,852) (12,464,852) - Pension Plan Fiduciary Net Position Net Changes During 2013-14 8,932,959 23,668,482 (14,735,523) Balance at: 6/30/2014 (Measurement Date) (1) $ 254,669,734 $ 207,812,443 $ 46,857,291 The plan fiduciary net position disclosed in the GASB 68 accounting valuation report may differ from the plan assets reported in the funding actuarial valuation report due to several reasons. First, for the accounting valuations, CalPERS must keep items such as deficiency reserves, fiduciary self-insurance and OPEB expense included as assets. These amounts are excluded for rate setting purposes in the funding actuarial valuation. In addition, differences may result from early Comprehensive Annual Financial Report closing and final reconciled reserves.

96 97 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 11: Defined Benefit Pension Plan Obligations (Continued) Note 12: Other Post Employment Benefits

Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Collateral Benefits Plan Pensions Plan Description As of the start of the measurement period (July 1, 2013), the net pension liability was $155,870,207. For the measurement period ending June 30, 2014 (the measurement The Collateral Benefits Plan provides a supplemental retirement benefit to City date), the City incurred a pension expense/(income) of $8,901,982 for both the employees upon resigning from the City and concurrently retiring with CalPERS. The Miscellaneous Plan and Safety Plan. supplemental benefit is a monthly benefit of $100 from the first of the month following retirement from the City until the age of 65 for Tier 1 and Tier 2 employees. Tier 1 Note that no adjustments have been made for contributions subsequent to the employees include Mid-Management and Confidential, Police Officers’ Association, measurement date. Adequate treatment of any contributions made after the City Employees’ Association, and Management Group B employees, and are measurement date is the responsibility of the employer. required to have at least 20 years of City service upon retiring after July 1, 1987. Tier 2 employees include Executive Management Group A employees and are required to As of June 30, 2015, the City has deferred outflows and deferred inflows of resources have at least one year of City service upon retiring after July 1, 1991. Employees related to pensions as follows: hired after July 1, 2011, are not eligible for this plan.

Deferred Outflows of Deferred Inflows of Eligibility Resources Resources Current year contributions that occurred Bargaining Group City Service after the measurement date of Executive Management Group B, Mid-Management/Confidential June 30, 2014 $ 8,974,566 $ - Employees' Association, City Employees' Association, Net Difference between Projected and Police Officers' Association 20 Years Executive Management Group A 1 Year B-60 Actual Earnings on Pension Plan Investments - (31,497,200) Police Management Not Eligible Total $ 8,974,566 $ (31,497,200)

There are 88 participants receiving collateral benefits at June 30, 2015. $8,974,566 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension Funding Policy liability in the year ended June 30, 2016. Other amounts reported as deferred outflows or deferred inflows of resources related to pensions will be recognized as pension expense The City’s funding policy is to contribute the annual required contribution. The annual as follows: required contribution equals the sum of:

Measurement Deferred ! normal cost, and Period Ended Outflows/(Inflows) ! amortization of the unfunded actuarial accrued liability. June 30: of Resources 2015 $ (7,874,300) Government Accounting Standards Board Statement No. 27 (Statement 27) requires 2016 (7,874,300) that the City determine the plan’s annual pension cost based on the most recent 2017 (7,874,300) actuarial valuation. The annual pension cost equals the plan’s annual required 2018 (7,874,300) contribution, adjusted for historical differences between the annual required contribution and amounts contributed. The actuary has determined the City’s annual required contribution equal to the sum of (a) normal cost, and (b) amortization of the unfunded actuarial accrued liability.

Annual Pension Cost

For the year ending June 30, 2015, the City’s annual pension cost for the Collateral Benefits Plan of $110,032 was equal to the actuarial required contribution.

98 99 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 12: Other Post Employment Benefits (Continued) Note 12: Other Post Employment Benefits (Continued)

The summary of principal assumptions and methods used to determine the annual Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan required contribution is shown below: Plan Description Valuation Date July 1, 2012 Actuarial Cost Method Entry Age Normal Cost Method Employees of the City who retire through CalPERS, their spouses, and eligible dependents, may receive health plan coverage through the Public Employees’ Amortization Method Level Dollar Medical and Hospital Care Program (PEMHCA) Plan (Plan). The Plan is a Average Remaining Period Closed-12.5 Years as of July 1, 2013 single employer defined benefit plan which provides the retirees a monthly medical Asset Valuation Method Market Value on Date of Valuation contribution that is not to exceed the cost of the plan selected, with the maximum Actuarial Assumptions contribution limited for individual retirees based on bargaining groups as listed below: Investment Rate of Return 7.00% Bargaining Group Benefit Inflation 3.00% Pomona City Council Members $ 700 Salary Increases n/a Pomona Executive Management Group 700 Cost of Living Adjustment None Pomona Mid-Management/Confidential Employees' Association 700 Pomona City Employees' Association 700 The following table provides 3 years of historical information of the Annual Pension Pomona Police Managers' Association 700 Cost for the Collateral Benefits Plan: Pomona Police Officers' Association 700 Annual Net Pension Firefighters (Pre-Merger with Los Angeles County Fire District) 465 Pension Percentage of Obligation

B-61 Year Ending Cost(APC) APC Contributed (Asset) Police Management retirees with at least 22 years of service as a Police Officer receive up to 90% contribution towards the most expensive 2-party CalPERS plan 6/30/2013$ 92,391 100% $ - premium. This benefit terminates once the retiree is eligible for Medicare (age 65). 6/30/2014 110,032 100% - This provision has been eliminated for employees hired or promoted to the unit after 6/30/2015 110,032 100% - July 1, 2011.

Funded Status and Funding Progress Eligibility

Actuarial valuations of an ongoing plan involve estimates of the value of reported There are 489 employees eligible to receive or are receiving post-employment amounts and assumptions about the probability of occurrence of events far into the benefits at June 30, 2015. future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan Funding Policy and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates The required contribution of the City is based on a pay-as-you-go financing are made about the future. The table below shows an analysis of the actuarial value requirement. For fiscal year 2015, the City contributed $3,345,170 to the retiree of assets as a percentage of the actuarial accrued liability and the unfunded actuarial health plan. accrued liability as a percentage of the annual covered payroll. Annual OPEB Cost and Net OPEB Obligation Collateral Benfits Plan Unfunded The City’s annual Other Postemployment Benefit (OPEB) cost (expense) is Actuarial Actuarial Actuarial Actuarial UAAL as a % calculated based on the Annual Required Contribution of the employer (ARC), an Valuation Value of Accrued Accrued Funded Covered of Covered amount actuarially determined in accordance with the parameters of GASB Date Assets Liability Liability Ratio Payroll Payroll Statement 45. The ARC represents a level of funding that, if paid on an ongoing 1/1/2006 $ - $ 1,172,743 $ (1,172,743) 0.0% n/a n/a basis, is projected to cover normal cost each year and amortize any unfunded 7/1/2009 179,275 954,779 (775,504) 18.8% n/a n/a actuarial liabilities (or funding excesses) over a period not to exceed 30 years. 7/1/2012 220,801 976,744 (755,943) 22.6% n/a n/a Actuarial valuation is performed every three years. As of the date of this report, this is the latest information available.

100 101 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 12: Other Post Employment Benefits (Continued) Note 12: Other Post Employment Benefits (Continued)

The following table shows the components of the City’s annual OPEB cost for the The table below shows an analysis of the actuarial value of assets as a percentage year, the amount actually contributed to the plan, and changes in the City’s net of the actuarial accrued liability and the unfunded actuarial accrued liability as a OPEB Obligation to the Plan: percentage of the annual covered payroll.

Total Schedule of Funding Progress Public Employees' Medical and Hospital Care Program Plan Annual required contribution $ 5,508,998 Actuarial Entry Age UAAL as Interest on net OPEB obligation 749,061 Actuarial Value of Actuarial Unfunded Percentage Adjustment to annual required contribution (778,913) Valuation Assets Accrued Actuarial Funded Annual Covered of Covered Date (AVA) Liability Accrued Liability Ratio Payroll Payroll Annual OPEB cost (expense) 5,479,146 1/1/2010 $ - $ 73,291,000 $ (73,291,000) 0.0%$ 38,805,000 188.9% Contributions made 3,345,170 1/1/2012 - 77,168,916 (77,168,916) 0.0% 36,101,000 213.8% Increase in net OPEB obligation 2,133,976 1/1/2014 - 76,618,515 (76,618,515) 0.0% 40,318,000 190.0% Net OPEB obligation - beginning of year 17,668,252 Actuarial valuation is performed every two years. Net OPEB obligation - end of year $ 19,802,228 Actuarial Methods and Assumptions

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Projections of benefits for financial reporting purposes are based on the substantive plan, and the net OPEB obligation for 2015 is as follows: 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 B-62 Fiscal Year Annual OPEB Annual % of Annual OPEB Net OPEB actuarial methods and assumptions used include techniques that are designed to Ended Cost Contribution Cost Contributed Obligation reduce the effects of short-term volatility in actuarial accrued liabilities and the 6/30/2013$ 5,743,900 $ 3,229,187 56.2% $ 15,523,781 actuarial value of assets, consistent with the long-term perspective of the 6/30/2014 5,252,076 3,107,605 59.2% 17,668,252 calculations. 6/30/2015 5,479,146 3,345,170 61.1% 19,802,228 In the January 1, 2014, actuarial valuation, the entry age normal (EAN) cost method was used. The EAN normal cost equals the level annual amount of contribution from Funded Status and Funding Progress the employee’s date of hire (entry date) to their retirement date that is sufficient to fund the projected benefit. The actuarial assumptions include a 4.25% investment As of January 1, 2014, the most recent actuarial valuation date, the plan was rate of return which is based on the expected return on funds invested by CalPERS, zero percent funded. The Actuarial Accrued Liability (AAL) for benefits was and an annual healthcare cost trend rate of 7.5% and 7.0% for PPO and HMO $76,618,515 and the actuarial value of assets was $0 resulting in an Unfunded respectively and reduced to an ultimate rate of 5.0% thereafter. The actuarial Actuarial Accrued Liability (UAAL) of $76,618,515. The covered payroll (annual assumption for inflation was 2.75%. As of the valuation date, there are no eligible payroll of active employees covered by the plan) was $40,318,000 and the ratio of plan assets. The UAAL is being amortized over an initial 30 years using the level UAAL to the covered payroll was 190%. percentage-of-pay method on a closed basis. The remaining amortization period at June 30, 2015, was 23 years. As of the actuarial valuation date of January 1, 2014, Actuarial valuations of an ongoing plan involve estimates of the value of reported the City had 502 active eligible participants and 657 eligible retired participants and amounts and assumptions about the probability of occurrence of events far into the beneficiaries. future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan Note 13: Joint Powers Agreements and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates Alameda Corridor-East Construction Authority are made about the future. The City approved and adopted a Joint Exercise of Powers Agreement in November 2012. The Alameda Corridor East Construction Authority (ACE) is a single purpose construction authority created by the San Gabriel Council of Governments in 1998 to mitigate the impacts of significant increases in rail traffic over 70 miles of mainline railroad in the San Gabriel Valley. The ACE Project consists of multiple construction projects to improve safety at various rail crossings as well as at various grade separations in the San Gabriel Valley.

102 103 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 13: Joint Powers Agreements (Continued) Note 13: Joint Powers Agreements (Continued)

CSAC – Excess Insurance Authority Gold Line Phase II Construction Authority

The City became a member of CSAC Excess Insurance Authority (Authority) in The City participates in the Gold Line Phase II Construction Authority (GLCA) joint July 2008. The Authority is a risk sharing pool of California public agencies dedicated to venture, which became effective September 3, 2003. The GLCA oversees the planning, controlling losses and providing effective risk management solutions. Membership is funding, designing and construction contracts for the completion of the currently comprised of various member counties and various public entity organizations. Los Angeles-Pasadena Metro Blue Line light rail project. The GLCA’s governing Board is The governing board consists of one representative from each member county and seven comprised of an appointed representative from each of the affected cities and agencies, members elected by the public entity membership. including the cities of Azusa, Claremont, Duarte, Glendora, Arcadia, La Verne, Ontario, Montclair, Irwindale, Pomona, San Dimas, Monrovia, Pasadena, and South Pasadena, Foothill Air Support Team and the San Bernardino Associated Governments (SANBAG). Los Angeles County Metropolitan Transportation Agency (LACMTA) will have the responsibility to operate and The City joined the Foothill Air Support Team (FAST) in January 2011. FAST was maintain the rail after its completion. Member agencies will be paid for attending developed in 1999 creating a joint helicopter patrol operation that could enhance member meetings, not to exceed $1,800 per year, per member agency, plus direct expenses. agencies ability to deter criminal activity and apprehend offenders. The governing board Member agencies are not allowed to withdraw from the GLCA and each member agency consists of one representative from each of the seven member agencies. is required to pay $31,445 in initial dues (first payments were due October 1, 2003) and each member will be held liable for its share of operating costs. Foothill Transit The City paid the joint venture $0 during the year ended June 30, 2015. Assets are The City is a member of the Foothill Transit Joint Powers Agreement. The JPA is divided based on the proportionate equity share at the time the joint venture dissolves, comprised of 20 cities and the County of Los Angeles. The purpose of the authority is to which is currently not significant to the City. provide a more efficient and cost effective local transportation service for the area. Each member city has one representative and three members are appointed by the Board of Interagency Communications Interoperability System B-63 Supervisors. The City participates in the Interagency Communications Interoperability System (ICIS) Below are the most currently available condensed audited financial statements of the joint powers authority which became effective September 2003. The intent of ICIS is to JPA as of June 30, 2015. Separate financial statements of Foothill Transit are available provide public safety agencies with a formalized governance structure through which the from its offices located in West Covina, CA. participants may share resources to construct and manage a system for wide-area communications interoperability. The governing board is comprised of one member from Total each of the seven member agencies. The City paid $43,000 in annual dues for the fiscal year ending June 30, 2015. Assets $ 317,825,782 Liabilities 86,538,577 Los Angeles County Disaster Management Area D Net Position $ 231,287,205 The City has participated in the Disaster Management Area D joint powers agreement (JPA) since 1958. The JPA is intended to promote the coordination of disaster Revenues $ 20,070,304 management, training and preparedness of the Area D member cities under the direction Expenses 96,020,736 of the Disaster Management Area Board. The governing board includes Operating income (75,950,432) one representative from each of the 23 member cities. Annual dues at the rate of Nonoperating revenue (expenses) 56,182,236 $0.05 per capita are paid and totaled $7,498 for the fiscal year ending June 30, 2015. Net income (19,768,196) Capital contributions 43,067,156 Los Angeles Interagency Metropolitan Police Apprehensive Crime Task Force Net Position - July 1, 2014 207,988,245 The City joined the Los Angeles Interagency Metropolitan Police Apprehensive Crime Net Position - June 30, 2015 $ 231,287,205 Task Force (LA Impact) in March 2011. It is a compilation of numerous federal, state, and local law enforcement agencies in Los Angeles County, whose primary purpose is to investigate major crimes, with an emphasis on dismantling mid-to-major level drug trafficking organizations. Since its inception, LA Impact has grown to 80 Officers from 35 different Los Angeles County law enforcement agencies. The City is solely responsible for the salary and benefits of one (1) Police Sergeant position, currently assigned to this program, which is fully funded within the Police Department’s General Fund budget.

104 105 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 13: Joint Powers Agreements (Continued) Note 13: Joint Powers Agreements (Continued)

Pomona Valley Transportation Authority water use and $267,941 for capacity charges and other charges. Assets are divided based on the proportionate equity share at the time the joint venture dissolves. The City’s The City is a member of the Pomona Valley Transportation Authority (PVTA). The PVTA share in the equity of the Commission at June 30, 2015, was $672,618. is comprised of four cities and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the PVTA is to study, implement and As of June 30, 2015, the three participants had the following approximate ownership provide for public transportation that will best serve transit-dependent persons, including equity interest: handicapped and senior adults residing in the Pomona Valley. Agreement Each member city has two representatives on the Board of Directors. Officers of the Member Percentages Balance PVTA are elected annually by the Board of Directors. City of Pomona 28% $ 672,618 Walnut Valley Water District 43% 1,032,949 The City does not have an equity interest in the PVTA. However, the City does have an Rowland Water District 28% 672,618 ongoing financial interest. Because the City also has an ongoing financial responsibility Unallocated 1% 24,022 for continued funding of the PVTA, the City is able to influence operations. As a result, the PVTA uses its resources on behalf of the City. Total 100% $ 2,402,207

Following are the most currently available condensed audited financial statements of the The Commission’s basic financial statements for the fiscal year ended June 30, 2015, PVTA as of June 30, 2015. Separate financial statements of the PVTA are available from reflect the implementation of GASB 34 and include the following: its offices located in La Verne, California. Total Total Assets $ 5,239,818 Assets $ 3,168,365 Total Liabilities 2,837,610 B-64 Liabilities $ 1,689,898 Net Position $ 2,402,208 Contributed capital 411,448 Retained earnings 1,067,019 The Commission does not recognize income or loss. Net operating expenditures in Total liabilities and fund equity $ 3,168,365 excess of users’ assessments are treated as accounts receivable on the Commission’s books and charged to each user’s account in the following year. Conversely, user’s Operating revenues $ 283,727 assessments in excess of net operating expenditures are treated as a liability and Operating expenses 4,428,926 credited against each user’s account, also in the following year. Under this basis, Operating (income) (4,145,199) operating expenses for the Commission totaled $17,134,901 compared to total operating Non-operating revenue 4,092,296 revenues of $17,122,934 in fiscal year 2015. Complete financial statements can be obtained from the Pomona-Walnut-Rowland Joint Water Line Commission, Net income (52,903) P.O. Box 8460, Rowland Heights, CA 91748. Retained earnings - July 1, 2014 1,119,922 Retained earnings - June 30, 2015 $ 1,067,019 San Gabriel Valley Council of Governments

The City is a member of the San Gabriel Valley Council of Governments (Council) which Pomona-Walnut-Rowland (PWR) Joint Water Line Commission became effective March 1994. The Council provides member agencies a vehicle to voluntarily engage in regional and cooperative planning and coordination of government The City participates in the Pomona-Walnut-Rowland (PWR) Joint Water Line services and responsibilities to assist member agencies in the conduct of their affairs. Commission (Commission) joint venture, which provides for the acquisition, construction, The goal and intent of the Council is one of voluntary cooperation among members for maintenance, repair and operation of a water transmission pipeline for the benefit of the collective benefit of cities and unincorporated areas in the San Gabriel Valley. The member agencies. The Pomona-Walnut-Rowland Joint Water Line Commission’s governing board is comprised of one member from each of 31 member cities and the governing board is comprised of an appointed representative from each of three member San Gabriel Valley Water Districts, except the County of Los Angeles. The County has agencies – the City, Walnut Valley Water District, and Rowland Water District. three members who represent the unincorporated communities of Supervisor Districts 1, 4, and 5. All member agencies pay dues. The City paid $30,000 in annual The cost of providing water to the member agencies is financed though user charges. dues for the fiscal year ending June 30, 2015. The Commission purchases water for resale to the member agencies at a price sufficient to provide reserve funds for emergencies. In addition, the member agencies are billed for the costs of maintenance and operation of the pipeline. The City paid the joint venture $3,757,541 during the year ended June 30, 2015, which is comprised of $3,489,570 for

106 107 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 13: Joint Powers Agreements (Continued) Note 14: Risk Management (Continued)

Tri-City Mental Health Center The estimated claims payable reported at June 30, 2015, is based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information The City is a member of the Tri City Mental Health Center (Center). The Center is a prior to the issuance of the financial statements indicates that it is probable that a liability has jointly governed organization comprised of three cities and is organized under a Joint been incurred at the date of the financial statements and the amount of the loss can be Powers Agreement pursuant to the California Government Code. The purpose of the reasonably estimated. Center is to develop mental health services and facilities to serve persons residing in the three member cities. The City’s contribution to the Center was $43,675 for the year The following is a summary of changes in claims liabilities over the past three fiscal years: ended June 30, 2015. Claims Payable The Board of Directors is composed of seven members, two councilmembers from Expenses and Pomona, one councilmember each from the cities of Claremont and La Verne, and one Beginning Changes in Claims non-elected member from each of the three cities. Balance Estimates Payments Ending Balance

Below are the most currently available condensed audited financial statements of the 2011-2012$ 19,657,917 $ 3,775,783 $ 4,402,134 $ 19,031,566 Center as of June 30, 2015. Separate financial statements of the Center are available 2013-2014 19,031,566 2,024,844 4,876,966 16,179,444 from its offices located in Pomona, California. 2014-2015 16,179,444 2,029,341 6,107,237 12,101,548

Total Note 15: Commitments and Contingencies Assets $ 34,430,939 Deferred outflows of resources 976,390 Agency Participation Agreement Liabilities 16,126,863 On April 5, 2004, the City entered into a reclaimed water agreement with the Los Angeles

B-65 Deferred inflows of resources 9,719,890 County Sanitation District (LACSD). The agreement is for 20 years, beginning on Net Position $ 9,560,576 July 1, 2003, and requires the City to sell its interest in the Northside Recycled Water Line, a 20” non-reinforced concrete gravity reclaimed water pipeline to the LACSD for Revenues $ 5,988,257 $441,730. Additionally, the contract provides the City with up to 2/3 of the supply of water Expenses 15,491,200 from the plant which can then be sold by the City to other customers. The City receives Operating income (9,502,943) discounted rates on water during the first 12 years of the agreement. Non-operating revenue (expenses) 13,442,888 Net income 3,939,945 Contractual Commitments Special items 683,816 The following schedule summarizes the major capital project contractual commitments of Net Position - July 1, 2014 (as restated) 4,936,815 the City as of June 30, 2015: Net Position - June 30, 2015 $ 9,560,576 Major Commitments and Contracts for Professional Services:

Note 14: Risk Management TBU Inc. $ 1,367,554 Vasilj, Inc. 966,075 The Self-Insurance Internal Service Fund is part of the City’s self-insurance program for General Pump Co. 595,557 general liability, workers compensation, and unemployment insurance. The City is a member E2 Managetech, Inc. 468,223 of the California State Association of Counties Excess Insurance Authority (CSAC-EIA). Gentry Bros 373,220 Through CSAC-EIA, the City has a program limit of $25 million dollars with a self-insured A&B Electric 350,198 retention of $1 million for its excess liability program and its worker’s compensation program. Tetra Tech 256,748 Additionally, the City purchases catastrophic excess liability coverage that provides an Civil Source Consulting 208,330 additional $25 million in coverage. RBF Consulting 175,692 VA Consulting 120,494 CSAC-EIA is a governmental joint powers authority created by certain California counties and All other commitments 167,873 cities to provide a pooled approach to the members’ liability and excess workers’ Total $ 5,049,964 compensation coverage as allowed under the California Government Code. The authority manages various types of pooled coverage programs for participating members.

As of June 30, 2015, estimated claims payable amounted to $12,101,548.

108 109 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 15: Commitments and Contingencies (Continued) Note 16: Net Position and Fund Balance (Continued)

Lawsuits Deficit Fund Balance

The City is a defendant in certain other legal actions arising in the normal course of At June 30, 2015, the following funds had fund balance deficits: operations. As of June 30, 2015, in the opinion of City management, there were no additional outstanding matters that would have a significant effect on the financial Fund Fund Type Deficit position of the funds of the City. General Debt Service Major Governmental Fund $ (40,083,190) Self-Insurance Funds Internal Service Fund (5,177,085) Note 16: Net Position and Fund Balance Equipment Maintenance Internal Service Fund (934,018) Information Technology Internal Service Fund (362,636) Government-Wide Financial Statements The General Debt Service Fund deficit is the result of the issuance of bonds and the Net Investment in Capital Assets Self-Insurance Fund deficit is due to unfunded outstanding claim liabilities. The Equipment Maintenance Fund and the Information Technology Fund deficits are due to The following is a calculation of net the investment in capital assets at June 30, 2015: the implementation of GASB 68. The City will eliminate these deficits with future revenue.

Primary Government Net Position and Fund Balances Restatement Governmental Business-Type Activities Activities Total Beginning net position and fund balances haves been restated as follows:

Capital assets, net of Governmental Activities accumulated depreciation $ 273,493,714 $ 156,451,321 $ 429,945,035 GASB 68 Implementation $ (154,818,523) Less: Outstanding principal on capital related debt (36,939,006) (114,365,698) (151,304,704) Business Type Activities B-66 GASB 68 Implementation $ (17,015,517) Net investment in capital assets$ 236,554,708 $ 42,085,623 $ 278,640,331 Governmental Funds Housing Authority Fund Unrestricted Net Position To reclassify unavailable revenue for prior year principal balance on notes/loans receivable. $ 8,037,978 The unrestricted net position for governmental activities has a deficit balance of Miscellaneous Grants Fund $223,563,692 at June 30, 2015. To reclassify unavailable revenue for prior year principal balance on notes/loans receivable. 16,437,022 Fund Financial Statements CDBG Fund Net Investment in Capital Assets To reclassify unavailable revenue for prior year principal balance on notes/loans receivable. 1,928,846 The following is a calculation of net investment in capital assets, for the Proprietary Total Governmental Funds$ 26,403,846 Funds at June 30, 2015: Enterprise Funds Water Fund Enterprise Funds GASB 68 Implementation $ (12,371,225) Canon Internal Service Water Sewer Refuse Water Total Funds Sewer Fund GASB 68 Implementation (1,899,274) Capital assets, net of Refuse Fund accumulated depreciation $ 123,958,986 $ 28,323,797 $ 4,142,494 $ 26,044 $ 156,451,321 $ 387,489 GASB 68 Implementation (2,745,018) Less: outstanding principal on capital related debt (89,397,617) (21,963,688) (3,004,393) - (114,365,698) - Total Enterprise Funds$ (17,015,517) Internal Service Fund $ 34,561,369 $ 6,360,109 $ 1,138,101 $ 26,044 $ 42,085,623 $ 387,489 Self-Insurance Fund GASB 68 Implementation $ (595,441) Equipment Maintenance Fund GASB 68 Implementation (1,954,076) Information Technology Fund GASB 68 Implementation (551,455) Total Internal Service Funds$ (3,100,972)

110 111 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

On June 28, 2011, Governor Jerry Brown signed into law two bills that amended California In accordance with the timeline set forth in the Bill (as modified by the California Supreme Community Redevelopment Law in order to address the state’s ongoing budget deficit. Court on December 29, 2011) all redevelopment agencies in the State of California were ABx1 26 (”the Bill”) dissolved all California redevelopment agencies (RDAs) effective dissolved and ceased to operate as a legal entity as of February 1, 2012. October 1, 2011. This legislation prevented RDAs from engaging in new activities and outlined a process for winding down the RDA’s financial affairs. It also set forth a process for Cash and Investments distributing funds from the former RDAs to other local taxing entities. A companion bill, ABx1 27, was also passed, which allowed individual RDAs to avoid dissolution if they agreed The following is a summary of cash and investments of the Successor Agency at to make substantial annual payments into a Special District Allocation Fund and Educational June 30, 2015: Revenue Augmentation Fund. Cash and investments $ 10,397,238 In response, the California Redevelopment Association, the League of California Cities and Restricted cash 52,764,660 other parties filed petitions with the California Supreme Court challenging the constitutionality of both ABx1 26 and ABx1 27. On December 29, 2011, the California Supreme Court upheld Total $ 63,161,898 the constitutionality of ABX1 26, while striking down ABx1 27 as unconstitutional. The ruling in California Redevelopment Association v. Matosantos also extended some of the deadlines The Successor Agency’s cash and investments are pooled with the City’s cash and stipulated in ABx1 26 due to delays caused by the litigation. As a result, approximately investment in order to generate optimum interest income. The share of the pooled cash 400 RDAs were dissolved on February 1, 2012, with the assets and liabilities transferred to account is separately accounted for, and investment income is allocated to all Successor Agencies and Successor Housing Agencies pursuant to ABx1 26. The California participating funds based on the relationship of average quarterly cash balances to the State Legislature made additional changes to the dissolution process when Governor total of the pooled cash and investments. Information regarding the authorized types of Jerry Brown signed AB 1484 into law on June 27, 2012. This legislation made a variety of deposits and investments, the type of risks (i.e. credit, interest rate, custodial, etc.) and substantive amendments to the original Dissolution Act. These actions impacted the reporting other disclosures associated with the City's pooled cash and investments is reported in entity of the City of Pomona that previously had reported a redevelopment agency within the

B-67 Note 2. report entity of the City as a blended component unit. Loans Receivable (Net) The Bill provide that upon dissolution of a redevelopment agency, either the city or another unit of local government would agree to serve as the “successor agency” to hold the assets At June 30, 2015, the Successor Agency’s net loans receivable consisted of the until the assets were distributed to other units of state and local government. On following: January 9, 2012, the City Council adopted resolution number 2012-8 electing to assume the responsibility of Successor Agency for the former Pomona Redevelopment Agency. Balance Balance July 1, 2014 Additions Deletions June 30, 2015 After enactment of the law, redevelopment agencies in the State of California could not enter Business Assistance Loans $ 1,402,000 $ 48,000 $ - $ 1,450,000 into new projects, obligations or commitments. Subject to the control of an established Guadalajara Market 210,600 - - 210,600 oversight board, remaining assets can only be used to pay enforceable obligations in Pomona Fox Theater 1,289,060 - - 1,289,060 existence at the date of dissolution. Pomona Fox Theater 1,150,000 - - 1,150,000 Garey Village Complex 5,000,000 - - 5,000,000 Subsequent to the dissolution, Successor Agencies are only allocated revenue up to the Total $ 9,051,660 $ 48,000 $ - $ 9,099,660 amount necessary to pay the estimated annual installment payments on enforceable obligation of the former redevelopment agency until all enforceable obligations have been paid in full and all assets have been liquidated. Land Held for Resale

The Bill directed the State Controller of the State of California to review the propriety of any At June 30, 2015, land held for resale in the amount of $19,648,669 is recorded at cost in transfers of assets between Redevelopment Agencies and other public bodies that occurred the Successor Agency Trust Fund. after January 1, 2011. If the public body that received such transfers was not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller was required to order the available assets to be transferred to the public body designated as the successor agency by the Bill. The State completed its required audit and provided the Successor Agency its report on November 26, 2014.

Management believes, in consultation with legal counsel, that the obligations of the former Redevelopment Agency due to the City are valid enforceable obligations payable by the Successor Agency trust under the requirements of the Bill. The City’s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City.

112 113 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

Capital Assets Pollution Remediation Obligations

The following is a summary of capital assets for the Successor Agency as of The dissolution law that eliminated all redevelopment agencies in the State requires that June 30, 2015: all assets of the former Redevelopment Agency be sold, following State approval of the Long Range Property Management Plan (LRPMP). On October 7, 2014, the Successor Balance Balance Agency received State approval for the sale of a property. The property was the location July 1, 2014 Additions Deletions June 30, 2015 of a former landfill and is subject to remedial action. As of June 30, 2015, the remediation cost is estimated at $1,700,000. Sale of the property is contingent upon the completion Non-depreciable assets: of the remediation. Land $ 125,423 $ - $ - $ 125,423 Total non-depreciable assets 125,423 - - 125,423 County Deferred Tax Loans

Depreciable assets: Buildings and building improvements 63,126 - - 63,126 At June 30, 2015, the County deferred tax loans consisted of the following: Inprovements other than buildings 148,995 - - 148,995 Machinery and equipment 429,179 - - 429,179 Balance Accrued Balance Furniture and fixtures 8,361 - - 8,361 July 1, 2014 Interest Additions Deletions June 30, 2015 Autos and trucks 19,513 - - 19,513 Southwest Pomona Project Area $ 38,411,344 $ 2,688,794 $ - $ - $ 41,100,138 Total depreciable assets, at cost 669,174 - - 669,174 South Garey/Freeway Corridor Less accumulated depreciation Project Area 6,567,727 483,331 336,998 - 7,388,056 Buildings and building improvements 12,626 1,263 - 13,889 Total $ 44,979,071 $ 3,172,125 $ 336,998 $ - $ 48,488,194 Inprovements other than buildings 119,197 5,960 - 125,157

B-68 Machinery and equipment 429,178 - - 429,178 Furniture and fixtures 8,360 - - 8,360 The former Redevelopment Agency entered into agreements with the County of Autos and trucks 19,513 - - 19,513 Los Angeles whereby a portion of the County’s share of tax increment revenues from the Total accumulated depreciation 588,874 7,223 - 596,097 Southwest Pomona Project Area and South Garey/Freeway Corridor Project Area are Total depreciable assets, net 80,300 (7,223) - 73,077 loaned annually to the Successor Agency. Interest on both loans accrue at 7% per year, Total capital assets $ 205,723 $ (7,223) $ - $ 198,500 compounded annually. The Successor Agency will commence repayment of the loans when excess funds become available.

Long-Term Debt ERAF Loan The following summary of debts of the Successor Agency as of June 30, 2015, follows: Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year Accreted/ Balance Accrued Balance Due Within ERAF loan $ 180,000 $ - $ 180,000 $ - $ - July 1, 2014 Interest Additions Deletions June 30, 2015 One Year

Pollution remediation In April 2005, the former Redevelopment Agency financed its portion of the state ERAF obligations $ - $ - $ 1,700,000 $ - $ 1,700,000 $ 1,700,000 payment through a bond offering with other former redevelopment agencies. The former County deferred tax loans 44,979,071 3,172,125 336,998 - 48,488,194 - Redevelopment Agency’s portion of the bonds was $1,455,000. Interest and principal are ERAF loan 180,000 - - 180,000 - - payable semi-annually on February 1 and August 1 at rates varying from 3.87% to 5.01% Notes payable 3,359,351 - - 28,985 3,330,366 138,163 per annum. However, the payments of both principal and interest are due to the fiscal Tax allocation bonds 7,990,000 - - 535,000 7,455,000 570,000 Advances from the Public agent on November 1 and March 1 annually. Therefore, the outstanding balance of the Financing Authority 160,935,000 - - 5,680,000 155,255,000 5,925,000 loan was paid in full to the fiscal agent before June 30, 2015. Advance from the Housing Authority - SERAF loan 4,000,000 - - - 4,000,000 - Compensated absences 103,948 - 39,211 38,644 104,515 40,000 Total $ 221,547,370 $ 3,172,125 $ 2,076,209 $ 6,462,629 $ 220,333,075 $ 8,373,163

114 115 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

Notes Payable US Bank Loans

Balance Balance Due Within In March 2008, the former Redevelopment Agency partially financed the purchase of July 1, 2014 Additions Deletions June 30, 2015 One Year properties from the Pomona Valley Education Foundation by assuming existing loans on the properties totaling $988,730 bearing an adjustable interest rate not to exceed Mission Promenade, LLC $ 2,378,080 $ - $ - $ 2,378,080 $ - 12.250% from U.S. Bank. PVEF Note 167,129 - - 167,129 108,634 US Bank Loans 814,142 - 28,985 785,157 29,529 The annual debt service requirements at June 30, 2015, is as follows: Total $ 3,359,351 $ - $ 28,985 $ 3,330,366 $ 138,163 Principal * Interest Total 2015-2016 $ 29,529 $ 24,536 $ 54,065 Mission Promenade, LLC 2016-2017 30,452 23,613 54,065 2017-2018 31,403 22,662 54,065 In December 2008, the former Redevelopment Agency partially financed the purchase of the Mission Promenade project (MP 1) with a promissory unsecured note 2018-2019 32,385 21,680 54,065 bearing 0% interest for the first 5 years. After the maturity date of 5 years, the Note is 2019-2020 33,397 20,668 54,065 to bear interest at the LIBOR rate +1% or 6%, whichever is greater. The note may be 2020-2025 183,305 87,020 270,325 prepaid at any time. The Successor Agency may sell the retail and office 2025-2030 213,794 56,531 270,325 condominium project at any time in whole or in part. Once the $9 million threshold is 2030-2035 230,892 20,972 251,864 received by the Successor Agency, the excess cash flow from the property operations (rental income minus operating expenses) is to be paid to Mission Total $ 785,157 $ 277,682 $ 1,062,839 Promenade, LLC to reduce the Note amount. The outstanding balance on the note, B-69 which includes the brokerage obligation, at June 30, 2015, is $2,378,080. Due to * Interest rate is adjustable and was calculated using two separate interest insufficient Successor Agency funds available and thus the inability to pay the note, rates 3.125% as of June 30, 2015. the Successor Agency will not report a due within one year. Tax Allocation Bonds

Pomona Valley Education Foundation Note (PVEF Note) Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year In March 2008, the former Redevelopment Agency partially financed the purchase of properties from the Pomona Valley Education Foundation (PVEF) with a promissory note of $167,129. The note is secured by a Second Trust Deed on the properties. In 1998 Tax Allocation Bonds, Series X $ 1,460,000 $ - $ 315,000 $ 1,145,000 $ 335,000 five years after closing, the Note is to accrue interest at a rate of 5% with the unpaid 1998 Tax Allocation Bonds, Series Y 6,530,000 - 220,000 6,310,000 235,000 balance all due and payable in ten years. Due to insufficient Successor Agency funds Total $ 7,990,000 $ - $ 535,000 $ 7,455,000 $ 570,000 available and thus the inability to pay the note, the Successor Agency will not report a due within one year. 1998 Tax Allocation Refunding Bonds, Series X – Original Issuance $5,055,000

The annual debt service requirements outstanding at June 30, 2015, is as follows: On October 1, 1998, the former Redevelopment Agency issued $5,055,000 in 1998 Tax Allocation Refunding Bonds, Series X, for the Mountain Meadows Principal Interest Total Redevelopment Project to refund $4,360,000 of the loan between the former 2015-2016$ 108,634 $ 27,161 $ 135,795 Redevelopment Agency and the Public Financing Authority related to the Public 2016-2017 33,426 8,357 41,783 Financing Authority’s 1993 Refunding Revenue Bonds, Series N. 2017-2018 25,069 6,264 31,333 Total $ 167,129 $ 41,782 $ 208,911 Interest is payable semiannually on June 1 and December 1 at rates varying from 3.0% to 5.1% per annum. $3,595,000 of bond principal is payable in annual installments ranging from $95,000 to $300,000 through December 1, 2013. Term bonds of $1,000,000 and $460,000 mature on December 1, 2016 and December 1, 2024, respectively, and are subject to mandatory redemption from a sinking fund account in amounts ranging from $45,000 to $350,000, as outlined in the bonds’ official statement. A municipal bond insurance policy has been issued that insures the payment of the principal and interest on the bonds when due. During 2007, the bonds in the amount of $790,000 were refunded by the 2006 Taxable Revenue Bonds, series AT.

116 117 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

The annual debt service requirements outstanding at June 30, 2015, is as follows: Advances from the Public Financing Authority

Principal Interest Total The Public Financing Authority issued various debt instruments and advanced the proceeds to the former Redevelopment Agency, subsequently the Successor Agency, for 2015-2016 $ 335,000 $ 52,527 $ 387,527 the purposes described below for each debt issued. The Successor Agency is 2016-2017 350,000 34,203 384,203 responsible for installment payments to the Public Financing Authority in amounts equal 2017-2018 45,000 23,625 68,625 to the debt service requirement. The following is a summary of changes for the year 2018-2019 50,000 21,060 71,060 ended June 30, 2015, of the long-term debts issued through the Public Financing Authority with proceeds advanced to the Successor Agency: 2019-2020 50,000 18,360 68,360 2020-2025 315,000 44,415 359,415 Balance Balance Due Within Total $ 1,145,000 $ 194,190 $ 1,339,190 July 1, 2014 Additions Deletions June 30, 2015 One Year

1998 Revenue Refunding Bonds, Series W $ 36,205,000 $ - $ 425,000 $ 35,780,000 $ 450,000 2001 Revenue Refunding Bonds, Series AD 32,320,000 - 2,020,000 30,300,000 2,110,000 1998 Tax Allocation Refunding Bonds, Series Y – Original Issuance $8,980,000 2003 Revenue Refunding Bonds, Series AH 19,870,000 - 1,325,000 18,545,000 1,380,000 2005 Taxable Housing Tax Revenue Bonds, Series AQ 8,285,000 - 295,000 7,990,000 310,000 On October 1, 1998, the former Redevelopment Agency issued $8,980,000 in 2006 Revenue Bonds, Series AS 25,955,000 - 80,000 25,875,000 70,000 1998 Tax Allocation Refunding Bonds, Series Y, for the West Holt Avenue 2006 Taxable Revenue Bonds, Series AT 7,275,000 - 400,000 6,875,000 420,000 Redevelopment Project to refund $7,130,000 of the loan between the former 2007 Subordinate Revenue Bonds, Series AW 7,640,000 - 260,000 7,380,000 275,000 Redevelopment Agency and Public Financing Authority related to the Public 2006 Subordinate Revenue Bonds, Series AX 23,385,000 - 875,000 22,510,000 910,000 Financing Authority’s 1993 Refunding Revenue Bonds, Series N, and to finance $ 160,935,000 $ - $ 5,680,000 $ 155,255,000 $ 5,925,000

B-70 certain redevelopment activities within the West Holt Avenue Project Area.

Interest on the bonds is payable semiannually on November 1 and May 1 at rates 1998 Revenue Refunding Bonds, Series W – Original Issuance $52,335,000 varying from 3.0% to 5.0% per annum. $1,770,000 of bond principal is payable in annual installments ranging from $115,000 to $180,000 through May 1, 2011. Terms On March 1, 1998, the Public Financing Authority issued $52,335,000 in bonds of $390,000, $2,360,000 and $4,380,000 mature on May 1, 2013, 1998 Revenue Refunding Bonds, Series W for the purpose of making an advance to May 1, 2022, and May 1, 2032, respectively, and are subject to mandatory the former Redevelopment Agency for refinancing the 1983 Refunding Southwest redemption from a sinking fund account in amounts ranging from $190,000 to Pomona RDA Tax Allocation Bonds, refinancing in whole the 1994 variable Rate $550,000 as outlined in the bonds’ official statements. Bonds maturing on Demand Refunding Revenue Bonds, Series M Bonds, and refinancing a portion of May 1, 2009 through May 1, 2011 are subject to redemption prior to maturity, as a the 1993 Local Agency Revenue Bonds, Series L. The prior bonds, now retired, were whole or in part, at the option of the Agency on any date on or after May 1, 2008 at issued to finance or refinance certain improvements in the Southwest Pomona redemption prices ranging from 100% to 101% of principal. A municipal bond Redevelopment Area. insurance policy has been issued that insures the payment of the principal and interest on the bonds when due. During 2007, the bonds in the amount of $645,000 Interest on the bonds is payable semiannually on each August 1 and February 1. The were refunded by the 2006 Taxable Revenue Bonds, Series AT. rates of interest range from 3.8% to 5% per annum. Principal is payable in annual installments ranging from $30,000 to $4,105,000. Term bonds of $3,005,000, The annual debt service requirements outstanding at June 30, 2015, is as follows: $16,690,000 and $29,285,000 mature on February 1, 2018, February 1, 2024 and February 1, 2030, respectively, and are subject to mandatory redemption from a Principal Interest Total sinking fund account in amounts ranging from $545,000 to $5,495,000, as outlined in 2015-2016 $ 235,000 $ 346,085 $ 581,085 the bond’s official statement. MBIA has issued a municipal bond insurance policy that insures the payment of the principal and interest on the bonds when due. During 2016-2017 245,000 333,278 578,278 2007, the bonds in the amount of $13,305,000 were refunded by the 2006 Revenue 2017-2018 260,000 319,925 579,925 Bonds, Series AS, 2006 Taxable Revenue Bonds, Series AT, and 2006 Subordinate 2018-2019 275,000 305,755 580,755 Revenue Bonds, Series AX. 2019-2020 290,000 290,768 580,768 2020-2025 1,705,000 1,198,803 2,903,803 2025-2030 2,230,000 675,400 2,905,400 2030-2032 1,070,000 89,100 1,159,100

Total $ 6,310,000 $ 3,559,114 $ 9,869,114

118 119 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

The annual debt service requirements for the 1998 Revenue Bonds, Refunding 2003 Revenue Refunding Bonds, Series AH – Original Issuance $46,650,000 Series W outstanding at June 30, 2015, is as follows: On November 1, 2003, the Public Financing Authority issued $46,650,000 in Principal Interest Total 2003 Revenue Bonds, Series AH, to provide funds for a loan to the former 2015-2016 $ 450,000 $ 1,789,000 $ 2,239,000 Redevelopment Agency for certain improvements and to refinance certain former Redevelopment Agency obligations to the Public Financing Authority, including 2016-2017 470,000 1,766,500 2,236,500 defeasance of 1993 Series L. 2017-2018 495,000 1,743,000 2,238,000 2018-2019 520,000 1,718,250 2,238,250 Interest on the bonds is payable semiannually on each August 1 and February 1. The 2019-2020 545,000 1,692,250 2,237,250 rates of interest range from 3.70% to 5.25% per annum. Principal is payable in annual installments ranging from $370,000 to $4,870,000. Term bonds of $2,410,000 2020-2025 14,630,000 6,933,750 21,563,750 and $10,145,000 mature on February 28, 2028 and 2034, respectively. 2025-2030 18,670,000 2,891,500 21,561,500 During 2007, the bonds in the amount of $17,110,000 were refunded by the Total $ 35,780,000 $ 18,534,250 $ 54,314,250 2006 Revenue Bonds, Series AS, 2006 Taxable Revenue Bonds, Series AT, and 2006 Subordinate Revenue Bonds, Series AX. 2001 Revenue Refunding Bonds, Series AD – Original Issuance $39,165,000 The annual debt service requirements for the 2003 Revenue Bonds, Series AH On April 1, 2001, the Public Financing Authority issued $39,165,000 in outstanding at June 30, 2015, is as follows: 2001 Revenue Bonds, Series AD for the purpose of making an advance to the former Redevelopment Agency to refinance certain prior bonds and to make an additional Principal Interest Total advance to the former Redevelopment Agency to provide financing for certain 2015-2016 $ 1,380,000 $ 900,178 $ 2,280,178 B-71 improvements in the merged project area. Tax Allocation Bonds defeased include the 2016-2017 1,440,000 844,978 2,284,978 1997 Refunding RDA Series S, the 1997 Refunding Series T, the 1998 Refunding Series U, the 1998 Refunding Subordinate Series V and the 1998 Refunding 2017-2018 1,520,000 785,938 2,305,938 Series Z; the 1993 Refunding Series L Revenue Bonds were partially defeased. 2018-2019 1,540,000 706,138 2,246,138 2019-2020 1,805,000 625,288 2,430,288 Interest on the bonds is payable semiannually on each August 1 and February 1. The 2020-2025 2,000,000 2,481,125 4,481,125 rates of interest range from 3.50% to 5.39% per annum. Principal is payable in 2025-2030 2,560,000 1,946,425 4,506,425 annual installments ranging from $95,000 to $2,470,000. Term bonds of $10,550,000, $10,115,000 and $7,525,000 mature on February 1, 2021, 2030-2034 6,300,000 444,263 6,744,263 February 1, 2027 and February 1, 2033, respectively, and are subject to mandatory Total $ 18,545,000 $ 8,734,333 $ 27,279,333 redemption from a sinking fund account in amounts ranging from $445,000 to $2,470,000, as outlined in the bond’s official statement. 2005 Taxable Housing Tax Revenue Bonds, Series AQ – Original Issuance $10,065,000 The annual debt service requirements for the 2001 Revenue Bonds, Series AD outstanding at June 30, 2015, is as follows: On December 1, 2005, the Public Financing Authority issued $10,065,000 in 2005 Taxable Housing Tax Revenue Bonds, Series AQ, to provide funds to make a Principal Interest Total loan to the former Redevelopment Agency for the purpose of financing redevelopment activities with respect to the Merged Redevelopment Project Area. 2015-2016 $ 2,110,000 $ 1,516,250 $ 3,626,250 2016-2017 2,120,000 1,409,500 3,529,500 Interest on the bonds is payable semiannually on each August 1 and February 1. The 2017-2018 2,350,000 1,303,500 3,653,500 rates of interest range from 5.23% to 6.25% per annum. Principal is payable in 2018-2019 2,470,000 1,186,000 3,656,000 annual installments ranging from $100,000 to $750,000. The bonds are secured by 2019-2020 2,175,000 1,062,500 3,237,500 monies in the Redevelopment Property Tax Trust Fund (RPTTF) monies for the Recognized Obligation Payment Schedules (ROPS). 2020-2025 7,900,000 4,016,500 11,916,500 2025-2030 8,715,000 1,979,500 10,694,500 2030-2033 2,460,000 212,750 2,672,750

Total $ 30,300,000 $ 12,686,500 $ 42,986,500

120 121 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

The annual debt service requirements for the 2005 Taxable Housing Tax Revenue 2006 Taxable Revenue Bonds, Series AT – Original Issuance $8,355,000 Bonds, Series AQ outstanding at June 30, 2015, is as follows: On December 1, 2006, the Public Financing Authority issued $8,355,000 in Principal Interest Total 2006 Taxable Revenue Bonds, Series AT, to make a loan to the former 2015-2016 $ 310,000 $ 487,826 $ 797,826 Redevelopment Agency for the purpose of refinancing a portion of the Public 2016-2017 325,000 471,613 796,613 Financing Authority’s 1998 Refunding Revenue Bonds, Series W, 2003 Revenue Bonds, Series AH, 1998 Tax Allocation Refunding Bonds, Series X (now retired), and 2017-2018 345,000 451,300 796,300 1998 Tax Allocation Refunding Bonds, Series Y (now retired). 2018-2019 365,000 429,738 794,738 2019-2020 390,000 406,925 796,925 Interest on the bonds is payable semiannually on each August 1 and February 1. The 2020-2025 2,340,000 1,637,438 3,977,438 rates of interest range from 5.289% to 5.718% per annum. Principal is payable in 2025-2030 3,165,000 818,600 3,983,600 annual installments ranging from $340,000 to $760,000. The bonds are secured by certain revenues on the Series AT Loan pursuant to a Loan Agreement, dated as of 2030-2031 750,000 45,000 795,000 December 1, 2006 between the Public Financing Authority and the former Total $ 7,990,000 $ 4,748,440 $ 12,738,440 Redevelopment Agency. The loan payments are limited obligations of the Successor Agency payable solely from and secured by the pledged tax revenues to be derived from the Successor Agency’s project area remaining after payment of the Senior 2006 Revenue Bonds, Series AS – Original Issuance $26,305,000 Obligations. On December 1, 2006, the Public Financing Authority issued $26,305,000 in 2006 Revenue Bonds, Series AS, to make a loan to the former Redevelopment The annual debt service requirements for the 2006 Taxable Revenue Bonds, Series Agency for the purpose of refinancing a portion of the Public Financing Authority’s AT outstanding at June 30, 2015, is as follows:

B-72 1998 Refunding Revenue Bonds, Series W, 2003 Revenue Bonds, Series AH, and 2003 Subordinate Revenue Bonds, Series AI. Principal Interest Total 2015-2016 $ 420,000 $ 378,316 $ 798,316 Interest on the bonds is payable semiannually on each August 1 and February 1. The 2016-2017 440,000 355,574 795,574 rates of interest range from 3.50% to 5.00% per annum. Principal is payable in annual installments ranging from $65,000 to $5,400,000. The bonds are secured by 2017-2018 465,000 330,643 795,643 certain revenues on the Series AS Loan pursuant to a Loan Agreement, dated as of 2018-2019 490,000 303,340 793,340 December 1, 2006, between the Public Financing Authority and the former 2019-2020 520,000 274,464 794,464 Redevelopment Agency. The loan payments are limited obligations of the Successor 2020-2025 3,060,000 879,714 3,939,714 Agency payable solely from and secured by the pledged tax revenues to be derived 2025-2027 1,480,000 85,770 1,565,770 from the Successor Agency’s project area remaining after payment of the Senior Obligations. Total $ 6,875,000 $ 2,607,821 $ 9,482,821 The annual debt service requirements for the 2006 Revenue Bonds, Series AS outstanding at June 30, 2015, is as follows: 2007 Subordinate Revenue Bonds, Series AW – Original Issuance $8,375,000 Principal Interest Total 2015-2016 $ 70,000 $ 1,246,210 $ 1,316,210 On July 1, 2007, the Public Financing Authority issued $8,375,000 in 2007 Subordinate Revenue Bonds, Series AW, to provide funds for a loan to the 2016-2017 65,000 1,243,723 1,308,723 former Redevelopment Agency for certain improvements, funding a reserve account 2017-2018 105,000 1,240,469 1,345,469 for the Bonds and paying costs of issuing the Bonds. 2018-2019 165,000 1,235,218 1,400,218 2019-2020 235,000 1,227,300 1,462,300 Interest on the Bonds is payable semiannually on each February 1 and August 1. The rates of interest range from 4.25% to 5.125% per annum. Principal on 2020-2025 1,640,000 5,925,344 7,565,344 $1,348,000 of the subordinate bonds is payable in annual installments ranging from 2025-2030 4,840,000 5,362,562 10,202,562 $230,000 to $285,000. Term bonds of $625,000, $1,910,000 and $4,285,000 mature 2030-2035 13,220,000 2,631,750 15,851,750 on February 1, 2019, February 1, 2024, and February 1, 2033, respectively. 2035-2040 4,895,000 709,225 5,604,225 2040-2041 640,000 14,400 654,400

Total $ 25,875,000 $ 20,836,201 $ 46,711,201

122 123 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015

Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

The annual debt service requirements for the 2007 Subordinate Revenue Bonds, The annual debt service requirements for the 2006 Subordinate Revenue Bonds, Series AW outstanding at June 30, 2015, is as follows: Series AX outstanding at June 30, 2015, is as follows:

Principal Interest Total Principal Interest Total 2015-2016 $ 275,000 $ 363,806 $ 638,806 2015-2016 $ 910,000 $ 1,063,155 $ 1,973,155 2016-2017 285,000 351,206 636,206 2016-2017 920,000 1,024,265 1,944,265 2017-2018 305,000 337,550 642,550 2017-2018 925,000 984,598 1,909,598 2018-2019 320,000 322,706 642,706 2018-2019 970,000 943,370 1,913,370 2019-2020 335,000 306,731 641,731 2019-2020 975,000 900,580 1,875,580 2020-2025 1,940,000 1,254,053 3,194,053 2020-2025 5,380,000 3,785,065 9,165,065 2025-2030 2,415,000 707,378 3,122,378 2025-2030 6,645,000 2,307,875 8,952,875 2030-2033 1,505,000 103,397 1,608,397 2030-2035 4,540,000 698,250 5,238,250 Total $ 7,380,000 $ 3,746,827 $ 11,126,827 2035-2040 1,100,000 176,500 1,276,500 2040-2041 145,000 3,625 148,625

2006 Subordinate Revenue Bonds, Series AX – Original Issuance $25,865,000 Total $ 22,510,000 $ 11,887,283 $ 34,397,283

On December 1, 2006, the Public Financing Authority issued $25,865,000 in Advances from the Housing Authority 2006 Subordinate Revenue Bonds, Series AX, to make a loan to the former Redevelopment Agency for the purpose of refinancing a portion of the Public B-73 Financing Authority’s 1998 Refunding Revenue Bonds, Series W, 2003 Revenue Balance Balance Due Within Bonds, Series AH, and 2003 Subordinate Revenue Bonds, Series AI (now retired), July 1, 2014 Additions Deletions June 30, 2015 One Year and financing certain improvements in the former Redevelopment Agency’s Merged SERAF loan $ 4,000,000 $ - -$ $ 4,000,000 -$ Redevelopment Project.

Interest on the bonds is payable semiannually on each August 1 and February 1. The On July 24, 2009, Assembly Bill AB4-26 that shifts former Redevelopment Agency funds rates of interest range from 4.00% to 5.00% per annum. Principal is payable in and established a Supplemental Educational Revenue Augmentation Fund (SERAF) was annual installments ranging from $145,000 to $1,515,000. The bonds are secured by passed. It was a “budget trailer bill” that was part of the State’s legislation to balance its certain revenues on the Series AX Loan pursuant to a Loan Agreement, dated as of budget. The former Redevelopment Agency of the City of Pomona’s share of SERAF December 1, 2006, between the Public Financing Authority and the former obligation was $8,264,547 in Fiscal Year 2009-10 and $1.7 million in Fiscal Year Redevelopment Agency. The loan payments are limited obligations of the Successor 2010-11. Health and Safety Code Section 33690(c) provides that a redevelopment Agency payable solely from and secured by the Subordinate Tax Revenues to be agency, which made a finding that insufficient monies were available to fund its SERAF derived from the Successor Agency’s project area remaining after payment of the obligation in Fiscal Years 2009-10 or 2010-11, may borrow funds from its Low and Senior/ Subordinate Obligations. Moderate Income Housing Fund to make the full SERAF payment. On May 3, 2010, the Redevelopment Agency Board authorized a loan of $5,000,000 from the Low-Mod Fund to provide partial funding for the balance of the SERAF payment due. The Successor Agency’s outstanding balance on the note as of June 30, 2015, is $4,000,000.

Compensated Absences

The following is a summary of compensated absences outstanding as of June 30, 2015:

Balance Balance Due Within July 1, 2014 Additions Deletions June 30, 2015 One Year $ 103,948 $ 39,211 $ 38,644 $ 104,515 $ 40,000

124 125 CITY OF POMONA CITY OF POMONA

NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 JUNE 30, 2015 Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

Pledged Tax Revenues Commitments and Contingencies

The City has pledged, as security for bonds issued, either directly or through the Pomona Agreement for Allocation of Tax Increment Funds Public Financing Authority, certain tax revenues to the repayment of certain Successor Agency debts (bonds, loans and advances) through final maturity of bonded debt on On December 5, 1988, the former Redevelopment Agency entered into an February 1, 2047, or earlier retirement, whichever occurs first. agreement with the County whereby the County has agreed to provide sufficient allocation of tax increment to allow the Successor Agency to meet its debt service Tax revenues consist of tax increment revenues allocated to the Successor Agency to agreements on debt it has incurred in connection with the Southwest Pomona Project various project areas pursuant to Section 33670 of the Redevelopment Law. Such Law Area. Beginning in fiscal year 1988-89, and thereafter for the life of the project, the excludes a portion of tax increment revenues required to be paid under Tax-Sharing County will provide a grant to the Successor Agency for any “deficiencies” of tax Agreements unless the payment of such amounts has been subordinated to the payment increment revenues allocated to the Successor Agency as described in the of debt service on the Bonds. Assembly Bill 1X 26 provided that upon dissolution of the agreement. In accordance with the agreement, during the fiscal year 2014-15, the Redevelopment Agency, property taxes allocated to redevelopment agencies no longer Successor Agency received a grant in the amount of $336,999, which was recorded are deemed tax increment but rather property tax revenues and will be allocated first to as intergovernmental revenue. local agency and school entity pursuant to any pass through agreement, then second to successor agencies to make payments on the indebtedness incurred by the dissolved Net Position Restatement redevelopment agency. For the current year, the total property tax revenue recognized by the City was $16,537,691 and the debt service obligation on the bonds was $14,875,126. Beginning net position was restated by $4,051,660 to reclassify unavailable revenue for prior year principal balance on notes/loans receivable. Remaining balance on the debt at June 30, 2015, is as follows:

Debt Issue Remaining Balance B-74 County of LA Agreement $ 48,488,194 1998 Series W Bonds 54,314,250 1998 Series X Bonds 1,339,190 1998 Series Y Bonds 9,869,114 2001 Series AD Bonds 42,862,500 2003 Series AH Bonds 27,279,333 2005 Series AQ Bonds 12,738,440 2006 Series AS Bonds 46,711,201 2006 Series AT Bonds 9,482,821 2007 Series AW Bonds 11,126,827 2006 Series AX Bonds 34,397,283 Total $ 298,609,153

Insurance

The Successor Agency is covered under the City of Pomona’s insurance policies. Therefore, the limitation and self-insured retentions applicable to the City also apply to the Successor Agency. Additional information as to coverage and self-insured retentions can be found in Note 14.

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130 131 CITY OF POMONA

BUDGETARY INFORMATION JUNE 30, 2015

Budgetary Information

Annual budgets are adopted on a basis consistent with generally accepted accounting principles in the United States for all governmental funds, except that encumbrances are shown in the year incurred for budgetary purposes. All annual appropriations lapse at fiscal year end.

On or before the last day in January of each year, all operational units submit requests for appropriations to the City Manager for budget preparation purposes. The City Council holds public hearings and a final budget must be adopted no later than June 30.

The appropriated budget is prepared by fund, function, and department. The City’s department directors, with approval of the Finance Director and City Manager, may make transfers of appropriations within a department and between departments within a fund. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level. The City Council made several supplemental budgetary appropriations throughout the year. The supplementary budgetary appropriations made in the various governmental funds are not detailed in the required supplementary information.

Under encumbrance accounting, purchase orders, contracts and other commitments for expenditures are recorded to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary accounting. Unexpended appropriations lapse at year-end regardless of encumbrances. Following are the budget comparison schedules for the General Fund and all major special revenue funds. B-77

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132 133 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE BUDGETARY COMPARISON SCHEDULE GENERAL FUND HOUSING AUTHORITY YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Variance with Variance with Final Budget Final Budget Budget Amounts Actual Positive Budget Amounts Actual Positive Original Final Amounts (Negative) Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 12,373,245 $ 12,373,245 $ 12,373,245 $ - Budgetary Fund Balance, July 1, as restated $ 30,463,643 $ 30,463,643 $ 30,463,643 $ - Resources (Inflows): Resources (Inflows): Taxes 76,043,616 77,093,616 78,607,713 1,514,097 Intergovernmental 12,137,571 12,137,571 9,387,818 (2,749,753) Licenses and permits 5,286,760 5,385,160 4,566,429 (818,731) Charges for services 30,000 30,000 43,580 13,580 Intergovernmental 120,000 120,000 352,160 232,160 Interest and rentals 397,263 397,263 429,594 32,331 Charges for services 2,799,070 3,281,101 3,246,764 (34,337) Miscellaneous 13,055 13,055 124,948 111,893 Interest and rentals 286,408 286,408 447,838 161,430 Amounts Available for Appropriations 43,041,532 43,041,532 40,449,583 (2,591,949) Fines and forfeitures 1,802,200 1,660,700 2,051,647 390,947 Contributions - 50,000 51,581 1,581 Charges to Appropriations (Outflows): Miscellaneous 730,900 733,400 663,195 (70,205) Urban development 13,173,921 13,389,997 13,106,038 283,959 Transfers in - - 80 80 Capital outlay 22,400 22,400 18,182 4,218 Proceeds from sale of capital assets - - 32,830 32,830 Total Charges to Appropriations 13,196,321 13,412,397 13,124,220 288,177 Amounts Available for Appropriations 99,442,199 100,983,630 102,393,482 1,409,852 Budgetary Fund Balance, June 30 $ 29,845,211 $ 29,629,135 $ 27,325,363 $ (2,303,772) Charges to Appropriations (Outflows): General government 4,331,721 4,441,648 3,978,320 463,328 Public safety 65,146,011 66,703,040 65,116,912 1,586,128 Urban development 8,369,560 8,922,490 7,809,025 1,113,465 Neighborhood services 3,455,322 3,483,882 3,160,848 323,034 Capital outlay 52,600 142,317 105,557 36,760

B-78 Debt service: Principal retirement 217,944 217,944 292,945 (75,001) Interest and fiscal charges 18,824 18,824 20,136 (1,312) Transfers out 4,599,781 4,621,636 4,621,636 - Total Charges to Appropriations 86,191,763 88,551,781 85,105,379 3,446,402

Budgetary Fund Balance, June 30 $ 13,250,436 $ 12,431,849 $ 17,288,103 $ 4,856,254

134 135 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS MISCELLANEOUS GRANTS MISCELLANEOUS PLAN - AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN YEAR ENDED JUNE 30, 2015 AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS (1)

Variance with Final Budget MEASUREMENT PERIOD 2015 Budget Amounts Actual Positive Original Final Amounts (Negative) TOTAL PENSION LIABILITY Budgetary Fund Balance, July 1, as restated $ 18,273,910 $ 18,273,910 $ 18,273,910 $ - Service Cost $ 3,310,829 Resources (Inflows): Interest 18,086,982 Intergovernmental 6,140,880 11,423,268 6,174,869 (5,248,399) Benefit Payments, Including Refunds of employee Contributions (12,464,852) Charges for services 95,000 218,693 50,952 (167,741) Net Change in Total Pension Liability $ 8,932,959 Interest and rentals - - 229,564 229,564 Total Pension Liability - Beginning 245,736,775 Miscellaneous 105,000 352,817 361,890 9,073 Total Pension Liability - Ending (a) $ 254,669,734 Transfers in 71,245 71,245 284,123 212,878 PLAN FIDUCIARY NET POSITION Amounts Available for Appropriations 24,686,035 30,339,933 25,375,308 (4,964,625) Contribution - Employer $ 3,048,502 Charges to Appropriations (Outflows): Contribution - Employee 1,640,223 Public safety 1,034,470 1,637,667 1,378,650 259,017 Net Investment Income 31,444,609 Urban development 5,429,184 9,878,938 4,966,659 4,912,279 Benefit Payments, Including Refunds of Employee Contributions (12,464,852) Neighborhood services 371,369 387,826 336,929 50,897 Net Change in Fiduciary Net Position $ 23,668,482 Capital outlay 134,000 342,111 246,813 95,298 Plan Fiduciary Net Position - Beginning 184,143,961 Transfers out 60,000 60,000 80 59,920 Plan Fiduciary Net Position - Ending (b) $ 207,812,443

Total Charges to Appropriations 7,029,023 12,306,542 6,929,131 5,377,411 Plan Net Pension Liability/(Assets) - Ending (a) - (b) $ 46,857,291

Budgetary Fund Balance, June 30 $ 17,657,012 $ 18,033,391 $ 18,446,177 $ 412,786 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 81.60% Covered-Employee Payroll $ 21,843,562 B-79

Plan Net Pension Liability/(Asset) as a Percentage of Covered- Employee Payroll 214.51%

(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. (2) Net of administrative expenses.

Notes to Schedule: Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Changes of Assumptions: There were no changes in assumptions.

136 137 CITY OF POMONA CITY OF POMONA

SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS SCHEDULE OF PLAN CONTRIBUTIONS SAFETY PLAN - AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS (1) AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS (1)

2015 MEASUREMENT PERIOD 2015 Miscellaneous Plan TOTAL PENSION LIABILITY Actuarially Determined Contribution $ 3,803,283 Service Cost $ 4,880,486 Contribution in Relation to the Actuarially Determined Contribution (3,803,283) Interest 23,069,282 Contribution Deficiency (Excess) $ - Benefit Payments, Including Refunds of employee Contributions (17,510,572) Net Change in Total Pension Liability $ 10,439,196 Covered-Employee Payroll (3) (4) $ 21,843,562 Total Pension Liability - Beginning 313,905,458 Total Pension Liability - Ending (a) $ 324,344,654 Contributions as a Percentage of Covered-Employee Payroll (3) 17.41% PLAN FIDUCIARY NET POSITION Contribution - Employer $ 4,480,201 Safety Plan Contribution - Employee 1,402,077 Actuarially Determined Contribution $ 5,171,283 Net Investment Income 37,455,889 Contribution in Relation to the Actuarially Determined Contribution (5,171,283) Benefit Payments, Including Refunds of Employee Contributions (17,510,572) Contribution Deficiency (Excess) $ - Net Change in Fiduciary Net Position $ 25,827,595 Plan Fiduciary Net Position - Beginning 219,628,065 Plan Fiduciary Net Position - Ending (b) $ 245,455,660 Covered-Employee Payroll (3) (4) $ 15,182,720

Plan Net Pension Liability/(Assets) - Ending (a) - (b) $ 78,888,994 Contributions as a Percentage of Covered-Employee Payroll (3) 34.06%

Plan Fiduciary Net Position as a Percentage of the Total 75.68%

B-80 Covered-Employee Payroll $ 15,182,720 (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. Plan Net Pension Liability/(Asset) as a Percentage of Covered- 519.60%

Note to Schedule: (1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year Valuation Date: June 30, 2012 (2) Net of administrative expenses. Methods and assumptions used to determine contribution rates: Notes to Schedule: Actuarial cost method Entry age normal Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which Amortization method For details, see June 30, 2011 Funding Valuation Report. occurred after June 30, 2013. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Remaining amortization period For details, see June 30, 2011 Funding Valuation Report. Credit (a.k.a. Golden Handshakes). Assets valuation method Actuarial Value of Assets Inflation 2.75% Changes of Assumptions: There were no changes in assumptions. Salary Increases Varies by Entry Age and Service Investment rate of return 7.50% net of pension investment and administrative expenses; includes inflation. Retirement age The probabilities of retirement are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007.

Mortality The probabilities of mortality are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. Pre-retirement and post-retirement mortality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries.

138 139 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES B-81

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140 141 NON-MAJOR GOVERNMENTAL FUNDS

The Community Development Block Grant Fund develops viable urban communities by providing decent housing and a suitable environment and expand economic opportunity for persons of low and moderate income.

The State Gas Tax Fund accounts for revenues received and expenditures made for general street improvement and maintenance. The revenues consist of the City's share of state gasoline taxes collected under Sections 2105, 2106, 2107.5 of the Street and Highway Code.

The Proposition "A" Fund accounts for the receipt and disbursement of funds derived from the one-half cent sales tax imposed by the Proposition "A" ordinance of the Los Angeles County Transportation Commission. The funds are used to finance public transportation projects.

The Proposition "C' Fund accounts for receipt and disbursement of funds derived from a 1990-91 increase in County sales tax. The funds are used to finance transit or transit-related projects.

The Vehicle Parking District Fund accounts for the operation, maintenance, capital improvements, and administration of parking lots in the downtown business area. Revenues are received from parking fees.

The Air Quality Improvement Fund accounts for the revenues and expenditures made for air quality improvement projects. The revenues consist of funds received from the South Coast Air Quality Management District (SCAQMD) in accordance with AB2766.

The Traffic Congestion Relief Fund accounts for revenues received and expenditures made for either street pavement, rehabilitation and reconstruction of associated facilities such as drainage and traffic control devices.

The Landscape Maintenance District Fund accounts for revenues received and expenditures made for landscape and lighting maintenance in various areas of the City. Revenues consist of assessments received from property owners. B-82

This page intentionally left blank. The Asset Forfeiture Fund accounts for the City's share of assets seized by law enforcement agencies. The monies are used for law enforcement purposes.

The Traffic Offender Fund accounts for the fees collected for the impoundment of vehicles and expenditures shall be for the enforcement, education and prosecution of drivers with a suspended or revoked license as well as unlicensed drivers operating a motor vehicle.

The Measure "R" Fund accounts for street maintenance, traffic signal, street light maintenance, traffic paint and sign services which are funded with 1/2-cent sales tax revenues.

The General Sanitation Fees Operations Fund accounts for street sweeping services, graffiti abatement, storm water compliance, landscape median maintenance, and right-of-way clean-ups.

The Special Fees Fund accounts for fee analysis rate review and Public Arts fees.

The Capital Outlay Fund accounts for the accumulation of the cost of capital projects.

The Assessment District Improvement Fund accounts for capital improvements through special charges levied against the properties benefited.

142 143 CITY OF POMONA CITY OF POMONA

COMBINING BALANCE SHEET COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 JUNE 30, 2015 (CONTINUED)

Special Revenue Funds Special Revenue Funds

Community Vehicle Traffic Landscape Development Parking Air Quality Congestion Maintenance Block Grant State Gas Tax Proposition A Proposition C District Improvement Relief District Assets: Assets: Cash and investments $ 61,568 $ 2,071,775 $ 1,819,877 $ 5,893,671 Cash and investments $ 2,760,273 $ 506,638 $ - $ 658,522 Receivables (net): Receivables (net): Accounts - 26,980 37,000 60,000 Accounts 92,120 - - - Notes and loans 2,022,423 - - - Notes and loans - - - - Interest - 1,738 1,429 5,245 Interest 2,388 459 - 576 Prepaid costs - - - - Prepaid costs - - - - Due from other governments 535,008 50,045 449,078 - Due from other governments 372 49,392 - 22,292 Advances to other funds - - - - Advances to other funds 304,435 - - - Restricted assets: Restricted assets: Cash - - - - Cash - - - - Total Assets $ 2,618,999 $ 2,150,538 $ 2,307,384 $ 5,958,916 Total Assets $ 3,159,588 $ 556,489 $ - $ 681,390

Liabilities, Deferred Inflows of Liabilities, Deferred Inflows of Resources, and Fund Balances: Resources, and Fund Balances: Liabilities: Liabilities: Accounts payable $ 95,347 $ 183,119 $ 183,156 $ 13,076 Accounts payable $ 20,288 $ 16,973 $ - $ 88,154

B-83 Payroll payable 30,867 30,081 3,235 1,796 Payroll payable 7,260 1,218 - 4,619 Accrued liabilities - 41,540 - 20,000 Accrued liabilities - - - - Deposits payable - - - - Deposits payable 2,334 - - - Due to other governments - - - - Due to other governments 115 - - - Due to other funds - - - - Due to other funds - - - - Total Liabilities 126,214 254,740 186,391 34,872 Total Liabilities 29,997 18,191 - 92,773

Deferred inflows of resources: Deferred inflows of resources: Unavailable revenues - - 439,007 - Unavailable revenues 57,400 - - - Total Deferred inflows of Resources - - 439,007 - Total Deferred inflows of Resources 57,400 - - -

Fund Balances: Fund Balances: Nonspendable Nonspendable Prepaid costs - - - - Prepaid costs - - - - Notes and loans 2,022,423 - - - Notes and loans - - - - Advances to other funds - - - - Advances to other funds 304,435 - - - Restricted Restricted Urban development 470,362 1,895,798 1,681,986 5,924,044 Urban development 2,767,756 538,298 - - Public safety - - - - Public safety - - - - Neighborhood services - - - - Neighborhood services - - - 588,617 Capital projects - - - - Capital projects - - - - Assessment district improvement - - - - Assessment district improvement - - - - Total Fund Balances 2,492,785 1,895,798 1,681,986 5,924,044 Total Fund Balances 3,072,191 538,298 - 588,617

Total Liabilities, Deferred Inflows of Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 2,618,999 $ 2,150,538 $ 2,307,384 $ 5,958,916 Resources, and Fund Balances $ 3,159,588 $ 556,489 $ - $ 681,390

144 145 CITY OF POMONA CITY OF POMONA

COMBINING BALANCE SHEET COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 JUNE 30, 2015

Special Special Revenue Funds Revenue Fund Capital Projects Funds General Sanitation Assessment Total Non-Major Asset Traffic Fees Special Fees District Governmental Forfeiture Offender Measure R Operations Fund Capital Outlay Improvement Funds Assets: Assets: Cash and investments $ 2,108,099 $ 613,320 $ 2,325,232 $ - Cash and investments $ 486,823 $ 822,842 $ 53,688 $ 20,182,328 Receivables (net): Receivables (net): Accounts - - - 330,412 Accounts - 4,653 - 551,165 Notes and loans - - - - Notes and loans - - - 2,022,423 Interest 1,968 527 1,917 - Interest - 1,429 81 17,757 Prepaid costs 23,891 - - - Prepaid costs - - - 23,891 Due from other governments - - - - Due from other governments - 38,123 - 1,144,310 Advances to other funds - - - - Advances to other funds - - - 304,435 Restricted assets: Restricted assets: Cash - - - - Cash - 2,869,423 204,102 3,073,525 Total Assets $ 2,133,958 $ 613,847 $ 2,327,149 $ 330,412 Total Assets $ 486,823 $ 3,736,470 $ 257,871 $ 27,319,834

Liabilities, Deferred Inflows of Liabilities, Deferred Inflows of Resources, and Fund Balances: Resources, and Fund Balances: Liabilities: Liabilities: Accounts payable $ 162,910 $ 211 $ 125,606 $ 230,581 Accounts payable $ - $ 307,241 $ - $ 1,426,662

B-84 Payroll payable 20,027 7,602 17,580 22,126 Payroll payable - 15,229 379 162,019 Accrued liabilities - - - - Accrued liabilities - - - 61,540 Deposits payable - - - - Deposits payable - 11,967 - 14,301 Due to other governments - - - - Due to other governments - - - 115 Due to other funds - - - 67,980 Due to other funds - - - 67,980 Total Liabilities 182,937 7,813 143,186 320,687 Total Liabilities - 334,437 379 1,732,617

Deferred inflows of resources: Deferred inflows of resources: Unavailable revenues - - - - Unavailable revenues - - - 496,407 Total Deferred inflows of Resources - - - - Total Deferred inflows of Resources - - - 496,407

Fund Balances: Fund Balances: Nonspendable Nonspendable Prepaid costs 23,891 - - - Prepaid costs - - - 23,891 Notes and loans - - - - Notes and loans - - - 2,022,423 Advances to other funds - - - - Advances to other funds - - - 304,435 Restricted Restricted Urban development - - 2,183,963 9,725 Urban development - - - 15,471,932 Public safety 1,927,130 606,034 - - Public safety - - - 2,533,164 Neighborhood services - - - - Neighborhood services 486,823 - - 1,075,440 Capital projects - - - - Capital projects - 3,402,033 - 3,402,033 Assessment district improvement - - - - Assessment district improvement - - 257,492 257,492 Total Fund Balances 1,951,021 606,034 2,183,963 9,725 Total Fund Balances 486,823 3,402,033 257,492 25,090,810

Total Liabilities, Deferred Inflows of Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 2,133,958 $ 613,847 $ 2,327,149 $ 330,412 Resources, and Fund Balances $ 486,823 $ 3,736,470 $ 257,871 $ 27,319,834

146 147 CITY OF POMONA CITY OF POMONA

COMBINING STATEMENT OF REVENUES, COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015 (CONTINUED)

Special Revenue Funds Special Revenue Funds

Community Vehicle Traffic Landscape Development Parking Air Quality Congestion Maintenance Block Grant State Gas Tax Proposition A Proposition C District Improvement Relief District Revenues: Revenues: Taxes $ - $ - $ - $ - Taxes $ 15,430 $ - $ - $ - Special assessments - - - - Special assessments - - - 1,213,093 Licenses and permits - - - - Licenses and permits - - - - Intergovernmental 2,745,146 4,675,105 2,704,452 2,280,079 Intergovernmental - 188,233 - - Charges for services 48,701 - - - Charges for services 158,442 - - - Interest and rentals 109,538 2,537 2,409 9,019 Interest and rentals 533,845 686 - 767 Fines and forfeitures - - - - Fines and forfeitures 16 - - - Miscellaneous 1,652 33,585 14,000 - Miscellaneous - - - - Total Revenues 2,905,037 4,711,227 2,720,861 2,289,098 Total Revenues 707,733 188,919 - 1,213,860

Expenditures: Expenditures: Current: Current: General government - - - - General government - - - - Public safety 123,181 - - - Public safety - - - - Urban development 1,785,654 3,868,451 2,245,782 3,124,512 Urban development 781,676 65,966 - -

B-85 Neighborhood services - - - - Neighborhood services - - - 1,205,018 Capital outlay - 7,653 - - Capital outlay 30,651 - - - Debt service: Debt service: Principal retirement 145,000 - - - Principal retirement 75,045 - - - Interest and fiscal charges 8,029 - - - Interest and fiscal charges 5,675 - - - Total Expenditures 2,061,864 3,876,104 2,245,782 3,124,512 Total Expenditures 893,047 65,966 - 1,205,018 Excess (Deficiency) of Revenues Excess (Deficiency) of Revenues Over (Under) Expenditures 843,173 835,123 475,079 (835,414) Over (Under) Expenditures (185,314) 122,953 - 8,842

Other Financing Sources (Uses): Other Financing Sources (Uses): Transfers in 27,224 131,750 - 321,721 Transfers in - - - - Transfers out (1,081,683) (951,324) - (651,241) Transfers out - (135,490) (1,819) - Proceeds from sale of capital assets - - - - Proceeds from sale of capital assets - - - - Total Other Financing Sources Total Other Financing Sources (Uses) (1,054,459) (819,574) - (329,520) (Uses) - (135,490) (1,819) - Net Change in Fund Balances $ (211,286) $ 15,549 $ 475,079 $ (1,164,934) Net Change in Fund Balances $ (185,314) $ (12,537) $ (1,819) $ 8,842

Fund Balances: Fund Balances: Beginning of year, as originally reported $ 775,225 $ 1,880,249 $ 1,206,907 $ 7,088,978 Beginning of year, as originally reported $ 3,257,505 $ 550,835 $ 1,819 $ 579,775 Restatements 1,928,846 - - - Restatements - - - - Beginning of year, as restated 2,704,071 1,880,249 1,206,907 7,088,978 Beginning of year, as restated 3,257,505 550,835 1,819 579,775 Net change in fund balances (211,286) 15,549 475,079 (1,164,934) Net change in fund balances (185,314) (12,537) (1,819) 8,842 End of Year $ 2,492,785 $ 1,895,798 $ 1,681,986 $ 5,924,044 End of Year $ 3,072,191 $ 538,298 $ - $ 588,617

148 149 CITY OF POMONA CITY OF POMONA

Special Special Revenue Funds Revenue Fund Capital Projects Funds General Sanitation Assessment Total Non-Major Asset Traffic Fees Special Fees District Governmental Forfeiture Offender Measure R Operations Fund Capital Outlay Improvement Funds Revenues: Revenues: Taxes $ - $ - $ - $ - Taxes $ - $ 59,221 $ - $ 74,651 Special assessments - - - - Special assessments - - - 1,213,093 Licenses and permits - - - 1,390,269 Licenses and permits 299,889 312,860 - 2,003,018 Intergovernmental - - 1,661,057 - Intergovernmental - 118,830 - 14,372,902 Charges for services 79,743 366,726 - - Charges for services - 14,718 - 668,330 Interest and rentals 3,343 888 3,146 - Interest and rentals - 8,699 159 675,036 Fines and forfeitures - - - 11,754 Fines and forfeitures - - - 11,770 Miscellaneous 1,621,893 - - 3,528 Miscellaneous - 6,279 - 1,680,937 Total Revenues 1,704,979 367,614 1,664,203 1,405,551 Total Revenues 299,889 520,607 159 20,699,737

Expenditures: Expenditures: Current: Current: General government - - - - General government - 12,725 - 12,725 Public safety 1,581,131 200,560 - - Public safety - - - 1,904,872 Urban development - - 1,030,524 2,270,401 Urban development - - - 15,172,966

B-86 Neighborhood services - - - - Neighborhood services - - - 1,205,018 Capital outlay 548,919 - 32,913 - Capital outlay - 2,802,639 4,237 3,427,012 Debt service: Debt service: Principal retirement - - - - Principal retirement - - - 220,045 Interest and fiscal charges - - - - Interest and fiscal charges - - - 13,704 Total Expenditures 2,130,050 200,560 1,063,437 2,270,401 Total Expenditures - 2,815,364 4,237 21,956,342 Excess (Deficiency) of Revenues Excess (Deficiency) of Revenues Over (Under) Expenditures (425,071) 167,054 600,766 (864,850) Over (Under) Expenditures 299,889 (2,294,757) (4,078) (1,256,605)

Other Financing Sources (Uses): Other Financing Sources (Uses): Transfers in - - 179,718 864,850 Transfers in - 1,959,623 - 3,484,886 Transfers out - - (442,512) - Transfers out - (502,666) - (3,766,735) Proceeds from sale of capital assets 2,700 - - - Proceeds from sale of capital assets - - - 2,700 Total Other Financing Sources Total Other Financing Sources (Uses) 2,700 - (262,794) 864,850 (Uses) - 1,456,957 - (279,149) Net Change in Fund Balances $ (422,371) $ 167,054 $ 337,972 $ - Net Change in Fund Balances $ 299,889 $ (837,800) $ (4,078) $ (1,535,754)

Fund Balances: Fund Balances: Beginning of year, as originally reported $ 2,373,392 $ 438,980 $ 1,845,991 $ 9,725 Beginning of year, as originally reported $ 186,934 $ 4,239,833 $ 261,570 $ 24,697,718 Restatements - - - - Restatements - - - 1,928,846 Beginning of year, as restated 2,373,392 438,980 1,845,991 9,725 Beginning of year, as restated 186,934 4,239,833 261,570 26,626,564 Net change in fund balances (422,371) 167,054 337,972 - Net change in fund balances 299,889 (837,800) (4,078) (1,535,754) End of Year $ 1,951,021 $ 606,034 $ 2,183,963 $ 9,725 End of Year $ 486,823 $ 3,402,033 $ 257,492 $ 25,090,810

150 151 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE BUDGETARY COMPARISON SCHEDULE GENERAL DEBT SERVICE PUBLIC FINANCING AUTHORITY DEBT SERVICE YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Variance with Variance with Final Budget Final Budget Budget Amounts Actual Positive Budget Amounts Actual Positive Original Final Amounts (Negative) Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ (41,134,968) $ (41,134,968) $ (41,134,968) $ - Budgetary Fund Balance, July 1 $ 49,155,901 $ 49,155,901 $ 49,155,901 $ - Resources (Inflows): Resources (Inflows): Taxes 668,677 668,677 642,854 (25,823) Interest and rentals 305,489 305,489 314,326 8,837 Interest and rentals 930 930 2,758 1,828 Miscellaneous - - 8,628 8,628 Miscellaneous 335,448 335,448 335,448 - Transfers in 1,040,000 1,040,000 - (1,040,000) Transfers in 3,632,882 5,632,882 5,631,162 (1,720) Amounts Available for Appropriations 50,501,390 50,501,390 49,478,855 (1,022,535) Amounts Available for Appropriations (36,497,031) (34,497,031) (34,522,746) (25,715) Charges to Appropriation (Outflows): Charges to Appropriation (Outflows): General government 4,200 4,200 8,055 (3,855) General government 33,962 33,962 38,352 (4,390) Debt service: Debt service: Principal retirement 1,500,000 1,500,000 1,500,000 - Principal retirement 692,328 692,328 881,000 (188,672) Interest and fiscal charges 202,289 202,289 202,289 - Interest and fiscal charges 4,829,764 4,829,764 4,641,092 188,672 Total Charges to Appropriations 1,706,489 1,706,489 1,710,344 (3,855) Transfers out 1,040,000 1,040,000 - 1,040,000 Total Charges to Appropriations 6,596,054 6,596,054 5,560,444 1,035,610 Budgetary Fund Balance, June 30 $ 48,794,901 $ 48,794,901 $ 47,768,511 $ (1,026,390)

Budgetary Fund Balance, June 30 $ (43,093,085) $ (41,093,085) $ (40,083,190) $ 1,009,895 B-87

152 153 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE BUDGETARY COMPARISON SCHEDULE COMMUNITY DEVELOPMENT BLOCK GRANT STATE GAS TAX YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Variance with Variance with Final Budget Final Budget Budget Amounts Actual Positive Budget Amounts Actual Positive Original Final Amounts (Negative) Original Final Amounts (Negative) Budgetary Fund Balance, July 1, as restated $ 2,704,071 $ 2,704,071 $ 2,704,071 $ - Budgetary Fund Balance, July 1 $ 1,880,249 $ 1,880,249 $ 1,880,249 $ - Resources (Inflows): Resources (Inflows): Intergovernmental 2,342,780 2,598,051 2,745,146 147,095 Intergovernmental 4,090,431 4,090,431 4,675,105 584,674 Charges for services 125 48,148 48,701 553 Interest and rentals 1,870 1,870 2,537 667 Interest and rentals - - 109,538 109,538 Miscellaneous - - 33,585 33,585 Miscellaneous 136,000 136,000 1,652 (134,348) Transfers in 131,750 131,750 131,750 - Transfers in - - 27,224 27,224 Amounts Available for Appropriations 6,104,300 6,104,300 6,723,226 618,926 Amounts Available for Appropriations 5,182,976 5,486,270 5,636,332 150,062 Charges to Appropriations (Outflows): Charges to Appropriations (Outflows): Urban development 3,198,070 3,215,239 3,868,451 (653,212) Public safety 123,181 123,181 123,181 - Capital outlay - (60,299) 7,653 (67,952) Urban development 1,484,708 1,928,460 1,785,654 142,806 Transfers out 1,060,861 1,095,109 951,324 143,785 Debt service: Total Charges to Appropriations 4,258,931 4,250,049 4,827,428 (577,379) Principal retirement 146,000 145,000 145,000 - Interest and fiscal charges 7,200 8,200 8,029 171 Budgetary Fund Balance, June 30 $ 1,845,369 $ 1,854,251 $ 1,895,798 $ 41,547 Transfers out 717,816 717,816 1,081,683 (363,867) Total Charges to Appropriations 2,478,905 2,922,657 3,143,547 (220,890)

Budgetary Fund Balance, June 30 $ 2,704,071 $ 2,563,613 $ 2,492,785 $ (70,828) B-88

154 155 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE BUDGETARY COMPARISON SCHEDULE PROPOSITION A PROPOSITION C YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Budgetary Fund Balance, June 30 $ 1,055,053 $ 1,046,139 $ 1,681,986 $ 635,847 Budgetary Fund Balance, June 30 $ 5,919,794 $ 5,918,720 $ 5,924,044 $ 5,324 B-89

156 157 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE BUDGETARY COMPARISON SCHEDULE VEHICLE PARKING DISTRICT AIR QUALITY IMPROVEMENT YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Variance with Variance with Final Budget Final Budget Budget Amounts Actual Positive Budget Amounts Actual Positive Original Final Amounts (Negative) Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 3,257,505 $ 3,257,505 $ 3,257,505 $ - Budgetary Fund Balance, July 1 $ 550,835 $ 550,835 $ 550,835 $ - Resources (Inflows): Resources (Inflows): Taxes 12,164 12,164 15,430 3,266 Intergovernmental 189,900 189,900 188,233 (1,667) Charges for services 115,000 115,000 158,442 43,442 Interest and rentals - - 686 686 Interest and rentals 672,325 672,325 533,845 (138,480) Amounts Available for Appropriations 740,735 740,735 739,754 (981) Fines and forfeitures - - 16 16 Charges to Appropriations (Outflows): Amounts Available for Appropriations 4,056,994 4,056,994 3,965,238 (91,756) Urban development 200,023 47,102 65,966 (18,864) Charges to Appropriations (Outflows): Transfers out - 85,000 135,490 (50,490) Urban development 785,430 788,913 781,676 7,237 Total Charges to Appropriations 200,023 132,102 201,456 (69,354) Capital outlay t 612,000 615,500 30,651 584,849 Debt service: Budgetary Fund Balance, June 30 $ 540,712 $ 608,633 $ 538,298 $ (70,335) Principal retirement 75,045 75,045 75,045 - Interest and fiscal charges 5,675 5,675 5,675 - Total Charges to Appropriations 1,478,150 1,485,133 893,047 592,086

Budgetary Fund Balance, June 30 $ 2,578,844 $ 2,571,861 $ 3,072,191 $ 500,330 B-90

158 159 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE BUDGETARY COMPARISON SCHEDULE LANDSCAPE MAINTENANCE DISTRICT ASSET FORFEITURE YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Budgetary Fund Balance, June 30 $ 1,532,798 $ 1,505,275 $ 1,951,021 $ 445,746 B-91

160 161 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE BUDGETARY COMPARISON SCHEDULE TRAFFIC OFFENDER MEASURE R YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Budgetary Fund Balance, June 30 $ 1,283,162 $ 567,119 $ 2,183,963 $ 1,616,844 B-92

162 163 CITY OF POMONA CITY OF POMONA

BUDGETARY COMPARISON SCHEDULE BUDGETARY COMPARISON SCHEDULE GENERAL SANITATION FEES OPERATIONS CAPITAL OUTLAY YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Variance with Variance with Final Budget Final Budget Budget Amounts Actual Positive Budget Amounts Actual Positive Original Final Amounts (Negative) Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 9,725 $ 9,725 $ 9,725 $ - Budgetary Fund Balance, July 1 $ 4,239,833 $ 4,239,833 $ 4,239,833 $ - Resources (Inflows): Resources (Inflows): Licenses and permits 1,401,801 1,401,801 1,390,269 (11,532) Taxes - - 59,221 59,221 Fines and forfeitures 12,093 12,093 11,754 (339) Licenses and permits - - 312,860 312,860 Miscellaneous 800 800 3,528 2,728 Intergovernmental - 1,001,764 118,830 (882,934) Transfers in 1,010,861 1,049,716 864,850 (184,866) Charges for services - - 14,718 14,718 Amounts Available for Appropriations 2,435,280 2,474,135 2,280,126 (194,009) Interest and rentals - - 8,699 8,699 Miscellaneous - - 6,279 6,279 Charges to Appropriations (Outflows): Transfers in 4,849,910 5,950,658 1,959,623 (3,991,035) Urban development 2,433,479 2,487,377 2,270,401 216,976 Amounts Available for Appropriations 9,089,743 11,192,255 6,720,063 (4,472,192) Total Charges to Appropriations 2,433,479 2,487,377 2,270,401 216,976 Charges to Appropriation (Outflows): Budgetary Fund Balance, June 30 $ 1,801 $ (13,242) $ 9,725 $ 22,967 General government 170,000 170,000 12,725 157,275 Urban development - - - - Capital outlay 4,849,910 7,703,241 2,802,639 4,900,602 Transfers out 393,096 502,096 502,666 (570) Total Charges to Appropriations 5,413,006 8,375,337 3,318,030 5,057,307

Budgetary Fund Balance, June 30 $ 3,676,737 $ 2,816,918 $ 3,402,033 $ 585,115 B-93

164 165 INTERNAL SERVICE FUNDS

The Internal Service Funds account for the maintenance and repair of City vehicles and equipment, risk management, general liability, workers' compensation, information technology, and printing and mail services provided to other departments or agencies of the City. B-94

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166 167 CITY OF POMONA CITY OF POMONA

COMBINING STATEMENT OF NET POSITION COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS INTERNAL SERVICE FUNDS JUNE 30, 2015 JUNE 30, 2015

Self-Insurance Equipment Information Printing/Mail Funds Maintenance Technology Services Total Assets: Assets: Current: Current: Cash and investments $ 12,583,421 $ 856,812 $ 141,879 $ 21 Cash and investments $ 13,582,133 Receivables (net): Receivables (net): Accounts - 91 - - Accounts 91 Interest 6,563 - - - Interest 6,563 Prepaid costs - - - 4,480 Prepaid costs 4,480 Inventories - 384,118 - - Inventories 384,118 Total Current Assets 12,589,984 1,241,021 141,879 4,501 Total Current Assets 13,977,385 Noncurrent: Noncurrent: Capital assets, net of depreciation - 163,093 224,396 - Capital assets, net of depreciation 387,489

Total Noncurrent Assets - 163,093 224,396 - Total Noncurrent Assets 387,489 Total Assets 12,589,984 1,404,114 366,275 4,501 Total Assets 14,364,874 Deferred Outflows of Resources: Deferred Outflows of Resources: Deferred pension related items 38,682 126,945 35,825 - Deferred pension related items 201,452 Total Deferred Outflows of Resources 38,682 126,945 35,825 - Total Deferred Outflows of Resources 201,452 Total Assets and Deferred Total Assets and Deferred B-95 Outflows of Resources $ 12,628,666 $ 1,531,059 $ 402,100 $ 4,501 Outflows of Resources $ 14,566,326

Liabilities: Liabilities: Current: Current: Accounts payable $ 69,467 $ 133,177 $ 177,550 $ 849 Accounts payable $ 381,043 Payroll payable 11,918 55,864 10,376 165 Payroll payable 78,323 Due to other funds - - - 3,487 Due to other funds 3,487 Compensated absences - 115,000 - - Compensated absences 115,000 Claims and judgments 1,805,000 - - - Claims and judgments 1,805,000 Total Current Liabilities 1,886,385 304,041 187,926 4,501 Total Current Liabilities 2,382,853 Noncurrent: Noncurrent: Advances from other funds 5,000,000 - - - Advances from other funds 5,000,000 Compensated absences - 117,115 - - Compensated absences 117,115 Claims and judgments 10,296,548 - - - Claims and judgments 10,296,548 Net pension liability 476,575 1,563,990 441,370 Net pension liability 2,481,935 Total Noncurrent Liabilities 15,773,123 1,681,105 441,370 - Total Noncurrent Liabilities 17,895,598 Total Liabilities 17,659,508 1,985,146 629,296 4,501 Total Liabilities 20,278,451 Deferred Inflows of Resources: Deferred Inflows of Resources: Deferred pension related items 146,243 479,931 135,440 - Deferred pension related items 761,614 Total Deferred Inflows of Resources 146,243 479,931 135,440 - Total Deferred Inflows of Resources 761,614

Net Position: Net Position: Net investment in capital assets - 163,093 224,396 - Net investment in capital assets 387,489 Unrestricted (5,177,085) (1,097,111) (587,032) - Unrestricted (6,861,228)

Total Net Position (5,177,085) (934,018) (362,636) - Total Net Position (6,473,739) Total Liabilities, Deferred Inflows Total Liabilities, Deferred Inflows of Resources and Net Position $ 12,628,666 $ 1,531,059 $ 402,100 $ 4,501 of Resources and Net Position $ 14,566,326

168 169 CITY OF POMONA CITY OF POMONA

COMBINING STATEMENT OF REVENUES, EXPENSES, COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Self- Insurance Equipment Information Printing/Mail Funds Maintenance Technology Services Total Operating Revenues: Operating Revenues: Charges for services $ 4,633,643 $ 3,851,396 $ 1,675,437 $ 18,097 Charges for services $ 10,178,573 Miscellaneous 3,641,013 - - - Miscellaneous 3,641,013 Total Operating Revenues 8,274,656 3,851,396 1,675,437 18,097 Total Operating Revenues 13,819,586

Operating Expenses: Operating Expenses: Personnel services - 1,223,571 308,376 - Personnel services 1,531,947 Operations - 2,128,281 1,172,374 18,097 Operations 3,318,752 Claims expense 389,061 230,000 - - Claims expense 619,061 Insurance - 34,608 5,868 - Insurance 40,476 Depreciation - 23,053 - - Depreciation 23,053 Total Operating Expenses 389,061 3,639,513 1,486,618 18,097 Total Operating Expenses 5,533,289 Operating Income (Loss) 7,885,595 211,883 188,819 - Operating Income (Loss) 8,286,297 Nonoperating Revenues (Expenses): Nonoperating Revenues (Expenses): Interest revenue 10,619 - - - Interest revenue 10,619 Total Nonoperating Total Nonoperating Revenues (Expenses) 10,619 - - - Revenues (Expenses) 10,619 B-96 Income (Loss) Before Transfers $ 7,896,214 $ 211,883 $ 188,819 $ - Income (Loss) Before Transfers $ 8,296,916

Net Position: Net Position: Beginning of Year, as originally reported $ (12,477,858) $ 808,175 $ - $ - Beginning of Year, as originally reported $ (11,669,683) Restatements (595,441) (1,954,076) (551,455) - Restatements (3,100,972) Beginning of Fiscal Year, as restated (13,073,299) (1,145,901) (551,455) - Beginning of Fiscal Year, as restated (14,770,655) Changes in Net Position 7,896,214 211,883 188,819 - Changes in Net Position 8,296,916 End of Year $ (5,177,085) $ (934,018) $ (362,636) $ - End of Year $ (6,473,739)

170 171 CITY OF POMONA CITY OF POMONA

COMBINING STATEMENT OF CASH FLOWS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Self- Insurance Equipment Information Printing/Mail Funds Maintenance Technology Services Total Cash Flows from Operating Activities: Cash Flows from Operating Activities: Cash received from customers and users $ 4,633,643 $ 3,851,305 $ 1,675,437 $ 18,097 Cash received from customers and users $ 10,178,482 Cash received from (paid for) other 3,641,013 - - - Cash received from (paid for) other 3,641,013 Cash paid to suppliers for goods and services (5,930,514) (2,525,736) (1,022,085) (23,582) Cash paid to suppliers for goods and services (9,501,917) Cash paid for general and administrative expenses (11,305) (1,213,176) (314,114) - Cash paid for general and administrative expenses (1,538,595) Net Cash Provided (Used) by Net Cash Provided (Used) by Operating Activities 2,332,837 112,393 339,238 (5,485) Operating Activities 2,778,983 Cash Flows from Non-Capital Cash Flows from Non-Capital Financing Activities: Financing Activities: Amounts received from other funds - - - 3,487 Amounts received from other funds 3,487 Net Cash Provided (Used) by Net Cash Provided (Used) by Non-Capital Financing Activities - - - 3,487 Non-Capital Financing Activities 3,487 Cash Flows from Capital Cash Flows from Capital and Related Financing Activities: and Related Financing Activities: Acquisition and construction of capital assets - (38,869) (224,396) - Acquisition and construction of capital assets (263,265) Net Cash Provided (Used) by Net Cash Provided (Used) by Capital and Related Financing Activities - (38,869) (224,396) - Capital and Related Financing Activities (263,265) Cash Flows from Investing Activities: Cash Flows from Investing Activities:

B-97 Interest received 8,353 - - - Interest received 8,353 Net Cash Provided (Used) by Net Cash Provided (Used) by Investing Activities 8,353 - - - Investing Activities 8,353 Net Increase (Decrease) in Cash Net Increase (Decrease) in Cash and Cash Equivalents 2,341,190 73,524 114,842 (1,998) and Cash Equivalents 2,527,558 Cash and Cash Equivalents, Beginning of Year 10,242,231 783,288 27,037 2,019 Cash and Cash Equivalents, Beginning of Year 11,054,575 Cash and Cash Equivalents, End of Year $ 12,583,421 $ 856,812 $ 141,879 $ 21 Cash and Cash Equivalents, End of Year $ 13,582,133

Reconciliation of Operating Income to Net Cash Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Provided (Used) by Operating Activities: Operating income (loss) $ 7,885,595 $ 211,883 $ 188,819 $ - Operating income (loss) $ 8,286,297 Adjustments to reconcile operating income (loss) Adjustments to reconcile operating income (loss) net cash provided (used) by operating activities: net cash provided (used) by operating activities: Depreciation - 23,053 - - Depreciation 23,053 (Increase) decrease in accounts receivable - (91) - - (Increase) decrease in accounts receivable (91) (Increase) decrease in prepaid expense - - - (4,480) (Increase) decrease in prepaid expense (4,480) (Increase) decrease in inventories - (24,425) - - (Increase) decrease in inventories (24,425) (Increase) decrease in deferred outflows (7,677) (25,193) (7,110) - (Increase) decrease in deferred outflows (39,980) Increase (decrease) in deferred inflows 146,243 479,931 135,440 - Increase (decrease) in deferred inflows 761,614 Increase (decrease) in accounts payable (1,464,145) (108,422) 156,157 (1,170) Increase (decrease) in accounts payable (1,417,580) Increase (decrease) in payroll payable 588 28,839 4,732 165 Increase (decrease) in payroll payable 34,324 Increase (decrease) in claims and judgments (4,077,896) - - - Increase (decrease) in claims and judgments (4,077,896) Increase (decrease) in net pension liability (149,871) (491,838) (138,800) Increase (decrease) in net pension liability (780,509) Increase (decrease) in compensated absences - 18,656 - - Increase (decrease) in compensated absences 18,656 Total Adjustments (5,552,758) (99,490) 150,419 (5,485) Total Adjustments (5,507,314) Net Cash Provided (Used) by Net Cash Provided (Used) by Operating Activities $ 2,332,837 $ 112,393 $ 339,238 $ (5,485) Operating Activities $ 2,778,983

Non-Cash Investing, Capital, and Financing Activities: Non-Cash Investing, Capital, and Financing Activities: During fiscal year 2014-2015, there was no non-cash During fiscal year 2014-2015, there was no non-cash investing, capital and financing activities. investing, capital and financing activities.

172 173 FIDUCIARY FUNDS

The Agency Funds account for assets held by the City for other funds, governments or individuals. These funds include receipts and disbursements of funds for the debt service activity of the 1911 Act assessment districts, cash deposits collected for street and sidewalk encroachment permits, debt services activity related to debt without government commitment for various assessment district improvements, cash guarantees (deposits) collected by the City for various construction improvement projects, deposits of miscellaneous, self-supporting City projects, payment of various employee benefits and deductions, including, but not limited to, health and dental insurance premiums, federal and state withholding taxes, life insurance and other withholdings from regular compensation. B-98

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174 175 CITY OF POMONA CITY OF POMONA

COMBINING BALANCE SHEET COMBINING BALANCE SHEET AGENCY FUNDS AGENCY FUNDS JUNE 30, 2015 JUNE 30, 2015

Employee Assessment Engineers' Construction Municipal Benefits/ Settlement Districts Revolving Guarantee Revolving Deductions SBOE Total Assets: Assets: Cash and investments $ 223,449 $ 570,868 $ 920,014 $ 901,655 Cash and investments $ 1,680,299 $ - $ 4,296,285 Receivables: Receivables: Accounts - - - 10,037 Accounts - - 10,037 Interest 196 319 - - Interest - - 515 Due from other governments 37,389 - - 3,834 Due from other governments - - 41,223

Total Assets $ 261,034 $ 571,187 $ 920,014 $ 915,526 Total Assets $ 1,680,299 $ - $ 4,348,060

Liabilities: Liabilities: Accounts payable $ - $ - $ 4,409 $ 238,272 Accounts payable $ 1,680,299 $ - $ 1,922,980 Deposits payable 37,389 571,187 915,605 677,254 Deposits payable - - 2,201,435 Due to external parties/other agencies 223,645 - - - Due to external parties/other agencies - - 223,645

Total Liabilities $ 261,034 $ 571,187 $ 920,014 $ 915,526 Total Liabilities $ 1,680,299 $ - $ 4,348,060 B-99

176 177 CITY OF POMONA CITY OF POMONA

COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS AGENCY FUNDS YEAR ENDED JUNE 30, 2015 YEAR ENDED JUNE 30, 2015

Balance Balance Balance Balance 7/1/2014 Additions Deductions 6/30/2015 7/1/2014 Additions Deductions 6/30/2015

Employee Benefits/Deductions Assessment Districts Assets: Assets: Cash and investments $ 1,432,904 $ 34,468,485 $ 34,221,090 $ 1,680,299 Cash and investments $ 223,032 $ 417 $ - $ 223,449 Total Assets $ 1,432,904 $ 34,468,485 $ 34,221,090 $ 1,680,299 Receivables: Interest 180 196 180 196 Liabilities: Due from other governments 10,044 37,389 10,044 37,389 Accounts payable $ 1,432,904 $ 34,468,485 $ 34,221,090 $ 1,680,299 Total Assets $ 233,256 $ 38,002 $ 10,224 $ 261,034 Total Liabilities $ 1,432,904 $ 34,468,485 $ 34,221,090 $ 1,680,299 Liabilities: Settlement SBOE Deposits payable $ 10,044 $ 37,389 $ 10,044 $ 37,389 Due to external parties/other agencies 223,212 433 - 223,645 Assets: Total Liabilities $ 233,256 $ 37,822 $ 10,044 $ 261,034 Pooled cash and investments $ 376,919 $ 1,606,298 $ 1,983,217 $ -

Engineers' Revolving Total Assets $ 376,919 $ 1,606,298 $ 1,983,217 $ -

Assets: Liabilities: Cash and investments $ 567,509 $ 3,359 $ - $ 570,868 Accounts payable $ 376,919 $ 753,838 $ 1,130,757 $ - Receivables:

B-100 Interest 294 319 294 319 Total Liabilities $ 376,919 $ 753,838 $ 1,130,757 $ - Total Assets $ 567,803 $ 3,678 $ 294 $ 571,187

Liabilities: Total - All Agency Funds Deposits payable $ 567,803 $ 3,384 $ - $ 571,187 Assets: Total Liabilities $ 567,803 $ 3,384 $ - $ 571,187 Cash and investments $ 4,397,367 $ 37,578,133 $ 37,679,215 $ 4,296,285 Receivables: Construction Guarantee Accounts 11,072 40,011 41,046 10,037 Interest 474 515 474 515 Assets: Due from other governments 12,493 41,223 12,493 41,223 Cash and investments $ 860,960 $ 229,886 $ 170,832 $ 920,014 Total Assets $ 4,421,406 $ 37,659,882 $ 37,733,228 $ 4,348,060 Total Assets $ 860,960 $ 229,886 $ 170,832 $ 920,014 Liabilities: Liabilities: Accounts payable $ 1,896,485 $ 36,596,974 $ 36,570,479 $ 1,922,980 Accounts payable $ 15,828 $ 98,802 $ 110,221 $ 4,409 Deposits payable 2,301,709 127,367 227,641 2,201,435 Deposits payable 845,132 78,927 8,454 915,605 Due to external parties/other agencies 223,212 433 - 223,645 Total Liabilities $ 860,960 $ 177,729 $ 118,675 $ 920,014 Total Liabilities $ 4,421,406 $ 36,724,774 $ 36,798,120 $ 4,348,060

Municipal Revolving

Assets: Cash and investments $ 936,043 $ 1,269,688 $ 1,304,076 $ 901,655 Receivables: Accounts 11,072 40,011 41,046 10,037 Due from other governments 2,449 3,834 2,449 3,834 Total Assets $ 949,564 $ 1,313,533 $ 1,347,571 $ 915,526

Liabilities: Accounts payable $ 70,834 $ 1,275,849 $ 1,108,411 $ 238,272 Deposits payable 878,730 7,667 209,143 677,254 Total Liabilities $ 949,564 $ 1,283,516 $ 1,317,554 $ 915,526

178 179 Statistical Section (Unaudited)

This part of the City of Pomona's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health.

Contents Page

Financial Trends - These schedules contain information to help the reader to understand how the City's financial performance and well-being have changed over time. 1 Net Position by Component 182 2 Changes in Net Position 184 3 Fund Balances - Governmental Funds 188 4 Changes in Fund Balances - Governmental Funds 190 5 Governmental Activities Tax Revenues by Source 193 Revenue Capacity - These schedules contain information to help the reader assess the City's most significant own-source revenue. 6 Assessed Value and Estimated Actual Value of Taxable Property 194 7 Property Tax Rates - Direct and Overlapping Governments 196 8 Principal Property Taxpayers 197 9 Top 25 Sales Tax Generators 198 10 Property Tax Levies and Collections 199 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. B-101 11 Ratios of Outstanding Debt by Type 200 This page intentionally left blank. 12 Ratios of General Bonded Debt Outstanding 202 13 Direct and Overlapping Debt 203 14 Legal Debt Margin Information 204 15 Pledged Revenue Coverage - Water 206 16 Pledged Revenue Coverage - Sewer 207 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. 17 Demographic and Economic Statistics 208 18 Principal Employers 209 Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 19 Authorized Full-Time City Employees by Function 211 20 Taxable Sales by Category 212 21 Operating Indicators by Function 214 22 Capital Asset Statistics by Function 215

180 181 City of Pomona City of Pomona Schedule 1 Net Position by Component Net Position by Component Last Ten Fiscal Years Last Ten Fiscal Years

Fiscal Year Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental activities: Governmental activities: Net investment in Net investment in capital assets $ 271,540,388 $ 283,153,069 $ 266,292,700 $ 266,710,638 $ 259,501,244 capital assets $ 257,218,882 $ 272,949,495 $ 266,340,326 $ 239,862,742 $ 236,554,708 Restricted 113,101,903 121,330,491 126,440,546 130,746,703 134,747,514 Restricted 138,810,197 94,261,171 94,797,810 91,110,197 102,475,838 Unrestricted (179,150,706) (182,279,410) (188,834,296) (213,456,367) (227,480,138) Unrestricted (232,125,172) (99,699,617) (88,955,872) (66,485,308) (223,393,489) Total governmental Total governmental activates net position $ 205,491,585 $ 222,204,150 $ 203,898,950 $ 184,000,974 $ 166,768,620 activates net position $ 163,903,907 $ 267,511,049 $ 272,182,264 $ 264,487,631 $ 115,637,057

Business-type activities: Business-type activities: Net investment in Net investment in capital assets $ 54,100,219 $ 52,018,893 $ 58,437,024 $ 68,860,850 $ 62,252,632 capital assets $ 53,012,960 $ 46,811,318 $ 40,774,712 $ 43,825,224 $ 42,085,623 Restricted 2,986,079 4,049,389 3,015,084 2,940,659 2,225,388 Restricted 7,660,879 13,544,047 14,805,693 32,725,153 28,900,238 Unrestricted 27,474,990 28,867,217 32,851,495 32,957,936 34,455,240 Unrestricted 36,095,478 39,600,817 42,671,686 23,144,683 15,566,565 Total business-type Total business-type activities net position $ 84,561,288 $ 84,935,499 $ 94,303,603 $ 104,759,445 $ 98,933,260 activities net position $ 96,769,317 $ 99,956,182 $ 98,252,091 $ 99,695,060 $ 86,552,426

Primary government: Primary government: B-102 Net investment in Net investment in capital assets $ 325,640,607 $ 335,171,962 $ 324,729,724 $ 335,571,488 $ 321,753,876 capital assets $ 310,231,842 $ 319,760,813 $ 307,115,038 $ 283,687,966 $ 278,640,331 Restricted 116,087,982 125,379,880 129,455,630 133,687,362 136,972,902 Restricted 146,471,076 107,805,218 109,603,503 123,835,350 131,376,076 Unrestricted (151,675,716) (153,412,193) (155,982,801) (180,498,431) (193,024,898) Unrestricted (196,029,694) (60,098,800) (46,284,186) (43,340,625) (207,826,924) Total primary Total primary government net position $ 290,052,873 $ 307,139,649 $ 298,202,553 $ 288,760,419 $ 265,701,880 government net position $ 260,673,224 $ 367,467,231 $ 370,434,355 $ 364,182,691 $ 202,189,483

182 183 City of Pomona City of Pomona Schedule 2 Changes in Net Position Changes in Net Position, Continued Last Ten Fiscal Years Last Ten Fiscal Years

Fiscal Year Fiscal Year 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Expenses Net (Expense)/Revenue Governmental activities: Governmental activities $ (129,452,966) $ (130,761,085) $ (141,432,789) $ (146,972,963) $ (136,066,630) General government $ 4,566,737 $ 5,374,997 $ 7,799,411 $ 11,325,897 $ 6,492,505 Business-type activities 2,858,604 465,086 8,365,837 9,007,609 1,398,605 Public safety 62,314,546 66,368,961 71,782,018 76,866,332 71,238,620 Total primary Urban development 68,802,603 70,071,752 58,907,290 68,405,205 87,717,680 government net expense $ (126,594,362) $ (130,295,999) $ (133,066,952) $ (137,965,354) $ (134,668,025) Neighborhood services 14,817,177 12,761,215 21,517,903 10,418,491 8,228,099 Interest on long-term debt 25,274,237 25,372,308 30,865,822 27,731,312 29,442,106 General Revenues and Total governmental activities 175,775,300 179,949,233 190,872,444 194,747,237 203,119,010 Other Changes in Net Position Governmental activities: Business-type activities: Taxes: Water 19,172,107 23,845,899 22,807,789 18,980,506 27,457,755 Property taxes $ 53,239,617 $ 51,952,231 $ 56,246,496 $ 65,303,064 $ 60,772,676 Sewer 2,458,616 3,915,545 2,920,219 2,963,196 3,838,426 Sales taxes 14,710,345 19,072,975 17,200,015 10,628,900 11,224,835 Refuse 8,488,309 8,921,093 8,837,471 9,805,894 8,598,275 Motor vehicle licenses 1,109,390 874,237 718,936 555,277 479,477 Canon Water Company 52,345 17,472 96,255 16,681 11,787 Transient occupancy taxes 1,865,001 1,727,097 1,718,607 1,450,270 1,300,209 Total business-type activities 30,171,377 36,700,009 34,661,734 31,766,277 39,906,243 Property transfer taxes - 2,152,388 1,189,405 1,020,258 1,114,825 Franchise taxes 5,397,384 5,871,860 5,776,052 6,861,266 6,094,548 Total primary Utility users taxes 17,576,969 18,290,416 18,154,259 17,732,063 17,165,968 government expenses $ 205,946,677 $ 216,649,242 $ 225,534,178 $ 226,513,514 $ 243,025,253 Business licenses - 2,844,503 2,977,865 3,051,371 2,890,920 Other taxes 678,897 2,459,714 1,973,674 17,579 10,356 Program Revenues Investment earnings/(expenses) 17,819,663 19,509,780 19,956,964 17,219,062 14,542,222 Governmental activities: Miscellaneous 5,832,425 2,240,671 2,568,179 3,246,127 2,193,630 B-103 Charges for services: Extraordinary gain/(loss) on Police revenues $ 2,423,540 $ 1,723,534 $ 2,126,363 $ 3,046,908 $ 2,691,660 disollution of Redevelopment Agency - - - - - Plan check fees 988,874 543,317 924,010 410,451 297,073 Transfers 1,743,417 716,025 (1,753,920) (10,250) 1,044,610 Building permits 1,336,527 927,771 1,287,216 730,510 599,818 Total governmental activities 119,973,108 127,711,897 126,726,532 127,074,987 118,834,276 Graffiti abatement 609,228 530,399 560,006 566,197 561,363 Business-type activities: Street sweeping fees 512,819 423,356 471,387 476,351 468,575 Investment earnings/(expenses) (1,991,603) 108,433 (1,696,056) (563,393) (6,192,697) Maintenance assessment fees 1,227,281 1,208,338 1,172,825 1,242,240 1,214,568 Miscellaneous 334,034 516,717 944,403 2,001,376 12,517 All other 9,849,392 9,357,921 6,331,014 11,442,772 14,816,018 Income (loss) on Operating contributions and grants 22,656,450 27,319,477 24,171,583 17,838,374 30,034,337 sale of capital assets - - - - - Capital contributions and grants 6,718,223 7,154,035 12,395,251 12,020,471 16,368,968 Transfers (1,743,417) (716,025) 1,753,920 10,250 (1,044,610) Total governmental Total business-type activities (3,400,986) (90,875) 1,002,267 1,448,233 (7,224,790) activities program revenues 46,322,334 49,188,148 49,439,655 47,774,274 67,052,380 Total primary government $ 116,572,122 $ 127,621,022 $ 127,728,799 $ 128,523,220 $ 111,609,486 Business-type activities: Charges for services: Changes in Net Position Governmental activities $ (9,479,858) $ (3,049,188) $ (14,706,257) $ (19,897,976) $ (17,232,354) Water 22,689,164 26,210,565 27,155,086 27,857,381 27,084,809 Business-type activities (542,382) 374,211 9,368,104 10,455,842 (5,826,185) Sewer 2,853,610 3,384,966 4,008,291 4,189,672 4,271,176 Refuse 7,395,141 7,326,324 7,733,411 8,661,142 9,883,142 Total primary government $ (10,022,240) $ (2,674,977) $ (5,338,153) $ (9,442,134) $ (23,058,539) Canon Water Company - - - - - Operating contributions and grants 68,966 145,820 126,471 64,841 65,721 Capital contributions and grants 23,100 97,420 4,004,312 850 - Total business-type activities program revenues 33,029,981 37,165,095 43,027,571 40,773,886 41,304,848 Total primary government program revenues $ 79,352,315 $ 86,353,243 $ 92,467,226 $ 88,548,160 $ 108,357,228

184 185 City of Pomona Schedule 2 City of Pomona Schedule 2 Changes in Net Position Changes in Net Position, Continued Last Ten Fiscal Years Last Ten Fiscal Years (Continued)

Fiscal Year Fiscal Year 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Expenses Net (Expense)/Revenue Governmental activities: Governmental activities $ (122,784,937) $ (147,808,334) $ (77,073,142) $ (85,864,464) $ (82,028,670) General government $ 6,064,138 $ 5,248,291 $ 7,499,578 $ 5,583,709 $ 5,555,565 Business-type activities (2,521,277) 3,748,284 (902,272) 3,633,358 4,668,961 Public safety 63,110,539 63,470,704 62,632,820 66,570,974 67,614,849 Total primary Urban development 77,538,633 94,480,470 36,407,420 47,913,493 42,139,207 government net expense $ (125,306,214) $ (144,060,050) $ (77,975,414) $ (82,231,106) $ (77,359,709) Neighborhood services 7,082,135 6,771,751 14,858,140 6,181,264 6,151,817 Interest on long-term debt 29,390,035 21,834,146 7,997,227 5,364,960 5,252,517 General Revenues and Total governmental activities 183,185,480 191,805,362 129,395,185 131,614,400 126,713,955 Other Changes in Net Position Governmental activities: Business-type activities: Taxes: Water 29,408,125 25,909,880 28,242,875 29,585,491 27,125,628 Property taxes $ 58,116,765 $ 41,754,679 $ 32,143,878 $ 33,630,550 $ 36,408,806 Sewer 5,733,464 5,192,272 8,544,029 4,164,990 3,962,091 Sales taxes 9,507,105 10,804,554 12,354,719 12,040,357 13,544,946 Refuse 8,762,936 8,732,864 8,403,397 8,562,818 8,467,884 Motor vehicle licenses 829,147 83,907 69,443 - 67,079 Canon Water Company 13,927 13,219 25,163 18,154 26,747 Transient occupancy taxes 1,266,721 1,359,064 1,473,662 1,560,682 1,568,387 Total business-type activities 43,918,452 39,848,235 45,215,464 42,331,453 39,582,350 Property transfer taxes 987,363 1,111,530 1,475,856 1,430,195 1,581,039 Franchise taxes 5,910,791 5,961,105 5,671,708 6,029,371 6,563,245 Total primary Utility users taxes 17,718,623 17,374,682 16,941,444 17,311,594 17,465,816 government expenses $ 227,103,932 $ 231,653,597 $ 174,610,649 $ 173,945,853 $ 166,296,305 Business licenses 2,730,397 3,065,405 3,123,120 3,171,919 3,346,851 Other taxes 4,008 69,575 20,966 12,963 59,221 Program Revenues Investment earnings/(expenses) 23,775,050 13,432,247 4,363,428 2,304,604 2,109,735 Governmental activities: Miscellaneous 2,547,071 6,703,775 2,347,387 2,900,772 3,461,354 B-104 Charges for services: Extraordinary gain/(loss) on Police revenues $ 2,053,307 $ 2,493,299 $ 3,066,121 $ 3,316,768 $ 3,488,416 disollution of Redevelopment Agency - 149,004,835 804,048 (144,397) 808,340 Plan check fees 354,575 408,563 1,017,684 816,046 778,349 Transfers (220,346) 690,118 954,698 538,371 1,011,800 Building permits 466,567 687,783 937,070 1,107,049 1,093,143 Total governmental activities 123,172,695 251,415,476 81,744,357 80,786,981 87,996,619 Graffiti abatement 564,531 563,935 552,417 567,499 566,547 Business-type activities: Street sweeping fees 473,614 472,717 462,461 475,665 474,722 Investment earnings/(expenses) 133,255 126,449 41,890 125,696 92,349 Maintenance assessment fees 1,214,829 1,229,707 1,229,659 1,193,066 1,213,094 Miscellaneous 3,733 2,250 31,677 117,000 121,408 All other 7,249,221 731,866 9,066,076 6,014,243 6,878,744 Income (loss) on Operating contributions and grants 23,115,271 18,896,518 20,548,119 19,501,511 17,564,806 sale of capital assets - - 79,312 9,205 1,965 Capital contributions and grants 24,908,628 18,512,640 15,442,436 12,758,089 12,627,464 Transfers 220,346 (690,118) (954,698) (538,371) (1,011,800) Total governmental Total business-type activities 357,334 (561,419) (801,819) (286,470) (796,078) activities program revenues 60,400,543 43,997,028 52,322,043 45,749,936 44,685,285 Total primary government $ 123,530,029 $ 250,854,057 $ 80,942,538 $ 80,500,511 $ 87,200,541 Business-type activities: Charges for services: Changes in Net Position Governmental activities $ 387,758 $ 103,607,142 $ 4,671,215 $ (5,077,483) $ 5,967,949 Water 27,898,709 29,405,992 30,633,205 31,611,142 29,888,243 Business-type activities (2,163,943) 3,186,865 (1,704,091) 3,346,888 3,872,883 Sewer 4,342,682 4,528,346 4,461,575 4,684,934 4,733,661 Refuse 9,046,619 9,273,301 9,107,603 9,561,681 9,523,134 Total primary government $ (1,776,185) $ 106,794,007 $ 2,967,124 $ (1,730,595) $ 9,840,832 Canon Water Company - - 64,221 64,221 64,221 Operating contributions and grants 109,165 880 46,588 42,833 42,052 Capital contributions and grants - 388,000 - - - Total business-type activities program revenues 41,397,175 43,596,519 44,313,192 45,964,811 44,251,311 Total primary government program revenues $ 101,797,718 $ 87,593,547 $ 96,635,235 $ 91,714,747 $ 88,936,596

186 187 City of Pomona City of Pomona Schedule 3 Fund Balances - Governmental Funds Fund Balances - Governmental Funds Last Ten Years Last Ten Years

Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Fund: General Fund: Reserved $ 7,907,817 $ 6,888,120 $ 4,459,873 $ 4,365,820 $ 4,270,613 Reserved $ - $ -$ - $ - $ - Unreserved 10,914,430 13,903,948 10,809,579 4,430,794 2,265,028 Unreserved - - - - - Non-spendable - - - - - Non-spendable 126,089 140,834 109,949 112,436 102,280 Restricted - - - - - Restricted - - - - - Committed - - - - - Committed 5,563,011 2,007,185 7,316,769 12,260,809 14,467,914 Assigned - - - - - Assigned - - - - - Unassigned - - - - - Unassigned - - - - 2,717,909 Total General Fund $ 18,822,247 $ 20,792,068 $ 15,269,452 $ 8,796,614 $ 6,535,641 Total General Fund $ 5,689,100 $ 2,148,019 $ 7,426,718 $ 12,373,245 $ 17,288,103

All Other Governmental Funds: All Other Governmental Funds: Reserved $ 279,513,977 $ 329,767,481 $ 293,334,925 $ 305,411,945 $ 289,165,426 Reserved $ - $ -$ - $ - $ - Unreserved, designated 6,877,406 2,570,640 - - - Unreserved, designated - - - - - Unreserved, reported in: Unreserved, reported in: Special revenue funds 18,048,054 21,518,821 12,653,645 5,729,977 18,753,085 Special revenue funds - - - - - Debt service funds (182,032,654) (182,023,917) (198,469,799) (155,935,490) (160,398,749) Debt service funds - - - - - Capital projects funds 54,561,328 1,421,840 60,383,675 2,288,382 (1,497,507) Capital projects funds - - - - - Non-spendable - - - - - Non-spendable 259,577,717 60,310,838 13,880,356 11,996,916 84,397,170 B-105 Restricted - - - - - Restricted 81,339,275 41,875,382 88,633,395 86,119,256 37,213,976 Committed - - - - - Committed - - - - - Assigned - - - - - Assigned - - - - - Unassigned - - - - - Unassigned (202,261,861) (43,208,211) (41,655,762) (41,134,968) (43,063,475) Total All Other Total All Other Governmental Funds $ 176,968,111 $ 173,254,865 $ 167,902,446 $ 157,494,814 $ 146,022,255 Governmental Funds $ 138,655,131 $ 58,978,009 $ 60,857,989 $ 56,981,204 $ 78,547,671

188 189 City of Pomona City of Pomona Schedule 4 Changes in Fund Balances - Governmental Funds Changes in Fund Balances - Governmental Last Ten Fiscal Years Last Ten Fiscal Years

Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenues: Revenues: Taxes $ 94,577,603 $ 105,245,421 $ 113,490,746 $ 109,044,092 $ 98,510,896 Taxes $ 95,691,191 $ 79,677,392 $ 72,063,654 $ 74,894,452 $ 79,325,218 Special assessments 1,197,805 1,166,719 1,172,826 1,220,222 1,214,569 Special assessments 1,214,829 1,229,707 1,229,658 1,193,067 1,213,093 Licenses and permits 8,440,517 6,690,241 6,261,842 7,350,264 4,297,116 Licenses and permits 3,333,417 4,234,901 5,770,483 6,637,168 6,569,523 Intergovernmental 29,364,673 34,431,013 27,091,322 25,673,807 48,689,417 Intergovernmental 50,654,510 38,432,208 35,229,918 32,189,819 30,287,748 Charges for services 1,989,303 2,296,395 2,755,212 2,080,651 8,855,789 Charges for services 3,625,992 3,637,583 4,619,080 4,145,014 4,009,626 Interest and rentals 17,815,895 19,509,672 19,954,480 17,115,029 14,542,222 Interest and rentals 15,732,587 13,417,141 4,364,959 2,294,343 2,098,902 Fines and forfeitures 3,280,587 2,647,955 3,364,372 4,108,850 2,065,041 Fines and forfeitures 1,784,123 1,820,973 1,960,621 2,119,972 2,063,417 Loans repaid 2,039,449 912,428 235,265 253,064 46,814 Loans repaid - - - - - Contributions and donations - 3,344,179 257,000 - - Contributions and donations - - - - 51,581 Miscellaneous 5,832,425 2,240,671 2,629,419 4,888,034 3,401,802 Miscellaneous 4,663,782 5,223,877 5,040,269 2,329,091 3,175,185 Total Revenues 164,538,257 178,484,694 177,212,484 171,734,013 181,623,666 Total Revenues 176,700,431 147,673,782 130,278,642 125,802,926 128,794,293

Expenditures: Expenditures: General government 4,323,332 5,000,827 5,054,617 4,104,160 4,046,274 General government 3,073,323 2,385,778 4,388,871 3,569,806 4,037,452 Public safety 61,675,869 64,735,812 70,637,275 72,729,944 67,888,838 Public safety 61,574,218 61,362,969 62,362,342 65,349,307 68,400,434 Urban development 59,638,945 58,373,543 59,624,349 69,119,619 88,899,216 Urban development 83,925,250 59,708,273 45,707,873 43,679,402 43,859,126 Neighborhood services 13,122,353 12,120,611 20,816,615 8,823,294 7,121,480 Neighborhood services 5,889,207 5,577,913 5,007,798 4,748,939 4,702,795 Capital outlay 1,055,369 19,944,715 2,246,951 5,462,154 2,969,473 Capital outlay 2,644,383 1,835,062 2,040,791 1,660,811 993,126 Debt service: Debt service: Principal retirement 3,357,630 9,251,232 8,078,448 4,127,225 4,338,517 Principal retirement 5,480,210 8,123,605 2,437,533 2,817,951 2,916,051 B-106 Interest and fiscal charges 22,819,282 27,328,302 27,092,737 26,855,452 27,311,933 Interest and fiscal charges 26,522,841 25,243,568 7,358,464 4,974,045 4,855,160 Debt issuance costs 2,447,589 1,253,413 241,350 - - Debt issuance costs - - - - - Total Expenditures 168,440,369 198,008,455 193,792,342 191,221,848 202,575,731 Total Expenditures 189,109,432 164,237,168 129,303,672 126,800,261 129,764,144

Excess (Deficiency) of Revenues Excess (Deficiency) of Revenues Over (Under) Expenditures (3,902,112) (19,523,761) (16,579,858) (19,487,835) (20,952,065) Over (Under) Expenditures (12,409,001) (16,563,386) 974,970 (997,335) (969,851)

Other Financing Sources (Uses): Other Financing Sources (Uses): Notes and loans issued 76,825,100 74,207,460 8,805,595 533,765 533,765 Notes and loans issued 649,425 - 200,000 300,000 - Bond premium - 1,087,257 57,600 - - Bond premium - - - - - Payments to escrow agent (53,255,000) (59,750,000) - - - Payments to escrow agent - - - - - Proceeds from capital leases 1,343,850 1,714,407 304,646 2,048,956 - Proceeds from capital leases - 620,860 695,000 - - Proceeds from sale of capital assets 36,037 110,148 980,368 34,894 5,640,158 Proceeds from sale of capital assets 1,764,196 271,938 4,529,370 1,047,249 35,530 Gain/Loss - sale of land held for resale - (654,961) (101,238) - - Gain/Loss - sale of land held for resale - - - - - Transfers in 47,308,301 71,510,464 35,568,008 29,592,084 21,194,695 Transfers in 25,487,284 15,766,850 16,654,519 8,628,509 9,379,865 Transfers out (47,422,755) (70,794,439) (39,460,156) (29,602,334) (20,150,085) Transfers out (29,524,748) (15,076,732) (15,699,821) (7,764,284) (8,368,065) Total Other Financing Sources (Uses) 24,835,533 17,430,336 6,154,823 2,607,365 7,218,533 Total Other Financing Sources (Uses) (1,623,843) 1,582,916 6,379,068 2,211,474 1,047,330 Extraordinary gain/(loss) on dissolution Extraordinary gain/(loss) on dissolution of Redevelopment Agency - - - - - of Redevelopment Agency - (68,237,733) (195,359) - - Net Change in Fund Balances $ 20,933,421 $ (2,093,425) $ (10,425,035) $ (16,880,470) $ (13,733,532) Net Change in Fund Balances $ (14,032,844) $ (83,218,203) $ 7,158,679 $ 1,214,139 $ 77,479

Debt service as a percentage of Debt service as a percentage of noncapital expenditures 17.10% 21.25% 18.49% 16.68% 15.86% noncapital expenditures 17.16% 20.55% 7.70% 6.23% 6.03%

190 191 City of Pomona Schedule 5 Governmental Activities Tax Revenue by Source Last Fiscal Ten Years (in thousands of dollars)

Fiscal Year Motor Property Utility Ended Property Sales Vehicle Transient Transfer Users Business June 30 Tax Tax License Occupancy Tax Franchise Tax Licenses Other Total 2006$ 53,240 $ 14,710 $ 1,109 $ 1,865 $ - $ 5,397 $ 17,577 $ 2,625 $ 679 $ 97,202 2007 51,952 19,073 874 1,727 2,152 5,872 18,290 2,845 2,460 105,245 2008 56,246 17,200 719 1,719 1,189 5,776 18,154 2,978 1,974 105,955 2009 65,303 10,629 555 1,450 1,020 6,861 17,732 3,051 19 106,620 2010 60,773 11,225 479 1,300 1,115 6,095 17,166 2,891 10 101,054 2011 58,117 9,507 829 1,267 987 5,911 17,719 2,730 4 97,071 2012 41,755 10,805 84 1,359 1,112 5,961 17,375 3,065 70 81,586 2013 32,144 12,355 69 1,474 1,476 5,672 16,941 3,123 20 73,274 2014 33,631 12,040 - 1,561 1,430 6,029 17,312 3,172 13 75,188 2015 36,409 13,545 68 1,568 1,581 6,563 17,466 3,347 59 80,606 B-107

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192 193 City of Pomona Schedule 6 Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands of dollars)

Estimated Factor of Fiscal Year Less: Total Taxable Total Actual Taxable Ended Residential Commercial Industrial Unitary Unsecured Tax Exempt Assessed Direct Tax Taxable Assessed June 30 Property Property Property Other Values Property Property (1) Value Rate (2) Value (3) Value (3)

2006 $ 4,871,752 $ 753,876 $ 875,823 $ 548,455 $ 7,077 $ 383,627 $ 359,681 $ 7,080,929 1.15134 $ - $ - 2007 5,555,560 850,046 927,732 619,284 5,880 376,178 274,419 8,060,261 1.15214 - - 2008 6,175,439 946,442 1,012,035 690,821 790 372,791 429,662 8,768,656 1.13719 - - 2009 6,486,480 1,019,941 1,104,778 754,630 790 384,081 447,378 9,303,322 0.14340 8,726,237 0.937970 2010 5,759,284 1,039,418 1,197,842 830,321 788 381,397 459,461 8,749,589 0.17547 8,691,272 1.004839 2011 5,441,493 1,034,597 1,244,142 885,973 788 352,403 538,120 8,421,276 0.20728 8,288,686 0.984255 2012 5,571,482 998,040 1,226,077 905,772 655 360,777 652,301 8,410,502 0.20375 8,637,468 1.026986 2013 5,679,812 1,019,770 1,178,211 884,418 655 350,896 678,279 8,435,483 0.21734 9,148,296 1.084502 2014 5,932,623 1,059,762 1,233,924 869,787 374 372,621 647,264 8,821,827 0.18781 11,575,340 1.312125 2015 6,396,012 1,070,267 1,261,918 942,134 - 379,640 814,565 9,235,406 0.19079 12,340,257 1.336190 B-108

Source: Los Angeles County Assessor data, MuniServices, LLC Prior Year values have been restated for consistency and compliance with GASB No. 44 guidelines (1) Exemptions are exclusive of home owner exemptions. (2) Total direct tax rate is the voter approved taxes over and above the 1% Proposition 13 tax for TRA 007-790. (3) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a multiplier value was extrapolated and applied to current assessed values.

194 195 City of Pomona Schedule 7 City of Pomona Schedule 8 Property Tax Rates - Direct and Overlapping Governments Principal Property Taxpayers (Rate per $100 of assessed value) Current Fiscal Year and Nine Years Ago Last Ten Fiscal Years

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015 2006 Basic City and County Levy: Percent of Percent of City of Pomona 0.233504 0.233504 0.233504 0.233504 0.310821 0.233504 0.233504 0.233504 0.233504 0.233504 Other taxing agencies 0.766496 0.766496 0.766496 0.766496 0.689179 0.766496 0.766496 0.766496 0.766496 0.766496 Total City Total City Total 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Override Assessments: Taxpayer Valuation Rank Value Valuation Rank Value County 0.000790 0.000660 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 Crest Financing LP $ 81,991,804 1 8.88% Unified Schools 0.124880 0.124010 0.113790 0.115771 0.145455 0.177212 0.173636 0.184882 0.164074 0.165993 Ktr Pomona LLC 36,279,846 2 3.93%$ 27,611,833 5 0.40% Community College 0.021220 0.021840 0.017500 0.023326 0.025710 0.026363 0.026415 0.028957 0.020231 0.021294 Flood Control 0.000050 0.000050 0.001400 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 Lba Realty Fund III Co VII LLC 30,065,606 3 3.26% Metro Water District 0.005200 0.004700 0.004500 0.004300 0.004300 0.003700 0.003700 0.003500 0.003500 0.003500 Fairplex 29,462,358 4 3.19% CMC Dragon LP 28,541,954 5 3.09% Total 0.152140 0.151260 0.137190 0.143397 0.175465 0.207275 0.203751 0.217339 0.187805 0.190787 Pomona II LLC 28,293,217 6 3.06% Total Tax Rate 1.152140 1.151260 1.137190 1.143397 1.175465 1.207275 1.203751 1.217339 1.187805 1.190787 Ripon Cogeneration LLC 27,662,890 7 3.00% Rexford Indurstrial Realty LP 27,200,000 8 2.95% Pine Club Apts LLC 24,150,049 9 2.62% F D S Mfg.. Co 22,972,086 10 2.49% Udr Crest Lp 60,656,659 1 0.29% 1675 Mission Assoc LLC 31,365,000 2 0.97% Los Angeles County Fair Assoc 31,330,120 3 0.50% Rockwell Collins Inc. 28,119,139 4 0.41%

B-109 Source: Los Angeles County Auditor/Controller data, MuniServices, LLC Casa Colina Hospital 24,529,939 6 0.40% 2007-08 and prior: prior year CAFR reports Realty Associates 24,162,234 7 0.36% For presentation purposes, TRA 007-790 is represented Coca Cola Co 23,532,741 8 0.34% Topanga Owensmouth 7 LLC 22,661,900 9 0.34% Ch Realty Iiii Pomona Lp 21,420,000 10 0.32%

Source: Los Angeles County Assessor data, MuniServices, LLC

196 197 City of Pomona Schedule 9 City of Pomona Schedule 10 Top 25 Sales Tax Generators Property Tax Levies and Collections in Alphabetical Order Last Ten Fiscal Years Current Fiscal Year and Nine Years Ago

2015 2006 Fiscal Collected within the Alstar Kia Arco AM/PM Mini Marts Year Taxes Levied Fiscal Year of the Levy Delinquent Total Collections to Date Arco AM/PM Mini Marts Barretts Equine Sales Ended for the Percentage Tax Percentage Bastian Material Handling Car Pros Kia June 30 Fiscal Year Amount of Levy Collections Amount of Levy Cardenas Market Chevron Service Stations 2006$ 10,222,688 $ 9,994,413 97.8%$ 1,369,939 $ 11,364,352 111.2% Chevron Service Stations Circuit City 2007 11,542,995 11,208,880 97.1% 1,627,684 12,836,564 111.2% Construction Hardware Contractors Warhouse 2008 12,434,540 12,278,199 98.7% 1,355,970 13,634,169 109.6% Cornucopia Foods Ferguson Enterprises 2009 13,488,955 12,976,085 96.2% 977,302 13,953,387 103.4% DD's Discounts GTE Communication Systems Corp 2010 12,344,605 12,099,841 98.0% 608,391 12,708,232 102.9% Ferguson Enterprises Home Depot 2011 11,962,439 11,830,918 98.9% 697,738 12,528,656 104.7% Giant RV Center Huntington Hardware 2012 12,329,907 12,113,998 98.2% 377,392 12,491,390 101.3% Global Rental Company Mike Thompson's Recreational 2013 12,528,234 12,434,130 99.2% 349,337 12,783,467 102.0% Graybar Electric Company Myers Tire Supply 2014 13,596,705 13,442,112 98.9% 637,832 14,079,944 103.6% HD Supply Repair & Remodel Puma Oil 2015 14,612,641 14,510,121 99.3% 613,771 15,123,892 103.5% Home Depot Rancho Valley Chevrolet/Geo Huntington Hardware Redhill Forest Products Inc Mar-Co Equipment Company Rio Rancho Buick/Pontiac/GMC

B-110 Mike Thompson's Recreational Rio Rancho Chrysler Jeep & Dod Phenix Enterprises Rohr Steel Ralph's Grocery Company Shell Service Stations Rohr Steel Siemens Energy & Automation Sheraton Hotel Sylvania Lighting Services Source: Los Angeles County Auditor/Controller, City of Pomona Finance Department Superior Duct Fabrication Texaco Service Stations Target Stores Toys R Us USA Service Stations Wal Mart Stores Wal Mart Stores West Coast RV's

Source: MuniServices, LLC

198 199 City of Pomona Schedule 11 Ratios of Outstanding Debt by Type Last Ten Fiscal Years

Governmental Activities Business-type Activities Fiscal Year Tax Pension Certificates Total Total Total Percentage Debt Ended Allocation Revenue Obligation of Governmental Revenue Business-type Primary of Personal per June 30 Bonds Bonds Ref Bonds Participation Other Activities Bonds Other Activities Government Income (1) Capita (1)

2006$ 11,510,000 $ 216,256,435 $ 42,280,684 $ 18,621,789 $ 37,549,889 $ 326,218,797 $ 62,285,000 $ 3,581,475 $ 65,866,475 $ 392,085,272 n/a $ 2,423 2007 9,815,000 227,448,178 42,280,684 13,801,167 32,120,626 325,465,655 140,135,710 2,219,551 142,355,261 467,820,916 n/a 2,885 2008 9,730,000 229,692,274 42,280,684 13,520,545 33,021,439 328,244,942 139,885,619 1,744,955 141,630,574 469,875,516 n/a 2,876 2009 9,645,000 227,390,370 42,280,684 13,234,923 36,000,684 328,551,661 139,635,527 1,286,361 140,921,888 469,473,549 n/a 2,873 2010 9,555,000 224,932,467 42,209,382 12,944,301 37,228,313 326,869,463 139,070,435 844,741 139,915,176 466,784,639 n/a 2,857 2011 9,460,000 222,313,564 44,114,118 12,643,679 43,497,491 332,028,852 137,580,343 515,674 138,096,017 470,124,869 n/a 2,877 2012 - 43,836,347 44,299,214 12,333,057 2,379,277 102,847,895 136,030,252 174,904 136,205,156 239,053,051 n/a 1,468 2013 - 42,446,378 44,400,752 12,012,435 1,864,337 100,723,902 135,674,210 4,112,175 139,786,385 240,510,287 n/a 1,593 2014 - 41,110,000 44,414,040 11,681,813 1,754,285 98,960,138 133,915,426 3,564,689 137,480,115 236,440,253 n/a 1,558 2015 - 39,564,000 44,333,953 11,336,191 1,241,295 96,475,439 132,086,642 3,004,392 135,091,034 231,566,473 n/a 1,519 B-111

Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) These ratios are calculated using personal income and population for the prior year.

200 201 City of Pomona Schedule 12 City of Pomona Schedule 13 Ratios of General Bonded Debt Outstanding Direct and Overlapping Debt Last Ten Fiscal Years (dollars in thousands, except per capita) Current Year and Nine Years Ago

General Bonded Debt Outstanding Percentage Total Debt City’s Share of Fiscal Year Tax Pension Certificates Restricted of Actual OVERLAPPING DEBT 06/30/2015: 6/30/2015 % Applicable (1) Debt 06/30/2015 Ended Revenue Allocation Obligation of for Net Bonded Value Per June 30 Bonds Bonds Ref Bonds Participation Total Debt Service * Debt of Property (1) Capita (2) Los Angeles County Flood Control District $ 15,105,000 0.817% $ 123,408 2006$ 216,256 $ 11,510 $ 42,281 $ 18,622 $ 288,669 $ 2 $ 288,667 4.1% $ 1,783 Metropolitan Water District 110,420,000 0.403% 444,993 2007 227,448 9,815 42,281 13,802 293,346 7,031 286,315 3.9% 1,809 Citrus Community College District 99,862,553 1.238% 1,236,298 2008 229,692 9,730 42,281 13,521 295,224 14,073 281,151 3.6% 1,807 Mount San Antonio Community College District 359,178,346 11.994% 43,079,851 2009 227,390 9,645 42,281 13,235 292,551 13,233 279,318 3.1% 1,790 2010 224,932 9,555 42,209 12,944 289,640 17,589 272,051 3.3% 1,779 Bonita Unified School District 127,572,395 0.285% 363,581 2011 222,313 9,460 44,114 12,644 288,531 29,115 259,416 3.4% 1,933 Claremont Unified School District 30,700,000 6.061% 1,860,727 2012 43,836 - 44,299 12,333 100,468 51,855 48,613 1.2% 670 Pomona Unified School District 233,126,050 75.468% 175,935,567 2013 42,446 - 44,401 12,012 98,859 50,439 48,420 1.2% 655 Los Angeles County Regional Park and Open Space Assessment District 82,880,000 0.777% 643,978 2014 41,110 - 44,414 11,682 97,206 49,229 47,977 1.1% 640 Total Overlapping Debt 1,058,844,344 223,688,403 2015 39,564 - 44,334 11,336 95,234 47,845 47,389 1.0% 625 City of Pomona 1915 Act Bonds 3,915,000 100.000% 3,915,000 Obligations Under Capital Leases 586,295 100.000% 586,295 Notes Payable 655,000 100.000% 655,000 Revenue Bonds 39,564,000 100.000% 39,564,000 Pension Obligation Refunding Bonds 44,333,953 100.000% 44,333,953 Certificates of Participation 11,336,191 100.000% 11,336,191 Total Direct Debt 100,390,439 100,390,439 TOTAL DIRECT AND OVERLAPPING DEBT $ 1,159,234,783 $ 324,078,842

B-112 Total Debt City’s Share of OVERLAPPING DEBT 06/30/2006: 6/30/2006 % Applicable (1) Debt 06/30/2006 * Includes bond reserves and unspent bond proceeds. Los Angeles County $ 8,511,014 0.651% $ 55,407 Notes: Details regarding the City's outstanding debt can be found in the notes to Los Angeles County Flood Control District 129,773,949 0.661% 857,806 the financial statements. Metropolitan Water District 389,564,775 0.333% 1,297,251 (1) See Schedule 6 for property value data. Citrus Community College District 19,424,904 1.558% 302,640 (2) Population data can be found in Schedule 17. Mount San Antonio Community College District 110,757,175 10.768% 11,926,333 Bonita Unified School District 27,868,627 0.204% 56,852 Claremont Unified School District 44,601,329 6.578% 2,933,875 Pomona Unified School District 145,294,475 70.857% 102,951,306 Los Angeles County Regional Park & Open Space Assessment District 330,212,888 0.651% 2,149,686 Total Overlapping Debt 1,206,009,136 122,531,156 City of Pomona 1915 Act Bonds 9,481,000 100.000% 9,481,000 Participation Agreement 436,076 100.000% 436,076 County Deferred Tax Loan 23,456,729 100.000% 23,456,729 Obligations Under Capital Leases 3,830,417 100.000% 3,830,417 Notes Payable 2,725,000 100.000% 2,725,000 Revenue Bonds 216,256,435 100.000% 216,256,435 Tax Allocation Bonds 11,510,000 100.000% 11,510,000 Pension Obligation Refunding Bonds 42,280,684 100.000% 42,280,684 Certificates of Participation 18,621,789 100.000% 18,621,789 Total Direct Debt 328,598,130 328,598,130 TOTAL DIRECT AND OVERLAPPING DEBT $ 1,534,607,266 $ 451,129,286

Source: MuniServices, LLC and prior year CAFR 1) Percentage of overlapping agency's assessed valuation located within the boundaries of the city. 202 203 City of Pomona Schedule 14 Legal Debt Margin Information Last Ten Fiscal Years (in thousands of dollars)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Assessed valuation $ 7,080,929 $ 8,060,261 $ 8,768,656 $ 9,303,322 $ 8,749,589 $ 8,421,276 $ 8,410,502 $ 8,435,483 $ 8,821,827 $ 9,235,406 Debt limit percentage 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% Debt limit $ 1,062,139 $ 1,209,039 $ 1,315,298 $ 1,395,498 $ 1,312,438 $ 1,263,191 $ 1,261,575 $ 1,265,322 $ 1,323,274 $ 1,385,311 Amount of debt applicable to debt limit ------

Legal debt margin $ 1,062,139 $ 1,209,039 $ 1,315,298 $ 1,395,498 $ 1,312,438 $ 1,263,191 $ 1,261,575 $ 1,265,322 $ 1,323,274 $ 1,385,311

Total 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%

Legal Debt Margin Calculation for Fiscal Year 2015 Assessed Value $ 9,235,406 Debt Limit 15% 1,385,311 Debt applicable to debt limit - Legal Debt Margin $ 1,385,311 B-113

Notes: Under State Finance Law, the City's outstanding general obligation debt should not exceed 15 percent of the total assessed property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds.

204 205 City of Pomona Schedule 15 City of Pomona Schedule 16 Pledged Revenue Coverage - Water Pledged Revenue Coverage - Sewer Last Ten Fiscal Years Last Ten Fiscal Years

Water Revenue Bonds Sewer Revenue Bonds Fiscal Year Less Net Fiscal Year Less Net Ended Water Operating Available Debt Service Ended Sewer Operating Available Debt Service June 30 Revenue Expenses Revenue Principal Interest Total Coverage June 30 Revenue Expenses Revenue Principal Interest Total Coverage

2006$ 22,704,347 $ 18,684,358 $ 4,019,989 $ 1,125,000 $ 2,305,960 $ 3,430,960 1.2 2006$ 3,007,259 $ 2,189,272 $ 817,987 $ 165,000 $ 637,757 $ 802,757 1.0 2007 32,745,372 30,868,171 1,877,201 - 616,981 616,981 3.0 2007 3,745,389 2,671,343 1,074,046 175,000 827,787 1,002,787 1.1 2008 26,282,806 21,557,482 4,725,324 - - - N/A 2008 4,368,532 2,356,508 2,012,024 180,000 1,295,540 1,475,540 1.4 2009 27,750,167 22,229,863 5,520,304 - 5,106,170 5,106,170 1.1 2009 4,424,826 2,426,368 1,998,458 180,000 1,302,305 1,482,305 1.3 2010 27,071,134 20,970,174 6,100,960 200,000 5,099,665 5,299,665 1.2 2010 4,348,448 2,530,093 1,818,355 295,000 1,310,465 1,605,465 1.1 2011 27,087,846 19,041,122 8,046,724 1,095,000 5,087,935 6,182,935 1.3 2011 4,400,436 2,444,519 1,955,917 325,000 1,301,753 1,626,753 1.2 2012 27,735,841 18,961,467 8,774,374 1,140,000 5,041,155 6,181,155 1.4 2012 4,570,662 2,445,349 2,125,313 340,000 1,290,216 1,630,216 1.3 2013 28,794,435 20,836,902 7,957,533 1,190,000 4,992,405 6,182,405 1.3 2013 4,497,533 2,511,043 1,986,490 355,000 1,277,020 1,632,020 1.2 2014 29,734,402 22,343,608 7,390,794 1,240,000 4,941,475 6,181,475 1.2 2014 4,736,852 2,800,219 1,936,633 370,000 1,262,289 1,632,289 1.2 2015 29,076,093 20,837,368 8,238,725 1,295,000 4,888,376 6,183,376 1.3 2015 4,783,591 2,777,759 2,005,832 385,000 1,247,875 1,632,875 1.2

Notes: Details regarding the City's Water Fund outstanding debt can be found in the notes to the financial statements. Notes: Details regarding the City's Sewer Fund outstanding debt can be found in the notes to the financial statements. B-114 Prior Year information has been restated for consistency and compliance with GASB No. 44 guidelines. Prior Year information has been restated for consistency and compliance with GASB No. 44 guidelines.

No ratio calculation for 2008 due to bond refunding.

206 207 City of Pomona Schedule 17 City of Pomona Schedule 18 Demographic and Economic Statistics Principal Employers Last Ten Fiscal Years Current Year and Nine Years Ago

2015 2006 Per Percentage Percentage Personal Capita Number of of Total City Number of of Total City Employer Employees Rank Employment Employees Rank Employment Fiscal Income (2) Personal Median Public School Unemployment Year Population (1) (in thousands) Income (2) Age Enrollment (3) Rate (4) Pomona Valley Hospital 3,078 1 4.9% 3,089 2 4.7% Pomona Unified School District 2,902 2 4.6% 3,406 1 5.1% 2006 161,850 n/a n/a 26.5 33,294 4.8% California State Polytechnic University 2,612 3 4.2% 2007 162,140 $ 2,398,683 $ 14,794 26.5 33,683 5.8% Fairplex 954 4 1.5% 2008 163,405 2,398,683 14,679 26.5 33,683 5.8% Casa Colina Rehabilitation Center 817 5 1.3% 600 6 0.9% City of Pomona 689 6 1.1% 870 4 1.3% 2009 163,408 2,747,869 16,816 28.7 30,032 8.4% Verizon 596 7 1.0% 596 7 0.9% 2010 162,817 2,728,162 16,756 28.7 31,864 12.9% County of Los Angeles Department of Social Services 400 8 0.6% 378 9 0.6% 2011 149,243 2,651,969 17,769 28.6 28,298 14.7% First Transit 348 9 0.6% 311 11 0.5% 2012 149,950 2,533,677 16,897 28.1 27,737 13.2% Inland Valley Care & Rehab 339 10 0.5% 270 15 0.4% 2013 150,942 2,593,902 17,185 29.5 27,186 12.2% Kittrich Corporation 250 11 0.4% 2014 151,713 2,392,059 15,767 30.2 26,264 11.0% Torn & Glasser Inc. 250 12 0.4% Hayward Industries Inc 230 13 0.4% 351 10 0.5% 2015 152,419 2,659,712 17,450 29.9 25,311 7.9% Walmart Stores Inc 218 14 0.3% 284 13 0.4% Anheuser Busch Sales Pomona 212 15 0.3% Lanterman Developmental Center 1,780 3 2.7% California Acrylic Industries 650 5 1.0% Royal Cabinets 450 8 0.7% Interstate Brands West Corp 300 12 0.5% Pioneer Electronics 280 14 0.4% B-115

Source: 2008-09, 2009-10, 2011-12, 2012-13, 2013-14, and 2014-15: MuniServices, LLC Source: City of Pomona business license data and Businesses; 2006 CAFR Source: 2010-11, 2008-09 and prior: prior year previous CAFR reports. Total Employment Source: www.labormarketinfo.edd.ca.gov (1) Population Projections are provided by California Department of Finance Projections. (2) Income Data is provided by the United States Census Data and is adjusted for inflation. (3) Public School Enrollment reflects the total number of students enrolled in Pomona Unified School District only, per school district data. (4) Unemployment rates are provided by the Employment Development Department, Bureau of Labor and Statistics Department.

208 209 City of Pomona Schedule 19 Authorized Full-Time City Employees by Function Last Ten Fiscal Years

Function 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Government 37 36 36 29 26 24 20 19 19 19 Support Services 45 46 52 44 36 33 32 32 32 31 Police 332 345 348 342 335 271 270 269 270 268 Public Works 87 88 87 81 199 184 184 170 169 168 Community Development 40 40 40 40 38 47 40 38 40 40 Utility Services 126 127 128 127 0 0 0 0 0 0 Community Services and Library 76788078322121119 9

Total 743 760 771 741 666 580 567 539 539 535

Various departments were consolidated in 2009-2010

Source: City of Pomona Finance Department B-116

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210 211 City of Pomona Schedule 20 Taxable Sales by Category Last Ten Calendar Years (in thousands of dollars)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Apparel Stores $ 6,277 $ 7,929 $ 9,884 $ 8,210 $ 12,239 $ 12,339 $ 12,581 $ 13,953 $ 15,277 $ 22,874 General Merchandise 50,144 49,839 49,203 48,733 43,655 42,089 41,037 43,478 52,726 62,148 Food Stores 69,894 71,838 72,852 70,991 71,379 66,041 63,376 65,447 68,432 74,104 Eating and Drinking Places 117,108 121,796 124,146 119,631 117,873 115,634 121,730 128,363 135,882 149,074 Building Materials 306,092 283,287 234,707 189,624 160,244 146,146 163,013 185,123 207,681 242,612 Auto Dealers and Supplies 251,894 217,924 178,694 91,100 77,879 58,177 67,975 75,686 78,793 78,672 Service Stations 185,542 194,850 207,178 161,684 158,016 196,602 216,063 201,642 195,460 180,021 Other Retail Stores 136,855 130,933 148,426 115,747 115,538 132,188 137,444 165,937 127,969 142,246 All Other Outlets 509,377 544,522 343,162 284,376 263,940 279,060 301,495 316,419 308,980 360,476 Drug Stores ------14,704 14,696 Home Furnishing ------16,848 13,418 Packaged Liquor Store ------7,321 7,677 Total $ 1,633,183 $ 1,622,918 $ 1,368,252 $ 1,090,096 $ 1,020,763 $ 1,048,276 $ 1,124,714 $ 1,196,048 $ 1,230,073 $ 1,348,018 B-117

Source: MuniServices, LLC

212 213 City of Pomona Schedule 21 City of Pomona Schedule 22 Operating Indicators by Function Capital Asset Statistics by Function Last Ten Fiscal Years Last Ten Fiscal Years

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Police: Felony Arrests 4,276 4,234 3,686 3,584 3,150 2,825 2,713 3,145 3,105 2,726 Misdemeanor Arrests 8,591 8,886 8,042 7,824 6,686 5,557 5,780 5,821 5,876 6,424 Police: Parking Citations 13,000 14,670 24,293 26,223 24,305 22,685 21,462 36,718 30,145 30,788 Stations 1 1 1 1 111111 Moving Citations 5,774 18,663 18,470 25,305 18,412 11,554 10,452 9,179 9,791 9,153 Patrol Units 45 45 45 44 44 44 42 58 51 51

Fire: Fire: Incidents 12,892 12,557 12,393 12,171 12,317 12,239 11,807 12,447 13,675 15,289 Fire stations 8 8 8 8 888888

Urban development: Residential building permits iss 3,174 3,039 2,111 1,372 1,314 655 720 622 722 925 Public works: Inspections 14,585 20,877 23,235 17,278 6,918 5,378 5,645 4,054 6,050 5,536 Streets (miles) 296 297 388 388 388 388 388 388 388 388 Asphalt repaired (square feet) 19,500 16,600 31,862 23,911 26,489 38,842 9,222 19,400 36,068 84,879 Streetlights 9933 9,939 7,645 7,645 7,645 7,645 7,645 7,701 7,721 7,725 Sidewalk repaired (square feet) 26,000 16,859 14,977 6,328 12,508 18,700 12,415 7,285 1,500 1,750 Traffic signals n/a 175 175 176 180 180 161 162 164 164

Community services: Community Center participants 556,000 919,153 899,611 409,595 335,931 502,674 572,270 520,157 501,727 - Community services: Senior Program participants 110,240 185,285 244,000 145,851 101,104 120,095 121,165 108,086 100,703 44,768 Parks 25 25 26 26 26 26 26 26 26 26 Youth program participants 280,000 286,925 234,648 263,744 254,827 381,280 403,617 362,217 337,180 56,728 Other program participants 66,200 70,329 72,345 47,043 64,574 36,296 42,343 49,854 66,743 32,480 Park Acreage 210 210 210 221 221 221 221 221 221 221 Sports participants 450,300 376,614 348,618 206,853 314,405 254,989 311,201 309,795 366,978 168,034 Baseball fields 14 14 14 14 14 14 14 14 14 14 Facility rentals 466 424 273 220 248 310 547 635 687 2,090 Soccer fields 11 11 13 17 17 17 17 17 17 17 Basketball courts 17 18 22 22 22 22 22 22 22 22 Library: Tennis courts 9 9 9 9 9 9 9 9 9 9 Program attendance (all progra 17,650 11,514 10,711 12,350 10,855 8,857 8,568 1,770 2,578 2,940 Community centers 7 12 13 13 13 14 14 14 14 14 Literacy instruction (hours) 1,500 762 639 871 968 709 749 - - - Libraries 1 1 1 1 1 1 1 1 1 1

B-118 Water: New connections 166 47 152 23 10 5 7 17 9 12 Water: Average daily consumption 19,990 23,028 22,086 20,693 18,487 17,719 17,865 18,670 19,615 17,905 Water mains (miles) 435 436 439 439 439 467 457 457 457 457 (thousands of gallons)

Refuse: Sewer: Curbside Collection (in tons) 42,000 42,884 41,638 39,407 37,436 38,068 36,472 37,246 36,593 35,474 Sanitary sewers (miles) 313 313 313 313 313 357 305 305 305 305 Recycle Collection (in tons) 9,500 9,380 8,871 8,003 7,512 7,108 6,801 6,896 6,907 7,218 Storm drains (miles) 120 120 120 120 120 120 120 120 120 120 Greenwaste Collection (in tons) n/a 14,687 13,259 13,267 13,975 14,280 13,234 12,510 11,934 11,904

Source: Various City Departments * Due to staffing changes in Community Services, the methodology for counting service delivery was changed beginning 2015.

Source: Various City Departments

214 215 B-119

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216 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS

The following summary discussion of selected features of the Indenture and the Installment Sale Agreement, are made subject to all of the provisions of such documents and to the discussions of such documents contained elsewhere in this Official Statement. This summary discussion does not purport to be a complete statement of said provisions and prospective purchasers of the Bonds are referred to the complete text of said documents, copies of which are available upon request from the Trustee or the City.

DEFINITIONS

The following are definitions of certain of the terms used in the Indenture and the Installment Sale Agreement, to which reference is hereby made. The following definitions are equally applicable to both the singular and plural forms of any of the terms defined in this Appendix C:

“Additional Payments” means the payments so designated and required to be paid by the City pursuant to the Installment Sale Agreement.

“Additional Revenues” means, with respect to the issuance of any Parity Obligations, an allowance for Net Revenues arising from any increase in the charges made for service from the Enterprise which has become effective (or adopted but not yet effective) prior to the incurring of such Parity Obligations but which, during all or any part of the latest Fiscal Year or for any more recent consecutive twelve (12) month period selected by the City, was not in effect, in an amount equal to the total amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year or twelve (12) month period, all as shown by the certificate or opinion of an Accountant or Fiscal Consultant employed by the City.

“Agreement” or “Installment Sale Agreement” means that certain Installment Sale Agreement by and between the Authority and the City, dated as of October 1, 2016, as originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof and of the Indenture.

“Authority” means the Pomona Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State.

“Authorized Representative” means: (a) with respect to the Authority, its Chairperson, Acting Chairperson, Vice Chairperson, Treasurer, Secretary or any other person designated as an Authorized Representative of the Authority by a Written Certificate of the Authority signed by its Chairperson and filed with the City and the Trustee; and (b) with respect to the City, its Mayor, City Manager, City Clerk, Treasurer, Finance Director or any other person designated as an Authorized Representative of the City by a Written Certificate of the City signed by its Mayor or City Manager and filed with the Trustee.

“Board” means the Board of Directors of the Authority.

“Bond Counsel” means (a) Orrick, Herrington & Sutcliffe LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Authority of nationally recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.

“Bond Fund” means the fund by that name established and held by the Trustee pursuant to the Indenture.

C-1 “Bond Law” means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State, as in existence on the Closing Date or as thereafter amended from time to time.

“Bond Year” means each twelve-month period extending from December 2 in one calendar year to December 1 of the succeeding calendar year, both dates inclusive, except that the first Bond Year shall commence on the Closing Date, and end on June 1, 2017.

“Bonds” means the Series BB Bonds and the Series BD Bonds.

“Series BB Bonds” means the aggregate principal amount of Pomona Public Financing Authority Revenue Refunding Bonds, Series BB (Sewer Projects), authorized by and at any time Outstanding pursuant to the Bond Law and the Indenture.

“Series BD Bonds” means the aggregate principal amount of Pomona Public Financing Authority Taxable Revenue Refunding Bonds, Series BD (Sewer Projects), authorized by and at any time Outstanding pursuant to the Bond Law and the Indenture.

“Business Day” means a day (other than a Saturday or a Sunday) on which banks are not required or authorized to remain closed in the city in which the Trust Office is located.

“Closing Date” means the date of delivery of the Bonds to the Underwriter.

“Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the City dated as of October 1, 2016, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

“Costs of Issuance” means all expenses incurred in connection with the authorization, issuance, sale and delivery of the Bonds and the application of the proceeds of the Bonds, including but not limited to all compensation, fees and expenses (including but not limited to fees and expenses for legal counsel) of the Authority, initial fees and expenses of the Trustee, title insurance premiums, municipal bond insurance premiums, appraisal fees, compensation to any financial consultants or underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of preparation and reproduction of documents and costs of printing.

“Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to the Indenture.

“Defeasance Obligations” means cash and Federal Securities:

“Enterprise” means the entire sewage collection, treatment and disposal system owned or operated by the City, including but not limited to all facilities, properties and improvements at any time owned or operated by the City for the collection, treatment and disposal of sewage, whether within or without the City, and any other systems or facilities resulting in the deposits of fees or charges therefor into the Utility

C-2 Fund; together with any necessary lands, rights, entitlements and other property useful in connection with all of the foregoing, together with all extensions thereof and improvements thereto hereafter acquired, constructed or installed by the City, all as provided in Chapter 12 of the Pomona City Code.

“Federal Securities” means, with respect to the Bonds: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), for which the full faith and credit of the United States of America are pledged; or (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are fully and unconditionally directly or indirectly secured or guaranteed by the full faith and credit of the United States of America; specifically:

U.S. treasury Obligations, all direct or fully guaranteed obligations, Farmers Home Administration, General Services Administration, Guaranteed Title IX financing, Government National Mortgage Association (GNMA), and State and Local Government Series.

“Fiscal Consultant” means any consultant or firm of such consultants appointed by the Authority and the City and who, or each of whom: (a) is judged by the Authority and the City to have experience in matters relating to the financing of sewer system enterprises; (b) is in fact independent and not under domination of the Authority or the City; (c) does not have any substantial interest, direct or indirect, with the Authority or the City; and (d) is not connected with the Authority or the City as an officer or employee of the Authority or the City, but who may be regularly retained to make reports to the Authority or the City.

“Fiscal Year” means any twelve-month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve month period selected and designated by the Authority as its official fiscal year period.

“Gross Revenues” means all gross charges received for, and all other gross income and receipts derived by the City from, the ownership and operation of the Enterprise or otherwise arising from the Enterprise, including but not limited to investment earnings thereon; but excluding (a) connection charges, (b) the proceeds of any ad valorem property taxes levied for the purpose of paying general obligation bonds of the City relating to the Enterprise, and (c) the proceeds of any special assessments or special taxes levied upon real property within any improvement district served by the City levied for the purpose of paying special assessment bonds or special tax obligations of the City relating to the Enterprise.

“Indenture” means that certain Indenture by and between the Authority and the Trustee, dated as of October 1, 2016, as originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof.

“Independent Accountant” means any certified public accountant or firm of certified public accountants appointed and paid by the Authority or the City, and who, or each of whom (a) is in fact independent and not under domination of the Authority or the City; (b) does not have any substantial interest, direct or indirect, in the Authority or the City; and (c) is not connected with the Authority or the City as an officer or employee of the Authority or the City but who may be regularly retained to make annual or other audits of the books of or reports to the Authority or the City.

“Installment Payment Date” means the fifteenth (15th) day of each May and November during the Term of the Installment Sale Agreement, commencing November 15, 2016.

C-3 “Installment Payments” means the payments required to be paid by the City pursuant to the Installment Sale Agreement, including all prepayments thereof.

“Installment Sale Agreement” means that certain Installment Sale Agreement by and between the Authority and the City, dated as of October 1, 2016, as originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof and of the Indenture.

“Interest Account” means the account by that name established in the Bond Fund pursuant to the Indenture.

“Interest Payment Date” means each June 1 and December 1, commencing June 1, 2017.

“Maximum Annual Debt Service” means, as of the date of any calculation and with respect to the Installment Payments or any Parity Obligations, as the case may be, the maximum sum obtained for the current or any future Bond Year during the Term of the Installment Sale Agreement by totaling the following amounts for such Bond Year:

(a) the aggregate amount of the Installment Payments coming due and payable in such Bond Year pursuant to the Indenture, except to the extent payable from any security deposit pursuant to the Installment Sale Agreement;

(b) the principal amount of all outstanding Parity Obligations, if any, coming due and payable by their terms in such Bond Year;

(c) the amount of interest which would be due during such Bond Year on the aggregate principal amount of all outstanding Parity Obligations, if any, which would be outstanding in such Bond Year if such Parity Obligations are retired as scheduled; provided, however, that with respect to any Parity Obligations which bear interest at a variable rate, such interest shall be calculated at an assumed rate equal to the average rate of interest per annum for each of the five previous whole calendar years as shown by the J. J. Kinney Index (or, in the event and to the extent such index is not maintained for all or any portion of such period, any similar index of variable rate interest for tax-exempt obligations as may be selected by the City); and

(d) Maximum Annual Debt Service for purposes of establishing the amount required to be funded in a reserve fund for Parity Obligations as required by the Installment Sale Agreement shall be calculated solely with respect to the principal and interest which would be due on such proposed Parity Obligations during such Bond Year.

“Moody’s” means Moody’s Investors Service, its successors and assigns.

“MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, and notified by the Authority to the Trustee, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.

“Net Revenues” means, for any period, an amount equal to all of the Gross Revenues received during such period minus the amount required to pay all Operation and Maintenance Costs becoming payable during such period.

“Operation and Maintenance Costs” means the reasonable and necessary costs and expenses paid by the City for maintaining and operating the Enterprise, including but not limited to (a) costs of acquisition

C-4 of water to be supplied to the Enterprise, (b) costs of electricity and other forms of energy supplied to the Enterprise, (c) the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the Enterprise in good repair and working order, and (d) the reasonable administrative costs of the City attributable to the operation and maintenance of the Enterprise; but in all cases excluding (i) debt service payable on obligations incurred by the City with respect to the Enterprise, including but not limited to the Installment Payments and any Parity Obligations, (ii) depreciation, replacement and obsolescence charges or reserves therefor, and (iii) amortization of intangibles or other bookkeeping entries of a similar nature.

“Outstanding”, when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenture) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under the Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with the Indenture, including Bonds (or portions thereof) described in the Indenture; and (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to the Indenture.

“Owner”, whenever used in the Indenture with respect to a Bond, means the person in whose name the ownership of such Bond is registered on the Registration Books.

“Parity Obligations” means the 2007 Installment Sale Agreement and any leases, loan agreements, installment sale agreements, bonds, notes or other obligations of the City payable from and secured by a pledge of and lien upon any of the Net Revenues on a parity with the Installment Payments, entered into or issued pursuant to and in accordance with the Installment Sale Agreement.

“Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure Certificate.

“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:

(a) Federal Securities;

(b) (i) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: Export-Import Bank, Rural Economic Community Development Administration (formerly Farmers Home Administration), General Services Administration, U.S. Maritime Administration, Small Business Administration, Government National Mortgage Association, U.S. Department of Housing & Urban Development, Federal Housing Administration and Federal Financing Bank, and (ii) direct obligations for any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations rated “Aaa” by Moody’s and “AAA” by S&P issued by Fannie Mae or Federal Home Loan Mortgage Corporation (FHLMC); obligations of the Resolution Funding Corporation (REFCORP); and senior debt obligations of the Federal Home Loan Bank System;

(c) U.S. dollar denominated deposit accounts; bank deposit products, certificates of deposit (including those placed by a third party pursuant to an agreement between the Authority and the Trustee), trust funds, trust accounts, overnight bank deposits, interest-bearing deposits, interest-bearing money market accounts, federal funds and banker’s acceptances with domestic commercial banks, which may include the Trustee, its parent holding company, if any, and their affiliates, which (i) have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-1” or “A¬1+” by S&P and maturing no more than 360 days after the

C-5 date of purchase, provided that ratings on holding companies are not considered as the rating of the bank or (ii) are fully insured by the Federal Deposit Insurance Corporation;

(d) commercial paper which is rated at the time of purchase in the single highest classification, “P-1” by Moody’s and “A-1+” by S&P, and which matures not more than 270 calendar days after the date of purchase;

(e) investments in a money market mutual fund, including those of an affiliate of the Trustee, rated “AAAm” or “AAAm-G” or better by S&P, including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee or such holding company receive and retain a fee for services provided to the fund, for which it provides investment advisory, transfer agency, custody or other management services;

(f) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based upon an irrevocable escrow account or fund, in the highest rating category of Moody’s and S&P or any successors thereto; or (ii)(A) subject to the approval of S&P, which are fully secured as to principal and interest and prepayment premium, if any, by an escrow consisting only of Federal Securities, which escrow may be applied only to the payment of such principal of and interest and prepayment premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified prepayment date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and prepayment premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the prepayment date or dates specified in the irrevocable instructions referred to above, as appropriate;

(g) investment agreements, supported by appropriate opinions of counsel;

(h) the Local Agency Investment Fund of the State of California, created pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name;

(i) commercial paper having, at the time of investment or contractual commitment to invest therein, a rating from Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”), of A1 and P1, respectively; and

(j) repurchase and reverse repurchase agreements collateralized with Federal Securities, including those of the Trustee or any of its affiliates.

“Principal Account” means the account by that name established in the Bond Fund pursuant to the Indenture.

“Rate Stabilization Fund” means the Rate Stabilization Fund established by the City pursuant to the Installment Sale Agreement.

“Record Date” means, with respect to any Interest Payment Date, the fifteenth (15th) calendar day of the month preceding such Interest Payment Date.

“Redemption Fund” means the fund by that name established pursuant to the Indenture.

C-6 “Registration Books” means the records maintained by the Trustee pursuant to the Indenture for the registration and transfer of ownership of the Bonds.

“Reserve Account” means the account by that name in the Bond Fund established pursuant to the Indenture.

“Reserve Account Credit Facility” shall mean a letter of credit, line of credit, surety bond, insurance policy or similar facility deposited in the Reserve Account in lieu of, or in partial substitution for cash or securities deposited therein.

“Reserve Requirement” means (i) prior to the defeasance of the 2007 Series BA Bonds pursuant to Article X of the Series BA Indenture (the “2007 Bond Defeasance Date”), as of the date of calculation, an amount equal to the maximum amount of annual Debt Service coming due and payable in the current or any future Bond Year and (ii) following the 2007 Bond Defeasance Date, such amount, if any, as the Authority, in its sole discretion, shall determine by execution of a Supplemental Indenture for such purpose.

“Revenues” means (a) all amounts received by the Authority or the Trustee pursuant or with respect to the Installment Sale Agreement, including, without limiting the generality of the foregoing, all of the Installment Payments (including both timely and delinquent payments, any late charges, and whether paid from any source), prepayments, insurance proceeds, condemnation proceeds, and (b) all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to the Indenture; but excluding any Additional Payments.

“S&P” means S&P Global Ratings, its successors and assigns.

“Series BA Indenture” means the Indenture of Trust, dated as of January 1, 2007, by and between the Authority and The Bank of New York Mellon Trust Company, N.A.

“State” means the State of California.

“Supplemental Indenture” means any indenture hereafter duly authorized and entered into between the Authority and the Trustee, supplementing, modifying or amending the Indenture.

“Tax Code” means the Internal Revenue Code of 1986, as amended.

“Tax Regulations” means temporary and permanent regulations promulgated under or with respect to sections 103 and 141 through 150, inclusive, of the Tax Code.

“Term Bonds” means Bonds which are payable on or before their specified maturity dates from sinking fund payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates.

“Term of the Installment Sale Agreement” means the time during which the Installment Sale Agreement is in effect.

“Trust Office” means the corporate trust office of the Trustee at 700 South Flower, Suite 500, Los Angeles, California 90017, or at such other or additional offices as may be specified in writing to the Authority and the City.

“2007 Installment Sale Agreement” means the Installment Payment Agreement, dated as of January 1, 2007, by and between the Authority and the City.

C-7 “2007 Series BA Bonds” means the 2007 Revenue Bonds, Series BA (Sewer Projects) issued in the initial principal amount of $15,575,000 pursuant to an Indenture of Trust, dated as of January 1, 2007, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee.

“Underwriter” means B.C. Ziegler and Company, as the underwriter of the Bonds upon their delivery by the Trustee on the Closing Date.

“Utility Fund” means, the City’s existing Sewer Enterprise Fund established pursuant to Section 12-15 of the Pomona City Code and held by the City with respect to the Enterprise.

“Written Certificate”, “Written Request” and “Written Requisition” of the Authority or the City mean, respectively, a written certificate, request or requisition signed in the name of the Authority or the City by its Authorized Representative. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.

INDENTURE OF TRUST

Pledge and Assignment; Bond Fund

Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Revenues and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Indenture are pledged to secure the payment of the principal of and interest on the Bonds in accordance with their terms and the provisions of the Indenture. Said pledge will constitute a lien on and security interest in such assets and will attach, be perfected and be valid and binding from and after the Closing Date, without any physical delivery thereof or further act.

The Authority will agree to transfer in trust, grant a security interest in and assign to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues and all of the rights of the Authority (but none of its duties or obligations) in the Installment Sale Agreement (other than the rights of the Authority to give consents and approvals thereunder and its rights thereunder). The Trustee will be entitled to and will collect and receive all of the Revenues, and any Revenues collected or received by the Authority will be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and will forthwith be paid by the Authority to the Trustee. The Trustee also will be entitled to and will, subject to the provisions of the Indenture, take all steps, actions and proceedings which the Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the City under the Installment Sale Agreement.

The assignment of the Installment Sale Agreement to the Trustee is solely in its capacity as Trustee under the Indenture and the duties, powers and liabilities of the Trustee in acting thereunder will be subject to the provisions of the Indenture, including, without limitation, the provisions of the Indenture. The Trustee will not be responsible for any representations, warranties, covenants or obligations of the Authority.

Subject to the terms of the Indenture as summarized below under the caption “Investment of Funds,” all Revenues will be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which the Trustee will establish, maintain and hold in trust; except that all moneys received by the Trustee and required under the Indenture or under the Installment Sale Agreement to be deposited in the. Redemption Fund will be promptly deposited in such Fund. All Revenues deposited with the Trustee will be held, disbursed, allocated and applied by the Trustee only as provided in the Indenture.

C-8 Allocation of Revenues

Not later than the first Business Day preceding each date on which principal of or interest on the Bonds becomes due and payable, the Trustee will transfer from the Bond Fund and deposit into the following respective accounts (each of which the Trustee will establish and maintain within the Bond Fund), the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:

(a) The Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such date on all Bonds then Outstanding.

(b) The Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds coming due and payable on such date.

(c) The Trustee will deposit in the Sinking Account an amount equal to the aggregate principal amount of the Term Bonds required to be redeemed on such date, if any.

(d) The Trustee will deposit in the Reserve Account an amount, if any, required to cause the amount on deposit in the Reserve Account to be equal to the Reserve Requirement.

Reserve Account

All amounts in the Reserve Account will be used and withdrawn by the Trustee solely for the purpose of (a) paying interest on or principal of the Bonds, when due and payable to the extent that moneys deposited in the Interest Account or Principal Account, respectively, are not sufficient for such purpose, (b) paying the redemption price of any Term Bonds to be redeemed from Sinking Account payments in the event that amounts on deposit in the Sinking Fund are not sufficient for such purpose, and (c) making the final payments of principal of and interest on the Bonds. On the date on which all Bonds will be retired under the Indenture or provision made therefor pursuant to the Indenture, all moneys then on deposit in the Reserve Account will be withdrawn by the Trustee and paid to the City as a refund of overpaid Installment Payments. If as of the first (1st) day of the month preceding any Interest Payment Date there will be any deficiency in the Reserve Account (whether due to a payment therefrom or due to the fluctuation in market value of securities credited thereto, or otherwise), the Trustee will promptly notify the City in writing of the amount of such deficiency and the City will pay to the Trustee the amount of such deficiency as provided in the Installment Sale Agreement as summarized below under the caption “under the caption ” INSTALLMENT SALE AGREEMENT - Pledge of Net Revenues.” Any amounts on deposit in the Reserve Account at any time in excess of the Reserve Requirement will be transferred to the Bond Fund.

If following the 2007 Bond Defeasance Date the Reserve Requirement is reduced or the City exercises its option to substitute a Reserve Account Credit Facility for all or a portion of the moneys held by the Trustee in the Reserve Account, then such moneys, on or after the date of such reduction or the date that the Reserve Account Credit Facility becomes effective, at the option of the City, will be transferred (A) to the Bond Fund and on each subsequent Principal Payment Date, to the Principal Account and used to pay the principal of the Bonds due on such Principal Payment Date, or (B) to a construction fund to be held by the City and used for capital projects of the City in accordance with the Tax Certificate.

C-9 Establishment of Funds and Accounts; Flow of Funds

Costs of Issuance Fund. A portion of the proceeds of the Bonds will be deposited by the Trustee in the Costs of Issuance Fund on the Closing Date. The moneys in the Costs of Issuance Fund will be disbursed to pay costs of issuing the Bonds and other related financing costs from time to time upon receipt of written requests of the Authority. On December 1, 2016, or upon the earlier request of the Authority, all amounts remaining in the Costs of Issuance Fund will be transferred by the Trustee to the Bond Fund.

Bond Fund: Deposit and Transfer of Amounts Therein. All Revenues will be deposited by the Trustee in the Bond Fund promptly upon receipt. Not later than the first Business Day preceding each date on which principal of or interest on the Bonds becomes due and payable, the Trustee will transfer from the Bond Fund and deposit into the following respective accounts (each of which the Trustee will establish and maintain within the Bond Fund), the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit ) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:

(a) Interest Account. The Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on such date on all Outstanding Bonds. All moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it will become due and payable (including accrued interest on any Bonds redeemed prior to maturity).

(b) Principal Account. The Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit therein to equal the principal amount of the Bonds maturing on such date. All moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds at the maturity thereof.

(c) Sinking Account. The Trustee will deposit in the Sinking Account an amount equal to the aggregate principal amount of the Term Bonds required to be redeemed on such date, if any. Amounts on deposit in the Sinking Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Term Bonds upon the mandatory sinking account redemption thereof.

(d) Reserve Account. The Trustee will deposit in the Reserve Account an amount, if any, required to cause the amount on deposit in the Reserve Account to be equal to the Reserve Requirement. All amounts in the Reserve Account will be used and withdrawn by the Trustee solely for the purpose of (i) paying principal of or interest on the Bonds, including the principal amount of any Term Bonds subject to mandatory sinking account redemption, when due and payable to the extent that moneys deposited in the Interest Account, Principal Account or Sinking Account are not sufficient for such purpose, and (ii) making the final payments of principal of and interest on the Bonds. Any amounts remaining in the Reserve Account upon payment in full of all Outstanding Bonds, will be withdrawn by the Trustee and paid to the City as a refund of overpaid Installment Payments. If as of the first (1st) day of the month preceding any Interest Payment Date there will be any deficiency in the Reserve Account (whether due to a payment therefrom or due to the fluctuation in market value of securities credited thereto, or otherwise), the Trustee will promptly notify the City in writing of the amount of such deficiency and the City will pay to the Trustee the amount of such deficiency. Any amounts on deposit in the Reserve Account at any time in excess of the Reserve Requirement will be transferred to the Bond Fund.

C-10 (A) to the Bond Fund and on each subsequent Principal Payment Date, to the Principal Account and used to pay the principal of the Bonds due on such Principal Payment Date, or (B) to a construction fund to be held by the City and used for capital projects of the City in accordance with the Tax Certificate.

Redemption Fund. The Trustee will establish and maintain the Redemption Fund, amounts in which will be used and withdrawn by the Trustee solely for the purpose of paying the principal of on the Bonds to be redeemed (other than Term Bonds to be redeemed from Sinking Account deposits). At any time prior to giving notice of redemption of any such Bonds, the Trustee may apply such amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as will be directed pursuant to a request of the Authority, except that the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the Bonds if the Bonds are then subject to optional redemption.

Investment of Funds

All moneys in any of the funds or accounts established with the Trustee pursuant to the Indenture will be invested by the Trustee solely in Permitted Investments. Such investments will be directed by the Authority pursuant to a Written Request of the Authority filed with the Trustee at least two (2) Business Days in advance of the making of such investments. In the absence of any such directions from the Authority, the Trustee will hold such funds uninvested. Permitted Investments purchased as an investment of moneys in any fund will be deemed to be part of such fund or account. At least one-half of the amount in the Reserve Account is to be invested in Permitted Investments with maturities of less than six (6) months; the remainder of such amount is to be invested in Permitted Investments with maturities of not more than five (5) years, unless invested in an investment agreement. The Reserve Account will be marked to market valuation conducted on not less than an annual basis by the Trustee. In making any such market valuation, the Trustee may utilize and conclusively rely upon, without liability, such generally recognized pricing services (including brokers and dealers in securities) as are available to it.

All interest or gain derived from the investment of amounts in any of the funds or accounts established under the Indenture will be deposited in the Bond Fund, provided, however, that earnings on the investment of amounts in the Reserve Account will be retained therein to the extent required to maintain the Reserve Requirement. For purposes of acquiring any investments under the Indenture, the Trustee may commingle funds held by it under the Indenture. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee will incur no liability for losses arising from any investments made pursuant to the Authority’s written direction.

Covenants of the Authority

Payment of Bonds. The Authority will punctually pay or cause to be paid the principal and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of the Indenture, but only out of Revenues and other assets pledged for such payment as provided in the Indenture. The Authority will not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under the Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by the Indenture.

Accounting Records and Financial Statements. The Trustee will at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with industry standards, in which complete and accurate entries will be made of ail transactions made by it relating to the proceeds of the Bonds, the Revenues, the Installment Sale Agreement and all funds and accounts established pursuant to the Indenture. Such books of record and account will be available for inspection by the Authority and the City, during regular business hours and upon reasonable prior notice.

C-11 No Additional Obligations. The Authority covenants that no additional bonds, notes or other indebtedness will be issued or incurred which are payable out of the Revenues in whole or in part.

Continuing Disclosure. Pursuant to the Installment Sale Agreement, the City has undertaken all responsibility for compliance with continuing disclosure requirements and the Authority will have no liability to the holders of the Bond or any other person with respect to such disclosure matters. Notwithstanding any other provision of the Indenture, failure of the City to comply with the Continuing Disclosure Certificate will not be considered an Event of Default. However, any Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

Installment Sale Agreement. The Trustee will promptly collect all amounts due from the City pursuant to the Installment Sale Agreement. Subject to the provisions of the Indenture governing the enforcement of remedies upon the occurrence of an event of default, the Trustee will enforce, and take all steps, actions and proceedings which the Trustee determines to be reasonably necessary for the enforcement of all of its rights thereunder as assignee of the Authority and for the enforcement of all of the obligations of the City under the Installment Sale Agreement.

Amendment of Indenture

The Indenture may be modified or amended at any time by a supplemental indenture with the written consents of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding. No such modification or amendment may (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.

The Indenture may also be modified or amended at any time by a supplemental indenture, without the consent of any Bond Owners, to the extent permitted by law, but only for any one or more of the following purposes:

(a) to add to the covenants and agreements of the Authority contained in the Indenture, other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power therein reserved to or conferred upon the Authority;

(b) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in the Indenture, or in any other respect whatsoever, as the Authority may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the interests of the Bond Owners;

(c) to modify, amend or supplement the Indenture in such manner as to permit the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute;

(d) to modify, amend or supplement the Indenture in such manner as to cause interest on the Series BB Bonds to remain excludable from gross income under the Tax Code;

C-12 (e) to facilitate the issuance of Parity Obligations by the City under the Installment Sale Agreement; or

(f) on or after the 2007 Defeasance Date, to determine the amount, if any, of the Reserve Requirement, and to provide such terms, conditions and provisions applicable to the administration of the Reserve Account for the crediting to the Reserve Account of a Reserve Account Credit Facility.

Events of Default

Events of Default Defined. The following events constitute “Events of Default” under the Indenture:

(a) Default in the due and punctual payment of the principal of any Bonds when and as the same will become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise;

(b) Default in the due and punctual payment of any installment of interest on any Bonds when and as the same will become due and payable;

(c) Default by the Authority in the observance of any of the other covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, if such default will have continued for a period of thirty (30) days after written notice thereof, specifying such default and requiring the same to be remedied, will have been given to the Authority by the Trustee; provided, however, that if in the reasonable opinion of the Authority the default stated in the notice can be corrected, but not within such thirty (30) day period, such default will not constitute an Event of Default under the Indenture if the Authority will, commence to cure such default within such thirty (30) day period and thereafter diligently and in good faith cure such failure in a reasonable period of time;

(d) The filing by the Authority of a voluntary petition in bankruptcy, or failure by the Authority promptly to lift any execution, garnishment or attachment, or adjudication of the Authority as a bankrupt, or assignment by the Authority for the benefit of creditors, or the entry by the Authority into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Authority in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted; or

(e) The occurrence and continuation of any event of default under and as defined in the Installment Sale Agreement.

Remedies. Upon the occurrence of an Event of Default, the Trustee will at the written direction of the Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding and upon notice in writing to the Authority and the City, declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and, subject to receipt of indemnity satisfactory to it, enforce any rights of the Trustee under or with respect to the Indenture. The Trustee is irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, will be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in- fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds, the Indenture and applicable provisions of any law. Upon the occurrence and continuance of an event of default or other occasion giving rise to a right in the Trustee to represent the Bond Owners, the Trustee upon the written request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, the Trustee will, proceed to protect or enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it will deem most

C-13 effectual to protect and enforce any such right, at law or in equity. No delay or omission to exercise any right or power accruing upon any event of default will impair any such right or power or will be construed to be a waiver of any such event of default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient.

Any such declaration is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the moneys due will have been obtained or entered, the Authority or the City will deposit with the Trustee a sum sufficient to pay all the principal of and installments of interest on the Bonds payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds to the extent permitted by law, and the reasonable fees, charges and expenses (including those of its attorneys) of the Trustee, and any and all other Events of Default actually known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) will have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate will have been made therefor, then, and in every such case, the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority, the City and the Trustee, or the Trustee if such declaration was made by the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences and waive such Event of Default; but no such rescission and annulment will extend to or will affect any subsequent Event of Default, or will impair or exhaust any right or power consequent thereon.

Trustee to Represent Bond Owners. The Trustee is irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, will be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds, the Indenture and applicable provisions of any law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bond Owners, the Trustee may, in its discretion, and upon the written request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding with the consent of the nsurer, and upon being indemnified to its satisfaction therefor, will, proceed to protect or enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it will deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained in the Indenture, or in aid of the execution of any power granted under the Indenture, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under the Bonds, the Indenture or any other law; and upon instituting such proceeding, the Trustee will be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other assets pledged under the Indenture, pending such proceedings. All rights of action under the Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee will be brought in the name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions of the Indenture. Nothing in the Indenture will be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected.

Bond Owners’ Direction of Proceedings. Anything in the Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding will have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee under the Indenture, provided that such direction will not be otherwise than in accordance with law and the provisions of the Indenture, and that the Trustee

C-14 will have the right to decline to follow any such direction which in the opinion of the Trustee would expose it to liability.

Limitation on Bond Owners’ Right to Sue. No Owner of any Bonds will have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under the Indenture, the Installment Sale Agreement or any other applicable law with respect to such Bonds, unless (a) such Owner will have given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding will have made written request upon the Trustee to exercise the powers granted under the Indenture or to institute such suit, action or proceeding in its own name; (c) such Owner or Owners will have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee will have failed to comply with such request for a period of sixty (60) days after such written request will have been received by, and said tender of indemnity will have been made to, the Trustee; and (e) no direction inconsistent with such written request will have been given to the Trustee during such sixty (60) day period by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding.

Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy under the Indenture or under law; it being understood and intended that no one or more Owners of Bonds will have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of the Indenture or the rights of any other Owners of Bonds, or to enforce any right under the Bonds, the Indenture, the Installment Sale Agreement or other applicable law with respect to the Bonds, except in the manner provided in the Indenture, and that all proceedings at law or in equity to enforce any such right will be instituted, had and maintained in the manner provided in the Indenture and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of the Indenture.

Absolute Obligation of Authority. Nothing in the Indenture or in the Bonds will affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the principal of and interest and premium (if any) on the Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon call for redemption, as provided therein, but only out of the Revenues and other assets pledged therefor under the Indenture, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.

Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Bond Owners on account of any Event of Default will have been discontinued or abandoned for any reason or will have been determined adversely to the Trustee or the Bond Owners, then in every such case the Authority, the Trustee and the Bond Owners, subject to any determination in such proceedings, will be restored to their former positions and rights under the Indenture, severally and respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and the Bond Owners will continue as though no such proceedings had been taken.

Remedies Not Exclusive. No remedy conferred upon or reserved to the Trustee or to the Owners of the Bonds under the Indenture is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, will be cumulative and in addition to any other remedy given under the Indenture or now or hereafter existing at law or in equity or otherwise.

No Waiver of Default. No delay or omission of the Trustee or of any Owner of the Bonds to exercise any right or power arising upon the occurrence of any Event of Default will impair any such right or power or will be construed to be a waiver of any such Event of Default or an acquiescence therein; and every power and remedy given by the Indenture to the Trustee or the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient.

C-15 Discharge of Indenture

The Authority may pay and discharge the indebtedness on any or all of the Outstanding Bonds in any one or more of the following ways:

(a) by paying or causing to be paid the principal of and interest on the Bonds, as and when the same become due and payable;

(b) by irrevocably depositing with the Trustee, in trust, at or before maturity, cash and/or Defeasance Obligations which, together with the investment earnings to be received thereon, have been verified by an independent accountant to be sufficient to pay or redeem such Bonds when and as the same become due and payable; or

Upon such payment, and notwithstanding that any Bonds have not been surrendered for payment, the pledge of the Revenues and other funds provided for in the Indenture with respect to such Bonds, and all other obligations of the Authority under the Indenture with respect to such Bonds, will cease and terminate, except only the obligation of the Authority to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose. Any funds thereafter held by the Trustee, which are not required for said purposes, will be paid over to the Authority.

Whenever in the Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee money or securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be deposited or held may include money or securities held by the Trustee in the funds and accounts established pursuant to the Indenture and shall be:

(a) Lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as provided in the Indenture or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the principal amount of such Bonds and all unpaid interest thereon to the redemption date; or

(b) Defeasance Obligations, the principal of and interest on which when due will, in the written opinion of an Independent Accountant (the “Verification”) filed with the City, the Authority and the Trustee, provide money sufficient to pay the principal of and interest and premium (if any) on the Bonds to be paid or redeemed, as such principal, interest and premium become due, provided that in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in the Indenture or provision satisfactory to the Trustee shall have been made for the giving of such notice; provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms of the Indenture or by Written Request of the Authority) to apply such money to the payment of such principal, interest and premium (if any) with respect to such Bonds, (ii) the Authority shall have delivered to the Trustee an opinion of Bond Counsel to the effect that such Bonds have been discharged in accordance with the Indenture (which opinion may rely upon and assume the accuracy of the Independent Accountant’s opinion referred to above) and (iii) all fees and expenses of the Trustee have been provided for.

C-16 Unclaimed Funds

Notwithstanding any provisions of the Indenture, and subject to applicable provisions of State law, any moneys held by the Trustee in trust for the payment of the principal of, or interest on, any Bonds and remaining unclaimed for two (2) years after the principal of all of the Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as provided in the Indenture), if such moneys were so held at such date, or two (2) years after the date of deposit of such moneys if deposited after said date when all of the Bonds became due and payable, shall be repaid (without liability for interest) to the Authority free from the trusts created by the Indenture and at the request of the Trustee an indemnification agreement acceptable to the Authority, the City and the Trustee indemnifying the Trustee with respect to claims of Owners of Bonds which have not yet been paid, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the City as aforesaid, the Trustee may (at the cost of the City) first mail to the Owners of Bonds which have not yet been paid, at the addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Authority of the moneys held for the payment thereof.

Governing Law

The Indenture will be construed in accordance with and governed by the laws of the State.

INSTALLMENT SALE AGREEMENT

Sale of Improvements; Term

The Authority agrees to sell the Refinanced Improvements to the City pursuant to the Installment Sale Agreement. The Installment Sale Agreement commences upon the date thereof, and terminates on the date on which the City has paid all of the Installment Payments and all other amounts due and payable thereunder.

Installment Payments

The City agrees to pay Installment Payments as the purchase price of the Improvements and the Refinanced Improvements. The Installment Payment are payable solely from the Net Revenues and other funds pledged under the Installment Sale Agreement. All of the Gross Revenues will be deposited by the City immediately upon receipt in the Utility Fund which has previously been established by the City and which will continue to be held and maintained by the City at all times during the term of the Installment Sale Agreement. The City covenants and agrees that all Net Revenues will be held by the City in the Utility Fund in trust for the benefit of the Trustee (as assignee of the rights of the Authority) and the Bond Owners, and for the benefit of the owners of any Parity Obligations.

Deposit and Application of Gross Revenues

All of the Gross Revenues will be deposited by the City immediately upon receipt in the Utility Fund. The City agrees that all Net Revenues will be held by the City in the Utility Fund in trust for the benefit of the Trustee (as assignee of the rights of the Authority) and the Bond Owners, and for the benefit of the owners of any Parity Obligations. Each month, the City will segregate within an account in the Utility Fund, one-sixth of the amount required to be transferred to the Trustee on the next occurring Installment Payment Date. On or before each Installment Payment Date, the City is required to withdraw from the Utility Fund and transfer to the Trustee, for deposit in the Bond Fund, an amount which, together with the balance then on deposit in the Bond Fund, the Interest Account, the Sinking Account and the

C-17 Principal Account (other than amounts resulting from the prepayment of the Installment Payments and other than amounts required for payment of principal of or interest on any Bonds which have matured or been called for redemption but which have not been presented for payment ), is equal to the aggregate amount of the Installment Payments coming due and payable on the next succeeding Interest Payment Date.

In addition, the City is required to withdraw from the Utility Fund such amounts at such times as shall be required to: (i) pay all Operation and Maintenance Costs as they come due and payable; (ii) pay the principal of and interest on any Parity Obligations and otherwise comply with the provisions of the instruments authorizing the issuance of any Parity Obligations; (iii) pay to the Trustee the amount of any deficiency in the Reserve Account, the notice of which deficiency shall have been given by the Trustee to the City pursuant to the Indenture; and (iv) pay all other amounts when and as due and payable under the Installment Sale Agreement.

The City is required to manage, conserve and apply the Net Revenues on deposit in the Utility Fund in such a manner that all deposits required to be made pursuant to the preceding paragraph will be made at the times and in the amounts so required. So long as no Event of Default has occurred and is continuing, the City may use and apply moneys in the Utility Fund for (i) the payment of additional amounts payable under the Installment Sale Agreement, (ii) the payment of any subordinate obligations or any unsecured obligations, (iii) the prepayment of any obligations of the City relating to the Enterprise, or (iv) any other lawful purposes of the City.

Pledge of Net Revenues

All of the Net Revenues and all moneys on deposit in any of the funds and accounts established under the Indenture are irrevocably pledged, charged and assigned to the punctual payment of the Installment Payments and except as otherwise provided in the Installment Sale Agreement, the Net Revenues and such other funds shall not be used for any other purpose so long as any of the Installment Payments remain unpaid. Such pledge, charge and assignment shall constitute a first lien on the Net Revenues and such other moneys for the payment of the Installment Payments in accordance with the terms of the Installment Sale Agreement. Notwithstanding the foregoing, the pledge of and lien on the Net Revenues for the payment of Installment Payments contained in the Installment Sale Agreement is on a parity with the pledge of and lien on Net Revenues for the payment of any Parity Obligations.

All of the Gross Revenues shall be deposited by the City immediately upon receipt in the Utility Fund. The City covenants and agrees that all Net Revenues will be held by the City in the Utility Fund in trust for the benefit of the Trustee (as assignee of the rights of the Authority under the Installment Sale Agreement) and the Bond Owners, and for the benefit of the owners of any Parity Obligations. On or before each Installment Payment Date, the City shall withdraw from the Utility Fund and transfer to the Trustee, for deposit in the Bond Fund, an amount which, together with the balance then on deposit in the Bond Fund, the Interest Account, the Sinking Account and the Principal Account (other than amounts resulting from the prepayment of the Installment Payments pursuant to the Installment Sale Agreement and other than amounts required for payment of principal of or interest on any Bonds which have matured or been called for redemption but which have not been presented for payment), is equal to the aggregate amount of the Installment Payment coming due and payable on the next succeeding Interest Payment Date.

In addition, the City shall withdraw from the Utility Fund such amounts at such times as shall be required to: (i) pay all Operation and Maintenance Costs as they come due and payable; (ii) pay the principal of and interest on any Parity Obligations and otherwise comply with the provisions of the instruments authorizing the issuance of any Parity Obligations; (iii) pay on or before the next Interest Payment Date to the Trustee the amount of any deficiency in the Reserve Account, the notice of which deficiency shall have been given by the Trustee to the City pursuant to the Indenture; and (iv) pay all other amounts when and as due and payable under the Installment Sale Agreement.

C-18 The City shall manage, conserve and apply the Net Revenues on deposit in the Utility Fund in such a manner that all deposits required to be made pursuant to the preceding subsection (b) will be made at the times and in the amounts so required. Subject to the foregoing sentence, so long as no Event of Default shall have occurred and be continuing under the Installment Sale Agreement, the City may use and apply moneys in the Utility Fund for (i) the payment of Additional Payments, (ii) the payment of any subordinate obligations or any unsecured obligations, (iii) the acquisition and construction of extensions and betterments to the Enterprise, (iv) the prepayment of any obligations of the City relating to the Enterprise, or (v) any other lawful purposes of the City.

Rate Stabilization Fund Deposit

The City will, pursuant to the Installment Sale Agreement, establish and maintain a Rate Stabilization Fund, referred to herein as the “Sewer Rate Stabilization Fund.” From time to time the City may deposit in the Sewer Rate Stabilization Fund from remaining Gross Revenues such amounts as the City shall determine, provided that deposits for each Fiscal Year may be made until (but not after) one hundred eighty (180) days following the end of such Fiscal Year and the amount of current and available Gross Revenues shall be reduced by the amount so deposited for the Fiscal Year with respect to which such deposit is made. Following the defeasance of the 2007 Series BA Bonds pursuant to Article X of the Series BA Indenture, the City may withdraw amounts from the Rate Stabilization Fund only for inclusion in Gross Revenues for any Fiscal Year, such withdrawals to be made until (but not after) one hundred eighty (180) days after the end of such Fiscal Year. All interest or other earnings upon deposits in the Rate Stabilization Fund shall either be retained therein or withdrawn therefrom and accounted for as Gross Revenues. Notwithstanding the foregoing, no deposit of Gross Revenues to the Rate Stabilization Fund may be made to the extent such Gross Revenues were included in a Fiscal Consultant’s report submitted in accordance with the Installment Sale Agreement and withdrawal of the Gross Revenues to be deposited in the Rate Stabilization Fund from Gross Revenues employed in rendering said Fiscal Consultant’s report would cause noncompliance with the Installment Sale Agreement.

Special Obligation of the City, Obligations Absolute

The City’s obligation to pay the Installment Payments and any other amounts coming due and payable under the Installment Sale Agreement shall be a special obligation of the City limited solely to the Net Revenues. Under no circumstances shall the City be required to advance moneys derived from any source of income other than the Net Revenues and other sources specifically identified in the Installment Sale Agreement for the payment of the Installment Payments. The obligations of the City to make the Installment Payments from the Net Revenues and to perform and observe the other agreements contained in the Installment Sale Agreement shall be absolute and unconditional and shall not be subject to any defense or any right of setoff, counterclaim or recoupment arising out of any breach of the City, the Authority or the Trustee of any obligation to the City or otherwise with respect to the Enterprise.

Budget and Appropriation of Installment Payments

During the term of the Installment Sale Agreement, the City is required to adopt all necessary budgets and make all necessary appropriations of the Installment Payments from the Net Revenues, and must furnish to the Trustee shall, upon written request, a certificate stating that the Installment Payments have been included in the final budget of the City for the current Fiscal Year. In the event any Installment Payment requires the adoption by the City of any supplemental budget or appropriation, the City will promptly adopt the same.

C-19 Option to Prepay

The City has the option to prepay the Installment Payments or post a security deposit to pay the Installment Payments, in whole or in part, in the amounts and on the dates set forth in the Installment Sale Agreement. The optional prepayment dates and prices have been determined to correspond to the optional redemption dates and prices applicable to the Bonds under the Indenture.

Rates and Charges

Covenant Regarding Gross Revenues. The City is required, to the extent permitted by law, to fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Enterprise during each Fiscal Year, which will, after matting allowances for contingencies and error in the estimates, yield Gross Revenues which are sufficient to pay the following amounts in the following order of priority:

(i) All Operation and Maintenance Costs estimated by the City to become due and payable in such Fiscal Year;

(ii) The Installment Payments and the principal of and interest on any Parity Obligations as they become due and payable during such Fiscal Year, without preference or priority, except to the extent such Installment Payments or such principal and interest on Parity Obligations are payable from the proceeds of the Bonds or Parity Obligations, or from any other source of legally available funds of the City which have been deposited with the Trustee for such purpose prior to the commencement of such Fiscal Year;

(iii) All amounts, if any, required to restore the balance in the Reserve Account to the full amount of the Reserve Requirement; and

(iv) All other payments required to meet any other obligations of the City which are charges, liens, encumbrances upon, or which are otherwise payable, from Gross Revenues during such Fiscal Year.

Covenant Regarding Net Revenues. In addition, the City shall, to the extent permitted by law, fix, prescribe, revise and collect rates, fees and charges for the services and improvements furnished by the Enterprise during each Fiscal Year which are sufficient to yield Net Revenues at least equal to the sum of (i) one hundred percent (100%) of the total Installment Payments and payments with respect to all Parity Obligations coming due and payable in such Fiscal Year, plus (b) the amount by which the amount on deposit in the Utility Fund (including available reserves) on the last day of the immediately preceding Fiscal Year was less than one hundred ten percent (110%) of Maximum Annual Debt Service calculated as of the last day of such Fiscal Year.

Superior and Subordinate Obligations

The City will not issue or incur any additional bonds or other obligations during the term of the Installment Sale Agreement having any priority in payment of principal or interest out of the Gross Revenues or the Net Revenues over the Installment Payments. Nothing limits or affects the ability of the City to issue or incur (a) Parity Obligations in accordance with the terms of the Installment Sale Agreement, or (b) obligations which are either unsecured or which are secured by an interest in the Net Revenues which is junior and subordinate to the pledge of and lien upon the Net Revenues.

C-20 Issuance of Parity Obligations

Except for obligations incurred to prepay or post a security deposit for the payment of Installment Payments or Parity Obligations, the City will not issue or incur any Parity Obligations during the term of the Installment Sale Agreement unless:

(a) No event of default has occurred and is continuing under the Installment Sale Agreement;

(b) The Net Revenues, calculated in accordance with sound accounting principles, as shown by the books of the City for the most recent completed Fiscal Year for which audited financial statements are available, or for any more recent consecutive twelve (12) month period selected by the City, in either case verified by a certificate or opinion of an independent accountant or Fiscal Consultant, plus the Additional Revenues, at least equal one hundred ten percent (110%) and, without the Additional Revenues, at least equal one hundred percent (100%) of the amount of Maximum Annual Debt Service with respect to the Installment Payments and all Parity Obligations then Outstanding (including the Parity Obligations then proposed to be issued); and

Insurance

The City will at all times maintain with responsible insurers all such insurance on the Enterprise as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to such works or properties. If any useful part of the Enterprise is damaged or destroyed, such part must be restored to use. All amounts collected from insurance against accident to or destruction of any portion of the Enterprise must be used to repair or rebuild such damaged or destroyed portion of the Enterprise, and to the extent not so applied, will be used to prepay the Installment Payments or any Parity Obligations.

The City will also maintain with responsible insurers worker’s compensation insurance and insurance against public liability and property damage to the extent reasonably necessary to protect the City.

Sale or Eminent Domain of Enterprise

The City covenants that the Enterprise will not be encumbered, sold, leased, pledged, any charge placed thereon, or otherwise dispose of, as a whole or substantially as a whole. Neither the Net Revenues nor any other funds pledged or otherwise made available to secure payment of the Installment Payments may be mortgaged, encumbered, sold, leased, pledged, any charge placed thereon, or disposed or used except as authorized by the terms of the Installment Sale Agreement. The City will not enter into any agreement which impairs the operation of the Enterprise or any part of it necessary to secure adequate Net Revenues to pay the Installment Payments, or which otherwise would impair the rights of the Bond Owners with respect to the Net Revenues. If any substantial part of the Enterprise may be sold, the payment therefor will either (a) be used for the acquisition or construction of improvements, extensions or replacements of facilities constituting part of the Enterprise, or (b) be applied to pay or prepay the Installment Payments or any Parity Obligations.

Any amounts received as awards as a result of the taking of all or any part of the Enterprise by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, will either (a) be used for the acquisition or construction of improvements to the Enterprise, or (b) be applied to pay or prepay the Installment Payments or any Parity Obligations.

C-21 Continuing Disclosure

The City covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of the Installment Sale Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be an Event of Default thereunder. However, any Participating Underwriter, as defined in the Continuing Disclosure Certificate, or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the City to comply with its obligations as provided in the Installment Sale Agreement.

Events of Default

Each of the following constitutes an event of default under the Installment Sale Agreement:

(a) Failure by the City to pay any Installment Payment when due and payable;

(b) Failure by the City to pay any additional payment required to be paid under the Installment Sale Agreement when due and payable, and the continuation of such failure for a period of 10 days;

(c) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in the preceding clauses (a) or (b), for a period of 60 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority or the Trustee; provided, however, that if the City shall notify the Authority and the Trustee that in its reasonable opinion the failure stated in the notice can be corrected, but not within such 60-day period, such failure shall not constitute an event of default if the City commences to cure such failure within such 60-day period and thereafter diligently and in good faith cure such failure in a reasonable period of time;

(d) Certain events relating to the insolvency or bankruptcy of the City; or

(e) The occurrence of any event defined to be an event of default under the instruments authorizing the issuance of any Parity Obligations.

Remedies on Default

Whenever any event of default has happened and is continuing, the Trustee as assignee of the Authority, has the right without any further demand or notice, to:

(a) declare all principal components of the unpaid Installment Payments, together with accrued interest thereon at the net effective rate of interest per annum then borne by the Outstanding Bonds from the immediately preceding Interest Payment Date on which payment was made, to be immediately due and payable, whereupon the same shall immediately become due and payable;

(b) take whatever action at law or in equity may appear necessary or desirable to collect the Installment Payments then due or thereafter to become due during the term of the Installment Sale Agreement, or enforce performance and observance of any obligation, agreement or covenant of the City under the Installment Sale Agreement; and

(c) as a matter of right, in connection with the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and the Bond Owners under the Installment Sale Agreement, cause the appointment of a receiver or receivers of the Gross Revenues and other amounts pledged pursuant to the Installment Sale Agreement, with such powers as the court making such appointment shall confer.

C-22 Pursuant to the Indenture, the Authority assigns all of its rights with respect to remedies in an event of default to the Trustee, so that all such remedies will be exercised by the Trustee and the Bond Owners as provided in the Indenture.

Governing Law

The Installment Sale Agreement will be construed in accordance with and governed by the laws of the State.

C-23 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX D

FORM OF BOND COUNSEL OPINION

As a condition to the delivery of the Bonds, Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, is expected to render its final approving opinion with respect to the Bonds in substantially the following form:

[Closing Date]

Pomona Public Financing Authority Pomona, California

Pomona Public Financing Authority 2016 Revenue Refunding Bonds, Series BB and 2016 Taxable Revenue Refunding Bonds, Series BD (Sewer Projects Refunding) (Final Opinion)

Ladies and Gentlemen:

We have acted as bond counsel to the Pomona Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of $______aggregate principal amount of the Pomona Public Financing Authority 2016 Revenue Refunding Bonds, Series BB (Sewer Projects Refunding) (the “BB Bonds”) and $______aggregate principal amount of the Pomona Public Financing Authority 2016 Taxable Revenue Refunding Bonds, Series BD (Sewer Projects Refunding) (the “BD Bonds” and together with the BB Bonds, the “Bonds”), issued pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California and all laws of the State of California supplemental thereto and the Indenture of Trust, dated as of October 1, 2016 (the “Indenture”), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture.

In such connection, we have reviewed the Indenture, the Installment Sale Agreement, dated as of October 1, 2016 (the “Installment Sale Agreement”), between the City of Pomona (the “City”) and the Authority, the Tax Certificate of the City and the Authority, dated the date hereof, relating to the BB Bonds (the “Tax Certificate”), opinions of the City Attorney as counsel to the Authority and the City and the Trustee, certificates of the Authority, the City, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and

D-1 delivery thereof by, and validity against, any parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Installment Sale Agreement and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the BB Bonds to be included in gross income for federal income tax purposes. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Installment Sale Agreement and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public entities like the City and the Authority in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Indenture or the Installment Sale Agreement, or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:

1. The Bonds constitute the valid and binding limited obligations of the Authority.

2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding limited obligation of, the Authority. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Installment Payments, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture.

3. The Installment Sale Agreement has been duly executed and delivered by the City and the obligation of the City to pay the Installment Payments under the Installment Sale Agreement constitutes the valid and binding limited obligation of the City.

4. Interest on the BB Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. We observe that interest on the BD Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. Interest on the BB Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Interest on the Bonds is exempt from State of California personal income taxes. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds.

Faithfully yours,

D-2 APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE

THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of October 1, 2016, is executed and delivered by the City of Pomona (the “City”).

WHEREAS, pursuant to the Indenture of Trust, dated as of October 1, 2016 (the “Indenture”), between the Pomona Public Financing Authority (the “Authority”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), the Authority has issued of $______aggregate principal amount of the Pomona Public Financing Authority 2016 Revenue Refunding Bonds, Series BB (Sewer Projects Refunding) (the “Bonds”) and $______aggregate principal amount of the Pomona Public Financing Authority 2016 Taxable Revenue Refunding Bonds, Series BD (Sewer Projects Refunding) (the “BD Bonds” and together with the BB Bonds, the “Bonds”);

WHEREAS, the Bonds are payable from the Installment Payments to be made by the City under the Installment Sale Agreement, dated as of October 1, 2016 (the “Installment Sale Agreement”), between the City and the Authority; and

WHEREAS, this Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners (capitalized undefined terms used herein have the meanings ascribed thereto in Section 1 hereof) and Beneficial Owners of the Bonds, and in order to assist the Participating Underwriters in complying with the Rule;

NOW, THEREFORE, the City covenants as follows:

Section 1. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 2 and 3 hereof.

“Annual Report Date” means the date in each year that is nine months after the end of the City’s fiscal year, which date, as of the date of this Disclosure Certificate, is April 1.

“Beneficial Owner” means any person that has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).

“Dissemination Agent” means the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.

“Listed Events” means any of the events listed in Section 4(a) or (b) hereof.

“MSRB” means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.

E-1 “Official Statement” means the Official Statement, dated ______, 2016 (including all exhibits or appendices thereto), relating to the offering and sale of Bonds.

“Owner” means the person in whose name any Bond shall be registered.

“Participating Underwriters” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds.

“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 2. Provision of Annual Reports.

(a) The City shall, or shall cause the Dissemination Agent to provide to the MSRB an Annual Report which is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2015-16 fiscal year. The Annual Report may include by reference other information as provided in Section 3 hereof; provided, however, that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the City’s fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB.

(b) Not later than 15 Business Days prior to the date specified in subsection (a), the City shall provide the Annual Report to the Dissemination Agent, if any. The Dissemination Agent shall (i) file any Annual Report received by it with the MSRB, as provided herein, and (ii) file a report with the City certifying that the Annual Report has been filed with the MSRB pursuant to this Disclosure Certificate, stating the date it was so filed.

(c) If the City is unable to file, or cause the Dissemination Agent to file, an Annual Report with the MSRB by the date required in subsection (a) of this Section, the City shall, in a timely manner, file or cause to be filed with the MSRB, a notice in substantially the form attached as Exhibit A.

Section 3. Content of Annual Reports. The City’s Annual Report shall contain or include by reference the following:

(a) Audited financial statements of the City for the preceding fiscal year, prepared in accordance with the generally accepted auditing standards for municipalities in the State of California. If the City’s audited financial statements are not available by the time the Annual Report is required to be provided to the MSRB pursuant to Section 2(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be provided to the MSRB in the same manner as the Annual Report when they become available.

(b) To the extent not included in the audited financial statements of the City, the Annual Report shall also include the following:

(i) A list of the largest Sewer Enterprise payments during the most recently completed Fiscal Year, in substantially the form of Table 4 in the Official Statement.

E-2 (ii) A description of any changes in the service charges or the connection fees by the City during the most recently completed Fiscal Year.

(iii) A description of any additional indebtedness incurred during the most recently completed Fiscal Year which is payable from Net Revenues of the Sewer Enterprise on a parity with the Bonds.

(iv) The operating results and the amount of debt service coverage provided by Net Revenues (expressed in substantially the form of Table 8 of the Official Statement) for the most recently completed Fiscal Year.

In addition to any of the information expressly required to be provided under paragraphs (a), (b) and (c), above, the City shall provide such further information, if any, as may be necessary to make the specifically required statements, in light of the circumstances under which they are made, not misleading.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been made available to the public on the MSRB website. The City shall clearly identify each such other document so included by reference.

Section 4. Reporting of Listed Events.

(a) Pursuant to the provisions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten business days after the occurrence of the event:

(i) principal and interest payment delinquencies;

(ii) unscheduled draws on debt service reserves reflecting financial difficulties;

(iii) unscheduled draws on credit enhancements reflecting financial difficulties;

(iv) substitution of credit or liquidity providers or their failure to perform;

(v) adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);

(vi) tender offers;

(vii) defeasances;

(viii) rating changes; or

(ix) bankruptcy, insolvency, receivership or similar event of the City.

For purposes of the event identified in paragraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business

E-3 of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.

(b) Pursuant to the provisions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not later than ten business days after the occurrence of the event:

(i) unless described in paragraph (v) of subsection (a) of this Section, other material notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;

(ii) modifications to rights of Owners;

(iii) optional, unscheduled or contingent bond calls;

(iv) release, substitution or sale of property securing repayment of the Bonds;

(v) non-payment related defaults;

(vi) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; and

(vii) appointment of a successor or additional Paying Agent or the change of name of a Paying Agent.

(c) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (b) of this Section, the City shall determine if such event would be material under applicable Federal securities laws.

(d) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities laws, the City shall file, or shall cause the Dissemination Agent to file, within ten business days of such occurrence, a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Listed Events described in paragraphs (vii) of subsection (a) of this Section and (iii) of subsection (b) of this Section need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture.

Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.

Section 6. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds.

E-4 If such termination occurs prior to the final maturity of the Bonds, the City shall give, or cause the Dissemination to give, notice of such termination in a filing with the MSRB.

Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the City. If at any time there is not any other designated Dissemination Agent, the City shall be the Dissemination Agent.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) if the amendment or waiver relates to the provisions of Section 2(a), Section 3 or Section 4(a) or (b) hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by the Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds.

In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice required to be filed pursuant to this Disclosure Certificate.

Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the

E-5 City to comply with its obligations under this Disclosure Certificate; provided, that any such action may be instituted only in Superior Court of the State of California in and for the County of Los Angeles or in U.S. District Court in or nearest to the County of Los Angeles. A default under this Disclosure Certificate shall not be deemed an event of default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriters and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

CITY OF POMONA

By: City Manager

ATTEST:

City Clerk

APPROVED AS TO FORM:

City Attorney

E-6 EXHIBIT A

FORM OF NOTICE OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Pomona Public Financing Authority

Name of Issue: Pomona Public Financing Authority 2016 Revenue Refunding Bonds, Series BB (Sewer Projects Refunding) and Pomona Public Financing Authority 2016 Taxable Revenue Refunding Bonds, Series BD (Sewer Projects Refunding)

Date of Issuance: October __, 2016

NOTICE IS HEREBY GIVEN that the City of Pomona (the “City”) has not provided an Annual Report with respect to the above-named Bonds as required by Section 2 of the Continuing Disclosure Certificate, dated as of October 1, 2016, executed and delivered by the City. [The City anticipates that the Annual Report will be filed by ______.]

Dated: ______CITY OF POMONA

By: City Manager

E-7 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX F

INFORMATION REGARDING THE BOOK-ENTRY ONLY SYSTEM

The following description of DTC and its book-entry system has been provided by DTC and has not been verified for accuracy or completeness by the City or the Authority, and neither the City nor the Authority shall have any liability with respect thereto. Neither the City nor the Authority shall have any responsibility or liability for any aspects of the records maintained by DTC relating to or payments made on account of beneficial ownership, or for maintaining, supervising, or reviewing any records maintained by DTC relating to beneficial ownership, of interests in the Bonds.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond will be issued for each issue of the Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com, provided that nothing contained in such website is incorporated into this Official Statement. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested

F-1 by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Indenture and the Installment Sale Agreement. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on payable dates in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name” and will be the responsibility of such Participant and not of DTC, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, bonds are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, bonds will be printed and delivered to DTC. The information in this Official Statement concerning DTC and DTC’s book-entry system has been obtained from sources that the Authority and the City believes to be reliable, but the Authority and the City takes no responsibility for the accuracy thereof.

F-2 APPENDIX G

FORM OF CITY INVESTMENT POLICY (THIS PAGE INTENTIONALLY LEFT BLANK) CITY OF POMONA 2016 STATEMENT OF INVESTMENT POLICY

ADOPTED BY CITY COUNCIL RESOLUTION NO.2016-10 TABLE OF CONTENTS

I. MISSION STATEMENT ...... 3 II. SCOPE A. Pooling of Funds ...... 3 B. Funds Included in this Policy ...... 3 C. Funds Excluded from this Policy...... 3 III. GENERAL OBJECTIVES A. Safety...... 3 B. Liquidity ...... 4 C. Yield (Return on Investment) ...... 4 IV. STANDARDS OF CARE A. Prudence ...... 4 B. Ethics and Conflicts of Interest ...... 4 C. Delegation of Authority ...... 4 D. Internal Controls ...... 5 E. Review of Investment Portfolio ...... 5 V. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS...... 5 VI. SAFEKEEPING AND CUSTODY ...... 5 VII. SUITABLE AND AUTHORIZED INVESTMENTS ...... 6 A. Investment Types ...... 6 B. Collateralization ...... 9 C. Investments Not Approved ...... 10 D. Exceptions to Prohibited and Restricted Investments ...... 10 VIII. INVESTING PARAMETERS A. Diversification ...... 10 B. Maximum Maturities ...... 11 IX. REPORTING A. Quarterly Reporting to City Council ...... 11 X. PERFORMANCE STANDARDS A. Market Yield (Benchmark) ...... 11 B. Marking to Market ...... 11 XI. INVESTMENT POLICY COMPLIANCE AND ADOPTION A. Policy Compliance and Changes ...... 12 B. Annual Statement of Investment Policy ...... 12 APPENDIX: GLOSSARY OF INVESTMENT TERMS ...... 13

City of Pomona Investment Policy 2016 I. MISSION STATEMENT It is the policy of the City of Pomona (“City”) to invest public funds in a manner that will provide maximum security, adequate liquidity and sufficient yield, while meeting the daily cash flow demands of the City and conforming to all statutes and regulations governing the investment of public funds.

II. SCOPE This investment policy applies to all the cash assets of City of Pomona, the Pomona Housing Authority, the Pomona Public Financing Authority, and the Successor Agency of the City of Pomona. These funds are accounted for in the City’s audited Annual Financial Report. If the City invests funds on behalf of another agency and, if that agency does not have its own policy, the City's investment policy shall govern the agency's investments. A. Pooling of Funds Except for cash in certain restricted and special funds, the City shall consolidate cash balances from all funds to maximize investment earnings. Investment income shall be allocated to various funds in accordance with generally accepted accounting principles. B. Funds Included in this Policy The funds subject to this policy are: General Fund; Special Revenue Funds; Capital Project Funds; Enterprise Funds; Internal Service Funds; Trust and Agency Funds; and any new fund that may be created unless specifically exempted. C. Funds Excluded from this Policy 1. City’s Service Retirement System Fund. This fund is managed by the California Public Employee’s Retirement System (CalPERS). 2. Deferred Compensation Funds. Both the regular deferred compensation plan and the City’s Hourly/Part-time Employee Retirement Plan are invested in accordance with its trust fund agreement. 3. City’s Postemployment Benefits Plan. These funds are managed by PARS and are related to the collateral benefit program provided through employee MOUs. 3. Bond Proceeds. Investment of bond proceeds shall be subject to the conditions and restrictions of bond documents and are not governed by this policy.

III. GENERAL OBJECTIVES The primary objectives, in priority order, of the City’s investment activities are safety, liquidity and yield. A. Safety Preservation of principal is the foremost objective of the investment program. Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective shall be to mitigate credit risk and interest rate risk. To attain this objective, the City shall seek to diversify its investments by investing funds among several financial institutions and a variety of securities offering independent returns. 1. Credit Risk The City shall minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by: Limiting investments to the most creditworthy types of securities Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisers with which the City will do business By diversifying the investment portfolio so that the potential failure of any one issue or issuer will not place an undue financial burden on the City 2. Interest Rate Risk

City of Pomona Investment Policy 3 2015 To minimize the negative impact of material changes in the market value of securities in the portfolio, the City shall: Structure the investment portfolio so that securities mature concurrent with cash needs to meet anticipated demands, thereby avoiding the need to sell securities on the open market prior to maturity Invest operating funds primarily in shorter-term securities, money market mutual funds, and the State of California’s Local Agency Investment Fund (“LAIF”) B. Liquidity The City’s investment portfolio shall remain sufficiently liquid to enable the City to meet all operating requirements that might be reasonably anticipated without requiring a sale of securities. C. Yield (Return on Investment) The City’s investment portfolio shall be designed with the objective of attaining a benchmark rate of return throughout budgetary and economic cycles, commensurate with the City’s investment risk constraints and the liquidity characteristics of the portfolio. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed.

IV. STANDARDS OF CARE A. Prudence The standard of prudence to be used by City investment officials shall be the “prudent investor standard” (California Government Code Section 53600.3) in that a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the City, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of an enterprise of a like character and with like aims. This standard shall be applied in the context of managing the overall portfolio. City investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. B. Ethics and Conflicts of Interest Officers and employees involved in the City investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or that could impair their ability to make impartial investment decisions. City employees and investment officials shall disclose any material financial interests in financial institutions that conduct business within their jurisdiction, and they shall further disclose any personal financial/investment positions that could be related to the performance of the City immediately to the Pomona City Treasurer and annually to the Fair Political Practices Commission. City employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City. C. Delegation of Authority Authority to manage the City’s investment program is derived from Sections 704 and 705 of the Charter of the City of Pomona. In accordance with Section 704 (City Treasurer) the City Council shall appoint the City Treasurer who has the authority to invest or to reinvest funds, or to sell or exchange securities. Upon appointment, the City Treasurer shall thereafter

City of Pomona Investment Policy 4 2016 assume full responsibility for those transactions until the delegation of authority is revoked or expires. By Charter (Sec 705), the Finance Director also has authority to receive and invest City funds. Management responsibility for the investment program is delegated to the City Treasurer who shall establish a separate written investment procedures manual. The procedures should include reference to: authorized personnel, safekeeping, master repurchase agreements, wire transfer agreements, banking service contracts, collateral/depository agreements, and cash flow forecasting. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City Treasurer. The operation of the investment program shall be consistent with this policy and the investment procedures manual. D. Internal Controls The City Treasurer is responsible for establishing and maintaining a system of written internal controls. These controls shall be reviewed annually with an independent external auditor who will notify the City Council if there is a material non-compliance with its policies and procedures. The internal controls shall be designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets, or imprudent action by City employees and officers. The internal structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management. E. Review of Investment Portfolio The securities held by the City must be in compliance with Section VII Suitable and Authorized Investments at the time of purchase and at least quarterly. The City Treasurer shall establish procedures to report to the City Council, major and critical incidences of noncompliance identified through the review of the portfolio.

V. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Treasurer shall transact business only with Registered Investment Advisors, national or state- chartered banks, savings and loans, and broker dealers. The dealers should be primary dealers regularly reporting to the New York Federal Reserve Bank, or approved regional or secondary market dealers that qualify under the Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule). The Treasurer shall formally authorize investment broker-dealers to provide investment services to the City and shall maintain a list of financial institutions so authorized to provide investment services. Audited financials, proof of Financial Industry Regulatory Authority (FINRA) certification, State of California registration, and certification of having read and understanding the City’s Policy is required from approved advisors.

If a third party investment advisor is authorized to conduct investment transactions on the City’s behalf, the investment advisor may use its own list of broker/dealers and financial institutions. The investment advisor’s list must be available to the City upon request.

VI. SAFEKEEPING AND CUSTODY All security transactions, including collateral for repurchase agreements, entered into by the City shall be conducted on a delivery-versus-payment (DVP) basis which will ensure that securities are deposited in an eligible financial institution prior to the release of funds. Securities shall be held by a third-party

City of Pomona Investment Policy 5 2016 custodian or broker/dealer designated by the City Treasurer. The only exception to the foregoing shall be depository accounts and securities purchases made with: LAIF, time certificates of deposit and money market mutual funds, since the purchased securities are not deliverable. City Treasurer shall be bonded to protect the public against possible embezzlement and malfeasance.

VII. SUITABLE AND AUTHORIZED INVESTMENTS The City is governed by the California Government Code, Sections 53600 et seq. If the Code is amended to allow additional investments or is changed regarding the limits on certain categories of investments, the City is authorized to conform to the changes in the revised Code, provided that the changes are not specifically prohibited by the City's policy. The City shall be required to present those changes in the annual review of the policy and to incorporate the new legislation within the policy. Surplus funds are defined as funds not required for the immediate necessities of the City and include investments in individually managed portfolio(s), money market fund(s) and/or State LAIF, and all portfolio limitations and restrictions shall apply to this aggregate amount. For purposes of compliance with the California Government Code and the City’s Investment Policy, the credit rating requirement for medium-term notes, deposit notes, bank notes and commercial paper shall be based on the quality ratings at the time of purchase. If the quality rating of the issuer is downgraded, subsequent to purchase, by any of the Nationally Recognized Statistical-Rating Organizations below "A", or its equivalent, it shall be reported to the City Council with a recommendation, and ongoing information shall be provided if the bond is not sold. Percentage limitations of surplus funds invested are noted for the various investment instruments. Where there is a specified percentage limitation for a particular category of investments, that percentage is applicable only at the date of purchase. A later increase or decrease in a percentage resulting from a change in values or assets shall not constitute a violation of that restriction. The City is empowered by statute to invest in the following types of securities: A. Authorized Investment Summary Matrix

Maximum Maximum Specified % of Investment Type Maturity Portfolio 1 City of Pomona Bonds 5 Years No limit 2 U.S. Treasury Obligations 5 years No limit 3 U.S. Agency Obligations 5 years No limit 4 CA and Local Agency Obligations 5 years No limit 5 Medium-Term Notes 5 years 30% 6 Bankers’ Acceptances 180 days 40% 7 Commercial Paper 270 days 25% 8 Negotiable Certificates of Deposit 5 years 15% 9 Time Deposits 5 years 10% 10 Savings Accounts 5 years 10% 11 Money Market Mutual Funds n/a 15% 12 Repurchase Agreements 92 days 20% 13 Local Agency Investment Fund (LAIF) n/a No limit

City of Pomona Investment Policy 6 2016 Investment Types 1. Bonds issued by the City, including bonds payable solely out of the revenues from a revenue producing property owned, controlled, or operated by the City or by a department, board, agency, or authority of the local agency. 2. United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest. 3. Federal Agency or United States government-sponsored enterprise obligations (GSE), participations, or other instruments. 4. State of California and Local Agency Obligations. Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state; and bonds, notes, warrants, or other evidence of indebtedness of any local agency within this state including bonds payable solely out of the revenues from revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. Notes eligible for investment shall be rated in a category of "A" or its equivalent or better by two Nationally Recognized Statistical-Rating Organizations. 5. Medium-Term Notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five (5) years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Purchases of medium-term notes may not exceed 30% of the City's surplus funds. Investments in medium-term notes for any one non-government issuer shall be limited to no more than of surplus funds. Notes eligible for investment shall be rated in a category of "A" or its equivalent or better by two Nationally Recognized Statistical-Rating Organizations. 6. Bankers Acceptances otherwise known as bills of exchange or time drafts, drawn on and accepted by a commercial bank, which are eligible for purchase by the Federal Reserve System. Purchased bankers acceptances may not exceed one hundred and eighty (180) days maturity or 40% of the City's surplus funds, and no more than 10% of the City's surplus funds may be invested in the banker’s acceptances of any one commercial bank. 7. Commercial Paper of “prime” quality of the highest ranking or the highest letter and number rating as provided for by a Nationally Recognized Statistical-Rating Organization. The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (a) or paragraph (b): a. The entity is organized and operating in the United States as a general corporation and has total assets in excess of five hundred million dollars ($500,000,000). In addition, its debt other than commercial paper, if any, must be rated “A” or higher by a Nationally Recognized Statistical-Rating Organization. b. The entity is organized within the United States as a special purpose corporation, trust, or limited liability company and has a program-wide credit enhancement including, but not limited to, over-collateralization, letters of credit, or a surety bond. In addition, the entity has commercial paper that is rated “A-1” or higher, or the equivalent, by a Nationally Recognized Statistical- Rating Organization.

City of Pomona Investment Policy 7 2016 Eligible commercial paper shall have a maximum maturity of two hundred and seventy (270) days or less. The City may not invest more than 25% of its surplus funds in no more than 10% of the outstanding eligible commercial paper of any single issuer. 8. Negotiable Certificates of Deposit issued by a nationally or state-chartered bank or savings association or federal association or a state or federal credit union or by a state- licensed branch of a foreign bank. Purchases of negotiable certificates of deposit shall not exceed 15% of the City's surplus money invested and shall be limited to no more than 3% of any one issuer. Deposit notes and bank notes purchased through a broker or dealer shall be included with negotiable certificates of deposit in calculating allowable maximum percentages. Negotiable certificates of deposit, deposit notes and bank notes shall be rated in a category of "A" or its equivalent or better by two Nationally Recognized Statistical-Rating Organizations. Certificate of Deposit guaranteed by the Federal Deposit Insurance Corporation (FDIC) will be limited to $250,000 per issuer. 9. Time Deposits. The City may invest in non-negotiable Certificates of Deposit at commercial banks and savings and loan associations that are collateralized in accordance with the California Government Code. To be eligible to receive City funds, the depository institution shall have received an overall rating of not less than “satisfactory” in its most recent evaluation of its record of meeting the credit needs of California’s communities, including low and moderate-income neighborhoods. In selecting depositories, the credit worthiness of institutions shall be considered. Banks and savings and loan associations seeking to establish an investment relationship with the City shall submit an audited financial report that shall be reviewed for compliance with the City's investment standards. Any institution not providing an audited annual financial report shall be removed from the approved list and all funds maturing will be withdrawn. A list of eligible institutions shall be maintained. Qualification shall be determined by the following criteria: a. Tangible capital must equal or exceed 1½%; core capital must equal or exceed 3%; and, risk-based capital must equal 8% of assets adjusted for assigned risk- weightings. b. Return on assets of a minimum of a ½%; a return on equity of a minimum of 8%; an equity to assets ratio of a minimum of 5%; and, City investments shall be no greater than ½% of the total assets of the depository. c. Independent auditor's statement must have a clean opinion. 10. Savings accounts. Savings accounts when used in conjunction with the City's checking accounts at a qualified bank where funds are collateralized in accordance with the California Government Code. 11. U. S. Government money market funds registered with the Securities and Exchange Commission and which comply with rule 2a7 of the Investment Company Act of 1940. The dollar weighted average maturity of the portfolio shall be less than ninety (90) days and the portfolio is managed to maintain a one dollar ($1.00) share price. Also, the fund shall meet either of the following criteria: (a) Attained the highest ranking or the highest letter and numerical rating provided by not less than two Nationally Recognized Statistical-Rating Organizations; (b) retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000).

City of Pomona Investment Policy 8 2016 12. Repurchase Agreements. Investments in repurchase agreements or reverse repurchase agreements or securities lending agreements of any securities authorized by the Code, so long as the proceeds of the repurchase agreement are invested solely to supplement the income normally received from these securities. The City shall adopt as a standard the Bond Market Association Master Repurchase Agreement and shall maintain a list of approved counterparts and limit counter parties to primary dealers rated "A" or better by two Nationally Recognized Statistical-Rating Organizations. Reverse repurchase agreements and securities lending agreements shall require City Council authorization separate from City Council approval of this policy. Securities lending agreements shall include the following safeguard measures: terms of lending agreements, indemnification provisions, reinvestment guidelines, liquidity provisions, credit risks and monitoring requirements. Additionally any securities lending agreement shall be reviewed by the City Attorney to ensure the City’s interests are properly protected. a. Investments in repurchase agreements may be made, on any authorized investment, when the term of the agreement does not exceed one year. b. Reverse repurchase agreements or securities lending agreements may be utilized when the security to be sold on the reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the City for a minimum of thirty (30) days prior to sale; the total of all reverse repurchase agreements on investments owned by the City does not exceed 20% of the base value of the portfolio; and the agreement does not exceed a term of ninety two (92) days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between sale of a security using a reverse repurchase agreement and the final maturity date of the same security. 13. Local Agency Investment Fund (LAIF). The City may invest in The Local Agency Investment Fund (LAIF), a special fund in the California State Treasury created and governed pursuant to Government Code Sections 16429.1 et seq. This law permits the City with the consent of the Board of Directors, to remit money not required for the City’s immediate need, to the State City Treasurer for deposit in this special fund for the purpose of investment. LAIF currently limits investments to $50 million from any one public agency by State law; therefore, there is a fifty million dollar ($50,000,000) limit for the City of Pomona, fifty million dollar ($50,000,000) limit for the Pomona Housing Authority, and a fifty million dollar ($50,000,000) limit for the Pomona Public Financing Authority. The California Government Code states that monies placed for deposit in LAIF are in trust in the custody of the State City Treasurer and cannot be borrowed or be withheld from the City. Further, the right of the City to withdraw its deposited money from the LAIF upon demand may not be altered, impaired, or denied in any way by any state official or agency based upon the State’s failure to adopt a budget by July 1 of each new fiscal year. B. Collateralization Collateralization shall be required on two types of investments: Certificates of deposit and repurchase (and reverse repurchase) agreements. A collateral agreement must be current and on file before any funds can be transferred for collateralized certificates of deposit. Collateral shall be held by an independent third party with whom the City has a current written custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the City and retained. The right of collateral substitution is granted in accordance with the following requirements:

City of Pomona Investment Policy 9 2016 1. Certificates of Deposit a. Government securities used as collateral require 102% of market value to the face amount of the deposit b. Promissory notes secured by first trust deeds used as collateral require 150% of market value to the face amount of the deposit c. Irrevocable letters of Credit issued by the Federal Home Loan Bank of San Francisco require 105% of market value to the face amount of the deposit 2. Repurchase and Reverse Repurchase Agreements a. Only U.S. Treasury securities or federal agency securities are acceptable collateral. All securities underlying repurchase agreements must be delivered to the City’s custodian bank versus payment or be handled under a properly executed tri-party repurchase agreement. The total market value of all collateral for each repurchase agreement must equal or exceed 102% of the total dollar value of the money invested by the City for the term of the investment. For any repurchase agreement with a term of more than one (1) day, the value of the underlying securities must be reviewed on an ongoing basis according to market conditions. Market value must be calculated each time there is a substitution of collateral. b. The City or its trustee shall have a perfected first security interest under the Uniform Commercial Code in all securities subject to a repurchase agreement. C. Investments Not Approved Any security type or structure not specifically approved by this policy is hereby prohibited. Security types, which are hereby prohibited include, but are not limited to: Collateralized mortgage obligations (CMO's), mortgage pass-through securities, reverse repurchase agreements used as a leveraging vehicle, "exotic" derivatives structures such as range notes, dual index notes, inverse floating-rate notes, leveraged or de-leveraged floating-rate notes, interest-only strips that are derived from a pool of mortgages and any security that could result in zero interest accrual if held to maturity, or any other complex variable or structured note with an unusually high degree of volatility or risk. D. Exceptions to Prohibited and Restricted Investments The City shall not be required to sell securities prohibited or restricted in this policy, or any future policies, or prohibited or restricted by new State regulations, if purchased prior to their prohibition and/or restriction. Insofar as these securities provide no notable credit risk to the City, holding of these securities until maturity is approved. At maturity or liquidation, such monies shall be reinvested only as provided by this policy.

VIII. INVESTING PARAMETERS A. Diversification The City shall diversify its investments by security type, issuer, maturity, and financial institutions. No percentage limitations are established for United States government, United States government agencies, United States government sponsored enterprises, and LAIF; however percentage limitations are established for other permitted investments, as noted in Section VII of this policy. The investments shall be diversified by limiting investments to avoid over-concentration in securities from a specific issuer or business sector (excluding U.S. Treasury, Federal Agency securities, and LAIF), limiting investment in securities that have higher credit risks, and investing in securities with varying maturities.

City of Pomona Investment Policy 10 2016 B. Maximum Maturities To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. Where there is no specified maturity limitation on an investment, no investment shall be made in any security, which, at the time of the investment, has a term remaining to maturity in excess of five (5) years, unless the City Council has granted express authority to make that investment no less than three months prior to the investment.

IX. REPORTING The City Treasurer shall submit investment reports to the City Council that provide a clear picture of the status of the current investment portfolio and shall contain sufficient information to permit an independent organization to evaluate the performance of the investment program. A. Reporting to City Council In accordance with California Government Code Section 53646, the City Treasurer shall submit to City Council, within thirty (30) days following the end of the quarter, an investment report that summarizes all securities in the portfolio. The report shall include: 1. Investment type 2. Purchase date 3. Maturity date 4. Credit quality 5. Coupon and yield 6. Book value 7. Market value 8. Interest Earnings 9. Average days to maturity 10. Statement of the ability to meet expenditures for the next six months (or an explanation as to why sufficient money shall, or may, not be available)

X. PERFORMANCE STANDARDS The investment portfolio shall be managed in accordance with the parameters specified within this policy and always within consistently safe and prudent treasury management procedures. A. Market Yield (Benchmark) The City’s overall investment strategy is passive: Investments are generally held to maturity. If an investment advisory firm is retained by the City, the City portfolio shall be compared to a customized benchmark in order to determine whether market yields are being achieved. In addition, the quarter-to-date LAIF apportionment rate and the two-year U.S. Treasury Note shall also be considered useful benchmarks of the City’s portfolio performance. B. Marking to Market The market value of the portfolio shall be calculated at least quarterly. This will ensure that review of the investment portfolio, in terms of value and price volatility, has been performed. In defining market value, consideration shall been given to pronouncements from the Government Accounting Standards Board (GASB) that address the reporting of investment assets and investment income for all investment portfolios held by governmental entities. The fair value of all securities reported in the City’s portfolio is based on currently quoted market prices.

City of Pomona Investment Policy 11 2016 XI. INVESTMENT POLICY COMPLIANCE AND ADOPTION A. Policy Compliance and Changes Any deviation from the policy shall be reported to City Council at the next scheduled meeting. The City Treasurer shall promptly notify the City Council of any material change in the policy, and any modifications to the policy must be approved by the City Council. B. Annual Statement of Investment Policy The City Treasurer shall render a written Investment Policy that shall be reviewed at least annually by the City Council to ensure its consistency with the overall objectives of preservation of principal, liquidity and return, and its relevance to current law and financial and economic trends. The City Council shall consider the annual Investment Policy and any changes therein at a public meeting. The Investment Policy shall be adopted by resolution of the City Council.

City of Pomona Investment Policy 12 2016 APPENDIX GLOSSARY OF INVESTMENT TERMS

AGENCY: A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government (i.e. Government National Mortgage Association). Federally sponsored agencies (FSA's) are backed by each particular agency with a market perception that there is an implicit government guarantee (i.e. Federal National Mortgage Association). ASKED PRICE: The price at which securities are offered for sale, also known as offering price. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. BID PRICE: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) BOND PROCEEDS: The money paid to the issuer by the purchaser or underwriter of a new issue of municipal securities. These moneys are used to finance the project or purpose for which the securities were issued and to pay certain costs of issuance as may be provided in the bond contract. BOOK VALUE: The value at which a debt security is shown on the holder's balance sheet. Book value is often acquisition cost plus/minus amortization and accretion, which may differ significantly from the security’s current value in the market. BROKER: Someone who brings buyers and sellers together and is compensated for his/her service. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs are typically negotiable. COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. CREDIT QUALITY: The measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer's ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by a Nationally Recognized Statistical-Rating Organization. CREDIT RISK: The risk to an investor that an issuer will default in the payment of interest and/or principal on a security. CUSTODIAN: A bank or other financial institution that keeps custody of stock certificates and other assets. CURRENT YIELD (CURRENT RETURN): A yield calculation determined by dividing the annual interest received on a security by the current market price of that security. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, by buying and selling for his/her own account. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities).

City of Pomona Investment Policy 13 2016 DIVERSIFICATION: Dividing investment funds among a variety of security types by sector, maturity and quality ratings offering independent returns. DURATION: A measure of the timing of the cash flows, such as the interest payments and the principal repayment, to be received from a given fixed-income security. This calculation is based on three variables: term to maturity, coupon rate, and yield to maturity. The duration of a security is a useful indicator of its price volatility for given changes in interest rates. FAIR VALUE: The amount at which an investment could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. FEDERAL CREDIT AGENCIES: Agencies of the Federal Government set up to supply credit to various classes of institutions and individuals, e.g., S&L’s, small-business firms, students, farmers, farm co-operatives, and exporters. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits currently up to $250,000 per deposit. FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) that lend funds and provide correspondent banks services to member commercial banks, thrift institutions, credit unions and insurance companies. FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., twelve Regional Banks and about 5,700 commercial banks that are members of the system. FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA): A self-regulatory organization (SRO) responsible for governing business between brokers, dealers and the investing public. GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB): A standard-setting body, associated with the Financial Accounting Foundation, which prescribes standard accounting practices for governmental units. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA, or FMHA mortgages. The term “pass- throughs” is often used to describe Ginnie Maes. GOVERNMENT SECURITIES: An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See "Treasury Bills, Notes, and Bonds." INTEREST RATE RISK: The risk associated with declines or rises in interest rates which cause an investment in a fixed-income security to increase or decrease in value. INTERNAL CONTROLS: An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable City of Pomona Investment Policy 14 2016 assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points:

o CONTROL OF COLLUSION – Collusion is a situation where two or more employees are working in conjunction to defraud their employer. o Separation of transaction authority from accounting and record keeping – By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved. o Custodial safekeeping – Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party for custodial safekeeping. o Avoidance of physical delivery securities – Book-entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities. o Clear delegation of authority to subordinate staff members – Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities. o Written confirmation of transactions for investments and wire transfers – Due to the potential for error and improprieties arising from telephone and electronic transactions, all transactions should be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and if the safekeeping institution has a list of authorized signatures. o Development of a wire transfer agreement with the lead bank and third-party custodian – The designated official should ensure that an agreement will be entered into and will address the following points: controls, security provisions, and responsibilities of each party making and receiving wire transfers. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL AGENCY INVESTMENT FUND (LAIF): Chapter 730, Statutes of 1976 of the State of California, established the Local Agency Investment Fund. This fund enables local governmental agencies to remit money not required for immediate needs to the State City Treasurer for the purpose of investment. In order to derive the maximum rate of return possible, the State City Treasurer has elected to invest these monies with State monies as a part of the Pooled Money Investment Account. Each local governmental unit has the exclusive determination of the length of time its money will be on deposit with the State City Treasurer. At the end of each calendar quarter, all earnings derived from investments are distributed by the State Controller to the participating government agencies in proportion to each agency's respective amounts deposited in the Fund and the length of time such amounts remained therein. Prior to the distribution, the State's costs of administering the program are deducted from the earnings. MARK-TO-MARKET: The process whereby the book value or collateral value of a security is adjusted to reflect its current market value. MARKET RISK: The risk that the value of a security will raise or decline as a result of changes in market conditions.

City of Pomona Investment Policy 15 2016 MARKET VALUE: The current price at which a security is trading and could presumably be purchased or sold at that particular point in time. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase-reverse repurchase agreements that establish each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower. MATURITY: The date upon which the principal or stated value of a financial obligation is due and payable. MONEY MARKET MUTUAL FUND: Mutual funds that invest solely in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, repos and federal funds). MUTUAL FUND: An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by Securities and Exchange Commission (SEC) disclosure guidelines. NATIONALLY RECOGNIZED STATISTICAL-RATING ORGANIZATION (NRSRO): Standard and Poor’s, Moody’s, and Fitch Financial Services are examples of such organizations. OFFER: An indicated price at which market participants are willing to sell a security or commodity. Also referred to as the "Ask price." PAR VALUE: The amount of principal that must be paid at maturity. Also referred to as the face amount of a bond, normally quoted in $1,000 increments per bond. PORTFOLIO: Combined holding of more than one stock, bond, commodity, real estate investment, cash equivalent, or other asset. The purpose of a portfolio is to reduce risk by diversification. PRINCIPAL: The face value or par value of a debt instrument, or the amount of capital invested in a given security. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) registered securities broker/dealers, banks and a few unregulated firms. PRINCIPAL: (1) The face amount or par value of a debt instrument. (2) One who acts as a dealer buying and selling for his own account. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return. REINVESTMENT RISK: The risk that a fixed-income investor will be unable to reinvest income proceeds from a security holding at the same rate of return currently generated by that holding. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate the buyer for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money that is increasing bank reserves. REVERSE REPURCHASE AGREEMENT: An agreement of one party (for example, a financial institution) to purchase securities at a specified price from a second party (such as a public agency) and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specific date. RISK: Degree of uncertainty of return on an asset. RULE 2A-7 OF THE INVESTMENT COMPANY ACT: Applies to all money market mutual funds and mandates

City of Pomona Investment Policy 16 2016 such funds to maintain certain standards, including a 13-month maturity limit and a 90-day average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00). SAFEKEEPING SERVICE: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vault for protection and security. SECONDARY MARKET: A market is made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES LENDING: An agreement under which a local agency agrees to transfer securities to a borrower who, in turn, agrees to provide collateral to the local agency. During the term of the agreement, both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises, (FHLB, FNMA, FHLMC, etc.), and Corporations that have imbedded options, (e.g., call features, step-up coupons, floating rate coupons, derivative-based returns), into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. SWAP: Trading one asset for another. TOTAL RETURN: The sum of all investment income plus changes in the capital value of the portfolio. TREASURY BILLS: Short-term U.S. government non-interest bearing discounted debt securities with maturities of no longer than one year and issued in minimum denominations of $10,000. Auctions of three- and six-month bills are weekly, while auctions of one-year bills are monthly. The yields on these bills are monitored closely in the money markets for signs of interest rate trends. TREASURY BOND: A long-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of more than 10 years and issued in minimum denominations of $1,000. TREASURY NOTE: A medium-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of from one to ten years and issued in denominations ranging from $1,000 to $1 million or more. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission (SEC) Rule 15C3-1 outlining requirements that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. VOLATILITY: A degree of fluctuation in the price and valuation of securities. YIELD: The current rate of return on an investment security generally expressed as a percentage of the security’s current price. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.

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POMONA PUBLIC FINANCING AUTHORITY • 2016 Revenue Refunding Bonds, Series BB (Sewer Projects Refunding) and 2016 Taxable Revenue Refunding Bonds, Series BD (Sewer Projects Refunding)