ANAHEIM PUBLIC FINANCING AUTHORITY Goldman Sachs & Co
NEW ISSUE- BOOK-ENTRY ONLY RATINGS: See "RATINGS" herein. In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based on 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 Series2019 A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the InternalRevenue Code of 1986 (the "Code''). In the further opinion of Bond Counsel, interest on the Series 2019 A Bonds is not a specific prefereuce item for purposes of the federal alternative minimum tax. Bond Counsel observes that interest on the Series 2019 B Bonds is not excluded from gross income for federal income tax purposes under the Code. Bond Counsel is also of the opinion that interest on the 2019 Bonds is exempt from State of California personal income taxes. 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 2019 Bonds. See "TAXMATTERS" herein. $175,565,000 ANAHEIM PUBLIC FINANCING AUTHORITY SENIOR LEASE REVENUE REFUNDING BONDS (ANAHEIM PUBLIC IMPROVEMENTS PROJECT) $169,065,000 $6,500,000 SERIES 2019 A SERIES 2019 B (TAXABLE) Dated: Date of Delivery Due: As shown herein This cover page contains certain information for geueral refereuce only. It is not inteuded to be a summary of the security or terms of this issue. Investors are advised to read the entire OfficialStatemeut to obtain information essential to the making of an informed investmeut decision. Capitalized terms used on this coverpage not otherwise defined shall have the meanings set forth in AppeudixB. The Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A (the "Series 2019 A Bonds") and the Anaheim Public Financing AuthoritySenior LeaseRevenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 B (Taxable) (the "Series 2019 B Bonds" and together with the Series 2019 A Bonds, the "2019 Bonds") are being issued by the Anaheim Public Financing Authority (the "Authority") pursuant to the Indenture of Trust, dated as ofFebruary 1, 1997 (the "Original Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as successor to BNY Western Trust Company, as trustee (the "Trustee"), as amended and supplemented by a First Supplemental Indenture of Trust, dated as ofJune 1, 2007 (the "First Supplemental Indenture") and a Second Supplemental Indenture of Trust, dated as ofApril 1, 2019 (the "Second Supplemental Indenture" and together with the Original Indenture and the First Supplemental Indenture, the "Indenture"), each by and between the Authorityand the Trustee. Interest on the Series 2019 A Bonds will be payable on March 1 and September 1 of each year, commencing September 1, 2019. Interest on the Series 2019 B Bonds will be payable at maturity on June 1, 2019. The 2019 Bonds are subject to redemption prior to maturity as described herein. See "THE 2019 BONDS-Redemptionof 2019 Bonds." The 2019 Bonds will be special obligations of the Authority payable solely from lease payments (the "Lease Payments") required to be made by the City of Anaheim, California (the "City") to the Authority pursuant to aLease Agreement, dated as of February 1, 1997 (the "Lease Agreement") together with certain other amounts pledged under the Indenture (collectively, the "Revenues"). The 2019 Bonds will be payable from Revenues on a paritywith the 1997 Series A Bonds (as defined herein). Pursuant to a Site and Facility Lease, dated as of February 1, 1997 (the "Site Lease") and a Public Parking Facilities Ground Lease, dated as of February 1, 1997 (the "Parking Ground Lease"), the City and Walt Disney World Co., respectively, are leasing to the Authority certain real property more particularly described under the caption "THE LEASED PREMISES" herein; and pursuant to the Lease Agreement, the City is leasing back from the Authority such real property (the "Site"), together with the improvements on the Site (the "Facility" and together with the Site, the "Leased Premises"). The City has covenanted to budget and appropriate the payment of Lease Payments from all legally available funds of the City in an amount equal to the Lease Payment Measurement Revenues (as defined herein) in each year in consideration of the use and occupancy of the Leased Premises. The obligation of the City to make Lease Payments under the Lease Agreement does not constitute an obligation for which the City is obligated to levy or pledge, or has levied or pledged, any form of taxation. Neither the 2019 Bonds nor the obligation of the City to make Lease Payments constitutes an indebtedness of the City, the State of California or any of its political subdivisions within the meaning of the Constitution or laws of the State of California or otherwise or a pledge of the faith and credit of the City. The amount of the Lease Payments the City is obligated to make during any fiscal year is limited to an amount equal to the Lease Payment Measurement Revenues received during such fiscal year,which may be less than or greater than principal of and interest due on the 2019 Bonds and the 1997 Series A Bonds in such fiscalyear. The City has agreed to make Lease Payments due under the Lease Agreement from any available funds; provided however, that the taxes included in the calculation of the Lease Payment Measurement Revenues are not pledged to secure the City's obligation to make such Lease Payments. Under certain circumstances, Lease Payments may be abated under the Lease Agreement. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS" and "CERTAIN RISK FACTORS." The scheduled payment of principal of and interest on the Series 2019 A Bonds maturing on September 1 of the years 2030 through 2036, inclusive (the "Series 2019 A Insured Bonds"), as indicated on the inside cover page, and only those maturities, as and when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Series_, 2019 A Insured Bonds by BUILD AMERICA MUTUAL ASSURANCE COMPANY. ' BA The 2019 Bonds will be issued in book-entryform only and will be initiallyissued and registered in the name of Cede & Co., asnominee forThe Depository Trust Company, New York, New York ("DTC"). DTC will act as securitiesdepository forthe 2019 Bonds. Individual purchasesof the 2019 Bonds will be made in book-entry form only.Purchasers will not receive physical delivery of the 2019 Bonds purchasedby them. Paymentsof the principal of and interest on the 2019 Bonds will be made by the Trustee, to DTC forsubsequent disbursement to DTC Participants, who will remit such payments to the beneficial owners of the 2019 Bonds. See "APPENDIX C- BOOK-ENTRY-ONLY SYSTEM." The Series 2019 A Bonds are subject to optional redemption as described herein. The 2019 Bonds are subject to extraordinary optional redemption as described herein. The purchase and ownership of the 2019 Bonds involve investment risk and may not be suitable forall investors. This cover page is not intended to be a summary of the terms of, or the security for, the 2019 Bonds. Investors are advised to read this Official Statement in its entirety to obtain information essential to the making of an informed investment decision with respect to the 2019 Bonds, giving particular attention to the matters discussed under "CERTAIN RISK FACTORS." The 2019 Bonds are offered when, as and if issued by the Authority and received by the Underwriter, subject to the approval of legality by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel to the Authority. Certain legal matters will be passed upon for the Authority by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, as Disclosure Counsel to the Authority; and for the Underwriter by Nixon Peabody LLP, Los Angeles, California, as Underwriter's Counsel. Certain legal matters will be passedupon for the Authority and for the City by the City Attorney. It is anticipated that the 2019 Bonds, in definitive form, will be available for delivery through the facilities of DTC on or about April30, 2019. Goldman Sachs & Co. LLC Dated: April 17, 2019. MATURITY SCHEDULE BASE CUSIPt: 03255L
$169,065,000 ANAHEIM PUBLIC FINANCING AUTHORITY SENIOR LEASE REVENUE REFUNDING BONDS (ANAHEIM PUBLIC IMPROVEMENTS PROJECT) SERIES 2019 A
Maturity Date Principal Interest Price or (September 1) Amount Rate Yield cusIPt 2019 $ 1,390,000 5.00% 101.183% GY9 2020 4,950,000 5.00 1.480 GZ6 2021 1,995,000 5.00 1.530 HAO 2022 2,095,000 5.00 1.580 HB8 2023 2,205,000 5.00 1.610 HC6 2024 2,320,000 5.00 1.680 HD4 2025 12,585,000 5.00 1.760 HE2 2026 13,275,000 5.00 1.820 HF9 2027 12,650,000 5.00 1.870 HG7 2028 11,955,000 5.00 1.950 HHS 2029 11,180,000 5.00 2.030 HJl 2030* 10,320,000 5.00 2.140Cl HK8 2031* 9,365,000 5.00 2.2soc1 HL6 2032* 8,325,000 5.00 2.340Cl HM4 2033* 7,165,000 5.00 2.410Cl HN2 2034* 5,905,000 5.00 2.440C2 HP7 2035* 22,120,000 5.00 2.sooc2 HQ5 2036* 29,265,000 5.00 2.560C2 HR3
$6,500,000 ANAHEIM PUBLIC FINANCING AUTHORITY SENIOR LEASE REVENUE REFUNDING BONDS (ANAHEIM PUBLIC IMPROVEMENTS PROJECT) SERIES 2019 B (TAXABLE)
Maturity Date Principal Interest (June 1) Amount Rate Price cusIPt 2019 $6,500,000 2.55% 100.000% HSl
* Insured by Build America Mutual Assurance Company. Cl Priced to par call on September I, 2029. c2 Priced to par call on September I, 2027. t CUSIP® is a registered trademark of the American BankersAssociation. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright© 2019 CUSIP Global Services. All rights reserved. CUSIP®data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CU SIP® numbers are provided for convenience of reference only. None of the Authority, the City, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. ANAHEIM PUBLIC FINANCING AUTHORITY
Anaheim City Council and Authority Board of Directors
Harry S. Sidhu, Mayor and Chairman of the Authority Lucille Kring, Mayor Pro Tern and Vice-Chairman of the Authority Denise Barnes, Member Jordan Brandman, Member Jose F. Moreno, Member Stephen Faessel, Member Trevor O'Neil, Member
City/Authority Staff
Chris Zapata, City Manager Greg Garcia, Deputy CityManager David Belmer, Deputy CityManager Deborah A. Moreno, Finance Director/City Treasurer, AuthorityExecutive Director, AuthorityFinancial Advisor and Authority Treasurer Robert Fabela, City Attorneyand Authority Counsel Theresa Bass, CityClerk and Authority Secretary
SPECIAL SERVICES
Bond Counsel & Disclosure Counsel Orrick, Herrington & SutcliffeLLP Los Angeles, California
Municipal Advisor PFM Financial Advisors LLC Los Angeles, California
Trustee The Bank of New York Mellon Trust Company, N. A. Los Angeles, California
Verification Agent Robert Thomas CPA, LLC Minneapolis, Minnesota [THIS PAGE INTENTIONALLY LEFT BLANK] No dealer, broker, salesperson or other person has been authorized by the Authority or the City to give any information or to make any representations in connection with the offer and sale of the 2019 Bonds, other than as set forth herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the Authority or the City. This OfficialStatement does not constitute an offerto sell or the solicitation of an offerto buy nor will there be any sale of the 2019 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Statements contained in this Official Statement that include forecasts, estimates or matters of opinion, whether or not expressly stated as such, are intended solely as such and are not to be construed as representations of fact. The informationset forth herein has been furnished by the Authority, the City and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Underwriter. The informationand expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will under any circumstances create any implication that there has been no change in the affairsof the Authority or the City since the date hereof. This Official Statement is submitted in connection with the sale of the 2019 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. The Underwriter has submitted the following statement for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federalsecurities laws as applied to the factsand circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. In connection with the offering of the 2019 Bonds, the Underwriter may over-allot or effect transactions that stabilize or maintain the market price of the 2019 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 2019 Bonds to certain dealers, institutional investors and others at prices lower than the public offeringprice stated on the cover page hereof and such public offering price may be changed fromtime to time by the Underwriter. Build America Mutual Assurance Company ("BAM") makes no representation regarding the 2019 Bonds or the advisability of investing in the 2019 Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility forthe accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the informationregarding BAM, supplied by BAM and presented under the heading "BOND INSURANCE FOR SERIES 2019 A INSURED BONDS" and APPENDIX F - "SPECIMEN MUNICIPAL BOND INSURANCE POLICY."
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT
Certain statements included or incorporated by reference in this Official Statement and the Appendices hereto constitute "forward-looking statements." Such statements are generally identifiable by the terminology used such as "plan," "expect" "estimate," "budget" or other similar words. Forward looking statements in this OfficialStatement are subject to risks and uncertainties, which could cause actual results to differ materially fromthose contemplated in such forward-looking statements. The achievement of any results or the realization of other expectations contained in such forward looking statements involve known and unknown risks, uncertainties and other factorsthat may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-lookingstatemen ts. Neither the City nor the Authority plans to issue any updates or revisions to those forward-looking statements if or when expectations or events, conditions or circumstances on which such statements are based occur. The City maintains a website. However, the informationpresented there is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2019 Bonds. TABLE OF CONTENTS
Page
INTRODUCTION ...... 1 General...... 1 Purpose of the 2019 Bonds ...... 1 Bond Insurance Policy ...... 2 Special Obligations of the Authority ...... 2 Reserve Account ...... 3 Book-Entry Only...... 3 Continuing Disclosure Agreement...... 4 Forward-Looking Statements...... 4 Additional Information ...... 4 THE LEASED PREMISES ...... 4 Leased Premises...... 4 Leases and Agreements Relating to the Public Parking Facilities...... 5 PLAN OF REFUNDING AND APPLICATION OF 2019 BOND PROCEEDS AND OTHER MONEYS...... 6 Plan of Refunding...... 6 Use of Proceeds of the Refunded Bonds...... 7 SOURCES AND USES OF FUNDS ...... 8 THE 2019 BONDS ...... 8 General...... 8 Redemption of 2019 Bonds ...... 9 Redemption Otherwise than at the Authority's Direction ...... 9 Consent, Priority, Selection of Bonds, Notice of Redemption and Cessation oflnterest...... 10 SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS ...... 10 General ...... 10 Pledge and Assignment of Revenues...... 12 Lease Payments...... 13 Reserve Account ...... 13 Flow of Funds ...... 13 Special Reserve Fund...... 15 Insurance...... 15 Action on Default...... 16 No Additional Bonds ...... 17 BOND INSURANCE FOR SERIES 2019 A INSURED BONDS...... 17 Bond Insurance Policy ...... 17 Build America Mutual Assurance Company ...... 17 DEBT SERVICE REQUIREMENTS...... 19 LEASE PAYMENT MEASUREMENT REVENUES...... 19 General Description ...... 19 Reduction in Taxes Included in Lease Payment Measurement Revenues ...... 20 Transient Occupancy Taxes...... 20 Disney Incremental Revenues...... 25
-i- TABLE OF CONTENTS (c ontinued) Page
Property Tax Revenues ...... 25 City Hotel Room TOT ...... 26 Total Historical Amounts of Lease Payment Measurement Revenues...... 26 THE AUTHORITY ...... 27 THE CITY OF ANAHEIM ...... 27 General...... 27 City Council...... 28 City Management...... 30 Pensions ...... 31 Labor Relations...... 34 Area and Population...... 35 Building Activity ...... 36 Employment...... 3 6 Income ...... 37 Tourism and Community and Recreational Facilities...... 3 7 Retail Sales ...... 40 Education ...... 41 City Financial Information...... 42 Budgetary Processes ...... 43 Assessed Valuation and Tax Collections ...... 45 Largest Property Taxpayers ...... 4 7 Direct and Overlapping Debt...... 48 CITY INVESTMENT POLICY AND CONTROL...... 50 CERTAIN RISK FACTORS ...... 51 Limited Obligations ...... 51 Rights of Certain Parties ...... 51 Other General Fund Obligations and Financings Secured by the Leased Premises ...... 52 Limitations on Remedies Available to Owners of the 2019 Bonds and the Trustee ...... 52 Insurance...... 52 Loss of Tax-Exemption on Series 2019 A Bonds...... 53 Constitutional Limitations on Taxes and Appropriations ...... 53 State Budget ...... 5 3 Abatement of Lease Payments...... 5 3 Natural Disasters...... 54 Absence of Earthquake Insurance...... 54 Hazardous Substances...... 54 DefaultUnder Master Parking Ground Leases ...... 54 Static Mechanism To Calculate Lease Payment Measurement Revenues ...... 55 Economic and Tourism Factors ...... 55 Property Subject to Sales Tax ...... 55 Bankruptcy and Foreclosure; Other Federal Issues ...... 55 Forward-Looking Statements...... 55 Secondary Market for Bonds ...... 5 5
ii TABLE OF CONTENTS (c ontinued) Page
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS...... 56 Article XIIIA of the CaliforniaConstitution ...... 56 Article XIIIB of the California Constitution...... 56 Articles XIIIC of the California Constitution ...... 56 Articles XIIID of the CaliforniaConstitution ...... 58 Proposition 26...... 5 8 Initiative, Referendumand Charter Amendments ...... 58 TAX MATTERS...... 59 Series 2019 A Bonds...... 59 Series 2019 B Bonds...... 61 CERTAIN LEGAL MATTERS...... 63 CONTINUING DISCLOSURE AGREEMENT ...... 64 ABSENCE OF LITIGATION ...... 64 RATINGS ...... 64 VERIFICATION OF MATHEMATICAL COMPUTATIONS...... 65 MUNICIPAL ADVISOR...... 65 UNDERWRITING ...... 65 AUDITED FINANCIAL STATEMENTS ...... 66 MISCELLANEOUS ...... 67 APPENDIX A CITY OF ANAHEIM AUDITED FINANCIAL STATEMENTS...... A-1 APPENDIX B SUMMARY OF BOND DOCUMENTS ...... 8-1 APPENDIX C BOOK-ENTRY-ONLY SYSTEM...... C-1 APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT ...... D-1 APPENDIX E PROPOSED FORM OF OPINION OF BOND COUNSEL ...... E-1 APPENDIX F SPECIMEN MUNICIPAL BOND INSURANCE POLICY ...... F-1 APPENDIX G SPECIMEN MUNICIPAL BOND DEBT SERVICE RESERVE INSURANCE POLICY ...... G-1
iii [THIS PAGE INTENTIONALLY LEFT BLANK] OFFICIAL STATEMENT
$175,565,000 ANAHEIM PUBLIC FINANCING AUTHORITY SENIOR LEASE REVENUE REFUNDING BONDS (ANAHEIM PUBLIC IMPROVEMENTS PROJECT)
$169,065,000 $6,500,000 SERIES 2019 A SERIES 2019 B (TAXABLE)
INTRODUCTION
This Introduction is qualifiedin its entiretyby reference to the more detailed information included and referred to elsewhere in this OfficialStatement. The offering of the 2019 Bonds is made only by means of the entire OfficialStatement. Capitalized terms used in this OfficialStatement and not otherwise defined shall have the respective meanings assigned to them in Appendix B.
The purpose of this Official Statement (which includes the cover page and the appendices) is to provide information concerning the sale and delivery by the Anaheim Public Financing Authority (the "Authority") of $169,065,000 aggregate principal amount of its Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A (the "Series 2019 A Bonds") and $6,500,000 aggregate principal amount of its Senior Lease Revenue RefundingBonds (Anaheim Public Improvements Project), Series 2019 B (Taxable) (the "Series 2019 B Bonds" and together with the Series 2019 A Bonds, the "2019 Bonds").
General
The 2019 Bonds are being issued pursuant to Title 5, Division 2, Chapter 3, Article 11 of the California Government Code, a resolution adopted by the Board of Directors of the Authority on January 29, 2019 (the "Authority Resolution") and the Indenture of Trust, dated as of February 1, 1997 (the "Original Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N. A. , as successor to BNY Western Trust Company, as trustee (the "Trustee"), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of June 1, 2007 (the "First Supplemental Indenture") and a Second Supplemental Indenture of Trust, dated as of April 1, 2019 (the "Second Supplemental Indenture" and together with the Original Indenture and the First Supplemental Indenture, the "Indenture") each by and between the Authority and the Trustee. All capitalized terms used in this Official Statement, unless otherwise defined herein, have the same meanings assigned to such terms in the Indenture. See "APPENDIX B-SUMMARY OF BOND DOCUMENTS-DEFINITIONS" for definitions of certain terms used in this Official Statement.
Purpose of the 2019 Bonds
The 2019 Bonds are being issued by the Authority to (a) currently refund and defeasethe Refunded Bonds (as defined herein), (b) pay the costs of issuance of the 2019 Bonds and (c) fund a reserve account for the Series 2019 A Bonds. See "PLAN OF REFUNDING AND APPLICATION OF 2019 BOND PROCEEDS AND OTHER MONEYS." Bond Insurance Policy
Concurrently with the issuance of the 2019 Bonds, Build America Mutual Assurance Company ("BAM" or the "Series 2019 A Bond Insurer") will issue its Municipal Bond Insurance Policy (the "Series 2019 A Bond Insurance Policy") for the Series 2019 A Bonds maturing on September 1 in the years 2030 through 2036, inclusive (collectively, the "Series 2019 A Insured Bonds"). The Series 2019 A Bond Insurance Policy guarantees the scheduled payment of principal of and interest on the Series 2019 A Insured Bonds when due as set forthin the formof the Series 2019 A Bond Insurance Policy included as Appendix F to this Official Statement. See "BOND INSURANCE FOR SERIES 2019 A INSURED BONDS." The Series 2019 A Bond Insurance Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.
Special Obligations of the Authority
The 2019 Bonds will be special obligations of the Authority payable solely from lease payments (the "Lease Payments") to be made by the City of Anaheim, California (the "City") to the Authority forthe use and occupancy of the Leased Premises (as defined below) pursuant to a Lease Agreement, dated as of February 1, 1997 (the "Lease Agreement"), by and between the Authority, as lessor, and the City, as lessee, and certain other amounts pledged under the Indenture (collectively, the "Trust Estate"). Pursuant to a Site and Facility Lease, dated as of February 1, 1997 (the "Site Lease"), by and between the City, as lessor, and the Authority, as lessee, and a Public Parking Facilities Ground Lease, dated as of February 1, 1997 (the "Parking Ground Lease"), by and between the Authority and Walt Disney World Co. ("Disney"), the City and Disney, respectively, are leasing to the Authority certain real property (collectively, the "Site"). The City is leasing back fromthe Authority the Site and the improvements thereon (collectively, the "Facility" and, together with the Site, the "Leased Premises"). None of the Lease Agreement, the Site Lease or the Parking Ground Lease is being amended or modified in connection with the issuance of the 2019 Bonds. See "THE LEASED PREMISES."
Payments of the principal of and interest due on the 2019 Bonds will be made solely from(a) Lease Payments payable by the City to the Authority forthe use and occupancy of the Leased Premises; (b) rental interruption insurance proceeds, if any; (c) net proceeds of insurance or condemnation pertaining to the Leased Premises to the extent such proceeds are not used (i) to pay the holders of certain certificates of participation with respect to the Leased Premises (other than the Public Parking Facilities ( as defined herein)), Angels Baseball L. P. (the "Tenant") with respect to Angel Stadium of Anaheim (formerly known as Anaheim Stadium) (the "Stadium") under the Stadium Lease, or with respect to the Public Parking Facilities (forcondemnation proceeds only), the owners of the feeinterest of the site upon which the Public Parking Facilities are located; or (ii) for repair or replacement; (d) interest earned or other income derived from the investment of the funds and accounts held by the Trustee pursuant to the Indenture; (e) amounts received under the Series 2019 A Bond Insurance Policy (with respect to the Series 2019 A Insured Bonds only); and (f) in certain instances, from amounts held in the reserve account established pursuant to the Indenture for the Series 2019 A Bonds. The Facility consists of the Anaheim Convention Center, the Stadium, the Public Parking Facilities, a mechanical maintenance facility, a central maintenance facility, certain parking facilities, certain library facilities and a fire station. See "THE LEASED PREMISES."
The City has covenanted under the Lease Agreement to make Lease Payments from any legally available funds of the City for the use and occupancy of the Leased Premises and to take such action in each year as may be necessary to include all Lease Payments in its annual budget and to annually appropriate an amount necessary to make such Lease Payments. The Authority's Senior Lease Revenue Bonds (Anaheim Public Improvements Project) 1997 Series A, maturing on September 1, 2024 and currently outstanding in the aggregate principal amount of $37,465,000 (the "1997 Series A Bonds," and collectively, with the 2019 Bonds, the "Senior Lien Bonds") are secured by the Lease Payments on a parity
2 basis with the 2019 Bonds. The Authority's Subordinate Lease Revenue Bonds (Anaheim Public Improvements Project) 1997 Series C, which, as of March 1, 2019, were outstanding in the amount of $335,424,035 (the "1997 Series C Bonds" or the "Subordinate Lien Bonds"), are secured by the Lease Payments on a subordinate basis to the Senior Lien Bonds. The Senior Lien Bonds and the Subordinate Lien Bonds are collectively referred to herein as the "Bonds." The amount of Lease Payments the City is obligated to make during any fiscal year is limited to an amount equal to the Lease Payment Measurement Revenues (as defined herein) received during such fiscal year, which may be less than or greater than the principal or accreted value of and interest due on the Bonds in such fiscal year. See "LEASE PAYMENT MEASUREMENT REVENUES." The City has agreed to make Lease Payments due under the Lease Agreement fromany legally available funds of the City, including funds not included in the calculation of the Lease Payment Measurement Revenues; provided, however, that the taxes included in the calculation of the Lease Payment Measurement Revenues are not pledged to secure the City's obligation to make such Lease Payments. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS," "LEASE PAYMENT MEASUREMENT REVENUES" and "CERTAIN RISK FACTORS." The obligation of the City to make Lease Payments will be abated in whole or in part during any period in which, by reason of damage, destruction, condemnation or defect in the title, there is substantial interference with the use and occupancy by the City of the Leased Premises or any material portion thereof to the extent agreed upon by the City and the Authority. If the Lease Payments remain abated and the rental interruption insurance, if any, expires and the respective Reserve Accounts, the Bond Accounts for the Senior Lien Bonds and the Special Reserve Fund are depleted, the diminished Lease Payments may not provide sufficient Revenues to pay all of the principal of and interest on the Senior Lien Bonds (including the 2019 Bonds). The failure to make such payments of principal of and interest on the 2019 Bonds due to such abatement does not constitute a default under the Indenture, the Lease Agreement or the 2019 Bonds.
The obligation of the City to make Lease Payments under the Lease Agreement does not constitute an obligation forwhich the City is obligated to levy or pledge, or has levied or pledged, any formof taxation. Neither the 2019 Bonds nor the obligation of the City to make Lease Payments constitutes an indebtedness of the City, the State of California (the "State") or any of its political subdivisions within the meaning of the Constitution or laws of the State or otherwise or a pledge of the faith and creditof the City.
Reserve Account
A Reserve Account will be established and maintained for the Series 2019 A Bonds in an amount equal to the Reserve Requirement for the Series 2019 A Bonds. The Reserve Account for the Series 2019 A Bonds only secures the payment of debt service on the Series 2019 A Bonds and does not secure the payment of debt service on the Series 2019 B Bonds or any other Bonds. There is no Reserve Requirement for the Series 2019 B Bonds and, therefore, no reserve account will be established for the Series 2019 B Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS-Reserve Account. "
Book-Entry Only
Ownership interests in the 2019 Bonds may be purchased in book-entry form only through The Depository Trust Company, New York, New York ("DTC") in the United States. The 2019 Bonds will be issuable in fully registered formonly and, when issued and delivered, will be registered in the name of Cede & Co. , as nominee of DTC. DTC will act as the depository of the 2019 Bonds and all payments due on the 2019 Bonds will be made to DTC or its nominee. So long as Cede & Co. , as nominee of DTC, is the registered owner of the 2019 Bonds, references herein to the Owner or registered owner will mean Cede & Co. and will not mean the Beneficial Owners (as defined herein) of the 2019 Bonds. See "THE 2019 BONDS" and "APPENDIX C-BOOK-ENTRY-ONLY SYSTEM. "
3 Continuing Disclosure Agreement
The City will covenant for the benefitof the Owners and Beneficial Ownersof the 2019 Bonds to provide annually certain financial informationand operating data concerningthe City to certain information repositories and to provide notice to the Municipal Securities Rulemaking Board or to each Nationally Recognized Municipal Securities Information Repository certified by the Securities and Exchange Commission of certain enumerated events, pursuant to the requirements of Section (b)(5)(i) of Rule 15c2- 12 of the Securities Exchange Commission. See "CONTINUING DISCLOSURE AGREEMENT" and "APPENDIX D-FORM OF CONTINUING DISCLOSURE AGREEMENT" for the form of the Continuing Disclosure Agreement.
Forward-Looking Statements
This Official Statement, including the appendices hereto, contains statements relating to future results that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words "estimate," "anticipate," "forecast," "project," "intend," "propose," "plan," "expect" and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. See "CERTAIN RISK FACTORS-Forward-Looking Statements."
Additional Information
Brief descriptions of the 2019 Bonds, the Indenture, the Lease Agreement and certain other documents are included in this Official Statement and the appendices hereto. Such descriptions do not purport to be comprehensive or definitive. All references herein to such documents and any other documents, statutes, reports or other instruments described herein are qualifiedin their entirety by reference to each such document, statute, report or other instrument. The information herein is subject to change without notice, and the delivery of this Official Statement will under no circumstances, create any implication that there has been no change in the affairs of the Authority or the City since the date hereof. This Official Statement is not to be construed as a contract or agreement between the Authority or the City and the purchasers or Owners of any of the 2019 Bonds.
THE LEASED PREMISES
Leased Premises
Lease Payments will be made by the City to the Authority under the Lease Agreement for the use and occupancy of the Leased Premises. The Leased Premises consist of the Facility and the Site. The Facility consists of: (a) the Anaheim Convention Center, the eighth largest convention facilityin the United States, and the largest convention facility on the west coast of the United States, which currently consists of an approximately 1. 6 million square footfacility including exhibit halls, meeting rooms, prefunction and registration areas, a multipurpose-ballroom, office space, service area and related facilities, with parking for approximately 1,850 vehicles; (b) replacement parking facilities located adjacent to the Anaheim Convention Center consisting of approximately 1,365 spaces; (c) the Stadium, which recently underwent approximately $100 million of renovations, which consists of approximately 45,000 seats, a field level club/lounge, a Stadium Club restaurant, 10 dugout suites, 16 home plate suites, 64 standard club suites, two party suites, apron gardens, food courts, TV and radio broadcast booths and team facilities; (d) the City's
4 Mechanical Maintenance Facility which consists of a main shop of approximately 54,909 square feet, housing 28 repair stalls with parking spaces for 136 cars, 29 heavy trucks and a 12,480-footbody shop and related facilities; ( e) a central maintenance facility which includes a 4,300 square footwarehouse and office and maintenance facilities; (f) the Anaheim Main Library, which consists of 45,000 square feet of library space and approximately 250 parking stalls, the Haskett Branch Library which consists of approximately 6,000 square feet of library space, 90 parking stalls and Maxwell Park, and the Sunkist Branch Library which consists of approximately 8,000 square feetof library space, 120 parking stalls and Juarez Park; (g) one approximately 10,3 81 square footfire station, sufficientto house two firefightingcompanies and related facilities; and (h) the "Public Parking Facilities," which are located west of Disneyland and south of Interstate 5, which consists of a parking structure and adjacent surface parking of approximately 7,500 spaces and provides public parking for "The Disneyland Resort" (which includes, among other things, Disneyland Park, Disney's California Adventure, Downtown Disney, The Disneyland Hotel, Disney's Grand Californian Hotel, Disney's Paradise Pier Hotel and support facilities), the Anaheim Convention Center and other day uses within the "Anaheim Resort Area" (a 2.2 square mile area that consists of, among other things, The Disneyland Resort, the Anaheim Convention Center, and a majority of the City's 20,000 hotel and motel rooms). All portions of the Leased Premises are currently in a state of good repair and are available for use as contemplated under the Lease Agreement. The City has represented that the fair rental value of the Leased Premises is in excess of the Lease Payment Measurement Revenues.
The Lease Agreement provides that the City, Disney (only with respect to the Public Parking Facilities) and the Tenant (only with respect to the Stadium) have the right, subject to certain conditions, to remodel the Leased Premises, or to make additions, modifications and improvements to the Leased Premises. All such additions, modifications and improvements to the Leased Premises, will thereafter comprise part of the Leased Premises and will be subject to the provisions of the Lease Agreement. In addition to the 2019 Bonds, the 1997 Series A Bonds (on a parity basis), and the 1997 Series C Bonds (on a subordinate basis) are secured by the Lease Payments for use and occupancy of the Leased Premises pursuant to the terms of the Lease Agreement. Additionally, the City previously issued its 2014 Bonds (as defined herein) with respect to the Anaheim Convention Center and certain parking facilities located adjacent thereto. Although the owners of the 2014 Bonds have the same claim as the owners of the Bonds with respect to the receipt of their payments from the City's general fund, the Bond owners have certain priority rights with respect to remedies and condemnation and insurance proceeds involving the Leased Premises under the Lease Agreement and the Indenture. See "CERTAIN RISK FACTORS-Rights of Certain Parties." Proceeds frominsurance on or condemnation of the Leased Premises, other than the Public Parking Facilities, are subject to the prior rights of (a) the Tenant, with respect to the Stadium, and (b) the owners of the fee interest in the site upon which the Public Parking Facilities are located, with respect to condemnation proceeds only. See "CERTAIN RISK FACTORS-Rights of Certain Parties" herein.
Leases and Agreements Relating to the Public Parking Facilities
Existing Master Parking Ground Leases. The property upon which the Public Parking Facilities are located (the "Public Parking Property") is leased to Disney, successor by merger to WCO Vacationland, Inc. , pursuant to the Master Parking Ground Leases. Under the terms of the Master Parking Ground Leases, Disney has agreed, among other things, to pay to the owners of the Public Parking Property an annual rental amount for both parcels. In addition to the annual rental amount, Disney is obligated to pay all property taxes and assessments levied upon the property. The annual rental payments and all property taxes and assessments levied upon the property are guaranteed by The Walt Disney Company. The Master Parking Ground Leases expire in 2083. The Public Parking Property is subleased by Disney to the Authority pursuant to the Parking Ground Lease and further subleased to the City pursuant to the Lease Agreement. The City sub-leased the Public Parking Property and the Public Parking Facilities located thereon to Disney for operation pursuant to the Parking Operating Lease. The owners of the Public Parking Property have consented to the Parking Ground Lease, the Lease Agreement and the Parking Operating Lease. In the event
5 Disney defaults on its obligations under the Master Parking Ground Leases, the owners of the Public Parking Property have agreed to permit the Authority and the City to retain their leasehold interests in the Public Parking Property if the Authority elects to do so and the Authority assumes Disney's position as lessee under the Master Parking Ground Leases. See "CERTAIN RISK FACTORS-DefaultUnder Master Parking Ground Leases."
Management of Public Parking Facilities. The City and Disney have agreed that pursuant to the Parking Operating Lease, Disney will be responsible for the management and repair of the Public Parking Facilities. Pursuant to the Parking Operating Lease, the Public Parking Facilities and any and all improvements made thereon will be maintained by Disney in a clean, safe and sightly condition and kept in good repair, including without limitation trash removal, cleaning, maintenance and painting, ordinary wear and tear excepted. Such obligation by Disney to operate and maintain the Public Parking Facilities includes the right to make, or cause to be made, improvements to any part of the Public Parking Facilities and to demolish, remove, replace, alter, relocate, reconstruct or add to any improvement in whole or in part. During the term of the Parking Operating Lease, Disney will operate the Public Parking Facilities and will be responsible for all costs of operating the Public Parking Facilities, including without limitation, all maintenance, repair and capital costs, real and personal property taxes, insurance premiums, utility costs, expenses and assessments of every kind and nature, and personnel and labor costs involved in the operation of the Public Parking Facilities. Pursuant to the terms of the Parking Operating Lease, Disney retains all revenues generated from the Public Parking Facilities.
PLAN OF REFUNDING AND APPLICATION OF 2019 BOND PROCEEDS AND OTHER MONEYS
Plan of Refunding
The Authority is undertaking a current refunding of $209,065,000 aggregate principal amount of its Anaheim Public Financing Authority Senior Lease Revenue Bonds (Anaheim Public Improvements Project) 2007 Refunding Series A-1 (the "2007 Series A-1 Bonds") and its Anaheim Public Financing Authority Senior Lease Revenue Bonds (Anaheim Public Improvements Project) 2007 Refunding Series A-2 (the "2007 Series A-2 Bonds, and together with the 2007 Series A-1 Bonds, the "Refunded Bonds") in order to reduce the interest cost on its indebtedness. The Refunded Bonds consist of the following maturities:
2007 SERIES A-1 BONDS TO BE REFUNDED CU SIP Maturity Date Original Principal Redemption Date 1 Number2 9/01/2021 $165,000 4/30/2019 03255LDLO 9/01/2022 170,000 4/30/2019 03255LDM8 9/01/2023 180,000 4/30/2019 03255LDN6 9/01/2024 185,000 4/30/2019 03255LDP1 9/01/2025 195,000 4/30/2019 03255LDQ9 9/01/2026 205,000 4/30/2019 03255LDR7 9/01/2034 18,330,000 4/30/2019 03255LDUO 9/01/2035 19,390,000 4/30/2019 03255LDV8 9/01/2029 670,000 4/30/2019 03255LDS5 9/01/2033 63,315,000 4/30/2019 03255LDT3 3/01/2037 42,815,000 4/30/2019 03255LDW6
The 2007 Series A-1 Bonds will be optionally redeemed on April 30, 2019 at a redemption price of 100% of the principal amount, plus accrued interest. CU SIP numbers are provided only for the convenience of the reader. None of the Authority, the City or the Underwriter undertakesany responsibility for the accuracy of such CUSIPnumbers or for any changes or errors in the list of CU SIP numbers.
6 2007 SERIES A-2 BONDS TO BE REFUNDED CU SIP Maturity Date Original Principal Redemption Date 1 Number2 9/01/2019 $135,000 4/30/2019 03255LDZ9 9/01/2020 280,000 4/30/2019 03255LEA3 9/01/2021 585,000 4/30/2019 03255LEB 1 9/01/2022 610,000 4/30/2019 03255LEC9 9/01/2023 635,000 4/30/2019 03255LED7 9/01/2024 670,000 4/30/2019 03255LEE5 9/01/2026 22,045,000 4/30/2019 03255LEF2 9/01/2029 38,485,000 4/30/2019 03255LEGO
The 2007 Series A-2 Bonds will be optionally redeemed on April 30, 2019 at a redemption price of I00% of the principal amount, plus accrued interest. CU SIP numbers are provided only for the convenience of the reader. None of the Authority, the City or the Underwriter undertakesany responsibility for the accuracy of such CUSIPnumbers or for any changes or errors in the list of CU SIP numbers.
The net proceeds of the 2019 Bonds will be applied to optionally redeem the Refunded Bonds on April 30, 2019, at a redemption price of 100% of the principal amount, plus accrued interest of the Refunded Bonds.
Robert Thomas CPA, LLC, certified public accountants, will verify that such amounts will be sufficient to pay all of the principal of, and interest due on the Refunded Bonds, respectively, on April 30, 2019. See "VERIFICATION OF MATHEMATICAL COMPUTATIONS."
Use of Proceeds of the Refunded Bonds
The proceeds of the Refunded Bonds were used to refund certain of the Authority's Senior Lease Revenue Bonds (Anaheim Public Improvements Project) 1997 Series A and Senior (Taxable) Lease Revenue Bonds (Anaheim Public Improvements Project) 1997 Series B, which were originally issued, among other things, to financethe acquisition and construction of certain public improvements, including, the Convention Center Expansion, the City Managed Public Improvements and the Disney Managed Public Improvements, as described below.
Convention Center Expansion. The Convention Center Expansion generally included, among other things, the addition, improvement and betterment of the Anaheim Convention Center, including, without limitation, a new exhibit hall and enhancements to the existing halls, meeting rooms, prefunction and registration areas, multipurpose/ballroom and service areas, roadway improvements, landscaping and new parking.
City Managed Public Imp rovements. The City Managed Public Improvements generally including, among other things, certain electrical undergrounding, fire, paramedic and police equipment and improvements, landscaping, park and recreation improvements, storm drain improvements, improvements to streets and intersections, water main improvements, wastewater and sewer improvements.
Disney Managed Public Imp rovements. The Disney Managed Public Improvements generally included, among other things, the Public Parking Facilities, certain water, wastewater and sewer improvements, certain overcrossing, intersection and roadway improvements, storm drain improvements, electrical undergrounding and landscaping improvements.
7 SOURCES AND USES OF FUNDS
The followingtable sets forth the sources and uses of fundsin connection with the issuance of the 2019 Bonds.
Sources Principal Amount $175,565,000.00 Original Issue Premium 35,279,402.60 Release of Other Available Funds from Original Indenture 1,535,434.24 Total Sources $212,379,836.84 Uses Redemption of2007 Series A-1 Bonds1 $146,717,539.31 Redemption of2007 Series A-2 Bonds1 63,882,894.93 Costs of Issuance2 1, 779,40 2.60 Total Uses $212,3 79,836.84
Such amounts will be deposited in the redemption account for the redemption of the 2007 Series A-1 Bonds and the 2007 Series A-2 Bonds. Includes Underwriter's discount, legal, bond insurance and surety premiums and other costs of issuance.
THE 2019 BONDS
General
The 2019 Bonds will bear interest at the rates and mature on the dates set forth on the inside front cover of this Official Statement. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The Series 2019 A Bonds will be dated their date of delivery and will bear interest from that date, payable semi-annually on March 1 and September 1 of each year, commencing on September 1, 2019. The Series 2019 B Bonds will be dated their date of delivery and will bear interest from that date, payable at maturity on June 1, 2019. The 2019 Bonds will be issued in denominations of $5,000 or integral multiples thereof.
Ownership interests in the 2019 Bonds may be purchased in book-entry formonly through DTC in the United States. The 2019 Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede & Co. , as registered owner and nominee of DTC. DTC will act as securities depository forthe 2019 Bonds. Individual purchases may be made in book-entry formonly. Purchasers will not receive certificates representing their interest in the 2019 Bonds purchased. So long as Cede & Co. , as nominee of DTC, is the registered owner of the 2019 Bonds, references herein to the Owner or registered owner will mean Cede & Co. and will not mean the BeneficialOwners of the 2019 Bonds. So long as Cede & Co. is the registered owner of the 2019 Bonds, the principal of and interest on the 2019 Bonds are payable by wire transfer by the Trustee to Cede & Co. , as nominee ofDTC, which is required in tum, to remit such amount to the Direct Participants (as definedherein) forsubsequent disbursement by the Direct Participants and the Indirect Participants (as defined herein) to the Beneficial Owners. See "APPENDIX C-BOOK ENTRY-ONLY SYSTEM."
See "APPENDIX B-SUMMARY OF BOND DOCUMENTS-THE INDENTURE" for a summary of certain provisions of the Indenture, including without limitation certain covenants of the Authority, the rights and duties of the Trustee, the rights and remedies of the Trustee and the Bondowners upon an event of default, provisions relating to amendments of the Indenture and procedures for defeasance of the 2019 Bonds.
8 Redemption of 2019 Bonds
Op tional Redemption
Series 2019 A Bonds. The Series 2019 A Bonds maturing September 1, 2030 through September 1, 2033, inclusive, are subject to optional redemption, at the election of the Authority, in whole or in part in Authorized Denominations, on any date on or after September 1, 2029, from any source of available funds, at a redemption price equal to the principal amount of the Series 2019 A Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption.
The Series 2019 A Bonds maturing September 1, 2034 through September 1, 2036, inclusive, are subject to optional redemption, at the election of the Authority, in whole or in part in Authorized Denominations, on any date on or after September 1, 2027, from any source of available funds, at a redemption price equal to the principal amount of the Series 2019 A Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption.
Series 2019 B Bonds. The Series 2019 B Bonds are not subject to optional redemption prior to their stated maturities.
Extraordinary Optional Redemption
Series 2019 A Bonds. The Series 2019 A Bonds are subject to redemption, at the election of the Authority, in whole or in part, on any date, at a redemption price equal to the principal amount of the Series 2019 A Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption: (a) from and to the extent of moneys available from insurance or condemnation proceeds with respect to the Leased Premises; (b) from any source of money if all or substantially all of a Facility included in the Leased Premises is damaged or destroyed or taken by any public entity in exercise of its powers of eminent domain; and (c) fromany source of money within 90 days of the date of any action taken by the City or the Authority that is determined by the Authority upon advice of nationally recognized bond counsel to result in the private business tests or private loan tests of Section 141 of the Internal Revenue Code of 1986, as amended, being met with respect to the Leased Premises (a "Change in Use") in order to preserve the exclusion fromgross income of interest on the Series 2019 A Bonds.
Series 2019 B Bonds. The Series 2019 B Bonds are subject to redemption, at the election of the Authority, in whole or in part, on any date, at a redemption price equal to the principal amount of the Series 2019 B Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption: (a) from and to the extent of moneys available from insurance or condemnation proceeds with respect to the Leased Premises; and (b) from any source of money if all or substantially all of a Facility included in the Leased Premises is damaged or destroyed or taken by any public entity in exercise of its powers of eminent domain.
Redemption Otherwise than at the Authority's Direction
Whenever by the terms of the Indenture the Trustee is required or authorized to redeem bonds otherwise than at the direction of the Authority and otherwise than from Sinking Fund Installments, then Bonds will be selected for redemption (but not prior to the firstoptional redemption date) in the following order of priority: first, Senior Lien Bonds that are not Tax-Exempt, on a pro rata basis from each of the Owners thereof; second, Subordinate Lien Bonds that are Tax-Exempt, in inverse order of maturity of bonds callable; and third, Senior Lien Bonds that are Tax-Exempt, in inverse order of maturity of bonds callable.
9 Consent, Priority, Selection of Bonds, Notice of Redemption and Cessation of lnterest
In the case of any redemption of any Bonds at the direction of the Authority, the Authority will give written notice to the Trustee, with the written consent of The Walt Disney Company, of its direction so to redeem, of the redemption date, of the Series, and of the principal amounts of the Bonds of each maturity of such Series to be redeemed. The Authority will select Bonds for redemption in the following order of priority: first, Senior Lien Bonds that are not Tax-Exempt, on a pro rata basis from each of the Owners thereof; second, Subordinate Lien Bonds that are Tax-Exempt, in inverse order of maturity of bonds callable; and third, Senior Lien Bonds that are Tax-Exempt, in inverse order of maturity of bonds callable.
If less than all of the Bonds of like maturity of any Series are called for prior redemption, the particular Bonds or portions of Bonds to be redeemed will be selected in the followingmann er: (a) on a pro rata basis fromeach of the Owners thereof with respect to the Senior Lien Bonds which are not Tax-Exempt or (b) at random as selected by the Trustee or DTC forall other Bonds other than Senior Lien Bonds which are not Tax-Exempt; provided, however, that the portion of any Bonds of a denomination of more than $5,000 to be redeemed will be in the principal amount or accreted value at maturity of $5,000 or an integral multiple thereof, and that, in selecting portions of such Bonds for redemption, the Trustee will treat each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount or accreted value at maturity of such Bond to be redeemed in part by $5,000; provided, however, that such selection process may not cause the unredeemed portion of any Bond to be in a principal amount or accreted value at maturity which is not an Authorized Denomination. At the option of the Authority, the Authority's obligation, in whole or in part, with respect to any mandatory sinking fund redemption requirement may be satisfied by delivering to the Trustee forcancellation Bonds subject to such redemption or by specifying an amount of such Bonds which have been previously canceled, redeemed or purchased but not credited against such mandatory sinking fund redemption requirement.
The Trustee will give notice, in the name of the Authority, of the redemption of such Bonds, in the manner set forth in the Indenture. The Trustee will mail a copy of such notice, postage prepaid, not less than 30 days nor more than 60 days before the redemption date, to the Owners of any Bonds or portions of Bonds which are to be redeemed, at their last addresses appearing upon the Bond Register, but receipt of such notice will not be a condition precedent to such redemption and failureso to receive any such notice or any defect in such notice will not affect the validity of the proceedings for the redemption of Bonds.
When notice of redemption is given, Bonds called for redemption become due and payable on the redemption date at the applicable redemption price. In the event that funds are deposited with the Trustee sufficient for redemption, interest on the Bonds to be redeemed will cease to accrue as of the redemption date. Notwithstanding the foregoing, noticeof any redemption of the Bonds will either (a) explicitly state that the proposed redemption is conditioned on there being on deposit in the applicable fund or account on the redemption date sufficient money to pay the full redemption price of the Bonds to be redeemed, or (b) be sent only if sufficient money to pay the full redemption price of the Bonds to be redeemed is on deposit in the applicable fund or account.
SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS
General
The 2019 Bonds will be special obligations of the Authority payable solely (on parity with the 1997 Series A Bonds) from theTrust Estate. Trust Estate is defined under the Indenture as (a) the Revenues; (b) all amounts on deposit in the fundsand accounts established pursuant to the Indenture other than the Rebate Fund and the Policy Payments Account; and (c) all of the Authority's right, title and interest in and to the Lease Agreement. Revenues are defined under the Indenture as all amounts paid as Lease Payments by the
10 City under the Lease Agreement and all amounts received from rental interruption or use and occupancy insurance maintained pursuant to the Lease Agreement.
The Authority, pursuant to the Indenture, has assigned to the Trustee for the benefitof the Owners its rights under the Lease Agreement, including its right to receive Lease Payments and its right to enforce all rights of the Authority and all obligations of the City under the Lease Agreement. Payment of the principal of and interest on the 2019 Bonds will be made (on parity with the 1997 Series A Bonds) from (a) Lease Payments; (b) rental interruption insurance proceeds, if any; (c) net proceeds of insurance or condemnation pertaining to the Leased Premises to the extent such proceeds are not used (i) to pay (A) the Tenant with respect to the Stadium under the Stadium Lease, and (B) with respect to the Public Parking Facilities (forcondemnation proceeds only), the owners of the feeinterest in the site upon which the Public Parking Facilities are located (as more particularly described under "CERTAIN RISK FACTORS-Rights of Certain Parties"); or (ii) for repair or replacement; (d) interest earned or other income derived from the investment of the funds and accounts held by the Trustee pursuant to the Indenture; (e) amounts received under the Series 2019 A Bond Insurance Policy (with respect to the Series 2019 A Bonds only); and (f) in certain instances, with respect to the Series 2019 A Bonds only, from amounts held in the Series 2019 A Reserve Account.
Although the Lease Agreement does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease Agreement to pay Lease Payments fromany source of legally available funds (subject to the provisions of the Lease Agreement regarding abatement and modificationof Lease Payments as described herein) and the City has covenanted under the Lease Agreement to make Lease Payments for the use and occupancy of the Leased Premises and to take such action in each year as may be necessary to include all Lease Payments in its annual budget and to annually appropriate an amount necessary to make such Lease Payments in an amount equal to Lease Payment Measurement Revenues. See "LEASE PAYMENT MEASUREMENT REVENUES." The Lease Payments will be paid to the Trustee, as assignee of the Authority, and will be used to make payments of principal of, accreted value and interest first on the Senior Lien Bonds and secondly on the Subordinate Lien Bonds. Under California law, although the Lease Agreement becomes effective as of the date of the Bonds, the obligation of the City to make Lease Payments will be abated in whole or in part during any period in which, by reason of damage, destruction, condemnation or defectin the title, there is substantial interferencewith the use and occupancy by the City of the Leased Premises or any material portion thereof to the extent agreed upon by the City and the Authority. In the event the Lease Payments are abated in full, the Bond payments will be payable solely fromamounts on deposit in the Reserve Accounts forthe respective Series, the Special Reserve Fund, the Insurance and Condemnation Fund (the amounts actually deposited in this fund may be less than the total net proceeds frominsurance or condemnation due to the rights of the Tenant under the Stadium Lease, with respect to the Stadium, and the rights of the owners of the feeinterest in the site upon which the Public Parking Facilities are located (for condemnation proceeds only), as more particularly described under "CERTAIN RISK FACTORS-Rights of Certain Parties"), the Revenue Fund or the proceeds of rental interruption insurance, if any. See "SUMMARY OF BOND DOCUMENTS-THE INDENTURE" and - LEASE AGREEMENT." If the Lease Payments remain abated and the rental interruption insurance, if any, expires and the Reserve Accounts and the Bond Account for a particular Series and the Special Reserve Fund are depleted, the diminished Lease Payments may not provide sufficient Revenues to pay principal, accreted value and interest due with respect to that particular Series. The failureto make such payments of principal, accreted value and interest due to such abatement does not constitute a default under the Indenture, the Lease Agreement or the Bonds.
The City and the Authority have agreed in the Lease Agreement that in the event of an abatement of Lease Payments, under such circumstances, the amount of the Lease Payments will not be less than the amount of the unpaid Lease Payments as are then scheduled to be paid, unless such unpaid amounts are determined, upon consultation with The Walt Disney Company, to be greater than the fair rental value of
11 the portions of the Leased Premises not damaged, destroyed, condemned or affected by title defect, based upon the opinion of an appraiser with expertise in valuing such properties or other appropriate method of valuation, in which event the Lease Payments will be abated such that they represent said fair rental value. Such abatement will continue for the period commencing with the date on which such substantial interference with the City's right to use or possession of the Leased Premises, or any material portion thereof, as a result of such damage, destruction, condemnation or defect in title, and ending at the time of the restoration of the Leased Premises, or the affected portion thereof, to tenantable condition. In the event of any such damage, destruction, condemnation or defectin title, the Lease Agreement will continue in full force and effect and the City waives any right to terminate the Lease Agreement by virtue of any such damage, destruction, condemnation or defect in title. The failure of the City to make Lease Payments due to such an abatement does not constitute an event of default under the Indenture, the Lease Agreement or the Bonds (including the 2019 Bonds).
The obligation of the City to make Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any tax revenues. Neither the 2019 Bonds nor the obligation of the City to make Lease Payments constitutes an indebtedness of the City, the State or any of its political subdivisions within the meaning of the constitution of the State or otherwise or a pledge of the faith and credit of the Authority or the City. The amount of the Lease Payments the City is obligated to make during any fiscal year is limited to an amount equal to Lease Payment Measurement Revenues received during such fiscal year, which may be less than or greater than principal, accreted value and interest due on the Bonds in such fiscal year. The City has agreed to make Lease Payments due under the Lease Agreement from any available funds, including funds not included in the calculation of the Lease Payment Measurement Revenues; provided, however, that the taxes included in the calculation of the Lease Payment Measurement Revenues are not pledged to secure the City's obligation to make such Lease Payments. See "CERTAIN RISK FACTORS" and "LEASE PAYMENT MEASUREMENT REVENUES."
The City will compute the actual Lease Payment Measurement Revenues received during each month. Such amount will constitute the entire amount of Lease Payments to be made by the City for such period.
Pledge and Assignment of Revenues
Subject to the provisions of the Indenture with respect to the application thereof, 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 (other than the Rebate Fund) are pledged to secure the payment of the principal of, premium, if any, accreted value and interest on the Bonds in accordance with the terms and the provisions of the Indenture. The Indenture provides that said pledge constitutes a lien on and security interest in such assets and attaches, and is effective,binding and enforceablefrom and after delivery by the Trustee of the Bonds, without any physical delivery thereof or furtheract .
The Trustee is entitled to and will collect and receive all of the Revenues and other amounts included in the Trust Estate. Any Revenues and other amounts included in the Trust Estate collected or received by the Authority will be deemed to be collected or received by the Authority in trust for the benefit of the Trustee, and will be paid by the Authority to the Trustee. The Trustee is also entitled to and will take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all obligations of the City under the Lease Agreement.
12 Lease Payments
Lease Payments in an amount equal to Lease Payment Measurement Revenues actually received by the City are required to be paid by the City under the Lease Agreement on the fifthBusiness Day of each month, foruse and possession of the Leased Premises foreach Rental Period during the Term of the Lease Agreement. Assuming the Lease Payment Measurement Revenues are received in accordance with the projections, there may be times when the amount of the Lease Payments will be greater than the debt service requirements on the Bonds and may be deposited in the Special Reserve Fund in accordance with the Indenture.
The Lease Agreement requires that Lease Payments be deposited in the Revenue Fund maintained by the Trustee. Pursuant to the Indenture, the Trustee will apply such amounts in the Revenue Fund as are necessary to make principal, accreted value and interest payments due with respect to each Series of Bonds, in the priority provided forin the Indenture.
Reserve Account
General. The Indenture requires the establishment and maintenance of the Series 2019 A Reserve Account in the Reserve Fund for the Series 2019 A Bonds and requires it to be funded in an amount equal to the Reserve Requirement for the Series 2019 A Bonds. On the date of issuance of the Series 2019 A Bonds, a municipal bond debt service reserve insurance policy (the "Series 2019 A Reserve Surety"), will be issued by BAM (the "Series 2019 A Reserve Surety Provider"), in an amount equal to the Reserve Requirement for the Series 2019 A Bonds, which on the date of issuance of the Series 2019 A Bonds is $16,906,500. The Reserve Requirement for the Series 2019 A Bonds means, as of the date of any calculation, the least of (a) 10% of the original aggregate principal amount of the Series 2019 A Bonds ( excluding Series 2019 A Bonds refunded with the proceeds of subsequently issued Refunding Bonds), (b) maximum annual debt service on the Series 2019 A Bonds, and (c) 125% of average annual debt service on the Series 2019 A Bonds. The Series 2019 A Reserve Account only secures the payment of debt service on the Series 2019 A Bonds and does not secure the payment of debt service on the Series 2019 B Bonds or any other Bonds. See "APPENDIX G-SPECIMEN MUNICIPAL BOND DEBT SERVICE RESERVE INSURANCE POLICY."
The Trustee will pay out of the Series 2019 A Reserve Account (through a draw on the Series 2019 A Reserve Surety as provided in the Indenture, so long as the Series 2019 A Reserve Surety is in place) sufficient amounts to pay the principal and/or interest on the Series 2019 A Bonds, to the extent sufficient amounts are not available in the Series 2019 A Bonds Account; provided, however, that whenever any amounts are paid out of the Series 2019 A Reserve Account, the Trustee will, on that date if an Interest Payment Date or otherwise on the next succeeding Interest Payment Date, transfersufficient amounts from the Special Reserve Fund to the Series 2019 A Reserve Account so that the amount on deposit in the Series 2019 A Reserve Account is at least equal to the Reserve Requirement for the Series 2019 A Bonds. If amounts on deposit in the Series 2019 A Reserve Account on any Interest Payment Date exceed the Reserve Requirement for the Series 2019 A Bonds, such excess will be transferred to the Series 2019 A Bonds Account. See "APPENDIX B-SUMMARY OF BOND DOCUMENTS-THE INDENTURE-Reserve Fund" and "APPENDIX G-SPECIMEN MUNICIPAL BOND DEBT SERVICE RESERVE INSURANCE POLICY. "
Flow of Funds
The Indenture requires that all Revenues be deposited by the Trustee upon receipt thereof in the Revenue Fund. All Revenues deposited with the Trustee will be held, disbursed, allocated and applied by the Trustee as provided in the Indenture. The Indenture provides that Revenues received by the Trustee will
13 be transferredby the Trustee fromthe Revenue Fund into the followingfunds and accounts, in the following amounts, in the following order of priority, and the requirements of each such account (including the making up of any deficiencies in any such account resulting fromlack of Revenues sufficient to make any earlier required deposit) at the time of deposit will be satisfied before any transfer is made to any account subsequent in priority; provided, however, that (a) moneys representing payments under the 1997 Bond Insurance Policy will be held in trust solely to pay principal of and interest on the 1997 Series A Bonds and the 1997 Series C Bonds with respect to which such payments were made and (b) moneys representing payments under the Series 2019 A Bond Insurance Policy will be held in trust solely to pay principal of and interest on the Series 2019 A Bonds with respect to which such payments were made:
FIRST, to the 1997 Series A Bonds Account, the Series 2019 A Bonds Account and the Series 2019 B Bonds Account in the Debt Service Fund, an amount such that the balance in each such Account available forsuch purpose is equal to the Principal Installments of and interest on the Senior Lien Bonds, as applicable, becoming due on the next succeeding Bond Payment Date, and to the 1997 Series A Account, the 1997 Series C Account and the Series 2019 A Account in the Surety Reimbursement Fund (a) the amount due to the 1997 Reserve Surety Provider under the 1997 Reserve Surety for the 1997 Series A Bonds, and (b) the Series 2019 A Reserve Surety Provider under the Series 2019 A Reserve Surety;
SECOND, to the 1997 Series C Bonds Account in the Debt Service Fund, an amount such that the balance in such account available forsuch purpose is equal to the Principal Installments of and interest on the 1997 Series C Bonds becoming due on the next succeeding Bond Payment Date, and to the 1997 Series C Account in the Surety Reimbursement Fund, the amount due to the 1997 Reserve Surety Provider under the 1997 Reserve Surety for the 1997 Series C Bonds;
THIRD, to the City Account and the Disney Account in the Rebate Fund, the amount required to be deposited therein pursuant to the 1997 Rebate Instructions or the 2019 Rebate Instructions;
FOURTH, to the Administrative Fund an amount set forth in a Certificateof the Authority equal to the reasonable Administrative and Operating Costs to be paid by the Authority with respect to the Leased Premises, the Indenture or the Lease Agreement;
FIFTH, if amounts transferred fromthe Special Reserve Fund are insufficient to cause the amount on deposit in each Account established in the Reserve Fund for a Series of Senior Lien Bonds to equal the Reserve Requirement with respect to such Series of Senior Lien Bonds, then to each such Account, an amount so that the amount on deposit therein is at least equal to such Reserve Requirement; provided, however, that if the amount available in the Revenue Fund is not sufficient to make a deposit in such amount to each such Account established for a Series of Senior Lien Bond, then to each such Account on a parity pro rata basis;
SIXTH, if amounts transferred from the Special Reserve Fund are insufficientto cause the amount on deposit in the Account established in the Reserve Fund for the 1997 Series C Bonds to equal the Reserve Requirement with respect to the 1997 Series C Bonds, then to such Account, an amount so that the amount on deposit therein is at least equal to such Reserve Requirement;
SEVENTH, to the Reimbursement Fund, an amount such that the balance therein is equal to the amount then due under the Reimbursement Agreement as a reimbursement for amounts paid by The Walt Disney Company under the Disney Credit Enhancement Agreement and the Finance Agreement (as expanded pursuant to the Implementation Agreement);
14 EIGHTH, if any Bonds remain Outstanding, to the Special Reserve Fund, the balance of such Revenues forapplication as set forthin the Indenture;
NINTH, if there are no Bonds Outstanding and amounts are due and payable to The Walt Disney Company under the Reimbursement Agreement, the balance of any Revenues to the Supplemental Reimbursement Fund, for application as set forthin the Indenture; and
TENTH, if there are no Bonds Outstanding and no amounts are due and payable to the Supplemental Reimbursement Fund, to the Surplus Fund, any remaining Revenues.
Special Reserve Fund
General. Amounts in the Special Reserve Fund are required to be used first, to pay debt service on the Senior Lien Bonds not satisfied by Lease Payments, second, to pay debt service on the Subordinate Lien Bonds not satisfiedby Lease Payments, third, to replenish the Reserve Accounts for the Senior Lien Bonds, if necessary, so that the amounts therein equal the Reserve Requirement, fourth, to replenish the Reserve Accounts for the Subordinate Lien Bonds, if necessary, so that the amounts therein equal the Reserve Requirement, fifth, to reimburse The Walt Disney Company for obligations owed to it pursuant to the Reimbursement Agreement, and sixth, to purchase, redeem or pay Bonds as directed in writing by the Authority and The Walt Disney Company.
Purchase, Redemption or Paym ent of Bonds From Amounts in Sp ecial Reserve Fund. As stated above, amounts in the Special Reserve Fund may be applied to the purchase, redemption or payment of Bonds as directed in writing by the Authority and The Walt Disney Company. However, the Indenture provides that moneys may not be withdrawn from the Special Reserve Fund for the purpose of redeeming or purchasing Bonds unless the amount remaining in the Special Reserve Fund after such withdrawal is at least equal to the maximum annual debt service on the Bonds Outstanding after such redemption or purchase.
Amounts on deposit in the Special Reserve Fund were used to pay a portion of the debt service due on the 1997 Series C Bonds in fiscal years 2004 and 2005. Additionally, on April 5, 2019, funds were withdrawn from the Special Reserve Fund and applied to the redemption of all of the Authority's Senior (Taxable) Lease Revenue Bonds (Anaheim Public Improvements Project) 2007 Refunding Series B. As of April 6, 2019, there was approximately $109,000,000 on deposit in the Special Reserve Fund. The Authority anticipates that, in the future,the Authority and the Walt Disney Company will fromtime to time direct that funds be withdrawn from the Special Reserve Fund and applied to the defeasance of certain Outstanding Bonds, including, initially, the Outstanding 1997 Series C Bonds.
Insurance
The Lease Agreement provides that the City will procure and maintain, or cause to be maintained, throughout the term of the Lease Agreement, rental interruption or use and occupancy insurance (but, with respect to earthquake and flood exposures, only if such insurance is commercially available under reasonable terms), to cover loss, total or partial, of the use of any part of the Leased Premises during the term of the Lease Agreement as a result of any of the hazards covered by the City's fire and extended coverage insurance policy in an amount at least equal to the annual debt service payments scheduled to be paid on the Bonds in the next two succeeding years. The City does not currently maintain any rental interruption insurance with respect to earthquake and flood exposures.
The Lease Agreement requires the City to procure and maintain public liability, property damage, fire and extended coverage insurance (but, with respect to earthquake and flood exposures, only if such
15 insurance is commercially available under reasonable terms) in the amounts set forth therein. The Lease Agreement provides that the City may maintain self-insurance against certain risks. See "APPENDIX B-SUMMARY OF BOND DOCUMENTS-THE LEASE AGREEMENT." The obligation of the City to fund deductible amounts, should there be damage to or destruction of the Leased Premises, is from amounts available thereforin the Administrative Fund. As of April 5, 2019, there was approximately $30,628.76 on deposit in the Administrative Fund. If there are insufficient excess Lease Payments to fund these amounts, then Net Proceeds of insurance may be insufficient to repair and replace the damaged premises.
Pursuant to the terms of the Lease Agreement, Disney assumes all of the insurance obligations of the City with respect to the Public Parking Facilities and all the insurance obligations with respect to the Stadium will be satisfied by the Tenant as provided in the Stadium Lease. Disney does not currently maintain earthquake insurance on the Public Parking Facilities, and the Tenant does not currently maintain earthquake insurance on the Stadium.
Action on Default
Should the City defaultunder the Lease Agreement, the Trustee, as assignee of the Authority, may exercise any and all remedies available to the Authority pursuant to the Lease Agreement. The Authority does not have the right to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. In the event of such default, the City will continue to remain liable for the payment of the Lease Payments and the performanceof all conditions contained in the Lease Agreement, but said Lease Payments will be payable only at the same time and in the same manner as provided in the Lease Agreement, notwithstanding the exercise of any other remedy by the Authority. The Authority has waived any right it may have to terminate the Lease Agreement, re-enter the Leased Premises and eject the City therefrom, or to re-enter the Leased Premises, eject the City therefrom and, without terminating the Lease, to relet the Leased Premises forthe account of the City. The Authority is thus limited to suing the City foreach Lease Payment as the same becomes due. The Trustee is expressly authorized to exercise any or all of the rights of the Authority under the Lease Agreement, as summarized under the section entitled "APPENDIX B-SUMMARY OF BOND DOCUMENTS-THE LEASE AGREEMENT."
Notwithstanding the foregoing, Assured Guaranty Municipal Corp., formerly known as Financial Security Assurance Inc. (the "1997 Bond Insurer") will be deemed the sole Owner of the 1997 Series C Bonds insured by the 1997 Bond Insurer forthe purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the 1997 Series C Bonds insured by the 1997 Bond Insurer are entitled to take pursuant to the provisions of the Indenture relating to events of default and remedies of bondowners and the Trustee so long as the 1997 Bond Insurer is honoring its obligation to pay under the 1997 Bond Insurance Policy. Any action taken by the Trustee on behalf of Owners of the 1997 Series C Bonds insured by the 1997 Bond Insurer relating to events of default and remedies of bondowners will be subject to the consent of the 1997 Bond Insurer. The Series 2019 A Bond Insurer will be deemed the sole Owner of the Series 2019 A Insured Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the Series 2019 A Insured Bonds are entitled to take pursuant to the provisions of the Indenture relating to events of defaultand remedies of bondowners and the Trustee so long as the Series 2019 A Bond Insurer is honoring its obligation to pay under the Series 2019 A Bond Insurance Policy. Any action taken by the Trustee on behalf of the Owners of the Series 2019 A Insured Bonds relating to events of default and remedies ofbondowners will be subject to the consent of the Series 2019 A Bond Insurer.
16 No Additional Bonds
The Indenture does not permit the issuance by the Authority of additional parity bonds secured by Revenues, except Refunding Bonds.
BOND INSURANCE FOR SERIES 2019 A INSURED BONDS
Bond Insurance Policy
Concurrently with the issuance of the 2019 Bonds, BAM will issue its Series 2019 A Bond Insurance Policy for the Series 2019 A Insured Bonds. The Series 2019 A Bond Insurance Policy guarantees the scheduled payment of principal of and interest on the Series 2019 A Insured Bonds when due as set forth in the form of the Series 2019 A Bond Insurance Policy included as Appendix F to this Official Statement.
The Series 2019 A Bond Insurance Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.
Build America Mutual Assurance Company
BAM is a New York domiciled mutual insurance corporation and is licensed to conduct financial guaranty insurance business in all fifty states of the United States and the District of Columbia. BAM provides credit enhancement products solely to issuers in the U. S. public finance markets. BAM will only insure obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U. S. Internal Revenue Code of 1986, as amended. No member of BAM is liable forthe obligations of BAM.
The address of the principal executive offices of BAM is: 200 Liberty Street, 27th Floor, New York, New York 10281, its telephone number is: 212-235-2500, and its website is located at: www.buildamerica.com.
BAM is licensed and subject to regulation as a financial guaranty insurance corporation under the laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law.
BAM's financialstrength is rated "AA/Stable" by S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC ("S&P"). An explanation of the significance of the rating and current reports may be obtained from S&P at www.standardandpoors.com. The rating of BAM should be evaluated independently. The rating reflectsthe S&P's current assessment of the creditworthiness of BAM and its ability to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the Series 2019 A Insured Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal initiated at the request of BAM in its sole discretion. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the Series 2019 A Insured Bonds. BAM only guarantees scheduled principal and scheduled interest payments payable by the issuer of the Series 2019 A Insured Bonds on the date( s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the Series 2019 A Bond Insurance Policy), and BAM does not guarantee the market price or liquidity of the Series 2019 A Insured Bonds, nor does it guarantee that the rating on the Series 2019 A Insured Bonds will not be revised or withdrawn.
17 Capitalization of BAM
BAM's total admitted assets, total liabilities, and total capital and surplus, as of December 31, 2018 and as prepared in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services were $526 million, $113 million and $414 million, respectively.
BAM is party to a firstloss reinsurance treaty that provides first loss protection up to a maximum of 15% of the par amount outstanding for each policy issued by BAM, subject to certain limitations and restrictions.
BAM's most recent Statutory Annual Statement, which has been filed with the New York State Insurance Department and posted on BAM's website at www.buildamerica.com, is incorporated herein by reference and may be obtained, without charge, upon request to BAM at its address provided above (Attention: Finance Department). Future financial statements will similarly be made available when published.
BAM makes no representation regarding the Series 2019 A Insured Bonds or the advisability of investing in the Series 2019 A Insured Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any informationor disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading "BOND INSURANCE FOR SERIES 2019 A INSURED BONDS."
Additional Information Available fr om BAM
Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a brief Credit Insights video that provides a discussion of the obligor and some of the key factors BAM's analysts and credit committee considered when approving the credit for insurance. The Credit Insights videos are easily accessible on BAM's website at buildamerica.com/creditinsights/. (The preceding website address is provided forconvenience of reference only. Informationavailable at such address is not incorporated herein by reference. )
Credit Profiles. Prior to the pricing of bonds that BAM has been selected to insure, BAM may prepare a pre-sale Credit Profile for those bonds. These pre-sale Credit Profiles provide information about the sector designation ( e. g. general obligation, sales tax); a preliminary summary of financial information and key ratios; and demographic and economic data relevant to the obligor, if available. Subsequent to closing, forany offering that includes bonds insured by BAM, any pre-sale Credit Profile will be updated and superseded by a final Credit Profile to include information about the gross par insured by CUSIP, maturity and coupon. BAM pre-sale and final Credit Profiles are easily accessible on BAM's website at buildamerica.com/obligor/. BAM will produce a Credit Profilefor all bonds insured by BAM, whether or not a pre-sale Credit Profile has been prepared for such bonds. (The preceding website address is provided forconvenience of referenceonly. Informationavailable at such address is not incorporated herein by reference. )
Disclaimers. The Credit Profiles and the Credit Insights videos and the information contained therein are not recommendations to purchase, hold or sell securities or to make any investment decisions. Credit-related and other analyses and statements in the Credit Profiles and the Credit Insights videos are statements of opinion as of the date expressed, and BAM assumes no responsibility to update the content of such material. The Credit Profiles and Credit Insight videos are prepared by BAM; they have not been reviewed or approved by the issuer of or the underwriter forthe Series 2019 A Insured Bonds, and the issuer and underwriter assume no responsibility fortheir content.
18 BAM receives compensation (an insurance premium) for the insurance that it is providing with respect to the Series 2019 A Insured Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase, any of the Series 2019 A Insured Bonds, whether at the initial offeringor otherwise.
DEBT SERVICE REQUIREMENTS
The following table sets forth the debt service requirements for the 2019 Bonds.
Table 1 Debt Service Requirements for2019 Bonds1
Series 2019 A Bonds Series 2019 B Bonds Fiscal Year (June 30) Principal Interest Principal Interest Total 2019 $6,500,000 $14,273 $ 6,514,273 2020 $ 1,390,000 $ 7,033,106 8,423,106 2021 4,950,000 8,260,000 13,210,000 2022 1,995,000 8,086,375 10,081,375 2023 2,095,000 7,984,125 10,079,125 2024 2,205,000 7,876,625 10,081,625 2025 2,320,000 7,763,500 10,083,500 2026 12,585,000 7,390,875 19,975,875 2027 13,275,000 6,744,375 20,019,375 2028 12,650,000 6,096,250 18,746,250 2029 11,955,000 5,481,125 17 ,436,125 2030 11,180,000 4,902,750 16,082,750 2031 10,320,000 4,365,250 14,685,250 2032 9,365,000 3,873,125 13,238,125 2033 8,325,000 3,430,875 11,755,875 2034 7,165,000 3,043,625 10,208,625 2035 5,905,000 2,716,875 8,621,875 2036 22,120,000 2,016,250 24,136,250 2037 29,265,000 731,625 29,996,625 Total $169,065,000 $97,796,731 $6,500,000 $14,273 $273,376,004
Numbers may not total due to rounding to nearest dollar. Source: City of Anaheim
LEASE PAYMENT MEASUREMENT REVENUES
General Description
Lease Payments are payable from any legally available funds of the City, however, the amount of each Lease Payment to be made by the City under the Lease Agreement is measured by "Lease Payment Measurement Revenues," which in general means an amount equal to the sum of the following amounts actually received by the City forits own account ( and not as collector, custodian, depository foror on behalf of another entity) with respect to any date or transaction occurring on or afterJanuary 1, 2001:
(a) the aggregate of 100% of the 15% Transient Occupancy Tax ("TOT") levied on all Existing Hotel Rooms, Future Hotel Rooms and Supplemental Future Hotel Rooms
19 (collectively, the "Disney Hotel Rooms," as further described under "-Disney Incremental Revenues"); plus 100% of the sales tax revenues attributable to a 1% sales tax rate from facilities located on the Disney Property (mainly consisting of the Disneyland Resort) in excess of the amount of Baseline Measurement Revenues representing TOT and sales tax, which amount will be adjusted annually, commencing July 1, 1996, by the Baseline Index forthe previous Fiscal Year as determined under the provisions of the Lease Agreement, subject to certain mandatory increases and adjustments;
(b) 100% of property tax revenues attributable to the City's share (as of Fiscal Year 1994-1995) of the 1% basic real property tax levy (approximately 10. 8%) fromor allocable to the Disney Property in excess of the property tax amount of Baseline Measurement Revenues, as adjusted by the greater of the (i) statutory or constitutional limits established for property tax increases or in property tax assessments applicable to the period from June 1995 through the end of such Fiscal Year; and (ii) 2% per year, subject to certain modifications and adjustments as provided in the Lease Agreement; and
( c) 100% of three percentage points of the total percentage points of TOT rate levied on all Hotel Rooms in the City other than the Disney Hotel Rooms.
For any Bonds that remain outstanding afterMarch 1, 2037, the Lease Agreement provides that for the 10 years after March 1, 2037, Lease Payment Measurement Revenues will be reduced by 50%. The 2019 Bonds will have a scheduled maturity before March 1, 2037. See "APPENDIX B-SUMMARY OF BOND DOCUMENTS-DEFINITIONS" herein for a more detailed description of Lease Payment Measurement Revenues.
Reduction in Taxes Included in Lease Payment Measurement Revenues
The City has agreed in the Lease Agreement that any Voluntary changes made by the City to the TOT rates, sales tax rates or property tax rates utilized to determine the Lease Payment Measurement Revenues will not result in any changes in the calculation of Lease Payment Measurement Revenues. If at any time the rates or methodology forcalculating the TOT, sales tax or property tax that is used to determine Lease Payment Measurement Revenues are changed by any act or for any reason other than a Voluntary act of the City (a "Non-Voluntary Reduction"), and a substitute revenue source is provided or identifiedin conjunction with such Non-Voluntary Reduction, then the City will apply such substitute revenue source to offset such reductions in Lease Payment Measurement Revenues; provided, however, that if no such substitute revenue source is provided or identifiedin conjunction with such Non-Voluntary Reduction, then the Lease Payment Measurement Revenues will be decreased in accordance with such Non-Voluntary Reduction.
Transient Occupancy Taxes
Lease Payment Measurement Revenues include TOT fromtwo sources: (a) the incremental growth in the 15% TOT from all Disney Hotel Rooms over a baseline amount (see "-Disney Incremental Revenues"), and (b) 100% of 3% of the total TOT from all Hotel Rooms in the City other than the Disney Hotels. See "-City Hotel Room TOT."
Collection of the TOT. City Ordinance 5305 (the "TOT Ordinance") requires every Transient of a Hotel to pay a tax of 15% of the rent for such Hotel. Time Share Projects can be taxed at the same rate as Hotels and the Time Share Operator can enter into a written agreement setting the rate of the TOT. The TOT is collected by the Operator from every Transient at the same time the rent is collected. All TOT collected by each Operator is remitted on or before the last City business day of each month accompanied
20 by a return stating the total rents charged and the amount of TOT collected during the immediately preceding calendar month to the License Collector. The TOT is deemed paid only upon receipt of both the return and the TOT by the License Collector and if not received by the License Collector, a nonpayment occurs. The amount of a nonpayment accrues interest at a rate of 1. 5% per month calculated fromthe first day immediately following the due date of the nonpayment to the date of payment. Additionally, a nonpayment penalty of 10% for each month said payment is overdue is accrued on the firstday immediately following the due date; however, the penalty cannot exceed 50% of the TOT. TOT constitutes a debt owed by the Operator to the City which is extinguishable only by payment. In the event of a nonpayment, the License Collector may take certain actions to collect the amount owed by such Operator, including the recordation of a lien against all real property owned or thereafter acquired by the Operator with the Office(s) of the County Recorder(s) of such counties as the License Collector may determine. Once such lien is recorded, the License Collector has the option of executing against such property owned by the Operator. The License Collector has the authority to promulgate rules and regulations which may aid in the enforcementand administration of the TOT Ordinance. Any rule or regulation promulgated by the License Collector which may affectthe amount of the TOT owed the City is subject to City approval.
For purposes of the above section the following definitions have the following meanings:
"Hotel" means any structure or portion thereof, which is occupied by persons for lodging or sleeping purposes for periods of less than thirty consecutive days including, without limitation, any hotel, bachelor hotel, motel, lodging house, rooming house, bed and breakfastinn, apartment house, dormitory, vacation ownership resort, public or private club, mobile home or house trailer at a fixed location, or other similar structure or portion thereof, and any space, lot, area or site in any trailer court, camp, park, or lot which is occupied or intended or designed for occupancy by a tent, trailer, recreational vehicle, mobile home, motorhome, or other similar conveyance, where such structure, space, lot, area or site is occupied by persons forlodging or sleeping purposes forperiods less than thirty consecutive days.
"License Collector" means the City's Finance Director or any other authorized officialof the City.
"O perator " means any person, corporation, entity or partnership which is the proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, debtor in possession, licensee or any other capacity. Where the operator performs its functions through a managing agent of any type or character other than as an employee, the managing agent shall also be deemed an operator and shall have the same duties and liabilities as its principal. Compliance with the provisions of the TOT Ordinance by either the principal or managing agent shall constitute compliance by both. For purposes of the notice and appeal provisions of the TOT Ordinance, only, "operator" shall also include any managing employee or employee in charge of the hotel.
"Qualifying Rental Agreement" means and is limited to a written contract signed by both the landlord and tenant, legally enforceableby either party, fora rental period of not less than thirty consecutive days. "Qualifying Rental Agreement" shall expressly exclude: (a) any agreement regardless of length of the rental term which is terminated for any reason by either party or by mutual consent prior to the thirtieth consecutive day of the tenancy, or (b) any agreement regardless of the length of the rental term which is for occupancy of lodging or sleeping space which is not the legal residence or principal dwelling place of the occupant, or (c) any agreement which would be unlawfulor constitute a violation of law.
"Rent " means the consideration charged by an Operator for accommodations, including, without limitation, any (a) unrefunded advance rental deposits; or (b) separate charges levied for items or services which are part of such accommodations including, but not limited to, furniture,fixtures, appliances, linens, towels, non-coin operated safes and maid service. "Rent" shall not include any charge, billing or account or portion thereof which the Operator findsto be worthless or uncollectible and charged offfor tax purposes.
21 If any such worthless or uncollectible rent is thereafter collected, the amount shall be considered rent in the month collected and the tax collected shall be included in the next monthly payment to the City by the Operator. "Rent" shall also not include any amount upon which a sales and use tax is imposed pursuant to the Anaheim Municipal Code if the imposition of a tax pursuant to the TOT Ordinance would be deemed to constitute an additional sales and use tax conforming to all of the conditions set forth in subdivision (b) of Section 7203.5 of the Revenue and Taxation Code of the State.
"Time Share Interest " means either a time share estate or a time share use (as such terms are defined in Section 11003 .5 of the Business and Professions Code of the State, or any successor provision thereto) involving a right in perpetuity, forlife, or fora term of years, foroccupancy of a room or group of rooms formingin either case one accommodation unit (a "Time Share Unit") in a Time Share Project which right of occupancy is for the recurrent, exclusive use or occupancy of a Time Share Unit, annually or on some other periodic basis, fora period of time that has been allotted fromthe use or occupancy periods into which the Time Share Project has been divided.
"Time Share Operator " means any person or entity who owns a Time Share Project, sells Time Share Interests or operates a Time Share Project before, during or after the sale of Time Share Interests in such project.
"Time Share Owner" means any person or entity who purchases and owns a Time Share Interest or who acquires a right of occupancy of a Time Share Unit pursuant to a time share exchange program.
"Time Share Project " means a project in which purchasers receive the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel, unit or segment of real property, annually or on some other periodic basis, for a period of time that has been or shall be allotted from the use or occupancy periods into which the project has been divided.
"Transient " means any person who exercises occupancy, or is entitled to occupancy, of any room, space, lot, area or site in any hotel by reason of concession, permit, right of access, license or other agreement whether written or oral. Any such person shall be deemed to be a transient until the thirtieth consecutive day of such occupancy or right of occupancy and the tax shall be due upon all rent collected or accruing prior to said thirtieth consecutive day, unless the occupancy is pursuant to a Qualified Rental Agreement.
The City has an ongoing audit program under which it audits the Hotels within the City to verify compliance with the TOT Ordinance. The City audits the largest Hotels in the City (see "Table 3 - Summary of SignificantTOT Hotels" below fora list of the largest Hotels in the City) approximately every 18 months. The City audits non-major hotels and motels in the City approximately every 3 years, and all other establishments subject to the TOT Ordinance every 10 years. Delinquency rates on the collection of the TOT have historically been less than 2% since 1995.
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22 Historical TOT Revenues. TOT has been levied by the City for every occupancy of a guest room in hotels located in the City at the rate of 15. 0% since July 1, 1995. The following table sets forth a history of TOT collections in the City between fiscalyears 2014 and 2018.
Table 2 Historical Summary of TOT Receipts City of Anaheim (Fiscal Year Ended June 30)
Fiscal Year Fiscal Year Effective Fiscal Year Rooms Revenue Tax Receipts Tax Rate 2014 $ 734,226,667 $110,134,000 15. 0% 2015 798,293,333 119,744,000 15. 0 2016 923,200,000 137,570,000 15. 0 2017 1,001,960,000 149,566,000 15. 0 2018 1,037,906,667 154,925,000 15. 0 Source: City of Anaheim
The TOT Ordinance provides that any tax returnsfiled with the City and any informationcontained in the tax returns regarding amounts of gross receipts, adjustments, credits, overcollections, tax, penalties and interest are and remain confidential. Additionally, all proprietary and confidential information furnishedto or secured by the City froman operator are confidential. Unauthorized disclosure or use of any confidentialinformation by any officer, agent or employee of the City constitutes a misdemeanor; however, this provision does not apply to any disclosures made in connection with any hearing, appeal or any civil action or proceeding relating to the determination or recovery of the TOT or any prosecution of any person for violation of any provision of the TOT Ordinance or any criminal or civil proceeding pertaining to the TOT.
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23 The table below sets forth the top 22 TOT Hotels located in the City as of June 30, 2018. The top 22 hotels represent approximately 70% of the total TOT collections in the City.
Table 3 Summary of Significant TOT Hotels (As of June 30, 2018)
Number of Hotel Rooms Hilton Anaheim 1572 Anaheim Marriot 1033 Disneyland Hotel 1 990 1 Disney's Grand CalifornianHotel 745 Sheraton Park Hotel at Anaheim Resort 490 1 Disney's Paradise Pier Hotel 489 Anaheim Majestic Grand Hotel 489 Anaheim Fairfield Inn by Marriott 467 Howard Johnson Plaza Hotel 318 Red Lion Hotel Anaheim Maingate 314 Anaheim Hotel 300 Residence Inn by Marriott at Anaheim 296 Best Western Stovall's Inn 290 Hyatt House at Anaheim Resort Convention Center 264 Holiday Inn & Suites Anaheim 255 Doubletree Guest Suites 252 Courtyard Marriott Anaheim Theme Park 221 Homewood Suites Anaheim Resort 215 Anaheim Residence Inn #414 200 Best Western Park Place Inn 199 Grand Legacy at the Park 187 Springhill Suites by Marriott 174 Total 9,760
Disney Hotels. See "-Disney Incremental Revenues." Source: City of Anaheim.
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24 The table below sets fortha history of annual hotel occupancy rates in the City between fiscalyears 2014 and 2018.
Table 4 Historical Summary of Annual Hotel Occupancy Rates City of Anaheim (Fiscal Year Ended June 30)
Annual Hotel Fiscal Year Occupancy Rate 2014 76.5% 2015 79.2 2016 80.5 2017 82.0 2018 82.4
Source: City of Anaheim and CBRE Ho tels, as of September 2018.
Disney Incremental Revenues
Lease Payment Measurement Revenues with respect to TOT collected on the Disney Hotel Rooms (the "Disney Hotel Rooms TOT") and with respect to 100% of the sales tax revenues attributable to the 1% sales tax rate (the City's share of the total 7. 75% sales tax rate) occurring on or afterJanuary 1, 2001, from Disney Property facilities(the "1 % Sales Tax Revenues") are determined by the differencebetween (a) the sum of the Disney Hotel Rooms TOT and the 1% Sales Tax Revenues, and (b) the amount of Baseline Measurement Revenues representing TOT and sales tax, as adjusted annually (the "Disney Incremental Revenues"). See "APPENDIX B-SUMMARY OF BOND DOCUMENTS-DEFINITIONS-Lease Payment Measurement Revenues" for additional information on the Lease Payment Measurement Revenues.
"Disney Hotel Rooms" means, collectively, the Existing Hotel Rooms, the Future Hotel Rooms and the Supplemental Future Hotel Rooms. The "Existing Hotel Rooms" are the hotel rooms existing as of December 17, 1996 in The Disneyland Hotel and The Disney Paradise Pier Hotel (formerly known as The Disneyland Pacific Hotel) and are subject to the full 15 % TOT. Existing Hotel Rooms also include any remodels, renovations, rehabilitations, rebuildings and replacements of such Existing Hotel Rooms that are substantially similar in number and kind to such Existing Hotel Rooms. The "Future Hotel Rooms," which are subject to the 15% TOT, include the first 750 Hotel Rooms newly constructed on the Disney Property after December 17, 1996 excluding Existing Hotel Rooms or the replacement of Existing Hotel Rooms. The Future Hotel Rooms include the Hotel Rooms in the Disney Grand Californian,which opened in 2001. "Supplemental Future Hotel Rooms" consist of the first 250 Hotel Rooms in excess of the Future Hotel Rooms and Existing Hotel Rooms in the Disney Property provided that construction commenced by June 30, 2006. No construction of any Supplemental Future Hotel Rooms began prior to June 30, 2006 (or after June 30, 2006). Therefore, there currently are no Supplemental Future Hotel Rooms and there will be no Supplemental Future Hotel Rooms in the future. In the event Disney were to construct any new hotel rooms (that would not be included in Existing Hotel Rooms), such hotel rooms would be included in City Hotel Rooms (not Disney Hotel Rooms), and only three percentage points of the TOT collected on such hotel rooms would be included in Lease Payment Measurement Revenues. See "-City Hotel Room TOT" below.
Property Tax Revenues
Lease Payment Measurement Revenues also include 100% of the property tax revenues attributable to the City's share of the 1% basic real property tax levy occurring on and after January 1, 2001, allocable
25 to the Disney Property in excess of the property tax amount of Baseline Measurement Revenues, as adjusted (the "LPMR Property Tax Revenues"). The total historical amounts of LPMR Property Tax Revenues are set forth in the tables under "-Total Historical Amounts of Lease Payment Measurement Revenues" below.
City Hotel Room TOT
Lease Payment Measurement Revenues also include 3 of the total 15 percentage points of TOT levied on all Hotel Rooms in the City for transactions occurring on and afterJanuary 1, 2001, other than the Disney Hotel Rooms.
Total Historical Amounts of Lease Payment Measurement Revenues
The followingtable sets forth the total historical amount of Lease Payment Measurement Revenues from all sources: City Hotel Rooms TOT receipts ("City Hotel Rooms TOT"), Disney Incremental Revenues (representing Disney Hotel Rooms TOT and the 1% Sales Tax Revenues) and LPMR Property Tax Revenues forfiscal years 2002 through 2018. As of March 31, 2019, the fiscalyear to date total amount of Lease Payment Measurement Revenues was approximately $4 7. 20 million.
Table 5 Total Historical Amount of Lease Payment Measurement Revenues From All Sources (Fiscal Years Ended June 30)
Disney City Hotel City Hotel Rooms Incremental LPMR Property 1 Fiscal Year TOT Revenues Tax Revenues Total 2002 $ 8,280,323 $11,233,309 $1,609,798 $21,123,430 2003 7,767,949 11,724,280 2,023,013 21,515,242 2004 8,615,504 12,956,626 2,372,743 23,944,873 2005 9,047,602 14,506,287 2,223,164 25,777,053 2006 10,285,963 19,083,880 2,500,747 31,870,590 2007 11,333,722 19,291,499 2,744,594 33,369,815 2008 11,863,401 21,030,391 2,823,616 35,717,408 2009 10,957,422 18,158,200 2,958,082 32,073,704 2010 11,104,663 13,549,276 2,882,078 27,536,017 2011 11,987,925 13,616,495 2,929,936 28,534,356 2012 12,896,597 17,348,584 3,294,441 33,539,622 2013 14,605,657 22,459,347 3,469,102 40,534,106 2014 15,722,171 25,660,698 3,645,348 45,028,217 2015 17,031,528 26,520,755 3,920,729 47,473,012 2016 20,059,229 31,849,934 3,413,144 55,322,307 2017 22,448,189 31,163,119 3,493,886 57,105,194 2018 23,483,111 33,064,904 3,325,058 59,873,073
100% of property tax revenues attributable to the City's share of the 1 % basic real property tax levy from or allocable to the Disney Property in excess of the property tax amount of Baseline Measurement Revenues. Source: City of Anaheim
26 The following table sets forth the historical debt service coverage on the Refunded Bonds and the 1997 Series A Bonds for fiscalyears 2014 through 2018.
Table 6 Historical Debt Service Coverage Senior Lien Bonds
Total Lease Senior Lien Payment Senior Lien Bonds Debt Fiscal Measurement Bonds Net Debt Service Year Revenues Service1 Coverage 2014 $45,028,217 $17,902,905 2. 52x 2015 47,473,012 17,787,682 2. 67x 2016 55,322,307 17,961,203 3. 08x 2017 57,105,194 18,132,130 3. 15x 2018 59,873,073 18,304,268 3. 27x
Includes the Refunded Bonds and the 1997 SeriesA Bonds. Source: City of Anaheim
THE AUTHORITY
The Authority was created under the State's Joint Exercise of Powers Act pursuant to a Joint Powers Agreement, dated January 28, 1992 (the "Joint Powers Agreement", by and between the City and the Redevelopment Agency of the City of Anaheim (the "Anaheim Redevelopment Agency"). Effective February 1, 2012, the Anaheim Redevelopment Agency was dissolved pursuant to California AB 26. On January 10, 2012, the City Council elected to have the City serve as the successor agency to the Anaheim Redevelopment Agency. Pursuant to the Joint Powers Agreement, as amended, the Authority may enter into agreements to acquire, construct, maintain, improve, renovate, repair and expand certain real property, buildings, works, and improvements, and acquire, maintain, lease and operate certain personal property and equipment. The Authority also has the authority to issue bonds and incur indebtedness.
The members of the City Council of the City serve as the members of the Board and Directors of the Authority. See "THE CITY OF ANAHEIM - City Council."
The Authority may issue bonds and may enter into leases to financefacilities other than the Leased Premises. The administrative costs of the Authority are allocated among said facilities and the Leased Premises.
THE CITY OF ANAHEIM
The Bonds are not secured by the faith and credit or the taxing power of the City. The economic and financial data regarding the City of Anaheim and Orange County set forth in this section are included for information purposes only.
General
The City of Anaheim (the "City") was founded and incorporated in 1857. In June 1964, the local voters approved a City Charter. The City operates under the Charter and with a Council-Manager form of government. The six City Council members are elected to four-year terms in alternate slates every two years. In February 2016, the City Council unanimously adopted the city's first districting map and election
27 sequence, changing the election of council members from an at-large system to a by-district system as of the November 2016 election; the Mayor continues to be elected at-large. The Mayor presides over meetings of the City Council and has one vote.
The City Council appoints the City Manager, who heads the executive branch of government, implements City Council directives and policies, and manages the administrative and operational functions through the various departmental heads, who are appointed by the City Manager.
City full-time employees numbered 1,945 in 2018, of whom 590 were assigned to the Police Department and 276 to the Fire & Rescue. The latter has eleven stations; the City enjoys a Class One fire insurance rating, the highest rating possible.
The City covers 50 square miles and is located in northwestern Orange County, about 28 miles southeast of downtown Los Angeles and about 90 miles north of San Diego. The City lies on a coastal plain which is bordered by the Pacific Ocean on the west and the Santa Ana Mountains on the east.
The City is in the center of an area with 20 million people which is comprised of Orange, San Diego, Los Angeles, Riverside and San Bernardino counties. Major freeways in and through the City provide convenient access for industries and consumers to labor markets, recreation, and commerce. The Santa Ana Freeway (Interstate 5) connecting Los Angeles and San Diego, is the main artery traversing the City and connects, in or near the City, with the Artesia/Riverside freeway (State Route 91 ), the Garden Grove freeway (State Route 22), the Orange freeway (State Route 57), and the Costa Mesa freeway (State Route 55).
The City has over 24,000 active business licenses, of which approximately 19,000 are businesses operating within the City's boundaries, and is home to more than 8,500 manufacturing plants. The City has a population of over 357,000 residents.
The Anaheim Regional Transportation Intermodal Center, located in Anaheim's Platinum Triangle and near the Anaheim Resort, provides access to AMTRAK rail passenger service, Metrolink commuter rail, as well as bus service operated by Orange County Transportation Authority, Anaheim Resort Transportation, and Greyhound.
The major airports in the area include John Wayne (14 miles southwest), LA/Ontario International (20 miles northeast), Los Angeles International (30 miles northwest) and Long Beach (14 miles west).
City Council
The City Council is made up of a Mayor, elected at large, and six City Council members, who appoint a city manager to oversee day-to-day operations. As of the November 2016 election, council members are elected to staggered fouryear terms by district.
Biographies of the members of the City Council are set forth below:
Harry S. Sidhu, P. E., Mayor. Harry Sidhu was elected Mayor, representing the City at large, in November 2018 to a four-yearterm . Mayor Sidhu previously served on the City Council from 2004 to 2012, including as Mayor Pro Tern from 2009 to 2011 and in 2012. During his first tenure on the City Council, Mayor Sidhu started the City's annual Anaheim Health Fair as well as the annual Anaheim/QC Job Fair and Expo. Prior to serving on the City Council, Mayor Sidhu was chairman of the City's budget Advisory Commission and served on the City's Audit Committee. Since coming to Southern California in 1980, Mayor Sidhu has worked as an engineer for aerospace companies Rockwell International, General
28 Dynamics, and Hughes Aircraft. Mayor Sidhu earned his Bachelor's Degree in Science from Drexel University.
Lucille Kring, Mayor Pro Tem. Lucille Kring is Mayor Pro Ternand Council Member representing Council District 4 in south Anaheim, which includes the Anaheim Resort area. Ms. Kring was elected to the City Council in November 2016, representing District 4. She previously served on the City Council from 2006 to 2010 and 1998 to 2002. Her current term runs through 2020. Ms. Kring is a board member for the Orange County Fire Training Joint Powers Authority. She is a graduate from Western State University College of Law and practiced in the fields of labor, employment contract and real estate law.
Denise Barnes, Council Member. Denise Barnes represents Council District 1 in the western-most part of the City. She was elected to the City Council in November 2016 and is eligible for re-election in 2020. Ms. Barnes serves on the boards of the Orange County Sanitation District and Orange County-City HAZMAT Emergency Response Authority. Ms. Barnes is a retired accounting supervisor and, together with her husband, founded an Anaheim-based property management company.
Jo rdan Brandman, Council Member. Council Member Brandman was elected to the City Council in November 2018 and represents Council District 2, west of central Anaheim and the Anaheim Resort. Mr. Brandman previously served on City Council from 2012 to 2016. While serving on the City Council in 2015, Mr. Brandman represented the City on the board of the Orange County Water District. In addition, Mr. Brandman served as chair of the Anaheim Public Utilities Board. Mr. Brandman previously worked as a policy adviser in the governor's office for the secretary of education and as a legislative aide in the California Assembly, working on issues such as affordable housing, education, local government, and education. Mr. Brandman earned his Bachelor's degree in Political Science from the University of California, Irvine.
Dr. Jose F. Moreno, Council Member. Dr. Jose F. Moreno is Council Member representing District 3 in central-north Anaheim. Dr. Moreno was elected to the City Council for a two-year term in November 2016 and re-elected to a four-year term in November 2018. Dr. Moreno served as mayor pro ternin 2018. Beforejoining the City Council, Dr. Moreno served two terms on the Anaheim City School District Board of Education from 2006 to 2014. He is an associate professor and former chair in the Department of Chicano & Latino Studies at California State University, Long Beach, where he focuses on Latino education and policy studies. Dr. Moreno received his Bachelor's degree in Social Ecology with an emphasis on Criminology and Human Behavior from the University of California, Irvine. He earned his Master's and Doctorate in Administration, Planning and Social Policy from Harvard University, where he co-chaired the editorial board of the Harvard Educational Review.
Stephen Faessel, Council Member. Stephen Faessel represents Council District 5 in east-central Anaheim. He was elected in November 2016 and is eligible forre-election in 2020. Mr. Faessel represents the City on the board of directors of the Metropolitan Water District of Southern California. He has previously served on the Anaheim Public Utility Board, Anaheim Planning Commission, Budget, Investment and Technology Commission, and on the City's General Plan Advisory Committee. Mr. Faessel graduated from California State University, Fullerton, with a degree in Marketing. He is retired froma 50- year career in the retail hardware industry as merchandise manager forthe 16-store Crown ACE Hardware chain.
Trevor O'Neil, Council Member. Council Member O'Neil represents Council District 6 in east Anaheim. Mr. O'Neil was elected to the City Council in November 2018. Prior to his election to City Council, Mr. O'Neil served as a city commissioner forthe City's former Community Center Authority. In addition, Mr. O'Neil currently serves as vice chair of the Orange Unified School District Measure S Citizens' Oversight Committee and as a board member of the Orange County Taxpayers Association and
29 Anaheim Hills Community Council. Mr. O'Neil is a business owner whose company provides home healthcare services for the elderly and disabled. Mr. O'Neil earned his Bachelor's degree in Computer Science from California State Polytechnic University, Pomona.
City Management
Biographies of the members of the City Management are set forth below:
Chris Zapata, City Manager. Chris Zapata was appointed City Manager by the City Council in August 2018. Prior to joining the City, Mr. Zapata served as city manager of San Leandro in the San Francisco Bay Area and of National City in San Diego County. Mr. Zapata also served as Deputy City Manager of Glendale, Arizona. As City Manager, Mr. Zapata oversees a full-service city supporting nearly 357,000 residents, 20,000 businesses and 25 million annual visitors. He also oversees 11 city departments, including Anaheim Public Utilities, the Anaheim Police Department, Anaheim Fire & Rescue and Convention, Sports & Entertainment, the operator of the Anaheim Convention Center. Mr. Zapata has a Bachelor's degree in Recreation Leadership and a Minor in Business Administration fromNorthern Arizona University.
Greg Garcia, DeputyCity Manager. Greg Garcia was appointed Deputy City Manager in January 2019. He has served the City since 2005. In his current role, Mr. Garcia oversees the departments of community and economic development, community services and convention, sports and entertainment, as well as the communications office and handles government affairs for the City. In addition to administering the Mayor and City Council's policies, Mr. Garcia also provides policy support for the Mayor and City Council. Prior to his current position, Garcia held the positions of Deputy City Manager, Government Affairs Manager, and Budget Analyst. Mr. Garcia earned his Bachelor's degree in Political Science from the University of California, San Diego, and his Juris Doctorate from the University of Notre Dame Law School.
David Belmer, Deputy City Manager. David Belmer was appointed Deputy City Manager in January 2019. In his current role, he oversees the planning and public works departments while assisting the City Manager's Office in administering the policies set by the Mayor and City Council. Mr. Belmer joined the City in May 2015 as Planning Director. His previous roles included Assistant City Manager/Director of Economic Development and Community Preservation for the City of Lake Forest, Community Development Director with the City of Cypress, and various Economic Development, Redevelopment, Code Enforcement and Planning positions with the City of Garden Grove.
Deborah A. Mo reno, Fin ance Director/City Treasurer. Deborah Moreno was appointed Finance Director in July 2012 and City Treasurer in December 2015. Ms. Moreno oversees the department responsible forthe City's $1. 7 billion budget, accounting, cash and investment management, procurement, and technology services. Ms. Moreno initially joined the City in February 2001, and was appointed to Financial Accounting Manager. In January 2006, Ms. Moreno briefly left the City to be the Director of Finance of the City of La Palma, but returned to the City in August 2007 as Deputy Finance Director. Prior to her work in local government, Ms. Moreno was in public practice at Ernst and Young LLP and is a CertifiedPublic Accountant (inactive). She earned a Bachelor's degree in Administration from California State University, San Bernardino.
Robert Fabela, City Attorney. Robert Fabela was appointed City Attorney in April 2018. Mr. Fabela's previous positions during his 28-year career include General Counsel for the Santa Clara Valley Transportation Authority, Senior Deputy City Attorney for the City of San Jose and Associate for Wilson, Sonsini, Goodrich & Rosati. He leads the department providing legal advice and services to the City Council, City officials, staff, departments, boards, commissions and related City entities and enterprises.
30 Further, he works to protect the interests of the City and its taxpayers, and assures that actions by, or on behalf of, the City and its related entities are in accordance with all applicable legal requirements. Mr. Fabela earned a Bachelor's degree in Political Science and International Relations from the University of California, Santa Barbara and his Juris Doctorate fromthe University of California,Los Angeles School of Law.
Th eresa Bass, City Clerk. Ms. Bass originally joined the City in December 2007 and served as Assistant City Clerk until her appointment as City Clerk in March 2019. As City Clerk, Ms. Bass leads a department that is responsible for administrating the democratic process by conducting local elections, developing and maintaining the City's records management program, providing access to City records and all legislative actions, and ensuring transparency to the public. Ms. Bass earned her Bachelor's degree from the University of California, Los Angeles and attained her Certified Municipal Clerk designation from the InternationalInstitute of Municipal Clerks in 2009. Her professional memberships include the International Institute of Municipal Clerks, the City Clerk's Association of California and the Southern California City Clerk's Association
Pensions
All full-time and certain part-time City personnel belong to the California Public Employees' Retirement System ("CalPERS"). The City's policy is to fund all required actuarially determined contribution; such costs to be funded are determined annually as of July 1 by the CalPERS's actuary. The City maintains three Pension Plans with CalPERS: the Miscellaneous Plan, the Police Safety Plan and the Fire Safety Plan.
As of June 30, 2017, CalPERS had separate contracts with the State of Californiaplus 1,578 local public agencies. The 57 contracts with county offices of education included in that total provide benefits for 1,366 school districts and charter schools, bringing the total number of public agency employers to 2,945. Membership includes the State of California, cities, counties, county offices of education, school districts and other public agencies. Each agency has somewhat differing benefit programs and amounts of actuarial liabilities. For the Public Employees' Retirement Fund as a whole, the CalPERS investment portfolio market value as of June 30, 2017, was approximately $326. 4 billion, compared to $302. 0 billion as of June 30, 2016. As of June 30, 2016, the CalPERS unfunded actuarial accrued liability was $138.58 billion. Such informationis the most recent informationavailable and no assurances can be given that there has not been a reduction in the market value of the assets held by CalPERS. A copy of CalPERS' annual financial report may be obtained from its website at www.calpers.ca.gov. The CalPERS website also contains CalPERS' most recent actuarial valuation reports and other informationconcerning benefits and other matters. Such informationis not incorporated by referenceherein . Neither the City nor the Authority can guarantee the accuracy of such information. Actuarial assessments are "forward-looking" statements that reflectthe judgment of the fiduciariesof the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future. Actuarial assessments will change with the futureexperience of the pension plans.
With respect to the City's portion of the Public Employees' Retirement Fund, the net actuarial value of assets available for benefits, as of the most recent actuarial valuation date, June 30, 2017 was approximately $1. 79 billion with an unfunded liability of approximately $7 41.1 million.
31 The table below shows the funding progress of the three plans and is based on a June 30, 2017 market valuation date ($s in thousands).
(A) (B) (C) (D) (E) (F) Market Unfunded Value of Liability Funded Annual UL as a% Assets Accrued (UL) Ratio Covered of Payroll Plan (MVA) Liability (B)-(A) (A)/(B) Payroll (C)/(E) Miscellaneous $ 957,141 $1,361,536 $404,395 70.3% $120,748 334.9% Police Safety 534,056 749,345 215,289 71.3 49,413 435.7 Fire Safety 302,285 423,670 121,385 71.3 22,593 537.3 Total $1,793,482 $2,534,551 $741,069 70.8 $192,754 384.5
Source: Comprehensive Annual Financial Report of the City of Anaheim, dated as of Ju ne 30, 2018.
The table below shows the funding progress of the three plans and is based on the most recent market valuation data as of June 30, 2016 ($s in thousands).
(A) (B) (C) (D) (E) (F) Market Unfunded Value of Liability Funded Annual UL as a% Assets Accrued (UL) Ratio Covered of Payroll Plan (MVA) Liability (B)-(A) (A)/(B) Payroll (C)/(E) Miscellaneous $ 881,703 $1,295,862 $4 14,159 68.0% $117,138 353.6% Police Safety 490,402 708,804 218,402 69.2 46,888 465.8 Fire Safety 281,087 403,743 122,656 69.6 22,027 556.8 Total $1,653,192 $2,408,409 $755,217 68.6 $186,053 405.9
Source: Comprehensive Annual Financial Report of the City of Anaheim, dated as of June 30, 2018.
The table below shows the funding progress of the three plans and is based on a June 30, 2015 market valuation date ($s in thousands).
(A) (B) (C) (D) (E) (F) Market Unfunded Value of Liability Funded Annual UL as a% Assets Accrued (UL) Ratio Covered of Payroll Plan (MVA) Liability (B)-(A) (A)/(B) Payroll (C)/(E) Miscellaneous $ 896,992 $1,217,106 $320,114 73.7% $108,154 296.0% Police Safety 498,226 666,459 168,233 74.8 45,125 372.8 Fire Safety 289,122 387,567 98,445 74.6 20,971 469.4 Total $1,684,340 $2,271,132 $586,792 74.2 $174,250 336.8
Source: Comprehensive Annual Financial Report of the City of Anaheim, dated as of June 30, 2018.
Many assumptions are used to estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations. One of the most significant factors used in determining the liability and the funding requirements is the assumed rate of return that investments will yield prior to making payments, known as the discount rate. The City's pension plans currently utilize a discount rate of 7. 5% in determining the unfunded pension liability and funding requirements. If it is determined in the
32 future that a lesser rate of return is more appropriate, there will be a significant increase in the unfunded liability and the contributions required to meet those obligations. The City has adopted the new provisions of the Governmental Accounting Standards Board relating to the accounting and reporting forpensio ns.
The City's contribution rate is determined by annual actuarial valuations based on the benefit formula, the number of employees, and their respective salary schedules. As of June 30, 2019, the City's contribution rate, for employees hired on or after January 1, 2013, was 10.587% for miscellaneous employees and 17. 657% forfire safetyemployees, and 21.081% for police safetyemployees . Participants' contributions totaled $16. 801 million for the fiscal year ended June 30, 2017. On January 1, 2013, the Public Employees' Pension Reform Act of 2013 (PEPRA) took effect and applies mainly to new public employees. Some of the major changes include mandatory cost sharing by employees, reducing the overall benefitlevel (e. g. percentage of pay), increasing the retirement age, and placing a cap on the salary used to determine retirement benefits. Employees hired on or after January 1, 2013 who were not already members of a pension system are subject to PEPRA.
Contribution to fund the pension plans are comprised of (a) the Normal Cost, expressed as a percentage of total active payroll, and (b) the Amortization of the Unfunded Accrued Liability (UAL), expressed as a dollar amount. Prior to July 1, 2017, amortization of the UAL was expressed as a percentage of total active payroll. Starting from fiscal year 2017-18, the amortization of UAL components are expressed as a dollar amount. The City contributed $66.8 million toward the amortization of UAL during fiscalyear 2017-18.
The City's actuarially determined contribution, the City's actual contribution, and the City's net pension liability as a percentage of covered payroll for the fiscal years ended June 30, 2018 and June 30, 2017 are as follows ($s in thousands):
Police Fire Police Fire Safety Safety Total Safety Safety Total Miscellaneous 2017- 2017- 2017- Miscellaneous 2016- 2016- 2016- 2017-2018 2018 2018 2018 2016-2017 2017 2017 2017 Actuarially Determined $35,932 $20,410 $10,450 $66,792 $33,275 $19,615 $10,350 $63,240 Contribution (ADC) Contribution in Relation to the (35,932) (20,410) (10,450) (66,792) (33,275) (19,615) (10,350) (63,240) ADC Covered-Employee 121,096 51,770 25,866 198,732 120,653 48,294 22,688 191,635 Payroll1 Plan Net Pension Liability as a Percentage of 29.67% 39.42% 40.40% 33.61% 27.58% 40.62% 45.62% 33.00% Covered Employee Payroll1
1 Includes one year's payroll growth using 3.00% payroll assumption. Source: Comprehensive Annual Financial Report of the City of Anaheim, dated as of June 30, 2018.
Post-Retirement Medical Benefits. In addition to the contributions to CalPERS, the City provides post-retirement medical benefits for certain of its retired employees (the "Post-Retirement Medical Benefits Program"). Active employees (hired prior to January 1, 1996, July 6, 2001 for the Anaheim Police Association employees and November 9, 2001 for Anaheim Fire Association employees) are eligible to received post-retirement medical benefits from the City. The City's contribution to post-retirement health benefits for the fiscal year ended June 30, 2017 and June 30, 2018 was approximately $16. 02 million and $16.37 million, respectively. See "APPENDIX A - City of Anaheim Audited Financial Statements -
33 Notes to Financial Statements-Note 11-0ther Post-employment Benefits" foradditional informationon the post-retirement benefitsoffered by the City to its employees.
On June 30, 2008, the City transferred $63,223,656 to an irrevocable trust with CalPERS to pre fund the City's Post-Retirement Medical Benefits Program obligation. As of the actuarial valuation date of July 1, 2017, the unfundedliability forthe City's Post-Retirement Medical BenefitsProgram was $184.0 million or 32.8% funded.
The table below shows the fundingprogress of the Post-Retirement Medical Benefits Plan Program ($s in thousands).
(A) (B) (C) (D) (E) (F) Actuarial Unfunded Value of Liability Funded Annual UL as a% Actuarial Assets Accrued (UL) Ratio Covered of Payroll Valuation Date (MVA) Liability (B)-(A) (A)/(B) Payroll (C)/(E) July 1, 2017 $ 89,953 $273,950 $183,997 32.8% $203,473 90.4% July 1, 2015 79,787 271,243 191,456 29.4 178,721 107.1 July 1, 2013 74,013 237,202 163,189 31.2 167,871 97.2
Source: City of Anaheim.
The City's actuarially determined contributions, the City's actual contributions, and the City's net OPEB liability as a percentage of covered payroll for fiscal years ended June 30, 2018 and June 30, 2017 are as follows ($s in thousands):
Fiscal Year Fiscal Year 2017-2018 2016-2017 Actuarially Determined Contribution $16,368 $15,937 (ADC) Contribution in Relation to the ADC 16,368 16,016 Contribution Deficiency (Excess) (79) Covered-Employee Payroll 209,435 203,473 Contribution as a Percentage of 7.82% 7.87% Covered-Employee Payroll
Source: City of Anaheim.
Labor Relations
A majority of City employees are represented by various unions, including the Anaheim Municipal Employees Association, the Anaheim Police Association, Anaheim Police Management Association, the Anaheim Firefighters Association, the American Federation of State, County, and Municipal Employees (AFSCME), the InternationalBrotherhood of Electrical Workers, Local 47 (IBEW), the Service Employees International Union, Local 1877, and the Teamsters Local 952 (Teamsters). The preceding are designated representatives under the Meyer Milias Brown Act (Section 3500 et seq. of the Government Code of California). The expiration dates of current memoranda of understanding are: IBEW (full-timeemployees), June 30, 2020; IBEW (part-time employees), June 30, 2020; Anaheim Municipal Employees Association General Employees, January 4, 2018; Anaheim Municipal Employees Association Clerical Employees, January 4, 2018; Anaheim Municipal Employees Association Part Time Unit, January 3, 2018 (the City and the aforementioned AMEA groups are currently negotiating a new memorandum of understanding);
34 Anaheim Municipal Employees Association Police Cadet Unit, June 25, 2020; Anaheim Police Association, June 27, 2019; Anaheim Police Management Association, December 26, 2019; Anaheim Firefighters Association ("AFA"), June 29, 2017 (the City and the AFA are currently negotiating a new memorandum of understanding); Service Employees InternationalUnion, Local 1877 ("SEIU"), January 4, 2021; and the Teamsters, January 1, 2019.
Area and Population
The City land area remained at 3. 7 square miles from1900 through 1940. From 1940 to 2018, that area increased to 50.8 square miles. The City's population grew from 14,556 in 1950 to an estimated 357,084 in 2018. Anaheim is the oldest and most populous city in Orange County and California's tenth most populous city. The followingchart includes the growth in the City's population since 1950 as well as the growth in the population of Orange County and the City's population as a percentage of the population of Orange County.
CITY OF ANAHEIM AND ORANGE COUNTY POPULATION Calendar Year
Annual City Average Orange Population City Population County Percent of Year Population Change Population County 1950 14,556 216,224 6. 73% 1960 104,184 615. 75% 703,925 14.80 1970 166,701 60.01 1,420,386 11.74 1980 219,310 31.56 1,931,570 11.35 1990 266,406 21.47 2,410,556 11.05 2000 328,014 23. 13 2,846,289 11.52 2010 336,265 2. 52 3,010,232 11.17 2011 341,903 1. 68 3,035,167 11.26 2012 346,430 1. 32 3,069,454 11.29 2013 350,665 1. 22 3,102,606 11.30 2014 352,146 0. 42 3,127,083 11.26 2015 351,433 (0.20) 3,152,376 11. 25 2016 358,136 1. 91 3,172,152 11.21 2017 358,546 0. 11 3,194,024 11.22 2018 357,084 (0.41) 3,221,103 11. 09
Sources: CaliforniaDe partment of Finance and US. Census Bureau.
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35 Building Activity
In 2017, the City issued 3,157 building permits with a total valuation of approximately $548.85 million. The table below provides informationon City building permits forthe fivecalendar years ending 2017.
CITY OF ANAHEIM BUILDING ACTIVITIES Calendar Year
2013 2014 2015 2016 2017 Total Valuation (thousands) $338,946 $609,443 $568,394 $696,586 $548,845 Total Permits Issued 2,885 3,609 4,107 3,286 3,157 New Construction: Residential (thousands) $ 54,034 $213,731 $147,479 $204,052 $121,579 Permits 55 80 66 147 79 Non-Residential (thousands) $ 92,175 $182,135 $183,930 $284,771 $153,428 Permits 29 30 36 44 43 Additions and Alterations: Residential (thousands) $ 28,547 $ 37,648 $ 50,323 $ 33,389 $40,559 Permits 1,638 2,129 2,909 2,027 2,024 Other (thousands) $164,190 $175,930 $186,662 $176,373 $233,280 Permits 1,163 1,370 1,096 1,068 1,011 New Dwelling Units: Total Residential Units 420 1,301 1,019 1,295 753
Source: City of Anaheim Planning Department, Building Division.
Employment
No annual informationis regularly compiled on employment and unemployment for the City alone, though monthly estimates are made by the State of California Employment Development Department. Employment in the Anaheim-Santa Ana-Irvine Metropolitan Division, a census-designated region, increased from about 1,439,300 in 2012 to about 1,577,900 in 2018. The unemployment rate was lower than that in the State in each of the past seven years. The mobile resident labor forceof Orange County is employed not only in the County but also in adjacent counties, such as Los Angeles, San Bernardino and Riverside.
ORANGE COUNTY (ANAHEIM-SANTA ANA-IRVINE METROPOLITAN DIVISION) EMPLOYMENT, UNEMPLOYMENT AND LABOR FORCE<') Calendar Year Averages: 2012-2018
2012 2013 2014 2015 2016 2017 2018 Civilian Labor Force 1,562,100 1,565,300 1,572,000 1,588,700 1,602,400 1,618,800 1,625,400 Employment 1,439,300 1,462,400 1,485,700 1,518,000 1,538,000 1,561,700 1,577,900 Unemployment 122,900 102,900 86,200 70,700 64,300 57,000 47,500 Unemployment Rate 7.9% 6.6% 5.5% 4.4% 4.0% 3.5% 2.9% State Unemployment 10.4% 8.9% 7.5% 6.2% 5.4% 4.8% 4.2% Rate
(l) By place of residence, including workers involved in labor disputes. Sources: CaliforniaEmp loyment Development Department, Labor Market Information Division.
36 The table below lists the major non-governmental employers within the City.
CITY OF ANAHEIM PRINCIPAL PRIVATE EMPLOYERS 2018
Number of Company Employees Products/Purpose Disneyland Resort 31,160 Theme Park Kaiser Foundation Hospital 6,185 Medical Facilities N orthgate Gonzalez Supermarkets 2,000 Grocery Stores Anaheim Regional Medical Center 1,200 Medical Facilities Hilton Anaheim 1,000 Hotel Angels Baseball 930 Entertainment and Sports Anaheim Global Medical Center 900 Medical Facilities L-3 Communications 860 Aerospace and Defense Systems Carrington Mortgage Services LLC (CMS) 800 Mortgage Services G4S Secure Solutions 800 Security Services St. Joseph Heritage Healthcare 800 Medical Facilities
Sources: Inside Prospects Database, as published in City of Anaheim CAFR , year ended Ju ne 30, 2018.
Income
The following table summarizes median household income for the Los Angeles-Long Beach Anaheim Metro Area, the State, and the United States forthe years 2011 through 2017 :
MEDIAN HOUSEHOLD INCOME Calendar Years 2011 through 2017
Los Angeles-Long Beach-Anaheim Year Metro Area California United States 2011 $57,745 $58,509 $51,324 2012 57,271 58,328 51,371 2013 58,869 60,190 52,250 2014 60,565 61,990 53,713 2015 63,443 64,500 55,775 2016 65,950 67,739 57,617 2017 65,331 67,169 57,652
Source: US. Census Bureau.
Tourism and Community and Recreational Facilities
Tourism is a major industry in Anaheim. Much of that industry is centered around the Anaheim Resort District, an area of 1,100 acres that includes the Disneyland Park, Disney's California Adventure, the Anaheim Convention Center, the Anaheim GardenWalk, and a majority of the City's 20,000 hotel and motel rooms. Overall, the City has over 150 lodging establishments and 600 restaurants in a broad range of styles, ethnicities and price ranges.
37 Tourism continues to thrive with expansions and development activity in the Anaheim Resort and Platinum Triangle areas. Recent improvements include the following: in 2012, Disney's California Adventure completed a $1.1 billion expansion and opened its Cars Land attraction; in early 2013, the Anaheim Convention Center opened the Grand Plaza, an outdoor venue offering 100,000 square-feet of event space and the sixth major enhancement to the Anaheim Convention Center; as part of its 20th anniversary celebration in October 2013, Honda Center opened its doors to the outdoor Grand Terrace entertainment venue, adding 15,000 square-foot of entertainment space. Regional Transportation Intermodal Center, completed in December 2014, serves as a transportation gateway and mixed-use activity center where visitors seamlessly move between transit services to reach SouthernCalifornia activity centers and businesses. Anaheim Convention Center completed a solar project in August 2014 which is the largest solar photovoltaic array placed on a publicly owned/publicly managed convention center in the nation and is designed to produce enough energy to create 3.6 million kilowatt hours of electricity on an annual basis which is equivalent to producing electricity for 600 residential homes. Star Wars Land, a 14-acre expansion in Disneyland, is scheduled to open May 2019.
Anaheim Convention Center
In September 2017, the Anaheim Convention Center completed a 900,000 square foot expansion with 200,000 square feet of leasable space resulting in 1,015,000 square feet of exhibit space, 352,000 square feet of meeting space, 238,000 square feet of ballroom space and continues to be a sought-after meeting, event and entertainment destination. The Anaheim Convention Center hosts large annual events that have included NAMM, Natural Products, Medical Design Wondercon, D23 and Blizzcon, as well as a multitude of trade shows, educational events, consumer shows and conventions. In 2012, the Anaheim Convention Center was the recipient of the 2012 Venue Excellence award for convention centers, presented by the International Association of Venue Managers, an organization recognized as the world wide leader in the venue management industry.
In January 2013, the Anaheim Convention Center dedicated the opening of the Grand Plaza, a 100,000 square foot pedestrian plaza that includes a 45 foot lighted entry monument, more than 80,000 square feetof colored concrete and pavers, 153 palm trees, 60 citrus trees, and three signature water features with a river of lights connecting the Mountain Fountain and flowing through the Anaheim fountain and continuing to the Ocean fountain.
Angel Stadium
In 1964, the City commenced construction of the Angel Stadium (renamed Angel Stadium of Anaheim) (the "Stadium") for the public presentation of major league baseball, football,soccer, track, field and other sporting and nonsporting events. In 1964, the City entered into a 35 year agreement with Golden West Baseball Company (the California Angels) for the purpose of exhibiting American League Baseball at the Stadium.
In 1996, Anaheim Angels L. P. acquired 100% of what is now known as the Los Angeles Angels of Anaheim American League Baseball franchise and reached agreement with the City on a plan to keep the Angels in Anaheim forthe next 33 years. The agreement centered around a $118 million renovation of the Stadium, with Anaheim Angels L. P. obligated to pay $80 million of the total costs and for any costs overruns in excess of $100 million. The renovation made the Stadium a smaller and more intimate park with approximately 45,000 seats and upgraded concessions, suites, seating and other amenities. Also as part of the agreement, Anaheim Angels L. P. took over operation of the Stadium effectiveOctober 1, 1996. In 2003, Arturo Moreno (Angels Baseball LP) purchased the team for $185 million.
38 The current lease between the City and Angels Baseball LP expires in 2029; however, Angels Baseball LP has the option to terminate the current lease at any time, without cause, before December 31, 2020, with at least 12 months written notice. The City is currently in the process of an appraisal of the Stadium and Angels Baseball LP has retained the services of a development consultant.
Honda Center
In June 1993, the City completed construction on the $103 million 19,400-seat Honda Center (formerly known as the Arrowhead Pond of Anaheim) (the "Honda Center") with approximately 3,900 parking spaces. The Honda Center is now home to the National Hockey League's Anaheim Ducks and is equipped to accommodate National Basketball Association games, national touring shows as well as major concerts.
In 2018, Honda Center held more than 120 events including concerts, shows, and sporting events such as Depeche Mode, P!NK, Shakira, J. Cole, Chris Stapleton, Fall Out Boy, Disney On Ice, and the Los Angeles Lakers. As it celebrates its 25th anniversary, Honda Center continues to operate as Orange County's premier entertainment and sports venue with new shows and various upgrades around the building.
In an effort to enhance the guest experience, Honda Center continues to make changes throughout the venue. Currently, the in-bowl seating replacement project is underway. The firstphase completed prior to the start of the 2018-19 Anaheim Ducks season, with phase two scheduled to be completed in 2019. In late 2018, Honda Center opened The Wine Cellar Preserved by Sub-Zero, a wine bar available exclusively to guests seated on the Pacific Premier Bank Club Level.
The agreement between Anaheim Arena Management, LLC and the City was recently amended and extended to 2048. As a result, the Anaheim Ducks will stay at the Honda Center until 2048.
City National Grove ofAnaheim
In 2018, City National Grove of Anaheim held more than 200 events and welcomed 105,000 guests. Performances included favorites such as David Crosby, Brian McKnight, YES, Rufus Wainwright, comedians Russell Peters, Kathleen Madigan and Lewis Black, podcasters #IMOMSOHARD and Disney Junior Live.
The 1,700 capacity venue was named "Orange County's Favorite Live Music Venue," by the Los Angeles Times, and ranked #80 out of the Top 200 venues of its size according to Pollstar magazine in 2018.
Recreational Facilities
Orange County is a major tourist center of Southern California, attractingover 4 7 million annual visitors. Forty-two miles of shorelines with more than twenty publicly maintained beach areas provide year-round aquatic activities.
In the City, there are two 18-hole golf courses, 57 city parks, a nature center, and community centers that include senior citizen centers.
Recreational and amusement facilities in Anaheim include Disneyland, Disney's California Adventure, Downtown Disney, Anaheim GardenWalk, House of Blues-Anaheim, the Anaheim Convention Center, the Stadium and the Honda Center. Within one hour's drive fromthe City are Knott's Berry Farm
39 in the adjacent City of Buena Park, the Los Alamitos Race Course, the renowned Spanish Mission of San Juan Capistrano, and the Art Colony at Laguna Beach, which sponsors an annual art festival, and numerous cultural events and attractions in Los Angeles. The Newport Harbor area, a few miles south of the City, provides anchorage facilities for approximately 4,600 private boats. Boat launching ramps, deep sea fishing, scuba-diving, and other aquatic activities are readily accessible. Within a two-hour drive are numerous summer and winter resort areas in the San Bernardino and San Jacinto mountains.
Other Anaheim facilitiesinclude a main public library, six branch libraries, a self-service branch at the Anaheim Regional Transportation Intermodal Center, the Anaheim Heritage Center and a bookmobile. The MUZEO museum and cultural arts center, Anaheim Ice, the practice rink for National Hockey League's Anaheim Ducks, and the American Sports Center, the largest indoor sports complex in the world, are also located in the City.
Retail Sales
Total taxable sales during calendar year 2017 in the City were reported to be approximately $7.00 billion, a 3. 6% increase from the total taxable sales of approximately $6. 7 5 billion reported during calendar year 2016. A summary of historic taxable sales within the City during the past fiveyears for which data is available is shown in the following table.
CITY OF ANAHEIM TAXABLE RETAIL SALES NUMBER OF PERMITS AND VALUATION OF TAXABLE TRANSACTIONS (Dollars in Thousand)
Retail Stores Total All Outlets Number of Taxable Number of Taxable Year Permits Transactions Permits Transactions 2013 5,386 $3,282,770 8,977 $5,806,581 2014 5,750 3,392,709 9,373 6,163,023 2015 6,137 3,528,834 10,553 6,652,443 2016 6,085 3,561,722 10,602 6,752,148 2017 6,098 3,646,087 10,681 6,995,766
Source: California Department of Tax and Fee Information.
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40 Total taxable sales during calendar year 2017 in the County were reported to be $64.55 billion, a 3.3% increase fromthe total taxable sales of $62.51 billion reported during calendar year 2016. A summary of historic taxable sales within the County during the past fiveyears forwhich data is available is shown in the following table.
COUNTY OF ORANGE TAXABLE RETAIL SALES NUMBER OF PERMITS AND VALUATION OF TAXABLETRANSACTIONS (Dollars in Thousand)
Retail Stores Total All Outlets Number of Taxable Number of Taxable Year Permits Transactions Permits Transactions 2013 62,208 $40,025,929 94,862 $57,591,217 2014 65,291 41,288,537 97,943 60,097,128 2015 67,939 41,589,926 110,717 61,358,087 2016 68,570 42,269,771 112,477 62,511,422 2017 68,705 43,666,470 112,676 64,551,424
Source: CaliforniaDe partment of Tax and Fee Information.
Education
The City is served by three non-traditional public schools, eleven public high schools, seven public junior high schools and forty-sixpublic elementary schools. Almost all of the City lies within eight districts: the Anaheim, Centralia, Magnolia, and Savanna Elementary School Districts, the Anaheim Union High School District, the Orange Unified and Placentia-Yorba Linda Unified School Districts, and the North Orange County Community College District.
There are a number of institutions of higher learning located in Anaheim, including Bethesda University of California, Bristol University, California University of Management and Sciences, South Baylo University, Southern California Institute of Technology and West Coast University. Other institutions in Orange County, including the University of California, Irvine, California State University, Fullerton, Chapman University, Cypress College, Fullerton College, and a number of public community colleges.
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41 City Financial Information
The following unaudited summaries of certain funds of the City have been prepared by the City Finance Department from audited financial statements.
CITY OF ANAHEIM ALL GOVERNMENTAL FUND TYPEs<1) SUMMARY OF REVENUES, TRANSFERS AND OTHER FINANCING SOURCES<2) Fiscal Years Ended June 30, 2014 through 2018 ($000)
2014 2015 2016 2017 2018 Property taxes $ 66,282 $ 68,405 $ 70,646 $ 72,909 $ 76,547 Sales and use taxes 68,581 71,977 82,031 80,500 81,680 Transient occupancy taxes 110,134 119,744 137,570 149,566 154,925 Other taxes 7,012 7,478 8,024 8,287 8,311 Licenses, feesand permits 21,296 28,508 30,600 36,457 45,047 3 4 Intergovernmental revenue 144,85 1 ( ) 87,667( ) 47,375 45,805 124,696 Charges forservi ces 32,557 33,295 36,147 42,047 43,982 Fines, forfeitsand penalties 2,656 2,823 2,875 2,756 2,988 7 Use of money and property 5,649 5,502 51,1 99( ) 18,218 26,801 Contribution fromproperty 8 owners 36,864( ) 5 Other revenues 2,733 11,907( ) 3,804 5,782 1,178 Revenues beforetra nsfers and other financing sources 46 1,751 437,306 470,271 499,191 566,155 6 Other financing sources 7,583 28,432( ) 11,617 8,947 6,478 Total revenue and other financing sources $469,334 $465,738 $481,888 $508,138 $572,633
(l) Includes the General Fund, special revenue funds, debt service funds and capital projects funds and excludes the enterprise funds and internal service funds. (Z) Amounts have been restated from audited financial statements to conformwith current presentation. (3) Increase in 2014 was primarilydue to grant reimbursements for the ARTIC construction as the project was in construction during the entire fiscal year. (4) Decrease in 2015 was primarily due to lesser amount of grant reimbursement as the Anaheim Regional Transportation Intermodal Center (ARTIC) construction was completed in December 2014. (5) Increase in 2015 was primarilydue to receipts of developer contributions for Mello-Roos projects. (6) Increase in 2015 was primarilydue to issuance of bonds. (7) Increase in 2016 in use of money and property is due to one-time land held forresale transferred from the Successor Agency. (S) Contribution from property owners pursuant to the issuance of Community Facility District 08-1 Platinum Triangle Series 2016 Special Tax Bond.
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42 CITY OF ANAHEIM 1 2 ALL GOVERNMENTAL FUND TYPEs< , ) SUMMARY OF EXPENDITURES Fiscal Years Ended June 30, 2014 through 2018 ($000)
2014 2015 2016 2017 2018 City Council $ 548 $ 606 $ 268 $ 673 $ 847 City Administration 3,377 3,535 3,322 3,001 3,702 City Attorney 8,155 6,038 6,368 7,182 6,936 City Clerk 1,073 1,057 897 1,226 1,127 Human Resources 1,432 1,250 1,449 1,615 1,998 Finance 6,485 6,566 6,375 5,750 6,748 Police 120,962 127,226 139,775 148,801 156,338 Fire 57,529 61,483 66,399 70,164 74,888 Community and Economic Development 83,658 89,446 107,544 (3) 92,089 93,855 Planning 16,086 17,667 19,935 21,997 23,649 Public Works 29,737 29,814 30,388 30,886 34,331 Community Services 30,602 28,394 31,980 32,258 34,042 Public Utilities 2,510 2,622 2,727 2,496 2,341 Convention, Sports and Entertainment 10,714 11,608 13,089 14,023 14,639 Total operating expenditures $372,868 $387,312 $430,516 $432,161 $455,441 Redemption of serial bonds, general obligations 24,220 25,289 28,448 26,123 14,749 Interest expenditures 18,797 18,085 16,930 15,571 28,412 Bond issuance costs 127 Capital outlay 136,597 79,710 32,589 44,532 46,366 Total expenditures $552,482 $510,523 $508,483 $518,387 $544,968
(l) Includes the General Fund, special revenue funds, debt service funds and capital projects funds and excludes the enterprise funds and internal service funds. (Z) Amounts have been restated fromaudited financial statements to conformwith current presentation. Additionally, prior period adjustments for changes in accounting principles and corrections of errors have generally been treated as adjustments in Appendix A to beginning fundbalanc es. Therefore, no adjustments have been made to expenditures. See audited financial statements for furtherdeta ils. (3) Increase in Community and Economic Development expenditures is due to a one-time loss on sale ofland held for resale.
Budgetary Processes
The fiscalyear of the City begins on the firstday of July of each year and ends on the thirtieth day of June of the followingyear.
At such date as the City Manager determines, each department head must furnish to the City Manager an estimate of revenues and expenditures forsuch department, forthe ensuing fiscalyear, detailed in such manner as may be prescribed by the City Manager. In preparing the proposed budget, the City Manager reviews the estimates, holds conferencesthereon with the respective department heads, and revises the estimates as he may deem advisable.
43 At least thirty days prior to the beginning of each fiscal year, the City Manager submits to the City Council the proposed budget as prepared by the City Manager. Afterreviewing and making such revisions as it deems advisable, the City Council determines the time for the holding of a public hearing thereon and causes to be published a notice thereof not less than ten days prior to the hearing date. Copies of the proposed budget are available for inspection by the public in the office of the City Clerk at least ten days prior to the hearing.
At the conclusion of the public hearing, the City Council furtherconsiders the proposed budget and makes any revisions thereof that it deems advisable. On or before June 30, the City Council adopts the budget with revisions, if any, by the affirmativevote of at least a majority of the total members of the City Council.
From the effectivedate of the budget, the amounts stated as proposed expenditures are appropriated to the departments, forthe objects and purposes named. The City Manager is empowered to transferfunds from one object or purpose to another within the same department, as necessary. All appropriations lapse at the end of the fiscal year to the extent that they have not been expended or lawfullyencumbered . At any public meeting after the adoption of the budget, the City Council may amend or supplement the budget by the affirmativevote of at least a majority of the total members of the City Council.
Under the City Charter, the City may not incur indebtedness evidenced by general obligation bonds which would in the aggregate exceed 15% of the total assessed valuation, forpurposes of City taxation, of all the real and personal property within the City, and no bonded indebtedness which shall constitute a general obligation of the City may be created unless authorized by the affirmative votes of two-thirds of the electors.
The City Council employs, at the beginning of each fiscal year, an independent certified public accountant who, at such time or times as specified by the City Council, at least annually, and at such other times as they shall determine, examines the books, records, inventories and reports of all officers and departments as the City Council may direct. As soon as practicable afterthe end of the fiscal year, a report is submitted by such accountant to the City Council and a copy of the financial statements as of the close of the fiscal year is published.
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44 The followingtable sets forth the General Fund actual revenues and expenses forfiscal year ended June 30, 2016 through fiscalyear ended June 30, 2018, and the General Fund adopted budget forfiscal year ended June 30, 2019:
General Fund Revenue and Expenditures ($ in millions)
Fiscal Year 2015/16 2016/17 2017/18 2018/19 Actual Actual Actual Adopted General Fund Revenues Transient Occupancy Taxes $137.6 $149. 6 $154.9 $161.7 Sales and Use Taxes 81.8 80.5 82.2 85.6 Property Taxes 69.9 72.9 75.8 76.4 Business License Taxes 6. 6 6. 6 6. 7 6. 7 Property TransferTaxes 1. 4 1. 7 1. 6 1. 6 Other Revenues 51.0 54.7 68.8 59.0 Transfers from (to) Other Funds (50.1) (60.3) (59.1) (57.2) Total Revenues<1) $298.2 $305.7 $330.9 $333.8 General Fund Expenditures Keeping us Safe $198.6 $214. 1 $222. 4 $229. 7 Providing the Necessities 22. 4 22. 0 22. 6 21. 8 Ensuring Quality of Life 50.4 54.8 58.0 60. 8 Administering Efficient Gov't 10. 8 12. 0 12. 5 13. 6 Supporting Activities 7. 8 7. 3 8. 7 8. 7 Total Expenses<1) $290.0 $310.2 $324.2 $334.6 Net Contribution (Draw) $8.2 ($4.5) ($6.8) ($0.8)
(1) Figures may not sum due to rounding. Source: City of Anaheim CAFR, fiscalyear ended June 30, 2016 through fiscalyear ended June 30, 2018 and adoptedfiscal year 2018-19 Op erating Budget & Capital Improvement Program.
Assessed Valuation and Tax Collections
Taxes are levied each fiscal year on taxable real and personal property which is situated in the City as of the preceding January 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State-assessed public utilities property and real property, the taxes on which are a lien, sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll. "
Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. Delinquent taxes must be paid by June 30 to avoid additional penalties, which are equal to 1. 5% per month on the unpaid base tax amount for each June 30th delinquent amount, plus a $15 redemption fee. Taxpayers may elect to pay delinquent taxes in installments of 1/5 (20%) of the redemption amount over a five (5) year period. In June of the fifth year anniversary of original delinquency, those parcels still unpaid are officiallyprocessed forPower to Sell (i.e., forTax Action sale). Consequently, sometime in the 6th year of delinquency, if still unpaid, the property is officially offered at tax sale by the Orange County Tax Collector's office.
45 Property taxes on the unsecured roll are mailed between March and July of each fiscalyear and are due upon receipt. If unpaid, such taxes become delinquent after August 31 and a 10% penalty plus a $75 collection feeattaches to any delinquent payment. Delinquent taxes must be paid by October 31 to avoid the filingof a tax lien and additional penalties, which are equal to 1. 5% per month until paid. The Orange County Tax Collector further has the right to enforce tax collection through seizure and sale or a suit in court.
Assessed valuation for revenue purposes increased by 5. 4% in fiscalyear 2019 over the prior fiscal year. Such assessed valuations include secured and unsecured properties assessed by the Orange County Assessor, and secured utility properties assessed by the State Board of Equalization. Such assessed valuations exclude business inventory exemptions and exclude veterans, religious, charitable, and other such nonrecoverable exemptions.
The table below shows the assessed valuations, total City tax levies, total current tax levy collections, collection percentage, and per capita assessed valuation forthe last ten completed fiscalyears . The assessed valuation forfiscal year 2019 is $39,400,988,259.
CITY OF ANAHEIM ASSESSED VALUATION AND TAXCOLLECTION RECORD ($000)
Total Percent of Fiscal Year Total City Current Tax Current Per Capita Ended Assessed Tax Levy Tax Levy Population Assessed 1 June 30 Valuation Levy< ) Collections<2) Collected (OOOs) Valuation 2008 $29,672,033 $34,283 $32,798 95.7% 331 90 2009 30,555,271 34,579 33,068 95.6 332 92 2010 30,059,252 33,627 32,490 96.6 336 89 2011 29,878,214 33,512 32,517 97.0 341 88 2012 30,041,674 33,598 32,560 96.9 344 87 2013 30,874,486 34,813 34,116 98.0 346 89 2014 31,814,617 36,293 35,558 98.0 348 91 2015 33,539,662 38,365 37,456 97.6 352 95 2016 34,582,055 40,026 38,832 97.0 358 97 2017 35,905,110 40,787 39,710 97.4 359 100 2018 37,374,790 42,432 41,578 98.0 357 105
(1) Tax Levy excludes special assessments. (l) Tax Levy Collections excludes property taxes in-lieu of vehicle license feesand delinquent collections. Source: City of Anaheim Comprehensive Annual Financial Reports.
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46 Summarized below is a five-year history of property tax rates levied by the City and overlapping taxing agencies in a typical tax code area in Anaheim.
CITY OF ANAHEIM Typical Total Tax Rates per $100 of Assessed Valuation (TRA 1-007) 2018-19 Assessed Valuation: $15,716,541,059(1) Fiscal Years 2014-15 through 2018-19
2014-15 2015-16 2016-17 2017-18 2018-19 General Tax Rate 1.00000% 1.00000% 1.00000% 1.00000% 1.00000% Metropolitan Water District .00350 .00350 .00350 .00350 .00350 Cityof Anaheim .00198 .00173 Anaheim CitySchool District .02867 .04227 .04461 .04502 .05059 Anaheim High School District .02412 .04948 .04259 .02211 .04244 North Orange CountyJoint Community College District .01704 .03043 .02885 .02927 .02829 Total 1.07531% 1.12741% 1.11955% 1.09990% 1.12482%
(1) 2018-19 assessed valuation ofTRA 1-007 is 34.37% of the district's total assessed valuation. Source: CaliforniaMunicipal Statistics, Inc.
Largest Property Taxpayers
The twenty largest property taxpayers in Anaheim and their fiscalyear 2018-19 assessed valuations as of February 2019 are as follows:
CITY OF ANAHEIM LARGEST PROPERTY TAXPAYERS
2018-19 Assessed Property Owner Primary Land Use Valuation % of Tota1<1J 1. Walt Disney World Co. Theme Park $4,556,044,263 10.43% 2. HHC HA Investments II Inc. Commercial 211,738,518 0.48 3. Anaheim Concourse ILP LLC Commercial 191,931,843 0.44 4. US REIF MG Madison Park CA LLC Apartments 128,864,464 0.29 5. Irvine Company LLC Apartments 118,897,809 0.27 6. Teachers Insurance & Annuity Association Industrial 108,894,046 0.25 7. Prologis CaliforniaI LLC Industrial 100,724,675 0.23 8. Gateway Apartments II LLC Apartments 96,337,747 0.22 9. Angeli LLC Commercial 95,825,368 0.22 10. OTR Commercial 95,243,235 0.22 11. Platinum Gateway Development Company LP Apartments 94,490,144 0.22 12. Jefferson Platinum Triangle LLC Apartments 94,391,312 0.22 13. Mary Susan Samia Trust Commercial 94,015,409 0.22 14. Grants Advanced Group 18-116 Apartments 92,305,807 0.21 15. Essex Anavia LP Residential Properties 90,890,654 0.21 16. Rreef America REIT II Corp. Industrial 82,105,018 0.19 17. PK II Anaheim Plaza LP Commercial 82,053,774 0.19 18. Anaheim Corporate OfficePlaza LLC Commercial 81,855,889 0.19 19. UDR 1818 Platinum LLC Apartments 79,348,155 0.18 20. Anaheim Angels LP Commercial 78,473,050 0.18 $6,574,43 1,180 15.05%
(l) 2018-19 Local Secured Assessed Valuation (excluding utilityvaluati on): $43,688,040, 793. Source: California Mu nicipal Statistics, Inc.
47 Direct and Overlapping Debt
For details of the long-term liabilities of the City, see "APPENDIX A - City of Anaheim Audited Financial Statements-Notes to Financial Statements-Note 8-Long-Term Liabilities." The direct and overlapping bonded debt of the City as of February 7, 2019 is shown below. The City is not obligated to pay any Orange County obligations other than those identified as applicable to the City.
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48 CITY OF ANAHEIM STATEMENT OF DIRECT AND OVERLAPPING DEBT
2018-19 Assessed Valuation: $45,731,391,443(1)
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 3/1/19 Metropolitan Water District 1.566% $ 752,463 North Orange Joint Community College District 27.541 46,946,113 Rancho Santiago Community College District 12.249 28,669,030 Rancho Santiago Community College District School Facilities Improvement District No. 1 0.374 431,559 Anaheim Union High School District 67.605 131,534,962 Fullerton Joint Union High School District 0.252 409,412 Garden Grove Unified School District 0.565 1,814,724 Orange Unified School District 25.751 48,411,880 Placentia-Yorba Linda Unified School District 19.305 44,658,832 Anaheim School District 99.047 251 ,466,878 Magnolia School District 67.346 14,360,393 Other School Districts Various 23,375,290 City of Anaheim Community Facilities Districts 100.000 66,280,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $659,111,536
DIRECT AND OVERLAPPING GENERAL FUND DEBT: Orange County General Fund Obligations 7.725% $ 30,563,963 Orange County Pension Obligation Bonds 7.725 29,416,200 Orange County Board of Education Certificates of Participation 7.725 1,080,728 North Orange County Regional Occupation Program Certificates of Participation 28.372 2,635,759 Orange Unified School District Certificates of Participation 25.751 7,733,211 Orange Unified School District BenefitOb ligations 25.751 20,282,775 Placentia-Yorba Linda Unified School District Certificates of Participation 19.305 17,863,950 Anaheim Union High School DistrictCertificates of Participation 67.605 22,350,213 Fullerton Joint Union High School District Certificates of Participation 0.252 46,998 Fullerton School District Certificates of Participation 0.176 8,149 Magnolia School District Certificates of Participation 67.346 10,339,873 City of Anaheim General Fund Obligations 100.000 588,695,119(2) TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $73 1,016,938 Less: City of Anaheim Public Financing Authority (supported by various revenue funds) 588,695,119 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $142,321,819
OVERLAPPING TAX INCREMENT DEBT (Successor Agencies): 0.0005-100.000% $149,235,435
GROSS COMBINED TOTAL DEBT $1,539,363,909(3) NET COMBINED TOTAL DEBT $ 950,668,790
(J) This figure differs from the 2018-19 assessed valuation described under the heading "Assessed Valuation and Tax Collections," due to the inclusion of amounts attributed to the City's dissolved redevelopment agencies. C2l Excludes the 2019 Bonds. 3 ( ) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue bonds and non-bonded capital lease obligations. Qualified Zone Academy Bonds are included based on principal due at maturity.
Ratios to 2018-19 Assessed Valuation: Total Overlapping Tax and Assessment Debt ...... 1.44% Total Gross Direct Debt ($588,695,119) ...... 1.29% Total Net Direct Debt ($0) ...... 0.00% Gross Combined Total Debt ...... 3.37% Net Combined Total Debt...... 2.08%
Ratios to Redevelopment Successor Agencies Incremental Valuation: ($6,334,074,074) Total Overlapping Tax Increment Debt...... 2.36%
Source: California Mu nicipal Statistics, Inc.
49 CITY INVESTMENT POLICY AND CONTROL
Pursuant to the City's investment policy, the City Treasurer invests, on a commingled basis, all City funds (other than funds held by trustees for various debt obligations of the City). The only investment pool currently utilized by the City for investment is the Local Agency Investment Fund of the State, commonly referredto as LAIF.
The investment policies and procedures of the City Treasurer are based on federal, state and local laws and regulations, and prudent investment principles. The City Treasurer prepares an Investment Policy Statement annually that is presented to the Investment Advisory Commissioner for review and then to the City Council for approval. The Investment Advisory Commission, comprised of five individuals appointed by the City Council, has the responsibility of oversight of the Treasurer's investment activity.
Safety of principal is the foremostobjective of the City's investment policy. Liquidity is the second most important objective, followed by returnon investments. Of the three objectives, returnon investments is the least important. The investment policy restricts the permitted investments and requires diversification of the portfolio. The City's investment portfolio is managed to provide the necessary liquidity to meet operational needs. As of January 31, 2019, the average life of the City's investment portfolio was approximately 26 months. The cash flow is developed with information from various departments and is reviewed on a daily basis. The City Treasurer renders a monthly report of investment activity to the City Council and the Investment Advisory Commission. In addition, all investment transactions are reconciled by the Finance Department.
The City Treasurer has developed a system of internal investment controls and a segregation of responsibilities of investment functions in order to assure adequate control over the investment functions.
At January 31, 2019, the City had approximately $605. 33 million on deposit for investment. The investments are summarized below:
City of Anaheim Investments (As of January 31, 2019)
Book Market Percent of 1 Investments Value Value Portfo1io< l Treasury Securities $108,853,952.98 $108,291,900.00 17. 98% Federal Agency Issues 253,406,899.19 253,717,536.00 41.86 Local Agency Investment Fund (LAIF) 13,923,545. 86 13,923,545. 86 2. 30 Money Market Mutual Funds 39,468,011. 64 39,468,011. 64 6. 52 Medium Term Notes 164,878,035.50 164,271,032.60 27. 24 Negotiable CDs 24,803,208. 64 24,810,950.00 4. 10 Total Investments $605,333,653. 81 $604,482,976.10 100.00
(1) Based upon book value. Source: City of Anaheim
This information is only given for the purpose of outlining the general investment policy of the City Treasurer. The General Fund, Convention, Sports & Entertainment Fund, Golf Courses Fund and certain capital improvement funds have been invested by the City Treasurer would be available for the payment of the Lease Payments. Other funds managed by the City Treasurer would not be available for the payment of the Lease Payments.
50 CERTAIN RISK FACTORS
Investment in the 2019 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 2019 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 make Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any tax revenues. Neither the 2019 Bonds nor the obligation of the City to make Lease Payments constitutes an indebtedness of the City, the State or any of its political subdivisions within the meaning of the constitution of the State or otherwise, or a pledge of the faith and credit of the City. The amount of the Lease Payments the City is obligated to make during any fiscalyear is limited to an amount equal to the Lease Payment Measurement Revenues received during such fiscal year, which may be less than or greater than the principal, accreted value and interest due on the Bonds ( including the 2019 Bonds) in such fiscalyear . The City has agreed to make Lease Payments due under the Lease Agreement from any available funds; provided, however, that the taxes included in the calculation of the Lease Payment Measurement Revenues are not pledged to secure the City's obligation to make such Lease Payments. The amount of Lease Payments the City is obligated to pay under the Lease Agreement is not determined by the amount necessary to pay debt service on the Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS" and "LEASE PAYMENT MEASUREMENT REVENUES."
Rights of Certain Parties
The City has incurred other general fund lease payment obligations with respect to all of the Leased Premises (except for the Public Parking Facilities). With respect to the Anaheim Convention Center and certain parking facilities located adjacent thereto,the Authority issued its Lease Revenue Bonds (Anaheim Convention Center Expansion Project), 2014 Series A, in the aggregate principal amount of $252,725,000 (the "2014 Bonds") of which $235,380,000 are currently outstanding.
Although the owners of the 2014 Bonds have the same claim as the owners of the Bonds with respect to the receipt of their payments fromthe City's general fund, the Bond owners have certain priority rights with respect to remedies and condemnation and insurance proceeds involving the Leased Premises under the Lease Agreement and the Indenture.
With respect to the Stadium, the Tenant has certain priority rights before the owners of the 2014 Bonds and the Bonds with respect to condemnation and insurance proceeds under the Stadium Lease; and, with respect to the Public Parking Facilities (forcondemnation proceeds only), the owners of the feeinter est in the site upon which the Public Parking Facilities are located (the Public Parking Property), have certain priority rights to condemnation proceeds under the Master Parking Ground Leases. See "THE LEASED PREMISES-Leases and Agreements Relating to the Public Parking Facilities-Existing Master Parking Ground Leases."
Any net proceeds frominsurance or condemnation from any portion of the Leased Premises, other than the Public Parking Facilities, not used for repair or replacement, will be applied first to redeem the Bonds. The 2014 Bonds will be redeemed with any remaining proceeds. Use of such proceeds to redeem
51 could adversely affectthe ability to repair or rebuild and thus the ability of the City to make Lease Payments in the future. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS."
Other General Fund Obligations and Financings Secured by the Leased Premises
Lease Payments will be made by the City under the Lease Agreement for the use and possession of the Leased Premises. All of the Leased Premises, except for the Public Parking Facilities, are currently leased and leased back by the City, which are payable from the City's general fund revenues and have a parity claim and right to receive payment with the Lease Payments due under the Lease Agreement. The City previously issued its 2014 Bonds with respect to the Anaheim Convention Center and certain parking facilities located adjacent thereto pursuant to a lease agreement that constitutes a sublease of a portion of the Leased Premises. The rights and interests of the parties under the lease agreement with respect to the 2014 Bonds are subject to the rights and interests of the parties under the Lease Agreement, including rights with respect to insurance proceeds and condemnation proceeds. See "-Rights of Certain Parties" above.
The City currently has other obligations payable fromgeneral fund revenues. Additionally, the City has the authority to enter into other general fund obligations which may constitute additional charges against its general fund revenues. To the extent that additional obligations are incurred by the City, the funds available to make Lease Payments may be decreased. See "CITY FINANCIAL INFORMATION Overlapping Debt." No additional bonds, other than Refunding Bonds, may be issued by the Authority which are secured by the Revenues. The Authority may issue other obligations secured by other revenues.
Limitations on Remedies Available to Owners of the 2019 Bonds and the Trustee
The enforceability of the rights and remedies of the Owners of the 2019 Bonds and the Trustee, and the obligations incurred by the City, may be subject to the following: the federal 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 specificenforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the United States Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners of the 2019 Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitations or modifications of their rights.
Insurance
The City, Disney (with respect to the Public Parking Facilities) and the Tenant (with respect to the Stadium), are obligated to obtain and keep in force various formsof insurance or self insurance, subject to deductibles, forrepair or replacement of the relevant portions of the Leased Premises in the event of damage or destruction of the Leased Premises. There can be no assurance as to the ability of any insurer to fulfill its obligations under any insurance policy and no assurance can be given as to the adequacy of such insurance to fund necessary repair or replacement of the Leased Premises. Additionally, the Tenant, with respect to the Stadium, and the owners of the Public Parking Property (the site upon which the Public Parking Facilities are located), for condemnation proceeds only, have prior rights to net proceeds of insurance and condemnation from the Leased Premises. See "Rights of Certain Parties."
52 Loss of Tax-Exemption on Series 2019 A Bonds
As discussed under the caption "TAX MATTERS" herein, the interest on the Series 2019 A Bonds could become includable in gross income forpurposes of federalincome taxation retroactive to the date of issuance of such Series 2019 A Bonds as a result of acts or omissions of the Authority, the City or Disney in violation of their covenants in the Indenture and related documents. Should such an event of taxability occur, the Series 2019 A Bonds are not subject to special redemption and will remain outstanding until maturity or until redeemed under one of the redemption provisions contained in the Indenture.
Constitutional Limitations on Taxes and Appropriations
California law imposes various taxing, revenue and appropriation limitations, on public agencies, such as the City. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS" herein fora discussion of these limitations.
State Budget
The Governor released his proposed State budget for fiscal year 2019-20 (the "Proposed 2019-20 State Budget") on January 10, 2019. The Proposed 2019-20 State Budget sets forth a balanced budget for fiscal year 2019-20. However, the Governor cautions that there are uncertainties that must be considered as the budget is revised, including the impact of the global political and economic climate, changes to federal policy, rising costs and risk of recession. The Proposed 2019-20 State Budget estimates that total resources available in fiscal year 2018-19 totaled approximately $149.32 billion (including a prior year balance of approximately $12.38 billion) and total expenditures in fiscal year 2018-19 totaled approximately $144.08 billion. The Proposed 2019-20 State Budget projects total resources available for fiscalyear 2019-20 of approximately $147 .8 6 billion, inclusive of revenues and transfersof approximately $142.62 billion and a prior year balance of $5.24 billion. The Proposed 2019-20 State Budget projects total expenditures of $144.20 billion, inclusive of non-Proposition 98 expenditures of approximately $88.90 billion and Proposition 98 expenditures of approximately $55.30 billion. The Proposed 2019-20 State Budget proposes to allocate approximately $1.39 billion of the general fund's projected fund balance to the Reserve for Liquidation of Encumbrances and $2.28 billion of such fund balance to the State's Special Fund forEconomic Uncertainties. In addition, the Proposed 2019-20 State Budget estimates the Rainy Day Fund will have a fund balance of $15. 30 billion.
Abatement of Lease Payments
Lease Payments are paid by the City for and in consideration of the right of beneficial use and occupancy of the Leased Premises. The obligation of the City to make the Lease Payments will be abated in whole or in part if the City does not have substantial use and occupancy of the Leased Premises or any material portion thereof. For additional information, see "APPENDIX B-SUMMARY OF BOND DOCUMENTS-THE LEASE AGREEMENT-Lease Payments-Abatement of Lease Payments." Abatement of the Lease Payments is not an event of default under the Indenture, the Lease Agreement or the Bonds (including the 2019 Bonds) and will not permit the Trustee to take any action or avail itself of any remedy against the City. The City will not have an obligation to make Lease Payments other than fromthe proceeds of any rental interruption insurance, amounts on deposit in the Reserve Accounts and amounts on deposit in the Special Reserve Fund until such substantial interference with the use and possession of the Leased Premises, or a portion thereof, has been remedied. See also "-Absence of Earthquake Insurance. "
53 Natural Disasters
The City, like all California commumt1es, may be subject to unpredictable seismic act1v1ty, wildfires, or flooding in the wake of fires or in the event of unseasonable rainfall. There is significant potential for destructive ground-shaking during the occurrence of a major seismic event. In addition, land susceptible to seismic activity may be subject to liquefaction during such an event. In the event of seismic activity or other natural disasters that result in substantial damage, it is possible that many, if not all, of the Leased Premises could be damaged. In the event of such damage City's obligation to make Lease Payments could be abated. See "-Abatement of Lease Payments" above. Additionally, any damage to the hotels in the City, the Disneyland Resort and/or the Anaheim Convention Center could have a significant impact on the number of visitors to the City and on the level of Lease Payment Measurement Revenues.
Absence of Earthquake Insurance
The Lease Agreement does not require earthquake insurance to be maintained on the Leased Premises unless it is commercially available under reasonable terms. The City does not currently maintain any earthquake insurance. Disney currently maintains earthquake insurance on the Public Parking Facilities, but the Tenant currently does not maintain earthquake insurance on the Stadium.
If the Leased Premises or any part thereof is damaged or destroyed by an earthquake resulting in loss or substantial interference in the use and occupancy thereof, Lease Payments will be subject to abatement. In such event, the City may not have sufficient casualty insurance proceeds to repair or replace the damaged or destroyed portion of the Leased Premises or for the redemption of any of the 2019 Bonds.
Hazardous Substances
The discovery of hazardous substances on the Leased Premises could impact the City's ability to make Lease Payments. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA") is the most well-known and widely applicable of these laws, but Californialaws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition on the property whether or not the owner or operator has anything to do with creating or handling the hazardous substance.
The effect, therefore, should the Leased Premises be affected by a hazardous substance, would be to reduce the marketability and value of the Leased Premises by the costs of, and any liability incurred by, remedying the condition. Such reduction in the value of the Leased Premises could adversely impact the fair rental value of the Leased Premises and potentially result in abatement of the Leased Payments.
Default Under Master Parking Ground Leases
In the event Disney defaults on its obligations under the Master Parking Ground Leases, the Authority would have the option to assume Disney's rights and obligations under the Master Parking Ground Leases. If the Authority should decide not to assume Disney's rights under the Master Parking Ground Leases, or would not have sufficient funds to assume Disney's rental obligation, then the owners of the Public Parking Property could re-enter and relet the Public Parking Property and an abatement of Lease Payments could occur. See "- Abatement of Lease Payments" above. The Authority's sole source of funds for making any payments under the Master Parking Ground Leases is the Revenues.
54 Static Mechanism To Calculate Lease Payment Measurement Revenues
The method by which Lease Payment Measurement Revenues are calculated is a fixed formula. Therefore, if the level of projected Lease Payment Measurement Revenues are not met, or if the State abolishes or reduces the one percent basic real property tax levy, or if voters rescind the TOT, the amount of the Lease Payments the City is obligated to make during any fiscal year may be less than debt service due on the 2019 Bonds in such fiscal year.
Economic and Tourism Factors
The receipt of Lease Payment Measurement Revenues are directly affected by the number of visitors to the City, specifically to the Disneyland Resort and the Anaheim Convention Center. Numerous factors, many of which are beyond the control of the City, could have an adverse impact on the number of visitors to the City, including, but not limited to, the national economy and levels of tourism, terrorist attacks, natural disasters, competition from other vacation and convention center destinations, sales taxes, energy costs and airline fares.
Property Subject to Sales Tax
The State may change the types of products upon which sales tax is collected which may result in a decrease of the 1% Sales Tax Revenues which are a part of the calculation of Lease Payment Measurement Revenues. See "LEASE PAYMENT MEASUREMENT REVENUES-Disney Incremental Revenues."
Bankruptcy and Foreclosure; Other Federal Issues
The ability and willingness of an owner or operator of property (especially Disney) to collect and remit the TOT, sales taxes or property taxes may be adversely affected by the filing of a bankruptcy proceeding by the owner. The ability to collect delinquent TOT, sales taxes or property taxes using foreclosureand sale fornon-payment of taxes may be forestalledor delayed by bankruptcy, reorganization, insolvency or other similar proceedings of the owner of the taxed property. The federal bankruptcy laws provide for an automatic stay of foreclosure and sale proceedings, thereby delaying such proceedings, perhaps foran extended period. Delays in the exercise of remedies could result in TOT, sales tax or property tax collections being reduced and therefore directly reducing the amount of Lease Payment Measurement Revenues received during a fiscal year, which may be less than the principal, accreted value and interest due on the Bonds in a fiscal year.
Forward-Looking Statements
This Official Statement contains statements relating to future results that are "forward looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words "estimate," "anticipate," "forecast,""project," "intend," "propose," "plan," "expect," and similar expressions identify forward looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements. See "INTRODUCTION-Forward-Looking Statements. "
Secondary Market forBonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices
55 of issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially differentfrom the original purchase price.
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS
Article XIIIA of the California Constitution
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 water services 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 feessuch as capacity feeswill not be special taxes if they approximate the reasonable cost of constructing the water or wastewater capital improvements contemplated by the local agency imposing the fee.
Article XIIIB of the California Constitution
Article XIIIB of the California Constitution limits the annual appropriations of proceeds of taxes by State and local governmententities to the amount of appropriations of the entity forthe prior fiscalyear, as adjusted for changes in the cost of living, changes in population, and changes in services rendered by the entity. User feesand charges are considered proceeds of taxes only to the extent they exceed the reasonable costs incurred by a governmentalentity in supplying the goods and services forwhich such fees and charges are imposed.
The City is of the opinion that its sewer feesand charges do not exceed the costs it reasonably bears in providing such services and thereforeare not subject to the limits of Article XIIIB.
Articles XIIIC of the California Constitution
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 CaliforniaConstitution and contained a number of interrelated provisions affecting the ability
56 of local governments, including the City, to levy and collect both existing and future taxes, assessments, fees, and charges.
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 flexibilityof 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.
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 thereforebeyond 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 Wa ter Agency v. Virjil (Kelley) (the "Bighorn Decision") that charges for ongoing water delivery are property-related feesand 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 forwater 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 that 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 and wastewater 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. Additionally, SB 919 provides that the initiative power provided for in Proposition 218 "shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after November 5, 1996 (the date of adoption of Proposition 218), assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights" protected by the United States Constitution. No assurance can be given that the voters of the City will not, in the future, approve initiatives that repeal, reduce or prohibit the future imposition or increase of assessments, fees or charges.
57 Articles XIIID of the California Constitution
Article XIIID definesa "fee" or "charge" as any levy other than an ad valoremtax, 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 forongoing water delivery are feesand charges within the meaning of Article XIIID. Article XIIID requires that any agency imposing or increasing any property-related feeor 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 identifiedparcels filewritten protests against it. As a result, the local government'sability to increase such feeor charge may be limited by a majority protest.
In addition, Article XIIID also includes a number of limitations applicable to existing, new, or increased feesand charges, including provisions to the effectthat (i) revenues derived fromthe feeor 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 fora service unless that service is actually used by, or immediately available to, the owner of the property in question. Property-related feesor 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 classifiedas assessments. Procedural requirements forassessments 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 obligationof the affected parcel.
Proposition 26
Proposition 26, a State ballot initiative aimed at restricting regulatory fees and charges, was approved by the Californiavoters 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; feesfor the use oflocal governmental property; finesand 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 forauthoriz ation. Proposition 26 applies to charges imposed or increased by local governments after the date of its approval.
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
58 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 System Net 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 System Net Revenues.
TAX MATTERS
Series 2019 A 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 Series 2019 A Bonds is excluded from gross income forfederal 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 Series 2019 A Bonds is not a specific preference item for purposes of the federal alternative minimum tax. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX E hereto.
To the extent the issue price of any maturity of the Series 2019 A Bonds is less than the amount to be paid at maturity of such Series 2019 A Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2019 A Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Beneficial Ownerthere of, is treated as interest on the Series 2019 A Bonds which is excluded fromgross income forfederal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Series 2019 A Bonds is the firstprice at which a substantial amount of such maturity of the Series 2019 A 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 Series 2019 A Bonds accrues daily over the term to maturity of such Series 2019 A 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 Series 2019 A Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2019 A Bonds. Beneficial Owners of the Series 2019 A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2019 A Bonds with original issue discount, including the treatment of Beneficial Ownerswho do not purchase such Series 2019 A Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2019 A Bonds is sold to the public.
Series 2019 A 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 forthe 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 BeneficialOwner'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.
59 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 Series 2019 A Bonds. The Authority has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2019 A 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 Series 2019 A Bonds being included in gross income for federal income tax purposes, possibly fromthe date of original issuance of the Series 2019 A 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 informany 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 Series 2019 A Bonds may adversely affect the value of, or the tax status of interest on, the Series 2019 A 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 Series 2019 A Bonds is excluded from gross income for federalincome tax purposes and is exempt fromState of Californiapersonal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Series 2019 A 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 Series 2019 A Bonds to be subject, directly or indirectly, in whole or in part, to federalincome taxation or to be subject to or exempted fromstate income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarificationof the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series 2019 A Bonds. Prospective purchasers of the Series 2019 A 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 Series 2019 A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (the "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 about the effect of futurechanges in the Code, the applicable regulations, the interpretation thereof or the enforcementthereof by the IRS. The Authority has covenanted, however, to comply with the requirements of the Code.
Bond Counsel's engagement with respect to the Series 2019 A Bonds ends with the issuance of the Series 2019 A Bonds, and unless separately engaged, Bond Counsel is not obligated to defendthe Authority or the Beneficial Owners regarding the tax-exempt status of the Series 2019 A Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Authority and its 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 ofIRS positions with which the Authority legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2019 A 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 Series 2019 A Bonds, and may cause the Authority or the Beneficial Owners to incur significant expense.
60 Series 2019 B Bonds
Interest on the Series 2019 B Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Code. Bond Counsel is of the opinion that interest on the Series 2019 B Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion regarding any other tax consequences relating to the ownership or disposition of, or the amount, accrual, or receipt of interest on, the Series 2019 B Bonds. The proposed formof opinion of Bond Counsel is contained in APPENDIX E hereto.
The following discussion summarizes certain U. S. federal income tax considerations generally applicable to U. S. Holders (as defined below) of the Series 2019 B Bonds that acquire their Series 2019 B Bonds in the initial offering. The discussion below is based upon laws, regulations, rulings, and decisions in effectand 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 fromthe IRS with respect to any of the U. S. federalincome tax considerations discussed below, and no assurance can be given that the IRS will not take contrary positions. Further, the followingdiscussion 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 Series 2019 B 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) alternativeminimum tax consequences, (ii) the net investment income tax imposed under Section 1411 of the Code, or (iii) the indirect effectson persons who hold equity interests in a holder. This summary also does not consider the taxation of the Series 2019 B Bonds under state, local or non-U.S. tax laws. In addition, this summary generally is limited to U.S. tax considerations applicable to investors that acquire their Series 2019 B Bonds pursuant to this offering for the issue price that is applicable to such Series 2019 B Bonds (i. e. , the price at which a substantial amount of the Series 2019 B Bonds are sold to the public) and who will hold their Series 2019 B 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 Series 2019 B Bonds other than investors that are U. S. Holders.
As used herein, "U. S. Holder" means a beneficial owner of a Series 2019 B Bond that for U. S. federalincome 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. federalincome 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 Series 2019 B 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 Series 2019 B Bonds, and partners in such partnerships, should consult their own tax advisors regarding the tax consequences of an investment in the Series 2019 B Bonds (including their status as U. S. Holders).
Notwithstanding the rules described below, it should be noted that certain taxpayers that are required to prepare certified financial statements or file financial statements with certain regulatory or governmental agencies may be required to recognize income, gain and loss with respect to the Series 2019 B Bonds at the time that such income, gain or loss is recognized on such financial statements instead of under the rules described below (in the case of original issue discount, such requirements are only effective for tax years beginning after December 31, 2018).
61 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 Series 2019 B Bonds in light of their particular circumstances.
U.S. Ho lders
Interest. Interest on the Series 2019 B 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 Series 2019 B Bonds is less than the amount to be paid at maturity of such Series 2019 B Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2019 B Bonds) by more than a de minimis amount, the difference may constitute original issue discount ("OID"). U. S. Holders of Series 2019 B 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.
Series 2019 B 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 Series 2019 B 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 Series 2019 B Bond.
Sale or Other Taxable Disposition of the Series 2019 B Bonds. Unless a nonrecognition provision of the Code applies, the sale, exchange, redemption, retirement (including pursuant to an offerby the Authority or other disposition of a Series 2019 B Bond will be a taxable event for U. S. federal income tax purposes. In such event, in general, a U. S. Holder of a Series 2019 B Bond will recognize gain or loss equal to the differencebetween (i) the amount of cash plus the fairmarket value of property received ( except to the extent attributable to accrued but unpaid interest on the Series 2019 B 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 Series 2019 B Bond (generally, the purchase price paid by the U. S. Holder forthe Series 2019 B Bond, decreased by any amortized premium). Any such gain or loss generally will be capital gain or loss. In the case of a non-corporate U. S. Holder of the Series 2019 B 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 ordinary income if such U. S. holder's holding period for the Series 2019 B Bonds exceeds one year. The deductibility of capital losses is subject to limitations.
Defeasanceof the Series 2019 B Bonds. If the Issuer defeasesany Series 2019 B Bond, the Series 2019 B Bond may be deemed to be retired and "reissued" for U. S. federal income tax purposes as a result of the defeasance. In that event, in general, a holder will recognize taxable gain or loss equal to the difference between (i) the amount realized fromthe deemed sale, exchange or retirement (less any accrued qualified stated interest which will be taxable as such) and (ii) the holder's adjusted tax basis in the Series 2019 B Bond.
Information Reporting and Backup Withholding. Payments on the Series 2019 B 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 Series 2019 B Bonds may be subject to backup withholding at the current rate of 24% with respect to "reportable payments," which include interest paid on the Series 2019 B Bonds and the gross
62 proceeds of a sale, exchange, redemption, retirement or other disposition of the Series 2019 B Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U. S. taxpayer identificationnumber ("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)(l)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against the U. S. Holder's federalincome tax liability, if any, provided that the required informationis timely furnishedto the IRS. Certain U. S. holders (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. A holder's failureto comply with the backup withholding rules may result in the imposition of penalties by the IRS.
Foreign Account Tax Compliance Act ("FAT CA 'J
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 informationabout 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 furnishesiden tifying information regarding each substantial U. S. owner. Under current guidance, failure to comply with the additional certification, informationreporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments of interest on the Bonds. In general, withholding under FATCA currently applies to payments of U.S. source interest (including OID) and, under current guidance, will apply to certain "passthru" payments no earlier than the date that is two years after publication of final U. S. Treasury Regulations defining the term "foreign passthru payments. " Prospective investors should consult their own tax advisors regarding FATCA and its effecton 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 Series 2019 B 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 Series 2019 B Bonds, including the application and effect of state, local, non-U. S. , and other tax laws.
CERTAIN LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX E. Bond Counsel takes 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 and the City. Certain legal matters will be passed upon for the Authority and for the City by the City Attorney. Certain legal matters will be passed upon for the Underwriter by Nixon Peabody LLP, Los Angeles, California. Except for the City Attorney, such counsel will receive compensation contingent upon the sale and delivery of the Bonds.
63 CONTINUING DISCLOSURE AGREEMENT
Pursuant to a Continuing Disclosure Agreement, the City will covenant for the benefit of Owners and Beneficial Owners of the Bonds to provide certain financialinformation and operating data relating to the City and the System by not later than six months afterthe end of each of the City's fiscalyear (presently, by each December 31), commencing December 31, 2019, for the report for the fiscalyear ending June 30, 2019 (the "Annual Report") and to provide notices of the occurrence of certain enumerated events. The Annual Report and notices of material events will be filed by U. S. Bank National Association, the Dissemination Agent, on behalf of the City with the Municipal Securities Rulemaking Board through the EMMA System. These covenants have been made to assist the Underwriter in complying with Rule 15c2-12 of the Securities and Exchange Commission (17 C. F. R. § 240.15c2-12) ("Rule 15c2-12"). For the specific nature of the information to be contained in the Annual Report and the notices of enumerated events to be made by the City, see "APPENDIX D-FORM OF CONTINUING DISCLOSURE AGREEMENT."
The Authority has determined that no financial or operating data concerning the Authority is material to an evaluation of the offering of the 2019 Bonds or to any decision to purchase, hold or sell the 2019 Bonds, and the Authority will not provide any such information. The City has undertaken all responsibilities for any continuing disclosure to Owners as described above, and the Authority shall have no liability to the Owners of the 2019 Bonds or any other person with respect to Rule 15c2-12.
ABSENCE OF LITIGATION
At the time of delivery and payment for the 2019 Bonds, the City Attorney, who also serves as Counsel to the Authority, will certify that there is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending or, to the knowledge of the City Attorney, threatened, questioning (a) the existence of the City or the Authority, or the title of the officers of the City or the Authority to their respective offices; (b) the validity of the 2019 Bonds or the power and authority of the Authority to issue the 2019 Bonds; or (c) the validity of the Indenture, the Lease Agreement, or the Authority Resolution.
RATINGS
Moody's Investors Service, S&P and Fitch Ratings Inc. have assigned the 2019 Bonds their respective underlying ratings of "Al," "A," and "AA-," respectively. Such ratings reflects only the views of such organization and is not a recommendation to buy, sell, or hold the 2019 Bonds. Explanations of the significance of the ratings may be obtained only from the organization assigning the rating. There is no assurance that the ratings will remain in effect for any given period of time or that the ratings will not be revised, either downward, or upward, or withdrawn entirely, by the rating agency, if, in its judgment, circumstances so warrant. Other than as required by the Continuing Disclosure Agreement, the Authority and City undertake no responsibility to bring to the attention of the Owners of the Bonds any downward revision or withdrawal of the ratings. Any downward revision or withdrawal could have an adverse effect on the market price of the 2019 Bonds. Maintenance of the ratings will require periodic review of current financialdata and other updating informationby the rating agency.
In addition, S&P has assigned its rating of "AA" to the Series 2019 A Insured Bonds with the understanding that, upon delivery of the Series 2019 A Insured Bonds, the Series 2019 A Bond Insurance Policy will be delivered by BAM. See "BOND INSURANCE FOR SERIES 2019 A INSURED BONDS." Such rating is expected to be assigned solely as a result ofthe issuance of the Series 2019 A Bond Insurance Policy and will reflectonly the rating agency's view of the claims-paying ability and financial strength of BAM. None of the City nor the Authority nor the Underwriter have made any independent investigation of
64 the claims-paying ability of BAM and no representation is made that any insured rating of the Series 2019 A Insured Bonds based upon the purchase of the Series 2019 A Bond Insurance Policy will remain higher than the rating agency's underlying rating of the Series 2019 A Insured Bonds described above, which did not take bond insurance into account. The existence of the Series 2019 A Bond Insurance Policy will not, of itself, negatively affect such underlying ratings. Thus, when making an investment decision, potential investors should carefullyconsider the ability of the City to pay principal and interest on the Series 2019 A Insured Bonds and the claims paying ability of BAM, particularly over the life of the investment. Any downward revision or withdrawal of any rating of BAM may have an adverse effecton the market price or marketability of the Series 2019 A Insured Bonds.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Robert Thomas CPA, LLC, Certified Public Accountants will verifythe mathematical accuracy as of the date of the closing of the 2019 Bonds of the computations to determine that the amounts received from the proceeds of the 2019 Bonds shall be sufficient to pay, when due, the principal amount of the Refunded Bonds, plus the accrued but unpaid interest on the Refunded Bonds to the Redemption Date.
The report of Robert Thomas CPA, LLC, Certified Public Accountants 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 informationcoming to their attention, subsequent to the date of their report.
MUNICIPAL ADVISOR
The City has retained PFM Financial Advisors LLC, Los Angeles, Californiaas Municipal Advisor in connection with the 2019 Bonds. The Municipal Advisor is not obligated to undertake and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. PFM Financial Advisors LLC is a full service municipal advisor and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.
UNDERWRITING
The 2019 Bonds are being purchased by Goldman Sachs & Co. LLC (the "Underwriter"). The Underwriter has agreed to purchase the 2019 Bonds, subject to certain conditions, at a price equal to $210,317,739.22 (representing the principal amount of the 2019 Bonds, less Underwriter's discount of $526,663.38 and plus original issue premium of $35,279,402. 60). The Underwriter is committed to purchase all of the 2019 Bonds if any are purchased.
The 2019 Bonds may be offered and sold to certain dealers at prices lower than the public offering prices, and such public offering prices may be changed, from time to time, by the Underwriter.
The Underwriter is a full service financial institution engaged in various activities, which may include sales and trading, commercial and investment banking, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. The Underwriter and its affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses.
In the ordinary course of its various business activities, the Underwriter and its affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade
65 securities, derivatives, loans, commodities, currencies, credit default swaps and other financialinstruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
AUDITED FINANCIAL STATEMENTS
The City's audited financial statements include information regarding certain funds of the City, including its General Fund, which are not pledged to make Lease Payments or to otherwise pay debt service on the 2019 Bonds. Additionally, the City has not requested nor did the City obtain permission fromKPMG LLP (the "Auditor") to include the audited financial statements and the report thereon as an appendix to this Official Statement. Accordingly, the Auditor has not performed anypost-audit review of the financial condition or operations of the City. In addition, the Auditor has not reviewed this Official Statement. See "APPENDIX A - City of Anaheim Audited Financial Statements."
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66 MISCELLANEOUS
References are made herein to certain documents and statutes which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and statutes for full and complete statements of the contents thereof. Copies of the Indenture, the Lease Agreement and other documents referred to herein may be obtained from the Trustee or fromthe City.
Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority and the purchasers or owners of any of the 2019 Bonds.
The execution and delivery of this Official Statement has been duly authorized by the Authority.
ANAHEIM PUBLIC FINANCING AUTHORITY
By: Isl Harry S. Sidhu Harry S. Sidhu, Chairman
CITY OF ANAHEIM
By: ����ls_l _D�eb_o_r_ah�A_._M__or_e_n_o��� Deborah A. Moreno, Finance Director
67 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A
CITY OF ANAHEIM AUDITED FINANCIAL STATEMENTS
The Financial Statements include information regarding certain funds of the City, including its General Fund,which are not pledged to make Lease Payments or to otherwise pay debt service on the 2019 Bonds. Additionally, the City has not requested nor did the City obtain permission from KPMG LLP (t he "Auditor") to include the auditedfi nancial statements and the report thereon as an appendix to this Official Statement. Accordingly, the Auditor has not performed any post-audit review of the financial condition or operations of the City. In addition, the Auditor has not reviewed this OfficialStatement.
A-1 [THIS PAGE INTENTIONALLY LEFT BLANK]
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CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2018
INTRODUCTORY SECTION Page Letter of Transmittal 1 GFOA Certificate of Achievement for Excellence in Financial Reporting 9 Organization Chart 11 Administrative Personnel 12
FINANCIAL SECTION Independent Auditor's Report 13 Management's Discussion and Analysis 15 Basic Financial Statements Govern ment-wide Statements Statement of Net Position 29 Statement of Activities 31 Fund Financial Statements Balance Sheet - Governmental Funds 33 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 34 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 35 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 36 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Budgetary Basis Actual - General Fund 37 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Budgetary Basis Actual - Housing Authority 38 Statement of Net Position - Proprietary Funds 39 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 41 Statement of Cash Flows - Proprietary Funds 42 Statement of Fiduciary Net Position (Deficit) - Fiduciary Funds 44 Statement of Changes in Fiduciary Net Position (Deficit) - Fiduciary Funds 45 Notes to Financial Statements 47 Required Supplementary Information Schedule of Changes in the Net Pension Liability and Related Ratios 93 Schedule of Pension Plan Contributions 95 Schedule of Changes in the Net Other Postemployment Benefits (OPEB) Liability and Related Ratios 96 Schedule of Other Postemployment Benefits (OPEB) Plan Contributions 97 Combining Individual Fund Statements and Schedules Government Funds Combining Balance Sheet - Nonmajor Governmental Funds by Fund Type 99 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds by Fund Type 100 Combining Balance Sheet - Nonmajor Special Revenue Funds 101 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) - Nonmajor Special Revenue Funds 102 Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) - Budget and Actual -All Nonmajor Special Revenue Funds 103 Combining Balance Sheet - Nonmajor Debt Service Funds 107 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 108 CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents June 30, 2018 (continued)
Page
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Debt Service Funds 109 Combining Balance Sheet - Nonmajor Capital Projects Funds 110 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) - Nonmajor Capital Projects Funds 111 Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) - Budget and Budgetary Basis Actual -All Capital Projects Funds 112 Internal Service Funds Combining Statement of Net Position - Internal Service Funds 117 Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service Funds 118 Combining Statement of Cash Flows - Internal Service Funds 119 Fiduciary Funds Statement of Changes in Fiduciary Assets and Liabilities - Agency Fund - Mello-Roos 121
STATISTICAL INFORMATION (Unaudited) Net Position by Component - Last Ten Fiscal Years 124 Changes in Net Position - Last Ten Fiscal Years 125 Governmental Activities Tax Revenues By Source - Last Te n Fiscal Years 127 Fund Balances of Governmental Funds - Last Ten Fiscal Years 128 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Ye ars 129 General Government Tax Revenues By Source - Last Te n Fiscal Years 130 Assessed Va lue and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 131 Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years 132 Principal Property Tax Payers - Current Year and Nine Years Ago 133 Property Tax Levies and Collections - Last Ten Fiscal Ye ars 134 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 135 Ratios of Net General Bonded Debt Outstanding - Last Ten Fiscal Years 136 Direct and Overlapping Governmental Activities Debt -As of June 30, 2018 137 Legal Debt Margin - Last Te n Fiscal Years 139 Pledged-Revenue Coverage - Last Te n Fiscal Years 140 Demographic and Economic Statistics - Last Te n Fiscal Years 142 Principal Employers - Current Ye ar and Nine Ye ars Ago 143 Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years 144 Operating Indicators by Function - Last Ten Fiscal Years 145 Capital Assets Statistics by Function - Last Ten Fiscal Years 147 OTHER INFORMATION Summary of Pension Obligation Funding Progress 149 Summary of Other Postemployment Benefits (OPEB) Funding Progress 150 City of Anaheim Map 151 Center, the Anaheim Regional Transportation lntermodal Center (ARTIC), and two City of Anaheim, California major league professional sports teams-the Angels Major League Baseball team, which utilizes Angel Stadium of Anaheim, and the Anaheim Ducks National Hockey Finance Department League team, which utilizes the Honda Center.
Anaheim is a significant contributor to the diverse Orange County economy, which is home to more than 8,500 manufacturing plants. Product manufacturers include notable manufacturing businesses focused on defense and aerospace, biomedical, electronics, machinery, and computer products. The City has over 24,000 active business licenses, of which over 17,500 are businesses operating within the City's boundaries.
December 19, 2018 The economy continues to grow moderately and while there is little reason to believe that a recession is on the immediate horizon, we are cautious of the possibility in the coming years. Job growth nationally and locally has had a significant impact on the To the Honorable Mayor and City Council economy and should continue to bolster the economic outlook over the next few City of Anaheim years. Anaheim, California The unemployment rate in Anaheim for June 2018 was 3.5%, while the national In accordance with the Charter of the City of Anaheim (City), please accept average was at 4.0% and the state average at 4.5%. submission of the Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2018. Responsibility for the accuracy of the data, The City will continue to build on the successes and achievements realized in the completeness, and fairness of the presentation, including all disclosures, rests with current year, and remain committed to efforts to grow service levels. The City's "Big the City. We believe the data included is accurate in all material aspects, and is Three" revenue sources of transient occupancy tax, property tax, and sales and use tax, have all shown steady growth this year. As the City moves through fiscal year presented in a manner designed to fairly set forth the financial position and 2018/1 9, we are optimistic about continued growth but will remain attentive to the operational achievements of the City, as measured by the financial activity of its prevailing economic climate and mindful of managing enhanced services within the various funds. In addition, all disclosures necessary to enable the reader to gain limits of the City's General Fund. maximum understanding of the City's financial activities have been included. MAJOR INITIATIVES The City Charter requires an annual audit of the City's financial statements by an independent Certified Public Accountant. Accord ingly, this year's audit was With direction from the Mayor and City Council, City Ad ministration identifies the completed by KPMG LLP. In addition to meeting the requirements set forth in the priorities that shapes the path for Anaheim's future. City initiatives are reevaluated City Charter, the audit was also designed to meet the requirements of the Single regularly, and new items are frequently added to ensure that City efforts are Audit Act Amendments of 1996 and the Uniform Guidance. The auditors' report on consistent with the priorities of our policy body and the community. The City strives the basic financial statements is included in the financial section of this report. The each year to better fulfill its mission of delivering outstanding municipal services that auditors' reports related specifically to the single audit are presented as a separate are responsive to our entire community by continuing its tradition of fostering document. innovation, ingenuity, an opportunity In Its operations. This helps achieve the primary goals of focusing on community needs, building neighborhood connections, and Management's discussion and analysis (MD&A) immediately follows the governing for results that strengthen communities. The City's dedication to independent auditors' report and provides a narrative introduction, overview, and improvement and modernization creates an environment where residents and analysis of the City's basic financial statements. MD&A complements this letter of businesses are free to choose how best to enjoy all that Anaheim has to offer. transmittal and should be read in conjunction with it. ENSURING PUBLIC SAFETY ECONOMIC CONDITION AND OUTLOOK Public Safety re mains a top priority for the City of Anaheim with the commitment of Anaheim is located in northwestern Orange County, approximately 28 miles our Anaheim Police Department (APD) and Anaheim Fire & Rescue. Both APD and southeast of downtown Los Angeles and 90 miles north of San Diego. The City lies Anaheim Fire & Rescue continue to strive for excellence by constantly evaluating on a coastal plain, which is bordered by the Pacific Ocean to the west and the Santa their practices and evolving in order to meet the needs and ensure the safety of our Ana Mountains to the east. The City is the oldest and most populous city in Orange residents, visitors, businesses and schools. County. Anaheim is home to the Disneyland Resort, the Anaheim Convention CITY OF ANAHEIM The Anaheim Police Department is committed to delivering prompt, high-quality neighborhoods. Toward this end, the Police Department and Anaheim Fire & emergency response, crime prevention and investigation, and community Rescue developed an innovative class at a junior high school with curriculum that engagement. The City of Anaheim currently ranks nationally as the 3rd safest City includes not only public safety material, but the importance of hard work, ethics and for violent crime and the 11th in lowest property crime for cities with more than decision-making skills. Building on the success of the Public Safety Pathway at 300,000 in population. The City remains focused on crime prevention and criminal Sycamore Junior High School, the City is working to connect this program to the investigation and as a result, the City of Anaheim has seen a 21% decrease in high school level. It is a City priority to develop programs that encourage our youth violent crime over a 10 year period, far eclipsing the 13% decline in Orange County. to explore careers in public safety and APD is committed to providing a new and With the support of the City Council, APD has been working diligently to fill innovative program through our schools to give students a roadmap to college and vacancies to support officers in patrol and has hired more than 50 officers over 18 public safety careers after high school. months. The department is also committed to ensuring the efficient use of these resources and in early 2018, the Annual Planning Review (APR) meeting was As the City continues to address those who are homeless, our APD's Homeless conducted to discuss department goals, priorities and strategies. The APR plan Outreach Te am (HOT) remains a vital role in addressing the complexity of this issue. outlines the department's commitment to getting back to basics, including reducing HOT continues to work collaboratively with other agencies and community based response times, preparing officers for leadership roles and ongoing training. Hiring organizations in a multi-pronged approach to mitigate the impacts of homelessness officers further supports the organization's plan to absorb anticipated vacancies, and promote solutions to finding long-term, supportive housing for the homeless allowing more training and knowledge to be shared before retirements occur. A population in Anaheim. priority of APD is to train and develop officers so they are well poised to lead the organization in the coming years, guaranteeing our community continues to receive Along with addressing the needs of our homeless residents in the City, Drug Free the highest level of public safety and police service. Anaheim continues to provide a space for those who are struggling with substance abuse. APD launched this effort in 2017 as an avenue for those who seek the APD's core service commitment of providing timely response and excellent assistance and an alternative to arrest and prosecution for drug offenses. Drug Free customer service continues to be a priority. During fiscal year 201 7 /1 8, APD Anaheim has proven successful, with 316 individuals who have sought care through streamlined and changed the manner in which calls were dispatched and assigned this innovative program. additional officers to patrol. Since committing to this purposeful, two-pronged effort, APD has seen a 15% reduction in Priority 1 response times, equating to an average Finally, as the lead agency of the innovative Orange County Human Trafficking Task reduction of 1 minute, 14 seconds. Priority 1 calls are emergency calls with a high Force (OCHTFF), APD played a pivotal role in addressing these horrific crimes in expectation of rapid police response to preserve and protect life, and with a 201 7. 37 adult victims were rescued along with 19 juveniles, with victim services and reasonable likelihood of suspect apprehension. For the next fiscal year, APD plans resources brought to bear to provide the tools and support needed for these to review patrol districts and assignments more closely to ensure the daily survivors to return to healthy, safe and productive lives. With resources focused on deployment of officers aligns with the calls for service levels. This examination is the identification and apprehension of traffickers, dozens of dangerous criminals part of the department's ongoing efforts to enhance the quality of service and the were removed from the streets, including 47 for human trafficking and pimping. All time it takes for an officer to respond to priority calls. cases were successfully filed by the District Attorney, a critical and equally committed partner in this effort. In direct response to community feedback, the Anaheim Police Department worked with the community to add cameras at high traffic parks to allow APD to observe In unison with the efforts made by APD, Anaheim Fire & Rescue continues to play footage, aid in investigative follow-up and to assist with real-time illegal activity when an integral role in ensuring the safety of our city and residents. a call is received. The cameras are currently installed at Maxwell Park, Tw ila Reid Park, and Brookhurst Park and as the program evolves, the City is exploring Anaheim Fire & Rescue works to prevent or reduce the effects of an emergency additional parks to expand and leverage this technology. through proactive steps in various programs at community events, station tours, and working with school partners. The Home Safety Visit Program delivers fire safety Working with our community continues to be a core value for the City and APD education directly to Anaheim residents, particularly those households most recognizes that regular and meaningful engagement with our residents builds vulnerable to fire and fire injuries by installing new smoke alarms in households free strong, lasting and mutually beneficial relationships. In fiscal year 2018/19, APD will of charge. During fiscal year 2017/1 8, Fire & Rescue visited 173 homes and begin working with a new and enhanced Police Review Board which was expanded installed over 600 smoke alarms in rooms where there were not previously any by the City Manager. The new board will receive briefings on critical incidents, smoke alarms or the units previously installed were not working correctly. access to important information and engage with APD and the districts the members serve to provide transparency and foster relationship building. In addition, in fiscal Preventative measures that address the high risk for fire in certain areas remains a year 2018/19, APD plans to review the Chief's Neighborhood Advisory Committee priority for Anaheim Fire & Rescue. Through the clearing of brush and vegetation in (CNAC) to determine methods to enhance the department's relationship with key high risk areas, these efforts help prevent wildfires by reducing fire hazards in open neighborhood leaders who are instrumental in crime prevention strategies and spaces. In September and October of 2017, the City experienced the Canyon Fire quality of life improvement. Furthermore, working with our youth is key to ensure and Canyon Fire 2, which each brought over 1,500 fire personnel from across future leaders in the department and our community. Many in our City have California. Since then, Anaheim Fire & Rescue has been working to take steps to expressed interest that more of our public safety professionals come from their local CITY OF ANAHEIM improve safety in our community, including making changes to the types of trees and INVESTING IN OUR NEIGHBORHOODS plants allowed in certain high-risk areas in an effort to reduce a wildfire threat and incorporate plants that are more fire resistant. Maintaining and improving public spaces that benefit residents' health and overall well-being remained a priority for the City. The City continues to address the unique Anaheim Fire & Rescue continues to integrate the Community Care Response Unit needs of its residents by proactively engaging with the community. One way the City (CCRU) into the normal emergency response in the City. The CCRU consists of an has done this is through the Planning for Parks initiative. The goal of the initiative ambulance staffed with a certified nurse practitioner and an Anaheim Fire Captain/ was to hear from residents about their needs and desires for park facilities in the Paramedic. This unit is able to respond to low-level 911 medical calls, where the City. In order to accomplish this, the City conducted outreach at various City events Nurse Practitioner can address the medical needs onsite. Onsite service allows for as well as on the City's webpage and through social media, in order to encourage patients to be cared for and treated in their own home. This innovative program residents to share their opinions on what they would like to see in their existing and allows for fewer trips to the hospital and helps to free up Anaheim firefighters to future parks. Nearly 7,000 residents participated in the survey to share what they respond to high-level emergencies in the City. This past year an agreement was would like to see in City parks. The City is now able to use the information gathered reached with APD to allow the CCRU to respond and treat those incarcerated in the from residents to present key findings and recommendations to the City Council and City jail. This has helped to reduce the number of inmates having to be transferred to to develop an implementation plan to enhance City parks. a local hospital for treatment, which often removes an officer from patrol or other duties. The CCRU program continues to receive national attention and has set a The City's long awaited renovation of the Ponderosa Park Family Resource Center new standard for best practices in Mobile Integrated Healthcare. was completed in late 2017. This renovation has brought more community space and opportunities to Anaheim re sidents. The 18,400 square foot faci lity includes a In 2016, the department began working on the relocation and replacement of Fire gym with a full basketball court, dance and exercise ro om, demonstration kitchen, Station 5 from Kraemer Boulevard to La Palma Av enue and Sunkist Street. The new classroom and meeting space, and rooms for teens and younger children to learn location will improve response times and will reduce the demand on Fire Station 1, and play. Programs and services offered are free and include English as a second located on Broadway in the downtown area. Fire Station 5 is anticipated to be open language courses, sewing classes, cake decorating classes, and more. By in the fall of 2018. supporting health, education and well-being, the Ponderosa Park Family Resource Center will enhance the overall health and happiness within our community. In 2014, Anaheim Fire & Rescue received official Agency Status accreditation from the Commission on Fire Accreditation International (CFAI). The accreditation In addition to this renovation, there have been many other efforts to improve various process allows for a comprehensive self-assessment and evaluation. This process City parks and recreational areas. In fiscal year 2017/18, Pioneer Park received the enables fire and emergency service organizations to examine their service levels installation of a lighted perimeter walking trail, restroom renovations, exercise and performance compared to industry best practices. If a department meets the equipment and new picnic amenities. Similarly, play areas in both the Ronald criterion in the model, CFAI then awards accreditation status in recognition of good Reagan Park and Sycamore Park were replaced with new playground equipment. performance. This coming fiscal year, Anaheim Fire & Rescue will once again Edison Park, Schweitzer Park, and Modjeska Park all received renovations to its complete the re-accreditation process and have an on-site review to renew its CFAI athletic field because of its heavy usage. Founders Park had a shade structure Accredited Agency status, proving its commitment to continuous improvement, installed between the Carriage and Pump Houses that increased the serving the community efficiently and providing a fair and safe work environment for programmability of this space. These renovations will allow the community to enjoy all fire personnel. many more years of these beloved parks and recreational areas. This coming fiscal year 2018/1 9, the City plans to work with Theodore Roosevelt Elementary and This past year Anaheim Fire & Rescue also completed a comprehensive neighboring residents to explore opportunities to align the needs of the school and comparative study of its Insurance Service Office (ISO) grading compared to 25 Boysen Park to better serve the residents, with the ultimate development of a other similar departments. This analysis provided important insight into how Boysen Park Master Plan that will reflect those findings and will guide the City's Anaheim Fire & Rescue compares to others, and identified numerous opportunities design and improvements at the park. Palm Lane Park will also undergo an on how it could improve its overall score and continue to improve services to the evaluation process in fiscal year 2018/1 9. During the installation of the Palm Lane community. This is important, as the City's Class 1 rating will be at risk if service Skate Park, residents approached the City requesting additional park improvements levels cannot keep up with the City's continual growth. A Class 1 rating provides to expand its usability and active spaces. Through a community input process, the lower insurance rates for most insurers, affording cost savings for our residents and City plans to evaluate the installation of an exercise trail and enhanced lighting in businesses. Palm Lane Park, with construction anticipated to begin in 2019.
3 CITY OF ANAHEIM With the help of KaBOOM!, who is no stranger to Anaheim, the 9th and 10th The design phase for the La Palma Park soccer fields is also expected to be KaBOOM! playgrounds were built at Willow Park in September 201 7 and at Pearson completed during fiscal year 2018/19, with construction expected to begin in fiscal Park in February 2018. Since 1996, KaBOOM! has been dedicated to the goal that year 2020/21. This project will involve a redesign and redevelopment of the existing all kids get the childhood they deserve through great, safe places to play. These facilities on the west side of La Palma Park, which will replace underused areas with playgrounds were kid-inspired as neighborhood kids were invited to put crayons to soccer fields and related support structures. Soccer fields rank among the highest paper and draw their dream playground, with the community then selecting the final priorities of Anaheim residents and these improvements will respond directly to design. In 2016, five parks were selected as being in need of new playgrounds those needs. based on the age and condition of the equipment. With three of the parks completed, Anaheim can look forward to an additional two Disney-sponsored OUTREACH TO OUR COMMUNITY KaBOOM! playgrounds at Barton Park in 2018 and Julianna Park in 2019. Recognizing the need to support all Anaheim residents, including some of the most On February 14, 2018, the City's Bookmobile celebrated 60 years of service, which vulnerable residents faced with homelessness, the City began an innovative project was celebrated at the Anna Drive Bookmobile stop. By early 2019, a new 38-foot with Love Anaheim called Better Way Anaheim. Love Anaheim is a non-profit with a bookmobile will replace the aging current Bookmobile and provide many more years service project platform that seeks to coordinate leaders, volunteers and funding to of resources and services to neighborhoods across the City. accomplish a wide range of need-based projects. Better Way Anaheim offers basic work experience to participants through community service projects, while working Skate parks allow residents of all ages to take part in a much beloved sport while to connect participants to services that can help end homelessness. The program being in a safe space. In early 2018, the City received a $190,000 donation from the aims to provide the dignity of a day's work and experience to those looking to Logan Wells Memorial Foundation to create a skate park next to the East Anaheim transition out of homelessness and into the workforce. Gymnasium. The Logan Wells Memorial Skate Park will provide approximately 5,000 square feet of area for residents to enjoy and honor Logan Wells' love and The Better Way Anaheim effort is only the first phase of a jobs component that the passion for skateboarding. The skate park will undergo construction during the next City has developed to increase employment opportunities for the most vulnerable. fiscal year and consist of a street style skate park with built-in items such as grinding During the current fiscal year, the City was successful in bringing Chrysalis, a Los rails, jumps, ramps, grind boxes, ledges and/or snake runs. Additionally, the design Angeles based organization, to Anaheim. Chrysalis provides the tools and support for the Manzanita Skate Park has been completed and the project is expected to be necessary for individuals to step out of poverty and onto a pathway to self carried out in with approximately 12,000 square feet of new skating space. The sufficiency. Through job-readiness classes, one-on-one appointments, and various Manzanita Skate Park will feature a hybrid design for beginner to intermediate other supportive services, Chrysalis provides the tools necessary for an individual to skaters with features such as a bowl, pump track, and street plaza components. succeed in the job market and further serves as an employer through its transitional jobs component. Chrysalis has a proven success rate with Los Angeles' homeless The City has also continued to engage with neighborhoods through programming population and the City is hopeful that the same success will transpire in Anaheim. such as afterschool activities, neighborhood gatherings, and community meetings. During fiscal year 2017/18, the City provided afterschool activities for over 54,400 IMPROVING OUR INFRASTRUCTURE youth, coordinated 53 neighborhood clean-up campaigns, provided assistance to over 26,700 community stakeholders by facilitating an ongoing citywide effort to Investment in our City's infrastructure continued to be a priority. The City works hard improve the livability of Anaheim neighborhoods, and reached over 1,400 to ensure that streets are well-kept and efficient, landscapes are maintained, and community members through 16 Neighborhood Services District Community that improvements continue to take place across the City. Fiscal year 2017/18 Meetings. achievements include 7,500 trees pruned, 11,400 trees pruned for power line clearance, 357 trees planted, sealing 350,000 linear feet of cracks, asphalt slurry of Next fiscal year, the City plans to prioritize many community projects such as at the 1,550,000 square feet, pavement rehabilitation of 582,000 square feet, and Central Library where an accessible and safe outdoor space for programming will be landscape maintenance of 6 million square feet. For the next fiscal year, the City will created. Amenities will include a performance stage, science demonstration space, continue to prioritize this work, with a special emphasis on improving street sandbox, trike track, planters and seating. This outdoor space will be used for pavement conditions; improving neighborhood infrastructure including pavement, programming, special events, and large scale events. The Euclid Library will also sidewalks and curb and gutter; constructing sidewalks to eliminate gap closures; create an outdoor space to develop children's literacy and social skills through tree maintenance and inspection; and sign re placement. storytelling, interactive play, and Science, Te chnology, Engineering, Arts, and Math (STEAM) programs. Finally, the East Lawn area of the Canyon Branch Library will become an outside Kid Zone with a useable programming space, relaxing outdoor reading space and outdoor chairs and tables. 4 CITY OF ANAHEIM Safe and efficient traffic signal operations are high priority objectives in the City as expected to last longer and require less maintenance than the older, high pressure they improve traffic flow and reduce traffic congestion and harmful emissions. Signal sodium (HPS) technology. modification projects to add protected left turn arrows and countdown pedestrian heads include: Euclid Street at Glenoaks Avenue Signal Modifications, Euclid Street Other electric capital improvements planned for fiscal year 2018/19 include at Cerritos Avenue Signal Modifications, and Katella Avenue at Douglass Signal undergrounding on Beach Boulevard, a project jointly planned with Southern Modifications. Traffic signal coordination projects on major arterials in the City California Edison, and replacing 30,000 feet of direct buried cable for enhanced include Orangewood Avenue Corridor, Anaheim Boulevard Corridor, La Palma system reliability. Avenue Corridor, State College Boulevard Corridor, Magnolia Avenue Corridor, and Brookhurst Street Corridor. In addition, many of these projects will receive Planned capital improvements for the water system include beginning the second emergency vehicle preemption devices to reduce emergency response times. phase of the Linda Vista Complex project. Phase 1 of the Linda Vista Complex project was completed in summer 2014 and included construction of a 4 million Anaheim Public Utilities (Utilities) provides various ways to help our residents and concrete water storage tank, a new pump station, piping and valves, and associated businesses save energy, water, and money. Through the Weatherization Program, power and controls for a fully functional facility. The second phase of this project will income-qualified renters and homeowners can receive services such as air duct include replacement of pumps and motors, electric and communication equipment, testing and sealing, attic insulation, weather stripping, efficient lighting, and low flow and instrumentation. This project will increase overall re liability, ensure adequate water devices at no cost. In fiscal year 2017/18, the Weatherization Program was water flows and pressures, and reduce future maintenance costs. expanded, increasing eligibility from 800 to 2,000 participants annually. For fiscal year 2018/19, Utilities will be enhancing its Small Business Energy and Water Direct Other planned improvements for the water system include the Lenain Treatment Install Program, offering small business customers the opportunity to receive up to Plant Rehabilitation and Expansion project. Originally constructed in 1968, the $3,000 in energy or refrigeration upgrades and $500 in water upgrades. Lenain Water Treatment Plant treats raw imported water and supplies approximately 25% of Anaheim's overall water use. The project will replace outdated infrastructure The City also remains focused on providing a high level of customer service through and expand plant capacity from 15 to 20 million gallons of water per day, allowing for initiatives that underscore flexibility, convenience, and real value. In fiscal year 2017I maximum utilization of the plant and reducing per unit treatment costs during peak 18, customer service hours were expanded to Saturdays from 8 am to noon for demand periods. Utilities also plans to replace approximately 6.5 miles of water added convenience, supplementing the after-hours utility connection and mains citywide to minimize main breaks and increase water system reliability. reconnection services that were made available to customers the prior year. In the next fiscal year, Utilities will look to upgrade its phone system used for call center ENCOURAGING BUSINESS GROWTH operations to gain features like enhanced virtual hold technology for improved call response, speech analytics for enhanced call ro uting, and pre/post optional surveys With all of the investment being made to maintain and improve the City, Anaheim is for stronger service performance monitoring and evaluation. not only a great city to live in, but a great city to play in for residents and visitors alike. One venue that has received an incredible improvement that will surely bring In December 2017, City Council approved the design-build agreement and nine more visitors to Anaheim is the Anaheim Convention Center. In September 2017, licensing agreements with five Anaheim public school districts to launch the pilot the Anaheim Convention Center's Betterment VII expansion was completed. This Solar for Schools program. This program will provide multiple benefits including expansion has been the largest and most significant expansion to the Convention generating clean renewable energy to meet state mandates, providing a lunch Center in nearly two decades. The expansion added 200,000 square feet of flexible shelter or shade parking for schools, and educating students in science, technology, space for trade shows, conventions, meetings, galas and more. With a new total of engineering, and mathematics (STEM) as it relates to solar power. The solar power 1.8 million square feet, the Anaheim Convention Center solidifies its spot as the facilities are expected to generate a total of 1.5 megawatts, which is enough to largest convention center on the West Coast. On an annual basis, there are provide about 375 homes with clean and renewable energy. Construction of the approximately 1 million attendees to the venue, and this expansion will increase the solar shade structures is expected to be completed during fiscal year 2018/19. ability of the Convention Center to accommodate an even wider range of events. Such events have already taken place with the return of the American Heart In fiscal year 2017 /1 8, street light installations were prioritized to meet neighborhood Association Convention which is the first time the American Heart Association and roadway safety requirements, and were also done in conjunction with other Convention has taken place in Anaheim since 2001. capital projects to reduce cost and minimize impacts on the community. Utilities staff installed new LED street lights on Rio Vista and Frontera Street, along La Palma The Anaheim Convention Center also welcomed the 2018 National Association of Avenue near Acacia Street, the front of St. Anthony Claret Church, and on Anna Music Merchants (NAMM) Show into the Convention Center expansion. The Drive, resulting in significant improvements to the safety and visibility of the NAMM Show saw a record 150,000 visitors to the City. When visitors come to the neighborhood. In fiscal year 2018/19, Utilities plans to install 2,500 LEDs, which are Convention Center they not only spend their time at the venue but they explore our 5 CITY OF ANAHEIM great city and ultimately generate revenue for Anaheim's residents. The money the benefits likely to be derived; and (2) the valuation of costs and benefits requires visitors spend on hotels, dining and shopping helps the city provide public safety, estimates and judgments by management. parks, libraries, and revenue for other projects in the neighborhoods. This report consists of management's representations concerning the finances of Part of the citywide growth that was started in fiscal year 2017/1 8 and will continue the City. As a result, management assumes full responsibility for the completeness into fiscal year 201 8/1 9 will come from hotel developments that are under and reliability of all of the information presented in this report. Management asserts construction. Some of these developments include: the Cambria Hotel & Suites a that, to the best of their knowledge and belief, this financial report is complete and 12-story, 352 room hotel and 15,000 square feet of casual dining restaurant space, reliable in all material respects. targeted to open in early 2019; the Hampton Inn & Suites, a five-story, 178 room hotel, targeted to open in late 2019; the Element Hotel a five-story, 174 room hotel BUDGETARY CONTROLS: targeted to open in late 2018; the JW Marriott a 12-story, 466 room hotel planned for the Anaheim GardenWalk, targeted to open in early 2020; and the Westin Hotel a The City maintains budgetary controls, the objective of which is to ensure 634 room hotel, with 42,000 square feet of meeting space and 30,000 square feet of compliance with legal provisions embodied in the annual appropriated budget restaurant, spa and retail space, targeted to open In early 2020. These new approved by the City Council. Activities of the General Fund, special revenue funds, additions will not only accommodate the many visitors that come into the City every debt service funds, capital projects fu nds, and all the proprietary fu nds are included day, but they will allow for continual economic growth that remains important to the in the annual appropriated budget. The level of budgetary control (that is, the level at City. which expenditures cannot legally exceed the appropriated amount) is established at the departmental level. The City also maintains an encumbrance accounting Housing projects are also adding to the citywide growth. During fiscal year 2017/18 system as one technique of accomplishing budgetary control. Encumbrances there were four housing projects approved ra nging from a 41 unit condo generally are re-appropriated as part of the following year's budget. development with moderate income affordable units and market rate for-sale units, targeted to begin construction in August 2018; a 42 unit condo development at a RELEVANT FINANCIAL POLICIES: former Industrial building site targeted to begin construction in August 2018; 39 single family homes, targeted to begin construction in fall 2018; and a planned Through sound fiscal management, the City of Anaheim positions itself to provide a development of 546 homes made up of 72 single family homes, 160 condos, and positive atmosphere for economic development and the flexibility to strategically 314 apartments, targeted to begin construction in 2018. address budgetary challenges that re sult from fluctuations in the local, national, and global markets. As of June 30, 2018, the City's General Fund has a spendable, Not only Is the City working hard to ensure that visitors and residents alike are able unassigned fund balance of $4 1.6 million, which represents 13% of the General to enjoy all that Anaheim has to offer, but there is also a focus on creating economic Fund total fiscal year 2017/18 expenditures. Traditionally, the policy has been to development opportunities by assisting with business development. Through the maintain General Fund reserves at a minimum of 7 to 10% of expenditures. Business Development and Attraction Program's first phase, which was completed in fiscal year 2017/1 8, businesses wishing to locate in Anaheim are assisted with Further, the City has a long-standing practice of recognizing and reserving for known locating commercial space. The program also develops business seminars in and anticipated liabilities. The City fully funds its compensated absences and at an partnership with government resource agencies to ensure that support is readily actuarially acceptable level for self-insurance. Additionally, the City has established available to new and existing businesses. In next fiscal year, the City will continue to an irrevocable trust for other postemployment benefits (OPEB) and continues to enhance this program with dedicated marketing, new business events and make the annual required actuarial determined contribution (ADC) to ensure this seminars, outreach efforts, and technologies. future obligation is fully fu nded.
FINANCIAL INFORMATION LONG-TERM FINANCIAL PLANNING:
Management of the City is responsible for establishing and maintaining internal On June 19, 2018, the City Council adopted the fiscal year 2018/19 budget. control designed to ensure that the assets of the government are protected from Additionally, as a companion to approving the budget plan, a five-year Capital loss, theft, or misuse, and to ensure that adequate accounting data are compiled to Improvement Plan was presented to the City Council. The five-year plan links allow for the preparation of financial statements in conformity with U.S. generally anticipated expenditures for infrastructure development with community needs and accepted accounting principles. Internal control is designed to provide reasonable, desires, and provides a citywide perspective of recommended projects and but not absolute, assurance that these objectives are met. The concept of proposed fu nding sources. The Capital Improvement Plan was finalized In June reasonable assurance recognizes that: (1 ) the cost of a control should not exceed 2018, and totaled $702.1 million for the five-year fiscal period ending June 30, 2023. The five-year Capital Improvement Plan has been submitted and annually updated, 6 CITY OF ANAHEIM in its present form, since 1982, for effective long-range planning purposes. It is City Management's belief that these two plans give City Council members an expanded opportunity to set policy and provide direction for implementation, resulting in improved management efficiency and improved financial results.
AWA RD
GOVERNMENT FINANCE OFFICERS ASSOCIATION OF THE UNITED STATES AND CANADA IGFOA) CERTIFICATE OF ACHIEVEMENT AWARD: The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Anaheim, California, for its comprehensive annual financial report for the fiscal year ended June 30, 2017. This was the 42nd consecutive year that the City has achieved this prestigious award (fiscal years ended June 30, 1976 through 2017). In order to be awarded the Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both U.S. generally accepted accounting principles and applicable legal re quirements. A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to conform to the Certificate of Achievement Program's re quirements and we are submitting it to GFOA to determine its eligibility for another certificate.
ACKNOWLEDGMENTS
The preparation of this report on a timely basis is a team effort involving many dedicated people across the entire organization. I would like to extend a special thanks to the talented finance professionals throughout the City, led by Peggy Au, Financial Accounting Manager. Appreciation is also expressed to Mayor Harry S. Sidhu, Council Member Lucille Kring, and Acting Assistant City Manager Gregory A. Garcia for their significant contributions as members of the Audit Committee. In closing, without the leadership and support of the City Council, preparation and results of this report would not have been possible. Its leadership has made possible the implementation of these important and innovative concepts in fiscal management by the City.
Respectfully submitted, {J ·SrdD �a� Chris Zapata Deborah A. Moreno City Manager Finance Director/City Treasurer
7 00 CITY OF ANAHEIM The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Anaheim, California for its Comprehensive Annual Financial G Report for the fiscal year ended June 30, 2017. The Certificate GovernmentFinance Officers Association of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports.
Certificate of In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and Achievement efficiently organized Comprehensive Annual Financial Report, for Excellence whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and in Financial applicable legal requirements.
Reporting A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Presented to Certificate of Achievement program requirements, and we are submitting it to GFOA. City of Anaheim c·anfr-r '"f ,:. onua .- I}>
For its Comprehensive Annual Financial Report forthe Fiscal Year Ended
June 30, 2017 ���. P- � Executive Director/CEO
9
CITY OF ANAHEIM
CO!IldlAppoirte::1 Offi:i,rs AppohtedBoordsardComrissior,;
libtaiylloom Budget,Jnvestmenl:andT�Cormil Audit External Affairs COMMUNITY CON\18'1TlON, RNANCE Pl.ANNING& COMMUNITY& FIRE& HUMAN POUCE PUBUC PUBUC SPORTSAND BUILDING ECONOMIC SERI/ICES RESCUE RESOURCES ununES \J\ORKS ENfERrAINMENf Budget and DE\18..0PMENf Recruitment & Accounting SupportSeTVices Special Enforcement Planning SeTVices Engineering Parks Convention Center Emplyemnet Fire and Rescue Water SeTVices Workforce Operations Purchasing Field SeTVices BuildingSeTVices Operations Development Golf Operations Operations Benefits Energy Resources Visit Anaheim Cashiering Community & Community Fleet and Facility Housing Recreation, Human FirePrevention 12lnd Employee Resort Policing Financial Management PreseJVation and SeTVices Stadium Operations lnfom,ation and Neighborhood Community Risk Relations SeTVices Grants SeTVices Investigations Licensing Construction Arena Operations Reduction Organizational Community SeTVices Support SeTVices Electric SeTVices SeTVices Grove Operations Investment Emergency Development Financial and LibrarySeTVices ARTIC Operations Management and Risk Management Preparedness Administrative SeTVices 11 CITY OF ANAHEIM Administrative Personnel As of June 30, 2018 Acting City Manager Linda N. Andal Acting Assistant City Manager Gregory A. Garcia Acting Deputy City Manager/Planning & Building Director David Belmer Acting Chief of Police Julian Harvey City Attorney Robert Fabela Acting City Clerk Theresa Bass Community & Economic Development Executive Director John E. Woodhead IV Community Services Director Larry Pasco Convention, Sports & Entertainment Executive Director Thomas Morton Finance Director/City Treasurer Deborah A. Moreno Fire & Rescue Chief Randy R. Bruegman Acting Human Resources Director Jason Motsick Public Utilities General Manager Dukku Lee Public Works Director Rudy Emami 12 KPMG LLP Suite 700 20 Pacifica Irvine, CA 92618-3391 Independent Auditors' Report Honorable Mayor and City Council An audit involves performing procedures to obtain audit evidence City of Anaheim, California: about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the Report on the Financial Statements assessment of the risks of material misstatement of the financial We have audited the accompanying financial statements of the statements, whether due to fraud or error. In making those risk governmental activities, the business-type activities, each major fund, assessments, the auditor considers internal control re levant to the and the aggregate remaining fund information of the City of Anaheim, entity's preparation and fa ir presentation of the financial statements in California (the City), as of and for the year ended June 30, 2018, and order to design audit procedures that are appropriate in the the related notes to the financial statements, which collectively circumstances, but not for the purpose of expressing an opinion on comprise the City's basic financial statements as listed in the table of the effectiveness of the entity's internal control. Accordingly, we contents. express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness Management's Responsibility for the Financial Statements of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Management is responsible for the preparation and fa ir presentation of these financial statements in accordance with U.S. generally We believe that the audit evidence we have obtained is sufficient and accepted accounting principles; this Includes the design, appropriate to provide a basis for our audit opinions. implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free Opinions from material misstatement, whether due to fraud or error. In our opinion, the financial statements refe rred to above present Auditors ' Responsibility fairly, in all material res pects, the respective financial position of the governmental activities, the business-type activities, each major fund, Our responsibility is to express opinions on these financial statements and the aggregate remaining fund information of the City of Anaheim, based on our audit. We co nducted our audit in accordance with California, as of June 30, 2018, and the res pective changes in auditing standards generally accepted in the United States of America financial position and, where applicable, cash flows thereof and the and the standards applicable to the financial audits contained in respective budgetary comparison for the General Fund and Housing GovernmentAud iting Standards, issued by the Comptroller General Authority Fund for the year then ended in accordance with U.S. of the United States. Those standards require that we plan and generally accepted accounting principles. perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Emphasis of Matter As discussed in note 2 to the financial statements, effective July 1, 201 7, the City adopted the provisions of Governmental Accounting Standards Board (GASB) Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other Th an Pensions. Our The combining and individual fund financial statements and opinion is not modified with respect to this matter. schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other Other Matters records used to prepare the basic financial statements. Such Required Supplementary Information information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional U.S. generally accepted accounting principles require that the procedures, including comparing and reconciling such information management's discussion and analysis on pages 15-28, the schedule directly to the underlying accounting and other records used to of changes in the net pension liability and related ratios on page 93- prepare the basic financial statements or to the basic financial 94, the schedule of pension plan contributions on page 95, the statements themselves, and other additional procedures in schedule of changes in the net OPEB liability and re lated ratios on accordance with auditing standards generally accepted in the United page 96 and the schedule of OPEB plan contributions on page 97 be States of America. In our opinion, the combining and individual fund presented to supplement the basic financial statements. Such financial statements and schedules are fairly stated, in all material information, although not a part of the basic financial statements, is respects, in relation to the basic financial statements as a whole. required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing The introductory, statistical information, and other information the basic financial statements in an appropriate operational, sections have not been subjected to the auditing procedures applied economic, or historical context. We have applied certain limited in the audit of the basic financial statements, and accordingly, we do procedures to the required supplementary information in accordance not express an opinion or provide any assurance on them. with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the Other Reporting Required by GovernmentAud iting Standards methods of preparing the information and comparing the info rmation In accordance with GovernmentAud iting Standards, we have also for consistency with management's res ponses to our inquiries, the issued our report dated December 19, 2018 on our consideration of basic financial statements, and other knowledge we obtained during the City's internal control over financial reporting and on our tests of our audit of the basic financial statements. We do not express an its compliance with certain provisions of laws, regulations, contracts, opinion or provide any assurance on the information because the and grant agreements and other matters. The purpose of that report limited procedures do not provide us with sufficient evidence to is solely to describe the scope of our testing of internal control over express an opinion or provide any assurance. financial reporting and compliance and the res ults of that testing, and not to provide an opinion on internal control over financial reporting or Supplementary and Other Information on compliance. That report is an integral part of an audit performed in Our audit was conducted for the purpose of forming opinions on the accordance with GovernmentAu diting Standards in considering the financial statements that collectively comprise the City's basic City's internal control over financial re porting and co mpliance. financial statements. The accompanying introductory section, the combining individual fund statements and schedules, the statistical information, and other information sections as listed in the table of fCPMG- LL-P contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Irvine, California December 19, 2018 ;; ,, id&. · Bf�J@. · . 'W�If� - CITY OF ANAHEIM Management's Discussion and Analysis soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, assets, liabilities, revenues and (Unaudited) expenses are re ported in these statements for some items that will only result in cash flows in future fiscal periods (e.g. uncollected revenues and As management of the City of Anaheim (City), we offer readers of the City's accrued but unpaid interest expense). basic financial statements this narrative overview and analysis of the financial activities of the City as of and for the fiscal year ended June 30, The Statement of Net Position presents information on all of the City's 2018. We encourage readers to consider the information presented here in assets, deferred outflows of resources, liabilities and deferred inflows of conjunction with additional information that we have fu rnished in our letter of resources, including capital assets and long-term liabilities, with the transmittal, which can be found in the introductory section of this report, and difference reported as net position. Over time, increases or decreases in net the City's basic financial statements in the financial section of this report. All position may serve as a useful indicator of whether the financial position of amounts, unless otherwise indicated, are expressed in thousands of dollars. the City as a whole is improving or deteriorating. OVERVIEW OF THE BASIC FINANCIAL STATEMENTS The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. Functional activities are This discussion and analysis are intended to serve as an introduction to the highlighted in this statement, whereby direct and indirect functional costs City's basic financial statements. The City's basic financial statements are are shown net of related program revenue. This statement shows the extent comprised of three components: 1) government-wide financial statements, to which the various functions depend on general taxes and non-program 2) fund financial statements, and 3) notes to financial statements. This revenues for support. report also contains other supplementary information in addition to the basic financial statements themselves. The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) fro m other functions that are intended to recover COMPONENTS OF all or a significant portion of their costs through user fees and charges THE ANNUAL FINANCIAL REPORT (business-type activities). The governmental activities of the City include - ---- general government, Police, Fire & Rescue, Community & Economic i ' Development, Planning & Building, Public Works, Community Services, Public Utilities (street lighting), Convention, Sports & Entertainment (Visit Required Anaheim and the Honda Center), and interest on related long-term debt. Supplerrientary The business-type activities of the City include the electric, water and 1nf1:>rm<.1tion sanitation utilities, golf courses, convention, sports & entertainment venues (Anaheim Convention Center, Angel Stadium of Anaheim, and The City National Grove of Anaheim) operations, and the Anaheim Regional Transportation lntermodal Center (ARTIC) operation. The government-wide financial statements include not only the City itself, Notes to the ··· · , Fltri� fln,ar\�iaL Financial but also the Anaheim Housing Authority, Anaheim Public Financing · · �at�ine�ts < · Statements Authority, and Anaheim Housing and Public Improvement Authority. Although these entities are legally separate, they fu nction for all practical purposes as a part of the City, and therefore have been included as blended component units as an integral part of the primary government. Summary Detail The government-wide financial statements can be fo und on pages 29-31 of this report. Government-wide financial statements. The government-wide financial statements are comprised of the Statement of Net Position and the Fund financial statements. The fund financial statements focus on current Statement of Activities. These two statements are designed to provide available resources and are organized and operated on the basis of funds, readers with a broad overview of the City's finances utilizing the full accrual each of which is defined as a fiscal and accounting entity with a self method of accounting, in a manner similar to a private-sector business. balancing set of accounts, established for the purpose of carrying on Under the full accrual method of accounting, transactions are reported as specific activities or attaining certain objectives in accordance with special 15 CITY OF ANAHEIM regulations, restrictions or limitations. All of the funds of the City can be City uses its enterprise funds to account for its electric, water and sanitation divided into three categories: governmental funds, proprietary funds, and utilities, golf courses, convention, sports & entertainment venues and fiduciary fu nds. ARTIC operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. Governmental funds. Governmental funds are used to account for The City uses internal service funds to account for its general benefits and essentially the same functions re ported as governmental activities in the insurance, motorized equipment, information services, and municipal government-wide financial statements. However, unlike the government facilities maintenance functions. Because these services predominantly wide financial statements, the governmental funds financial statements benefit governmental rather than business-type fu nctions, they have been utilize the modified accrual basis of accounting, which focuses on near-term included with governmental activities in the government-wide financial inflow and outflow of spendable resources, as well as on balances of statements. spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial Proprietary funds provide the same type of information as the government requirements. wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for all of the enterprise Because the focus of the governmental funds is narrower than that of the funds, which are considered to be major funds of the City. Conversely, all of government-wide financial statements, it is useful to compare the the Internal service funds are combined into a single, aggregated information presented for the governmental funds with similar information presentation in the proprietary funds financial statements. Individual fund presented for governmental activities in the government-wide financial data for the internal service funds is provided in the form of combining statements. By doing so, readers may better understand the long-term statements elsewhere in this report. impact of the government's near-term financing decisions. Both the governmental funds Balance Sheet and the governmental funds Statement The proprietary funds financial statements can be found on pages 39-43 of of Revenues, Expenditures and Changes in Fund Balances provide a this report. reconciliation to facilitate this comparison between governmental funds and governmental activities. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not The City maintains 19 individual governmental funds. Info rmation is reflected in the government-wide financial statements because the presented separately in the governmental funds Balance Sheet and in the resources of those funds are not available to support the City's own governmental funds Statement of Revenues, Expenditures and Changes in programs. Fund Balances for the General Fund and the Housing Authority Special Revenue Fund, which are considered to be major funds. Data for the The City maintains three diffe rent types of fiduciary funds. The Investment remaining 17 governmental funds are co mbined into a single, aggregated Trust Fund is used to account for the external portion of the City's presentation. Individual fund data for each of these nonmajor governmental investment pool; the Private-Purpose Trust Fund is used to account for the funds is provided in the form of supplementary combining statements on assets and liabilities held in trust for the Successor Agency to the former pages 99-1 02, 107-1 08, and 110-111 of this report. Redevelopment Agency (Successor Agency); the Agency Fund is used to account for monies collected and disbursed in a custodial capacity for the The City adopts an annually appropriated budget for all governmental and Mello-Roos districts in the City. proprietary funds. Budgetary comparison statements for the General Fund and the major special revenue fund (Housing Authority) are required to be The fiduciary fund financial statements can be found on pages 44-45 of this presented; these schedules are included in the basic financial statements report. on pages 37-38 of this report. Additionally, budgetary schedules for the Notes to the financial statements. The notes provide additional other governmental funds have been provided to demonstrate compliance info rmation that is essential to a full understanding of the data provided in with the budget and can be found as part of other supplementary schedules the government-wide and fund financial statements. The notes to the on pages 103-1 06, 109, and 112-1 15 of this report. financial statements can be found on pages 4 7-92 of this report. The governmental funds financial statements can be found on pages 33-36 Other supplementary information. In addition to the basic financial of this report. statements and accompanying notes, this report also presents combining Proprietary funds. The City maintains two different types of proprietary individual fund statements refe rred to earlier in connection with nonmajor funds. Enterprise funds are used to report the same fu nctions presented as governmental funds and internal service funds. Also included are the budgetary comparison Schedules of Revenues, Expenditures and Changes business-type activities in the government-wide financial statements. The 16 CITY OF ANAHEIM in Fund Balances for all nonmajor special reve nue funds, all debt service utilize the full accrual basis of accounting. The adjustments decreased the funds, and all capital projects funds. These statements and schedules can beginning fiscal year net position by $194, 107. This amount represents the be found on pages 99-1 19 of this report. unfunded OPEB liability of $198,820 partially offset by the OPEB contributions made during fiscal year 2017 of $16,016, and the net OPEB Required Supplementary Information. The required supplementary asset of $11,303. The prior period adjustments, $146,632 in governmental information for pension and its related ratios, the postemployment benefits activities and $4 7,475 in business-type activities, are reflected in the (OPEB) and its related ratios can be found on page 93-97 of this re port. unrestricted net position of the government-wide Statement of Net Position. FINANCIAL HIGHLIGHTS (Amounts in thousands) Additional information of the City's OPEB plan can be found on note 11 of the notes to the financial statements on page 84-86 of this report. New Accounting Standard for Other Postemployment Benefits (OPEB} Results of Operations During fiscal year 2018, the City adopted the accounting pronouncement issued by the Governmental Accounting Standards Board (GASB) related to The City's total assets and deferred outflows of resources exceeded its lia other postemployment benefits (OPEB). The Statement established bilities and deferred inflows of resources at the end of the current fiscal year accounting, financial reporting and disclosure requirements for OPEB, by $1 ,835,691 . similar to pensions, rather than requirements for funding or budgetary • The City's governmental activities represent $723,865 (39%) and purposes. the business-type activities represent $1 , 111,826 (61 % ) of the City's Implementation of this accounting standard has significant impacts to the total net position. financial reporting of the City's OPEB defined benefit plan. The accounting • The City's net position increased by $70,878 (4%) as a result of the changes are as follows: current fiscal year's operations. The net position of the City's • Net OPEB liability - this liability is now required to be reported on a governmental activities increased $32,209 (5%) and the business full accrual basis in the government-wide financial statements, as type activities net position increased $38,669 (4%). well as in the proprietary fund financial statements. • The City's restricted net position of $353,846 represents amounts • Measurement date - the OPEB liability as re ported in the June 30, available for ongoing programs and obligations with external 201 8 financial statements has a measurement date of June 30, restrictions. 201 7, which reflects a one-year lag in re porting the liability. • The City's total capital assets increased by $88,552 (3%). Capital • Contributions made subsequent to the measurement date - assets in the City's governmental activities increased by $26,324 contributions made during fiscal year 2018 are reflected as deferred (2%) and business-type activities capital assets increased by outflows of resources for OPEB and will be applied as a reduction in OPEB liability in the next fiscal year. $62,228 (3%) during the current fiscal year. • • Governmental funds financial statements - the governmental funds The City's total long-term liabilities increased by $68,486 (2%) continues to apply the modified accrual basis of accounting related during the current fiscal year; of this amount, long-term liabilities in to OPEB, i.e. re porting expenditures when OPEB expenditures are the City's governmental activities increased by $70,593 (5%), and incurred, this amount represents governmental fu nds' proportionate business-type activities decreased by $2, 107 (less than 1 % ). share of the City's payments for retiree medical insurance • premiums. At the close of the current fiscal year, the City's governmental funds re ported a combined fund balance of $473,515, an increase of • Changes in actuary assumptions, diffe rences between projected to $27,665 in comparison with the prior fiscal year. Approximately actual plan experiences, differences between projected and actual 6% of this amount ($30,021) is available for spending at the City's investment earnings, and other plan amendments - will be reflected discretion (unassigned fund balance). as deferred inflows of resources or deferred outflows of resources depending on the nature of the changes. The amount will be At the end of the current fiscal year, unrestricted fund balance (total amortized and reflected as a component in the OPEB expense of committed, assigned and unassigned fu nd balance) for the calculation in the period incurred and in future fiscal years. General Fund was $52,564 or 16% of total General Fund To implement these changes, the City is required to make a prior period expenditures. Unassigned fund balance was $41 ,556 or 13% of total adjustment to the July 30, 201 7 net position in the government-wide General Fund expenditures. financial statements and the proprietary funds financial statements that 17 CITY OF ANAHEIM GOVERNMENT-WIDE FINANACIAL ANALYS IS NET POSITION June 30, 2018 AND 2017 Governmental Business-type Total Activities Activities Government 2018 2017 2018 2017 2018 Current and other assets $ 723,544 $ 704,179 $ 784,803 $ 825,077 $ 1,508,347 $ 1,529,256 Capital assets, net 1,401 ,354 1,375,030 2,059,830 1,997,602 3,461,184 3,372,632 Total assets 2,124,898 2,079,209 2,844,633 2,822,679 4,969,531 4,901,888 Deferred outflows of resources 180, 187 139,827 68,671 59,204 248,858 199,031 Total assets and deferred outflows of resources 2,305,085 2,219,036 2,913,304 2,881 ,883 5,218,389 5,100,919 Other liabilities 80,077 84,790 114,028 117,579 194,105 202,369 Long-term liabilities 1,467,982 1,397,389 1,573,882 1,575,989 3,041,864 2,973,378 Total liabilities 1,548,059 1 ,482, 179 1,687,910 1,693,568 3,235,969 3,175,747 Deferred inflows of resources 33, 161 45,201 113,568 115,158 146,729 160,359 Total liabilities and deferred inflows of resources 1,581 ,220 1,527,380 1,801 ,478 1,808,726 3,382,698 3,336, 106 Net position: Net investment in capital assets 1,008,489 974,071 1,009,302 1,016,113 2,017,791 1 ,990, 184 Restricted 266,983 274,830 86,863 83,811 353,846 358,641 Unrestricted (551,607) (557,245) 15,661 (26,767) (535,946) (584,012) Total net position $ 723,865 $ 691 ,656 $ 1,111 ,826 $ 1 ,073, 157 $ 1,835,691 $ 1,764,813 *As adjusted due to implementation of Government Accounting Standards Board Statement No. 75 At the end of fiscal year 201 8, the City's net position totaled $1,835,691 This amount decreased $4,795 from prior fiscal year. The decrease of which reflects a net increase of $70,878 or 4% fro m prior fiscal year. $5,027 in governmental activities is due to restricted resources spent for real property acquisitions for housing development purposes, $1,940 for The largest portion of the City's net position of $2,017, 791 reflects its infrastructure construction in the Platinum Triangle Mello-Roos Projects, investment in capital assets (e.g. land, buildings, utility plant, machinery, and $880 for other grant related expenses; partially offset by increases of equipment, and infrastructure), net of any related outstanding debt that was $2,525 in amounts restricted for debt services in business-type activities. used to acquire those assets. The City uses these assets to provide services to citizens; consequently, these assets are not available for future The remaining balance deficit of $535,946 is the unrestricted net position, of spending. Although the City's investment in capital assets is reported net of which the unfunded OPEB, net pension liabilities and the related deferred related debt, it should be noted that the resources needed to repay this debt inflows and outflows of resources account for $778,580. The unrestricted must be provided from other sources, since the capital assets themselves net position deficit decreased by $48,066 from prior fiscal year reflecting cannot be used to liquidate these liabilities. Net investment in capital assets results of contributions from current year operations. The unfunded net increased by $27,607 (1%) primarily due to capital asset additions from OPEB and pension liabilities are long-term obligations that will be funded unrestricted and grant fu nded resources, offset by reduction of the related annually in accordance with actuarially determined contribution amount and outstanding debt due to current year principal payments. rates. The positive component of the unrestricted net position, excluding the effects of OPEB and pension liabilities, is $242,634 and may be used to An additional portion of the City's net position of $353,846 represents meet the City's ongoing obligations to citizens and creditors. resources that are subject to external restrictions on how they may be used. 18 CITY OF ANAHEIM CHANGE IN NET POSITION YEARS ENDED June 30, 2018 AND 2017 Governmental Business-type Total Activities Activities Government 2018 2017 2018 2017 2018 2017 REVENUES Program revenues: Charges for services $ 87,561 $ 99,331 $ 638,567 $ 610,358 $ 726, 128 $ 709,689 Operating grants and contributions 115,520 109,989 88 425 115,608 110,414 Capital grants and contributions 39,340 65,937 8,353 4,381 47,693 70,31 8 General revenues: Taxes: Property taxes 76,547 72,909 76,547 72,909 Sales and use taxes 80,732 77,732 80,732 77,732 Transient occupancy taxes 154,925 149,566 154,925 149,566 Other taxes 9,076 8,946 9,076 8,946 Gain on sale of capital assets 6,258 6,258 Unrestricted investment earnings 2,783 2,116 4,423 4,001 7,206 6,117 Other 105 106 105 106 Total revenues 572,847 586,632 651 ,431 619,165 1,224,278 1,205,797 EXPENSES Program activities: Governmental activities: General government 15,645 11,825 15,645 11,825 Police 173,921 151 ,559 173,921 151,559 Fire & Rescue 81 ,528 70,365 81,528 70,365 Community & Economic Development 96,067 100,720 96,067 100,720 Planning & Building 25,376 21,944 25,376 21,944 Public Works 55,981 61,806 55,981 61,806 Community Services 39,020 34,799 39,020 34,799 Public Utilities 2,346 2,530 2,346 2,530 Convention, Sports & Entertainment 19,930 19,238 19,930 19,238 Interest on long-term debt 34,938 34,876 34,938 34,876 Business-type activities: Electric Utility 394,574 412,424 394,574 412,424 Water Utility 75,755 72,715 75,755 72,71 5 Sanitation Utility 61,145 58,218 61,145 58,21 8 Golf Courses 4,898 4,465 4,898 4,465 Convention, Sports and Entertainment Venues 66,058 47,321 66,058 47,321 ARTIC Management 6,218 6,374 6,218 6,374 Total expenses 544,752 509,662 608,648 601,517 1, 1 53,400 1,111, 17 9 Excess before transfers 28,095 76,970 42,783 17,648 70,878 94,61 8 Transfers in (out) 4,114 7,701 (4,114) (7,701) Special item (8,218) (8 ,218) Increase in net position 32,209 76,453 38,669 9,947 70,878 86,400 Effect of implementation GASB Statement No. 75 (146,632) (47,475) (194,107) Net position at beg inning of year 691 ,656 761 ,835 1 ,073, 157 1,110,685 1,764,813 1,872,520 Net position at end of year $ 723,865 $ 691 ,656 $ 1,111,826 $ 1 ,073, 157 $ 1,835,691 $ 1,764,81 3 * As adjusted due to implementation of Governmental Accounting Standards Board Statement No. 75 19 CITY OF ANAHEIM Betterment VI I in September 201 7 adding 200,000 square foot REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES exhibit space, have drawn new and returning visitors to the City. Other <1% Property taxes increased $3,638 (5%) primarily due to increase in Gain on sale of capital housing demand, additions of new hotels, and developments within assets Charges for services 1% 15% the Platinum Triangle providing an increase to the property base upon which taxes are levied. Sales and use tax increased $3,000 Transient occupancy (4%) due to general improvement in the economy. taxes 27% Charges for services decreased by $11,770 (12%) primarily due to $16, 700 realized gains in the prior fiscal year from the sales of vacant land ($8,089) in Community Services department, and in the Housing Authority ($8,611) for housing development which did not occur again in the current year. The decrease is partially offset by increase in building permits and fees of $5,216 due to increased activities in construction and the related inspections. 7% Operating grants increased $5,531 (5%) mainly due to an increase Governmental activities. Governmental activities increased the City's net of $937 in federal funding for Section 8 rental assistance; an position by $32,209. Key elements of this increase are as follows: increase of $2,509 in revenue allocations from the State of California of which $2, 101 for road maintenance and re habilitation per the The most significant reve nues of the governmental activities are general Road Repair and Accounting Act of 201 7 Senate Bill 1 Beall (SB1 ), taxes (56%), which include transient occupancy taxes (27%), property taxes (13%), sales and use taxes (14%), and other taxes (2%). Program revenues and $408 per 881 , the State General Fund Loan Repayment Fund are 42% of the total revenues of the governmental activities, which include to transportation fund; and $1 ,046 for fair share allocation of net operating grants and contributions (20%), capital grants and contributions waste importation revenues from Orange County Waste & (7%), and charges for services (15%); gain on sale of capital asset (1%), Recycling. other revenues less than 1 %, and unrestricted investment earnings less than 1 % of the total reve nues. Capital grants and contributions decreased by $26,597 (40%) primarily due to $39,893 of one-time revenues received in the prior Public safety (Police and Fire & Rescue) expenses are the most significant fiscal year that include $36,864 contribution from property owners (47%) of all governmental activities' expenses, followed by Community and related to the Community Facility District (CFO) 08-1 bond issuance Economic Development (18% ), Public Works (10% ), Community Services proceeds, and $3,029 transfer of the unspent bond proceeds from (7% ), interest on long-term debt (6% ), and various other programs (12% ). the Successor Agency to complete the bond funded eligible capital Included in these amounts is depreciation expense, which is 6% of the total projects. Partially offsetting the decrease is an increase of $6,818 in expenses for governmental activities. capital asset contributions from developers that include right-of-way Governmental activities revenues decreased $13,785 (2%) as compared to for streets and other public infrastructure, and an increase of $5, 198 the prior fiscal year due to the following: in capital asset contributions for the Honda Center. • Taxes increased $12, 127 (4%) mainly due to the increase of $5,359 Unrestricted interest earnings increased by $667 due to higher (4%) in transient occupancy taxes (TOT). TOT increases are largely investment income recognized for the current fiscal year, as interest attributable to the continued growth of the tourism industry. The rates begin to rise. additions of four new hotels in 2016, adding 816 rooms to the City's Gain on sale of capital asset of $6,258 realized from the sale of the hotel supply, the opening of the Disney's new Guardians of the real property 1221 S Auto Center Drive, Anaheim. Galaxy - Mission Breakout ride at the beginning of last summer, and the grand opening of the Anaheim Convention Center Expansion, 20 CITY OF ANAHEIM Governmental activities net transfers in decreased $3,587 primarily due to • The increase in Public Safety expenses of $33,525 (1 5%) is mainly the following: due to $26,092 increase in pension expense resulting from the pension plan's change in actuarial assumption as previously • Transfers out increased by $699 due to the increases of $321 in discussed, $2,047 increase in Fire & Rescue overtime cost primarily operational subsidy transfer, and $500 for debt services to the for providing strike team assistance to various fire incidents for ARTIC Management Fund; partially offset by a decrease of $236 to which the City is re imbursed; $3,513 increase in salary and benefit the Convention, Sports & Entertainment Ve nues for debt service. costs includes costs for the addition of 10 new sworn police officers which completes the fourth and final year of the commitment of The amount of transfers for debt services is based on actual debt hiring of 40 officers in 4 years initiative, $1, 180 increase in payment service requirements. to the County of Orange for the 800 MHz Countywide Coordinated Communication System partnership cost, $456 increase in • Transfers in decreased by $2,888 primarily due to a decrease of scheduled helicopter maintenance, and $500 increase in small $2, 114 from the Electric Utility transfer, calculated based on capital purchases of helmets and vests for new police officers operating revenues; and a decrease of $800 from the Convention, • The decrease in Community & Economic Development expenses of Sports & Entertainment transfer that provided funding for one-time $4,653 (5%) is mainly due to a one-time loss of $6, 166 on sale of capital funding for the Honda Center in the prior fiscal year. land in the prior fiscal year offset by an increase of $1 ,037 in Section 8 rental assistance due to higher costs per resident during the current fiscal year. EXPENSES AND PROGRAM REVENUES - GOVERNMENTAL ACTIVITIES • The increase in Planning & Building expenses of $3,432 (1 6%) is primarily due to increase in pension expense of $2,147 resulting from the pension plan's change of assumption in discount rate as �=-w ·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·-·------previously discussed; increases in contract costs of $576 for animal $1 60 +---·-··-·---·-··-·---· ·( ,.:?.k- ··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·---·-··-·--- . care, and $694 for graffiti removal contract services. $140 -· • ...... ,,.:.:,-- ...... • • The decrease in Public Works expenses of $5,825 (9%) is primarily $120 due to one-time expense write-off of a construction work in progress j ($1 1,13 5) of the Anaheim Rapid Connection (ARC) Project in the � $1 oo � ·- -·---�·- -;�;z. prior fiscal year, offset by an increase of $2, 734 in pension expense $80 ...... · f!JN, --·---· ---,,;,..• / .., due to the pension plan's change of assumption in discount rate as previously discussed; $794 in landscape maintenance, $854 in $60 facility seismic retrofit, and $956 funding provided to the $40 L ...... · --!fj'i.i!·---- ·-----fiff! · Transportation Network to develop, install and implement a Real $20 ·-··--·-·---··--·-·-·· Time Management and Passenger information system in the I Anaheim To urism Improvement District during the current fiscal year. $0 • "°'!' /'' .l' .f' tip' The increase in Community Services expenses of $4,221 (1 2%) is / "' r§' � "/"' .,,�- ,, 21 CITY OF ANAHEIM be found in note 1 of the notes to the financial statement on page 53 REVENUES BY SOURCE - BUSINESS-TYPE ACTIVITIES of this report. other The increase of $1,245 (2%) in Sanitation Utility charges for services is attributable to a 2.5% rate increase in solid waste collection and disposal revenues and 5% rate increase in wastewater reve nues for the entire fiscal year. The increase of $7,969 (22%) in the Convention, Sports and Entertainment Ve nues Fund is primarily due to $3,020 increase in facilities rental fro m higher corporate events, consumer shows and sporting events. Concession fees increased $4,945 resulting fro m higher food and beverage reve nues and technology services. The grand opening of the Convention Center North expansion in September 201 7 is partially attributable to the increases in rental demand along with all other revenues. The increase of $293 (28%) in ARTIC Management is due to facility Charges for services rental from new tenants moving in and an increase in advertising 98% revenues. Business-type activities - Business-type activities increased the City's net Net transfers out of $4, 114 decreased by $3,587 as discussed in the position by $38,669. Key elements of this change are as follows: government-wide financial analysis of governmental activities. Charges for services of $638,567 increased by $28,209 (5%) due to the following: EXPENSES AND PROGRAM REVENUES - BUSINESS-TYPE =------The increase of $10, 194 (2%) in Electric Utilities charges for $450 �·· ---... -� services is primarily due to an increase of $4,507 in wholesale .-·- ·""f:'.,'..;.�:tT revenues resulting from an increase in wholesale energy sales attributable to a generally warmer year coupled with higher $350 wholesale prices; transmission revenues increased $5,899 primarily due to an increase in reve nue related to the California Independent -� System Operator (ISO) congestion reve nue rights. Wild fires in �$250 Northern California caused downed transmission lines which in turn caused power to flow through fewer transmission lines. A reve nue $200 related to fees charged for the usage of such transmission lines was $150 allocated to the Electric Utility. The increase of $8,297 (12%) in Water Utilities charges for services $50 is primarily due to $9,709 (14%) increase from sale of water Electric Utility Water Utility Sanitation Utility Golf Courses Convention, Sports & ARTIC Management resulting from an 8% increase in customer demand of water retail Entertainment sales, and rate increases of 8% in April 2017 and 6% in April 2018. The increase in customer demand is due to the removal of the Total expenses of $608,648 increased $7, 131 (1 %). Key elements of the strenuous conservation efforts in response to the drought conditions changes are due to the following: throughout the region. Offsetting the increase is a $1,375 decrease • in Rate Stabilization Account reve nue (RSA) as the revenues from The decrease in the Electric Utility expenses of $17,850 (4%) is the sale of water increase. Additional information about the RSA can mainly due to $19,042 (7%) decrease in power costs partially resulting from increased use of renewable resources and Cap-and- 22 CITY OF ANAHEIM Trade funds (which reduces power costs), offset by increased ARTIC Management expenses decreased $156 (2%). The decrease wholesale energy purchases. Additional information about the is primarily due to a decrease in maintenance expenses. Electric Utility's Cap-and-Trade program can be found in note 13 of the notes to the financial statements on page 89 of this report. FINANCIAL ANALYSIS OF THE CITY'S FUNDS Depreciation expense decreased by $7,824 (14%) mainly due to the Governmental funds. The focus of the City's governmental funds is to decrease in depreciation expense related to the San Juan coal Unit provide information on near-term inflows, outflows, and balances of located in New Mexico which was fully depreciated and retired this spendable resources. Such info rmation is useful in assessing the City's fiscal year. These decreases were partially offset by $10,301 (21 %) financing requirements. In particular, unassigned fund balance may serve increase in maintenance, operations and administration cost mainly as a useful measure of a government's net resources available for spending attributable to increase of $7,661 in pension expense due to the at the end of the fiscal year. pension plan's change of assumption in discount rate as previously At the end of the current fiscal year, the City's governmental fu nds re ported discussed, $687 increase in benefits provided to the public for total ending fund balances of $473,515, an increase of $27,665 in energy efficiency rebates and incentives; and other increases in comparison with the prior fiscal year. Of the total fund balance of $473, 515, facility, software and hardware maintenance expenses. restricted fund balance totaled $385,408 (81%) and indicates the use of resources are constrained by external parties, resource providers, • The increase in Water Utility expenses of $3,040 (4%) is constitutions or enabling legislations. Unassigned fund balance totaled attributable mainly to $7,034 (20%) increases in purchase water and $30,021 (6%) and is available for spending at the City's discretion. The treatment and pumping costs due to co ntinuing increase in demand remaining fund balance is $58,086 (1 2% ), of which $9,644 is not in related to the ending of drought restriction; $3,696 (19%) decrease spendable form, $4,063 was committed to neighborhood projects and in operation, maintenance, and administration costs was mainly due $44,379 that was assigned for particular purposes. to a one-time increase in costs incurred for a cancelled capital Governmental revenues totaled $566, 155 while expenditures were project in the prior fiscal year, and higher overhead applied to $544,968. construction work in progress due to significant increase in bond funded construction projects during the fiscal year, offset by an The General Fund is the general operating fund of the City. At June 30, increase in pension expense of $2, 174, as previously discussed. 2018, the General Fund re ported a total ending fund balance of $58,277 and consisted of the following: • The increase in Sanitation Utility expense of $2,927 (5%) is primarily • $519 was nonspendable for inventory, prepaid and other assets due to both rate and volume increases of waste disposal services • $5, 124 was restricted for claims and judgments and gate fees; and increase in pension expense of $1,422, as previously discussed. • $70 was restricted for grant purposes • $11 ,008 was assigned for encumbrances and other purposes • The increase in Golf Courses expenses of $433 (10%) is due to a • $41,556 was unassigned $105 increase in water consumption resulting from warmer summer months, and a $194 increase in tree trimming and other repairs. General Fund total reve nues increased $23,823 (7%) as compared to the prior fiscal year primarily attributable to the following: Convention, Sports & Entertainment Ve nues expenses increased • To tal taxes increased by $10,237 (3%) due to growth in the overall $18,737 (40%). Part-time and contract labor increase of $1,144 economy. Taxes are the largest revenue sources of the General primarily related to the addition of new hires for the Convention Fund and they accounted for $321 ,463 or 82% of the total General Center North Expansion, $2,879 increase in pension expense for Fund reve nues. During fiscal year 2018, transient occupancy taxes reason previously discussed, $3,375 in small capital purchases, (TOT) increased $5,359 (4%), property taxes increased by $3,674 depreciation expense increased by $3,415 due to the completion of (5%), sales and use taxes increased $1,180 (1%); and other taxes the $203, 190 Convention Center North Expansion; and interest increased by $24 (less than 1 %). expense increased $6,686 due to the completion of the Convention License, fees and permits increased by $6,289 (25%) mainly due to Center Expansion. increases in overall construction and development activities, 23 CITY OF ANAHEIM • Use of money and property increased by $5,679 (148%) primarily Proprietary funds. The City's proprietary funds provide the same type of due to $5,389 of proceeds from sale of capital asset, and $385 information found in the government-wide financial statements, but in more increase in investment income. detail. The significant factors of the changes in fund net position of each proprietary fund are discussed in the government-wide financial analysis of General Fund expenditures increased by $13,723 (4%), of which $12,556 business-type activities. (5%) was attributable to an increase in labor and benefit costs due to higher employee benefit costs, hiring of new police officers, and pay rate increases The Electric Utility net position increased $33,343 (1 0%) in the from various labor contracts, The key elements of the changes as current fiscal year. discussed in the government-wide financial analysis of the governmental activities. The Water Utility fund net position increased $4, 186 (2%) in the current fiscal year. The Housing Authority Fund reve nues decreased by $15,523 (1 5%) primarily due to one-time revenues in the prior fiscal year related to $10,803 The Sanitation fund net position increased $2,275 (2%) in the of proceeds from the sale of land for housing development, and $6,226 in current fiscal year. ground lease reve nue from the Hermosa Village project; partially offset by a $937 increase in federal funding for Section 8 re ntal assistance. The Golf Courses fund net position decreased $640 (1 0%) in the current fiscal year. The Housing Authority expenditures increased by $5,700 (7%), essentially due to an increase of $1,037 in Section 8 rental assistance, as fewe r The Convention, Sports and Entertainment Venues fund net position residents were assisted at a higher cost per resident; $3,016 in properties decreased $2,207 (less than 1 % ) in the current fiscal year acquired for multifamily affordable housing and related tenant relocation; and an increase of $1,391 in tenant improvements to the second floor of The ARTIC Management fund increased net position by $1, 101 Anaheim West Tower and parking structure. (less than 1 % ). Total non major governmental funds revenues decreased by $45,007 (34% ). GENERAL FUND BUDGETARY HIGHLIGHTS The most significant factors of the changes are discussed in the government-wide financial analysis of the governmental-activities. During the year, the original budget was amended to increase appropriations by $7, 146 (2%). The increase in appropriations was primarily Total nonmajor governmental funds other financing sources decreased by the result of the carryover of prior year appropriations and amendments $5,889 (9%) primarily due to a decrease in loan issuances of $3,875; and amounting to $2,611 and the reallocation of appropriations from other funds decrease in net transfer of $2,014 is mainly due to transfer from the General of $4,535. These amendments were funded from actual revenue increases Fund for the 800 MHz equipment acquisition in the prior fiscal year. and from savings in other programs of the General Fund during the year. Total non major governmental fu nds expenditures increased by $7, 158 (6%) General Fund revenues of $390,350 were greater than budgeted revenues Debt services increased $1 ,467 of which principal payment decreased of $373,006 by $17,344 (5%), primarily due to stronger development $1 1 ,374 due to the repayment in full of the General Obligation Bonds and activities and proceeds from the sale of the Auto Center Drive real property. the 1997 Series C Anaheim Resort Improvement Term Bonds in the prior fiscal year; interest payment increased $12,841 primarily due to scheduled General Fund expenditures were less than budgeted. Of the total accretion payments of the 1997 Series C Anaheim Resort Improvement appropriations of $326, 160, approximately 6%, or $1,944, went unspent. Capital Appreciation Bonds. Other key elements of the changes are There were no significant variances. discussed in the government-wide financial analysis of the governmental activities. 24 CITY OF ANAHEIM CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS (net of accumulated depreciation) June 30, 2018 AND 2017 Governmental Business-type Total Activities Activities Government 2018 201 7 2018 2017 2018 2017 Land $ 658,827 $ 646,359 $ 89,505 $ 89,505 $ 748,332 $ 735,864 Construction in Progress 71,013 59,098 200,603 299,828 271,616 358,926 Building, structures, and improvements 193,896 192,256 718,550 525, 141 912,446 717,397 Utility plant 1,037,864 1,070,268 1,037,864 1,070,268 Machinery and equipment 44,487 39,015 13,308 12,860 57,795 51,875 Infrastructure 433, 131 438,302 433, 131 438,302 Total $ 1,401 ,354 $ 1,375,030 $ 2,059,830 $ 1,997,602 $ 3,461,184 $ 3,372,632 Capital assets. The City's investment in capital assets for its governmental ($1 ,330), and the compressed natural gas (CNG) detection system and business-type activities at June 30, 2018 amounted to $3,461 , 184 (net design ($450). Various software and equipment upgrades totaled of accumulated depreciation). This investment in capital assets included $684 including the Enterprise Permit Tracking and Land land, construction in progress, buildings, structures and improvements, Management system ($590). utility plant, machinery and equipment, and infrastructure. The total increase over the prior fiscal year was 3% ($88,552), of which governmental • Completion of $23,720 of construction work in progress including activities increased 2% ($26,324) and business-type activities increased neighborhood street improvements ($8,538), Pioneer Park 3% ($62,228). improvement ($1 , 128), 800 MHz equipment acquisition ($6,025), Gilbert Street improvement ($932), and Honda Center LED lighting Governmental activities capital asset additions totaled $67,419, capital project ($2,221 ). assets transfer to business-type activities was $1 14, capital asset • Acquisitions of various vehicles and equipment totaling $7,353. retirements, net of accumulated depreciation was $1 ,595 and offset by current year depreciation of $39,386. Major capital asset activities during • Public right-of-way and land and building additions of $23,049 which the current fiscal year include the following : include $8,381 for street construction purposes, $5,027 for housing development purposes, and $5,467 for parks and community • Addition of $37,016 in construction work in progress which consist centers, and $4, 154 for other general improvements. of various street improvements and street widening projects totaled • Sale of land and building with a net book value of $73. $15,068 including the Brookurst Street widening ($4, 170), Ball/ The increase in business-type activities is primarily due to increases in the Sunkist Street Improvement ($3, 134), Orangewood Street Widening following: ($1 ,225), Gene Autry Way Street Improvement ($769), and Gilbert Street Improvement ($757). Park developments totaled $11,400 • The Electric Utility increase of $29,204 (3%) is comprised of capital including the Ponderosa Park ($7,430), Anaheim Coves North Park asset additions of $77,701 , transfers in from Water Utility of $475, Improvement ($2, 158). Building and structure improvements totaled and partially offset by $48,972 for the curre nt year addition to $9,865 including Fire Station 5 construction ($4,627), Honda Center accumulated depreciation. Construction work in progress increased arena seating ($3,337), the LED lighting project at the Honda Center by $53, 162 mainly due to $74, 592 in additions of capital projects 25 CITY OF ANAHEIM offset by work completed of $21 ,430. Construction work in progress • The Sanitation Utility increase of $6,440 (6%) is comprised of capital of the Electric Utility includes replacement of aging overhead asset additions of $9,228, transfers in from the governmental electrical lines with state-of-the-art underground projects of activities of $114, and partially offset by the current year additions to continued improvements related to Underground District #64 at accumulated depreciation of $2,900 and capital asset retirements Orangewood and Harbor Boulevard; Underground District #63 at net of accumulated depreciation of $2. Construction work in Lincoln and Rio Vista; substantial progress made in the construction progress decreased $2,944 mainly due to additions of $8,698 for and purchase of materials related to the Harbor Substation, which is bond funded sanitary system improvement projects including the located at the Northeast corner of Katella Ave nue and Zyen Street, sewer system improvements on La Palma, Cerritos, and Cresent, ongoing work related to replacement of line extension; installation of offsetting by the completion of $5,754 of sanitary improvements on fiber optic equipment; upgrading communication equipment, and Cerritos and Sycamore. improvements to other general facilities; installation of 43, 796 feet of direct buried cable, replacement of switches, breakers, poles, cable • The Golf Courses decrease of $503 (5%) includes capital asset and conduit throughout the city, re placement of 1,705 aging street additions of $6 offset by the capital asset retirement net of lights with more efficient LED lights, acquisition of 400 new accumulated depreciation of $12 and current year additions to transformers to re place aging ones; and completion of Phase 2 of accumulated depreciation of $497. the Customer Info rmation System. These improvements to the Electric Utility facilities will provide more efficient and functional The Convention, Sports and Entertainment Ve nues increase of services to Anaheim's citizens. The Electric Utility also retired the $7,835 (2%) is comprised of capital asset additions of $24,629, and fully depreciated San Juan Coal Unit located in New Mexico. partially offset by the current year additions to accumulated depreciation of $16,469 and capital asset retirements net of • The Water Utility increase of $21,559 (7%) is comprised of capital accumulated depreciation of $325. The Convention Center Expansion Betterment VII bond funded project completed with a asset additions of $33,274 and partially offset by transfers out to the current year cost increase of $17,578. The entire project totaled Electric Utility of $475, capital asset retirements net of accumulated $203,823 was placed into service in September 201 7. Other capital depreciation of $83, and current year accumulated depreciation asset additions include the Stadium ballfield lighting upgrade addition of $11,15 7. Construction work in progress increased by ($1 ,145). $30,005 primarily due to $32,655 in additions of capital projects offset by work completed of $2,650. These projects include La The ARTIC Management decrease of $2,307 (1 % ) is mainly due to Palma reservoir and Pump Station Replacement, Katella Ave nue the current year addition to accumulated depreciation. Water Main Replacement, Construction of Well 59 Equipping, Alderdale/Maychelle Water Main Replacement. Additional info rmation on the City's Capital Assets can be found in notes 1 and 6 of the notes to the financial statements, on page 51 and pages 64-65 of this report. 26 CITY OF ANAHEIM LONG-TERM LIABILITIES JUNE 30, 2018 AND 2017 Governmental Business-type Total Activities Activities Government * * 2018 2017 2018 2017 2018 2017 Revenue bonds $ 621 ,675 $ 627,589 $ 1,214,339 $ 1,235,400 $ 1,836,014 $ 1,862,989 Interest payable 2,998 2,635 2,998 2,635 Capital lease obligations 1,550 1,738 1,550 1,738 Notes and loans payable 28,008 29,577 16,972 20,523 44,980 50,100 Self-insurance 54,312 51 ,865 54,312 51 ,865 Compensated absences 21,090 20,941 21 ,090 20,941 Decommissioning provision 116,523 116,477 116,523 116,477 Net OPEB liability 138,177 147,185 48,475 51,635 186,652 198,820 Net pension liability 603,170 518,494 174,575 149,319 777,745 667,813 Total $ 1,467,982 $ 1,397,389 $ 1,573,882 $ 1,575,989 $ 3,041 ,864 $ 2,973,378 * As adjusted due to implementation of Governmental Accounting Standards Board Statement No. 75 Long-term liabilities. The City's outstanding long-term liabilities, including The City's business-type activities outstanding long-term liabilities reve nue bonds, capital leases, notes and loans payable, self-insurance, decreased $2, 107 (less than 1 %). The decreases are primarily due to compensated absences, provision for decommissioning costs, net OPEB principal and decommissioning liability payments of $41 , 140; decrease in liability, and net pension liability totaled $3,041 ,864 at June 30, 2018. Of this net OPEB liability of $3, 160, reductions of $28,845 in bond premiums due to total, $1 ,467,982 (48%) was in governmental activities and $1,573,882 amortization and bond refunding; offset by increases in principal and (52%) in business-type activities. The significant increase in city-wide long premium totaled $38,398 from the issuances of the 2017 Series A and B term liabilities is primarily due to increase in net pension liability resulting Electric Revenues Bonds in the principal amount of $237,745 to refund from an actuarial change in assumption in accounting discount rate that was portion of outstanding balances of the 201 1-A, 2012-A and the 2016 A-B used to measure the total pension liability. This change in assumption Electric Revenue Bonds, and the 2018 Sewer Revenue bonds in the equates to a pension liability increase of $144,022 for the City's three principal amount of $45,705 to refund the outstanding balance of $39,395 retirement pension plans for the measurement date ended June 30, 2017 2007 Sewer Revenue Bonds, decommissioning liability increased $7,021 and reported in the City's financial for the period ended June 30, 2018. and net pension liability increased $25,256. The City's governmental activities outstanding long-term liabilities increased Additional information on the City's long-term liabilities can be found in $70,593 (5%) during the current fiscal year. The increases are primarily due notes 7, 8, 10 and 11 of the notes to the financial statements, on pages 67- to the increase in self-insurance of $2,447, compensated absences of $149, 86 of this report. net pension liability of $84,676, accrued accretion payable of $19,883 on the 1997 Anaheim Resort Improvement Bonds; and $3,434 issuances of a ECONOMIC FACTORS loan payable for technology equipment and the acquisition of the There remains a focus on public pensions and their sustainability; many community learning center. These increases are offset by decreases in net assumptions are used to estimate the ultimate liability of pensions and the OPEB liability of $9,008 and current year principal payments of $30,988. contributions that will be required to meet those obligations. One of the most significant factors used in determining the liability and the funding requirements is the rate of return that investments will yield prior to making 27 CITY OF ANAHEIM payments, known as the discount rate. The City's pension plans currently Abatement can be found in note 5 of the notes to the financial statements utilize a discount rate of 7.50%, which is used in determining the unfunded on page 63 of this report. pension liability and funding requirements. In December 2016, the California Senate Bill 1X 2 signed into law in April 2011 mandated that all CalPERS Board of Administration voted to lower this rate in its actuarial assumptions from 7.50% to 7.00% over a three-year phase in beginning California utilities are required to reach 25% re newable power in their power portfolios by 2016, 33% by 2020 and 50% by 2030. The higher renewable with the June 30, 2016 actuarial valuation. The reduction of discount rate power costs will increase future power supply costs. The Electric Utility has will be a significant increase in the unfunded liability and the contributions required to meet those obligations. Beginning in fiscal years 201 8-2019 to a number of strategies to mitigate the potential cost impacts. 2020-2021, the discount rates will be 7.375%, 7.25% and 7.00% REQUESTS FOR INFORMATION respectively. Additional info rmation about the City's retirement plans can be found in note 10 of the notes to the financial statements on pages 79-83 of This financial report is designed to provide a general overview of the City's this report. finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this re port or The State of California enacted pension legislation that went into effect in requests for additional information should be addressed to the Office of the January 2013 and applies mainly to new public employees. Some of the Finance Director, City of Anaheim, 200 South Anaheim Boulevard, Suite major changes include mandatory cost sharing by employees, reducing the 643, Anaheim, California, 92805. The City's Comprehensive Annual overall benefit level (e.g. percentage of pay), increasing the retirement age, Financial Report can also be found on the City's website at and placing a cap on the salary used to determine retirement benefits. The www.anaheim.net. impacts to the City for these changes for future employees have yet to be determined. For the 2019 fiscal year, the City appropriated $345,915 in estimated available resources of $388,053 for General Fund spending. This leaves $42, 138 in estimated available reserves, which is 12% of General Fund appropriations. The City's long-standing policy is to maintain General Fund reserves of at least 7% to 10% of annual appropriations. The City annually reviews all of its fees as part of the budget adoption process. Developer, construction, and other fees applicable to residents and development doing business in the City are adjusted in June of each year to reflect recurring costs. To urism plays a significant role in the economies of California, Orange County and the City of Anaheim. While Anaheim has been able to compete for and capture a significant portion of tourism revenue, Anaheim has long recognized its inability to robustly tap into the upscale convention and tourism business. In May 2013 and June 2015, the City entered into five economic assistance agreements to provide economic assistance in the development of four-diamond quality hotels thus creating the desired number of luxury rooms within the City. As such the program was rescinded for terminated for future developments in December 2016. Provision of economic assistance is contingent upon completion of construction of the hotels, the commencement of and continued operations as a four-diamond quality, and the generation of and payment to the City of TOT. The contemplated hotels have yet to be built, and therefore cannot operate, generate nor pay TOT, and as such no economic assistance is required by the City at this time. Once the hotels are constructed and operated at the required quality level, the City will use an amount equal to 70% of the TOT generated and paid to the City to fund the corresponding economic assistance referenced above. Additional information about the City's Tax 28 � 1n n I me. . . � B:ailiI,r,; flmu1d�! !i tii1l;;;i1nfu1rt;� CITY OF ANAHEIM Statement of Net Position June 30, 2018 (In thousands) Governmental Business-type Activities Activities Tota l ASSETS Cash and cash equivalents $ 71,128 $ 49,111 $ 120,239 Investments 248,221 172,278 420,499 Accounts receivable, net 23,869 67,371 91 ,240 Accrued interest receivable 1,044 1,229 2,273 Internal balances, net 14,955 (14,955) Due from other governments 38,584 38,584 Inventories 1,232 17,570 18,802 Land held for resale, net 29,014 29,014 Prepaid and other assets 12,717 99,555 112,272 Restricted cash and cash equivalents 46,219 200,598 246,8 17 Restricted investments 153,838 192,046 345,884 Unamortized prepaid bond insurance 1,137 1,137 Notes receivable, net 71,048 71 ,048 Due from Successor Agency 10,538 10,538 Capital assets, net: Nondepreciable 729,840 290, 108 1,019,948 Depreciable 671 ,514 1,769,722 2,441,236 Total assets 2,124,898 2,844,633 4,969,531 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding bonds 1,508 19,215 20,723 Deferred OPEB related items 15,050 5,119 20,169 Deferred pension related items 163,629 44,337 207,966 Total deferred outflows of resources 180, 187 68,671 248,858 LIABILITIES Accounts payable 26,721 87,528 114,249 Wages payable 8,734 1,644 10,378 Due to other governments 28,950 28,950 Interest payable 4,762 12,421 17,183 Arbitrage rebate liability 132 132 Deposits 7,251 8,963 16,214 Unearned revenues 3,659 3,340 6,999 Long-term liabilities: Due within one year 56,612 34, 191 90,803 Due in more than one year 670,023 1,313,643 1,983,666 Interest payable 2,998 2,998 Net other postemployment benefits (OPEB) liability 138, 177 48,475 186,652 Net pension liability 603, 170 174,575 777,745 Total liability 1,548,059 1,687,910 3,235,969 DEFERRED INFLOWS OF RESOURCES Deferred regulatory credits 103,773 103,773 Deferred item on refu nding bonds 638 638 Deferred OPEB related items 10,245 3,593 13,838 Deferred pension related items 22,916 5,564 28,480 Total deferred inflows of resources 33, 161 113,568 146,729 NET POSITION Net investment in capital assets 1,008,489 1,009,302 2,017,791 Restricted for: Debi service 22,769 22,769 Capital projects 98,577 53,504 152,081 Community and economic development 106,596 106,596 Streets, roads and transportation improvement projects 44,358 44,358 Other purposes 17,452 10,590 28,042 Unrestricted (551 ,607) 15,661 (535,946) Total net position $ 723,865 $ 1,111,826 $ 1,835,691 The accompanying notes are an integral part of these financial statements. 29 CITY OF ANAHEIM Statement of Activities Year Ended June 30, 2018 (In thousands) Net (Expense) Revenue and Program Revenues Changes in Net Position Indirect Operating Capital Expenses Charges for Grants and Grants and Governmental Business-type �enses Allocation Services Contributions Contributions Activities Activities Total Functions/Programs Governmental activities: General government $ 30,330 $ (14,685) $ 1,749 $ 782 $ (13,114) $ (13,114) Police 170,378 3,543 15,361 6,793 $ 997 (150,770) (150,770) Fire & Rescue 80,607 921 11,621 1,193 132 (68,582) (68,582) Community & Economic Development 95,620 447 7,421 86,781 (1 ,865) (1,865) Planning & Building 24,278 1,098 16,573 1,918 (6,885) (6,885) Public Works 55,969 12 17,378 17,096 18,415 (3,092) (3,092) Community Services 38,270 750 3,227 957 11,639 (23, 197) (23, 197) Public Utilities 2,346 (2,346) (2,346) Convention, Sports & Entertainment 19,660 270 14,231 8,157 2,458 2,458 Interest on long-term debt 34,938 (34,938) (34,938) To tal governmental activities 552,396 (7,644) 87,561 115,520 39,340 (302,331 ) (302,331) Business-type activities: Electric Utility 389,997 4,577 443,755 4,206 $ 53,387 53,387 Water Utility 74 ,611 1,144 79,074 855 4,174 4,174 Sanitation Utility 60,649 496 65, 138 88 458 4,539 4,539 Golf Courses 4,781 117 4,273 (625) (625) Convention, Sports & Entertainment Venues 64,748 1,310 44,984 2,834 (18,240) (18,240) ARTIC Management 6,218 1,343 (4,875) (4,875) Total business-type activities 601 ,004 7,644 638,567 88 8,353 38,360 38,360 Total government $ 1,1 53,400 $ $ 726, 128 $ 115,608 $ 47,693 (302,331 ) 38,360 $ (263,971) General revenues: Taxes: Property taxes 76,547 76,547 Sales and use taxes 80,732 80,732 Transient occupancy taxes 154,925 154,925 Other taxes 9,076 9,076 Gain on sale of capital asset 6,258 6,258 Unrestricted investment earnings 2,783 4,423 7,206 Other 105 105 Transfers 4,114 (4,114) Total general revenues and transfers 334,540 309 334,849 Change in net position 32,209 38,669 70,878 Net position at beginning of year, as adjusted 691 ,656 1 ,073, 157 1,764,813 Net position at end of year $ 723,865 $ 1,111 ,826 $ 1,835,691 31 The accompanying notes are an integral part of these financial statements. CITY OF ANAHEIM Balance Sheet Governmental Funds June 30, 2018 (In thousands) Non major Total Housing Governmental Governmental General Authority Funds Funds ASSETS Cash and cash equivalents 9,482 $ 17,466 23,935 $ 50,883 Investments 31,390 61,241 84,287 176,918 Accounts receivable, net 17,630 15 1,702 19,347 Accrued interest receivable 152 255 383 790 Due from other funds 1,544 2,150 12,060 15,754 Due from other governments 16,983 167 21 ,434 38,584 Inventories 238 238 Land held for resale, net 6,032 22,982 29,014 Prepaid and other assets 281 34 9,091 9,406 Restricted cash and cash equivalents 963 43,826 44,789 Restricted investments 153,838 153,838 Notes receivable, net 47,017 24,031 71,048 Due from Successor Agency 10,538 10,538 Total assets 77,700 $ 135,340 408,107 $ 62 1,147 LIABILITIES Accounts payable 7,948 $ 706 13,081 $ 21,735 Wages payable 3,957 76 352 4,385 Deposits 5,579 110 1,562 7,251 Due to other funds 361 14,516 14,877 Due to other governments 2 1,500 1,502 Unearned revenue 589 493 22 1,104 Total liabilities 18,434 1,387 31 ,033 50,854 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 989 148 14,055 15,192 Unavailable resources- long-term notes receivable 47,017 24,031 71,048 Unavailable resources - due from Successor Agency 10,538 10,538 Total deferred inflows of resources 989 ______£,16 5 48,624 96,778 FUND BALANCES: Nonspendable : Inventory 238 238 Prepaid and other assets 281 34 9,091 9,406 Restricted: Anaheim Resort maintenance and improvement 5,286 5,286 Capital projects 7,664 7,664 Claims and judgments 5,124 5,124 Community & economic development projects 23,301 23,301 Debt service 148,492 148,492 Development impact projects 92,302 92,302 Grant purposes 70 4,360 4,430 Homebuyer assistance programs 944 6,958 7,902 Low and moderate income housing 57,041 57,041 Rental assistance 2,195 2,195 Streets, roads and transportation improvement projects 31 ,671 31,671 Committed: Capital projects 4,063 4,063 Assigned: Capital projects 5,237 5,237 Debt service 1,560 1,560 Housing projects 26,574 26,574 Other purposes 11,008 11,008 Unassigned 41,556 (11,535) 30,021 Total fund balances 58,277 86,788 328,450 473,515 Total liabilities, deferred inflows of resources, and fund balances 77,700 135,340 408,107 $ 62 1,147 The accompanying notes are an integral part of these financial statements. 33 CITY OF ANAHEIM Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2018 (In thousands) Total fund balances - governmental funds $ 473,515 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in the operation of governmental funds are not current financial resources and, therefore, are not reported in the funds. These assets consist of: Land $ 658,827 Construction in progress 68,310 Buildings, structures and improvements 349,644 Machinery and equipment 68,105 Infrastructure 874,960 Accu mulated depreciation (646,667) Total capital assets, net 1 ,373, 179 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as deferred inflows of resources in the funds. 96,778 Unamortized prepaid bond insurance ($1,13 7) and deferred charge on refunding bonds ($1 ,508) are not current financial resources, and, therefore, are not reported in the funds. 2,645 Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position. 21 ,311 Compensated absences, not otherwise included in the internal service funds, are not due and payable in the current period and, therefore, are not reported in the funds. (6 16) Certain liabilities are not due and payable in the current period, and therefore, are not reported in the funds. (27,448) Effects of net pension liability and net OPEB liability are not due and payable in the current period, and therefore, are not reported in the funds. Deferred outflows of resources 166,384 Net OPEB obligation (127,709) Net pension obligation (571,968) Deferred inflows of resources (31 ,280) (564,573) Long-term liabilities of governmental funds, including revenue bonds ($621 ,675), notes and loans payable ($24,554), and accrued interest payable ($4,697) are not due and payable in the cu rrent period and, therefore, are not reported in the funds. (650,926) Net position of governmental activities $ 723,865 34 The accompanying notes are an integral part of these financial statements. CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended June 30, 2018 (In thousands) Nonmajor Total Housing Governmental Governmental General Authority Funds Funds Revenues: Property taxes $ 76,547 $ 76,547 Sales and use taxes 81 ,680 81,680 Transient occupancy taxes 154,925 154,925 Other taxes 8,311 8,311 Licenses, fees and permits 31 ,342 $ 77 $ 13,628 45,047 Intergovernmental revenues 2,972 78,929 42,795 124,696 Charges for services 20,538 23,444 43,982 Fines, forfeits and penalties 2,988 2,988 Use of money and property 9,512 8,972 8,317 26,801 Other 984 170 24 1,178 To tal revenues 389,799 88,148 88,208 566,155 Expenditures: Current: City Council 847 847 City Administration 3,702 3,702 City Attorney 6,816 120 6,936 City Clerk 1,083 44 1,127 Human Resources 1,998 1,998 Finance 6,695 53 6,748 Police 148,598 7,740 156,338 Fire & Rescue 73,375 1,513 74,888 Community & Economic Development 1,682 82, 113 10,060 93,855 Planning & Building 22,161 1,488 23,649 Public Works 20,209 14, 122 34,331 Community Services 32, 131 1,911 34,042 Public Utilities 2,341 2,341 Convention, Sports & Entertainment 749 13,890 14,639 Capital outlay 1,530 6,650 38, 186 46,366 Debt service: Principal retirement 14,749 14,749 Interest charges 28,412 28,412 To tal expenditures 323,917 88,763 132,288 544,968 Excess of revenues over expenditures 65,882 (6 15) (44,080) 21, 187 Other financing sources (uses): Transfers in 27,631 2,161 67,721 97,513 Transfers out (86,685) (6,600) (93,285) Issuance of loan payable 2,250 2,250 Total other financing sources (uses) (59,054) 2,161 63,371 6,478 Net change in fund balances 6,828 1,546 19,291 27,665 Fund balances at beginning of year 51 ,449 85,242 309,159 445,850 Fund balances at end of year $ 58,277 $ 86,788 $ 328,450 $ 473,515 35 The accompanying notes are an integral part of these financial statements. CITY OF ANAHEIM Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2018 (In thousands) Net change in fund balances - total governmental funds $ 27,665 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlay as expenditures. However, in the Statement of Activities the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay ($46,366) exceeded depreciation ($33,359) in the cu rrent period. 13,007 Transfers of capital assets between governmental funds and proprietary funds do not require the use of financial resources and are not reported as transfers in the fu nds. (114) The net effect of other miscellaneous transactions involving capital assets (i.e., sales, trade-in, retirements and contributions) is to decrease net position. 13,657 Revenues in governmental funds provide current financial resou rces but have been included in the Statement of Activities in prior fiscal year. (16) Collections of notes and long-term receivables provide cu rrent financial resources to governmental funds but reduce receivables in the Statement of Net Position. (8,331) Proceeds from long-term debt provide current financial resources to governmental fu nds, but the issuance of debt increases long-term liabilities in the Statement of Net Position (2,250) Payments of principal on long-term debt use current financial resou rces in the governmental funds, but the repayments reduce long-term liabilities in the Statement of Net Position. 14,749 Certain expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore , are not reported as expenditures in governmental funds. (6,386) Net effect of accrued net pension liabilities and the related deferred outflows and deferred inflows of resources are not (21 ,343) reported as expenditures in the funds. Internal service funds are used by management to charge the costs of certain activities, such as insurance, employee benefits, and fleet services, to individual fu nds. The net expense of the internal service funds is reported with governmental activities. 1,571 Change in net position of governmental activities $ 32,209 The accompanying notes are an integral part of these financial statements. 36 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual - General Fund Year Ended June 30, 2018 (In thousands) Original Final Budgeted Budgeted Actual Va riance with Amounts Amounts Amounts Final Budget Revenues: Property taxes $ 73,082 $ 75,753 $ 76,547 $ 794 Sales and use taxes 82,203 82,203 81 ,680 (523) Transient occupancy taxes 154,600 154,600 154,925 325 Other taxes 8,419 8,419 8,311 (108) Licenses, fees and permits 23,452 23,452 31 ,342 7,890 Intergovernmental revenues 2,260 2,260 2,972 712 Charges for services 19,325 19,325 20,538 1,213 Fines, forfeits and penalties 2,827 2,827 2,988 161 Use of money and property 2,562 2,562 9,512 6,950 Other 4,144 1,605 1,535 (70) Total revenues 372,874 373,006 390,350 17,344 Expenditures: City Council 968 968 847 (121) City Administration 3,769 3,869 3,714 (155) City Attorney 7,197 7,197 6,851 (346) City Clerk 1,264 1,319 1,083 (236) Human Resources 2,172 2,172 1,998 (174) Finance 6,981 6,864 6,695 (169) Police 148,437 148,598 148,598 Fire & Rescue 71,111 73,846 73,846 Community & Economic Development 1,857 1,857 1,775 (82) Planning & Building 21 ,083 22,161 22, 161 Public Works 18,032 20,277 20,277 Community Services 32,769 33,610 33,160 (450) Public Utilities 2,552 2,552 2,341 (211) Convention, Sports & Entertainment 822 870 870 Total expenditures 31 9,014 326,160 324,216 (1,944) Excess of revenues over expenditures 53,860 46,846 66,134 19,288 Other financing sources (uses): Transfers in 28,524 28,524 27,631 (893) Transfers out (82,521) (82,521) (86,685) (4 ,164) Total other financing uses (53,997) (53,997) (59,054) (5,057) Net change in fund balance (137) (7,151) 7,080 14,231 Fund balance at beginning of year 51 ,449 51,449 51 ,449 Fund balance at end of year $ 51 ,312 $ 44,298 58,529 $ 14,231 Adjustment to reconcile to GAAP: Receipt of interfund receivable (551) Acquisition of capital assets using funds from interfu nd loan 299 Ending fund balance - GAAP basis $ 58,277 The accompanying notes are an integral part of these financial statements. 37 CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual - Housing Authority Year Ended June 30, 2018 (In thousands) Original Final Budgeted Budgeted Actual Va riance with Amounts Amounts Amounts Final Budget Revenues: Licenses, fees and permits $ 30 $ 30 $ 77 $ 47 Intergovernmental revenues 76,218 76,218 78,929 2,711 Use of money and property 586 586 9,285 8,699 Other 1,619 1,619 170 (1,449) To tal revenues 78,453 78,453 88,461 10,008 Expenditures: Community and Economic Development 126,178 126,178 88,458 (37,720) To tal expenditures 126,178 126,178 88,458 (37,720) Excess (deficiency) of revenues over expenditures (47,725) (47,725) 3 47,728 Other financing sources (uses): Transfers in 11 11 Transfers out To tal other financing sources 11 11 Net change in fund balance (47,725) (47,725) 14 47,739 Fund balance at beginning of year 85,242 85,242 85,242 Fund balance at end of year $ 37,517 $ 37,517 85,256 $ $47,739 Adjustments to reconcile to GAAP: Park fee credits received from the City for future housing projects 2,150 Swap of land held for resale parcel with the City (258) Sale of land held for resale (313) Cost of improvements to land held for resale 11 Decline in value of land held for resale (92) Prepaid software maintenance 34 Ending fund balance - GAAP basis $ 86,788 38 The accompanying notes are an integral part of these financial statements. CITY OF ANAHEIM Statement of Net Position Proprietary Funds June 30, 2018 (In thousands) Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities Electric Water Sanitation Golf Entertainment ARTIC Internal Utility Utility Utility Courses Ve nues Management Total Service ASSETS Current assets: Cash and cash equivalents $ 19,964 $ 8,236 $ 10,478 $ 1 $ 10,317 $ 115 $ 49,111 $ 20,245 Investments 70,309 29,005 36,904 36,060 172,278 71 ,303 Restricted cash and cash equivalents 26,037 3,462 2,193 8,443 40,135 526 Restricted investments 45,606 3,802 6,318 55,726 Accounts receivable, net 48,052 6,109 8,038 171 4,420 581 67,371 2,221 Accrued interest receivable 696 160 182 191 1,229 254 lnterfund receivable 451 451 198 Inventories 16,786 784 17,570 994 Prepaid and other assets 22,608 1,565 5 46 132 24,356 3,311 Total current assets 250,509 53, 123 64,118 172 59,477 828 428,227 99,052 Noncurrent assets: Restricted cash and cash equivalents, less current portion 145,738 1,073 2,217 11,435 160,463 904 Restricted investments, less current portion 80,593 34,291 14,063 7,373 136,320 Accounts receivable, less current portion 2,301 lnterfund receivable, less current portion 2,480 2,480 53 Prepaid and other assets 75, 199 75,199 Capital assets: Land 34,243 2,339 316 1,949 18, 135 32,523 89,505 Buildings, structures and improvements 120,688 18,858 706,559 171 ,041 1,017, 146 9,493 Utility plant 1,304,690 455,574 1,760,264 Machinery and equipment 8,517 820 21 ,261 2,482 33,080 75,063 Construction in progress 144,398 45,237 9,61 1 1,357 200,603 2,703 Total capital assets 1,483,331 503, 150 1 39, 132 21 ,627 747,312 206,046 3,100,598 87,259 Less accumulated depreciation (559,890) (162,510) (24,527) (12,867) (272,852) (8,122) (1,040,768) (59,084) Capital assets, net 923,441 340,640 114,605 8,760 474,460 197,924 2,059,830 28,175 Total noncurrent assets 1,227,451 376,004 130,885 8,760 493,268 197,924 2,434,292 31 ,433 Total assets 1,477,960 429, 127 195,003 8,932 552,745 198,752 2,862,519 130,485 DEFERRED OUTFLOWS OF RESOURCES: Deferred charge on refunding bonds 14,088 4,955 172 19,215 Deferred OPEB related items 2,568 973 666 44 868 5,119 1,123 Deferred pension related items 22,723 7,332 4,659 315 9,308 44,337 11,17 2 Total deferred outflows of resources 39,379 13,260 5,325 359 10,348 68,671 12,295 39 (continued) CITY OF ANAHEIM Statement of Net Position Proprietary Funds June 30, 2018 (In thousands) (continued) Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities Electric Water Sanitation Golf Entertainment ARTIC Internal Utility Utility Utility Courses Ve nues Management Total Service LIABILITIES Current liabilities (payable from cu rrent assets): Accounts payable $ 40,760 $ 14,648 $ 5,762 $ 426 $ 1,956 $ 384 $ 63,936 $ 4,986 Wages payable 563 239 102 8 521 1,433 4,349 Interest payable 1,879 1,879 65 Compensated absences 11,986 Long-term liabilities 5,273 649 5,098 3,500 14,520 13,770 Unearned revenues 3,340 3,340 2,555 Deposits 4,735 368 604 3 3,209 44 8,963 lnterfund payable 344 1,238 1,582 231 To tal current liabilities (payable from current assets) 51 ,331 15,599 7,117 1,675 16,003 3,928 95,653 37,942 Current liabilities (payable from restricted assets): Accounts payable 12,885 1,878 507 8,322 23,592 Wages payable 203 5 3 211 Interest payable 7,544 1,896 984 118 10,542 Arbitrage rebate liability 132 132 Long-term liabilities 15,731 3,490 450 19,671 To tal current liabilities (payable from restricted assets) 36,495 7,264 1,946 8,443 54, 148 Total current liabilities 87,826 22,863 9,063 1,675 24,446 3,928 149,801 37,942 Noncurrent liabilities: lnterfund payable, less current portion 2,064 2,064 182 Interest payable 2,998 2,998 Long-term obligations, less current portion 725,879 170,854 53,550 233,837 13,000 1,1 97, 120 54,034 Net OPEB liability 24,486 9,136 6,126 425 8,302 48,475 10,468 Net pension liability 91 ,561 29,417 16,674 1,232 35,691 174,575 31 ,202 Provision for decommissioning costs 116,523 116,523 Total noncurrent liabilities 958,449 211,471 76,350 1,657 277,830 15,998 1,541 ,755 95,886 Total liabilities 1,046,275 234,334 85,413 3,332 302,276 19,926 1,691 ,556 133,828 DEFERRED INFLOWS OF RESOURCES Regulatory credits 101,584 2,189 103,773 Deferred item on refunding bonds 638 638 Deferred OPEB related items 1,815 677 454 32 615 3,593 777 Deferred pension related items 2,483 1,755 376 28 922 5,564 1,104 Total deferred inflows of resources 105,882 4,621 1,468 60 1,537 113,568 1,881 NET POSITION Net investment in capital assets 291 ,606 204,196 71,263 8,760 252,053 181 ,424 1,009,302 24,075 Restricted for: Debt service 19,364 2,955 450 22,769 Capital projects 15,685 2,954 10,822 24,043 53,504 Other purposes 10,590 10,590 Unrestricted 27,937 (6,673) 30,91 2 (2,861 ) (16,816) (2,598) 29,901 (17,004) Total net position $ 365,182 $ 203,432 $ 113,447 $ 5,899 $ 259,280 $ 178,826 1,1 26,066 $ 7,071 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (14,240) Net position of business-type activities $ 1,111 ,826 40 The accompanying notes are an integral part of these financial statements. CITY OF ANAHEIM Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Year Ended June 30, 2018 (In thousands) Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities Electric Water Sanitation Golf Entertainment ARTIC Internal Utility Utility Utility Courses Venues Management Total Service Funds Operating revenues: Sales of retail and wholesale electricity, net $ 400,627 $ 400,627 Transmission revenues 37,356 37,356 Sales of water, net $ 77,903 77,903 Solid waste collection fees $ 46,741 46,741 Wastewater fees 13,500 13,500 Street cleaning fees 3,248 3,248 Green fees and cart rentals $ 3,831 3,831 Facilities rental $ 31 ,611 $ 1,307 32,918 Concession fe es 238 11,391 11,629 Charges for services $ 146,416 Other 5,772 1,171 1,649 204 1,982 36 10,814 116 Total operating revenues 443,755 79,074 65, 138 4,273 44,984 1,343 638,567 146,532 Operating expenses: Cost of purchased power 244,687 244,687 Fuel and generation of power 19,676 19,676 Cost of purchased water 35,028 35,028 Treatment and pumping of water 7,954 7,954 Maintenance, operations and administration 60,429 15,949 56,605 4,393 41,430 3,548 182,354 52,018 Insurance premiums and claims 19,229 Compensated absences and other benefits 67,015 Depreciation and amortization 48,972 11,15 7 2,900 497 16,469 2,307 82,302 6,027 To tal operating expenses 373,764 70,088 59,505 4,890 57,899 5,855 572,001 144,289 Operating income (loss) 69,991 8,986 5,633 (617) (12,915) (4,512) 66,566 2,243 Nonoperating income (expenses): Intergovernmental revenues 88 88 Investment income 2,401 1,057 496 (11) 492 (12) 4,423 8 Interest expense (21 , 135) (5,776) (1,706) (8,003) (363) (36,983) (169) Gain (loss) from disposal of capital assets (2) (12) (261 ) (275) 100 Total nonoperating expenses (18,734) (4,719) (1,124) (23) (7,772) (375) (32,747) (61) Income (loss) before contributions and transfers 51,257 4,267 4,509 (640) (20,687) (4,887) 33,819 2,182 Capital contributions 4,206 855 572 2,834 8,467 Transfers in 492 600 16,571 5,988 23,651 Transfers out (22,612) (1,536) (2,806) (925) (27,879) Change in net position 33,343 4,186 2,275 (640) (2,207) 1,101 38,058 2,182 Net position at beg inning of year, as adjusted 331 ,839 199,246 111,172 6,539 261 ,487 177,725 4,889 Net position at end of year $ 365, 182 $ 203,432 $ 113,447 $ 5,899 $ 259,280 $ 178,826 $ 7,071 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 611 Change in net position of business-type activities $ 38,669 41 The accompanying notes are an integral part of these financial statements. CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2018 (In thousands) Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities Electric Water Sanitation Golf Entertainment ARTIC Internal Utility Utility Utility Courses Venues Management Total Service Funds Cash flows from operating activities: Receipts from customers and users $ 444,654 $ 79,101 $ 63,320 $ 3,803 $ 44,426 $ 927 $ 636,231 Receipts from interfund services provided 3,439 308 20 3,767 $ 146,416 Payments to suppliers (268,313) (35,749) (42,562) (3,464) (13,366) (3,395) (366,849) (30,851) Payments for salaries, wages and other benefits (46,657) (15,732) (8,365) (577) (21 ,702) (93,033) (85,094) Payments for interfu nd services used (14,377) (5,249) (3,356) (199) (3,488) (42) (26,711) (4,565) Payments for insurance premiums and claims (15,681 ) Other receipts 1,615 442 43 2,100 141 Net cash provided by (used for) operating activities 118,746 22,679 10,672 ---5- 5,870 (2,467) 155,505 10,366 Cash flows from noncapital financing activities: Receipt of interfund balances 18 1,238 1,256 1,027 Payment of interfund balances (541) (344) (700) (1 ,585) (1,054) Payment of decommissioning costs (6,866) (6,866) Transfers in 600 2,488 3,088 Transfers out (22,612) (1,044) (2,806) (925) (27,387) Operating grant receipts 88 88 Net cash provided by (used for) noncapital financing activities (30,001 ) (788) (2,718) 538 (925) 2,488 (31 ,406) (27) Cash flows from capital and related financing activities: Proceeds from sale of capital assets 133 Capital contributions 3,166 855 181 4,202 Capital purchases (65,592) (30,327) (8,300) (6) (25,276) (129,501) (4,539) Proceeds from issuance of bonds 273,772 54,741 328,513 Transfer to refunded bond escrow agent (274,663) (39,452) (3 14,115) Debt Issuance costs (1 ,135) (278) (1,413) Principal payments on long-term debt (21 ,334) (3,370) (1 , 114) (4,847) (3,500) (34, 165) (2,610) Interest payments (28,614) (7,679) (1,906) (11,317) (49,516) (198) Receipt of capital grant 380 Receipt of interfund balances for capital purposes 344 344 231 Payment of interfund balances for capital purposes (551) (551) (7) Transfers in for capital purposes 17 16,571 3,500 20,088 Transfers out for capital purposes (17) (17) Net cash provided by (used for) capital and related financing activities (114,039) (40,538) 3,691 � (24,688) (176,131) (6,610) Cash flows from investing activities: Purchase of investment securities (86,583) (48,453) (34,561 ) (17,110) (186,707) (33,830) Proceeds from sale and maturity of investment securities 65,016 7,224 17,084 20 57,919 147,263 29,464 Interest received 5,597 1,368 983 1,038 8,986 812 Interest paid (11) (12) (23) (7) Net cash provided by (used for) investing activities (15,970) (39,861) (16,494) ---9- 41 ,847 (12) (30,481) (3,561 ) Increase (decrease) in cash and cash equivalents (41 ,264) (58,508) (4,849) --(-5) 22, 104 9 (82,513) 168 Cash and cash equivalents at beginning of the year 233,003 71 ,279 19,737 6 8,091 106 332,222 21 ,507 Cash and cash equivalents at end of the year $ 191 ,739 $ 12,771 $ 14,888 $ 1 $ 30, 195 $ 115 $ 249,709 21 ,675 42 (continued) CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended June 30, 2018 (In thousands) (continued) Business-type Activities - Enterprise Funds Convention, Governmental Sports and Activities Electric Water Sanitation Golf Entertainment ARTIC Internal Utility Utility Utility Courses Venues Management Total Service Funds Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) $ 69,991 $ 8,986 $ 5,633 $ (6 17) $ (12,915) $ (4,512) $ 66,566 $ ----2,243 Adjustment to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation 48,972 11,157 2,900 497 16,469 2,307 82,302 6,027 Increase in provision for decommissioning costs 5,890 5,890 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: Accounts receivable 407 (55) (222) (28) (24) (363) (285) 983 Inventories (2 ,819) (109) 2 (2,926) (84) Prepaids and other assets (2,426) 331 (5) 13 11 (2,076) (221 ) Accounts payable (9,978) 808 1,418 99 486 100 (7,067) (2,882) Wages and benefits payable 4,778 1,17 1 909 54 2,373 9,285 1,475 Unearned revenues (82) (10) (92) 275 Deposits 565 37 39 (452) 189 Compensated absences and self-insurance liability 2,550 Regulatory credits 3,366 353 3,719 To tal adjustments 48,755 13,693 5,039 622 18,785 2,045 88,939 8,123 Net cash provided by (used for) operating activities $ 118,746 $ 22,679 $ 10,672 $ 5 $ 5,870 $ (2,467) $ 155,505 $ 10,366 Schedule of noncash investing, capital and noncapital financing activities: Capital assets financed through capital leases $ 1,184 Capital contributions $ 1,040 $ 572 $ 2,653 $ 4,265 Transfers in (out) of capital assets 475 $ (475) Decrease in fair value of investments (1 ,760) (367) (494) (428) (3,049) (831) Reconciliation of cash and cash equivalents: Cash and cash equivalents $ 19,964 $ 8,236 $ 10,478 $ $ 10,317 $ 115 $ 49 ,111 $ 20,245 Restricted cash and cash equivalents, current portion 26,037 3,462 2,193 8,443 40,135 526 Restricted cash and cash equivalents, noncurrent portion 145,738 1,073 2,217 11,435 160,463 904 To tal cash and cash equivalents $ 191)39 $ 12,771 $ 14,888 $ $ 30,195 $ 115 $ 249,709 $ 21 ,675 43 The accompanying notes are an integral part of these financial statements. CITY OF ANAHEIM Statement of Fiduciary Net Position (Deficit) Fiduciary Funds June 30, 2018 (In thousands) Successor Investment Agency Trust Private Purpose Agency Funds Trust Fund Funds ASSETS Restricted cash and cash equivalents $ 352 $ 30,240 $ 2,659 Restricted investments 1,239 96 4,600 Accrued interest receivable 6 57 Accounts receivable, net 2 28 Notes receivable, net 827 Prepaid and other assets 128 Unamortized prepaid bond insurance 718 To tal assets 1,597 32,068 7,287 LIABILITIES Accounts payable 47 Wages payable Interest payable 4,832 Unearned revenues 6 Due to bond holders 7,287 Long-term liabilities: Due within one year 9,133 Due in more than one year 202,785 To tal liabilities 216,804 $ 7,287 DEFERRED INFLOWS OF RESOURCES Deferred gain on refunding bonds 292 To tal deferred outflows of resources 292 NET POSITION Held in trust for pool participants 1,597 Held in trust for other purposes ( deficit) (185,028) To tal net position (deficit) $ 1,597 $ (185,028) The accompanying notes are an integral part of these financial statements. 44 CITY OF ANAHEIM Statement of Changes in Fiduciary Net Position (Deficit) Fiduciary Funds Year Ended June 30, 2018 (In thousands) Successor Investment Agency Trust Private Purpose Funds Trust Fund ADDITIONS Property taxes $ 26,880 Contributions to pooled investments $ 7,494 Interest and investment income 13 628 Rental income 432 Other 177 To tal additions 7,507 28, 117 DEDUCTIONS Distributions from pool investments 7,383 Salaries and administration 449 Program expenses 1,035 Interest expense 10,471 To tal deductions 7,383 11,955 Change in net position 124 16, 162 Net position (deficit) held in trust at beginning of year 1,473 (201 , 190) Net position (deficit) held in trust at end of year $ 1,597 $ (185,028) 45 The accompanying notes are an integral part of these financial statements. CITY OF ANAHEIM into various governmental and business-type activities and funds of the City Notes to Financial Statements as applicable. (Amounts in thousands) Anaheim Housing and Public Improvement Authority (AHPIA}, a joint power NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: authority, was created by and between the City and the Anaheim Housing The financial reporting entity Authority as a vehicle to re duce local borrowing costs and promote greater use of existing and new financial instruments and mechanisms. Members of As defined by U. S. generally accepted accounting principles (GAAP) that the City Council of the City serves as the members of the Board and are established by the Governmental Accounting Standards Board (GASB), Directors of the AHPIA. Financial activity of the AHPIA has been blended the financial reporting entity consists of the primary government, as well as into the City's CAFR into various business-type activities and funds of the its component units, which are legally separate organizations for which the City as applicable. elected officials of the primary government are financially accountable. Financial accountability is defined as 1) appointment of a voting majority of The City is a participant in four joint ventures and jointly-owned properties the component unit's board, and either a) the ability to impose will by the (see note 12), which are not considered part of the financial re porting entity, primary government, or b) the possibility that the component unit will as the City does not have significant equity interests in the joint ventures provide a financial benefit to or impose a financial burden on the primary and jointly-owned properties. government; and 2) the component unit is fiscally dependent on and there is a potential for the component unit to provide specific financial benefit to or The City is a participant in the California Municipal Finance Authority impose financial burden on the primary government regardless of whether (CMFA), a non-profit Joint Power Authority created to strengthen local the component unit has a) a separately elected government board, b) a communities by assisting with the financing of economic development and governing board appointed by a higher level of government, or c) a jointly charitable activities throughout the State of California. The CMFA acts as appointed board . conduit issuer by assisting local governments, non-profits and businesses with the issuance of taxable and tax-exempt financing aimed at improving The accompanying financial statements present the City of Anaheim (City), the quality of life in California. The City has no financial, budgeting and the primary government, and its component units. The financial data of the operational obligations and responsibilities of the CMFA. The CMFA is a component units are included in the City's re porting entity because of the jointly governed organization. The City has recorded assets and liabilities significance of their operational or financial relationships with the City. from the City's debt issuances through the CMFA in the business-type activities and funds of the City as applicable (see note 8). The component units described below are each legally separate from the City, but are so intertwined with the City that they are, in substance, the Basic financial statements same as the City. They are re ported as part of and accountable to the City In accordance with GASB Statement No. 34 - Basic Financial Statements and blended into the government-wide and fund financial statements. and Management's Discussion and Analysis for State and Local Anaheim Housing Authority (Housing Authority) is a separate entity Governments, the basic financial statements include both government-wide primarily funded by the U.S. Department of Housing and Urban and fund financial statements. Development to administer funds received under the Federal Housing The government-wide financial statements (Statement of Net Position and Assistance Payments program. City Council members, in separate session, Statement of Activities) re port on the City and its component units, serve as the governing board of the Housing Authority. All budgeting, excluding fiduciary activities. Governmental activities, which normally are accounting and administrative fu nctions of the Housing Authority are supported by taxes and intergovernmental revenues, are reported performed by the City. The financial activity of the Housing Authority has separately from business-type activities, which rely to a significant extent on been blended into the City's Comprehensive Annual Financial Report fees and charges for support. All activities, both governmental and (CAFR) in the government-wide governmental activities and in the fund business-type, are reported in the government-wide financial statements financial statements as the Housing Authority Special Revenue Fund. using the economic resources measurement focus and the accrual basis of Anaheim Public Financing Authority (APFA}, a joint powers authority, was accounting, which includes long-term assets and receivables as well as established as a vehicle to reduce local borrowing costs and promote long-term debt and obligations. The government-wide financial statements greater use of existing and new financial instruments and mechanisms. City focus more on the sustainability of the City as an entity and the change in Council members, in separate session, serve as the governing board of the aggregate financial position resulting from the activities of the fiscal period. APFA. Financial activity of the APFA has been blended into the City's CAFR 47 CITYOF ANAHEIM Generally, the effect of interfund activity has been removed from the revenues. The general reve nues support the net costs of the functions and government-wide financial statements, except for lnterfu nd services programs not covered by program reve nues. provided and used. Net interfund activity and balances between governmental activities and business-type activities are shown as internal Also, part of the basic financial statements are fund financial statements for balances, net, In the government-wide financial statements. The "doubling governmental fu nds, proprietary fu nds and fiduciary funds, even though the up" effect of internal service fund activity has been eliminated from the latter are excluded from the government-wide financial statements. The government-wide financial statements with the expenses shown in the focus of the fund financial statements is on major funds, as defined by various functions and programs on the Statement of Activities. GASB Statement No. 34. Although this reporting model sets forth minimum criteria for determination of major funds (a percentage of assets, deferred Further, certain eliminations are also made to transfers of resources outflows of resources, liabilities, deferred inflows of resources, reve nues, or between funds in the fund financial statements so that only the net amount expenditures/expenses of fund category and of the governmental and of the transfers are shown in the governmental activities and business-type enterprise funds co mbined), it also gives governments the option of activities columns. displaying other funds as major funds. Other non major funds, as well as the internal service fu nds, are combined in a single column on the fund financial The government-wide Statement of Net Position re ports all financial and statements. capital resources of the City (excluding fiduciary funds). It is displayed in a format of assets and deferred outflows of resources less liabilities and The City reports the following major governmental funds: deferred inflows of resources equal net position, with the assets and The General Fund is the City's primary operating fund. It accounts for all liabilities shown in order of their relative liquidity. Net positions are required financial resources of the general government, except those required to to be displayed in three components: 1) net investment in capital assets 2) be accounted for in another fund. restricted, and 3) unrestricted . Investment in capital assets represents capital assets net of accumulated depreciation which is reduced by The Housing Authority Special Revenue Fund accounts for the providing outstanding balances of any bonds, notes or other borrowings that are of housing assistance to low and moderate-income families in the attributable to the acquisition, construction, or improvement of those assets. Anaheim area. Financing is provided primarily from Federal Section 8, U.S. Department of Housing and Urban Development receipts. Restricted net position is those with constraints placed on their use by (HUD) either: 1) creditors (such as through debt covenants), granters, contributors, The City reports the following major enterprise funds: or laws or regulations of other governments, or 2) law through constitutional The Electric Utility Fund accounts for the operation of the City's electric provisions or enabling legislation. All net positions not otherwise classified utility, a self-supporting activity, which renders services on a user charge as restricted, are shown as unrestricted. Generally, the City would first apply basis to residents and businesses located in Anaheim. restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net positions are available. The Water Utility Fund accounts for the operation of the City's water utility, a self-supporting activity, which renders services on a user charge The government-wide Statement of Activities demonstrates the degree to basis to residents and businesses located in Anaheim. which both direct and indirect expenses of the various functions and The Sanitation Utility Fund accounts for the operation of the City's solid programs of the City are offset by program revenues. Direct expenses are waste and sanitation program, a self-supporting activity, which provides those that are clearly identifiable with a specific function or program. Indirect for the collection and disposal of solid waste, street sweeping, and expenses for administrative overhead are allocated among the functions sanitary sewer cleaning on a user charge basis to residents and and programs using a full cost allocation approach and are presented businesses located in Anaheim. separately to enhance comparability of direct expenses between governments that allocate direct expenses and those that do not. Interest The Golf Courses Fund accounts for the operation of the Anaheim Municipal ("Dad Miller'') Golf Course and the Anaheim Hills Golf Course, on general long-term debt is not allocated to the various functions. Program a self-supporting activity that renders services on a user charge basis. reve nues include: 1) charges to customers or users who purchase, use or directly benefit from goods, services or privileges provided by a particular The Convention, Sports & Entertainment Venues Fund accounts for the function or program and 2) grants and contributions that are restricted to operations of the Anaheim Convention Center, Angel Stadium of meeting the operational or capital requirements of a particular function or Anaheim, and The City National Grove of Anaheim. See note 13 for program. Taxes, unrestricted investment income and other reve nues not further discussions of the Angel Stadium of Anaheim and The City identifiable with particular functions or programs are included as general National Grove of Anaheim. 48 CITYOF ANAHEIM Anaheim Regional Transportation lntermodal Center (ARTIC) the City, dissolved on February 1, 2012 under the State of California Management Fund accounts for the operation and maintenance of the Assembly Bill 1X26. ARTIC that serves as a ra il station for Amtrak intercity ra il, Metrolink commuter rail and bus station. The ARTIC renders services on a user The Agency Funds are used to account for the monies collected and charge basis. paid on behalf of the Mello-Roos Districts located in the City. The internal service funds, which provide services to the other funds of the Measurement focus and basis of accounting City, are presented in a single column in the proprietary funds financial The governmental funds financial statements are prepared on a current statements. Because the principal users of the internal service funds are the financial resources measurement focus and modified accrual basis of City's governmental activities, the assets and liabilities of the internal accounting. To conform to the modified accrual basis of accounting, certain service funds are consolidated into the governmental activities column of modifications must be made to the accrual method. These modifications are the government-wide Statement of Net Position. The costs of the internal outlined below: service fund services are spread to the appropriate function or program on the government-wide Statement of Activities and the revenues and Revenue is recorded when it is earned, measurable and available (received within 60 days after year-e nd). Revenue considered expenses within the internal service funds are eliminated from the susceptible to accrual includes: property taxes, sales and use taxes, government-wide financial statements to avoid any doubling effect of these transient occupancy taxes, licenses, fees and permits, reve nues and expenses. The City operates four internal service funds: intergovernmental revenues (including motor vehicle license fees), The General Benefits and Insurance Fund is used to account for charges for services, fines, forfe its and penalties, and investment employee compensated absences, retirement and health benefits, and income. Due to certain unforeseen administrative delays, the City self-insurance programs. accrued sales tax of $1,894 that was received after the 60 days availability period as reve nue at June 30, 201 8. The Motorized Equipment Fund is used to account for motorized equipment used by City departments. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as The Info rmation and Communication Services Fund is used to account fund liabilities when due or when amounts have been accumulated for data processing and telecommunication services provided to City in the debt service fund for payments to be made early in the departments. following year. The Municipal Facilities Maintenance Fund is used to account for office Disbursements for the purchase of capital assets providing future maintenance services and equipment used by City departments. benefits are considered expenditures. Bond proceeds are reported as other financing source. Fiduciary Funds account for assets held by the City in a trustee or agency capacity on behalf of others and, therefore, are not available to support City With this measurement focus, operating statements present increases programs. The Fiduciary Funds are not included in the government-wide (revenues and other financing sources) and decreases (expenditures and financial statements as they are not an asset of the City. The City reports other financing uses) in net current assets. This is the traditional basis of the following fiduciary funds: accounting for governmental funds and also is the manner in which these funds are normally budgeted . This presentation is deemed most appropriate The Investment Trust Funds are used to account for the external portion to: 1) demonstrate legal and covenant compliance, 2) demonstrate the of the City's investment pool, which commingles resources of legally sources and uses of liquid resources, and 3) demonstrate how the City's separate entities administered by the City in an investment portfolio for actual revenues and expenditures conform to the annual budget. Since the the benefit of all participants. The entities include three Joint Powers governmental funds financial statements are presented on a different basis Authorities (JPA) governed by local boards. The City separately than the governmental activities column of the government-wide financial maintains these entities' money in three individual funds; these funds statements, a reconciliation is provided immediately following each fund represent the assets, primarily cash and investment, and the related net statement. These reconciliations briefly explain the adjustments necessary position held in trust by the City to disburse these monies on demand. to transform the fund financial statements into the governmental activities The Successor Agency Private Purpose Trust Fund is used to account column of the government-wide financial statements. for resources legally held in trust for use by the Successor Agency to the The proprietary funds financial statements are prepared on the same basis Former Anaheim Redevelopment Agency (Successor Agency). The Former Anaheim Redevelopment Agency, a former component unit of (economic resources measurement focus and accrual basis of accounting) as the government-wide financial statements. Therefo re, most lines for the 49 CITYOF ANAHEIM total enterprise funds on the proprietary funds financial statements will obligations and agency securities and medium term corporate notes are directly reconcile to the business-type activities column on the government carried at fair value based on quoted market prices. Nonparticipating wide financial statements. Because the enterprise funds are combined into guaranteed investment contracts, flexible re purchase agreements are a single business-type activities column on the government-wide financial carried at cost-based measure. Money market mutual funds and statements, certain interfund activities between these funds are eliminated participating interest-earning investment contracts that have a remaining maturity at the time of purchase of one year or less are carried at amortized in the consolidation for the government-wide financial statements, but are cost (which approximates fair value). The City's investment in the State of included in the fund columns in the proprietary funds financial statements. California Local Agency Investment Fund (LAIF) is carried at fa ir value The net costs of the internal service funds are also partially allocated to the based on the value of each participating dollar as provided by LAIF. LAIF is business-type activities column on the government-wide financial authorized by California Government Code (Government Code) Section statements. A reconciliation of the total enterprise funds on the fu nd 16429 under the oversight of the Treasurer of the State of California. financial statements to the business-type activities column on the Commercial paper, participating guaranteed investment contracts and government-wide financial statements is provided on the face of the fund negotiable certificates of deposit are carried at amortized cost (which financial statements. approximates fair value). Interest income, which includes changes in fa ir value, on investments is allocated to all funds on the basis of daily cash and Enterprise funds account for operations where the intent of the City is that investment balances. See note 3 for further discussion. the costs of providing goods or services to the general public on a For purposes of the basic financial statements, the City considers cash continuing basis be financed or recovered primarily through user charges equivalents to be highly liquid short-term investments that are readily and fees. Under GASB Statement No. 34, enterprise funds are also convertible to known amounts of cash and mature within three months of required for any activity whose principal revenue sources meet any of the the date they are acquired. Cash and cash equivalents are included in the following criteria: 1) any activity that has issued debt backed solely by the City's cash and investments pool and in accounts held by fiscal agents. fees and charges of the activity, 2) the cost of providing services for an activity, including capital costs such as depreciation or debt service, must Notes receivable legally be recovered through fees and charges, or it is the policy of the City In the government-wide financial statements, notes receivable of $71 ,048 to establish activity fees or charges to recover the cost of providing includes accrued interest receivable of $21 ,360, ranging from 3% to 10% services, including capital costs. interest per annum, and is net of allowances of $27,166 for uncollectible On the proprietary funds financial statements, operating reve nues are those accounts at June 30, 2018. Allowances for uncollectible accounts were that flow directly from the operations of the activity, i.e. charges to estimated based on certain assumptions; therefore, actual results could customers or users who purchase or use the goods or services of that diffe r from the estimates. activity. Operating expenses are those that are incurred to provide those In the governmental funds financial statements, disbursements for providing goods or services. Non-operating revenues and expenses are items such notes and loan receivables are recorded as expenditures while the as investment income and interest expense that are not a result of the direct collections of these receivables are recorded as revenues. Due to the operations of the activity. extended period of time over which notes receivable are to be collected and The Electric and Water Utility funds follow the uniform system of accounts the contingent nature of certain sources of repayment, the City has prescribed by the Federal Energy Regulatory Commission (Electric Utility) recorded deferred inflows of resources equal to the outstanding principal and accrued interest balance, net of allowances of the notes receivable. and the California Public Utilities Commission (Water Utility). The utilities are not subject to the regulations of these commissions. Inventories The re porting focus for the investment trust fund and the private-purpose Inventories are stated at average cost which consist of expendable trust fund is upon net position and changes in net position and employs supplies, electrical parts, and vehicle re pair parts. The cost of such accounting principles similar to proprietary funds. The agency fund has no Inventories are recorded as expenditures/expenses when consumed rather measurement focus but utilizes the accrual basis of accounting for reporting than when purchased. its assets and liabilities. Prepaid and other assets Cash and investments Certain payments to vendors such as insurance premiums, prepaid power, The City pools available cash from all funds for the purpose of increasing prepaid re nts, prepaid software maintenance and deposits for real property income through investment activities. Investments in U.S. Treasury acquisitions reflect costs applicable to future periods and are recorded as 50 CITY OF ANAHEIM prepaid and other assets in both government-wide and fund financial Capital assets are recorded at cost or estimated historical cost if purchased statements. The costs of these prepaid items are recorded as expenditures/ or constructed. Donated capital assets, donated works of art and similar expenses in the period when consumed or when the City receives title to items, and capital assets received in a service concession arrangement are the real property rather than when purchased. recorded at acquisition value rather than fair value at the date of donation. Land held for resale The costs of normal maintenance and re pairs that do not add to the value of the capital asset or materially extend capital assets lives are not capitalized . The Housing Authority has recorded parcels of land held for resale in their financial records. The properties held for resale are for the primary purpose Major improvements are capitalized and depreciated over the remaining of developing low and moderate income housing and are recorded at the useful lives of the related capital assets. lower of cost or estimated net realizable value. At June 30, 2018, land held Major outlays for capital assets and improvements are capitalized as the for resale with an original cost of $10,454 was recorded net of the allowance projects are constructed . Interest incurred during the construction phase of for decline in value of $4,422 and totaled $6,032, with this amount offset by a restriction of fund balance for low and moderate income housing in the projects is reflected in the capitalized value of the asset constructed for Housing Authority major governmental fund financial statement. proprietary funds. For the year ended June 30, 2018, business-type activities capitalized net interest costs of $7,745 net of $105 in interest The Long Range Property Management Plan nonmajor Special Revenue income due to the 2014-A Lease Revenue Bonds was issued to finance the Fund records parcels of land held for resale transferred from the Successor specific convention center expansions, in the government-wide and fund Agency to the former Anaheim Redevelopment Agency on January 1, 2016 financial statements. Total interest expense incurred by the business-type under the authorization of the approved Long Range Property Management Plan of the State of California Health and Safety Code Section 341 91 .5. The activities (and the enterprise funds on the proprietary fu nds statements) parcels are approved for future developments. The City has recorded the before capitalization was $44,833. land held for resale equal to the net realizable value of these assets as Capital assets are depreciated using the straight-line method over the recorded in the Successor Agency's financial records in the amount of $22,982 with a corresponding restriction in fund balance for future following estimated useful lives: economic development. Buildings, structures and improvements 5 to 85 years Restricted assets Utility plant 5 to 75 years Machinery and equipment 2 to 40 years Certa in proceeds of the City's bonds, as well as certa in resources set aside Infrastructure 25 to 75 years for their repayment, are classified as restricted on the Statement of Net Position or Balance Sheet, because they are maintained in separate bank The net book value of capital assets retired or disposed of, related salvage accounts and their use is limited by applicable debt covenants. Additionally, value proceeds and the costs of removal are recorded in accumulated resources set aside by the Electric Utility for the future decommissioning of depreciation in the Electric Utility and Water Utility Funds. In all other cases, its fo rmer ownership share of the San Onofre Nuclear Generating Station, these amounts are recorded as gains or losses on disposal of capital Units 2 and 3 (SONGS) and the San Juan (SJ) Generating Station, Unit 4, assets. are classified as restricted on both the government-wide Statement of Net Capital assets transferred between funds are transferred at their net book Position and proprietary funds Statement of Net Position. value (cost less accumulated depreciation), as of the date of the transfer. Capital assets Debt issuance costs Under GASB Statement No. 34, all capital assets, whether owned by Debt issuance costs, with the exception of prepaid insurance costs, are governmental activities or business-type activities are recorded and recognized as outflow of resources (expense/expenditure) in the period depreciated in the government-wide financial statements. No long-term when the debt is issued. Prepaid insurance costs are capitalized and capital assets or depreciation are shown in the governmental funds financial amortized over the lives of the related debt issues on a basis that statements. approximates the effective-interest method. Capital assets, including public domain infrastructure (e.g., roads, bridges, Bond refunding costs sidewalks and other assets that are immovable and of value only to the City), are defined as assets with an initial, individual cost of more than $5 Bond refunding costs are deferred and amortized over the life of the new ($50 for infrastructure) and an estimated useful life of greater than one year. bond or over the life of the old bond, whichever is shorter, on a basis that 51 CITYOF ANAHEIM approximates the effective-interest method. These costs are shown as a Deferred inflows of resources deferred outflow of resources on the Statement of Net Position. In addition to liabilities, the statement of financial position reports a separate Accretion section for deferred inflows of resources. This separate financial statement Accretion is an adjustment of the difference between the prices of a bond or element, deferred inflows of resources, represents acquisitions of fund certificates of participation (COP) issued at an original discount and the par balance or net position that applies to a future period(s) and so will not be value of the bond or COP. The accreted value is recognized as it accrues by recognized as an inflow of resources (revenue) until that time. The City fiscal year. reported the following in these categories: Deferred outflows of resources 1. Unavailable resources - (which include revenues, notes and long term receivables) measured under the modified accrual basis of In addition to assets, the statement of net position will sometimes report a accounting reported in governmental funds. These amounts are separate section for deferred outflows of resources. This separate financial deferred and will be recognized as an inflow of resources in the statement element, deferred outflows of resources, represents consumption of net position that applies to a future period(s) and so will not be period that the amounts become available. recognized as an outflow of resources (expense/expenditure) until then. In the government-wide statement of net position, the City reported two items Non major in this category: General Housing Governmental Fund Authority Funds Total 1. Deferred charges on refunding bonds - A deferred charge on refunding bonds results from the diffe rence in the carrying value of Governmental Funds: debt and its reacquisition price. This amount is deferred and Grants $ 867 $ 148 $ 14,022 $ 15,037 amortized over the shorter of the life of the refunded or refunding Other revenues 122 33 155 debt. The City re ported $1,508 in governmental activities and Long-term notes receivable 47,01 7 24,031 71 ,048 $19,215 in business-type activities in this category. Due from successor agency 10,538 10,538 2. Deferred outflows of OPEB related items - these balances represent Total $ 989 $ 47,165 $ 48,624 $ 96,778 current fiscal year contribution to the OPEB Trust that will be applied as a reduction in net OPEB liability in the next fiscal year; or other 2. Regulatory credits - accumulated from collections of the Electric and items arising from changes in actuarial assumptions, difference Water Utility customers reported in business-type activities. These between actual and projected experience, difference between actual amounts provide recovery in current period for costs to be incurred and projected investment gains/losses or changes in a fund's in future periods (refer to the discussion of Regulatory Credits proportionate share of the net OPEB liability; the amount will be below). amortized and reported as a component in OPEB expense in future fiscal years (refer to discussion of OPEB Plan). The City re ported Business-type $15,050 in governmental activities and $5, 119 in business-type activities activities in this category. Enterprise Funds: 3. Deferred outflows of resources of pension related items - these Electric Utility $ 101,584 balances represent current fiscal year contribution to the pension Water Utility 2,189 plans that will be applied as a reduction in net pension liability in the Total $ 103,773 next fiscal year; or other items arising from changes in actuarial assumptions, diffe rence between actual and projected experience, 3. Deferred inflow related to refunding bonds includes gains from debt diffe rence between actual and projected investment gains/losses or refunding. The City reports $638 in business-type activities in this changes in a fund's proportionate share of the net pension liability; category. the amount will be amortized and reported as a component in 4. Deferred inflows of resources related to OPEB presents changes in pension expense in future fiscal years (refer to discussion of total OPEB liability arising from changes in actuarial assumptions; Pension Plans). The City reported $163,629 in governmental difference between actual and projected plan experiences; activities and $44,337 in business-type activities in this category. difference between actual and projected investment gains/losses or changes of the Fund's proportionate share of the net OPEB liability. Refer to discussion of the OPEB Plan in note 11 of the notes to the financial statements on pages 84-86 of this report. The City reported 52 CITYOF ANAHEIM $10,245 in governmental activities and $3,593 in business-type The Water Utility's rates, rules and regulations provide for a water activities in this category. regulatory credit account to reflect variations in the cost of water to the 5. Deferred inflows of resources related to pension are certain changes Water Utility and provide more stable retail water rates to the customers of in total pension liability and fiduciary net position that are to be the City's Water Utility. This rate stabilization account (RSA) provides recognized as an increase in pension expenses in future fiscal increased flexibility by allowing the Water Utility to maintain financial years. These are the balances arise from changes in actuarial performance indicators and goals specified in bond covenants. The assumptions; diffe rence between actual and projected experience; account is funded through expense re imbursements such as water supply diffe rence between actual and projected investment gains/losses or cost refunds received from the Metropolitan Water District and Orange changes in the Fund's proportionate share of the Plan's net pension County Water District and other miscellaneous credits and revenue. At June liability. Refe r to discussion of Pension Plans in note 10 of the notes 30, 2018 the deferred inflows of resources recorded for regulatory credits to the financial statements on pages 79-83 of this report. The City totaled $2, 189 for the Water Utility. During fiscal year 2018, there was no re ported $22,916 in governmental activities and $5,564 in business RSA revenues recognized . type activities in this category. Regulatory credits Compensated absences The Electric Utility's Rates, Rules, and Regulations provide for the Rate Compensated absences, vacation and sick pay, for all City employees are Stabilization Account (RSA), which contains two components: the Power generally paid by the General Benefits and Insurance Fund, an internal Cost Adjustment (PCA) that was adopted by City Council on April 1, 2001 , service fund. The General Benefits and Insurance Fund is reimbursed and the Environmental Mitigation Adjustment (EMA) that was adopted by through payroll charges to all other funds based on estimates of benefits to the City Council on January 13, 2009. The PCA has mitigated variations in be earned and used during the fiscal year. It is the policy of the City to pay the power supply or fuel costs. The EMA allows the recovery of all accumulated vacation pay when an employee retires or terminates. environmental mitigation costs, such as greenhouse gas emissions costs, Accumulated sick pay in excess of 175 hours per employee is paid to the marginal cost diffe rential between renewable power and traditional employees at their then current rate of pay in January each year or upon fossil-fuel-based power. The RSA provides the City with operational and termination from the City. Employees are paid for all accumulated sick pay billing flexibility to mitigate material fluctuations in the cost of energy, loss of when they retire from the City. Vested vacation and sick pay benefits are reve nues, or unplanned costs including unexpected long-term loss of a accrued when incurred in the General Benefits and Insurance Fund and at generating facility, unplanned limits on the ability to transmit energy to the June 30, 201 8, totaled $20,474 and is included in long-term liabilities in the City, or major disasters. The RSA funded by PCA and EMA collections is Statement of Net Position. Also included in long-term liabilities in the billed to customers through standard rates. Statement of Net Position at June 30, 201 8, is compensatory time liability of $616. The Electric Utility restructured its rates effective September 1, 2015 in order to more effectively align the recovery of the Electric Utility's costs with Changes in the City's compensated absences liability in fiscal year 2018 the nature of the costs incurred . This was accomplished by reducing the were as follows: Power Cost Adjustment (PCA) and the Environmental Mitigation Estimated compensated liability at beginning of year $ 20,941 Adjustment (EMA) with corresponding increases to base rates. The Estimated compensated absence benefits earned 24,539 restructuring was designed to be reve nue neutral to the customer. As of Compensated absences used June 30, 201 8, the PCA rate was $0.0050 per kWh for domestic, general (24,390) commercial, industrial and municipal customers and ($0.0002) for large Compensated absences liability end of year $ 2T09o commercial customers. The Electric Utility recorded deferred inflows of Provision for decommissioning costs resources for regulatory credits related to PCA totaled $24,448. Federal regulations require the Electric Utility to provide for the future As of June 30, 2018, the EMA rate was $0.0005 per kWh for residential, decommissioning costs of its former ownership share of San Onofre general commercial, industrial and municipal customers and $0.0055 per Nuclear Generating Station (SONGS). The Electric Utility has established a KWh for large commercial customers. The deferred inflows of resources provision for decommissioning costs of SONGS and restoration of the recorded for regulatory credits related to EMA totaled $77, 136. During fiscal beachfront at San Onofre, California where it is located. A separate year 2018, there was no RSA reve nues recognized . irrevocable trust account has been established for amounts funded and these amounts are classified as restricted assets in the accompanying 53 CITYOF ANAHEIM statement of net position. At June 30, 201 8, the Electric Utility has recorded Postemployment benefits other than pension (OPEB) a provision for decommissioning costs for SONG totaled $104,912. Regular, full time employees meeting certain eligibility requirements are On June 7, 201 3, the Southern California Edison (SCE) announced the provided the OPEB benefits. The City is a participant in the California permanent retirement of the SONGS plant. The estimated completion of the Employer's Retiree Benefit Trust (CERBT). It is the City's policy to fund all decommissioning is expected to take approximately 30 to 40 years. The annual required actuarially determined contributions (ADC) determined by Electric Utility continues to fund the reserve until the end of the trust fund. an actuarial valuation. On September 23, 2014, the SCE submitted a decommissioning cost analysis study to Nuclear Regulatory Commission (NRC). According to this Payments of the ADC is allocated among all City Funds in proportion to the new study for the decommissioning costs of SONGS, the Electric Utility's Fund's full time payroll expenses in the General Fund, the Housing share of decommissioning costs is $87, 131 . The Electric Utility currently Authority major special revenue fund, all nonmajor capital project funds, all has $104,912 in an irrevocable trust for the decommissioning costs. During nonmajor special revenue funds and all proprietary funds. fiscal year 2018, the Electric Utility has drawn $6,866 from the trust for the disbursements of decommissioning related obligations. For purposes of measuring the net OPEB liability and deferred outflows/ inflows of resources related to OPEB, and OPEB expense, information The Electric Utility is providing for the future demolition and reclamation about the fiduciary net position of the City's OPEB Plan and additions to/ costs allocation based on its former ownership share of SJ of 10.04% . As of deductions from the Plans' fiduciary net position have been determined on June 30, 2018, the Electric Utility has recorded a provision for the same basis as they are re ported by CERBT. For this purpose, benefit decommissioning costs for SJ of $1 1,61 1 of which $6,233 was in payments are recognized when due and payable in accordance with the irrevocable trust and $5,378 in the City's restricted cash account. For the benefit terms. Investments are re ported at fair value. See note 11 for further year ended June 30, 2018, the Electric Utility has drawn $109 from the trust discussion. for the decommissioning costs, and accrued future decommissioning costs for SJ of $6,000 in fuel and generation of power of the operating expenses. On October 1, 2005, the City and the International Brotherhood of Electrical Workers (IBEW), Local 47, entered into a Letter of Understanding related to Pension plan the Retiree Medical Plan. Under the Plan, the IBEW would establish a union Full-time City employees are members of the State of California Public trust (Trust) for the sole and exclusive purpose of providing post-retirement Employees' Retirement System (CalPERS). The City's policy is to fund all medical benefits to IBEW bargaining unit employees employed by City of annual required actuarially determined contribution (ADC); such costs to be Anaheim on October 1, 2005, and their eligible surviving spouses and funded are determined annually as of July 1 by the CalPERS's actuary. The dependents. The City agreed to transfer to the Trust for each employee in City maintains three Pension Plans with CalPERS - Miscellaneous Plan, the IBEW bargaining unit the one-time post-retirement medical reserve Police Safety Plan and Fire Safety Plan. See note 10 for further discussion. allocations, and the IBEW and City also agreed that the sum of four percent Payments of the ADC are liquidated from the Funds where the employees' of base biweekly pay shall be contributed by the employees of the IBEW payroll expenses are charged . The Police and Fire Safety Plans are bargaining unit to the Retiree Medical Plan. It should be noted that the Trust liquidated from the General Fund, and the Grant nonmajor special reve nue does not constitute a City-sponsored OPEB defined benefit plan and funds. The Miscellaneous Plan is allocated among all City Funds that furthermore, that the City's responsibility is limited to contributions include the General Fund, the Housing Authority major special reve nue negotiated with the IBEW, as such, there is no related retiree-medical fund, all nonmajor capital project funds, all nonmajor special revenue funds, liability included in the City's OPEB plan. and all proprietary funds, in proportion to the Fund's payroll expenses. Net position restricted by enabling legislation For purposes of measuring the net pension liability and deferred outflows/ The government-wide Statement of Net Position reports $266,983 of inflows of resources related to pensions, and pension expense, information governmental activities restricted net position, of which $60,41 9 is restricted about the fiduciary net position of the City's California Public Employee's by enabling legislation. Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same Fund balances basis as they are re ported by CalPERS. For this purpose, benefit payments In the fund financial statements, governmental funds report the following (including refunds of employee contributions) are recognized when due and classifications: payable in accordance with the benefit terms. Investments are re ported at • fair value. Nonspendable fund balance includes amounts that cannot be spent 54 CITY OF ANAHEIM because they are either (a) not in spendable form or (b) legally or The accumulated deficit fund balances at June 30, 2018 of $27 in the contractually required to be maintained intact. The "not in spendable Workforce Development nonmajor special revenue Fund, $3,655 in the form" criterion includes items that are not expected to be converted Streets Construction and $97 in the Transportation Improvement Projects to cash, for example, inventories, prepaid or long term loans and nonmajor Capital Project Funds, will be eliminated in future years by the notes receivable. receipt of reimbursements for grant expenditures. Restricted fund balance includes amounts when constraints placed Budgetary principles on the use of the resources are either imposed by external resource The City is required by its charter to adopt an annual budget on or before providers, constitutional provisions or enabling legislation. June 30 for the ensuing fiscal year. The General, special revenue, debt Committed fund balance includes amounts that can be used only for service, and capital projects governmental fund types and proprietary fund the specific purposes pursuant to constraints imposed by formal types have legally adopted budgets approved by City Council. The level of action of the City's highest level of the decision-making authority. budgetary control (that is, the level at which expenditures cannot legally The City Council is the highest level of decision-making authority exceed the appropriated amount) is established at the department level. that can, by adoption of an ordinance prior to the end of the fiscal From the effective date of the budget, the amounts stated herein as year, commit fund balance. Once adopted, the limitation imposed by proposed expenditures/expenses become appropriations to the various City the ordinance remains in place until a similar action by the City departments. Throughout the fiscal year the budget was amended to add Council to remove or revise the limitation. supplemental appropriations. All amendments to the budget which change the total appropriation amount for any department require City Council • Assigned fund balance includes amounts that the City intends to approval and all increases in appropriations in operating expenditures must use for specific purposes but do not meet the criteria to be classified be accompanied by an increase in reve nue sources of a like amount to as restricted or committed. The City Council has by Resolution maintain a balanced budget. The City Manager has the authority to change authorized the City Manager or his designee to establish, modify or individual budget line items within a department as long as the total rescind an assigned fund balance. department's appropriation amount is not changed. Unassigned fund balance accounts for the residual balance of the The City utilizes an encumbrance system as a management control City's general fund and includes all spendable amounts not technique to assist in controlling expenditures. All appropriations lapse at contained in other classifications. In other governmental funds, the the end of the fiscal year, except for capital projects which are carried unassigned classification reports a deficit balance resulting from forward until such time as the project is completed or terminated and for overspending for specific purposes for which amounts had been encumbered balances that are re-appropriated in the next fiscal year. restricted, co mmitted or assigned. Generally, the City would first apply restricted resources when expenditures incurred for which GASB Statement No. 34 allows that budgetary comparison statements for both restricted and unrestricted resources are available. Further, the General Fund and major special revenue funds be presented in the when the components of unrestricted fund balance can be used for basic financial statements rather than as Required Supplementary the same purpose, committed fund balance is applied first, followed Information. These statements must display original budget, amended by assigned fund balance. Unassigned fund balance is applied last. budget and actual results. Generally, the City would first apply restricted resources when expenditures Budgeted revenue amounts represent the original budget modified by City incurred for which both restricted and unrestricted resources are available. Council authorized adjustments during the year, which were contingent Further, when the components of unrestricted fund balance can be used for upon new or additional revenue sources. Budgeted expenditure amounts the same purpose, co mmitted fu nd balance is applied first, followed by represent original appropriations adjusted for supplemental appropriations assigned fund balance. Unassigned fund balance is applied last. during the year. Budgets are generally prepared in conformity with GAAP using the modified accrual basis of accounting, with the exception of capital in all governmental funds, encumbered amounts have been restricted or leases, or other similar instruments, and land held for resale, which are assigned for specific purposes for which resources have already been budgeted on a cash basis. allocated . At June 30, 201 8, encumbrances totaled $548, $3, and $17,094 in the General Fund, Housing Authority Special Revenue Fund, and other nonmajor governmental funds, respectively. 55 CITY OF ANAHEIM Property taxes Statement No. 75, Accounting and Financial Reporting for Post employment Benefits Other Th an Pension Plans. The requirements Property taxes attach as an enforceable lien on property as of January 1 . of this statement are effective for fiscal years beginning after June Taxes are levied on July 1 and are payable in two installments due on 15, 2017. November 1 and February 1 and become delinquent after December 10 and April 10. The County of Orange, California (County) bills and collects Statement No. 81, Irrevocable Split-Interest Agreement. The the property taxes and re mits them to the City in installments during the requirements of this Statement are effective for fiscal year beginning year. City property tax revenues are recognized when levied in the after December 15, 2016. governmental funds to the extent that they result in current receivables Statement No. 85, "Omnibus 2017." The requirements of this collectible within 60 days after year-end. See note 8 for discussion of statement will take effect for financial statements starting with the pledged property tax reve nues. fiscal year ends June 30, 2018. The County is permitted by State law (Proposition 13) to levy taxes at 1 % of Statement No. 86, Certain Debt Extinguishment Issues. The full market value (at time of purchase) and can increase the property tax requirements of this Statement are effective for reporting periods rate no more than 2% per year from the full market value at the time of beginning after June 15, 2017. purchase. The City receives a share of this basic levy proportionate to what Implementations of GASB Statement No. 81, 85 and 86 have no material it received in the 1976 and 1978 periods. effect on amounts re ported in the City's financial statements. The requirement of GASB Statement No. 75 caused the City to restate prior year Entitlements, shared revenues and grants net positions in the governmental-activities and business-type activities by Entitlements and shared revenues are recorded at the time of receipt or reducing the beginning net positions by the amount of net OPEB liability net earlier if the susceptible to accrual criteria are met. Expenditure-driven of deferred outflows of resources for OPEB contribution. grants are recognized in the fund financial statements as revenue when the qualifying expenditures have been incurred, all eligibility requirements have The following table provides a reconciliation of net position at June 30, been met, and re imbursement is received within the availability period. 2017, as previously reported, to net position at June 30, 201 7, as adjusted : Revenue recognition for Electric Utility, Water Utility, and Sanitation Govern- Business- Utility Funds rnental type Activities Activities Total Revenue, net of uncollectible, is recorded in the period in which services Net position at June 30, 2017, as previously reported $ 838,288 $ 1,12 0,632 $ 1,958,920 are provided. Most residential and smaller co mmercial customers are billed Reduction of net position from irnplernentation of GASB 75: bimonthly and all other customers monthly. At June 30, 201 8 unbilled but Governmental Funds (125,076) (125,076) earned service charges recorded in accounts receivable for the Electric Internal Service Funds Utility, Water Utility, and Sanitation Utility Funds amounted to $26,320, (21 ,556) (21 ,556) $1 ,61 5, and $3,684, respectively. See note 8 for discussion of pledged Electric Utility (23,982) (23,982) revenues. Water Utility (8,947) (8,947) Sanitation Utility (5,999) (5,999) Use of estimates Golf Courses (416) (416) The preparation of financial statements in conformity with GAAP requires Convention, Sports & Entertainment Venues (8,131) (8,131) management to make estimates and assumptions that affect the reported Net position at June 30, 2017, as adjusted $ 691 ,656 $1,073,157 $1,764,813 amounts of certain assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported The City is currently reviewing its accounting practices to determine the amounts of revenues and expenditures/expenses during the reporting potential impacts on the financial statements for the following GASB Statements: period. As such, actual results could diffe r from those estimates. Statement No. 83, Certain Asset Retirement Obligations. The NOTE 2 - NEW ACCOUNTING PRONOUCEMENTS requirements of this Statement are effective starting with the fiscal On July 1, 2017, the city adopted the following new accounting year that ends June 30, 2019. pronouncements issued by the GASB: Statement No. 84, Fiduciary Activities. The requirements of this Statement are effective starting with the fiscal year that ends June 56 CITY OF ANAHEIM 30, 2019. Deposits and investments are comprised of the following at June 30, 2018: Statement No. 87, Leases. The requirements of this Statement are effective for reporting periods starting with the fiscal year that ends Deposits $ 40,526 June 30, 2021. Investments 1,132,099 To tal deposits and investments $ 1,172,625 NOTE 3 - DEPOSITS AND INVESTMENTS: The City maintains a cash and investment pool, which includes the cash At June 30, 2018, deposits of $40,526 with a corresponding bank balance balances of all fu nds, and is invested by the City Treasurer to enhance of $43, 185 were maintained in various federally regulated financial interest earnings. The pooled interest earned, net of administrative fees, is institutions. The difference of $2,659 represents deposits in transit, reallocated to each fund based on their respective average daily cash outstanding checks, and other reconciling items. Deposits with bank balances. balances of $1,912 are insured by the Federal Depository Insurance Corporation. For deposits with bank balances totaling $41 ,272, California The City's pooled investment fund has been reviewed by Standard and Poor's Corporation (S&P) and received a credit rating of AA+f/S1 in state statutes require federally regulated financial institutions to secure a December 2017. city's deposits by pledging collateral consisting of either government securities with a value of 110% of a city's total deposits or by pledging first The City's investment policy further limits the permitted investments in trust deed mortgage notes having a value of 150% of a city's total deposits. Government Code Sections 53600 et al, 16429.1 and 53684 to the The collateral is required by regulation to be held by the counterparty's following: obligations of the United States government, federal agencies, agent in the name of the City. and government sponsored enterprises; medium-term corporate notes; certificates of deposit; bankers' acceptances; commercial paper; LAIF; Investments repurchase agreements; reverse repurchase agreements; superanationals; and money market mutual fu nds. The City Treasurer prepares an investment policy statement annually, which is presented to the Budget, Investment and Te chnology Commission for Deposits and investments are comprised of the following at June 30, 2018: review and the City Council for approval. The approved investment policy Statement is submitted to the California Debt and Investment Advisory Restricted Cash and Cash and Committee in accordance with Government Code. Cash Cash Restricted Equivalents Investments Equivalents Investments Total The policy provides the basis for the management of a prudent, Governmental activities: conservative investment program. Public funds are invested for the General Fund $ 9,482 $ 31 ,390 $ 40,872 maximum security of principal and to meet daily cash flow needs while Housing Authority 17,466 61 ,241 $ 963 79,670 providing a return . All investments are made in accordance with the Non major governmental funds 23,935 84,287 43,826 $ 153,838 305,886 Government Code and, in general, the City Treasurer's policy is more Internal service funds 20,245 71 ,303 1,430 92,978 restrictive than Government Code. Total governmental activities 71, 128 248,221 46,219 153,838 519,406 Business-type activities: Investments authorized by the Government Code and the City's Electric Utility 19,964 70,309 171 ,775 126,199 388,247 investment policy Water Utility 8,236 29,005 4,535 38,093 79,869 The following table identifies the investment types that are authorized for Sanitation Utility 10,478 36,904 4,410 20,381 72,173 the City by its investment policy which is more restrictive than Government Golf Courses 1 1 Code. The table also identifies certain provisions of the City's investment Convention, Sports & policy that address interest rate risk, credit risk, and concentration of credit Entertainment Venues 10,317 36,060 19,878 7,373 73,628 risk. This table does not address investments of debt proceeds held by ARTIC Management 115 115 bond trustees that are governed by the provisions of debt agreements of the Total business-type activities 49, 111 172,278 200,598 192,046 614,033 City, rather than the general provisions of the Government Code or the Government-wide totals 120,239 420,499 246,817 345,884 1,1 33,439 City's investment policy. Fiduciary funds 33,251 5,935 39,186 Total cash and investments $ 120,239 $ 420,499 $ 280,068 $ 351,819 $ 1,172,625 57 CITYOF ANAHEIM Maximum Maximum Fair Maximum Percentage Investment in (S&P/Moody's I Issuer Investment Type Value % Authorized Investment TyQe Maturity of Portfolio* One Issuer Fitch) U.S. treasury Treasury securities $141,976 27% U.S. treasury obligations 5 Years 100% 30% None Morgan Stanley Flexible repurchase agreement 115,608 22% 80,005 U.S. agency securities 5 Years 100% 40% None Federated Money market mutual fund 15% U.S. Bank Money market mutual fund 42,800 8% Banker's acceptances 180 days 40% 5% None Federal Home Loan Bank U.S. agency securities 31,967 6% Commercial paper 270 days 25% 5% A-1 ;P-1 ;F-1 Negotiable certificates of deposit 365 days 25% 5% None All guaranteed investment contracts have downgrade language that Repurchase agreements 1 Year 30% None None requires collateral should credit ratings drop below certain levels. Reverse repurchase agreements 90 days 20% None None Medium-term corporate notes 5 Years 30% 5% A Custodial credit risk Money market mutual funds N/A 20% 10% AAA Custodial credit risk for investments is the risk that the City will not be able LAIF N/A $50 million $50 million None to recover the value of investment securities that are in the possession of an per account per account outside party. All securities owned by the City with the exception of LAIF Time Certificate of Deposit (TCD) 1 year 20% 5% None and money market mutual funds are deposited in trust for safekeeping with Supranationals 5 Years 20% 10% AAA a custodial bank diffe rent from the City's primary bank. Securities are not *Excl uding amounts held by bond trustees that are not subject to Government Code restrictions held in broker accounts. Funds held by LAIF and money market mutual funds are held in the City's name. The City's pooled investments comply with the requirements of the Custodial credit risk for investments held by bond trustees is the risk that investment policy. GAAP requires disclosure of certain investments in any the City will not be able to recover the value of investment securities that one issuer that exceeds five percent concentration of the total investments. are in the possession of an outside party. All securities held by bond At June 30, 201 8, the following investments represent five percent or more trustees are in the name of the bond issue in trust for safekeeping with the of the City's total pooled investments: bond trustee, which is different from the City's primary bank. Fair Interest rate risk Issuer Investment Type Value % Interest rate risk is the risk that changes in interest rates will adversely U.S. treasury Treasury securities $127,077 21% affect the fa ir value of an investment. The City Treasurer mitigates this risk Federal Home Loan Mortgage Corporation U.S. agency securities 58,794 10% by investing in longer-term securities only with funds that are not needed for Federal National Mortgage Association U.S. agency securities 54,253 9% curre nt cash flow purposes and holding these securities to maturity. The LAIF LAIF 33,515 6% City Treasurer uses the segmented time distribution method to identify and manage interest rate risk. In accordance with the City investment policy, the Investments authorized by debt agreements City Treasurer monitors the segmented time distribution of its investment Investment of debt proceeds held by bond trustees is governed by portfolio and analysis of cash flow demand. provisions of the debt agreements, rather than the general provisions of the Government Code or the City's investment policy. The table below identifies Investments held by bond trustees are typically long-term securities which the investment types that are authorized for investments held by bond are not adversely affected by interest ra te changes. Guaranteed investment trustees. The table also identifies certain provisions of these debt contracts for construction funds are usually limited to three years or less. agreements that address interest rate risk, credit risk, and concentration of Info rmation about the sensitivity of the fa ir values of the City's investments credit risk. (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of At June 30, 201 8, the following investments represent five percent or more the City's investments by maturity at June 30, 2018: of the City's total investments controlled by bond trustees: 58 CITYOF ANAHEIM Credit Rating Fair Value 12 months or 13 to 24 25 to 36 37 to 60 More than Investments (S&P/Moody's) 6/30/2018 less Months Months Months 60 Months Investments controlled by City Treasurer: U.S. agency securities AA+/Aaa $ 141,653 $ 44,854 $ 38,473 $ 9,733 $ 48,593 U.S. treasury obligations AA+/Aaa 127,077 39,938 29,220 57,919 Medium term corporate notes A, A1 9,923 4,998 4,925 Medium term corporate notes A,A2 14,696 9,820 4,876 Medium term corporate notes A+,A1 16,659 4,919 6,848 4,892 Medium term corporate notes A+,A2 16,012 5,198 10,814 Medium term corporate notes A+,Aa3 4,924 4,924 Medium term corporate notes AA, A1 4,984 4,984 Medium term corporate notes AA, Aa2 4,893 4,893 Medium term corporate notes AA-,A1 24,583 14,898 4,912 4,773 Medium term corporate notes AA-,Aa3 4,914 4,914 Medium term corporate notes AA+,Aa1 6,882 6,882 Medium term corporate notes AAA,Aaa 18,734 4,982 4,921 3,937 4,894 Commercial paper A-1,P-1 61,808 61,808 Commercial paper A-1+,P-1 40,898 40,898 Negotiable certificate of deposit A-1,P-1 9,979 9,979 Money market mutual funds AAA 62,861 62,861 LAIF Unrated 33,515 33,515 Total investments controlled by City Treasurer 604,995 314,015 94,676 65,464 130,840 Investment controlled by bond trustees: U.S. agency securities AA+/Aaa 25,206 24,960 246 U.S. agency securities A+1 +,P1 31,718 31,718 U.S. treasury obligations AA+/Aaa 13,018 11,074 734 731 479 U.S. treasury obligations A+1 +,P1 128,958 128,958 Guaranteed investment contracts Unrated 16,832 7,305 8,353 $ 1,17 4 Flexible repurchase agreements Unrated 129,558 129,558 Money market mutual funds AAA/Aaa 139,014 139,014 Money market mutual funds A-1+ 30,844 30,844 LAIF Unrated 11,956 11,956 Total investments controlled by bond trustees 527,104 378,524 8,285 9,084 479 130,732 Total Investments $ 1,1 32,099 $ B92,539 $ TITT,961$74,548 $� $ T3o,732 Fair Value Measurement: the assumptions used, including discount rates and estimates of future cash flows. Accordingly, the fa ir value estimates may not be realized in an The City categorizes its fair value measurements within the fa ir value immediate settlement of the instrument. hierarchy established by generally accepted accounting principles. The fa ir value of a financial instrument is the price that would be received to sell an The City groups its assets and liabilities measured at fa ir value in three asset or paid to transfer a liability in an orderly transaction between market levels, based on the markets in which the assets and liabilities are traded participants at the measurement date. Fair value is best determined based and the reliability of the assumptions used to determine fair value. The three upon quoted market prices. levels of the fair value hierarchy are as follows: However, in certain instances, there are no quoted market prices for the Level 1 of the fair value hierarchy are valued using prices quoted in City's various financial instruments. In cases where quoted market prices active markets for those securities for identical assets or liabilities are not available, fair values are based on estimates using present value or that the City has the ability to access at the measurement date. other valuation techniques. Those techniques are significantly affected by Level 2 of the fair value hierarchy are valued using a matrix pricing 59 CITY OF ANAHEIM technique utilizing market data including, but not limited to benchmark yields, reported trades, and broker-dealer quotes. Matrix Less Accounts Allowance for pricing is the process of estimating the market price of a bond based Receivable Uncollectibles Total on the quoted prices of more frequently traded comparable bonds Governmental activities: Level 3: inputs are unobservable inputs for the asset or liability. This General Fund $ 21,458 $ (3,828) $ 17,630 valuation is accomplished using management's best estimate of fair Housing Authority 136 (121) 15 value, with inputs into the determination of fa ir value that require Nonmajor governmental funds 1,703 (1) 1,702 significant management judgment or estimation. The level in the fair Internal service fu nds 4,522 4,522 value hierarchy within which a fa ir measurement in its entirety falls is Total governmental activities 27,819 (3,950) 23,869 based on the lowest level input that is significant to the fa ir value Business-type activities: measurement in its entirety. Electric Utility 49,155 (1,103) 48,052 The City has the following recurring measurements as of June 30, 201 8: Water Utility 6,316 (207) 6, 109 Sanitation Utility 8,202 (164) 8,038 Fair Value Measurement Using Golf Courses 171 171 Quoted Convention, Sports & Prices in Entertainment Venues 4,488 (68) 4,420 Active Significant Not 581 581 Markets for other Required ARTIC Management Identical Observable to be Total business-type activities 68,913 (1 ,542) 67,371 Assets Inputs leveled Total accounts receivable $ 96,732 $ (5,492) $ 91,240 Investment by fair value level 6/30/201 8 (Level 1) (Level 2) Due from other governments Debt securities: U.S. agency securities $ 198,577 $ 31 ,718 $ 166,859 Due from other governments for the City's governmental activities at June U.S. treasury obligations 269,053 269,053 30, 2018, are as follows: Commercial paper 102,706 102,706 Negotiable certificate of deposit 9,979 9,979 Taxes Grants Other Total Medium term corporate notes 127,204 127,204 Governmental activities: LAIF 45,471 $ 45,471 General Fund 15,550 78 1,355 16,983 Total investment measured at fair value 752,990 $ 300,771 $ 406,748 $ 45,471 $ $ $ $ Housing Authority 167 167 Investments measured at cost-based: Nonmajor governmental funds 21,423 11 21,434 Guaranteed investment contracts 16,832 --- Flexible repurchase agreements 129,558 Total due from other governments $ 15,550 $ 21,668 $ 1,366 $ 38,584 Money Market Mutual Funds 232,719 Total investment measured at cost-based 379, 109 Revenues are reported net of estimated uncollectible amounts. To tal estimated uncollectible amounts related to reve nues of the current period Total pooled and bond trustee investments $1 ,132,099 are as follows: NOTE 4 - ACCOUNTS RECEIVABLE, DUE FROM OTHER General fund $ 1,19 6 GOVERNMENTS, DUE FROM THE SUCCESSOR AGENCY, INTERFUND RECEIVABLE AND PAYABLE BALANCES, AND CERTAIN INTERFUND Electric Utility 673 TRANSACTIONS: Water Utility 27 Sanitation 177 Accounts receivable Convention, Sports and Entertainment Venues 12 Accounts receivable for the City's governmental and business-type Total $ 2,085 activities, including the applicable allowance for uncollectible accounts at June 30, 201 8, are as follows: 60 CITYOF ANAHEIM Due from the Successor Agency All interfund balances at June 30, 2018 are generally short-term loans to At June 30, 2018, the amount due from the Successor Agency is $10,538. relieve temporary cash deficits in various funds, except the following Due to the extended period of time over which the receivables are to be interfund balances that are expected to be repaid in more than one year: collected, the City has recorded expenditures at the time the loans were Electric Utility provided and deferred inflows of resources equal to the amount due in the nonmajor special reve nues funds ($5,570) and the nonmajor capital project In 2015, the Public Utility Customer Service Information System fund ($4,968). Project was completed and placed in service. The Electric Utility On April 1, 2003 the City and the former Anaheim Redevelopment paid for the total cost of the project. The Water Utility portion of the Agency entered into a Cooperation Ag reement whereby the City total cost is $3,484, payable in annual amounts of not less than $344 assisted the Redevelopment Agency with the development of beginning July 2016 until July 2024. The outstanding balance at Westgate utilizing $10,000 of funds from the HUD Section 108 loan June 30, 201 8 is $2,408. program. The amount is due to the City by annual installment through June 2024. At June 30, 2018, the amount due is $4,968. in October 2016, the Public Utility and the Community Services Department entered into a Memorandum of Understanding (MOU) On June 1, 201 0, the City and the former Anaheim Redevelopment whereby the Public Utility agreed to provide low-interest financial Agency entered into a Cooperation Ag reement whereby the City assistance of $309 to fund the costs of the security light and photo assisted the Redevelopment Agency with the rehabilitation of the cell re placement resource efficiency upgrading projects in Maxwell historic Packing House site utilizing $7,000 of funds from the HUD Park, Tw illa Reid Park and Brookhurst Park. The fund will be repaid Section 108 $15,000 loan proceeds. The amount is due to the City by annual installment through June 2031 . At June 30, 201 8, the over five years at an interest rate of 0.65% per annum. Monthly amount due is $4,686. principal and interest payment is $5 payable from unrestricted general fund resources. At June 30, 2018, the balance is $299. On February 5, 201 3, the City and the Successor Agency entered into a Cooperation Agreement whereby the City assisted the in November 2016, the Public Utility and the Public Works Successor Agency with loaning the proceeds of one-time allocation Department entered into a Memorandum of Understanding (MOU) of the $1,563 from the low and moderate income housing fund for whereby the Public Utility agreed to provide low-interest financial various Successor Agency projects. At June 30, 2018, the amount assistance of $231 to fund the costs of the general office lighting and due to the City is $884. parking garage structure resource efficiency upgrading projects. lnterfund receivable and payable balances The fund will be re paid over five years at an interest rate of 0.65% per annum. Monthly principal and interest payment is $4 payable Net internal balances between governmental activities and business-type from unrestricted resources of the Municipal Facility Maintenance activities of $14,955 are included in the government-wide financial internal service fund . At June 30, 201 8, the balance is $224. statements at June 30, 2018. lnterfund receivables and payables that are included in the fund financial Housing Authority statements at June 30, 201 8, are as follows: In February 2018, the City and the Anaheim Housing Authority entered lnterfu nd Receivable: into a Cooperation Agree ment whereby the City and Housing Authority exchanged real property for the purpose of developing affordable Nonmajor Internal General Housing government service Electric housing. The market value of the Housing Authority property exceeded ___£_lJ_r1__cl_ Authority al funds funds Utility � that of the City property by $2, 150; hence, the City agreed to provide lnterfund Payable: $2, 150 in future Park Fee Credits to the Housing Authority for the benefit Governmental Funds: of affordable housing development. At June 30, 201 8, the park fee credit General Fund $ 62 $ 299 $ 361 due to the Housing Authority is $2, 150 from the Community Services Nonmajor governmental funds $ 306 $ 2, 150 $ 12,060 14,516 Facilities non major special revenue fund. Enterprise Funds: Water Utility 2,408 2,408 Golf Courses 1,238 1,238 Internal Service Funds 189 224 413 Total --$1,544--- $ 2,15- 0 $ 12,060 $251 --$ 2,931--- $18,936- 61 CITYOF ANAHEIM Certain interfund transactions The following interfund transfers are reflected in the fund financial statements at June 30, 2018: Transfers In: Enterprise Funds Convention, Nonmajor Sports & General Housing governmental Electric Water Entertainment ARTIC Fund Authority funds Utility Utility Venues Management Total Transfers Out: General Fund $ 67,026 $ 600 $ 16,571 $ 2,488 $ 86,685 Nonmajor governmental funds $ 244 $ 2, 161 695 3,500 6,600 Electric Utility 22,612 22,612 Water Utility 1,044 $ 492 1,536 Sanitation Utility 2,806 2,806 Convention, Sports & Entertainment Venues 925 925 Total $ 27,631 $ 2, 161 $ 67,721 $ 492 $ 600 $ 16,571 $ 5,988 $ 121,164 The net transfers between governmental funds and proprietary funds is • Transfer of $600 from the General Fund to the Water Utility $4,228 which are primarily comprised of operational subsidies from Enterprise Fund per the result of Measure N in the November 2014 enterprise funds to the General Fund and are offset by debt service election. subsidies to the ARTIC Management and Convention, Sports & • Transfer of $2, 150 from the Community Services Facilities nonmajor Entertainment Venues Funds. capital project fund to Housing Authority major Special Revenue. This amount is the diffe rence between marl<.et value of the land The City made the following major transfers during fiscal year ended June exchanged. 30, 2018: • Transfer of $3,500 from the Gas Tax nonmajor Special Revenue • Transfer of $60, 181 represents Lease Payment Measurement Fund to the ARTIC Management Enterprise Fund for debt services Revenues (LPMR) from the General Fund to the Anaheim Resort on the ARTIC land acquisition loan as discussed on note 8 of the Improvements nonmajor Debt Service Funds which is held by the notes to the financial statements on pages 72-73 of this report. Trustee, see discussion on note 8 of the notes to the financial • Transfers of $17,028 fro m the Electric Utility Enterprise Fund and statements on page 68 of this report. $2,806 from the Sanitation Utility Enterprise Fund to the General • Transfer of $16,571 from the General Fund to the Convention, Fund. As defined by City Charter, the transfer is equal to the Sports & Entertainment Ve nues Enterprise Fund for debt service maximum of 4% of total operating revenues of the current fiscal subsidy. year. • Transfer of $2,488 from the General Fund to ARTIC Management • Transfer of $5,584 from the Electric Utility Enterprise Fund and Enterprise Fund for operational subsidy. $1,044 from the Water Utility Enterprise Fund to the General Fund. The amount represents the City Council approved transfer of 1.5% • Transfer of $1,652 from the General Fund to the Municipal Facilities retail electric reve nue and net water revenue of the prior fiscal year. non major debt service fund for debt service. The net transfer of $4, 114 from the business-type activities to governmental • Transfer of $2,663 from the General Fund to the Other Capital activities in the government-wide Statement of Activities consisted of the net Improvements nonmajor Capital Project Fund for Public Safety 800 Megahertz (mHz) communication debt service ($803); park restroom transfers ($4,228) described above offsetting by a reclassification of $114 renovation 330); park development projects ($585), vehicle from capital contribution to transfer in resulting from the sewer improvement acquisitions �$300), and various neighborhood capital improvement capital assets contributed from the governmental activities to the Sanitation proJects ($64 ). Utility business-type activities. • Transfer of $2,264 from the General Fund to the Other Capital Improvements Fund, per Council Resolution, to set aside 25% of Except for the transfers detailed above, there were no other significant annual surplus funds of the General Fund for community and transfers during the fiscal year that were either non-routine in nature or neighborhood improvements. inconsistent with the activities of the Fund making the transfer. 62 CITY OF ANAHEIM NOTE 5: ECONOMIC ASSISTANCE AGREEMENTS - TAX contingent upon completion of construction of the hotels, the ABATEMENTS (as defined by GASB Statement No. 77) commencement of and continued operations as a four-diamond quality hotel, and the generation of and payment to the City of TOT. The As of June 30, 201 8, the City Council approved two Economic Assistance contemplated hotels have yet to be built, and therefore cannot operate, Agreements (Agreements) to developers. These Agree ments related to generate nor pay TOT, and as such no economic assistance is required by constructions of a Hotel and retail spaces (Projects) within the City of the City at this time. Once the hotels are constructed and operated at the Anaheim. There has been analysis of the feasibility gap between the costs required quality level, the City will use an amount equal to 70% of the TOT of developing and operating the Projects and the costs that the Projects can generated and paid to the City to fund the corresponding economic finance and viably support. The feasibility gap for the Projects is the assistance of the following projects: economic assistance that the City has committed to partially provide. In May 201 3, the City entered into two economic assistance In July 2002, the City entered into a Development and Economic agreements for up to 866 hotel rooms, of a four-diamond quality, in Assistance Agreement (Agreement) with a developer to provide two phases at the Garden-Walk. These agreements provide for City certain economic assistance to the developer in connection with the assistance in an amount equal to 70% of the TOT for the development of a seven story all-suites hotel (DoubleTree Hotel) on development of a Convention Hotel (of not less than 466 rooms) and certain real property owned by developer and located in the City. a Resort Hotel (of not less than 350 rooms). The City's economic The feasibility gap of the economic assistance is capped at $12,908 assistance obligation ends on the earlier of twenty years from in total for a period over 15 years expiring in fiscal year 2021 completion of construction or, provision of assistance up to a not to payable semi-annually calculated from the Transient Occupancy Tax exceed amount of approximately $158 million. (TOT), ra nging from 5% to 40% in accordance to the Adjustment table of the Agree ment. During fiscal year 2018, the developer Further, in June 2015, the City established the Hotel Incentive received $762 in economic assistance. Program to bring other four-diamond quality hotels to Anaheim. In accordance with the Hotel Incentive Program, the City entered into In April 2006, the City entered into a Disposition and Development Ag reement with a developer to construct and operate retail space three additional economic assistance agreements in July 2016 with (Garden-Walk) in Anaheim. Upon completion of the construction, the similar terms for 580 rooms at 1700 South Harbor with an estimated developer receives economic assistance equal to a portion of the economic assistance from the City in an amount of $145 million, 634 sales tax that Garden-Walk generated for a period of 25 years rooms at 1030 West Katella Avenue with an estimated economic expiring at the earlier of 1) December 2038 or 2) maximum amount assistance from the City in an amount of $148 million, and of $15,600 in total which increases 8% annually starting on July 1, approximately 700 roo ms to the north of the Disneyland Hotel with 201 3. During fiscal year 201 8, the developer received $273 in an estimated economic assistance from the City in an amount of economic assistance. $267 million; thereby, creating the desired number of luxury rooms within the City. As such the program was rescinded for terminated In addition, the City entered into several economic assistance agreements for future developments in December 201 6. to provide assistance to partially fill the feasibility gap of the four-diamond hotel developments within the City. Provision of economic assistance is The following is a summary of economic assistance agreements: Total Total Tax Base for % of Tax for Maximum Economic Total Maximum Calculation Calculation Economic Assistance Economic Economic Years of Economic of Economic Assistance Paid in Assistance Assistance Project Expiration Date Remaining Assistance Assistance Amount Fiscal Year 2018 Paid to Date Remaining DoubleTree Hotel 6/30/2021 4 TOT 5%-40% $ 12,908 $ 762 $ 10,229 $ 2,679 GardenWalk Retail 12/31/2038 21 Sales 40%-50% 15,600 273 1,188 14,412 GardenWalk Hotel - 466+ Rooms 20 Years from Completion 20 TOT 70% 81 , 100 81, 100 GardenWalk Resort Hotel - 350+ Rooms 20 Years from Completion 20 TOT 70% 76,900 76,900 1700 South Harbor - 580 Rooms 20 Years from Completion 20 TOT 70% 145,000 145,000 1030 West Katella Avenue - 634 Rooms 20 Years from Completion 20 TOT 70% 148,000 148,000 North of Disneyland Hotel - 700 Rooms* 20 Years from Completion 20 TOT 70% 267,000 267,000 *Refer to note 14 of the notes to the financial statement on page 92 of this report. 63 CITY OF ANAHEIM NOTE 6-CAPITAL ASSETS : Capital asset activities for the year ended June 30, 201 8, were as fo llows: Beginning Tranter In Ending Balance Additions (Out) Deletions Balance Governmental activities: Nondepreciable assets: Land $ 646,359 $ 12, 133 $ 408 $ (73) $ 658,827 Construction in progress 59,098 37,016 (23,720) (1 ,381) 71,013 Total 705,457 49,149 (23,312) (1 ,454) 729,840 Depreciable assets: Buildings, structures and improvements 345,786 8,997 4,805 (451) 359,137 Machinery and equipment 132,631 7,353 6,526 (3,342) 143,168 Infrastructure 861 ,347 1,920 11,867 (174) 874,960 Total 1,339,764 18,270 23,198 (3,967) 1,377,265 Total assets 2,045,221 67,419 (114) (5,421) 2, 1 07, 105 Less accumulated depreciation for: Buildings, structures and improvements (153,530) (12,057) 346 (165,241) Machinery and equipment (93,616) (8,373) 3,308 (98,681) Infrastructure (423,045) (18,956) 172 (441 ,829) Total accumulated depreciation (670,191) (39,386) 3,826 (705,751) Total governmental activities capital assets, net $ 1,375,030 $ 28,033 $ (114) $ (1,595) $ 1,401 ,354 Business-type activities: Nondepreciable assets: Land $ 89,505 $ 89,505 Construction in progress 299,828 $ 134,946 $ (234,107) $ (64) 200,603 Total 389,333 134,946 (234,107) (64) 290,108 Depreciable assets: Buildings, structures and improvements 804,466 4,432 208,861 (613) 1,017,146 Utility plant 1,827,004 3,728 24,080 (94,548) 1,760,264 Machinery and equipment 40 ,149 1,732 1,280 (10,081) 33,080 Total 2,671 ,619 9,892 234,221 (105,242) 2,810,490 Total assets 3,060,952 144,838 114 (105,306) 3,100,598 Less accumulated depreciation for: Buildings, structures and improvements (279,203) (19,904) 511 (298,596) Utility plant (756,736) (60,129) 94,465 (722,400) Machinery and equipment (27,411) (2,269) 9,908 (19,772) Total accumulated depreciation (1,063,350) (82,302) 104,884 (1 ,040,768) Total business-type activities capital assets, net $ 1,997,602 $ 62,536 $ 114 $ (4222 $ 2,059,830 - 64 CITY OF ANAHEIM Depreciation expense was charged to functions/programs of the City during with lease expiration dates from 2054 to 2080. The total base re nt to be fiscal year 201 8 as follows: collected over the terms of the leases are $70,570 with simple interest accruing on unpaid portions at a rate ranging from 1 % to 6%. Minimum Governmental activities: lease payments are calculated annually, based on residual receipts, as General government $ 106 defined in the lease agreements. At June 30, 2018, the Housing Authority Police 1,977 has recorded lease receivables due from developers related to these Fire & Rescue 892 transactions of $7,794, net of allowances of $10,240 for uncollected Community & Economic Development 1,907 accounts in the government-wide financial statements. In the governmental fund financial statements, this amount is included in the $4 7,017 notes Planning & Building 34 receivable balance of the Housing Authority. Public Works 19,797 Community Services 3,367 ARTIC Management Convention, Sports & Entertainment 5,279 The ARTIC has entered into numerous long-term operating leases with Capital assets held by the City's internal service funds are charged tenants granting them certain uses of the ARTIC premises described in the to the various functions based on their usage of the assets 6,027 respective lease agreements. Terms of the leases ra nge from 5 years to 10 Total depreciation expense - governmental activities $ 39,386 years with lease expiration dates from 2020 to 2027. Extension options range from 5 years to 15 years. Certain leases are subject to percentage rent in an amount equal to a percentage of the amount by which tenant's Business-type activities: gross sales exceed certain thresholds. Electric Utility $ 48,972 Water Utility 11, 157 Future minimum lease payments are as follows: Sanitation Utility 2,900 Fiscal Year Ending 6/30 Golf Courses 497 2019 $ 593 Convention, Sports & Entertainment Venues 16,469 2020 550 ARTIC Management 2,307 2021 448 Total depreciation expense - business-type activities $ 82,302 2022 437 2023 446 2024-2027 1,12 2 Capital leases Total $ 3,596 Included in the capital assets amounts listed above are the following capitalized leased assets: ARTIC also entered into agreements to grant bus companies non-exclusive rights to use certain spaces in ARTIC. These agreements range from 5 years to perpetuity. Some of the agreements can be terminated by either Governmental Activities party with a 60 days termination notice; some of them have extension Machinery and equipment $ 4,861 options, while others will automatically continue on a month-to-month basis Less accumulated amortization (2,853) upon expiration. Capitalized leased assets, net $ 2,008 NOTE 7 - SELF INSURANCE: Operating leases The Insurance Fund (a function of the General Benefits and Insurance Fund), an internal service fund, is used to account for self-funded workers' Housing Authority compensation related benefits, self-funded general liability claims, At June 30, 201 8, the Housing Authority earned reve nues as the lessor of commercial insurance purchases, and alternative risk financing vehicles. land, carried at cost of $67,202 in the government-wide financial Revenues of the Insurance Fund are derived from cost-allocation charges statements, under ten operating ground leases. These leases to developers to City departments using estimates of anticipated risk-transfer costs, new are noncancelable. Terms of the leases range from 55 years to 65 years losses, payments on existing claims, and reserve development on known 65 CITYOF ANAHEIM claims. In addition, the Insurance Fund receives interest income from Above the retained limit of $1,000 per occurrence for liability losses, the City reserves. maintains excess coverage for all City operations to $150,000 per occurrence, excluding helicopter operations for which the City purchases At June 30, 201 8, the City was fu nded at an actuarially acceptable level for $50,000, per occurrence, of commercial aviation liability insurance (on a self-funded retention for workers' compensation and general liability claim first-dollar basis). The first layer of excess liability loss coverage is procured exposures (with retention levels of $2,000 per occurre nce for workers' through the Authority for California Cities Excess Liability (ACCEL), a joint compensation claims and $1 ,000 per occurrence for general liability powers insurance authority, formed in 1986, pooling catastrophic general, claims). Above these retained levels, the City's potential liability is covered automobile, personal injury, and public officials errors and omissions liability through various commercial insurance and intergovernmental risk pooling losses among twelve California cities, through both risk-sharing and programs (collectively, "Insurance"). Settled claims have not exceeded total commercial insurance joint-purchase arrangements. The City, therefore, Insurance in any of the past three years, nor does management believe that continues to maintain some limited excess liability risk sharing exposure, there are any pending claims that will exceed total Insurance coverage. above $1,000 per occurrence, directly with ACCEL. This pooled coverage The unpaid claims liability included in the Insurance Fund is based on the has exposure from the run-out periods from prior years in the ACCEL results of actuarial studies and includes amounts for claims incurred-but retained layer of $4,000 in excess of $1,000. Each ACCEL member's share not-reported, known-claim development, and allocated loss adjustment of pooled losses is based on a retrospectively-rated risk-sharing fo rmula expenses. Claims liabilities are calculated using a discount rate of 2.00% which includes, but is not limited to, exposure and loss experience factors. and consider the effects of inflation, multi-year loss development trends, In order to provide funds to pay claims, ACCEL collects an annual deposit and other economic and social factors. It is the City's practice to obtain full from each member. The deposits are credited with investment income at the actuarial studies annually for its retained levels for general liability and rate earned on ACCEL's investments. At June 30, 2018, ACCEL's cash and workers' compensation exposures. "Premiums" are charged by the investments totaled $49,904, of which $2,487 consists of deposits and Insurance Fund using various allocation methods that include actual costs, interest on deposits provided by the City. The City has no specific equity trends in claims experience and various exposure bases. interest in ACCEL. Deposits provided to ACCEL by the City are expensed Changes in claims liability of the General Benefits and Insurance Fund and when paid by the General Benefits and Insurance Fund. that relates to the governmental funds and reported in the governmental ACCEL is responsible for deciding the risks it will underwrite, the activities in the government-wide Statement of Net Position in fiscal years monitoring, and handling of large claims, and arranging excess risk 2018 and 201 7 were as follows: financing programs. ACCEL does not have any debt outstanding. For a copy of ACCEL's separate financial statements, contact the Finance 2018 2017 Director of the City. Claims liability at beginning of year $ 51,865 $ 50,616 Current year claims and changes in estimates 14,488 12,302 Claims payments (12,041) (11,053) Claims liability at end of year $ 54,312 $ 51,865 Above the retained limit of $2,000 per occurrence for workers' compensation losses, the City purchases excess coverage, utilizing both commercial insurance and an intergovernmental risk pooling program (CSAC-EIA), to statutory limits. 66 CITY OF ANAHEIM NOTE 8 - LONG-TERM LIABILITIES: The following is a summary of changes in long-term liabilities reported in the government-wide financial statements for the year ended June 30, 2018: Beginning Additions/ Reductions/ Ending Within One Balance Proceeds Refu nded Payments Balance Year Governmental activities: City lease revenue bonds $ 394,492 $ (12,168) $ 382,324 $ 12,550 Accretion 233,265 $ 19,883 (13,673) 239,475 14,745 (168) 44 (124) Unamortized bond discount/premium, net Total 627,589 19,883 (25,797) 621,675 27,295 Ca italized lease obligations: frnternal Service Funds 1,738 1,184 (1,372) 1,550 831 Total 1,738 1,184 (1,372) 1,550 831 Notes and loans payable: City 24,885 2,250 (2,581) 24,554 2,945 4,692 (1,238) 3,454 1,269 Internal Service Funds Total 29,577 2,250 (3,819) 28,008 4,214 Claims liabilities (note 7) 51,865 14,488 (12,041) 54,312 11,670 Compensated absences (note 1) 20,941 24,539 (24,390) 21 ,090 12,602 Other Postemployment Benefits (OPEB) (note11) Governmental Funds 136,034 2,634 (10,959) 127,709 11,151 215 (898) 10,468 Internal Service Funds Total 147,185 2,849 (11,857) 138,177 Pension (note 10): Governmental Funds 496,073 123,046 (47, 151) 571 ,968 22,421 11,221 (2,440) 31 ,202 Internal Service Funds Total 518,494 134,267 (49,591) 603,170 Governmental activities total 1,397,389 199,460 (128,867) 1,467,982 56,612 Business-type activities: Bonds payable: Electric Utility 705,225 237,745 $ (250,720) (21,305) 670,945 20,975 Water Utility 162,270 (3,370) 158,900 3,490 40,490 45,705 (39,395) (1,095) 45,705 1,080 Sanitation Convention, Sports & Entertainment Venues 228,860 (4,844) 224,016 5,096 98,555 45,063 (28,845) 114,773 Unamortized bond discount/premium, net Total 1,235,400 328,513 (290,115) (59,459) 1,214,339 30,641 Notes and loans payable: Electric Utility 301 (29) 272 29 Sanitation Utility 196 (19) 177 19 26 (3) 23 2 Convention, Sports and Entertainment Venues ARTIC Management 20,000 (3,500) 16,500 3,500 Total 20,523 (3,551) 16,972 3,550 Interest ayable ARTI g Management 2,635 363 2,998 Total 2,635 363 2,998 Decommissioning provision (note 1) 116,477 7,021 (6,975) 116,523 Other Postemployment Benefits (OPEB) (note11) 26,083 504 (2,101) 24,486 Electric Utility 9,731 189 (784) 9,136 Water Utility 6,525 127 (526) 6,126 Sanitation Utility 453 8 (36) 425 Golf Courses 8,843 171 (712) 8,302 Convention, Sports & Entertainment Venues Total 51,635 999 (4, 159) 48,475 Pension (note 10): Electric Utility 77,861 20,859 (7,1 59) 91 ,561 25,862 5,855 (2,300) 29,417 Water Utility Sanitation Utility 14,035 3,943 (1,304) 16,674 1,035 293 (96) 1,232 Golf Courses Convention, Sports & Entertainment Venues 30,526 7,956 (2,791) 35,691 Total 149,319 38,906 (13,650) 174,575 Business-type activities total 1,575,989 375,802 (290,115) (87,794) 1,573,882 34, 191 $ 2,973,378 $ 575,262 $ (290,115) $ (216,661) $ 3,041,864 $ 90,803 Government-wide total 67 CITY OF ANAHEIM Bond ratings for the City's revenue bonds are as follows: debt service on the bonds. The Walt Disney Company provided a guarantee to the bond insurer to enable the issuer to obtain municipal bond insurance. Standard & Fitch Poo r's Ratings Moody's LPMR began on January 1, 2001 , with the first payment made to the trustee General Fund Lease Revenue Bonds AA- AA Aa3 on July 7, 2001 , for the LPMR generated during the period January through 2007 Senior Lease Revenue Bonds BBB+ A+ A1 June 2001 . Subsequent to that date, LPMR is collected and re mitted to the trustee monthly. During the fiscal year ended June 30, 201 8, $59,683 was Electric Revenue Bonds Unrated AA- Aa3 remitted to the trustee. Water Revenue Bonds AA+ AAA Unrated Sewer Revenue Bonds AA+ Unrated Unrated Debt service requirements to maturity for the 1997 Anaheim Lease Revenue Bonds and the 2007 Anaheim Lease Revenue Refunding Bonds GOVERNMENTAL ACTIVITIES: to be paid by the Anaheim Resort Improvements Debt Service Fund from future LPMR are as follows: BONDS PAYABLE At June 30, 201 8, bonds payable consisted of the followings: Fiscal Year Ending 6/30 Principal Interest Total 2019 $ 12,031 $ 27,086 $ 39, 117 Range of Authorized Out 2020 12,616 27,781 40,397 Date Final Interest Rates and standing Issued Maturity at Issue Date Issued 6/30/2018 2021 13,279 28,464 41,743 City 2022 13,782 29,197 42,979 1997 Anaheim Lease 2023 14,378 29,854 44,232 Revenue Bonds 2/1/1997 3/1/2037 4.5%-6.0% $ 510,427 $ 1 34,161 2024-2028 80,633 160,653 241,286 Accretion 239,475 2029-2033 96,466 181,723 278, 189 2007 Anaheim Lease 2034-2037 116,311 176,254 292,565 3 3 3 3 5 5 5 5 3 225 ,335 Revenue Refunding Bonds 6/1 /2007 /1/20 7 .2 % - . % 2 6, 20 Total 359,496 661,012 1,020,508 2008 Anaheim Lease Unamortized bond discount (1,624) (1,624) Revenue Refunding Bonds 12/1 0/2008 8/1/2019 3.0%-5.0% 5,084 1,074 Total bonds $ 357,872 $ 661 ,012 $ 1,018,884 2014 Anaheim Lease Revenue Bonds 11/14/2014 5/1/2046 0.4%-5.0% 27,954 21 ,754 Total 621 ,799 Included in interest is $239,475 related to accretion on capital appreciation Unamortized bond premium/discounts, net (124) bonds. Total governmental activities bonds $ 799,785 $ 62 1,675 Lease reve nue bonds - City Bonds Payable - City Debt service requirements to maturity for the City's lease reve nue bonds to be paid from unrestricted reve nues of the Municipal Facilities Debt Service Lease payment measurement revenues Fund are as follows: In February 1997, the Anaheim Public Financing Authority sold $51 0,427 of Fiscal Year Ending 6/30 Principal Interest Total lease revenue bonds to construct public improvements in The Anaheim 2019 $ 519 $ 1,12 9 $ 1,648 Resort. In June 2007, the Authority sold $256,320 of lease revenue bonds 555 1,102 1,657 to defease $248,335 of the 1997 lease reve nue bonds. The bonds are 2020 2021 1,088 1,088 special obligations of the Authority payable solely from lease payments to 40 1,088 1,128 be made by the City to the Authority for the use and occupancy of the 2022 3 488 1,086 1,574 leased premises. Debt service requirements to maturity for these lease 202 reve nue bonds are paid from lease payment measurement revenues 2024-2028 2,831 5,037 7,868 (LPMR) defined as amounts equal to: 1) 3% of the 15% transient occupancy 2029-2033 3,613 4,255 7,868 taxes (TOT) (i.e. 20% of the total transient occupancy taxes) for all hotel 2034-2038 4,611 3,257 7,868 properties in the City, excluding Disney properties, and 2) 100% of the 2039-2043 5,885 1,983 7,868 incremental TOT, sales, and property tax reve nues from all Disney 2044-2046 4,286 435 4,721 properties over the 1995 base, adjusted each year by the CPI change, with Total 22,828 20,460 43,288 a minimum 2% increase annually. The City is not required to pay any Unamortized bond premium 1,500 1,500 additional sums should the LPMR fall short of the amount required to pay Total Bonds $ 24,328 $ 20,460 $ 44,788 68 CITY OF ANAHEIM CAPITAL LEASE OBLIGATIONS Justice Center and Miraloma Park site, construction of the Thornton Brady The City has a long-term noncancelable agreement with HP Financial storm drain and the rehabilitation of the historic Packing House site. The Services to finance the acquisition of the City's server, desktop, and loan is payable from the Community Development Block Grant yearly portable computer equipment. The agreement qualifies as a capital lease entitlement and from the receipts of the Successor Agency receivable. The for accounting purposes as defined under the Financial Accounting outstanding balance of the loan at June 30, 2018, was $10,240. The loan Standards Board (FASB) Statement No. 13, Accounting for Leases, and bears interest ranging from 1.74% to 3.97% and is payable over 20 years therefore has been recorded at the present value of future minimum lease beginning on February 1, 2011 through August 1, 2030. Loan debt service payments at the date of inception of the lease. Future minimum lease requirements to maturity are as follows: payments to be made from unrestricted reve nues of the Information Fiscal Year Ending 6/30 Principal Interest Total Services Internal Service Fund under the capital lease are as follows: 201 9 690 394 1,084 2020 710 372 1,082 Fiscal Year Ending 6/30 2021 730 348 1,078 201 9 $ 868 2022 755 321 1,076 2020 517 2023 780 292 1,072 2021 213 2024 - 2028 4,335 959 5,294 2022 32 2029 - 2031 2,240 117 2,357 Total 1,630 Total notes and loans $ 10,240 $ 2,803 $ 13,043 Less amount representing interest, variable (80) Present value of future minimum lease payments $ 1,550 Helicopter loan payable NOTES AND LOANS PAYABLE In January 2009, the City entered into an agreement with Government At June 30, 201 8, notes and loans payable are as follows: Capital Corporation to finance the acquisition of a police helicopter. The amount of the loan totaled $1 , 799 and bears interest at 5.391 % per annum Notes and Loans Payable - City for a term of 12 years. On January 29, 2009, Government Capital Corporation assigned this agreement to Bank of America which HUD Section 108 guaranteed loans payable subsequently assigned it to Western Alliance Equipment Finance on March In May 2003, the City entered into an agreement with HUD, making 21 , 2012. Principal and interest payments of $206 are due annually available $10,000 to provide financial assistance related to the development beginning on December 16, 2009, until December 16, 2020. The of Westgate on a fo rmer landfill site located at the northeast corner of outstanding balance at June 30, 2018 was $557. Loan debt service Beach Boulevard and Lincoln Avenue. The loan is payable from the receipts requirements to maturity are as follows: of the Successor Agency receivable. The outstanding balance at June 30, 2018 was $4,968. The loan bears interest ranging from 1.7 4% to 5.97% and Fiscal Year Ending 6/30 Principal Interest Total 20 19 176 30 206 is payable over 20 years beginning on February 1, 2005, until August 1, $ $ $ 2020 186 20 206 2023. Loan debt service requirements to maturity are as follows: 2021 195 11 206 Fiscal Year Ending 6/30 Principal Interest Total Total notes and loans $ 557 $ 61 $ 618 201 9 $ 730 $ 266 �96 2020 785 223 1,008 Lincoln Ave nue Construction loan payable 2021 841 177 1,018 In March 2013, the City entered into a cooperative agreement with the 2022 907 127 1,034 County of Orange (County) for the funding and construction of Lincoln 2023 975 72 1,047 2024 730 22 752 Avenue. The project includes widening of Lincoln Avenue from Rio Vista Total notes and loans $ 4,968 $ 887 $ 5,855 Street to Riverbend Parkway, and construction of the Lincoln Ave nue Bridge over the Santa Ana River. Construction costs of the Lincoln Avenue within the City boundary is estimated to be $2,250 which will be payable to In March 2010, the City entered into an agreement with HUD, making the County in seven installments starting on July 1, 2013 and on July 1 of available $15,000 to fund the acquisitions of the Orange County Family 69 CITYOF ANAHEIM each subsequent year at no interest cost. The outstanding balance at June outstanding balance at June 30, 2018 was $3, 112. Loan debt service 30, 2018 was $500. requirements to maturity are as follows: 800 Megahertz Communication Equipment Fiscal Year Ending 6/30 Principal Interest Total On November 30, 2015, the City entered into a Master Equipment Lease/ 2019 $ 1,012 $ 77 $1]89 Purchase Agreement (Agreement) with Banc of America Public Capital 2020 1,037 52 1,089 Corp., to finance the acquisitions and replacement of the City portion of the 2021 1,063 26 1,089 800 Megahertz (MHz) Countywide Coordinated Communications System Total notes and loans $ 3, 112 $ 155 $ 3,267 (CCCS). The CCCS project includes a plan for replacement of three main components: Backbone Equipment, Subscriber Equipment, and Dispatch Network Core Equipment loan payable Consoles. On January 10, 2017, the City entered into a lease purchase agreement On November 30, 2015, the Ag reement provided $1, 100 financing for with Delage Landen Public Finance, LLC to provide $723 financing for the acquisition of a portion of the mobile radio equipment payable over 10 years replacement of the Citywide Network Core system. The loan is payable over and bears interest of 1.98% per annum, Principal and interest payments of 3 years with an annual payment of $251 . The outstanding balance of the $61 are due semi-annually beginning on May 30, 2016, until November 30, loan at June 30, 201 8 was $246. Total debt service to maturity of the loan 2025. The outstanding balance at June 30, 2018 was $846. are as follows: On November 30, 2016, the Ag reement provided $6,840 financing for Fiscal Year Ending 6/30 Principal Interest Total acquisition of the remaining radio equipment payable over 10 years and 2019 $ 246 $ 5 $25 1 bears interest of 1.87% per annum. Principal and interest of $377 are due Total notes and loans $ 246 $ 5 $ 251 semi-annually beginning on May 30, 2017, until November 30, 2026. Amount of this financing allocated to the governmental activities totaled Community Learning Center property acquisition loan paya ble $6,235. The outstanding balance at June 30, 2018 was $5,421 . Loan debt service requirements to maturity are as follows: On September 1, 2017, the City entered into an Agreement with Los Altos V. LP (Seller) for the purchase and sale of the former Northgate Market site Fiscal Year Ending 6/30 Principal Interest Total located at 71 8-744 N. Anaheim Boulevard for the development of a 2019 $ 701 $ 114 -$ -8 15 Community Learning Center. The purchase price of the property is $4,750 2020 714 101 815 of which $2,500 was paid in cash from resources of the Community 2021 727 88 815 Development Block Grant with the balance of $2,250 will be payable to 2022 740 75 815 Seller over five years at an annual interest rate of 5% . Principal and interest 2023 754 61 815 of $43 are due on the first of each month commencing on March 1, 2018 2024-2026 2,631 98 2,729 until February 1, 2023. The annual loan payment will be funded from the Total notes and loans $ 6,267 $ 537 $ 6,804 restricted resources of the Community Development Block Grant yearly entitlement. The outstanding balance of the loan at June 30, 2018 was ACCELA Enterprisepe rmit tracking and land management software system $2, 118. Total debt service to maturity are as follows: loan paya ble On September 13, 2016, the City entered into a Te chnology Lease Fiscal Year Ending 6/30 Principal Interest Total Purchase Agreement with Government Capital Corporation to provide 2019 $ 409 $ 107 �16 $5, 190 financing for the procurement of the Accela, Inc. software, 2020 433 83 516 programming, maintenance, support, licenses and project implementation 2021 457 59 516 services for the re placement of the Citywide enterprise permit tracking and 2022 483 33 516 land management system. The loan bears interest at 2.48% per annum for 2023 336 7 343 a term of 5 years. Principal and interest payments of $1,090 are due Total notes and loans $ 2, 118 $ 289 $ 2,407 annually beginning on September 22, 2016, until September 22, 2020. The 70 CITY OF ANAHEIM BUSINESS-TYPE ACTIVITIES: Bonds Payable - Electric Utility BONDS PAYABLE The City's Electric Utility has pledged future electric revenues, net of certain costs, to repay a total of $1 ,015,303 outstanding long-term obligations, Range of principal and interest. Proceeds from bonds provided financing for various Date Interest Rates Authorized Outstanding capital improvements, primarily distribution assets. The Electric Utility's Issued Maturity at Issue Date and Issued 6/30/2018 bonds are payable solely from electric customer net revenues and are Electric Utility payable through 2046. At June 30, 2018, the annual principal and interest 2009 Revenue Bonds 3/1 0/2009 10/1/2039 3.0%-5.25% $ 70,000 $ 1,540 payments on the bonds, excluding early bond retirements, were 42.8% of 2011 Revenue Bonds 5/1 1/201 1 10/1/2036 3.0%-5.375% 90,390 8,565 2012 Revenue Bonds 9/19/2012 10/1/2031 3.125%-5% 92,130 62,990 net reve nues. Principal and interest paid for the current fiscal year and total 2014 Revenue Bonds 10/8/2014 10/1/2035 2.0%-5.0% 109,350 87,360 net reve nues were $51 ,918 and $121 ,364 respectively. 2015A Revenue 4/21/2015 10/1/2045 Variable a 50,000 50,000 Bond debt service requirements to maturity for the Electric Utility to be paid 20158 Revenue 7/21/2015 10/1/2035 3.0%-5.0% 92,865 85,110 from revenues are as follows: 2016A Revenue 10/1 9/2016 10/1/2041 3.0%-5.0% 219,285 126,985 20168 Revenue 10/1 9/2016 10/1/2028 0.80%-2.71 % 69,780 11,110 Fiscal Year Ending 6/30 Principal Interest Total 2017A Revenue 12/21/2017 10/1/2028 1 .57%-2.21 % 42,955 42,955 20178 Revenue 12/21/2017 10/1/2036 1.14%-2.50% 194,790 194,330 2019 $ 20,975 $ 29,745 $ 50,720 Total 670,945 2020 25,005 28,738 53,743 Unamortized bond premiums/discounts, net 75,666 2021 26, 170 28,324 54,494 Total Electric Utility 746,611 2022 28,920 27,748 56,668 Water Utility 2023 30,110 26,272 56,382 2008 Revenue Bonds 7/9/2008 10/1/2038 4.0%-5.0% 48,580 405 2024-2028 2010 Revenue Bonds 10/28/2010 10/1/2040 2.0%-4.75% 34,525 32,775 165,070 107,084 272,154 2015 Revenue Bonds 4/21/2015 10/1/2045 2.0%-5.0% 95,885 91,915 2029-2033 182,410 65,533 247,943 2016-A Revenue 10/19/2016 10/1/2046 2.0%-5.0% 35,225 33,805 2034-2038 139,790 23,947 163,737 Total 158,900 2039-2043 35,610 6,164 41 ,774 Unamortized bond premiums/discounts, net 15,444 2044-2046 16,885 803 17,688 Total Water Utility 174,344 Total 670,945 344,358 1,015,303 Sanitation Utility Unamortized bond 2007 Revenue Bonds 1/25/2018 2/1/2048 5% 45,705 45,705 Unamortized bond premium 8,767 premiums/discounts, net 75,666 75,666 Total Sanitation 54,472 Total bonds $ 746,611 $ 344,358 $ 1,090,969 Convention, Sports and Entertainment Venues Bonds Payable - Water Utility 2008 Lease Revenue Refunding Bonds 12/10/2008 8/1/2019 3.0%-5.0% 45,847 10,390 The City's Water Utility has pledged future reve nues from the sale of water, 2014 Lease Revenue net of certain costs, to repay a total of $275,244 for outstanding long-term Bonds 11/14/2014 5/1/2046 0.4%-5.0% 230,971 213,626 obligations, principal and interest. Proceeds from bonds provided financing Total 224,016 for various capital improvements, primarily distribution assets. The bonds Unamortized bond premiums/discounts, net 14,896 are payable solely from water net reve nues and are payable through 2047 Total Convention, Sports and Entertainment Venues 238,912 At June 30, 2018, the annual principal and interest payments on the bonds Total business-type activities bonds $ 1,568,283 $ 1,214,339 were 51.9% of net revenues. Principal and interest paid for current fiscal year and total net revenues were $11,008 and $21,200 res pectively. a The interest is calculated weekly based on SIFMA-Based index rate and a base SIFMA spread of 0.35%. On December 1, 2020, these bonds are subject to mandatory tender for purchase. Bond debt service requirements to maturity for the Water Utility to be paid from revenues are as follows: 71 CITY OF ANAHEIM Bonds Payable - Convention, Sports and Entertainment Ve nues Fiscal Year Ending 6/30 Principal Interest Total 2019 $ 3,490 $ 7,519 $ 11,009 Bond debt service requirements to maturity for the Convention, Sports and 2020 3,640 7,369 11,009 Entertainment Ve nues to be paid from reve nues are as fo llows: 2021 3,810 7,199 11,009 Fiscal Year Ending 6/30 Principal Interest Total 2022 3,985 7,025 11,010 2019 $ 5,096 $ 11,074 $ 16, 170 2023 4,165 6,836 11,001 2020 6,355 10,814 17, 169 2024-2028 23,855 30,949 54,804 2021 2,400 10,628 13,028 2029-2033 30,160 24,219 54,379 2022 3,890 10,508 14,398 2034-2038 37,305 16,547 53,852 2023 4,637 10,314 14,951 2039-2043 33,920 7,365 41 ,285 2024-2028 26,894 47,852 74,746 2044-2047 14,570 1,316 15,886 2029-2033 34,322 40,421 74,743 Total 158,900 116,344 275,244 2034-2038 43,804 30,939 74,743 Unamortized bond 2039-2043 55,910 18,836 74,746 premiums/discount, net 15,444 15,444 2044-2046 40,708 4,137 44,845 Total bonds $ 174,344 $ 116,344 $ 290,688 Total 224,016 195,523 419,539 Unamortized bond Bonds Payable - Sanitation Utility premium/discounts, net 14,896 14,896 Total bonds $ 238,912 $ 195,523 $ 434,435 The City's Sanitation Utility has pledged future sanitation system net reve nues to pay a total of $78,892 for reve nue bonds issued in January NOTES AND LOANS PAYABLE 2018. Proceeds from the bonds provided financing for capital improvements to the sanitation sewer collection system. The bonds are payable solely Note Payable - Electric Utility from system net reve nues and are payable through February 2048. At June On March 1, 2013, the Public Utility Department entered into a Revolving 30, 2018, total principal and interest payments on the bonds were less than 41 .7% of net reve nues. Total principal and interest paid and total system net Cred it Agreement (Agreement) with Wells Fargo Bank, National Association reve nues for the current fiscal year were $2,997 and $7, 184 respectively. for a note amount not to exceed $100,000, of which $86,000 is made available for the Electric Utility and $14,000 for the Water Utility. The note Bond debt service requirements to maturity for the Sanitation Utility to be has a three year term at variable interest rate based on the LIBOR Daily paid from reve nues are as fo llows: Index Rate and a spread. The annual commitment fee is 0.175% of the Fiscal Year Ending 6/30 Principal Interest Total total note amount of $100,000. 2019 $ 1,080 $ 2,323 $ 3,403 On January 1, 2016, upon expiration of the Ag reement, the Public Utility 1,17 0 2,231 3,401 2020 Department and Wells Fargo Bank National Association entered into a new 2021 1,230 2,173 3,403 revolving credit Agreement for the same term with a maturity date of 2022 1,295 2, 111 3,406 January 28, 2021. 2023 1,355 2,047 3,402 2024-2028 7,875 9,144 17,019 The Utility Department did not draw fund from the Revolving Credit during 2029-2033 10,060 6,969 17,029 fiscal year 2018. 2034-2038 12,825 4,190 17,015 Note Payable -ARTIC Management 2039-2043 5,250 1,447 6,697 2044-2048 3,565 552 4, 117 Anaheim Regional Transportation lntermodal Center (ARTIC} Land Acquisition Loan payable Total 45,705 33,187 78,892 Unamortized bond premium 8,767 8,767 In July 201 2, the City entered into an agreement with the Orange County Total bonds $ 54,472 $ 33,187 $ 87,659 Transportation Authority (OCTA) for the Purchase and Sale of a 13.58 acres real property located at 1750 South Douglass Road in Anaheim. The 72 CITY OF ANAHEIM purchase price for the site is $32,500. The City paid $1,000 at the close of Sanitation Utility escrow and the remaining $31 ,500 will be payable to OCTA over 13 years and bears 2% simple interest per annum. Annual principal payments are Fiscal Year Ending 6/30 Principal Interest Total due on or before July 10th each year commencing 201 2. The payment of 2019 $ 19 $ 4 $ 23 accrued interest is deferred until equal payments of $1 ,883 are due and 2020 20 3 23 payable on or before July 10, 2024 and July 10, 2025. The loan is payable 2021 20 3 23 with the Anaheim Tourism Improvement Special District (ATID) special 2022 21 2 23 assessments and Measure M2 Local Fair Share funds. OCTA will retain 2023 21 2 23 payments from Anaheim's "Local Fair Share" funds allocated by OCTA 2024-2026 76 3 79 under Measure M2 each year until the final payment is made on July 10, Total notes and loans $ 177 $ 17 $ 194 2025. At June 30, 2018, accrued interest payable for the ARTIC loan was $2,998. The City may elect to provide alternative funding from other City Convention, Sports and Entertainment Ve nues funds for transportation related purposes, such as gas tax funds. At June 30, 2018, the outstanding balance of the ARTIC loan was $16,500. Loan Fiscal Year Ending 6/30 Principal Interest Total debt service requirements to maturity are as follows: 2019 $ 2 $ 2 2020 2 2 Fiscal Year Ending 6/30 Principal Interest Total 2021 3 $ 4 2019 $ 3,500 $ 3,500 2022 3 4 2020 3,500 3,500 2023 3 4 2021 3,500 3,500 2024-2026 10 10 2022 4,000 4,000 Total notes and loans $ 23 $ 3 $ 26 2023 2,000 2,000 2024-2025 $ 3,765 3,765 ARBITRAGE Total notes and loans $ 16,500 $ 3,765 $ 20,265 The Tax Reform Act of 1986 (Act) substantially revised the treatment to be 800 Megahertz Communication Equipment loan payable afforded to earnings on the proceeds of tax-exempt debt, and requires the City to calculate and remit re batable arbitrage earnings to the Internal Portion of the 800 Megahertz Communication Equipment financing were Revenue Service. Certa in of the City's debt and interest earned on the allocated to The Electric Utility, the Sanitation Utility and the Convention, proceeds thereof are subject to the requirements of the Act. The City has Sports & Entertainment Venues. Loan debt service requirements to maturity accrued a liability for estimated rebatable arbitrage earnings and has set are as follows: aside such earnings as restricted cash. At June 30, 2018, the arbitrage rebate liability for governmental and business-type activities was zero and Electric Utility $132, respectively. Fiscal Year Ending 6/30 Principal Interest Total COMPLIANCE WITH DEBT COVENANTS 2019 $ 29 $ 5 -$--34 2020 31 4 35 There are various limitations and restrictions contained in the City's bonds 2021 31 4 35 and certificates of participation indentures. The City believes they are in compliance with all significant limitations and restrictions. 2022 32 3 35 2023 32 3 35 DEBT ISSUANCES 117 4 121 2024-2026 City - Debt Issuance Total notes and loans $ 272 $ 23 $ 295 On September 1, 2017, the City issued a loan of $2,250 with Los Altos V. LP at an interest rate of 5% per annum to purchase the former Northgate Market site located at 718-744 N. Anaheim Boulevard for the purpose of developing a Community Learning Center. The City has recorded the loan proceed ($2,250) and the land acquisition expenditure ($4,750) in the 73 CITY OF ANAHEIM Community Development Block Grant nonmajor special revenue fund. The DEBT RETIREMENTS annual loan payment will be funded from the restricted resources of the Debt Defeased Community Development Block Grant yearly entitlement. Total debt service The City defeased the following bonds prior to June 30, 2018: to maturity is $2,579. Outstanding Electric Utility - Debt Issuances 6/30/2018 On December 21 , 2017, the Electric Utility issued Anaheim Housing and Electric Utility Public Improvement Authority (AHPIA) Bonds Series 201 7-A and 201 7-B in 2009-A Electric Revenue Bonds $ 58,260 the principal amount of $237,745 at a premium of $36,027 to partially refund 201 1-A Electric Revenue Bonds 78,110 the AH PIA 2016 A&B Revenue Refunding Bonds ($143,470), the Anaheim 2012-A Electric Revenue Bonds 29,140 Public Financing Authority 2011-A ($78,110) and 2012-A ($29,140) Revenue Bonds, to fund debt service reserve and cost of issuance 2016-A Electric Revenue Bonds 91,610 expenses. The true interest costs are 1.98% and 3.60% for the 201 7-A and Water Utility 201 7-B respectively. The total debt service to maturity is $374,460. The 2008 Water System Revenue Bonds 46,595 Electric Utility reduced its total debt service payments over the life of the $ 303,715 refunded bonds by $19,217, and obtained a net present value savings of $12,378. In the refunding, the proceeds of the refunding issue were placed in irrevocable escrow accounts and invested in government securities that, The bond proceeds, net of premium and along with $17,614 of the previous together with interest earnings thereon, will provide amounts sufficient for debt service reserve and accrued debt service of $1 ,997 totaled $293,383 future payments of interest and principal on the issues refunded. Refunded were deposited as follows: debt is not included in the City's accompanying basic financial statements as the City has satisfied its obligation through the in-substance defeasance of these issues. 201 7-A 2017-B Total --- Debt service reserve refund $ 2,857 $ 14,757 $ 17,614 CONDUIT FINANCINGS Cost of issuance fund 206 900 1,106 City Deposited in escrow for therefu ndings of: The City has entered into two conduit financings on behalf of a community 2011 APFA care provider facility and one to facilitate the management agreement for 86,830 86,830 the Honda Center (formerly the Arrowhead Pond) of Anaheim. In 2012 APFA 33,213 33,213 accordance with applicable agreements, the City has no obligation for debt 2016A APFA 102,348 102,348 service payments and therefore, the debt is not reflected in the 2016B APFA 52,272 52,272 accompanying basic financial statements. Bonds payable and certificates of participation related to co nduit financings outstanding at June 30, 2018, Total $ 55,335 $ 238,048 $ 293,383 were as follows: Sanitation Utility - Debt Issuance Date Final Amount Outstanding On January 25, 2018, the Anaheim Housing and Public Improvement Issued Maturity Issued 6/30/2018 Authority (AHPIA) sold Sewer Revenue Bonds, Series 201 8 with a principal 1993 Anaheim Memorial amount of $45, 705 and at a premium of $9,036 for a total of $54, 7 41 to Hospital Association 10/15/1993 5/15/2020 $ 46,690 $ 6,145 refund the $39,395 outstanding principal balance on the 2007 Sewer 2003 Anaheim Arena Revenue Bonds and to provide additional financing of $15,000 to complete Financing Project 12/1 1/2003 6/1/2023 42,600 19,500 more sewer system improvements throughout the City. The Sanitation Total $ 89,290 $ 25,645 Utility reduced its total debt service payments over the life of the bonds by $9,671 , and obtained a present value savings of $6,766. Anaheim Housing Authority The Anaheim Housing Authority has entered into co nduit debt financings on behalf of various developers to assist with the acquisition, construction, equipping, rehabilitation and refinancing of multifamily residential rental 74 CITY OF ANAHEIM projects within the City of Anaheim. In accordance with the bond Bonds Payable documents, neither the City nor the Housing Authority has an obligation for debt service payments and therefore, the debt is not reflected in the 2007 Tax Allocation Refunding Bonds accompanying basic financial statements. Housing Authority reve nue bonds related to conduit financings outstanding at June 30, 2018, were as follows: The Successor Agency will repay a total of $67,240, principal and interest, for the outstanding 2007 tax allocation bonds issued in December 2007 from the semi-annual Redevelopment Property Tax Trust Fund (RPTTF) Date Final Amount Outstanding Issued Maturity Issued 6/30/2018 revenue allocations. Proceeds from the bonds provided financing for public Heritage Village Apartments 11/12/92 7/1 5/33 $ 8,485 $ 5,485 improvements related to the merged project areas, for the supply of low-and Sage Park Project 11/1/98 11/1/28 5,500 5,500 moderate-income housing within the City, to repay certain Redevelopment Sciara Court Apartments 11/1/04 12/1/34 8,200 4,824 Agency loan obligations and to advance refund the 1992, 1997 and 2000 Bel Age Manor Apartments 2/1/08 2/1/44 22,350 19,399 bonds. The bonds bear interest at rates ra nging fro m 4.25% to 6.50% and Pradera Apartments(Lincoln Anaheim) Phase B 5/1 5/09 4/15/39 23,217 7,448 are payable through February 2031 . During the fiscal year ended June 30, Anton Monaco Apartments 12/14/12 1/1/46 35,460 34,019 2018, total principal and interest paid was $18,008. Crossings at CherryOrchard Apartments Tranche A 8/23/12 12/1/44 9,365 1,060 In January 201 8, series A and C of the 2007 Tax Allocation Bonds were Crossings at Cherry Orchard Apartments Tranche B 8/23/12 12/1/29 2,985 2,467 refunded through the issuance of the 2018 Tax Allocation Refunding Bonds. Paseo Village Apartments 2/28/13 9/1/45 19,750 12,446 Debt service requirements to maturity for 2007 Tax Allocation bonds, series Village Center Apartments 8/7/14 3/1/47 15,000 15,000 B and D are as follows: Pebble Cove Apartments Series A 8/1 9/15 9/1/31 13,000 12,668 Pebble Cove Apartments Taxable Subordinate Series 8/1 /15 8/1/55 2015A 3,550 3,550 Fiscal Year Ending 6/30 Principal Interest Total Hermosa Village Apartments Phase 1 Series A-1 12/28/16 7/1/49 34,169 34,169 2019 $ 2,755 $ 2,880 $ 5,635 Hermosa Village Apartments Phase 1 Series A-2 12/28/16 7/1/49 6,859 6,859 2020 2,935 2,700 5,635 Miracle Terrace Apartments Series B-1 1/10/17 2/1/50 26,555 26,555 2021 3,130 2,509 5,639 Miracle Terrace Apartments Series B-2 1/10/17 2/1/20 11,445 11,445 2022 3,330 2,306 5,636 Cobblestone Apartments Series A-1 3/14/17 10/1/54 6,185 6,185 2023 1,780 2,089 3,869 Cobblestone Apartments Series A-2 3/14/17 10/1/19 2,435 2,435 2024-2028 14,815 8,435 23,250 Sea Wind Apartments Series B-1 3/14/17 10/1/54 11,015 11,015 2029-2031 15,515 2,061 17,576 Sea Wind Apartments Series B-2 3/14/17 10/1/19 4,340 4,340 Total bonds $ 44,260 $ 22,980 $ 67,240 Total $ 269,865 $ 226,869 201 8 Tax Allocation Refundinq Bonds FIDUCIARY FUNDS On January 25, 2018, the Successor Agency issued Tax Allocation Successor Aqencv Refunding Bonds, 201 8 Series A and B. The bond proceeds together with The following is a summary of changes in long-term liabilities for the year the 2007 series A and C bond reserve funds were used to refund the 2007 ended June 30, 2018: Tax Allocation Bonds series A and C, and the 2010 Recovery Economic Zone Development Bonds. The Successor Agency will repay a total of Within Beginning Additions/ Reductions/ Ending One $159,046, principal and interest, from the semi-annual RPTTF reve nue Balance Proceeds Payments Balance Year allocations. The refu nding bonds bear interest at rates ranging from 2.27% to 2.50% and are payable through February 2031 . Bonds payable $ 193,960 $ 112,195 $ (149,700) $ 156,455 $ 7,225 Premium/(discount), net 2,032 23,041 (3,158) 21 ,915 Debt service requirements to maturity for 201 8 Tax Allocation Refunding Notes and loans payable 5,832 (400) 5,432 443 bonds are as follows: Due to City of Anaheim 11,610 (1,072) 10,538 1,072 Pollution remediation liability 17,888 (310) 17,578 393 Total $ 231 ,322 $ 135,236 $ (154,640) $ 211,918 $ 9, 133 75 CITY OF ANAHEIM Fiscal Year Ending 6/30 Principal Interest Total whether or not the entire amount has been repaid. At June 30, 2018, the outstanding balance of the participation note was $2,685. 2019 $ 4,470 $ 5,570 $ 10,040 2020 4,660 5,379 10,039 Debt service requirements to maturity for the Successor Agency notes 2021 4,885 5,153 10,038 payable and contractual commitments to be paid from future RPTTF 2022 5,130 4,909 10,039 revenues are as follows: 2023 7,155 4,653 11,808 2024-2028 47,340 17,269 64,609 Fiscal Year Ending 6/30 Principal Interest Total 2029-2031 38,555 3,918 42,473 2019 $ 443 $ 609 $ 1,052 Total 112,195 46,851 159,046 2020 489 579 1,068 Unamortized bond 2021 1,792 439 2,231 premium/discounts, net 21,915 21 ,915 2022 428 428 2034 428 428 Total bonds $ 134, 110 $ 46,851 $ 180,961 2023-2027 416 1,725 2, 141 Notes and Loans Payable 2028-2032 1,273 868 2, 141 Savi Ranch Associates note payable 2034 1,019 193 1,212 Total notes and loans 5,432 5,269 10,701 In July 1989, the fo rmer Redevelopment Agency executed a note with Savi $ $ $ Ranch Associates, a California general partnership. The amount of the note totaled $2,707 and bears interest at 9.5% per annum. The note is payable Due to the City of Anaheim from net property tax increment as defined in the Redevelopment Agency The Successor Agency will repay a total of $5,855 outstanding long-term note. If there is insufficient RPTTF revenue to pay for principal and interest obligations, principal and interest, from the semi-annual RPTTF reve nue at the termination of the River Valley project area plan in November 2031, allocations for the $10,000 Cooperation Agreement dated April 1, 2003, the note ceases to be an obligation of the Successor Agency. For the fiscal between the former Redevelopment Agency and the City, whereby the City year ended June 30, 2018, total interest paid was $588. assisted the former Agency with the development of the Anaheim Westgate Center (Westgate project) utilizing $10,000 of funds from the HUD Contractual obligations Section 108 loan. This Cooperation Ag reement obligation (HUD Section As part of the Redevelopment Agency's economic development program to 108 loan) bears interest ranging from 1.74% to 5.97% and is payable semi attract and retain businesses in the City, the fo rmer Redevelopment Agency annually through August 2023. At June 30, 201 8, outstanding principal due has entered into various contractual obligations to reimburse tenant to the City for the Westgate project obligation was $4,968. Principal and improvement costs to be paid from property tax incre ment revenues interest paid for the current fiscal year were $990. (thereafter RPTTF). At June 30, 2018, the outstanding balance of these The Successor Agency will repay a total of $5,963 outstanding long-term obligations totaled $40. obligations, principal and interest, from the semi-annual RPTTF reve nue In December 1992, the former Redevelopment Agency has entered into an allocations for the $7,000 Cooperation Agreement dated June 2010 agreement with California State Teachers Retirement System (CALSTRS), between the former Redevelopment Agency and the City, whereby the City to share in the development costs of the Plaza Redevelopment Project. In assisted the fo rmer Redevelopment Agency with the re habilitation of the March 2004, CALSTRS assigned the agreement to the new owners, Pan historic Packing House site utilizing proceeds from the HUD Section 108 Pacific Retail Properties, Inc. (PPRP). In October 2006, Kimco Realty loan. This Cooperation Agreement obligation (HUD 108 Section loan) bears Corporation (KRC) acquired PPRP including the assumption of the interest ranging from 1.68% to 3.98% and is payable over 20 years assigned plaza project agreement. The KRC participation note bears 7% beginning on February 1, 2011 through August 1, 2030. As of June 2018, simple interest rate, and has a maximum term of 25 years. The Successor the outstanding principal due to the City for the Packing House site project Agency's obligation to repay the note is entirely contingent on the revenues obligation was $4,686. Principal and interest paid for the current fiscal year generated by the project. The note will be forgiven at the end of the term were $528. 76 CITY OF ANAHEIM In 2013, the Successor Agency entered into a Cooperative Agreements At June 30, 2018, the City has the following outstanding Mello-Roos special with the City whereby the City assisted the Successor Agency by providing tax bonds: a loan of $1,563 to finance various Successor Agency projects. The Successor Agency will repay the City from future RPTTF reve nue Outstanding allocation. At June 30, 2017, the outstanding balance of these loan are 6/30/2018 $884. CFD 06-02 $ 7,265 Westgate Pollution Remediation Obligation CFD 08-01 60,305 In June 2003, the former Redevelopment Agency acquired property located $ 67,570 at 2951 West Lincoln Avenue as part of a redevelopment project named the Westgate project. Approximately 11 acres of the property were formerly In February 2007, the City issued $9,060 in special tax bonds to finance a known as the Sparks and Rains Landfills. The County of Orange was the portion of the cost of acquisition and construction of facilities in the Platinum Triangle of Anaheim, Community Facility District 06-2. Stadium Loft. On operator of these landfills until 1960. In November 2008, the County paid August 10, 2016, the outstanding balance of $7,680 of the 2007 special tax the Redevelopment Agency $5, 176 in settlement of claims related to the bonds were refunded by Special Tax Refunding Bonds, Series 2016, CFO pollution remediation for the Westgate project site prior to the development 06-02, in the principal amount of $7,540 and at a premium of $91 . The City of a shopping center. The total costs of the pollution remediation work reduced the CFO 06-2 total debt service payments over the life of the amounted to $12,420 based on actual contract received for the project. refunded bonds by $1,989 with a present value savings of $1,352. The true During the year ended June 30, 201 5, management identified potential interest cost is 2.89% payable semi-annually commencing from March 1, additional pollution remediation costs including ongoing maintenance 201 7 through September 1, 2037. Balance of total debt service is $9,598 to responsibilities required for the Westgate project amounting to $18,576. At maturity. June 30, 2018, the pollution re mediation liability is estimated to be $17,578. In August 2010, the City issued $28,630 in special tax bonds, Series 2010 Mello-Roos Community Facilities Districts to finance a portion of the cost of acquisition and construction of facilities in the Platinum Triangle of Anaheim, Community Facility District 08-1 and to The City issued special tax bonds to finance construction in various fund a reserve fund for the Series 201 0 Bonds. On August 10, 2016 the City Community Facilities Districts (CFO). These bonds were authorized issued Special Tax Bonds, Series 2016, CFO 08-1 in the principal amount of pursuant to the Mello-Roos Community Facilities Act of 1982. The bonds $60,000 and at a premium of $5,923. The bonds are being used to provide are payable from a special assessment tax and are non-recourse bonds financing for acquisition and construction of certain public facilities secured by the properties. Neither the faith and credit nor the taxing power necessary for the continued development of the District, and to refund of the City, the State of California or any political subdivision of either of the $22,730 outstanding principal of the CFO 08-1 , Special Tax Bonds, Series foregoing is pledged to the payment of the bonds. The bonds are not 2010. The City reduced the CFO 08-1 total debt service payments over the general or special obligations of the City, nor do they contain any credit life of the refunded bonds by $13,325 with a present value savings of enhancements that secondarily pledge existing or future resources of the $8,649. The true interest cost is 3.38% payable semiannually commencing City, accordingly they are not reflected in the accompanying basic financial from March 1, 2017 through September 1, 2037. Balance of total debt statements. The City is acting as agent only for the property owners in service is $106,366 to maturity. collecting the special assessments and forwarding the collections to the fiscal agent. This activity is recorded in an agency fund in the basic financial statements. 77 CITY OF ANAHEIM NOTE 9 - SEGMENT INFORMAT ION: Condensed Statement of Revenues, Expenses and Changes in Net Position The Sanitation Utility Fund issued reve nue bonds to fi nance sewer system Waste water fees (pledged against bonds) $ 13,500 expansion and improvements. The Sanitation Utility Fund accounts for Other revenues 148 three activities: solid waste collection, wastewater, and street cleaning. However, investors in the revenue bonds rely solely on reve nue generated Depreciation and amortization (2,334) through wastewater activities for repayment. Summary fi nancial information Other operating expenses (6,779) for wastewater activities is presented below: Total operating Income 4,535 Nonoperating income(expenses) Condensed Statement of Net Position Interest income 315 Assets Interest expense (1 ,706) Loss on disposal of capital assets (2) Cash and cash equivalents $ 6,760 Investments 23,808 Capital contribution 572 Transfer out (550) Other current assets 1,770 Total nonoperating expense (1 ,371) Restricted cash and cash equivalents 4,409 Change in net position 3,164 Restricted investments 20,381 Net position at beginning of year, as adjusted 98,607 Capital assets, net 111,256 Net position at end of year 101 ,771 Total assets 168,384 $ Deferred outflows of resources 2,470 Condensed Statement of Cash Flows Liabilities Net cash provided by (used for): Current liabilities 2,587 Operating activities $ 8,533 Current liabilities payable from restricted assets 1,946 Noncapital financing activities (550) Noncurrent liabilities 63,558 Capital and related financing activities 3,764 Total liabilities 68,091 Investing activities (16,575) Deferred inflows of resources 992 Net decrease (4,828) Net Position Beginning cash and cash equivalents 15,997 Net investment in capital assets 68,014 Ending cash and cash equivalents 11,16 9 Restricted for debt services 450 Reconciliation of cash and cash equivalents Restricted for capital projects 10,822 Cash and cash equivalent 6,760 Unrestricted 22,485 Restricted cash and cash equivalent 4,409 Total net position $ 101,771 Total cash and cash equivalent $ 11,16 9 78 CITYOF ANAHEIM NOTE 10 - PENSIONS: Police Safety General information about the Pension Plans Prior to On or after Hire Date January 1, 2013 January 1, 2013 Plan Description Benefit formula 3.0% @50 2.7% @57 Benefit vesting schedule 5 years service 5 years service The City provides pension benefits to eligible full-time employees in three separate pension plans: Miscellaneous Plan, Police Safety Plan and Fire Benefit payments monthly for life monthly for life Safety Plan. These plans are agent multiple-employer public employee Retirement age 50 52-57 defined benefit plans and are administered through the California Public Monthly benefits, as a % of eligible compensation 3.00% 2.70% Employees' Retirement System (CalPERS), which acts as a common Required employee contribution rates 9.00% 12.00% investment and administrative agent for participating public entities within Required employer contribution rates 21.081% 21.081% the State of California. Benefit provisions and all other requirements are established by State statute and City ordinance. CalPERS issues publicly Fire & Rescue Safety available reports that include a full description of the pension plans Prior to On or after regarding benefit provisions, assumptions and membership information that Hire Date January 1, 2013 January 1, 2013 can be found on the CalPERS website @www.calpers.ca.gov. Benefit formula 3.0% @50 2.7% @57 Benefits Provided Benefit vesting schedule 5 years service 5 years service CalPERS provides service retirement and disability benefits, annual cost of Benefit payments monthly for life monthly for life living adjustments and death benefits to plan members, who must be public Retirement age 50 50-57 employees and beneficiaries. Benefits are based on years of credited Monthly benefits, as a % of eligible compensation 3.00% 2.0%-2.7% service, equal to one year of full time employment. Members with five years Required employee contribution rates 9.00% 10.75% of total service are eligible to retire at age 50 with statutorily reduced Required employer contribution rates 17.657% 17.657% benefits. All members are eligible for non-duty disability benefits after 10 Employees Covered years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death At June 30, 201 7, the following employees were covered by the benefit Benefit. The cost of living adjustments for each plan are applied as terms for each Plan: specified by the Public Employee's Retirement Law. Miscellan- Police Fire eous Safety Safety The Plans' provisions and benefits in effect at June 30, 2018 are ------summarized as follows: Inactive employees or beneficiaries currently receiving benefits 2,045 549 305 Inactive employees entitled to but not yet receiving benefits 1,541 69 56 Miscellaneous Active employees 1,709 414 205 Prior to On or after Total 5,295 1,032 566 Hire Date January 1, 2013 January 1, 2013 Benefit formula 2.7% @55 2.0% @62 Contributions Benefit vesting schedule 5 years service 5 years service Section 20814(c) of the California Public Employees' Retirement Law Benefit payments monthly for life monthly for life (PERL) requires that the employer contribution rates for all public Retirement age 50-55 52-65 employers be determined on an annual basis by the actuary and shall be Monthly benefits, as a% of eligible compensation 2.70% 2.00% effective on the July 1 following notice of a change in the rate. The total plan Required employee contribution rates 8.00% 6.75% contributions are determined through CalPERS' annual actuarial valuation Required employer contribution rates 10.587% 10.587% process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability, The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. 79 CITYOF ANAHEIM Effective with fiscal year 201 8, CalPERS began collecting employer contributions toward the plan's unfunded liability portions as dollar amounts instead of the prior method of a contribution rate. The total required minimum employer contribution is the sum of the Employer Normal Cost Rate (Employer Rate, expressed as a percentage of payroll) plus the Employer Unfunded Accrued Liability (UAL) Contribution amount (in dollar). The following table summarizes the required contribution rates by employee and employer effective for fiscal year 201 8. The contribution requirements of plan members and the City are established and may be amended by CalPERS. Employer Rate Total Rate CalPERS1 Retirement Employee Total FY 2018 UAL Employee Group Membership Formula Rate Employee2 City Employee � Rate Contribution3 Miscellaneous Employees Management; Confidential Classic 2.7% @55 8.00% 4.00% 6.59% 12.00% 6.59% 18.59% Anaheim Municipal Employees Association (AMEA) General New 2% @62 6.75% 0.00% 10.59% 6.75% 10.59% 17.34% $22,936 Anaheim Municipal Employees Association (AMEA) Clerical International Brotherhood of Electrical Workers (IBEW) Anaheim Police Association Trainees Safety Employees Fire Management Classic 3% @50 9.00% 3.00% 14.66% 12.00% 14.66% 26.66% Anaheim Fire Association (AFA) Classic 2% @50 9.00% 3.00% 14.66% 12.00% 14.66% 26.66% New 2.7% @57 10.75% 0.00% 17.66% 10.75% 17.66% 28.41 % $5,880 Police Management Classic 3% @50 9.00% 3.00% 18.08% 12.00% 18.08% 30.08% Anaheim Police Management Association (APMA) New 2.7% @57 12.00% 0.00% 21.08% 12.00% 21.08% 33.08% $9,491 Anaheim Police Association (APA) 1 Definition of a 'New' PERS member A new hire who is brought in Cal PERS membership for the first lime on or after January 1, 2013, and who has no prior membersh ip in any California public retirement system. A new hire who is brought into Cal PERS membership for the first lime on or after January 1, 20 13, and who is not eligible for reciprocity with another California public retirement system. A member who first established Cal PERS membership prior to January 1, 2013, and who is rehired by a different CALPERS employer after a break in service of greater than six months. 2 PERS Cost Share is the employee contribution towards the employer's Normal Cost (NC) Rate. Normal cost is the annual cost of service accrual for the upcoming fiscal year for active employees. Normal cost is shown as a percentage of payroll and paid as part of the payroll reporting process. 3 The Unfunded Accrued Liability (UAL) is the amortized dollar amount needed to fund past service credit earned (or accrued) for members who are currently receiving benefits, active members, and for members entitled to deferred benefits, as of the valuation dale The pension plans (pensions) are recognized in the government-wide recorded as a component of pension expense beginning with the period in financial statements and proprietary funds financial statements on an which the diffe rence incurred. accrual basis of accounting, while the contributions to the pension plan are Projected earnings on pension investments are recognized as a component recognized as expenditures on modified accrual basis of accounting on the of pension expense. Diffe rences between projected and actual investment governmental fund statements in the General Fund, the Housing Authority earnings are reported as deferred inflows of resources or deferred outflows Major Special Revenue Fund, the Nonmajor Special Revenue Fund and the of resources and amortized as a component of pension expense on a Non major Capital Project Funds. closed basis over a five-year period beginning with the period in which the The net pension liability in the Statement of Net Position represents the diffe rence occurred. City's excess of the total pension liability over the fiduciary net position Net Pension Liability reflected on the Valuation Reports provided by CalPERS. The net pension liabilities are measured as of the City's prior fiscal year. Changes in net The City's net pension liability for each Plan is measured as the total pension liability are recorded as pension expense or as deferred inflows of pension liability, less the pension plan's fiduciary net position. The net resources or deferred outflows of resources depending on the nature of the pension liability of each of the Plan is measured as of June 30, 2017. change. Liabilities are based on the results of the actuarial calculations performed as The changes in net pension liability that are recorded as deferred inflows of of June 30, 2016 and were rolled forward to determine the June 30, 2017 resources or deferred outflows of resources that arise from changes in total pension liability. Fiduciary net position is based on fa ir value of actuarial assumptions or other inputs and diffe rences between expected or investments as of June 30, 2017. actual experience are amortized over the weighted average remaining A summary of principal assumptions and methods used to determine the service life of all participants in the res pective pension plan and are net pension liability is shown below. 80 CITY OF ANAHEIM ActuarialAssumpti ons: assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical Valuation Date (VD) June 30, 2016 returns of all the funds' asset classes, expected compound (geometric) Measurement Date (MD) June 30, 2017 returns were calculated over the short-term (first 10 years) and the long Measurement Period July 1, 20 16 to June 30, 2017 term (1 1-60 years) using a building-block approach. Using the expected nominal returns for botti short-term and long-term, the present value of Reporting Date (RD) June 30, 2018 benefits was calculated for each fund. The expected rate of return was set Actuarial Cost Method Entry Age Normal in accordance with the requirements of by calculating the single equivalent expected return that arrived at the same GASB 68 present value of benefits for cash flows as the one calculated using both Asset Valuation Method Market Value of Assets short-term and long-term returns. The expected rate of return was then set Actuarial Assumptions: equivalent to the single equivalent rate calculated above and rounded down Discount Rate 7.15% to the nearest one quarter of one percent. The table below reflects long Inflation 2.75% term expected real rate of return by asset class. Salary Increase Varies by Entry Age and Service The rate of return was calculated using the capital market assumptions Payroll Growth 3.00% applied to determine the discount rate and asset allocation. The target Investment Rate of Return 7.15% Net of Pension Plan Investment and Administrative allocation shown was adopted by CalPERS effective July 1, 2014. Expenses, includes inflation Current Target Real Return Real Return Retirement Age The probabilities of Retirement are based on the 2014 Asset Class Allocation Years 1-10 1 Years 11+ 2 CalPERS Experience Study for the period from 1997 to 201 1. Global Equity 47.00% 4.90 % 5.38 % Mortality The probabilities of mortality are based on the 2014 Global Fixed Income 1 .00% 0.80 % 2.27 % CalPERS Experience Study for the period from 1997 to 9 201 1. Pre-retirement and Post-retirement mortality rates Inflation Sensitive 6.00% 0.60 % 1.39 % include 20 years of projected mortality improvement using Private Equity 12.00% 6.60 % 6.63 % Scale BB published by the Society of Actuary. Real Estate 11.00% 2.80 % 5.21 % Post Retirement Benefits Contract COLA up to 2.75% until Purchasing Power Infrastructure and Forestland 3.00% 0 % 5.36 % Increase Protection Allowance Floor on Purchasing Power applies, 3.9 2.75% thereafler. Liquidity 2.00% (0.40 %) (0.90 %) 100.00% Change of Assumptions 1 In 2017, the accounting discount rate reduced fro m 7.65% to 7.15%. An expected inflation of 2.5% used for this period 2 An expected inflation of 3.0% used for this period Discount Rate The discount rate used to measure the total pension liability was 7.15 Recognition of Gains and Losses percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested Under GASB 68, gains and losses related to changes in total pension plans that would most likely result in a discount rate that would be diffe rent liability and fiduciary net position are recognized 1n pension expense from the actuarially assumed discount rate. The tests revealed the assets systematically over time. would not run out. Therefore, the current 7.15 percent discount rate is appropriate, and the use of the municipal bond rate calculation is not The first amortized amounts are recognized in pension expense for the year deemed necessary. The long-term expected discount rate of 7.15 percent is the gain or loss occurs. The remaining amounts are categorized as deferred applied to all plans in the Public Employees Retirement Fund. outffows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real Difference between projected and actual 5-year straight-line amortization rates of return (expected returns, net of pension plan Investment expense earnings on investments and inflation) are developed for each major asset class. All other amounts Straight-line amortization over the average In determining the long-term expected rate of return, CalPERS took into expected remaining service lives of all account both short-term and long-term market return expectations as well members that are provided with benefits as the expected pension fund cash flows. Such cash flows were developed (active, inactive, and retired) as of the beginning of the measurement period 81 CITYOF ANAHEIM Change in the Net Pension Liability Total Pension Plan Fiduciary Net Pension Net pension liability is the plan's total pension liability based on the entry Liability Net Position Liability age normal actuarial cost method less the plan's fiduciary net position. Fire & Rescue Safety Plan: (a) (b) (c) = (a) - (b) The following table shows the changes in net pension liability for each Plan Balance at June 30, 2016 (VD) $ 394,090 $ 281 ,742 $ 112,348 recognized over the measurement period: Changes recognized for the Measurement Period: Total Pension Plan Fiduciary Net Pension Service Cost 6,600 6,600 Liability Net Position Liability Interest on the Total Pension Liability 29,093 29,093 Miscellaneous Plan: (a) (b) (c) = (a) - (b) Changes of Assumptions 23,564 23,564 Balance at June 30, 20 16 (VD) $ 1,245,540 $ 883,735 $ 361 ,805 Difference between Expected and Changes recognized for the Actual Experience (3,028) (3,028) Measurement Period: Plan to Plan Resource Movement Service Cost 23,736 23,736 Interest on the Total Pension Liability 93,754 93,754 Contribution from the Employer 10,350 (10,350) Changes of Assumptions 76,961 76,961 Contributions from Employees 2,316 (2 ,316) Difference between Expected and Net Investment Income 31,036 (31 ,036) Actual Experience 8,902 8,902 Benefit Payments, including Plan to Plan Resource Movement 2 (2) Refu nds of Employee Contributions (22,071) (22,071) Contribution from the Employer 33,276 (33,276) Contributions from Employees 9,743 (9,743) Administrative Expenses (416) 416 Net Investment Income 97,855 (97,855) Net Changes during 2016-2017 34, 158 21,215 12,943 Benefit Payments, including Balance at 6/30/2017 (MD) $ 428,248 $ 302,957 $ 125,291 Refu nds of Employee Contributions (64,059) (64,059) Administrative Expenses (1 ,305) 1,305 Net Changes during 2016-2017 139,294 75,51 2 63,782 Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Balance at 6/30/2017 (MD) $ 1,384,834 $ 959,247 $ 425,587 Combined Total: (a) (b) (c) = (a) - (b) Balance at June 30, 2016 (VD) $ 2,324,818 $ 1,657,005 $ 667,813 Total Pension Plan Fiduciary Net Pension Changes recognized for the Liability Net Position Liability Police Safety Plan: (a) (b) (c) = (a) - (b) Measurement Period: Service Cost 46,250 46,250 Balance at June 30, 20 16 (VD) $ 685,188 $ 491,528 $ 193,660 Interest on the Total Pension Liability Changes recognized for the 174,311 174,311 Measurement Period: Changes of Assumptions 144,022 144,022 Service Cost 15,914 15,914 Difference between Expected and Interest on the Total Pension Liability 51 ,464 51,464 Actual Experience 6,099 6,099 Changes of Assumptions 43,497 43,497 Plan to Plan Resource Movement 2 (2) Difference between Expected and Contribution from the Employer 63,240 (63,240) Actual Experience 225 225 Contributions from Employees Plan to Plan Resource Movement 16,801 (16,801 ) Contribution from the Employer 19,61 5 (19,615) Net Investment Income 183,153 (183, 153) Contributions from Employees 4,741 (4,741) Benefit Payments, including Net Investment Income 54,262 (54,262) Refu nds of Employee Contributions (120,325) (120,325) Benefit Payments, Including Administrative Expenses (2,446) 2,446 Refu nds of Employee Contributions (34, 195) (34,195) Net Changes during 2016-2017 Administrative Expenses (725) 725 250,357 140,425 109,932 Net Changes during 2016-2017 76,905 43,698 33,207 Balance at 6/30/2017 (MD) $ 2,575, 175 $ 1,797,430 $ 777,745 Balance at 6/30/2017 (MD) $ 762,093 $ 535,226 $ 226,867 82 CITY OF ANAHEIM Sensitivity of the Net Pension Liability to Changes in the Discount Rate $66,792 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of The following presents the net pension liability of the City's three Plans of the net pension liability in the measurement year ended June 30, 2018. the measurement date, calculated using the discount rate of 7.15 percent, Other amounts reported in deferred outflows and deferred inflows of as well as what the net pension liability would be if it were calculated using a resources related to pensions will be recognized as a component in pension discount rate that is 1 percentage-point lower (6.15 percent) or 1 expense as follows: percentage-point higher (8.15 percent) than the current rate: Discount Discount Discount Measurement Period Rate - 1% Rate Rate + 1% Ended June 30 Plans' Net Pension Liability (6.15%) (7.15%) (8.15%) 2018 $ 24,374 Miscellaneous $ 611,022 $ 425,587 $ 272,676 2019 73,294 Police Safety 332,815 226,867 140,125 2020 25,838 Fire & Rescue Safety 181,690 125,291 78,800 2021 (10,812) Combine total $ 1,12 5,527 $ 777,745 $ 491,601 Total $112,694 Pension Plan FiduciaryNet Position Payable to the Pension Plans Detailed information about each pension plan's fiduciary net position is At June 30, 2018, the City reported a payable of $878 for the outstanding available in the separately issued CalPERS financial re ports. amount of contributions to the pension plan required for the fiscal year ended June 30, 2018. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions Pension expense is the change in net pension liability from the previous fiscal year to the current fiscal year less adjustments. For the fiscal year ended June 30, 201 8, the City recognized pension expense of $101,465. At June 30, 2018, the City re ported deferred outflows of resources and deferred inflows of resources related to pension from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Pension contributions subsequent to measurement date $ 66,792 Changes of Assumptions 102,279 $ 4,653 Difference between Expected and Actual Experiences 9,649 19,333 Net difference between projected and actual earnings on plan investments 24,752 Change in proportions 4,494 4,494 Total $ 207,966 $ 28,480 83 CITY OF ANAHEIM NOTE 11 - Other postemployment Benefits Plan Description The City provides other postemployment benefits (OPEB) to eligible re gular full-time employees who retired from city services in a single-employer defined benefit healthcare plan (Plan). The Plan participates in the California Employers' Retiree Benefit Trust (CERBT) to pre-fund OPEB liabilities. The CERBT is an agent multiple employer plan consisting of an aggregation of single-employer plans, with pooled administrative and investment functions that are administered by CalPERS. A copy of the aggregated CERBT annual financial report may be obtained @www.calpers.ca.gov. The City's OPEB Plan provides medical, dental and life insurance coverage to eligible retirees. This coverage is available for employees who retire from City services with PERS and meet the eligibility requirements in accordance with City Personnel Resolutions and various Memoranda of Understanding summarized as follows: Employee Group Date of Hire Eligibility Requirement City Contribution Formulas 1 Management Before 1/1/1996 Age 50 with 10 years of continuous full time City 1.5 multiplied by Miscellaneous 2% @ 60 PERS retirement schedule based services; must have been awarded a retirement from on employee's age at retirement & City service accrued through 12/31/2005 Council - Unrepresented PERS as the reason for separation from City service Anaheim Municipal Employees Association (AMEA) Police Safety Before 7/6/2001 Age 50 with 10 years of continuous full time City 1.2 multiplied by 2% @ 50 Safety PERS based on the employee's age and services; must have been awarded a retirement from years of City service at the time of retirement PERS as the reason for separation from City service Fire Safety Before 11/9/2001 Age 50 with 10 years of continuous full time City 1.2 multiplied by 2% @ 50 Safety PERS based on the employee's age and services; must have been awarded a retirement from years of City service at the time of retirement PERS as the reason for separation from City service 1 The maximum City contribution for the retiree's OPEB is 95% of the annual contribution amount for active employees Regular full time employees hired after the dates above have access to the Contributions City's medical and dental plans but do not receive a defined benefit. The contribution requirements of plan members and the City are Benefits provided established in accordance with City Personnel Resolutions, Council Resolution and various Memoranda of Understanding. The retired plan The City provides healthcare, dental and vision benefits for retirees and members receiving benefits make varying contributions toward the cost of their dependents. Benefits are provided through payment of insurance these benefits. The City contributes an amount not less than the annual premiums. actuarially Determined Contribution (ADC) measured in accordance to the Additionally, full time employees who retire from the City at age 50 or older parameters of GASB Statement No. 75. The ADC represents a level of with 5 years of City service receive life insurance benefits. Retirees receive funding that, if paid on an ongoing basis, is projected to cover normal costs a paid-up life insurance policy at retirement. The City pays the full cost of each year and amortization of any unfunded actuary liabilities over a closed the life insurance coverage. 30-year period. Employees Covered City contributions to the Plan occur as benefits are paid to retirees or contributions to the OPEB Trust. Benefit payments occur in the form of As of the June 30, 2017 actuarial valuation, the following employees were direct payments for premiums and taxes (explicit subsidies) and indirect covered by the benefit terms of the OPEB Plan: payments to retirees in the form of higher premiums for active employees Inactive employees or beneficiaries currently receiving benefit payments 1,320 (implicit subsidies). Inactive employees entitled to but not yet receiving benefit payments 84 For the fiscal year ended June 30, 2018, the City contributed the full amount Active employees 1,864 of the ADC totaled $16,368 of which included insurance premiums of Total 3,268 $19,069, implicit subsidy of $2,541 , and cash contribution to the CERBT of $306 offsetting by retiree contributions of $5,548. 84 CITYOF ANAHEIM Net OPEB Liability Change of Assumptions The City's OPEB liability was measured as of June 30, 2017, and the total The June 30, 2017 actuarial valuation has the following changes since the prior OPEB liability used to calculate the net OPEB liability was determined by an valuation: actuarial valuation as of that date. Actuarial Cost Method The cost method applied to develop the ADC is the Entry Age Normal Level Dollar Method. As required by GASB Actuarial assumptions. 75, the Entry Age Normal Level Percent of Pay method was used to develop liabilities. The difference was A summary of principal assumptions and methods used to determine the relatively minor. net OPEB liability is show below. Mortality improvement Updated from Bickmore Scale 2014 to Bickmore Scale Valuation Date (VD) June 30, 2017 2017 based on new data published by the Society of Actuaries and the Social Security Ad ministration. Measurement Date (MD) June 30, 2017 Healthcare trend Assumed to increase at slightly higher rates from 2018 Measurement Period July 1, 2016 to June 30, 2017 through 2024 than was assumed in the prior valuation. Reporting Date (RD) June 30, 2018 Spouse coverage Modified the prior 75% assumption of future retiree spouse Actuarial Cost Method Entry Age Normal Cost, level percent of pay coverage to 70%, if eligible for explicit City benefits, and to 60%, if not eligible for explicit City benefits, based on a Asset Valuation Method Market Value of Assets review of current retiree and active employee elections. Actuarial Assumptions: Retiree participation Assumed participation of retirees age 70 or older and Long Term Return on Assets 7.28% eligible for, but waiving coverage, was reduced from 50% to 25%. Discount Rate 7.28% Discount Rate General Inflation Rate 2.75% Salary Increase 3.25% per year, used only to allocate the cost of benefits The discount rate used to measure the total OPEB liability was 7.28%. The between service years projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined Assumed Wage Inflation 3.0% per year, used to determine amortization payments contribution rates. Based on those assumptions, the OPEB plan's fiduciary if developed on a level percent of pay basis net position was projected to be available to make all projected OPEB Participants Valued Only current active employees and retired participants payments for current active and inactive employees. Therefore, the long and covered dependents are valued. No future entrants term expected rate of return on OPEB plan investments was applied to all are considered in this valuation. periods of projected benefit payments to determine the total OPEB liability. Active employees expected to qualify for explicit City Participation Rates benefits in retirement: 90% of future retirees are The long-term expected rate of return on the CERBT OPEB plan assumed to elect coverage through the City in investments were determined using a building block approach in which retirement; expected future real rates of return (expected returns, net of OPEB plan Active employees not eligible forexplicit City benefits in investment expense and inflation) are developed for each major class. This retirement: 22.5% are assumed to continue their cu rrent approach considers the general inflation rate assumption, real risk-free rate medical plan elections in retirement; of investment return and risk premiums which vary by each asset due to unique attributes and risks. The City's OPEB Plan participates in CERBT Current retirees: All currently participating retirees are portfolio investment Strategy 1. The target allocation and best estimates of assumed to continue their existing medical and dental plan elections for the remainder of their lifetime. 50% of arithmetic real rates of return for each major asset class of Strategy 1 are retirees eligible for benefits but currently waiving summarized in the following table: coverage are assumed to rejoin the plan. Long-Term Demographic Based on the 2014 experience study of the CalPERS Target Expected Real using data from 1997 to 201 1, except for a different basis 1 used to project future mortality improvements. The Asset Class Allocation Rate of Return representative mortality rates were those published by Global Equity 57% 5.71% CalPERS, adjusted to back out 20 years of Scale to Fixed Income 27% 2.40% central year 2008 Treasury Inflation-Protected Securities 5% 2.25% Mortality Improvement Bickmore Scale 2017 applied generationally Real Estate Investment Trusts 8% 7.88% Healthcare Trend 8.0% for year 2018, decreasing 0.5% per year to an Commodities 3% 4.95% ultimate rate of 5.0% for year 2025 & later 1 Geometric representation; inflation 3% 85 CITYOF ANAHEIM Recognition of Plan Changes and Gains and Losses Discount Under GASB 75, gains and losses related to changes in total OPEB liability 1% Decrease Rate 1% Increase and fiduciary net position are recognized in OPEB expense systematically 6.28% 7.28% 8.28% over time. Net OPEB Liability $220,440 $186,652 $158,696 Timing of recognition: Changes in the Total OPEB liability relating to Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost changes in plan -benefits are recognized immediately (fully expensed) in the year in which the change occurs. Gains and Losses are amortized, with the Trend Rates applicable period based on the type of gain or loss. The first amortized The following presents the net OPEB liability of the City if it were calculated amount are recognized in OPEB expense for the year the gain or loss using health care cost trend rates that are 1 percentage-point lower or 1 occurs. The remaining amounts are categorized as aeferred outflows and percentage point higher than the current rate, for measurement period deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. ended June 30, 2017: Current Difference between projected and 5 year straight-line amortization 1 % Decrease Medical Trend 1 % Increase actual earnings on investments 7.0% 8.0% 9.0% All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all rnernbers that Net OPEB Liability $153,721 $186,652 $227,649 are provided with benefits (active, inactive, and retired) as of the beginning of the rneasurernent period. In OPEB Plan fiduciarynet position deterrning the EARSL, all active, retired and inactive (vested) rnernbers are counted, with the latter two Detailed information about the OPEB Plan's fiduciary net position is groups having O remaining service years. available in the separately issued CERBT annual financial report which may Changes in the OPEB Liability be obtained @www.calpers.ca.gov The following table shows the changes in the net OPEB liability of the City's OPEB Expense and Deferred Outflows of Resources and Deferred Inflows Plan recognized over the measurement period. of Resources Related to OPEB For the year ended June 30, 2018, the City recognized OPEB expense of Increase (Decrease) $13,886. At June 30, 2018, the City re portea deferred outflows of resources Plan and deferred inflows of resources related to OPEB from the following Total Fiduciary Net sources: OPEB Net OPEB Liabilities Position Liability Deferred Deferred (a) (b) (a) - (b) Outflows of Inflows of Balance at 06/30/2016 $ 274,520 $ 75,700 $ 198,820 Resources Resources Changes for the year: OPEB contributions subsequent to measurement date $ 16,368 Service cost 2,032 2,032 3,801 19,550 19,550 Changes of Assumptions Interest on Total OPEB Liability Difference between Expected and Actual Experiences $ 11,837 Expected investment income 5,509 (5,509) 4,617 4,617 Net diffe rence between projected and actual earnings Changes of Assumptions 2,001 Differences between Expected and Actual (14,382) (14,382) on plan investments $ 20, 169 $ 13,838 Contributions - Employer 16,01 6 (16,016) Total Investment experience 2,501 (2,501) Amount reported as deferred outflows of resources and deferred inflows of Benefit payments (16,016) (16,016) Trust Administrative Expense (41 ) 41 resources related to OPEB will be recognized in OPEB expense as follows: Net Change (4,199) 7,969 (12,168) Balance at: 06/30/2017 $ 270,321 $ 83,669 $ 186,652 Measurement Period Ended June 30 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate 2018 $ (2,228) 2019 (2,228) The following presents the net OPEB liability of the City if it were calculated 2020 (2,228) using a discount rate that is 1 percentage-point lower (6.28%) or 1 2021 (2,228) perce ntage-point higher (8.28%) than the current rate: 2022 (1 , 1 25) Total $ ffQ,037) 86 CITY OF ANAHEIM NOTE 12 - JOINT VENTURES AND JOINTLY-OWNED PROPERTIES: Members of the Board of Directors (the "Board") consist of one voting Board member and an alternate appointed by their governing body. Authority for Orange County - City Hazardous Materials Emergency Response Public entities in Orange County may receive services from the Fire The City participates in joint powers authority (J PA), the Authority for Authority by executing an agreement and paying a fair share contribution. Orange County-City Hazardous Materials Emergency Response (Hazmat), Audited financial information for the Fire Authority as of and for the year for the purposes of responding to, assessing the nature of, and stabilizing ended June 30, 201 8, was as follows: any emergency created by the release or threatened release of hazardous Total assets $ 1,596 materials. Total liabilities 213 The following entities are members of Hazmat: City of Anaheim and City of Members' equity 1,383 Huntington Beach (provider agencies). Members of the Board of Directors Total revenues 6,328 (Hazmat Board) consist of one voting Board member and an alternate Total expenses 6,461 appointed by the governing body fro m the provider agencies. Under the Change in net position (133) Fifth Amendment to the JPA agreement, three representatives from the subscribing agencies are also voting Board Members. The following cities The City has no significant equity interest in the Fire & Rescue Authority, were subscribing agencies: Brea, Costa Mesa, Fountain Va lley, Fullerton, and accordingly neither assets nor liabilities of the Fire & Rescue Authority Garden Grove, Newport Beach and Orange. have been recorded in the City's basic financial statements. For a copy of the Fire & Rescue Authority's separate financial statements, contact the Public entities in Orange County may receive hazardous materials Finance Director of the City. response services from the Hazmat by executing an agreement and paying a fair share contribution. Audited financial information for the joint powers North Net Joint Training Authority authority as of and for the year ended June 30, 2018, was as follows: The City participates in a joint powers authority, North Net Training Authority To tal assets $ 277 (Authority), for the purpose of providing a joint use of a consolidated Members' equity 277 Training Center and record keeping system for fire training services. To tal revenues 111 The following entities are members of the North Net Training Authority: City To tal expenses 69 of Anaheim, City of Garden Grove and City of Orange. Members of the Change in net position 42 Board of Directors (the "Board") consist of one voting Board member and an alternate appointed by their governing body. Hazmat does not have any debt outstanding at June 30, 2018. Public entities in Orange County may receive training services from the The City has no significant equity interest in Hazmat, and accordingly Authority by executing a "subscription agreement" and by paying the annual neither assets nor liabilities of Hazmat have been recorded in the City's fee and other costs. Audited financial information for the Authority as of and basic financial statements. For a copy of Hazmat's separate financial for the year ended June 30, 2018, was as follows: statements, contact the Finance Director of the City. Total assets $ 1,700 Metro Cities Fire & Rescue Authority Total liabilities 171 The City participates in a joint powers authority, Metro Cities Fire Authority Members' equity 1,529 (Fire Authority), for the purpose of providing a central communication Total revenues 1,083 network and record keeping system to support fire suppression, emergency Total expenses 1,044 medical assistance, rescue service, and related services provided by the Change in net position 39 members of the Fire Authority. The following entities are members of the Fire Authority: City of Anaheim, City of Brea, City of Fountain Va lley, City of Fullerton, City of Garden Grove, City of Huntington Beach, City of Newport Beach, and the City of Orange. 87 CITY OF ANAHEIM Jointly-owned utility plants and 2 net output is 900 megawatts each). The City is obligated for the following percentage of electrical facilities at IPA: Songs On December 29, 2006, The Electric Utility sold its 3.16% ownership Entitlement Expiration interest of SONGS to SCE. As such, the Electric Utility ceased recording all Generation: related operating expenses, except marine mitigation costs, and spent fuel lntermountain Power Project 13.225 % 2027 storage charges. Based on the SONGS settlement agreement, the Electric Utility is responsible for the City's share of marine mitigation costs up to The contract constitutes an obligation of the Electric Utility to make $2,300, and SCE is responsible for costs approximately $2,300 to $7,300. payments from revenues and requires payment of certain minimum The Electric Utility is responsible for spent fuel storage charges until the charges. These minimum charges include debt service requirements on the federal government takes possession. The Decommissioning Trust Fund financial obligations used to construct the plant. These requirements are will continue to pay for spent fuel storage charges. considered a cost of purchased power. As a fo rmer participant in SONGS, the Electric Utility is subject to Southern California Public Power Authority assessment of retrospective insurance premiums in the event of a nuclear incident at SONGS or any other licensed reactor in the United States of The Electric Utility is a member of the Southern California Public Power America. Authority (SCPPA), a joint powers agency. SCPPA provides for the financing and construction of electric generating and transmission projects San Juan Generating Station for participation by some or all of its members. To the extent the Electric On July 31 , 2015, the Electric Utility and the other Parties involved with the Utility participates in projects developed by SCPPA, it is obligated for its San Juan Generating Plants, agreed to a plan for the closure of two of the proportional share of the cost of the project. The City is obligated for the four units. As co-owner of one of the units that is not being closed, on following percentage of electrical facilities owned by SCPPA: December 31, 201 7, the Electric Utility relinquished its 10.04% ownership interest in the existing coal-fired SJ, Unit 4, located near Waterflow, New Entitlement Expiration Mexico to the parties that will co ntinue in the Plant. Other participants Transmission: include Public Service of New Mexico, 45.485%; the City of Farmington, Souther Transmission System (STS) 17.6 % 2027 8.475%; the County of Los Alamos, 7.200%; and M-S-R Public Power Mead-Adelanto Project (MAP) 13.5 2030 Agency, 28.800%. The Electric Utility's original purchase cost and Mead-Phoenix Project (MPP) 24.2 2030 cumulative share of ongoing construction costs included in utility plant at Generation: December 31, 2017 amounted to $84,616. All capital assets related to the Hoover Dam Uprating (Hoover) 42.6 % 2018 San Juan unit were fully depreciated and retired as of June 30, 201 8. There Magnolia Generating Station (Magnolia) 38 2037 are no separate financial statements for this venture, as each participant's Canyon Power Project (Canyon) 100 2040 interest is reflected in its respective financial statements. Refer to note 1 on pages 53-54 Provision for decommissioning costs related to the Natural Gas Reserve Projects (Natural Gas) decommissioning trust fund set-aside for the future decommissioning of the SCPAA Natural Gas Project-Pinedale, Wyoming 35.7 % 2033 Plant. SCPPA Natural Gas Project-Barnett, Texas 45.5 2033 NOTE 13 - COMMITMENTS AN D CONTINGENCIES: Ta ke or pay commitments lntermountain Power Agency As part of the take or pay co mmitments with IPA and SCPPA, the Electric The Electric Utility has entered into a power purchase contract with the Utility has agreed to pay its share of current and long-term obligations. lntermountain Power Agency (IPA) for delivery of electric power. The share Payment for these obligations will be made fro m the operating revenues of IPA power is equal to 13.225% of the generation output of IPA's two received during the year that the payment is due. A long-term obligation has recently uprated coal-fueled generating units located in Delta, Utah (Unit 1 not been recorded on the accompanying basic financial statements as these commitments do not represent an obligation of the Electric Utility until the year the power is available to be delivered to the Electric Utility. The following schedule details the amount of take-or-pay commitments that are 88 CITY OF ANAHEIM due and payable by the Electric Utility for each project and the final maturity the secondary market quarterly. At June 30, 2018, the value of prepaid Cap date. and Trade allowance is $19,854, and the value of the Cap and Trade obligation is $16,060. In addition to take-or-pay commitments referenced above, the City's entitlement requires the payment for fuel costs, operations and Operating Leases maintenance (O&M), administration and general (A&G) and other miscellaneous costs associated with the generation and transmission In January 2005, the City entered into a long-term noncancelable ground facilities discussed above. These costs do not have a similar structured lease with City of Fullerton, for an approximately 1.56 acre site at the payment schedule as debt service; however, prior experience indicates that Fullerton Municipal Airport for the operation of the Anaheim Police annual costs are generally consistent from year to year. Department Heliport. The term of the lease is 40 years with two 10-year extensions commencing from January 2005 and ending December 2044. Fiscal Year Natural The base rent is adjusted every five years by ten percent (1 0%). The City constructed a building of approximately 30,000 square feet that includes Ending 6/30 IPA STS --MAP-- --MPP Magnolia Gas Canyon Total 2019 $27,684 $13,704 $2,882 $1,555 $ 6,294 $ 5,360 $ 14,948 $72,427 offices, aircraft maintenance and storage facilities and other infrastructure 2020 30,496 12,003 2,859 1,538 6,293 4,895 16,668 74,752 supporting such facilities on the leased premise. Future minimum lease 2021 31,192 13,761 2,136 1,142 48,531 4,514 16,638 117,914 payments to be made fro m unrestricted revenues of the General Fund are 2022 12,351 16,403 5,436 4,169 16,629 54,988 as follows: 2023 10,415 12,602 4,801 3,854 16,618 48,290 2024-2028 (444) 35,028 22,800 15,371 82,921 155,676 Fiscal Year Ending June 30 2029-2033 23,433 10,502 98,665 132,600 2019 $ 59 2034-2038 30,030 102,641 132,671 2020 62 2039-2043 ------61,054 61,054 2021 65 Total $111,694 $103,501 $7,877 $4,235 $147,618 $48,665 $426,782 $850,372 2022 ------65 2023 65 The fiscal year 201 8 expenses for fuel, O&M, A&G and other costs at these 2024-2028 349 projects were as follows: 2029-2033 384 Fiscal Natural 2034-2038 422 Year IPA STS MAP MPP Magnolia � Canyon Total 2039-2043 464 2018 $40,302 $5,572 $79 $472 $16,857 $659 $11,967 $75,908 2044-2045 143 Cap-and-Trade Program Total minimum future rentals $ 2,078 California Assembly Bill (AB) 32 requires that Utilities in California reduce The Honda Center their greenhouse gas (GHG) emissions to 1990 levels by the year 2020. It directed the California Air Resources Board (GARB) to develop regulations On January 26, 1999, the City entered into a series of lease transactions for of GHG that became effective January 2012. Emission compliance the Honda Center. Under these transactions, the City leased the Honda obligations under the Cap-and-Trade regulation began in January 201 3. Center to a third party trustee acting for the benefit of an equity investor for a term of approximately 39.2 years. The trustee sublet the facility back to The Cap-and-Trade program (Program) was implemented beginning the City for 20 years, which was shorter than the then remaining term of the January 1, 2013. This Program requires Electric Utilities to have GHG management agreement between the third-party manager at that time allowances on an annual basis to offset GHG emissions associated with (Manager) and the City in consideration of an advance rental payment for generating electricity. GARB will provide a free allocation of GHG allowance the entire lease term . At the end of the sublease, the City has a purchase to each electric utility to mitigate retail rate impacts. This free allocation of option to purchase the trustee's rights under the lease for a fixed amount. GHG allowance is expected to be sufficient to meet Electric Utility's GHG The advance re nt payments to the City were deposited into a trust fund and compliance obligations for retail sales. During this fiscal year, an unused invested. The cash scheduled to be available from this trust fund is portion of retail allowance was sold for $10,596 to reduce future renewable sufficient to pay the City's rent payments for the term of the sublease and to energy costs for retail customers. The compliance obligation for the exercise the City's purchase option at the end of the sublease. The excess wholesale sales requires allowance to be obtained through the auction or in 89 CITYOF ANAHEIM of the amount of the advance rent payment made by the trustee to the City 2013, the agreement was modified extending the Te am's right to terminate over the deposit to the trust funds, after the payment of transaction the agreement by three years to October 16, 2019. expenses and payment to the Manager for agreeing to pledge its interest as Manager under the management agreement then in effect and agreeing to Under the terms of the agreement, the Team assumed full responsibility for undertake certain additional obligations to the transaction, was all Stadium operations and maintenance, including capital maintenance. approximately $4,000. This amount was recognized by the City as The Team books all Stadium and parking lot events (except for ten annual unearned revenue and is being amortized over the sublease term. The City City events), pays all expenses, and retains all revenue (subject to the has secured its obligations to the other parties to these lease transactions City's rights to share in certa in net reve nues) except that the City credits the by a pledge of its respective interest in reve nues from the facility, Te am up to $500 per year adjusted annually for CPI as a capital reserve subordinate (with certain exceptions) to any interests of the debt holders of contribution, calculated on the basis of property taxes. The City's the facility. The City's obligations under these lease transactions are participation in net revenues includes amounts received by the Te am above considered to be defeased in substance, and therefore the related liabilities certain thresholds including paid admissions ($2.00 per paid admission in as well as the trust assets have been excluded from the City's financial excess of 2.6 million admissions per year), net income from nongame statements. The City's and AAM's respective rights under the FMA are events (in excess of $2,000 per year adjusted annually for CPI), and parking subject in certain respects to the effect of the 1999 lease transaction. lot net income (25% in excess of $4,000 per year adjusted annually for CPI). Additionally, as indicated above, the City retained the right to book Effective December 16, 2003, the City and Anaheim Arena Management and retain all reve nue from ten parking lot events per year. Major League LLC (AAM) entered into a Facility Management Agreement (FMA) whereby Baseball consented to the transfer of the Team in fiscal year 2003 to AAM has the exclusive right and license to manage, maintain and operate interests controlled by Arte Moreno. No changes in the terms of the all aspects of the Honda Center in accordance with the FMA through June agreement with the Te am were made in connection with that transfer. 30, 2023, with an option to extend the term for an additional period not to exceed 10 years. Annual distributions to the City, AAM and the County of The Agreement also provided that the City had the right to develop Orange are required for their respective share of adjusted net revenues, as approximately 42 acres of the parking lot development site. In 1998 a land defined in the FMA. In the event that cash on hand is insufficient to pay sale of $1,000 for a 1.25 acre site was approved for the construction of a operating expenses, debt service, distributions to the City, the County of 1,10 0-seat theatre called "Tinseltown Studios" (now known as "City National Orange, or other amounts payable, AAM shall make or cause an affiliate or Grove of Anaheim"). In November 2002, the City purchased the fa cility and third-party lending institution to make loans for such purposes, as defined in the land for $6,700 from its then owner, SMG. Concurrent with the the FMA. Such funds will be repaid from gross revenues or adjusted net purchase, the City granted to Nederlander-Grove LLC (Nederlander) a reve nues, if any, as defined in and in accordance with disbursement license to operate the facility for three years with the right to extend another priorities established in the FMA. At June 30, 2018, the outstanding conduit five years. In May 2009, the management agreement was amended debt on the Honda Center totaled $19,500. The debt is non-recourse, extending the term to December 31, 2015 with the right to extend another payable from reve nues generated by the facility. Neither the faith and credit five year period. In June 201 5, the option to extend was exercised, which nor the taxing power of the City is pledged to the payment of the debt. The extends the term to December 31, 2020. Additionally, under the amended debt is not a general or special obligation of the City, nor does it contain any management agreement, effective January 1, 2009, Nederlander no longer credit enhancements that secondarily pledge existing or future resources of receives a management fee of $150 and the City's share in the annual net the City (other than revenues generated by the facility), and accordingly it is profits and losses from operations increased from 50% to 60%. not reflected in the accompanying basic financial statements. Nederlander is responsible for 100% of losses in excess of $400, thereby limiting the City's share of net losses to a maximum of $240 in any given Angel Stadium of Anaheim year. The City may elect to terminate the agreement prior to expiration of On May 14, 1996, the City and the California Angels, LP (Team), which was the term under certain conditions, and pay the unamortized balance of then managed by Disney Sports Enterprises, Inc. (subsequently known as capital assets purchased during the term to Nederlander. Concurrent with Anaheim Sports, Inc.), entered into an agreement to provide for the the amendment to the management agreement, the parking license fee operation and refurbishment of the Stadium. Pursuant to the agreement, the agreement was amended, wherein the parking license fees from Team assumed responsibility for the operation of the Stadium on October 1, Nederlander were reduced to $176 and is subject to adjustment annually 1996. The agreement runs for 33 years (subject to a limited Team option to based on CPI increases. Nederlander paid the City $204 for the year ended June 30, 2018, for parking and common area maintenance. cancel at 20 years and the Te am's right to extend the term). In September 90 CITYOF ANAHEIM Muzeo Grants In October 2007, the City and the fo rmer Redevelopment Agency entered Amounts received or receivable from grant agencies are subject to audit into a property operating agreement (Agreement) with the Muzeo and adjustment by granter agencies. Any disallowed claims, including Foundation to operate and provide programming for the Muzeo, the amounts already collected, may constitute a liability of the applicable funds. downtown museum. The Agreement is for a term of 30 years and provides The amount, if any, of expenditures that may be disallowed by the granter for a line of credit for the first 3 years from the City to the Muzeo Foundation cannot be determined at this time, although the City expects such amounts, in an amount not to exceed $1,000 or 95% of pledges at an annual interest if any, to be immaterial. rate of 5%. The Agreement was amended on August 1, 2010, to extend the maturity date to June 30, 201 5. It also amended the aggregate amount of Construction and other significant commitments the line of credit to $500 during fiscal year 2011 and $200 during each fiscal At June 30, 2018, the City had the following commitments with res pect to year thereafter with amounts being converted to grants upon achieving fund unfinished capital projects, disposition and development agreements, raising thresholds. On June 30, 2014, the agreement was amended to reimbursement agreements and cooperation agreements: extend the maturity date to the June 30, 2019 and increased the line of credit amount from $200 to $250 annually. At June 30, 2018, there was no Remaining Expected Construction Completion amount due to the City. Capital Projects Commitment Date Participation Agreement - Construction of Regional Animal Care Shelter Anaheim Coves Northern Extention Phase II $ 3,239 2018 On April 12, 2016 the City Council approved a Participation Agreement Anaheim Resort Electric Line Extension 2,118 2018 between the County of Orange and City of Anaheim for the construction of a Cerritos Ave Sidewalk Gap Closure And Intersection 826 2019 new regional animal shelter at the fo rmer Tustin Air Base. Participants of Electric Reliability Improvement 5,498 2019 this Participation Agreement is among the County of Orange and fourteen Equipping Of Well No. 59 585 2018 Orange County Cities. The Shelter will be a County public works project Gene Autry Way Improvement East Of Westside Drive To State 6,560 2018 with a maximum construction amount of $35 million of which the County will Harbor 69-12Kv Substation Design/Build 16,294 2019 fund $7.2 million and contribute the land at no cost. The re maining $27.3 Heating Ventilation and Air Conditioning System 1,915 2018 million of the maximum construction amount will be divided proportionately Katella Substation To Central Anaheim 12 Kv Line Extension 1,048 2018 among the contract cities based on the percentage of actual shelter usage Katella Water Main Replacement Project 3,759 2018 over the last five years. The City's proportionate share is 28.28% or $7.7 La Palma Complex Reservoir And Pump Station 1,378 2018 million for an estimate annual payment of $798 payable quarterly over 10 Manzanita Skate Park And Logan Wells Skate Zone 675 2019 years starting with fiscal year 2017. Orange Avenue Rehabilitation 594 2018 During fiscal year 2018, the City has paid $828 with an estimated unpaid Platinum Triangle Electric Line Extension Project 11,905 2019 balance of $6, 177. Rehabilitation And Expansion Of Lenain Water Treatment Plant 15,508 2020 Litigation Solar For Schools 4,614 2018 Street Improvement-La Palma Ave; Romneya Drive And Acacia 2,381 2018 A number of claims and suits are pending against the City for alleged Street Improvement-Lincoln Ave From State College To Sunkist 529 2018 damages to persons and/or property and for other alleged liabilities arising Underground District #50 - Euclid Street 12,261 2019 out of matters usually incident to the operation of a city such as Anaheim. Underground District #62 - Phase 2, Miraloma Ave 1,243 2018 Although the aggregate amount asserted for such lawsuits and claims is Underground District #63 - Lincoln I Rio Vista 3,051 2018 significant, in the opinion of City management, the City has strong defenses Underground District #64 - Orangewood Ave 4,840 2018 against such claims, and thus the ultimate loss, if any, relating to these Vehicle Acquisitions 1,665 2018 claims and suits not covered by insurance or reflected in the financial Total $ 102,486 statements, will not materially affect the financial position of the City. 91 CITY OF ANAHEIM NOTE 14 - SUBSEQUENT EVENTS: On August 28, 2018, the Anaheim City Council and Walt Disney Parks and Resorts U.S., Inc. mutually agreed to terminate two agreements that the parties had previously entered into: (1) the Agreement Concerning Entertainment Tax Reimbursement dated July 7, 2015 ("Entertainment Tax Agreement"), and (2) the Operating Covenant Agreement dated July 1, 2016 (collectively, "Agreements"). Under the Entertainment Tax Ag reement, Disney was required to make a minimum $1 billion of capital improvements to receive an extended entertainment tax rebate period of 30 years, were the City to ever impose an entertainment tax. There was an option to extend the rebate period an additional 15 years were Disney to make another $500 million investment in the future. Under the Operating Covenant Agreement, Disney was required to construct, operate, and maintain a AAA Four Diamond Hotel for at least 20 years, in exchange for a 70% rebate on the transient occupancy tax that would be generated. On November 20, 2018, the Anaheim City Council approved a Te rmination Agreement to effect the City's election to exercise the Purchase Option under the Honda Center, located at 2695 E Katella Avenue, lease-in, lease out transaction, or "LILO," The Te rmination Ag reement effectuates the Purchase Option on January 2, 201 9. All funds necessary to make the Purchase Option payments under the various agreements were deposited with various payment undertakers at the inception of the transaction and will be used to effectuate the Purchase Option without further cost to the City, other than minor legal expenses. Refer to note 13 of the notes to the financial statement of this report on pages 89-90 for further discussion of the lease agreements of the Honda Center. 92 I .�·� I r,v I r fi ifi.:,u�rll!I!.rl �nf;;:�maitku, CITY OF ANAHEIM Schedule of Changes in the Net Pension Liability and Related Ratios Last Ten Fiscal Years 1 (In thousands) Miscellaneous Police Safety Fire Safety Total Miscellaneous Police Safety Fire Safety Total Measurement Period: 2016-2017 2016-2017 2016-2017 2016-2017 2015-2016 2015-2016 2015-2016 2015-2016 TOTAL PENSION LIABILITY Service cost $ 23,736 $ 15,914 $ 6,600 $ 46,250 $ 19,841 $ 13,551 $ 5,572 $ 38,964 Interest on the Total Pension Liability 93,754 51 ,464 29,093 174,311 89,941 49,349 28,550 167,840 Changes of Assumptions 76,961 43,497 23,564 144,022 Difference Between Expected and Actual Experience 8,902 225 (3,028) 6,099 (28,822) 6,919 (2,504) (24,407) Benefit Payments, including Refunds of Employee Contributions (64,059) (34, 195) (22,071 ) (1 20,325) (60,039) (32,039) (20,907) (112,985) Net Change in Total Pension Liability 139,294 76,905 34,158 250,357 20,921 37,780 10,711 69,412 Total Pension Liability - Beginning 1,245,540 685,188 394,090 2,324,818 1,224,619 647,408 383,379 2,255,406 Total Pension Liability - Ending (a) $ 1,384,834 $ 762,093 $ 428,248 $2,575, 175 $ 1,245,540 $ 685,188 $ 394,090 $2,324,818 PLAN FIDUCIARY NET POSITION Contributions - Employer $ 33,275 $ 19,615 $ 10,350 $ 63,240 $ 31,595 $ 17,527 $ 9,483 $ 58,605 Contributions - Employees 9,744 4,741 2,316 16,801 9,812 4,726 2,328 16,866 Net Investment Income 97,855 54,262 31 ,036 183, 153 4,556 2,607 1,449 8,612 Benefit Payments, including Refunds of Employee Contributions (64,059) (34, 195) (22,071) (120,325) (60,039) (32,039) (20,907) (112,985) Plan to Plan Resource Movement 2 2 (34) (34) Administrative Expense (1,305) (725) (4 16) (2,446) (548) (304) (177) (1 ,029) Net Change in Fiduciary Net Position 75,512 43,698 21,215 140,425 (14,658) (7,483) (7,824) (29,965) Plan Fiduciary Net Position - Beginning 883,735 491,528 281,742 1,657,005 898,393 499,011 289,566 1,686,970 Plan Fiduciary Net Position - Ending (b) 959,247 535,226 302,957 1,797,430 883,735 491,528 281 ,742 1,657,005 Plan Net Pension Liability - Ending (a) - (b) $ 425,587 $ 226,867 $ 125,291 $ 777,745 $ 361,805 $ 193,660 $ 112,348 $ 667,813 Plan Fiduciary Net Position as a percentage of the Total Pension Liability 69.27% 70.23% 70.74% 69.80% 70.95% 71 .74% 71 .49% 71 .27% Covered Payroll $ 120,653 $ 48,294 $ 22,688 $ 191 ,635 $ 111,398 $ 46,479 $ 21 ,600 $ 179,477 Plan Net Pension Liability as a Percentage of Covered Payroll 352.74% 469.76% 552.23% 405.85% 324.79% 41 6.66% 520.13% 372.09% 1 Historical information is required only for measurement periods for which GASB 68 is applicable, Additional years will be presented as they become available Notes: Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2016 valuation dale. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Cred (a.k.a. Golden Handshakes). Changes of Assumptions: In 2017, the accounting discount rate reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense.) In 2014. amount reported were based on the 7.5% discount rate. 93 See accompanied independent auditors' report CITY OF ANAHEIM Schedule of Changes in the Net Pension Liability and Related Ratios Last Ten Fiscal Years 1 (In thousands) (In thousands) (continued) Miscellaneous Police Safety Fire Safety Total Miscellaneous Police Safety Fire Safety Total Measurement Period 2014-2015 2014-2015 2014-2015 2014-2015 2013-2014 2013-2014 2013-2014 2013-2014 TOTAL PENSION LIABILITY Service cost $ 20,334 $ 12,193 $ 5,419 $ 37,946 $ 21 ,254 $ 13,088 $ 5,961 $ 40,303 Interest on the Total Pension Liability 88,334 46,658 27,760 162,752 85,591 45,898 27,044 158,533 Changes of Assumptions (21 ,249) (11,546) (6,582) (39,377) Difference Between Expected and Actual Experience (16,296) (19,370) (4,549) (40,215) Benefit Payments, including Refunds of Employee Contributions (57,158) (30,517) (19,944) (107,619) (53,552) (28,845) (18,657) (101 ,054) Net Change in Total Pension Liability 13,965 (2,582) 2,104 13,487 53,293 30, 141 14,348 97,782 Total Pension Liability - Beginning 1,210,654 649,990 381,275 2,241,919 1,157,361 61 9,849 366,927 2,144,137 Total Pension Liability - Ending (a) $ 1,224,6 19 $ 647,408 $ 383,379 $2,255,406 $ 1,210,654 $ 649,990 $ 381 ,275 $2,241 ,919 PLAN FIDUCIARY NET POSITION Contributions - Employer $ 25,375 $ 14,663 $ 7,622 $ 47,660 $ 23,841 $ 13,505 $ 7,723 $ 45,069 Contributions - Employees 8,877 4,192 2,075 15,144 8,893 4,064 2,337 15,294 Net Investment Income 20,081 10,967 6,515 37,563 135,468 75,115 44,305 254,888 Benefit Payments, including Refunds of Employee Contributions (57,158) (30,517) (19,944) (107,619) (53,552) (28,845) (18,657) (101 ,054) Plan to Plan Resource Movement (5) 5 Administrative Expense (1,011) (562) (326) (1,899) Net Change in Fiduciary Net Position (3,841 ) (1 ,252) (4,058) (9,151) 114,650 63,839 35,708 214,197 Plan Fiduciary Net Position - Beginning 902,234 500,263 293,624 1,696,121 787,584 436,424 257,916 1,481,924 Plan Fiduciary Net Position - Ending (b) 898,393 499,011 289,566 1,686,970 902,234 500,263 293,624 1,696,121 Plan Net Pension Liability - Ending (a) - (b) $ 326,226 $ 148,397 $ 93,813 $ 568,436 $ 308,420 $ 149,727 $ 87,651 $ 545,798 Plan Fiduciary Net Position as a percentage of the Total Pension Liability 73.36% 77.08% 75.53% 74.80% 74.52% 76.96% 77.01% 75.65% Covered Payroll $ 112,039 $ 41,800 $ 20,935 $ 174,774 $ 110,815 $ 43,204 $ 22,107 $ 176, 126 Plan Net Pension Liability as a Percentage of Covered Payroll 291 .17% 355.02% 448.12% 325.24% 278.32% 346.56% 396.49% 309.89% 1 Historical information is required only for measurement periods for which GASB 68 is applicable, Additional years will be presented as they become available Notes: Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2016 valuation dale. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Cred (a.k.a. Golden Handshakes). Changes of Assumptions: In 2017, the accounting discount rate reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense.) In 2014. amount reported were based on the 7.5% discount rate. 94 See accompanied independent auditors' report CITY OF ANAHEIM Schedule of Pension Plan Contributions Last Ten Fiscal Years 1 Contributions in Contributions Relation to the as a Actuarially Actuarially Contribution Percentage of Fiscal Pension Determined Determined Deficiency Covered Covered Year Plan Contribution Contribution (Excess) Payroll 2 Payroll 2 2017-2018 Miscellaneous $ 35,932 $ (35,932) $ 121,096 29.67% Police Safety 20,410 (20,410) 51 ,770 39.42% Fire Safety 10,450 (10,450) 25,866 40.40% Total $ 66,792 $ (66,792) $ 198,732 33.61 % 2016-2017 Miscellaneous $ 33,275 $ (33,275) $ 120,653 27.58% Police Safety 19,615 (19,615) 48,294 40.62% Fire Safety 10,350 (10,350) 22,688 45.62% Total $ 63,240 $ (63,240) $ 191,635 33.00% 2015-2016 Miscellaneous $ 31,141 $ (31 ,595) $ (454) $ 111 ,398 28.36% Police Safety 17,527 (17,527) 46,479 37.71% Fire Safety 9,483 (9,483) 21 ,600 43.90% Total $ 58,151 $ (58,605) $ (454) $ 179,477 32.65% 2014-2015 Miscellaneous $ 25,375 $ (25,375) $ 112,039 22.65% Police Safety 14,663 (14,663) 41 ,800 35.08% Fire Safety 7,622 (7,622) 20,935 36.41 % Total $ 47,660 $ (47,660) $ 174,774 27.27% 2013-2014 Miscellaneous $ 23,841 $ (23,841) $ 110,815 21 .51 % Police Safety 13,505 (13,505) 43,204 31 .26% Fire Safety 7,723 (7,723) 22,107 34.93% Total $ 45,069 $ (45,069) $ 176, 126 25.59% 1 Historical information is required only for measurement periods for which GASB 68 is applicable. Additional years will be presented as they become available. 2 Includes one year's payroll growth using 3.00% payroll assumption Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2016-2017 were derived from the June 30, 2014 funding valuation reports. Actuarial Cost Method Entry Age Normal Amortization Method/Period For details, see June 30, 2014 Funding Valuation Report Asset Valuation Method Market Value of Assets Inflation 2.75% Salary Increases Varies by Entry Age and Service Payroll Growth 3% Investment Rate of Return 7.15% Net of Pension Plan Investment and Administrative Expenses; includes Inflation Retirement Age The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 201 1. The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 201 1. Pre-retirement and Post-retirement Mortality mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries. 95 See accompanied independent auditors' report CITY OF ANAHEIM Schedule of Changes in the Net Other Postemployment Benefits (OPEB) Liability and Related Ratios Last Te n Fiscal Years1 (Amounts in Thousands) Measurement Period: 2016-2017 TOTAL OPEB LIABILITY Service cost $ 2,032 Interest on the Total OPEB Liability 19,550 Difference Between Expected and Actual Experience (14,382) Changes of As sumptions 4,617 Benefit Payments, including Refu nds of Employee Contributions (16,016) Net Change in Total OPEB Liability (4, 199) Total OPEB Liability - Beginning 274,520 Total OPEB Liability - Ending (a) 270,321 PLAN FIDUCIARY NET POSITION Contributions - Employer 16,016 Net Investment Income 8,010 Benefit Payments, including Refu nds of Employee Contributions (16,016) Administrative Expense � Net Change in Fiduciary Net Position 7,969 Plan Fiduciary Net Position - Beginning 75,700 Plan Fiduciary Net Position - Ending (b) 83,669 Plan Net OPEB Liability - Ending (a) - (b) $ 186,652 Plan Fiduciary Net Position as a percentage of the Total OPEB Liability 30.95% Covered-Employee Payroll $ 203,473 Plan Net OPEB Liability as a Percentage of Covered Employee Payroll 91.73% 1 Historical information is required only for measurement periods for which GASB 75 is applicable. Additional years will be presented as they become available. 96 See accompanied independent auditors' report CITY OF ANAHEIM Schedule of Other Postemploment Benefits (OPEB) Plan Contributions Last Ten Fiscal Years1 (Amounts in Thousands) Measurement Period 2017-2018 2016-2017 Actuarially Determined Contribution (ADC) $ 16,368 $ 15,937 Contribution in relation to ADC $ 16,368 $ 16,016 Contribution deficiency (excess) (79) Covered-Employee Payroll $ 209,435 $ 203,473 Contributions as a Percentage of Covered-employee Payroll 7.82% 7.87% 1 Historical information is required only for measurement periods for which GASB 75 is applicable. Additional years will be presented as they become available. Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2016-2017 were derived from the July 1, 2015Actuarial Valuation Report. Methods and assumptions used to determine contributions: Actuarial Cost Method Entry Age Normal Cost, level percent of pay Amortization Method/Period Level percent of payroll over a closed 30-year period initially beginning July 1, 2007. Asset Va luation Method Market Value of Assets General Inflation Rate 2.75% Salary Increase 3.25% per year, used only to allocate the cost of benefits between service years. Long Term Return on Assets 7.28% Healthcare Trend 8.0% for year 2018, decreasing 0.5% per year to an ultimate rate of 5.0% for year 2025 & later. Retirement Age The probabilities of Retirement are based on the 2014 Cal PERS Experience Study for the period from 1997 to 2011. Mortality Improvement Bickmore Scale 20 17 applied generationally 97 See accompanied independent auditors' report 00 O') � J I :SPECIAL R.EVENUE FUNDS are used to account for revenues derived from specific taxes or other earmarked revenue sources (other than for major capital proJec:ts)that are restricted by law or administrative action to expenditures for specifiedplirposes. GAS TAX FUND • Established to account for the constn.1ction and maintenance of the road network system of the City. Financing is provided primarily by the City's share of State and local gasoline taxes. Federal, State, and local regulations require that these gasoline taxes be used to Improve and maintain streets, and includes programs intended to improve the air quaHty of the region. WORKFORCE DEVELOPMENT FUND · Established to account for the City's involvement in Federai., State, and local programs to create jobs and provide the unemployed citizensin the Anaheim area with job training opportunities. COMMUNITY DEVELOPMENT BLOCK GRANT FUND ·· E.stabllshed to account for financing of the devel.opment of viable urban communities through the provision of decent housing, suitable living environments and economic opportunity, principally for persons oflow and moderatf1 income. Financing is provided by the Federal Housing and Urban Development (HUD) grants. GRANTS FUND · Estab.!ishe Non major Non major Non major Total Special Debt Capital Non major Revenue Service Projects Governmental Funds Funds Funds Funds ASSETS Cash and cash equivalents $ 10,417 $ 344 $ 13,174 $ 23,935 Investments 36,676 1,212 46,399 84,287 Accounts receivable, net 1,702 1,702 Accrued interest receivable 160 42 181 383 Due from other fu nds 12,060 12,060 Due from other governments 5,842 15,592 21,434 Land held for resale 22,982 22,982 Prepaid and other assets 2 9,089 9,091 Restricted cash and cash equivalents 3,067 24,604 16, 155 43,826 Restricted investments 123,852 29,986 153,838 Notes receivable, net 24,031 24,031 Due from Successor Agency 5,570 4,968 10,538 To tal assets $ 110,449 $ 150,054 $ 147,604 $ 408, 107 LIABILITIES Accounts payable $ 5,688 $ 2 $ 7,391 $ 13,081 Wages payable 306 46 352 Deposits 368 1,194 1,562 Due to other funds 306 14,210 14,51 6 Due to other governments 1,500 1,500 Unearned revenues 22 22 To tal liabilities 8,190 2 22,841 31,033 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 1,519 12,536 14,055 Unavailable resources - long-term notes receivable 24,031 24,031 Unavailable resources - due from Successor Agency 5,570 4,968 10,538 To tal deferred inflows of resou rces 31 , 120 17,504 48,624 FUND BALANCES Nonspendable: Prepaid and other assets 2 9,089 9,091 Restricted: Anaheim Resort maintenance and improvement 5,286 5,286 Capital projects 7,664 7,664 Community & Economic Development projects 23,301 23,301 Debt service 148,492 148,492 Development impact projects 92,302 92,302 Grant purposes 4,360 4,360 Homebuyer assistance program 6,958 6,958 Streets, roads and transportation improvement projects 31,671 31,671 Committed Capital projects 4,063 4,063 Assigned Debt service 1,560 1,560 Capital Projects 5,237 5,237 Unassigned (439) (11,096) (11,535) To tal fund balances 71,13 9 150,052 107,259 328,450 To tal liabilities, deferred inflows of resources, and fund balances $ 110,449 $ 150,054 $ 147,604 $ 408, 107 99 See accompanied independent auditors' report CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds by Fund Type Year Ended June 30, 2018 (In thousands) Non major Non major Non major Total Special Debt Capital Non major Revenue Service Projects Governmental Funds Funds Funds Funds Revenues: Licenses, fees and permits $ 66 $ 13,562 $ 13,628 Intergovernmental revenues 31 ,286 11,509 42,795 Charges for services 23,430 14 23,444 Use of money and property 6,119 $ 322 1,876 8,317 Other 21 3 24 To tal revenues 60,922 322 26,964 88,208 Expenditures: Current: City Attorney 120 120 City Clerk 44 44 Finance 31 22 53 Police 6,377 1,363 7,740 Fire & Rescue 460 1,053 1,513 Community & Economic Development 10,023 37 10,060 Planning & Building 1,426 62 1,488 Public Works 11,827 2,295 14, 122 Community Services 389 1,522 1,911 Convention, Sports & Entertainment 13,890 13,890 Capital outlay 11,047 27,139 38, 186 Debt service: Principal retirement 1,219 12,168 1,362 14,749 Interest charges 496 27,485 431 28,412 To tal expenditures 57,274 39,684 35,330 132,288 Excess (deficiency) of revenues over (under) expenditures 3,648 (39,362) (8,366) (44,080) Other financing sources (uses): Transfers in 368 61 ,833 5,520 67,721 Transfers out (4,308) (2,292) (6,600) Issuance of loan payable 2,250 2,250 To tal other financing sources (1,690) 61,833 3,228 63,371 Net change in fund balances 1,958 22,471 (5 ,138) 19,291 Fund balances at beginning of year 69, 181 127,581 112,397 309,159 Fund balances at end of year $ 71, 139 $ 150,052 $ 107,259 $ 328,450 100 See accompanied independent auditors' report CITY OF ANAHEIM Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2018 (In thousands) Anaheim Anaheim Long Range Community Resort Tourism Narcotic Property Gas Workforce Development Maintenance Improvement Asset Management Tax Development Block Grant Grants District District Forfeiture Plan Total ASSETS Cash and cash equivalents $ 3,593 $ 3 $ 1,725 $ 1,298 $ 3,061 $ 158 $ 579 $ 10,4 17 Investments 12,655 6,075 4,572 10,779 556 2,039 36,676 Accounts receivable, net 1,669 33 1,702 Accrued interest receivable 59 22 19 43 6 11 160 Notes receivable, net 3,022 21 ,009 24,031 Due from other governments 2,467 $ 692 427 2,251 5 5,842 Land for resale 22,982 22,982 Prepaid and other assets 1 1 2 Restricted cash and cash equivalents 3,067 3,067 Due from Successor Agency 4,686 884 5,570 To tal assets $ 18,775 $ 692 $ 8,138 $ 31 ,082 $ 5,894 $ 15,552 $ 3,787 $ 26,529 $ 110,449 LIABILITIES Accounts payable $ 439 $ 360 $ 315 $ 1,367 $ 601 $ 2,139 $ 49 $ 418 $ 5,688 Wages payable 62 23 40 74 7 96 4 306 Deposits 2 366 368 Due to other funds 306 306 Due to other governments 1,500 1,500 Unearned revenues 22 22 Total liabilities 501 689 357 1,441 608 2,139 145 2,310 8,190 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 15 30 1 1,440 33 1,519 Unavailable resources - long-term notes receivable 3,022 21 ,009 24,031 Unavailable resources - due from Successor Agency 4,686 884 5,570 Total deferred inflows of resou rces 15 30 7,709 22,449 917 31 , 120 FUND BALANCES Nonspendable: Prepaid and other assets 1 1 2 Restricted: Anaheim Resort maintenance and improvement 5,286 5,286 Community & Economic Development projects 23,301 23,301 Grant purposes 72 646 3,642 4,360 Homebuyer assistance program 6,958 6,958 Streets, roads and transportation improvement projects 18,258 13,4 13 31,671 Unassigned (27) (412) (439) To tal fund balances (deficit) 18,259 (27) 72 7,192 5,286 13,413 3,642 23,302 71,139 Total liabilities, deferred inflows of resources, and fund balance $ 18,775 $ 692 $ 8,138 $ 31 ,082 $ 5,894 $ 15,552 $ 3,787 $ 26,529 $ 110,449 101 See accompanied independent auditors' report CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) Nonmajor Special Revenue Funds June 30, 2018 (In thousands) Anaheim Anaheim Long Range Community Resort To urism Narcotic Property Gas Workforce Development Maintenance Improvement Asset Management Tax Development Block Grant Grants District District Forfeiture Plan Total Revenues: Licenses, fees and permits $ 18 $ 48 $ 66 Intergovernmental revenues 15,982 $ 3,344 $ 3,983 6,587 $ 1,390 31,286 Charges for services 139 $ 4,584 $ 18,707 23,430 Use of money and property 91 2,277 1,700 27 29 37 $ 1,958 6,119 Other 8 12 1 21 To tal revenues 16,238 3,356 6,260 8,335 4,612 18,736 1,427 1,958 60,922 Expenditures: Current: City Attorney 120 120 Police 3,698 2,679 6,377 Fire & Rescue 31 429 460 Community & Economic Development 3,310 1,207 2,450 3,056 10,023 Planning & Building 1,426 1,426 Public Works 5,560 5,207 1,060 11,827 Community Services 346 43 389 Convention, Sports & Entertainment 13,890 13,890 Capital outlay 5,238 5,005 68 219 149 278 90 11,047 Debt service: Principal retirement 250 802 167 1,219 Interest charges 457 39 496 To tal expenditures 11,048 3,310 9,394 6,688 5,426 15,099 3,163 3,146 57,274 Excess (deficiency) of revenues over (under) expenditures 5,190 46 (3,134) 1,647 � 3,637 (1,736) (1,188) 3,648 Other financing sources (uses): Transfers in 168 200 368 Transfers out (3,61 8) (11) (679) (4,308) Issuance of loan payable 2,250 2,250 To tal other financing sources (uses) (3,450) 2,239 200 � (1,690) Net change in fund balances 1,740 46 (895) 1,647 (614) 2,958 (1,736) (1,188) 1,958 Fund balances at beginning of year 16,519 (73) 967 5,545 5,900 10,455 5,378 24,490 69, 181 Fund balances at end of year $ 18,259 $ (27) $ 72 $ � $ � $ � $ 3,642 $ 23,302 $ 71, 139 102 See accompanied independent auditors' report CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2018 (In thousands) Gas Tax Workforce Development Final Variance Final Va riance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues: Licenses, fees and permits $ 22 $ 18 $ (4) Intergovernmental revenues 15,637 15,982 345 $ 3,252 $ 3,344 $ 92 Charges for services 192 139 (53) Use of money and property 10 91 81 Other 8 8 12 12 Total revenues 15,861 16,238 377 3,252 3,356 104 Expenditures: City Attorney Police Fire & Rescue Community & Economic Development 3,529 3,310 (2 19) Planning & Building Public Works 28,408 11,048 (17,360) Community Services Convention, Sports & Entertainment Total expenditures 28,408 11,048 (17,360) 3,529 3,310 (219) Excess (deficiency) of revenues over (under) expenditures (12,547) 5,190 17,737 (277) 46 323 Other financing sources (uses): Transfers in 66 168 102 Transfers out (3,500) (3,618) (118) To tal other financing sources (uses) (3,434) (3,450) (16) Net change in fund balances (15,981 ) 1,740 17,721 (277) 46 323 Fund balances at beginning of year 16,51 9 16,519 (73) (73) Fund balance at end of year $ 538 $ 18,259 $ 17,721 $ (350) $ (27) $ 323 103 (continued) CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2018 (In thousands) (continued) Community Development Block Grant Grants Final Variance Final Va riance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues: Licenses, fees and permits $ 30 $ 48 $ 18 Intergovernmental revenues $ 5,037 $ 3,983 $ (1,054) 16,353 6,587 (9,766) Charges for services Use of money and property 2,143 2,277 134 757 1,700 943 Other Total revenues 7,180 6,260 (920) 17, 140 8,335 (8,805) Expenditures: City Attorney 120 120 Police 8,078 3,720 (4,358) Fire & Rescue 49 31 (18) 1,410 444 (966) Community & Economic Development 9,293 5,190 (4,103) 7,505 2,450 (5,055) Planning & Building 1,466 1,426 (40) Public Works Community Services 1,384 377 (1,007) 259 74 (185) Convention, Sports & Entertainment Total expenditures 12,31 2 7,144 (5,168) 17,252 6,688 (10,564) Excess (deficiency) of revenues over (under) expenditures (5,132) (884) 4,248 (112) 1,647 1,759 Other financing sources (uses): Transfers in Transfers out (11) (11) Total other financing sources (uses) (11) (11) Net change in fund balances (5 ,132) (895) 4,237 (112) 1,647 1,759 Fund balances at beginning of year 967 967 5,545 5,545 Fund balance at end of year $ (4,165) 72 $ 4,237 $ 5,433 $ 7,192 $ 1,759 Adjustment to reconcile to GAAP: Issuance of loan payable 2,250 Land acquisition from loan proceeds (2,250) Ending fund balance - GAAP basis $ 72 104 (continued) CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2018 (In thousands) (continued) Anaheim Resort Maintenance District Anaheim Tourism Improvement District Final Variance Final Va riance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services $ 4,602 $ 4,584 $ (18) $ 18,829 $ 18,707 $ (122) Use of money and property 53 27 (26) 57 29 (28) Other 4 1 (3) Total revenues 4,659 4,61 2 (47) 18,886 18,736 (150) Expenditures: City Attorney Police Fire & Rescue Community & Economic Development Planning & Building Public Works 6,568 5,426 (1,142) 2,217 1,209 (1 ,008) Community Services Convention, Sports & Entertainment 13,900 13,890 (10) To tal expenditures 6,568 5,426 (1,142) 16, 117 15,099 (1,018) Excess (deficiency) of revenues over (under) expenditures (1,909) (814) 1,095 2,769 3,637 868 Other financing sources (uses): Transfers in 200 200 Transfers out (188) (679) (491) Total other financing sources (uses) 200 200 (188) (679) (491) Net change in fund balances (1 ,709) (614) 1,095 2,581 2,958 377 Fund balances at beginning of year 5,900 5,900 10,455 10,455 Fund balance at end of year $ 4,191 $ 5,286 $ 1,095 $ 13,036 $ 13,413 $ 377 105 (continued) CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Basis Actual - All Nonmajor Special Revenue Funds Year Ended June 30, 2018 (In thousands) Narcotic Asset Forfeiture Long Range Property Management Plan Final Va riance Final Va riance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues: Licenses, fees and permits Intergovernmental revenues $ 1,678 $ 1,390 $ (288) Charges for services Use of money and property 22 37 15 $ 14,447 $ 1,958 $ (12,489) Other Total revenues 1,700 1,427 (273) 14,447 1,958 (12,489) Expenditures: City Attorney Police 3,166 3,163 (3) Fire & Rescue Community & Economic Development 7,053 3,950 (3 ,103) Planning & Building Public Works Community Services Convention, Sports & Entertainment Total expenditures 3,166 3,163 (3) 7,053 3,950 (3 ,103) Excess (deficiency) of revenues over (under) expenditures (1,466) (1 ,736) (270) 7,394 (1,992) (9,386) Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balance (deficits) (1,466) (1,736) (270) 7,394 (1,992) (9,386) Fund balances (deficits) at beginning of year 5,378 5,378 24,490 24,490 Fund balances at end of year $ 3,912 $ 3,642 $ (270) $ 31,884 22,498 $ (9,386) Adjustment to reconcile to GAAP: Purchase of land held for resale 804 Ending fund balance - GAAP basis $ 23,302 106 See accompanied independent auditors' report CITY OF ANAHEIM Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2018 (In thousands) Anaheim Municipal Resort Facilities Improvements Total ASSETS Cash and cash equivalents $ 344 $ 344 Investments 1,212 1,212 Accrued interest receivable 12 $ 30 42 Restricted cash and cash equivalents 522 24,082 24,604 Restricted investments 692 123,160 123,852 Total assets $ 2,782 $ 147,272 $ 150,054 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 2 $ 2 To tal liabilities 2 2 Fund balances: Restricted for debt service $ 1,222 147,270 148,492 Assigned for debt service 1,560 1,560 To tal fund balances 2,782 147,270 150,052 Total liabilities and fund balances $ 2,782 $ 147,272 $ 150,054 107 See accompanied independent auditors' report CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds Year Ended June 30, 2018 (In thousands) Anaheim Municipal Resort Facilities Improvements Total Revenues: Use of money and property 119 $ 203 $ 322 To tal revenues 119 203 322 Expenditures: Current: Finance 30 31 Debt service: Principal retirement 501 11,667 12, 168 Interest charges 1,153 26,332 27,485 To tal expenditures 1,655 38,029 39,684 Deficiency of revenues under expenditures (1 ,536) (37,826) (39,362) Other financing sources: Transfers in 1,652 60, 181 61 ,833 Transfers out To tal other financing sources 1,652 60, 181 61 ,833 Net change in fund balances 116 22,355 22,471 Fund balances at beginning of year 2,666 124,915 127,581 Fund balances at end of year $ 2,782 $ 147,270 $ 150,052 108 See accompanied independent auditors' report CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - All Debt Service Funds Year Ended June 30, 2018 (In thousands) Municipal Facilities Anaheim Resort Improvements Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues: Property taxes Intergovernmental revenues Use of money and property 119 119 203 $ 202 To tal revenues 119 119 203 202 Expenditures: Finance $ 1,088 1,088 38,083 38,029 (54) Public Works 567 567 Total expenditures 1,655 1,655 38,083 38,029 (54) Excess (deficiency) of revenues over (under) expenditures (1,655) (1,536) 119 (38,082) (37,826) 256 Other financing sources: Transfers in 1,088 1,652 564 59,876 60, 181 305 Transfers out Total other financing sources 1,088 1,652 564 59,876 60, 181 305 Net change in fund balances (567) 116 683 21,794 22,355 561 Fund balances at beginning of year 2,666 2,666 124,915 124,915 Fund balances at end of year $ 2,099 $ 2,782 683 $ 146,709 $ 147,270 $ 561 109 See accompanied independent auditors' report CITY OF ANAHEIM Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2018 (In thousands) Transportation Development Community Storm Street Improvement Impact Services Drain Other Capital Mello-Roos Construction Projects Projects Facilities Construction Improvements Projects Total ASSETS Cash and cash equivalents $ 109 $ 34 $ 7,661 $ 1,164 $ 237 $ 1,895 $ 2,074 $ 13, 174 Investments 384 121 26,983 4,097 837 6,674 7,303 46,399 Accrued interest receivable 1 93 17 14 29 27 181 Due from other fu nds 4,060 4,000 4,000 12,060 Due from other governments 12,900 241 602 1,843 6 15,592 Prepaid and other assets 7,344 13 1,732 9,089 Restricted cash and cash equivalents 4,624 11,531 16, 155 Restricted investment 29,986 29,986 Due from the Successor Agency 4,968 4,968 To tal assets $ 20,737 $ 397 $ 39,399 $ 5,278 $ 5,088 $ 24,046 $ 52,659 $ 147,604 LIABILITIES Accounts payable $ 1,345 $ 323 $ 1,249 $ 325 $ 2,276 $ 1,545 $ 328 $ 7,391 Wages payable 20 1 3 2 1 2 17 46 Deposits 1,194 1,194 Due to other funds 12,060 2,150 14,210 To tal liabilities 13,425 324 1,252 2,477 3,471 1,547 345 22,841 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 10,967 170 602 797 12,536 Unavailable resources - due from Successor Agency 4,968 4,968 To tal deferred inflows of resou rces 10,967 170 602 5,765 17,504 FUND BALANCES Nonspendable: Prepaid and other assets 7,344 13 1,732 9,089 Restricted: Capital projects 7,664 7,664 Development impact projects 37,545 2,558 1,617 50,582 92,302 Committed : Capital projects 4,063 4,063 Assigned: Capital projects 243 4,994 5,237 Unassigned (10,999) (97) (11 ,096) To tal fund balances (deficits) (3,655) (97) 37,545 2,801 1,617 16,734 52,314 107,259 To tal liabilities, deferred inflows of resources, and fund balances (deficits) $ 20,737 $ 397 $ 39,399 $ 5,278 $ 5,088 $ 24,046 $ 52,659 $ 147,604 110 See accompanied independent auditors' report CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) Nonmajor Capital Projects Funds June 30, 2018 (In thousands) Transportation Development Community Storm Street Improvement Impact Services Drain Other Capital Mello-Roos Construction Projects Projects Facilities Construction Improvement Projects Total Revenues: Licenses, fees and permits $ 12,801 $ 761 $ 13,562 Intergovernmental revenues $ 6,992 $ 2,570 670 $ 1,277 11,509 Charges for services 14 14 Use of money and property (34) (17) 191 93 $ 61 1,155 $ 427 1,876 Other 2 1 3 Total revenues 6,972 2,553 12,994 1,524 61 2,433 427 26,964 Expenditures: Current: City Clerk 44 44 Finance 22 22 Police 17 1,346 1,363 Fire & Rescue 3 1,050 1,053 Community & Economic Development 37 37 Planning & Building 62 62 Public Works 776 346 85 1,069 19 2,295 Community Services 263 332 927 1,522 Capital outlay 8,035 140 10,363 1,378 1 5,301 1,921 27, 139 Debt service: Principal retirement 1,362 1,362 Interest charges 431 431 Total expenditures 8,811 486 10,646 1,710 86 11,651 1,940 35,330 Excess (deficiency) of revenues over (under) expenditures (1,839) 2,067 2,348 � � (9,218) (1,513) (8,366) Other financing sources (uses): Transfers in 549 1 4,930 40 5,520 Transfers out (104) (38) (2,150) (2,292) Total other financing sources (uses) 549 (103) (38) (2,150) 4,930 40 3,228 Net change in fund balances (1,290) 1,964 2,310 (2,336) (25) (4,288) (1,473) (5,138) Fund balances (deficits) at beginning of year (2,365) (2,061) 35,235 5,137 1,642 21,022 53,787 112,397 Fund balances (deficits) at end of year $ (3,655) $ (97) $ 37,545 $ 2,801 $ 1,617 $ 16,734 $ 52,314 $ 107,259 111 See accompanied independent auditors' report CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Basis Actual - All Capital Proj ects Funds Year Ended June 30, 2018 (In thousands) (continued) Street Construction Transportation Improvement Projects Final Va riance Final Va riance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues: Licenses, fees and permits Intergovernmental revenues $ 49,435 $ 6,992 $ (42,443) $ 4,973 $ 2,570 $ (2,403) Charges for services 14 14 Use of money and property (34) (34) (17) (17) Contribution from property owners Other Total revenues 49,435 6,972 (42,463) 4,973 2,553 (2,420) Expenditures: Police Fire & Rescue Community & Economic Development Planning & Building Public Works 40,970 8,811 (32, 159) 2,163 486 (1,677) Community Services Total expenditures 40,970 8,811 (32,159) 2,163 486 (1,677) Excess (efficiency) of revenues over (under) expenditures 8,465 (1,839) (10,304) 2,810 2,067 (743) Other financing sources (uses): Transfers in 549 549 1 1 Transfers out (104) (104) Total other financing sources 549 549 (103) (103) Net change in fund balances 8,465 (1,290) (9,755) 2,810 1,964 (846) Fund balances at beginning of year (2,365) (2,365) (2,061) (2,061 ) Fund balances at end of year $ 6,100 $ (3,655) $ (9,755) $ 749 $ (97) $ (846) 112 (continued) CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Basis Actual - All Capital Proj ects Funds Year Ended June 30, 2018 (In thousands) (continued) Development Impact Projects Community Services Facilities Final Va riance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues: Licenses, fees and permits $ 2,050 $ 12,801 $ 10,751 $ 500 $ 761 $ 261 Intergovernmental revenues 1,734 (1 ,734) 737 670 (67) Charges for services Use of money and property 15 191 176 2 93 91 Contribution from property owners Other 2 2 To tal revenues 3,799 12,994 9,195 1,239 1,524 285 Expenditures: Police 610 124 (486) Fire & Rescue 5,058 3 (5,055) Community & Economic Development Planning & Building Public Works 2,832 247 (2,585) Community Services 12,972 10,272 (2,700) 5,686 1,710 (3,976) Total expenditures 21,472 10,646 (10,826) 5,686 1,710 (3,976) Excess (deficiency) of revenues over (under) expenditures (17,673) 2,348 20,021 (4,447) (186) 4,261 Other financing sources (uses): Transfers in Transfers out (38) (38) To tal other financing sources (38) (38) Net change in fund balances (17,673) 2,310 19,983 (4,447) (186) 4,261 Fund balances at beginning of year 35,235 35,235 5,137 5,137 Fund balances at end of year $ 17,562 $ 37,545 $ 19,983 $ 690 4,951 $ 4,261 Adjustment to reconcile to GAAP: Provided park fee credits for future housing projects (2,150) Ending fund balance - GAAP basis $ 2,801 113 (continued) CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Basis Actual - All Capital Proj ects Funds Year Ended June 30, 2018 (In thousands) (continued) Storm Drain Construction Other Capital Improvements Final Va riance Final Variance Budgeted Actual with Final Budgeted Actual with Final Amounts Amounts Budget Amounts Amounts Budget Revenues: Licenses, fees and permits $ 30 $ (30) Intergovernmental revenues $ 2,805 $ 1,277 $ (1,528) Charges for services Use of money and property $ 61 61 990 1,155 165 Contribution from property owners Other 1 1 To tal revenues 30 61 31 3,795 2,433 (1,362) Expenditures: City Clerk 200 194 (6) Finance 117 117 Police 1,910 1,863 (47) Fire & Rescue 10,308 5,934 (4,374) Community & Economic Development 3,805 1,069 (2,736) Planning & Building 118 117 (1) Public Works 210 86 (124) 3,620 1,279 (2,341) Community Services 1,918 1,078 (840) To tal expenditures 210 86 (124) 21,996 11,651 (10,345) Excess (deficiency) of revenues over (under) expenditures (180) (25) 155 (18,201) (9,21 8) 8,983 Other financing sources (uses): Transfers in 1,053 4,930 3,877 Transfers out To tal other financing sources 1,053 4,930 3,877 Net change in fund balances (180) (25) 155 (17, 148) (4,288) 12,860 Fund balances at beginning of year 1,642 1,642 21,022 21,022 Fund balances at end of year $ 1,462 1,617 155 $ 3,874 $ 16,734 $ 12,860 114 (continued) CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Basis Actual - All Capital Proj ects Funds Year Ended June 30, 2018 (In thousands) (continued) Mello-Roos Projects Final Budgeted Actual Variance with Amounts Amounts Final Budget Revenues: Licenses, fees and permits Intergovernmental revenues Charges for services Use of money and property $ 427 $ 427 Contribution from property owners Other Total revenues 427 427 Expenditures: Police Fire & Rescue Community & Economic Development Planning & Building Public Works $ 45,349 1,940 (43,409) Community Services Total expenditures 45,349 1,940 (43,409) Excess of deficiency of revenues over (under) expenditures (45,349) (1,513) 43,836 Other financing sources (uses): Transfers in 40 40 Transfers out To tal other financing sources 40 40 Net change in fund balances (45,349) (1,473) 43,876 Fund balances at beg inning of year 53,787 53,787 Fund balances at end of year $ 8,438 $ 52,314 $ 43,876 115 The accompanying notes are an integral part of these financial statements. I I r u ir1��rrt�iSttr vit� Fu�ds ' I I rv. -·1 tNTERNAlSf.:RVICEFUN OS are used to account for the financingof centralized servicesto City departments on a cost-reimbursement basis {including depredation) GENERAL BENEFITS AND INSURANCE FUND • Estabtished to account forempfoyee compensated absences, retirement and health benefits, and self-insurance programs. MOTORIZED EQUIPMENT FUND - Estabtished to acc0;1.mtfor mot orized equipment used by Citydepartments. INFORMATION AND COMMUNICATION SERVICES FUND - Established to account for data processingand communication services to City departments. MUNICIPAL FACILITIES MAINTENANCE FUND- Establishedto account forCity building maintenance services andequipment used by Citydepartments. CITY OF ANAHEIM Combining Statement of Net Position Internal Service Funds June 30, 2018 (In thousands) General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total ASSETS Current assets: Cash and cash equivalents $ 18,629 $ 950 $ 580 $ 86 $ 20,245 Investments 65,613 3,342 2,043 305 71 ,303 Restricted cash and cash equivalent 526 526 Accounts receivable, net 2,205 16 2,221 Accrued interest receivable 242 11 1 254 lnterfund receivable 9 189 198 Inventories 994 994 Prepaid and other assets 58 1,357 1,896 3,311 Total current assets 86,756 6,859 5,046 ------:m, ------gg;u52 Noncurrent assets: Restricted cash and cash equivalent 904 904 Accounts receivable, less current portion 2,301 2,301 lnterfu nd receivable, less current portion 53 53 Capital assets: Buildings, structures and improvements 3,230 6,263 9,493 Machinery and equipment 93 44,615 27,212 3,143 75,063 Construction in progress 504 2, 199 2,703 Less accumulated depreciation (78) (32,309) (21 ,477) (5,220) (59,084) Capital assets, net 15 16,040 7,934 4,186 28,175 To tal noncurrent assets 2,369 16,040 8,838 4,186 31 ,433 To tal assets 89,125 22,899 13,884 4,577 130,485 DEFERRED OUTFLOW OF RESOUCES Deferred OPEB related items 275 342 202 304 1,123 Deferred pension related items 2,145 2,362 4,627 2,038 11,172 To tal deferred outflow of resources 2,420 2,704 4,829 2,342 � LIABILITIES Current liabilities: Accounts payable 1,418 695 1,623 1,250 4,986 Wages payable 4,171 61 48 69 4,349 Interest payable 65 65 Due to other Funds 231 231 Compensated absences 11,986 11,986 Self-insurance liability 11,670 11,670 Long-term liabilities 10 2,090 2,100 Unearned revenues 2,555 2,555 Total current liabilities 31 ,800 766 3,826 1,550 37,942 Noncurrent liabilities: Due to other Funds, less current portion 182 182 Compensated absences, less current portion 8,488 8,488 Self-insurance liability, less current portion 42,642 42,642 Long-term liabilities, less current portion 85 2,819 2,904 Net other postemployment benefits (OPEB) liabilities 2,640 3,333 1,829 2,666 10,468 Net pension liability 8,573 8,561 6,803 7,265 31 ,202 Total noncurrent liabilities 62,343 11,979 11,451 ------m;T13 95,886 To tal liabilities 94,143 12,745 15,277 11,663 133,828 DEFERRED INFLOW OF RESOURCES Deferred OPEB related items 196 247 136 198 777 Deferred pension related items 223 512 205 164 1,104 To tal deferred inflow of resources 419 759 341 � 1,881 NET POSITION Net investment in capital assets 15 15,945 3,929 4,186 24,075 Unrestricted (3,032) (3,846) (834) (9,292) (17,004) Total net position $ (3,017) $ 12,099 $ 3,095 $ � $ 7,071 117 See accompanied independent auditors' report CITY OF ANAHEIM Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds Year Ended June 30, 2018 (In thousands) General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Operating revenues: Charges for services $ 98,078 $ 12,892 $ 22,987 $ 12,459 $ 146,416 Other 25 21 70 116 To tal operating revenues 98,103 12,913 22,987 12,529 146,532 Operating expenses: Salaries and wages 4,256 4,570 4,925 4,294 18,045 Maintenance and operations 3,053 5,432 16,541 8,947 33,973 Insurance premiums and claims 19,229 19,229 Compensated absences and other benefits 67,015 67,015 Depreciation 1 2,410 3,257 359 6,027 To tal operating expenses 93,554 12,412 24,723 13,600 144,289 Operating income (loss) 4,549 501 (1 ,736) (1,071) 2,243 Nonoperating income (expenses): Intergovernmental revenues Investment income 28 14 (31 ) (3) 8 Interest expense (2) (167) (169) Gain from disposal of capital assets 100 100 To tal nonoperating income (loss) 28 112 (198) (3) (61 ) Income (Loss) before transfer 4,577 613 (1 ,934) (1,074) 2,182 Transfer in Transfers out Change in net position 4,577 613 (1 ,934) (1,074) 2,182 Net position at beginning of year, as adjusted (7,594) 11,486 5,029 (4,032) 4,889 Net position at end of year $ (3,017) $ 12,099 $ 3,095 $ (5,106) $ 7,071 118 See accompanied independent auditors' report CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2018 (In thousands) General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Cash flows from operating activities: Receipts from interfu nd services provided $ 98,078 $ 12,892 $ 22,987 $ 12,459 $ 146,416 Payments to suppliers (1,159) (5,342) (15,989) (8,361) (30,851 ) Payments for salaries and wages to employees (4,608) (4,313) (3,404) (4,201) (16,526) Payments for interfund services used (1 ,902) (649) (1,015) (999) (4,565) Payments for insurance premiums and claims (15,681 ) (15,681) Payments for compensated absences and other benefits (68,568) (68,568) Other receipts 61 10 70 141 Net cash provided by (used for) operating activities 6,221 2,598 2,579 (1,032) 10,366 Cash flows from noncapital financing activities: Receipt of interfu nd balances 13 825 189 1,027 Payment of interfund balances (40) (189) (103) (722) (1,054) Net cash provided by (used for) noncapital financing activities (27) 636 (103) (533) (27) Cash flows from capital and related financing activities: Proceeds from sale of capital assets 133 133 Receipt of capital grant 380 380 Capital purchases (3,595) (369) (575) (4,539) Principal payments on long-term debt (10) (2,600) (2,610) Interest payments (2) (196) (198) Receipt of interfu nd loan for capital purpose 231 231 lnterfu nd payment for capital purpose (7) (7) Net cash used for capital and related financing activities (3,094) (3,165) (351) (6,610) Cash flows from investing activities: Purchase of investment securities (3 1,133) (1 ,585) (969) (143) (33,830) Proceeds from sale and matu rity of investment securities 25,369 1,421 1,044 1,630 29,464 Interest received 763 49 812 Interest paid (6) (1) (7) Net cash provided by (used for) investing activities (5,001) (115) 69 1,486 (3,561) Increase (decrease) in cash and cash equivalents 1,193 25 (620) (430) 168 Cash and cash equivalents at beg inning of the year 17,436 925 2,630 516 21 ,507 Cash and cash equivalents at end of the year $ 18,629 $ 950 $ 2,010 $ 86 $ 21 ,675 119 (continued) CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2018 (In thousands) (continued) General Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Reconciliation of operating income to net cash provided by operating activities: Operating income $ 4,549 $ 501 $ (1,736) $ (1,071) $ 2,243 Adjustment to reconcile operating income to net cash provided by operating activities: Depreciation 1 2,410 3,257 359 6,027 Changes in assets, deferred outflows of resources, liabilities and deferred inflows of resources: Accounts receivable 994 (11) 983 Inventories (84) (84) Prepaid and other assets 47 (268) (221) Accounts payable (1,799) (475) (195) (413) (2,882) Wages and benefit payable (396) 257 1,521 93 1,475 Unearned revenues 275 275 Compensated absences 103 103 Self-insurance liability 2,447 2,447 To tal adjustments 1,672 2,097 4,315 39 8,123 Net cash provided by (used for) operating activities $ 6,221 $ 2,598 $ 2,579 $ (1,032) $ 10,366 Schedule of noncash financing and investing activities: Capital assets financed through capital leases $ 1,184 $ 1,184 Decrease in fair value of investments $ (766) $ (37) (26) $ (2) (831 ) Reconciliation of cash and cash equivalents: Cash and cash equivalents $ 18,629 $ 950 $ 580 $ 86 $ 20,245 Restricted cash and cash equivalents, current portion 526 526 Restricted cash and cash equivalents, noncurrent portion 904 904 Total cash and cash equivalents $ 18,629 $ 950 $ 2,010 $ 86 $ 21 ,675 120 See accompanied independent auditors' report CITY OF ANAHEIM Statement of Changes in Fiduciary Assets and Liabilities Agency Fund - Mello-Roos Year Ended June 30, 2018 (In thousands) Beginning Ending Balance Additions Deductions Balance ASSETS Restricted cash and cash equivalents $ 7,103 $ 3,385 $ (7,829) $ 2,659 Restricted investments 29 4,571 4,600 Due from other governments 7 3,353 (3,332) 28 To tal assets $ 7,139 $ 11,309 $ (11,161) $ 7,287 LIABILITIES Due to bond holders $ 7,139 $ 3,406 $ (3,258) $ 7,287 121 See accompanied independent auditors' report (This page left blank intentionally) 122 ·O cttlJilD·,. • -·1·• I St.�·�d1rtJ(:�i Se�:t!{t;� I The Statlstlcat Section is included toprovi de-detailed data on the physical, economic,socla I and political characteristic;sof the reporting government. It is intended to provide the user with a broader and more comphete 1.mderstandirig of the governmentandits financial affairs than is possible from the bas.lefinanc ial statements and supplementaryin formation included in the FinancialSec tion. CITY OF ANAHEIM STATISTICAL INFORMATION (Unaudited) The Statistical Section is included to provide financial statement users with additional historical perspective, context, and detail for them to use in evaluating the information contained within the financial statements, notes to the financial statements, and required supplementary information with the goal of providing the user a better understanding of the City's economic condition. Contents Page Financial trends These schedules contain information to help the reader understand how the City's financial performance and well-being have changed over time. Net Position by Component - Last Ten Fiscal Years 124 Changes in Net Position - Last Ten Fiscal Years 125 Governmental Activities Tax Revenues by Source - Last Ten Fiscal Years 127 Fund Balances of Governmental Funds - Last Ten Fiscal Years 128 Changes In Fund Balances of Governmental Funds - Last Ten Fiscal Years 129 Revenue capacity These schedules contain information to help the reader assess the City's most significant local revenue sources. General Government Tax Revenues by Source - Last Ten Fiscal Years 130 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 131 Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years 132 Principal Property Tax Payers - Current Year and Nine Years Ago 133 Property Tax Levies and Collections - Last Ten Fiscal Years 134 Debt capacity These schedules contain information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the Ratio of Outstanding Debt by Type - Last Ten Fiscal Years 135 Ratio of Net General Bonded Debt Outstanding - Last Ten Fiscal Years 136 Direct and Overlapping Government Activities Debt - As of June 30, 2018 137 Legal Debt Margin information - Last Ten Fiscal Years 139 Pledged-Revenue Coverage - Last Ten Fiscal Years 140 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. Demographic and Economic Statistics - Last Ten Fiscal Years 142 Principal Employers - Current and Nine Years Ago 143 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 Full-Time Equivalent City government Employees by Function I Program - Last Ten Fiscal Years 144 Operating Indicators by Function - Last Ten Fiscal Years 145 Capital Assets Statistics by Function - Last Ten Fiscal Years 147 Summary of Pension Obligation Funding Progress 149 Summary of Funding Progress for Other Post-Employment Benefits 150 City of Anaheim Map 151 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 123 CITY OF ANAHEIM Net Position by Component Last Ten Fiscal Years (In thousands) (Accrual basis of accounting) Fiscal Year 2018 201 7 2016 2015 2014 2013 2012 201 1 2010 2009 Governmental Activities Net investment in capital assets $ 1,008,489 $ 974,071 $ 968,473 $ 894,651 $ 1,016,259 $ 894,625 $ 831 ,430 $ 832,951 $ 794,164 $ 751 ,910 Restricted 266,983 274,830 211,338 210,934 205,998 196,853 190,868 182,011 150,750 154,306 2 1 Unrestricted (551,607) (557,245) (4 17,976) (447,817) (455,863) 30,341 16,760 (124,422) (121,283) (92,773) Total Governmental Activities 723,865 691 ,656 $761 ,835 $657,768 $766,394 1,121,819 1,039,058 890,540 823,631 813,443 Business-type Activities Net investment in capital assets 1,009,302 1,016,113 997,292 993,075 823,505 787,459 780,093 779,224 756,020 747,379 Restricted 86,863 83,811 76,749 83,448 77,311 71,131 61,235 54,626 49,325 45,493 2 1 Unrestricted 15,661 (26,767) 36,644 (1,725) (37,696) 121,083 112,159 115,445 130,812 145,269 Total Business-type Activities 1,111 ,826 1,073,157 1,110,685 1,074,798 863, 120 979,673 953,487 949,295 936,157 938,141 Total Government Net investment in capital assets 2,017,791 1,990,184 1,965,765 1,887,726 1,839,764 1,682,084 1,611,523 1,612,175 1,550,184 1,499,289 Restricted 353,846 358,641 288,087 294,382 283,309 267,984 252,103 236,637 200,075 199,799 Unrestricted (535,946) (584,012) (381 ,332) (449,542) (493,559) 151,424 128,919 (8,977) 9,529 52,496 Total Government $ 1,835,691 $ 1,764,813 $ 1,872,520 $1,732,566 $ 1,629,514 $ 2,101,492 $ 1,992,545 $ 1,839,835 $ 1,759,788 $ 1,751 ,584 Note: 1 The City implemented Governmental Accounting Standards Board (GASB) Statement No. 68 Accounting and Financial Reporting for Pension, and Statement No. 71 Pension Tra nsition for Con trib utions Made Subsequent to the Measurement Date, for the fiscal year ended June 30, 2015. Implementation of these Statements require the City to restate prior period net position and are reflected in the fiscal year 2014 Unrestricted net position. Information prior to the implementation of these Statements is not available. 2 The City implemented Governmental Accounting Standards Board (GASB) Statement No. 75 Accounting and Financial Reporting for Other Postemployment enefits Other Than Pension for the fiscal year ended June 30, 2018. Implementation of this Statements requires the City to restate prior period net positions and are reflected in the fiscal year 2017 Unrestricted net position. Information prior to the implementation of these Statements is not available. Certain reclassifications have been made to prior year data to conform to the current presentation. Source: Finance Department,City of Anaheim 124 See accompanied independent auditors' report CITY OF ANAHEIM Changes in Net Position Last Ten Fiscal Years (In thousands) (Accrual basis of accounting) Fiscal Year 2018 2017 2016 2015 2014 2013 201 2 2011 2010 2009 Program Revenues Governmental activities: Charges for services General government $ 1,749 $ 1,903 $ 2,034 $ 2,398 $ 1,779 $ 2,001 $ 1,872 $ 1,872 $ 1,708 $ 1,890 Police 15,361 15,441 11,775 10,001 9,927 9,859 10,122 10,435 10,127 10,089 Fire & Rescue 11,621 10,582 9,814 9,024 10, 166 9,912 9,431 9,518 9,369 9,122 Community & Economic Development 7,421 19,046 10,21 0 14,023 17,305 9,151 7,281 8,143 7,306 5,459 Planning and Building 16,573 11,357 11,515 9,800 7,746 6,404 5,327 6,263 6,453 7,724 Public Works 17,378 16,140 15,81 7 13,309 13,037 14,012 11,401 9,837 7,619 7,421 Community Services 3,227 11,190 3,430 3,408 3,479 3,556 3,386 4,024 4,561 4,833 Convention, Sports & Entertainment 14,231 13,672 12,528 11,12 4 10,236 9,574 9,142 4,356 202 200 To tal charges for services 87,561 99,331 77, 123 73,087 73,675 64,469 57,962 54,448 47,345 46,738 Operating grants and contributions 115,520 109,989 108,131 109,968 114,584 112,507 108,620 124,358 121 ,731 110,200 Capital grants and contributions 39,340 65,937 85,782 67,014 110,295 71 ,472 44 ,184 70,080 31 ,828 66,347 Governmental activities program revenues 242,421 275,257 271 ,036 250,069 298,554 248,448 210,766 248,886 200,904 223,285 Business-type activities: Charges for services Electric Utility 443,755 433,561 430,485 453,697 426,051 451 ,958 397,931 381 ,496 377,387 365,526 Water Utility 79,074 70,777 60,509 63,495 65,946 60,785 57,748 55,598 56,368 50,807 Sanitation Utility 65, 138 63,893 61 ,006 60,076 57,843 57,230 56,630 56,359 56,023 55,424 Golf Courses 4,273 4,062 4,114 4,435 4,667 4,759 4,802 4,711 5,168 5,634 Convention, Sports and Entertainment 44,984 37,015 35,363 34,742 32,084 29,656 29,389 27,981 30,797 26,987 ARTIC Management 1,343 1,050 878 448 To tal charges for services 638,567 610,358 592,355 616,893 586,591 604,388 546,500 526,145 525,743 504,378 Operating grants and contributions 88 425 776 287 452 952 1,10 1 746 1,990 965 Capital grants and contributions 8,353 4,381 11,743 8,734 8,441 6,698 8,954 12,667 5,622 6,620 Business-type activities program revenues 647,008 615,164 604,874 625,914 595,484 61 2,038 556,555 539,558 533,355 511 ,963 Total government program revenues 889,429 890,421 875,91 0 875,983 894,038 860,486 767,321 788,444 734,259 735,248 Expenses Governmental activities: General government 15,645 11,825 10,331 12,370 15,790 13,275 11,617 10,911 10,917 12,144 Police 173,921 151 ,559 132,889 135,161 127,037 124,556 117,840 119,504 125, 121 121,162 Fire & Rescue 81,528 70,365 62,520 61 ,794 59,51 0 58,508 58,027 56,393 58,229 57,768 Community & Economic Development 96,067 100,720 110,61 8 80,976 80,043 82,769 95,683 105,937 117,621 109,523 Planning & Building 25,376 21 ,944 19,862 18,303 17,030 16,917 15,648 15,627 16,822 17,057 Public Works 55,981 61 ,806 48,71 9 66,023 60,262 44,740 41 ,228 44,109 39,017 47,226 Community Services 39,020 34,799 34,21 2 31 ,587 34, 130 28,925 28,282 30,958 35,372 37,704 Public Utilities 2,346 2,530 2,687 2,599 2,514 2,405 2,315 2,218 1,952 1,515 Convention, Sports & Entertainment 19,930 19,238 18,503 17,026 15,586 13,935 13,584 13,633 9,931 10,069 Interest on long-term debt 34,938 34,876 35, 185 35,340 35,514 35,880 42,824 47,985 47 ,610 47,779 Governmental Activities Expenses 544,752 509,662 475,526 461 ,179 447,416 42 1,910 427,048 447,275 462,592 461 ,947 125 (continued) CITY OF ANAHEIM Changes in Net Position Last Ten Fiscal Years (In thousands) (Accrual basis of accounting) (continued) Fiscal Year 2018 2017 2016 2015 2014 2013 201 2 2011 2010 2009 Expenses Business-type Activities: Electric Utility 394,574 412,424 390,732 401 ,243 411,246 41 7,008 386,358 372,129 375,173 359,320 Water Utility 75,755 72,715 61 ,620 68,011 62,996 57,056 58 ,319 56,608 55,478 49,309 Sanitation 61, 145 58,218 56,564 55,979 53,508 52,813 55,939 49,845 50,521 52,702 Golf Courses 4,898 4,465 4,405 4,418 4,399 4,473 4,114 4,256 4,436 4,495 Convention, Sports and Entertainment Venues 66,058 47,321 44,285 56,715 46,385 45,001 45,278 44,662 45,954 45,487 ARTIC Management 6,21 8 6,374 6,235 5,075 Business-type activities expense 608,648 601 ,517 563,841 591 ,441 578,534 576,351 550,008 527,500 531 ,562 511 ,313 Total government expenses 1,1 53,400 1,111 , 179 1,039,367 1,052,620 1,025,950 998,261 977,056 974,775 994,154 973,260 Net (Expense)/Revenue Governmental activities (302,331 ) (234,405) (204,490) (211,110) (148,862) (173,462) (216,282) (198,389) (261,688) (238,662) Business-type activities 38,360 13,647 41,033 34,473 16,950 35,687 6,547 12,058 1,793 650 Total government, net (expense) revenue (263,971 ) (220,758) (163,457) (176,637) (131,912) (137,775) (209,735) (186,331) (259,895) (238,012) General Revenues and Other Changes in Net Position Governmental activities: Taxes: Property taxes 76,547 72,909 70,646 68,405 66,282 64,311 58,896 59,053 59,689 60,806 Property tax increments 28,678 47,040 47,731 47, 115 Sales tax and use tax 80,732 77,732 76,975 72,356 67,505 65,445 59,654 54,711 51 ,214 56,035 Transient occupancy taxes 154,925 149,566 137,570 119,744 110,134 102,936 90,376 82,605 77,139 80,055 Motor vehicle license fees 1,783 1,026 1,180 Other taxes 9,076 8,946 8,731 8,318 7,780 7,756 7,272 7,288 7,288 8,041 Gain on sale on capital assets 6,258 Unrestricted investment earnings 2,783 2,116 3,692 2,725 2,930 1,094 3,598 3,667 7,012 8,667 Other 105 106 87 55 49 1,857 873 614 1,175 394 Transfers 4,114 7,701 10,856 (169,119) 7,288 12,824 12,571 8,537 19,602 41 ,141 Special Item (8 ,218) Extraordinary gain 102,882 Governmental activities 334,540 310,858 308,557 102,484 261 ,968 256,223 364,800 265,298 271 ,876 303,434 Business-type activities: Unrestricted investment earnings 4,423 4,001 5,71 0 8,086 6,986 3,323 10,216 9,617 15,825 19,580 Transfers (4,114) (7,701) (10,856) 169, 119 (7,288) (12,824) (12,571) (8,537) (19,602) (41,141) Business-type activities 309 (3,700) (5,146) 177,205 (302) (9,501) (2,355) 1,080 (3,777) (21 ,561 ) Total government 334,849 307,158 303,411 279,689 261 ,666 246,722 362,445 266,378 268,099 281 ,873 Change in Net Position Governmental activities 32,209 76,453 104,067 (108,626) 113,106 82,761 148,518 66,909 10,188 64,772 Business-type activities 38,669 9,947 35,887 211 ,678 16,648 26, 186 4,192 13,138 (1,984) (20,911) Total government change in net position $ 70,878 $ 86,400 $ 139,954 $ 103,052 $ 129,754 $ 108,947 $ 152,710 $ 80,047 $ 8,204 $ 43,861 Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation. Source: Finance Department,City of Anaheim 126 See accompanied independent auditors' report CITY OF ANAHEIM Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (In thousands) (Accrual basis of accounting) Motor Property Sales and Transient Vehicle Fiscal Property Tax Use Occupancy License Other Year Taxes Increments Taxes Taxes Fees1 Taxes Total 2018 $ 76,547 $ 80,732 $ 154,925 $ 9,076 $ 321 ,280 2017 72,909 77,732 149,566 8,946 309, 153 2016 70,646 76,975 137,570 8,731 293,922 2015 68,405 72,356 119,744 8,31 8 268,823 2014 66,282 67,505 110,134 7,780 251,701 2013 64,311 65,445 102,936 7,756 240,448 2012 58,896 $ 28,678 59,654 90,376 7,272 244,876 2011 59,053 47,040 54,711 82,605 1,783 7,288 252,480 2010 59,689 47,731 51 ,214 77,139 1,026 7,288 244,087 2009 60,806 47, 115 56,035 80,055 1,180 8,041 253,232 1 The decrease in motor vehicle license fees starting from fiscal year 2005 is due to the shifting of revenue from motor vehicle license fees category to the property tax category. This was part of the State of California 2004 Budget Act. 2 The decrease in Property tax increments from fiscal year 2012 was due to the dissolution of Redevelopment Agency on February 1, 2012. 3 Motor Vehicle License Fees allocation was eliminated per the fiscal year 2012 State Budget. Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation. Source: Finance Department, City of Anaheim 127 See accompanied independent auditors' report CITY OF ANAHEIM Fund Balances of Governmental Funds Last Ten Fiscal Years (In thousands) (Modified accrual basis of accounting) Fiscal Year 2018 2017 2016 201 5 2014 2013 201 2 2011 2010 2009 General Fund Nonspendable $ 519 $ 819 $ 958 $ 1,538 $ 2,099 $ 2,531 $ 3,082 $ 3,626 Restricted 5,194 6,238 7,730 6,124 6,449 1,766 982 582 Committed 788 Assigned 11,008 2,056 7,442 513 4,073 6,879 320 141 Unassigned 41,556 42,336 39,850 39,615 30,394 26,920 22,636 22139 Reserved $ 4,092 $ 4,530 Unreserved - undesignated 29,490 47,729 Total General fund 58,277 51,449 55,980 47,790 43,015 38,884 27,020 26,488 33,582 52,259 Housing Authority Fund Nonspendable 34 2 4 7 38 42 Restricted 60,180 62,338 48,974 43,703 41,134 32,234 29,935 7778 Assigned 26,574 22,904 16, 129 14,283 11,664 11,823 11,237 9922 Reserved 1,373 1,830 Unreserved - undesignated 11,603 5,669 Total Housing Authority Fund 86,788 85,242 65, 105 57,990 52,805 44,095 41 ,172 17,742 12,976 7,499 Nonmajor Governmental Funds Nonspendable 9,091 8,713 6,000 6,270 3,542 4,61 9 1 631 Restricted 320,034 303,036 237,930 197,360 170,950 164,870 158,933 241 ,674 Committed 4,063 Assigned 6,797 9,612 5,875 3,040 3,291 8,055 7,400 7,761 Unassigned (11,535) (12,202) (17,991 ) (20,071) (19,005) (11 ,231) (32,448) (34,293) Reserved 130,31 3 142,760 Unreserved - designated, reported in: Special revenue funds 7,349 7,211 Debt service funds 156 4,433 Capital projects funds 31,899 41 ,544 Unreserved - undesignated, reported in: Special revenue funds 14,350 5,342 Capital projects funds (3,376) (7,037) Total nonmajor governmental funds 328,450 309, 159 231,814 186,599 158,778 166,31 3 133,886 215,773 180,691 194,253 Total governmental funds 1 $ 473,515 $ 445,850 $ 352,899 $ 292,379 $ 254,598 $ 249,292 $ 202,078 $ 260,003 $ 227,249 $ 254,011 1 The City implemented Governmental Accounting Standards Board Statement No 54 (GASB 54) for theFiscal Year Ended June 30, 201 1. Fund Balance Classifications prior to the implementation of GASB 54 is not available. Source: Finance Department, City of Anaheim 128 See accompanied independent auditors' report CITY OF ANAHEIM Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (In thousands) (Modified accrual basis of accounting) Fiscal Year 2018 2017 2016 2015 2014 201 3 2012 201 1 2010 2009 Revenues Property taxes $ 76,547 $ 72,909 $ 70,646 $ 68,405 $ 66,282 $ 64 ,311 $ 58,896 $ 59,053 $ 59,689 $ 60,806 Property tax increments 28,678 47,040 47,731 47, 115 Sales and use taxes 81 ,680 80,500 81,844 71 ,977 68,581 62,793 58,589 55,034 48,210 56,493 Transient occupancy taxes 154,925 149,566 137,570 119,744 110,134 102,936 90,376 82,605 77,139 80,055 Other taxes 8,311 8,287 8,024 7,478 7,012 7,078 6,401 6,486 6,303 6,451 Licenses fees, and permits 45,047 36,504 30,653 28,573 21,353 22,305 17,067 18,772 21,580 21,062 Intergovernmental revenues 124,696 123,797 121,055 155,314 215,755 186,018 143,348 150,394 141,418 158,729 Charges for services 43,982 42,047 36,147 33,295 32,569 30,883 29,672 24,408 18,351 17,874 Fines, forfeits, and penalties 2,988 2,756 2,875 2,823 2,656 2,907 3,515 3,304 3,255 3,409 Use of money and property 5 26,801 47,505 67,204 2 20,068 22,427 12,141 10,582 12,423 12,647 11,754 Contribution from property owners 36,864 4 41,007 1 Other5 1,178 2,127 1,368 9,738 809 4,843 3,692 374 1,598 7,676 Total revenues 566, 155 602,862 557,386 517,415 547,578 496,215 450,816 500,900 437,921 471,424 Expenditures General government 21 ,358 19,447 18,679 19,052 21,070 18,270 16,502 16,055 15,822 16,953 Police 156,338 148,801 139,775 127,226 120,962 117,702 112,656 114,678 115,379 112,057 Fire & Rescue 74,888 70,164 66,399 61 ,483 57,529 56, 127 55,886 55,802 55,713 55,966 Community & Economic Development 93,855 92,089 107,544 3 89,446 83,658 86,282 95,352 110,138 126,590 112,406 Planning & Building 23,649 21,997 19,935 17,667 16,086 15,785 14,408 14,560 15, 173 15,489 Public Works 34,331 30,886 30,388 29,814 29,737 25,387 22,861 27,087 19,957 29,321 Community Services 34,042 32,258 31,980 28,394 30,602 25,268 24,618 27,813 31,311 33,572 Public Utilities 2,341 2,496 2,727 2,622 2,510 2,398 2,313 2,220 1,939 1,507 Convention, Sports & Entertainment 14,639 14,023 13,089 11,608 10,714 10,002 9,725 9,917 6,369 6,699 Capital outlay 46,366 44,532 32,589 79,710 136,597 98,601 55,505 70,918 62,422 52,229 Debt service: Principal 14,749 26, 123 28,448 25,289 24,220 18,948 16,294 12,219 12,777 16,085 Interest charges 28,412 15,571 16,930 18,085 18,797 19,808 26,927 33,032 33,509 34,830 Debt issuance costs 127 227 70 Total expenditures 544,968 518,387 508,483 510,523 552,482 494,578 453,047 494,666 496,961 487,184 Revenues over (under) expenditures 21,187 84,475 48,903 6,892 (4,904) 1,637 (2,231) 6,234 (59,040) (15,760) Other Financing Sources (Uses) Transfers in 97,513 103,797 95,920 85,818 84,81 3 73,470 131 ,093 99,571 83,498 121,987 Transfers out (93,285) (101,446) (85,403) (79,373) (75,953) (59,393) (119,552) (86,621) (59,970) (76,304) Issuance of refunding bonds 6,200 5,084 Payments to refunded bond escrow agent (6,200) (5,683) Premium on long term debt 1,790 94 Issuance of long-term debt 2,250 6,125 1,100 22,654 1,350 31 ,500 13,570 8,000 2,769 Claims settlement proceeds 750 3,848 Extraordinary loss (67,235) Total other financing sources 6,478 8,476 11,617 30,889 10,21 0 45,577 (55,694) 26,520 32,278 51,795 Net change in fund balances $ 27,665 $ 92,951 $ 60,520 $ 37,781 $ 5,306 $ 47,214 $ (57,925) $ 32,754 $ (26,762) $ 36,035 Debt service as a percentage of non-capital expenditures 8.66% 8.80% 9.54% 10.07% 10.34% 9.79% 10.87% 10.68% 10.65% 11.71% 1 Contribution from properly owners pursuant tothe issuance of Community Facility District 08-1 Platinum Triangle Series 2010 Special Tax Bond ' Increase in Use of money and property is due to one-lime land held for resale transferred from the Successor Agency ' Increase in Community and Economic Development expenditures is due to a one-lime loss on sale of land held for resale. 'Contribution from properly owners pursuant to the issuance of Community Facil ity District 08-1 Platinum Triangle Series 2016 Special Tax Bond s Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation. 129 See accompanied independent auditors' report CITY OF ANAHEIM General Government Tax Revenues By Source Last Ten Fiscal Years (In thousands) (Modified accrual basis of accounting) Amounts in Dollars PropertyTaxes Property Tax Increments Secured Unsecured Supplemental Secured Unsecured Supplemental Property Sales Transient Fiscal Property Property Property Property Property Property Taxes in-lieu and Use Occupancy Other Year Taxes Taxes Taxes Residual Taxes Taxes Taxes ofVLF1 Taxes Taxes Taxes Total 2018 $ 39,396 $ 1,265 $ 1,259 $ 2,892 $ 31 ,735 $ 81,680 $ 154,925 $ 8,311 $ 321 ,463 2017 37,771 1,214 1,108 2,484 30,332 80,500 149,566 8,287 311,262 3 2016 37,000 1,256 991 2,203 29 ,196 81,844 137,570 8,024 298,084 2015 35,624 1,358 1,001 2,262 28 ,160 71,977 119,744 7,478 267,604 2014 33,976 1,243 832 2,873 27,358 68,581 110, 134 7,012 252,009 2013 33,114 1,194 806 2,834 26,363 62,793 102,936 7,078 237,118 2 2 2 2012 31,770 1,289 207 $ 21 ,576 $ 6,884 $ 218 25,630 58,589 90,376 6,401 242,940 2011 31,848 1,300 373 36,824 8,859 1,357 25,532 55,034 82,605 6,486 250,218 2010 32,267 1,341 385 38,809 8,221 701 25,696 48,210 77, 139 6,303 239,072 2009 32,496 1,351 712 37 ,710 7,986 1,419 26,247 56,493 80,055 6,451 250,920 ' Collection of property taxes in-lieu of VLF starting in fiscal year 2005 is due to the shifting of revenue from motor vehicle license fees category to the property tax category. This was part of the State of California 2004 Budget Act. 2 Decrease in property tax increments revenues in fiscal year 2012 was due to dissolution of the Redevelopment Agency on February 1, 2012. Property tax increments were received up to January 31, 2012. 3 Increase in sales and use taxes in fiscal year 2016 was due to the sales tax triple flip final distribution. Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation. Source: Finance Department,City of Anaheim 130 See accompanied independent auditors' report CITY OF ANAHEIM Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (In thousands) (Modified Accrual Basis of Accounting) Fiscal Year 201 8 201 7 2016 2015 2014 City of Anaheim Secured property $ 36, 1 99, 163 $ 34,732,460 $ 33,338,748 $ 32,023,757 $ 30,548,214 Unsecured property 1,1 75,627 1,1 72,650 1,243,307 1,515,905 1,266,403 Total City of Anaheim 37,374,790 35,905, 110 34,582,055 33,539,662 31,814,617 Dissolved Anaheim Redevelopment Agency Secured property 5,182,683 4,773,715 4,479,386 4,102,931 3,916, 169 Unsecured property 720,305 684,544 753,736 759,729 654,982 Total Anaheim Redevelopment Agency 5,902,988 5,458,259 5,233,122 4,862,660 4,571 , 151 Total Taxable Assessed Value $ 43,277,778 $ 41,363,369 $ 39,815,177 $ 38,402,322 $ 36,385,768 Total Direct Tax Rate 0.10851% 0.10851 % 0.11024% 0.1 1049% 0.11062% Fiscal Year 201 3 201 2 2011 2010 2009 City of Anaheim Secured property $ 29,608,967 $ 28,808,849 $ 28,600,152 $ 28,775,989 $ 29,329,062 Unsecured property 1,265,51 9 1,232,825 1,278,062 1,283,263 1,226,209 Total City of Anaheim 30,874,486 30,041 ,674 29,878,214 30,059,252 30,555,271 Dissolved Anaheim Redevelopment Agency Secured property 4,338,935 3,977,843 3,751 ,227 3,762,168 3,644,931 Unsecured property 683,237 656,505 743,403 762,903 789,618 Total Anaheim Redevelopment Agency 5,022, 172 4,634,348 4,494,630 4,525,071 4,434,549 Total Taxable Assessed Value $ 35,896,658 $ 34,676,022 $ 34,372,844 $ 34,584,323 $ 34,989,820 Total Direct Tax Rate 0.11078% 0.11075% 0.11075% 0.11031% 0.11024% Note: In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total rnaxirnurnrate of 1 % based upon the assessed value of the property being taxed. Each year, the assessed value of properly rnay bein creased by an "inflation factor" (limited to a rnaxirnurn increase of 2%). With few exceptions, property is only reassessed at the lime that ii is sold to a new owner. Al that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is su bject to the limitations described above. Source: Auditor-Controller, California Municipal Statistics, Inc, County of Orange 131 See accompanied independent auditors' report CITY OF ANAHEIM Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years (Rate per $100 assessed value) Fiscal Year 2018 2017 2016 2015 201 4 2013 2012 2011 201 0 2009 City Direct Rate (1 l City Basic Rate (Z) 0.10851 0.10851 0.10851 0.10851 0.10851 0.10851 0.10851 0.10851 0.10816 0.10816 Anaheim General Obligation Bond Fund 0.00000 0.00000 0.00173 0.00198 0.00211 0.00227 0.00224 0.00224 0.00215 0.00208 0.10851 0.10851 0.11024 0.11049 0.11062 0.11078 0.11075 0.11075 0.11031 0.11024 Overlapping Rates: Anaheim Elementary General Fund 0.29873 0.29873 0.29873 0.29873 0.29873 0.29873 0.29873 0.29873 0.29778 0.29778 Anaheim High General Fund 0.19043 0.19043 0.19043 0.19043 0.19043 0.19043 0.19043 0.19043 0.18982 0.18982 Educational Revenue Augmentation Fund 0.15592 0.15592 0.15592 0.15592 0.15592 0.15592 0.15592 0.15592 0.15543 0.15543 North Orange Co. Community College General Fund 0.07755 0.07755 0.07755 0.07755 0.07755 0.07755 0.07755 0.07755 0.07730 0.07730 Orange County Cemetery District 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 0.00057 Orange County Department Of Education 0.01 579 0.01579 0.01579 0.01579 0.01579 0.01 579 0.01579 0.01579 0.01 574 0.01574 Orange County Flood Control District General 0.02197 0.02197 0.02197 0.02197 0.02197 0.02197 0.02197 0.02197 0.02190 0.02190 Orange County General Fund 0.06849 0.06849 0.06849 0.06849 0.06849 0.06849 0.06849 0.06849 0.06827 0.06827 Orange County Harbors Beaches & Parks CSA 0.01 698 0.01698 0.01698 0.01698 0.01698 0.01 698 0.01698 0.01698 0.01 693 0.01693 Orange County Sanitation District #2 Operating 0.03227 0.03227 0.03227 0.03227 0.03227 0.03227 0.03227 0.03227 0.03469 0.03469 Orange County Transportation Authority 0.00312 0.00312 0.00312 0.00312 0.00312 0.00312 0.00312 0.00312 0.00311 0.00311 Orange County Vector Control 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 0.00124 Orange County Water District 0.00831 0.00831 0.00831 0.00831 0.00831 0.00831 0.00831 0.00831 0.00893 0.00893 Orange County Water District Water Reserve 0.00012 0.0001 2 0.00012 0.00012 0.00012 0.00012 0.00012 0.0001 2 0.00013 0.00013 Anaheim Elementary School Districts 0.04502 0.04461 0.04227 0.02867 0.05848 0.05382 0.05371 0.03363 0.03193 0.02248 Anaheim High School Districts 0.0221 1 0.04259 0.04948 0.02412 0.02620 0.02858 0.02678 0.02745 0.02617 0.02363 North Orange County Community College 0.02927 0.02885 0.03043 0.01704 0.01704 0.01 902 0.01742 0.01758 0.01 662 0.01493 Water District Rate 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00370 0.00370 0.00430 0.00430 Total Direct and Overlapping Rate 1.09990 1.11955 1.12741 1.07531 1.10733 1.10719 1.10385 1.08460 1.08 117 1.06742 (1 ) Excludes rates associated with mello-roos districts. (2) In 1978, California voters passed Proposition 13 which sets the properly tax rate at a 1 % fixed amount. This 1 % is shared by all taxing agencies for which the subject property resides. In 1986, the State Constitution was amended to allow rates over the 1 % base rate for voter approved general obligation debt. Valuations of real properly are frozen at the value of the property in 1975, with an allowable adjustment up to 2% per year for inflation. However, property is assessed to its current value when a change of ownership occurs. New construction, including tenant improvements, is assessed at its current value. Source: Auditor Controller, Orange County 132 See accompanied independent auditors' report CITY OF ANAHEIM Principal Property Tax Payers Current Year and Nine Years Ago (In thousands) Fiscal Year 2018 2009 Percentage Percentage of Total Taxable of Total Taxable Assessed Assessed Assessed Assessed Tax Payer Rank Value Value Rank Value Value Walt Disney World Company 1 79.30% $ 4,310,881 1 77.06% $ 3,746,771 HHC HA Investment II Inc. 2 3.82% 207,587 Anaheim Concourse ILP LLC 3 3.46% 188,151 US REIF MG Madison Park CA LLC 4 2.32% 126,338 Irvine Company LLC 5 2.14% 116,566 Teachers Insurance & Annuity Association 6 1.96% 106,759 Prologis California I LLC 7 1.82% 98,750 Gateway Apartments II LLC 8 1.74% 94,449 Angeli LLC 9 1.73% 93,946 8 1.74% 84,668 OTR 10 1.71% 92,868 Lennar Platinum Trialble 2 4.39% 213,460 Maker Anaheim LLC 3 3.91 % 190,006 Kaiser Foundation Health 4 3.19% 154,884 Anaheim GW II LLC 5 2.40% 116,740 PPC Anaheim Apartments 6 2.23% 108,243 Maguire Properties Syadium Gateway 7 1.75% 84,897 Worldmark Club 9 1.68% 81,600 Anaheim Memorial Hospital 10 1.66% 80,879 Total 100.00% $ 5,436,295 100.00% $ 4,862,148 Source: Finance Department,City ofAnaheim, California Municipal Statistics, Inc. 133 See accompanied independent auditors' report CITY OF ANAHEIM Property Tax Levies and Collections Last Ten Fiscal Years (In thousands) Collected within the Total Collected within the Total Fiscal Ye ar of the Lev}'_ Collections to Date Fiscal Ye ar of the Levy Collections to Date Collections Collections Total in Total Tax in Fiscal Taxes Percentage Subsequent Percentage Increments Percentage Subsequent Percentage 2 2 Ye ar � Amount of Levy Ye ars Amount of Levy Levy Amount of Levy Years Amount of Levy 2018 $ 42,432 $ 41 ,578 97.99% $ 162 $41 ,740 98.37% 2017 40,787 39,710 97.36% 342 40,052 98.20% 2016 40,026 38,832 97.02% 382 39 ,214 97.97% 2015 38,365 37,456 97.63% 414 37,870 98.71% 2014 36,293 35,558 97.97% 460 36 ,018 99.24% 2013 34,813 34, 116 98.00% 384 34,500 99.10% 2012 33,598 32,560 96.91 % 512 33,072 98.43% $ 49,004 $ 28,327 57.81 % $ 28,327 57.81% 2011 33,512 32,517 97.03% 558 33,075 98.70% 49,294 45,906 93.13% $ 282 46, 188 93.70% 2010 33,627 32,490 96.62% 796 33,286 98.99% 49, 119 46,584 94.84% 524 47, 108 95.91% 2009 34,579 33,068 95.63% 1,231 34,299 99.19% 48,432 46,057 95.10% 622 46,679 96.38% 1 Excludes property taxes in-lieu of vehicle license fees 2 Decrease in property tax collection is due to the dissolution of the Redevelopment Agency on February 1, 2012. Property tax increments were received up to January 31 , 2012. Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation. Source: Auditor-Controller, County of Orange 134 See accompanied independent auditors' report CITY OF ANAHEIM Ratios of Outstanding Debt by Ty pe Last Ten Fiscal Years (In thousands, except per capita amount) 2018 201 7 2016 201 5 2014 Governmental Activities Bonds $ 621 ,675 $ 627,589 $ 632,321 $ 640,891 $ 614,757 Certificates of participation 8,880 Notes and loans 28,008 29,577 20,820 21 ,372 50,757 Capital leases 1,550 1,738 2,088 2,346 1,325 Total governmental activities 651 ,233 658,904 655,229 664,609 675,719 Business-Type Activities Bonds 1,214,339 1,235,400 1,12 4,159 1,116, 443 780,553 Certificates of participation 38,000 Notes and loans 16,972 20,523 36,200 57,399 48,271 Total business-type activities 1,231,311 1,255,923 1,1 60,359 1,1 73,842 866,824 Total Government $ 1,882,544 $ 1,914,827 $ 1,815,588 $ 1,838,451 $ 1,542,543 Percentage of Personal Income 19.87% 20.12% 20.18% 21.26% 17.22% Per Capita $ 5,272 $ 5,341 $ 5,070 $ 5,231 $ 4,429 Fiscal Year 2013 201 2 201 1 201 0 2009 Governmental Activities Bonds $ 616,086 $ 61 6,444 $ 821 ,587 $ 810,504 $ 805,068 Certificates of participation 10,020 11,085 12,070 12,990 13,840 Notes and loans 54,877 25,546 34,566 29,094 24,621 Capital leases 1,369 1,694 2,341 2,605 1,235 Total governmental activities 682,352 654,769 870,564 855,193 844,764 Business-Type Activities Bonds 863,987 889,581 908,683 805,925 829,707 Certificates of participation 38,000 38,000 38,000 38,000 38,000 Notes and loans 62,722 24,652 30,519 11,379 12,299 Total business-type activities 964,709 952,233 977,202 855,304 880,006 Total Government $ 1,647,061 $ 1,607,002 $ 1,847,766 $ 1,710,497 $ 1,724,770 Percentage of Personal Income 19.74% 20.95% 24.57% 23.32% 23.96% Per Capita $ 4,758 $ 4,674 $ 5,418 $ 5,088 $ 5,193 Note: Per capita amounts are estimates Certain reclassifications have been made to prior year data to conform to the current presentation. Sources: California State Department of Finance and Finance Department, City of Anaheim US Census Yearly American Community Survey 135 See accompanied independent auditors' report CITY OF ANAHEIM Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (In thousands, except per capita amount) Fiscal Year 2018 2017 2016 2015 2014 Bonds General Obligation $ 700 $ 1,360 $ 1,995 Lease Revenue $ 621,675 $ 627,589 631 ,621 639,531 612,762 621,675 627,589 632,321 640,891 614,757 Less amounts available in debt service fund 150,052 127,581 108,482 88,174 73,500 Total net obligation bonds outstanding $ 471,623 $ 500,008 $ 523,839 $ 552,717 $ 54 1,257 Percentage of Assessed Value of Property 1.09% 1.21% 1.32% 1.44% 1.51% Per capita $ 1,321 $ 1,395 $ 1,463 $ 1,573 $ 1,554 Fiscal Year 2013 2012 2011 2010 2009 Bonds General Obligation $ 2,605 $ 3,185 $ 3,735 $ 4,255 $ 4,750 Lease Revenue 613,481 616,444 609,683 605,252 600,064 Tax Allocation 208,169 200,997 200,254 616,086 619,629 821 ,587 810,504 805,068 Less amounts available in debt service fund 61 ,625 53,398 67,363 69,043 63,560 Total net obligation bonds outstanding $ 554,461 $ 566,231 $ 754,224 $ 741 ,461 $ 741 ,508 Percentage of Assessed Value of Property 1.54% 1.63% 2.19% 2.14% 2. 12% Per capita $ 1,602 $ 1,647 $ 2,212 $ 2,205 $ 2,233 Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements Certain reclassifications have been made to prior year data to conform to current presentation. Source: Finance Department, City of Anaheim 136 See accompanied independent auditors' report CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2018 (In thousands) 2017-1 8 Assessed Valuation $ 43,277,778 _ Outstandin!:I DIRECT TAX AND ASSESSMENT DEBT: $ Cny of Anaheim DIRECT GENERAL FUND DEBT: City of Anaheim General Fund Obligations 651 ,233 TOTAL GROSS DIRECT DEBT 651 ,233 Less: City of Anaheim Public Financing Authority (100% self-supporting) 621 ,675 City of Anaheim various revenue funds (100% self-supporting) 29,558 TOTAL NET DIRECT DEBT -$ -- City's Share Total Debt of Debt 6/30/2018 % A1:mlicable (l) 6/30/2018 OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District $ 60,600 1.577 % $ 956 North Orange Joint Community College District 206,054 27.453 56,568 Rancho Santiago Community College District 246,734 12.451 30,721 Rancho Santiago Community College District School Facilities Improvement District No 1 121 ,395 0.384 466 Anaheim Union High School District 200,529 67.590 135,538 Fullerton Joint Union High School District 169,665 0.249 422 Garden Grove Unified School District 328,540 0.576 1,892 Orange Unified School District 188,000 25.958 48,801 Placentia - Yorba Linda Unified School District 236,975 19.244 45,603 Anaheim School District 168,236 99.138 166,786 Magnolia School District 21 ,793 67.359 14,680 Other School Districts 150,086 Va rious 24,31 6 City of Anaheim Community Facilities Districts 66,960 100.000 66,960 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 2,165,567 593,709 OVERLAPPING GENERAL FUND DEBT: Orange County General Fund Obligations 210,347 7.761 16,325 Orange County Pension Obligation Bonds 383,564 7.761 29,768 Orange County Board of Education Certificates of Participation 13,990 7.761 1,086 North Orange County Regional Occupation Program Certificates of Participation 9,610 28.265 2,71 6 Orange Unified School District Certificates of Participation 31 ,578 25.958 8,197 Orange Unified School District Benefit Obligations 78,765 25.958 20,446 Placentia-Yorba Linda Unified School District Certificates of Participation 94 ,175 19.244 18, 123 Anaheim Union High School District Certificates of Participation 68,605 67.590 26,093 Fullerton Joint Union High School District Certificates of Participation 19,295 0.249 48 Fullerton School District Certificates of Participation 4,810 0.166 8 Magnolia School District Certificates of Participation 16,257 67.359 10,951 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT 930,996 133,761 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): City of Anaheim Tax Allocation Bonds 189,870 .0005-100 % 156,463 TOTAL OVERLAPPING TAX INCREMENT DEBT 156,463 TOTAL GROSS OVERLAPPING DEBT 883,933 TOTAL NET OVERLAPPING DEBT 883,933 2 GROSS COMBINED TOTAL DEBT $ 1,535, 166 ( ) $ 883,933 NET COMBINED TOTAL DEBT 137 (continued) CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of June 30, 2018 (In thousands) (continued) (1 ) Percentage of overlapping agency's assessed valuation located within boundaries of the city. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non-bonded capital lease obligations. Ratios to 2017-18 Assessed Valuation: Direct Debt ($0) 0.00% Total Overlapping Tax and Assessment Debt 1.37% Ratios to Adjusted Assessed Valuation: Gross Combined Direct Debt ($651,233) 1.50% Net Combined Direct Debt ($0) 0.00% Gross Combined Total Debt 3.55% Net Combined Total Debt 2.04% Ratios to Redevelopment Increment Valuation ($5 906 608) Total Overlapping Tax Increment Debt 2.65% Source: California Municipal Statistics, Inc. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlap ping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repay ing the debt, of each overlapping government. 138 See accompanied independent auditors' report CITY OF ANAHEIM Legal Debt Margin Last Ten Fiscal Years (In thousands) Fiscal Year 2018 2017 2016 2015 2014 Debt limit $ 1,622,917 $ 1,551,12 6 $ 1,493,069 $ 1,440,087 $ 1,364,466 Total net debt applicable to limit (700) (1 ,360) (1 ,995) Legal debt margin $ 1,622,917 $ 1,551,12 6 $ 1,492,369 $ 1,438,727 $ 1,362,471 Total net debt applicable to the limit as a percentage of debt limit 0.00% 0.00% 0.05% 0.09% 0.15% Legal Debt Margin Assessed value $ 43,277,778 $ 41 ,363,369 $ 39,815, 177 $ 38,402,322 $ 36,385,768 Debt limit (3.75% of total assessed value)1 $ 1,622,917 $ 1,551,12 6 $ 1,493,069 $ 1,440,087 $ 1,364,466 Fiscal Year 2013 2012 2011 2010 2009 Debt limit $ 1,346,125 $ 1,300,351 $ 1,288,982 $ 1,296,912 $ 1,312, 118 Total net debt applicable to limit (2,605) (3,1 85) (3,735) (4,255) (4,750) Legal debt margin $ 1,343,520 $1,297,166 $1,285,247 $ 1,292,657 $ 1,307,368 Total net debt applicable to the limit as a percentage of debt limit 0.19% 0.24% 0.29% 0.33% 0.36% Legal Debt Margin Assessed value $ 35,896,658 $ 34,676,022 $ 34,372,844 $ 34,584,323 $ 34,989,820 Debt limit (3.75% of total assessed value)1 $ 1,346, 125 $ 1,300,351 $ 1,288,982 $ 1,296,912 $ 1,312, 118 Note: 1 California Government Code sets the debt limit at 15%. The Code section was enacted when assessed valuation were based on 25% of full market value. This has since changed to 100% of full market value. Thus the limit shown is 3.75% (one-fourth the limit of 15%). By law, the general obligation debt su bject to the limitation rnay be offset by amounts set aside for repaying general obligation bonds. Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation. Source: Finance Department,City of Anaheim 139 See accompanied independent auditors' report CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (In thousands) (continued) Electric Utility Revenue Bonds Less Net Fiscal Electric Operating Available Debt Service Year Revenue Exi>enses Revenue Princii>al Interest Total Coverage 2018 $ 446, 156 $ 330,376 $ 115,780 $ 21,305 $ 30,613 $ 51,918 2.2301 2017 435,805 338,888 96,917 18,950 28,948 47,898 2.0234 2016 433,744 319, 169 114,575 14,040 27,995 42,035 2.7257 2015 458,211 341,206 117,005 12,950 27,878 40,828 2.8658 2014 430,782 347,290 83,492 11,590 30,039 41,629 2.0056 2013 453,949 349,835 104,114 18,995 33,335 52,330 1.9896 2012 407,787 314,231 93,556 18, 175 34, 104 52,279 1.7896 2011 391 ,218 309,274 81,944 17,825 30,825 48,650 1.6844 2010 390,364 309,112 81,252 15,995 31,788 47,783 1.7004 2009 378,916 300,269 78,647 15,370 28,798 44, 168 1.7806 1 Operating expenses includes transfer for right of way and excludes amortization and depreciation. 140 See accompanied independent auditors' report CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fiscal Years (In thousands) Water Utility Revenue Bonds Less Net Fiscal Water Operating Available Debt Service Year Revenue Exi>enses Revenue Princii>al Interest Total Coverage 2018 $ 80, 131 $ 59,975 $ 20, 156 $ 3,370 $ 7,638 $ 11,008 1.8310 2017 71 ,790 56,487 15,303 3,380 6,815 10,195 1.5010 2016 61 ,721 46,383 15,338 5,885 1,775 7,660 2.0023 2015 65,518 52,883 12,635 960 4,178 5, 138 2.4591 2014 66,979 50,046 16,933 920 4,217 5, 137 3.2963 2013 61 ,849 44,838 17,011 950 4,255 5,205 3.2682 2012 59,330 44,615 14,715 915 4,292 5,207 2.8260 2011 56,935 45,293 11,642 880 3,275 4,155 2.8019 2010 57,787 45,231 12,556 1,490 2,544 4,034 3.1 125 2009 53,039 40,123 12,916 1,435 1,967 3,402 3.7966 1 Operating expenses include transfer and excludes amortization and depreciation. Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Source: Finance Department,City of Anaheim Sanitation Revenue Bonds Less Net Fiscal Wastewater Operating Available Debt Service 2 3 Year Revenue Exoeases Revenue Principal Interest Total Coverage 2018 $ 13,963 $ 6,779 $ 7,184 $ 1,095 $ 1,902 $ 2,997 2.3971 2017 13,771 6,252 7,519 1,045 1,954 2,999 2.5072 2016 13,291 5,733 7,558 1,005 1,994 2,999 2.5202 2015 13,373 6, 103 7,270 955 2,042 2,997 2.4258 2014 12,572 5,594 6,978 920 2,079 2,999 2.3268 2013 12,106 5,477 6,629 880 2, 118 2,998 2.21 11 2012 11,933 4,832 7,101 835 2, 161 2,996 2.3702 2011 11,813 4,030 7,783 805 2, 193 2,998 2.5961 2010 11,773 5,452 6,321 775 2,224 2,999 2.1077 2009 10,913 5, 176 5,737 2,224 2,224 2.5796 2 Amounts based on the notes to the basic financial statement, segment reporting 3 Operating expenses excludes amortization and depreciation. Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Source: Finance Department,City of Anaheim 141 (continued) CITY OF ANAHEIM Demographic and Economic Statistics Last Ten Fiscal Years Personal Per Education Orange Income Capita Level in County Fiscal (thousands Personal Median Years of School Unemployment Year Population (1l of dollars} Income � Schooling Enrollment Rate (2) 2018 357,084 $9,476,295 26,538 33.7 12.2 63,727 3.30% 2017 358,546 9,515,094 26,538 33.6 12.2 64,870 3.80% 2016 358,136 8,998,883 25, 127 33.6 12.2 65,692 4.40% 2015 351 ,433 8,649,469 24,612 33.6 12.2 66,439 4.10% 2014 348,305 8,955,966 25,713 33.8 12.2 66,982 6.20% 2013 346,161 8,344,211 24, 105 32.8 12.2 67,014 6.10% 2012 343,793 7,669,678 22,309 32.4 12.2 67,760 7.90% 201 1 341 ,034 7,519,459 22,049 32.1 12.2 67,884 9.20% 2010 336,208 7,333,705 21,813 32.1 12.2 68,331 9.50% 2009 332,120 7,198,701 21,675 31.5 12.2 68,890 9.30% (1 ) Population and Median Age were updated to reflect Census 201 0 counts. (2) Per capita income for FY 2018 is estimated. Data not readily available. Sources: California State Department of Finance Anaheim City Superintendent of Schools State of California, Employment Development Department State Department of Commerce and Labor State Department of Education US Census Yearly American Community Survey 142 See accompanied independent auditors' report CITY OF ANAHEIM Principal Employers Current Year and Nine Years Ago Fiscal Year 2018 2009 Percentage Percentage of Total of Total City City Employer Rank Employees Employment Rank Employees Employment Disneyland Resort 1 31, 160 19.0% 1 20,050 12.6% Kaiser Foundation Hospital 2 6, 185 3.8% 2 3,660 2.3% Northgate Gonzalez Supermarkets 3 2,000 1.2% 4 2,000 1.3% Anaheim Regional Medical Center 4 1,200 0.7% 5 1,18 5 0.7% Hilton Anaheim 5 1,000 0.6% 8 920 0.6% Angels Baseball 6 930 0.6% Anaheim Global Medical Center 7 900 0.5% L-3 Communications 8 860 0.5% Carrington Mortgage Services LLC (CMS) 9 800 0.5% G4S Secure Solutions 10 800 0.5% St. Joseph Heritage Healthcare 10 800 0.5% Airport Bus 3 2,000 1.3% West Anaheim Medical Center 9 774 0.5% Honda Center 7 1,000 0.6% AT &T 6 1,000 0.6% Alstyle Apparel 10 750 0.5% Total 46,635 28.4% 33,339 21.0% Source: Inside Prospects Database 143 See accompanied independent auditors' report CITY OF ANAHEIM Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Fiscal Year 2018 2017 2016 2015 2014 2013 2012 201 1 2010 2009 Function/Program City Council 9 9 6 7 7 7 7 7 7 7 City Administration 19 19 19 20 20 20 21 21 24 24 City Attorney 33 33 33 33 31 30 30 30 35 35 City Clerk 8 8 8 7 7 7 6 6 7 7 Human Resources 40 40 39 37 37 38 36 36 40 40 Finance 55 55 54 44 44 44 46 47 52 53 Police 590 576 569 561 549 536 530 554 610 610 Fire & Rescue 276 276 274 267 262 262 275 277 289 289 Community & Economic Development 73 73 73 71 68 78 102 105 106 109 Planning & Building 76 76 76 75 71 69 73 75 93 94 Public Works 236 236 235 237 236 234 235 252 252 252 Community Services 93 92 92 91 87 87 115 123 180 183 Public Utilities 352 352 352 354 353 352 355 377 377 377 Convention, Sports & Entertainment 85 85 85 85 84 83 91 91 91 91 Total 1,945 1,930 1,915 1,889 1,856 1,847 1,922 2,001 2,163 _bill 1 Increase is due to reorganization of the Citywide Geographic Information System (GIS) and Police Information System into Finance. Source: City of Anaheim (continued) 144 CITY OF ANAHEIM Operating Indicators by Function Last Ten Fiscal Years 2018 2017 2016 2015 2014 2013 201 2 201 1 2010 2009 Function/Program Police Department Number of calls for service 200,934 200,695 208,710 195,305 186,042 186,461 189,751 195,587 185,934 191,037 Number of 911 calls received 146,770 150,555 155,371 158,447 145,813 182,856 179,313 165,698 140,529 129,998 Number of Part I Crimes per 100,000 population 2,925 2,917 3,279 2,950 2,883 3,326 3,057 2,886 2,857 2,764 Number of Arrest 11,865 11,010 11,604 11,405 11,846 11,617 11,494 13,345 17,650 15,951 Number of Field Reports processed by Records Bureau 45,402 41,208 41 ,655 39 ,191 38,362 39,066 33,050 35,807 35,256 37,999 Number of traffic collisions 4,757 4,81 7 5,179 4,833 4,686 4,414 4,044 4,046 4,027 4,251 Number of Hours of Vo lunteer service 19,270 21,13 2 21 ,647 22,885 24, 124 23,470 25,309 20,335 18,038 16,201 Fire & Rescue Department Fire & Rescue responses 1,057 1,035 1,082 952 885 902 923 983 1,275 1,016 False alarm responses 1,803 1,903 1,848 3,910 1,735 1,424 1,390 1,487 1,467 1,503 Mutual aid responses 4,069 5,450 5,506 4,322 3,001 2,860 2,744 2,707 2,560 2,532 Medical responses 29,385 28,437 28,858 27, 158 24,912 24,735 23,061 22,202 24,045 21,553 Hazardous condition responses 190 222 211 213 21 1 207 201 199 207 224 Public Works Centerline miles of arterial highway pavement improved 1.29 1.22 4.7 3.55 7.13 5.9 8.7 5.8 9.0 8.1 Square feet of deteriorated pavement replaced 2,960,600 4,017,828 2,487,188 2, 101 ,231 4,345,480 4,029,806 2,977,482 4,274,463 820,000 780,500 Square feet of deteriorated pavement slurry sealed 4,704,400 5,519,982 1,941 ,187 7,253,633 4,422, 148 2,850,939 4,208,194 4,167,569 1,975,000 2,532,000 Number of traffic intersections maintained 360 335 333 321 327 318 318 319 318 318 Number of traffic control hubs maintained 18 18 18 18 19 18 18 18 18 17 Square feet of deteriorated sidewalk replaced 162,774 102,305 232,922 153,531 96,399 77,590 74,780 62,940 60,000 50,500 Linear feet of damaged curb/gutter replaced 65,569 6,797 33,373 30, 152 29,996 25, 187 27,661 24,755 11,500 12,500 Square feet of medians/parkways maintained 6, 101,098 6,063,299 6,063,299 5,721 ,764 5,644,799 5,644,81 8 5,51 1 ,065 5,460,655 5,400,000 5,350,000 Square feet of landscape maintained in the Anaheim Resort 1,605,958 1,554,886 1,554,886 1,542,442 1,542,442 1,430,486 1,430,486 1,430,486 1,430,486 1,419,286 Square feet of hardscape maintained in the Anaheim Resort 991 ,350 991 ,360 991 ,360 991 ,370 991 ,360 858,828 858,828 1,001 ,743 858,828 858,828 Number of vehicles maintained 1,050 1,036 1,025 1,097 1,144 1,106 1,152 1,162 1,331 1,331 Number of vehicles per mechanic 52 49 49 57 58 58 50 47 50 55 Square feet of interior space maintained 2,399,337 2,379, 100 2,379,100 2,379,100 2,700,000 2,362,992 2,176,265 2, 1 76,265 2,176,265 2, 176,265 Square feet of exterior space maintained 37,698,184 37,662,184 37,662,184 37,662, 184 37,655,278 37,645,278 39,138,187 39 ,138,187 39,138,187 Number of facility square feet (interior) per worker 126,281 125,215 1,459,000 1,459,000 150,000 139,000 120,904 114,540 103,631 103,631 Number of construction projects 180 80 120 100 165 120 100 136 130 130 Number of permit inspections 900 650 510 429 486 380 404 355 800 800 Parks Number of park acres maintained per full-time equivalent employee 77 77 77 76 75 75 75 75 12 12 Number of sports fields prepared 66 66 66 66 66 66 66 66 66 66 Cost per acre of parks maintained. $9,497 $9,221 $8,952 $8,691 $8,438 $8, 192 $8,031 $8,333 $9,651 $9,950 Cost per sports field maintained. $4,934 $4,791 $4,655 $4 ,519 $4,387 $4,260 $4 ,133 $4,261 $5,134 $5, 134 Golf Courses Cost per acre of golf course maintained $1 1 ,147 $10,434 $10,076 $9,455 $9,931 $9,595 $9,010 $9,569 $11,327 $10,674 Number of rounds played 102,498 102,542 102,234 110,855 117,652 118,879 120,675 116,287 124,404 137,948 Number of acres maintained 200 200 200 200 200 200 200 200 200 200 145 (continued) CITY OF ANAHEIM Operating Indicators by Function Last Ten Fiscal Years (continued) Fiscal Year 2018 2017 2016 2015 2014 2013 201 2 201 1 2010 2009 Function/Program City Libraries Hours open 17,065 16,023 15,461 16,929 16,820 16,243 15,530 15,364 18,944 19,290 Total circulation of materials, including eBooks 1,026,897 1,117,096 1,1 69,829 1 ,257, 127 1,397,239 1,520,841 1,635,627 1 ,700, 104 1,655,922 1,721 ,779 Patron assistance (reference, information, computer) 207,724 226,429 185,436 207,305 240,287 291 ,960 347,085 397,287 530,364 537,807 Patron visits 1,460,551 981 ,637 1,098,146 1,221 ,982 1,264,972 1,317,689 1,321 ,309 1,403,995 1,572,138 1,752,838 Library cardholders 233,312 230,951 217,661 201 ,194 186,891 158,396 157,278 156,444 149,501 138,826 Pragrams offered 4,770 4,507 3,900 3,800 3,397 3,097 3,235 3,927 3,991 4,777 Program attendance 144,660 142,098 125,609 117,226 111,380 102,728 101 ,696 124,401 146,357 158,669 Hours of public internet usage 151,709 144,364 150,712 184,851 209,953 237,340 220,930 209,673 246,676 277,097 Community Services Programs Number of youth program participants 197,228 181,697 183,967 177,746 126,429 136,345 129,215 110,013 134,611 146,381 Number of youth program participants in recreation classes 7,957 8,500 13,026 10, 136 13,897 10,906 9,213 10,231 10,125 16,332 Number of adult program sports teams 588 679 725 750 791 841 845 908 885 875 Number of park ranger contacts 641 ,320 382,310 278,599 327,893 263,765 233,308 275,014 232, 132 187,000 208, 176 Public Utilities Department Electric Utility: Number of meters 119,564 118,248 117,593 115,682 115,474 115,41 8 115,1 13 114,662 113,434 112,548 Megawatt-hours - sales 3,217,353 3,298,340 3,229,569 3,725,386 4,065,552 3,312,01 8 2,966,1 19 2,976,014 3,344,188 3,208, 123 Megawatt-hours - purchased power 2,985,962 2,990,931 3,050,657 3,417,459 3,751 ,220 3,029,766 2,707,466 2,737, 174 3,085,358 2,836,962 Megawatt-hours - owned generation 231,391 398,068 318,921 371 ,657 467,348 410,601 430,323 431 ,027 410,784 435,835 Water Utility: Number of meters 64,001 63,489 63,775 63 ,145 63,002 62,917 62,793 62,717 62,607 62,456 Millions of gallons sold 19,308 17,422 16,607 19,804 20,743 20,464 19,672 19,526 20,492 22,238 Millions of gallons purchased from Metropolitan Water 8,767 4,170 4,373 4,717 5,286 6,878 7,023 7,398 8,054 6,614 Millions of gallons pumped from water system wells 10,742 14,21 7 13,213 15, 180 16,749 14,659 14, 100 13,399 14,669 17,034 Anaheim Convention Center Number of events serviced 171 179 181 197 221 263 222 200 232 310 Number of attendees 960,000 925,000 954,000 986,000 1,020,000 1,070,000 1,059,000 935,000 944,000 917,000 Percentage of occupancy 68.0% 72.0% 59.0% 63.0% 63.0% 58.0% 62.0% 56.0% 68.0% 56.0% ARTIC Management1 Hours Open 7,118 7,118 Daily Ridership 2 Non-event day 4,364 Event day 5,199 1 The ARTIC management started operation on December 6, 2014. 2 Ridership survey is performed every two years. Sources: Various City departments 146 See accompanied independent auditors' report CITY OF ANAHEIM Capital Assets Statistics by Function Last Ten Fiscal Years 2018 2017 2016 2015 2014 2013 2012 201 1 2010 2009 Function/Program Police Department Police Faci lities 10 10 10 10 10 10 10 10 10 10 Motorized Equipment 256 260 260 250 247 247 242 242 250 266 Police Helicopters 3 3 2 2 2 3 3 3 4 4 Shooting Range Communication/Radio Tower Fixed Wing Fire & Rescue Department Fire & Rescue stations 11 11 11 11 11 11 11 11 11 11 Training center Fire & Rescue trucks, engines, and other vehicles 76 75 75 74 74 79 74 69 74 74 Public Works Streets (center lane miles) 584 585 584 584 578 578 578 578 588 633 Traffic signals 360 335 321 321 321 318 318 318 306 318 Sewers (miles) 578.43 578.17 578.13 577.60 575.52 575.52 573.63 570.44 569.60 568.30 Storm Drains (miles) 151.82 151 .82 151.30 151.30 151 .30 151.30 151 .24 151.24 151.24 148.00 Parks Community parks 11 11 11 11 11 11 11 11 11 11 Mini parks 15 15 15 9 7 7 7 7 7 7 Neighborhood parks 23 23 23 21 21 21 21 21 21 21 Special use parks 9 8 8 7 7 7 7 7 6 6 Golf Courses 2 2 2 2 2 2 2 2 2 2 City Libraries Branch libraries 8 8 8 8 7 7 7 7 7 7 Book mobiles 1 1 1 1 1 1 1 1 2 2 Museums/Historic properties 5 5 5 5 5 5 5 5 5 3 147 See accompanied independent auditors' report CITY OF ANAHEIM Capital Assets Statistics by Function Last Ten Fiscal Years (continued) Fiscal Year 2018 2017 2016 2015 2014 2013 2012 201 1 2010 2009 Function/Program Public Utilities Department Electric Utility: Transmission, 69 kV, circuit miles 90 90 88 87 86 87 86 90 80 80 Distribution, 12 kV and lower, circuit miles Overhead 401 402 408 414 420 426 428 440 446 446 Underground 709 708 693 680 666 662 656 658 61 7 625 Water Utility: Active Wells 15 18 17 18 17 18 18 18 18 18 Reservoirs 13 14 14 14 14 14 14 14 13 13 Water Mains (miles) 754 753 753 753 753 753 753 752 753 750 Fire & Rescue Hydrants 7,835 7,842 7,832 7,840 7,832 7,816 7,812 7,802 7,805 7,751 Anaheim Convention Center Square footage available 1,370,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,130,000 1,1 30,000 1,130,000 Number of exhibit halls 7 5 5 5 5 5 5 5 5 5 ARTIC Management1 67,000 67,000 Terminal square footage 1,059 1,059 Parking stalls 18 18 Bus bays 24 24 Bike lockers 1 The ARTIC management started operation on December 6, 2014. Source: Various City Departments 148 See accompanied independent auditors' report er l m C.tth.�t if',furr,Hit��n CITY OF ANAHEIM Summary of Pension Obligation Funding Progress (in thousands) June 30, 2017 Market Value of Accrued Unfunded Funded Annual UL as a% Actuarial Valuation Date Assets (MVA) Liability Liability Ratio Covered Payroll of Payroll Miscellaneous $ 957,141 $ 1,361,536 $ 404,395 70.3% $ 120,748 334.9% Police Safety 534,056 749,345 215,289 71 .3% 49,413 435.7% Fire Safety 302,285 423,670 121 ,385 71 .3% 22,593 537.3% Total $ 1,793,482 $ 2,534,55 1 $ 741 ,069 70.8% $ 192,754 384.5% June 30, 2016 Market Value of Accrued Unfunded Funded Annual UL as a% Actuarial Valuation Date Assets (MVA) Liability Liability Ratio Covered Payroll of Payroll Miscellaneous $ 881 ,703 $ 1,295,862 $ 414,159 68.0% $ 117, 138 353.6% Police Safety 490,402 708,804 218,402 69.2% 46,888 465.8% Fire Safety 281,087 403,743 122,656 69.6% 22,027 556.8% Total $ 1 ,653, 192 $ 2,408,409 $ 755,217 68.6% $ 186,053 405.9% June 30, 2015 Market Value of Accrued Unfunded Funded Annual UL as a% Actuarial Valuation Date Assets (MVA) Liability Liability Ratio Covered Payroll of Payroll Miscellaneous $ 896,992 $ 1,217, 106 $ 320,114 73.7% $ 108,154 296.0% Police Safety 498,226 666,459 168,233 74.8% 45,125 372.8% Fire Safety 289, 122 387,567 98,445 74.6% 20,971 469.4% Total $ 1,684,340 $ 2,271,132 $ 586,792 74.2% $ 174,250 336.8% 149 See accompanied Independent auditors' report CITY OF ANAHEIM Summary of Other Postemployment Benefits (OPEB) Funding Progress (Amounts in thousands) UL as a % of Annual Covered Actuarial Value of Accrued Unfunded Funded Covered Employee Actuarial Valuation Date Assets (AVA) Liability Liability -AVA Ratios -AVA Payroll Payroll July 1, 2017 $ 89,953 $ 273,950 $ 183,997 32.8% $ 203,473 90.4% July 1, 2015 79,787 271 ,243 191,456 29.4% 178,721 107.1% July 1, 2013 74,013 237,202 163,189 31.2% 167,871 97.2% 150 See accompanied independent auditors' report C ITV OF ANAHEIM Legend CITY HALL * 200 S. ANAHEIM BLVD ... FIRE STATIONS * POLICE STATIONS ti LIBRARIES � CITY F ACI LITI ES -f" HELIPORT PARKS 1. HANSEN PARK 13. SAGE PARK 25. LINCOLN PARK 37. 0AK PARK 49. ENERGY FIELD 1300 S. Knott St 1313 Lido Pl 1440 E. Lincoln Ave 6400 E. Nohl Ranch Rd 1625 S. Ninth St 2. TWILA REID PARK 14. STODDARD PARK 26. EDISON PARK 38. YORBA PARK 50. MAGNOLIA PARK 3100 W. Orange Ave 901 S. Ninth St 1145 Baxter St 7600 E. La Palma Ave 1515 Wright Cir 3. SCHWEITZER PARK 15. MANZANITA PARK 27. BOYSEN PARK 39. OAK CANYON NATURE CENTER 51 . FRIENDSHIP PLAZA PARK 238 S. Bel Air St 1260 Riviera St 951 State College Blvd 6700 Walnut Canyon Rd 200 S. Anaheim Blvd 4. MAXWELL PARK 16. LA PALMA PARK & STADIUM 28. JUAREZ PARK 52. ANAHEIM COVES 40. SYCAMORE PARK 962 S. Rio Vista St 2660 W. Orange Ave 1151 La Palma Park Way 841 S. Sunkist St 8268 Monte Vista Rd 53. PAUL REVERE PARK 5. PETER MARSHALL PARK 17. PEARSON PARK 29. PIONEER PARK 41 . CANYON RIM PARK 160 Guinida Ln 801 N. Magnolia Ave 400 N. Harbor Blvd 2565 E. Underhill Ave 7305 E. Canyon Rim Rd 54. MIRALOMA PARK 6. BROOKHURST COMMUNITY PARK 18. LITILEPEOPLES PARK 30. RIO VISTA PARK 42. RONALD REAGAN PARK 2600 E. Miraloma Way 2271 W. Cresent Ave 220 W. Elm St 201 N. Park Vista St 945 S.Weir Canyon Rd 19. JULIANNA PARK 31. OLIVE HILLS PARK 55. CIRCLE PARK 7. JOHN MARSHALL PARK 43. ROOSEVELT PARK 924 S.Park Cir 2066 Falmouth Ave 309 E. Juliana St 4200 Nohl Ranch Rd 8160 E.Bauer Rd 56. CORAL TREE PARK 8. MODJESKA PARK 20. GEORGE WASHINGTON PARK 32. RIVERDALE PARK 44. ROSS PARK 1711 S. Betmor Ln 1331 S. Nutwood St 250 E. Cypress St 4545 E. Riverdale Ave 1280 W. Santa Ana St 57. ANAHEIM WETLANDS PARK 21 . COLONY SQUARE 33. PERALTA CANYON PARK 8500 E. La Palma Ave 9. CLARA BARTON PARK 115 N. Pinney Dr 45. COTIONWOOD PARK 1926 Clearbrook Ln 210 E. Lincoln Ave 853 W. Cottonwood Cir 58. DELPHI PARK 10. CHAPARRAL PARK 22. WALNUT GROVE PARK 34. PELANCONI PARK 1211 N. MAGNOLIA AVE 905 S. Anaheim Blvd 46. DEER CANYON PARK 1770 E. Broadway 222 S. Ave nida Margarita Mohler & Santa Ana Rd 23. CITRUS PARK 11. WILLOW PARK 104 S. Atc hison St 35. IMPERIAL PARK 47. FOUNDERS PARK 1625 W. Crone Ave 450 S. Imperial Hwy 400 N. West St 24. PONDEROSA PARK 12. PALM LANE PARK 2100 S. Hasler St 36. EUCALYPTUS PARK 48. COLONY PARK 1595 Palais Rd 100 N. Quintana Dr 501 E. Water St Date: 10/9/2018 4744 151 (This page left blank intentionally) 152 APPENDIX B SUMMARY OF BOND DOCUMENTS The following summary discussion of selected provisions of the Indenture and the Lease Agreement is made subject to all of the provisions of the Indenture and the Lease Agreement. This summary discussion does not purport to be a complete statement of said provisions and prospective purchasers of the 2019 Bonds are referred to the complete text of the Indenture and the Lease Agreement, copies of which are available upon request sent to the Trustee. DEFINITIONS "Account " means (a) when used with reference to the Debt Service Fund and a Series of Bonds, the account within the Debt Service Fund established for such Series of Bonds in accordance with the provisions of the Indenture, and (b) when used with reference to the Reserve Fund and a Series of Bonds, the account within the Reserve Fund established for such Series of Bonds in accordance with the provisions of the Indenture. "Accreted Va lue" means, with respect to each of the Capital Appreciation Bonds, the original principal amount of such Bond, plus the interest accrued and compounded thereon as of the most recent Interest Payment Date which will be the then current date if an Interest Payment Date. "Administrative and Operating Costs" means all amounts to be paid by the Authority with respect to the Leased Premises (including any amounts that the Authority may determine to pay under the Master Parking Ground Leases), under the Indenture and the Lease Agreement, including without limitation amounts due to the Trustee, depositories, the 1997 Bond Insurer, the Series 2019 A Bond Insurer, Paying Agents, providers of continuing disclosure services, providers of arbitrage rebate calculation services and insurance deductibles. "Administrative Fund " means the fund so designated and established pursuant to the Indenture. "Affiliate " means, with respect to Disney or The Walt Disney Company, a person, sole proprietorship, limited liability company, partnership, joint venture, trust, unincorporated organization, association, corporation, institution or entity, who directly or indirectly controls, is controlled by, or is under common control with Disney or The Walt Disney Company. For purposes of this definition, "control " means the possession, directly or indirectly, of the power to vote 50% or more of the ownership interest of securities having ordinary voting power for the entity or possession of the power or authority to generally direct the management and policies of the entity. "AMC " means the Anaheim Municipal Code. "Authority " means the Anaheim Public Financing Authority. "Authorized Denomination" means, with respect to the Current Interest Bonds, $5,000 principal amount and integral multiples thereof, and, with respect to the Capital Appreciation Bonds, $5,000 Accreted Value at maturity and integral multiples thereof, and unless otherwise specified with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, $5,000 or integral multiples thereof. "Authorized AuthorityRep resentative " means the person or persons at the time designated to act on behalf of the Authority by a written certificate signed by the Chairman or Executive Director of the Authority, as furnished to the Trustee, containing the specimen signature of each such person. B-1 "Authorized City Representative " means the Mayor, the City Manager, the Treasurer or the Finance Director of the City and such other person or persons at the time designated to act on behalf of the City by a written certificate signed by an Authorized City Representative, furnished to the Trustee, containing the specimen signature of each such person. "Authorized Disney Representative " means the Treasurer, Chief Financial Officer and the Vice President-Corporate Finance of The Walt Disney Company, and any other person or persons at the time designated to act on behalf of The Walt Disney Company by a written certificate signed by the Treasurer or Chief Financial Officer of The Walt Disney Company, furnished to the Trustee, containing the specimen signature of each such person. "Baseline Index " means the annual percentage change in the Los Angeles-Anaheim-Riverside, California Region Consumer Price Index for Urban Consumers for all Items published by the U. S. Department of Labor, Bureau of Labor Statistics, or, in the event such index is no longer published, such successor index published by the U. S. Department of Labor, Bureau of Labor Statistics as most closely approximates the consumer price index for the Los Angeles-Anaheim-Riverside region. "Baseline Me asurement Revenues" means the TOT, sales taxes and property taxes established for the Disney Property for the Baseline Year, the total amount of which was $11,460,000 which represented $10,467,000 as the aggregate baseline amount for TOT and sales tax and $993,000 as the baseline amount of property tax. "Baseline Ye ar " means the City's fiscalyear from July 1, 1994 through June 30, 1995. "Bond " or "Bonds" means the Series 2019 A Bonds, the Series 2019 B Bonds, the 2007 Series A Bonds, the 2007 Series B Bonds, the Unrefunded Series 1997A Bonds, the Series 1997C Bonds and any other Bond or all of the Bonds, as the case may be, of the Authority authorized and issued by the Authority, authenticated by the Trustee and delivered pursuant to the Indenture. "Bond Counsel " means any attorney at law or firm of attorneys of nationally recognized standing in matters pertaining to the exclusion of interest from gross income for federal income tax purposes on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America. "Bond Payment Date " means any date on which any Principal Installment of, or premium or interest on, any Outstanding Bond will be due and payable whether at maturity or on a scheduled Interest Payment Date or upon redemption, including redemption from Sinking Fund Installments, in each case in accordance with the terms of the Bonds and the Indenture. "Bond Register " means the registration books for the ownership of Bonds maintained by the Bond Registrar pursuant to the Indenture. "Bond Registrar " means the Trustee. "Business Day " means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the State of New York or in any state in which the principal officeof the Trustee is located are closed or a day on which the New York Stock Exchange is closed. "Capital Appreciation Bonds " means those 1997 Series C Bonds with a stated maturity date of 2017 through and including 2037, for which interest compounds semiannually but is not paid until maturity. B-2 "Certificate, " "Statement," "Request, " "Requisition " or "Order " of the Authority means, respectively, a written certificate, statement, request, requisition or order signed in the name of the Authority by the Executive Director or any member of the Board of Directors of the Authority or any other Authorized Authority 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 will be read and construed as a single instrument. "Certificate, " "Statement," "Request, " "Requisition " or "Order " of the City means, respectively, a written certificate, statement, request, requisition or order signed in the name of the City by the City's Finance Director or such other person as may be designated in a resolution as authorized to sign for the City. 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 will be read and construed as a single instrument. "Certificate, " "Statement," "Request, " "Requisition " or "Order " of Disney means, respectively, a written certificate, statement, request, requisition or order signed in the name of The Walt Disney Company by the Treasurer, Chief Financial Officer or the Vice President-Corporate Finance of The Walt Disney Company or the Development Manager, Finance and Administration of Walt Disney Imagineering, or such other person as may be designated in a resolution as authorized to sign for The Walt Disney Company. 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 will be read and construed as a single instrument. "Change in Use" means any action taken by the City or the Authority that is determined by the Authority upon advice of nationally recognized bond counsel to result in the private business tests or private loan tests of Section 141 of the Code being met with respect to the Leased Premises. "City " means the City of Anaheim, a municipal corporation of the State of California exercising municipal home rule powers pursuant to a charter approved by the State of California. "City Managed Public Improvements" means the infrastructure improvements generally including, without limitation, certain electrical undergrounding, fire, paramedic and police equipment and improvements, landscaping, park and recreation improvements, storm drain improvements, improvements to streets and intersections, water main improvements, wastewater and sewer improvements, all as more specifically described in the Indenture. "City Supplemental Subaccount " means the subaccount so designated and established within the Disney Managed Public Improvements Account of the Construction Fund pursuant to the Indenture. "Closing Date " means, with respect to each Series of the Bonds, the date of initial delivery thereof. "Code " means the Internal Revenue Code of 1986, as amended from time-to-time. Unless the context clearly requires otherwise, each reference to a section of the Code in the Indenture will be deemed to include the United States Treasury Regulations proposed or in effect thereunder and applied to the Bonds or the use of proceeds thereof, and also includes all applicable amendments and successor provisions thereto. "Construction Fund " means the fund by that name established pursuant to the Indenture. B-3 "Continuing Disclosure Agreement " means each Continuing Disclosure Agreement executed by the City and the Trustee dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time-to-time in accordance with the terms thereof. "Convention Center Expansion " means the additions, improvements and betterments to the Anaheim Convention Center generally including, without limitation, a new exhibit hall and enhancement of the existing halls, meeting rooms, prefunction and registration areas, multipurpose/ballroom and service areas, roadway improvements, landscaping and new parking, all as more specifically described in the Indenture. "Costs of Issuance " means all items of expense directly or indirectly payable by the Authority and related to the authorization, issuance, sale and delivery of Bonds, including but not limited to costs of preparation and reproduction of documents, printing expenses, filing and recording fees, initial fees and charges of the Trustee, insurance premiums payable to the 1997 Bond Insurer, the 1997 Reserve Surety Provider, the 2007 Bond Insurer, the 2007 Reserve Surety Provider, the Series 2019 A Bond Insurer, the Series 2019 A Reserve Surety Provider, legal fees and charges, fees and disbursements of consultants and professionals, rating agency fees, title fees and expenses, fees and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or fee in connection with the original issuance of Bonds which constitutes a "cost of issuance " within the meaning of Section 14 7(g) of the Code. "Costs of Issuance Fund " means the fundby that name established pursuant to the Indenture. "Current Interest Bonds" means those Bonds other than the Capital Appreciation Bonds on which interest is payable on each Interest Payment Date. "Debt Service Fund " means the fund so designated and established pursuant to the Indenture. "Defeasance Securities " means any of the following securities, if and to the extent the same are at the time legal for investment of Authority funds: (a) any noncallable direct obligations of the United States of America ("Treasuries "); (b) any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local government unit of any such state (i) which are rated "AAA " by S&P and "Aaa " by Moody 's; (ii) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds or other obligations for redemption on the date or dates specified in such instructions; (iii) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described in clause (a) of this definition which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the redemption date or dates specified in the irrevocable instructions referred to in clause (ii) of this clause (b), as appropriate; and (iv) as to which the principal of and interest on the bonds and obligations of the character described in clause (a) of this definition which have been deposited in such fund, along with any cash on deposit in such fund, are sufficient to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (b) on the maturity date or dates thereof or on the redemption date or dates specifiedin the irrevocable instructions referred to in clause ( ii) of this clause (b ), as appropriate; (c) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated; or (d) such other obligations as will be approved by the 1997 Bond Insurer, the 2007 Bond Insurer or the Series 2019 A Bond Insurer, and accompanied by a Certificate of an Authorized Authority Representative stating that each of the rating B-4 agencies then maintaining a rating on the Bonds have been informed of the proposal to invest in such investment and each of such rating agencies has confirmed that such investment is acceptable. "Development Agreement " means the Development Agreement No. 96-1 by and between the City and Disney dated as of October 22, 1996, as amended or modified from time-to-time in accordance with its terms. "Disney" means Walt Disney World Co. , a Delaware corporation. "Disney Certificate of Abandonment " means a certificate signed by an Authorized Disney Representative and provided to the Trustee and the 1997 Bond Insurer to the effect that Disney has abandoned the Opening Day Project or a certificate signed by an Authorized City Representative to the effect that the Finance Agreement has been terminated by the City pursuant to the Finance Agreement. "Disney Credit Enhancement Agreement " means the agreement among The Walt Disney Company, the 1997 Bond Insurer, BNY Western Trust Company, as the 1997 Bond Insurer's Fiscal Agent and as Calculation Agent and Trustee, dated as of February 1, 1997, and all amendments, supplements and modifications thereto. "Disney Managed Public Improvements" means the infrastructure improvements, including without limitation the Public Parking Facilities, certain water, wastewater and sewer improvements, certain overcrossing, intersection and roadway improvements, storm drain improvements, electrical undergrounding and landscaping improvements, all as more specifically described in the Indenture. "Disney Property" means the specific real properties owned or leased by Disney within The Disneyland Resort Specific Plan Area, and The Disneyland Pacific Hotel property, all as specifically described in the Indenture. "DTC " means The Depository Trust Company, New York, New York, or any successor securities depository forthe Bonds. "Effective Date " means, as used in the definition of Lease Payment Measurement Revenues, December 17, 1996. "Event of Default " means an event described in the Indenture and the Lease Agreement. See "THE INDENTURE-Events of Default and Remedies of Bondholders " and "THE LEASE AGREEMENT-Events of Defaultand Remedies. " "Existing Hotel Rooms" means those certain Hotel Rooms existing as of the effective date of the Finance Agreement (The Disneyland Hotel and The Disney Paradise Pier Hotel (formerlyknown as The Disneyland Pacific Hotel)) and remodels, renovations, rehabilitations, rebuildings and replacements of such Existing Hotel Rooms that are substantially similar in number and kind to such Existing Hotel Rooms. "Facility " or "Facilities" means those improvements located on or to be constructed on the Site as described in the Lease Agreement. "Finance Agreement" means that certain Infrastructure and Parking Finance Agreement, dated as of October 8, 1996, among the City, the Authority, Disney and The Walt Disney Company, as supplemented by the Implementation Agreement, and all amendments, supplements and modifications thereto. B-5 "Financial Guaranty " means one or more of the following to be delivered to the Trustee pursuant to the Indenture which, so long as any Bonds remain Outstanding, must be approved in writing by the 1997 Bond Insurer and must be accompanied by a Certificateof an Authorized Authority Representative stating that each of the rating agencies then maintaining a rating on the Bonds have been informed of the proposal to provide a Financial Guaranty and each of such rating agencies has confirmed that such action will not adversely affect the rating then assigned by such rating agency to any of the Bonds; (a) unconditional and unexpired letters of credit issued by banking institutions, or (b) an irrevocable and unconditional policy or policies of insurance in full force and effect issued by municipal bond insurers; in each case providing for the payment thereunder of sums for the payment of Principal Installments with respect to, and interest on, Bonds as required by the Indenture. "First Supplemental Indenture " means the First Supplemental Indenture of Trust, to be dated as of June 1, 2007, by and between the Authority and the Trustee. "Fiscal Ye ar " means each fiscalyear commencing on July 1 and ending on July 30. "Future Hotel Rooms" means the first 750 Hotel Rooms newly constructed on the Disney Property pursuant to The Disneyland Resort Specific Plan, following the effective date of the Finance Agreement. Future Hotel Rooms will not include Existing Hotel Rooms or Hotel Rooms constructed in replacement of Existing Hotel Rooms pursuant to the Development Agreement. "Hotel Rooms" or "Hotel " means hotel, motel or other transient occupancy accommodation as definedin the AMC. "Implementation Agreement " means that certain Covenant Implementation Agreement dated as of February 1, 1997, among the City, the Authority, The Walt Disney Company and Disney, and all amendments, supplements and modifications thereto. "Indenture " means, collectively, the Original Indenture, the First Supplemental Indenture and the Second Supplemental Indenture. "Insurance and Condemnation Fund " means the fund by that name designated and established pursuant to the Indenture. "Interest Payment Date " means, unless otherwise specified with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, the dates upon which interest on the Current Interest Bonds becomes due and payable and the dates on which interest is compounded on the Capital Appreciation Bonds. With respect to the 1997 Series A Bonds, the 1997 Series B Bonds and the 1997 Series C Bonds, "Interest Payment Date " means March 1 and September 1 of each year, commencing on September 1, 1997. With respect to the 2007 Bonds, "Interest Payment Date " means March 1 and September 1 of each year, commencing on September 1, 2007. With respect to the 2019 Bonds, "Interest Payment Date " means March 1 and September 1 of each year, commencing on September 1, 2019. "Investment Securities " means any of the following securities (other than those issued by the Authority or the City): (a) commercial paper of "prime " quality of the highest ranking or the highest letter and numerical rating as provided for by Moody 's and S&P, of issuing corporations that are organized and operating within the United States and having total assets in excess of $500,000,000 and having an "AA " or "Aa " or higher rating for the issuer 's debentures or other long-term unsecured obligations, other than commercial paper, as provided for by Moody 's and B-6 S&P and provided that purchases of eligible commercial paper may not exceed 180 days ' maturity nor represent more than 10% of the outstanding paper of an issuing corporation; (b) United States Treasury notes, bonds, bills or certificates of indebtedness or those for which the faith and credit of the United States of America are pledged for the full and timely payment of principal and interest, not subject to prepayment or call; (c) obligations, debentures, notes or other evidences of indebtedness issued or guaranteed by any of the following instrumentalities or agencies of the United States of America: Federal Home Loan Bank System; Export-Import Bank of the United States; Federal Financing Bank; Government National Mortgage Association; Federal National Mortgage Association (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); Student Loan Marketing Association (excluded are securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date); Federal Farm Credit Bureau; Farmers Home Administration; Federal Home Loan Mortgage Corporation (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); and Federal Housing Administration; ( d) negotiable certificates of deposit issued by or deposit accounts with a nationally or state chartered bank, including the Trustee or any affiliate thereof, or by a state licensed branch of a foreign bank; provided that the senior debt issued by such bank and/or its holding company are rated "Aa/AA" by Moody's and S&P, respectively, and the commercial paper issued by such holding company or branch of a foreign bank is rated "P-1" and "A-1" by Moody's and S&P, respectively; ( e) Bonds, notes or other obligations of any state, municipality or political subdivision the interest on which is excluded from gross income forfederal income tax purposes, which are rated "AA" or higher by Moody's and S&P; (f) repurchase agreements with (i) any domestic bank, or domestic branch of a foreign bank, the long-term debt of which is rated at least "A" by S&P and Moody's; or (ii) any broker dealer with "retail customers" or a related affiliate thereof which broker dealer has, or the parent company (which guarantee the provider) of which has, long term debt rated at least "A" by S&P and Moody's, which broker dealer falls under the jurisdiction of the Securities Investors Protection Corporation; or (iii) any other entity rated "A" or better by S&P and Moody's and acceptable to the 1997 Bond Insurer; provided that: (A) the market value of the collateral is maintained at levels and upon such conditions as would be acceptable to S&P and Moody's to maintain an "A" rating in an "A" rated structured financing (with a market value approach); (B) the Trustee or a third-party acting solely as agent therefor or for the Authority or The Walt Disney Company (the "Holder of the Collateral") has possession of the collateral or the collateral has been transferred to the Holder of the Collateral in accordance with applicable state and federal laws (other than by means of entries on the transferor's books); (C) the repurchase agreement will state and an opinion of counsel will be rendered at the time such collateral is delivered that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in possession); (D) all other requirements of S&P and Moody's in respect of repurchase agreements will be met; and (E) the repurchase agreement will provide that if during its term the provider's rating by either Moody's or S&P is withdrawn or suspended or falls below "A" by S&P or "A3" by Moody's, as appropriate, the provider must, at the direction of the Authority, The Walt Disney Company or the Trustee (who will give such direction if so directed by the 1997 Bond Insurer), within 10 days of receipt of such direction, B-7 repurchase all collateral and terminate the agreement, with no penalty or premium to the Authority, The Walt Disney Company or Trustee. Notwithstanding the above, if a repurchase agreement has a term of 270 days or less (with no evergreen provision), collateral levels need not be as specified in clause (A) above, so long as such collateral levels are 103% or better and the provider is rated at least "A" by S&P and Moody's, respectively; (g) money market mutual funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, which are rated "AAAm" or "AAm" or "AAmG" by S&P or "Aaa" by Moody's, including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee or such holding company provide investment advisory or other management services; (h) any investment agreement or guaranteed investment contract (i) with or guaranteed by a national or state chartered bank or savings and loan, an insurance company or other financial institution whose unsecured debt or claims paying ability is rated in the highest short-term rating category (if the term of the investment agreement is less than three years) or in either of the two highest long-term rating categories (if the term of the investment agreement is three years or longer) by S&P if S&P then maintains a rating, and Moody's if Moody's then maintains a rating, on any of the Bonds to be secured thereby; or (ii) which investment agreement or guaranteed investment contract is fully secured by obligations described in clause (b) or (c) of the definition of Investment Securities (A) which are valued not less frequently than weekly and have a fair market value, exclusive of accrued interest, at all times at least equal to the principal amount of the investment; (B) held by the Trustee (who will not be the provider of the collateral) or by any Federal Reserve Bank or a depository acceptable to the Trustee; (C) subject to a perfected firstlien by the Trustee; and (D) freeand clear from all third-party liens. Any investment agreement will provide that if during its term (a) the provider's rating by either S&P or Moody's falls below "AA-"or "Aa3," respectively, the provider will, at its option, within 10 days of receipt of publication of such downgrade, either (i) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider's books) to the Authority, the Trustee or a third party acting solely as agent therefor (the "Holder of the Collateral") collateral free and clear of any third-party liens or claims the market value of which collateral is maintained at levels and upon such conditions as would be acceptable to S&P and Moody's to maintain an "A" rating in an "A" rated structured financing (with a market value approach); or (ii) transfer the agreement and its rights and obligations to a replacement provider whose ratings are at least "AA-" and "Aa3" by S&P and Moody's, respectively, which provider will be approved by the 1997 Bond Insurer and the Authority; or (iii) at the sole expense of the provider, prepare written bid specifications for the unconditional assumption of their remaining obligations under the investment agreement. The provider will solicit bids, fromeligible replacement providers whose ratings are at least "AA-" and "Aa3" by S&P and Moody's, respectively, which providers will be approved by the 1997 Bond Insurer, the 2007 Bond Insurer and the Authority; (b) the provider's rating by either S&P or Moody's is withdrawn or suspended or falls below "A-" or "3," respectively, the provider must, at the direction of the Authority, The Walt Disney Company or the Trustee (who will give such direction if so directed by the 1997 Bond Insurer), within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Authority, The Walt Disney Company or the Trustee; (c) the provider will default in its payment obligations, the provider's obligations under the investment agreement will, at the direction of the Authority, The Walt Disney Company or the Trustee (who will give such direction if so directed by the 1997 Bond B-8 Insurer) be accelerated and amounts invested and accrued but unpaid interest thereon will be repaid to the Authority, The Walt Disney Company or the Trustee, as appropriate; and (d) the provider will become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ( "event of insolvency "), the provider 's obligations will automatically be accelerated and amounts invested and accrued but unpaid interest thereon will be repaid to the Authority, The Walt Disney Company or the Trustee, as appropriate; (i) The Local Agency Investment Fund of the State of California; and (j) any other type of investment in which the Trustee is directed to invest pursuant to the Indenture; provided that there is delivered to the Trustee the consent of the 1997 Bond Insurer and a certificate of an Authorized Authority Representative stating that each of the rating agencies then maintaining a rating on the Bonds have been informed of the proposal to invest in such investment and each of such rating agencies has confirmed that such investment will not adversely affectthe rating then assigned by such rating agency to any of the Bonds. "Lease Agreement " means that certain Lease Agreement by and between the City and the Authority, dated as of February 1, 1997, 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. "Lease Default Event " means the failure of the City to pay any Lease Payments when and as the same become due pursuant to the Lease Agreement. "Lease Payments " means those payments made by the City to the Authority pursuant to the Lease Agreement. "Lease Payment Measurement Revenues" means: (a) except as provided in the Lease Agreement, until March 1, 2037, an amount equal to the total sum of the amounts actually received by the City for its own account ( and not as collector, custodian, depository or otherwise for or on behalf of another entity) in each Fiscal Year from all of the following sources with respect to any date or transaction occurring on and after January 1, 2001: (i) (A) the aggregate of 100% of the 15% TOT levied on all Existing Hotel Rooms, Future Hotel Rooms and Supplemental Future Hotel Rooms plus 100% of the sales tax revenues attributable to a 1 % sales tax rate from facilities located on the Disney Property in excess of (B) the amount of Baseline Measurement Revenues representing TOT and sales tax, which amount will be adjusted annually, commencing July 1, 1996, by the Baseline Index for the preceding Fiscal Year commencing July 1 and ending on June 30; provided, however, that the annual increase in the Baseline Measurement Revenues representing TOT and sales tax in any given year will not be less than 2%; provided, further, however, that for annual periods in which the Baseline Index has increased by less than 2%, subsequent increases to the Baseline Measurement Revenues representing TOT and sales tax in excess of the 2% minimum will be reduced by the compounded effect of the difference between the 2% minimum annual increase and the Baseline Index until such difference has been recouped; plus (ii) 100% of property tax revenues attributable to the City 's share (as of Fiscal Year 1994-1995) of the 1% basic real property tax levy (approximately 10. 8%) B-9 from or allocable to the Disney Property in excess of the property tax amount of Baseline Measurement Revenues, as adjusted by the greater of the (A) statutory or constitutional limits established for property tax increase or in property tax assessments applicable to the period from June 1995 through the end of such Fiscal Year, and (B) 2% per year. In the event California statutory and constitutional limitations on property tax are changed such that there is no constitutional or statutory limitation property taxes, the provisions of clause (i) above regarding annual TOT and sales tax escalations will also be applied to property tax. Sales tax, property tax, and TOT attributable to the Hotel Rooms built on the Disney Property in excess of the Future Hotel Rooms and Supplemental Future Hotel Rooms, and any Retail, Dining and Entertainment Uses built on the Disney Property in excess of the first 400,000 square feet will be excluded from the Lease Payment Measurement Revenues; and provided, further, any property tax, sales tax and TOT attributable to any additional properties acquired or leased by Disney after the effective date of the Finance Agreement and included in the Disney Property pursuant to the Development Agreement will be excluded from the Lease Payment Measurement Revenues; plus (iii) 100% of three percentage points of the total percentage points of TOT rate levied on all Hotel Rooms in the City other than Existing Hotel Rooms, Future Hotel Rooms and Supplemental Future Hotel Rooms; (b) except as provided in the Lease Agreement, for 10 years thereafter, 50% of the amount determined pursuant to clause (a) above. "Leased Premises" means the Site and the Facility. "Master Parking Ground Leases" means (a) the Ground Lease Agreement dated as of January 1, 1993 between Phyllis June Crawford, as Trustee, under that certain Declaration of Trust, dated November 14, 1989, as amended and WCO Vacationland, Inc., a California corporation (predecessor to Disney); and (b) the Ground Lease Agreement, dated as of January 1, 1993, between Joan M. Schlund and Phyllis J. Crawford, Co-Trustees under the Will of Serepta A. Mohn and WCO Vacationland, Inc., a California corporation (predecessor to Disney). "Net Proceeds" means, when used with respect to insurance or condemnation proceeds, any insurance proceeds or condemnation awards paid with respect to the Leased Premises, to the extent remaining after payment of (a) all expenses incurred in the collection thereof; (b) all amounts required to be paid pursuant to the Lease Agreement dated as of January 1, 1992 between the City and the Community Center Authority; (c) all amounts required to be paid pursuant to the Lease Agreement dated as of January 1, 1993 between the City and the Anaheim Public Improvement Corporation; (iv) all amounts required to be paid under the Stadium Lease; and (d) with respect to condemnation proceeds, amounts required to be paid under the Master Parking Ground Leases. "199 7 Bond Insurer " means Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof. "199 7 Bond Insurance Policy" means the municipal bond insurance policies issued by the 1997 Bond Insurer guaranteeing the scheduled payment, of the principal or, in the case of Capital Appreciation Bonds Accreted Value of, and interest on the Unrefunded 1997 Series A Bonds and the 1997 Series C Bonds. B-10 "1997 Rebate Instructions " means those calculations and written directions regarding the payment of rebate required to be prepared and delivered pursuant to the 1997 Tax Certificate. "1997 Reserve Surety " means the municipal bond debt service reserve insurance policies issued by the 1997 Reserve Surety Provider in satisfaction of 1997 Series A and 1997 Series C Reserve Account's relative Reserve Requirement. "1997 Reserve SuretyProvid er" means Financial Security Assurance Inc. "1997 Tax Certificate " means the Tax Certificate and Agreement, dated February 13, 1997, executed by the Authority and the City in connection with the 1997 Series A Bonds and the 1997 Series C Bonds and relating to the requirements of the Code. "1997 Series A Bond " or "1997 Series A Bonds " means any or all, as appropriate, of the Bonds so designated and authorized by the Indenture and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such 1997 Series A Bonds. "1997 Series B Bond " or "1997 Series B Bonds " means any or all, as appropriate, of the Bonds so designated and authorized by the Indenture and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such 1997 Series B Bonds. "1997 Series C Bond " or "1997 Series C Bonds " means any or all, as appropriate, of the Bonds so designated and authorized by the Indenture and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such 1997 Series C Bonds. "Opening Day " means June 30, 2001. "Opening Day Project" means the project generally including a second gated Disney Theme Park, 750 new Disney hotel rooms, 200,000 square feet of new Retail, Dining and Entertainment Uses, a pedestrian plaza and 5,800 new parking spaces, all as more specifically described in the Indenture. "Original Indenture " means the Indenture of Trust, dated as of February 1, 1997, by and between the Authority and the Trustee. "Outstanding " means, when used as of any particular time with reference to Bonds, (subject to the provisions of the Indenture regarding disqualification of Bonds) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under the Indenture except (a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which liability of the Authority will have been discharged in accordance with the Indenture, including Bonds (or portions of Bonds) referred to in the section of the Indenture regarding disqualification of Bonds; and (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds will have been authenticated and delivered by the Trustee pursuant to the Indenture. "Owner" means, when used with respect to a Bond, the Person in whose name such Bond is registered. "Parking Ground Lease " means the Public Parking Facilities Ground Lease, dated as of February 1, 1997, between the Authority and Disney. "Parking Operating Lease " means the Public Parking Facilities Operating Lease dated as of February 1, 1997, between the City and Disney. B-11 "Paying Agent" means the Trustee, and any other paying agent for a Series of Bonds appointed pursuant to the provisions of the Indenture. "Permitted Encumbrances" means, as of any particular time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to the provisions of the Lease Agreement, permit to remain unpaid; (b) the Site Lease; (c) the Lease Agreement; (d) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (e) easements, rights-of-way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist as of the Closing Date and which the City certifiesin writing will not materially impair the use of the Leased Premises; (f)easements, rights-of-way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of the Lease Agreement and to which the Authority and the City consent in writing; and (g) those specificencumbrances set forth in the Lease Agreement. "Person " means an individual, corporation, limited liability company, firm, assoc1at10n, partnership, trust, or other legal entity or group of entities, including a governmentalentity or any agency or political subdivision thereof. "Principal Installment" means the principal or Accreted Value, as applicable, of any Bond and any Sinking Fund Installments due with respect to any Bonds. "Public Improvements" means, collectively, the City Managed Public Improvements, the Convention Center Expansion and the Disney Managed Public Improvements. "Public Parking Facilities" means those facilities forday-use parking to be constructed as part of the Disney Managed Public Improvements by Disney. "Rebate Fund " means the fund by that name so designated and established in the Indenture. "Record Date " means, unless otherwise specified with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, for each Interest Payment Date, the fifteenth day of the calendar month preceding such Interest Payment Date. "Redemption Account " means the account so designated in the Debt Service Fund established pursuant to the Indenture. "Refunding Bonds " means Bonds issued pursuant to the Indenture to refund a Series of Bonds. "Reimbursement Agreement" means that certain Reimbursement Agreement, dated as of February 1, 1997, among the City, the Authority, the Trustee, Disney and The Walt Disney Company, as the same may be amended and supplemented in accordance with its terms. "Reimbursement Fund " means the fund so designated and established pursuant to the Indenture. "Rental Period" means (a) the period from January 1, 2001 to and including June 30, 2001; (b) each 12-month period during the Term of the Lease Agreement from July 1 in each year commencing July 1, 2001 to June 30 in the next succeeding year; and (c) the period from the final July 1 during the Term of the Lease Agreement to the end of the Term. "Requisition " means a request for payment from the Construction Fund pursuant to the Indenture. "Reserve Fund " means the fund so designated and established pursuant to the Indenture. B-12 "Reserve Requirement " means, as of the date of any calculation (a) with respect to the 1997 Series A Bonds, the amount of $20,432,993.91, (b) with respect to the 1997 Series C Bonds, the amount of $22,806, 106.92, and (c) with respect to the Series 2019 A Bonds, an amount equal to the Series 2019 A Reserve Requirement. "Retail, Dining and Entertainment Uses " means those retail, dining and entertainment uses built or caused to be built by Disney on the Disney Property outside of the admission gate of any Theme Park in accordance with The Disneyland Resort SpecificPlan and which are uses permitted pursuant to "Retail Entertainment Centers, " "Retail Uses " and "Restaurants " in Sections 18.78.030.110, 18.78.060 and 18.78.070 of the AMC. "Revenues " means all amounts paid as Lease Payments by the City under the Lease Agreement, except certain amounts that are required to be directly deposited into the City Supplemental Subaccount, all amounts received from rental interruption or use and occupancy insurance maintained pursuant to the Lease Agreement, all amounts paid to the Trustee, as assignee of the Authority, by The Walt Disney Company as liquidated damages pursuant to the Finance Agreement (as expanded pursuant to the Implementation Agreement), and all amounts received by the City as liquidated damages fromcontractors pursuant to the Lease Agreement. "Revenue Fund " means the fund so designated and established pursuant to the Indenture. "Second Supplemental Indenture " means the Second Supplemental Indenture, dated as of April 1, 2019, by and between the Authority and The Bank of New York Mellon Trust Company, N. A. , as Trustee. "Senior Lien Bonds" means the Series 2019 A Bonds, the Series 2019 B Bonds, the 2007 Series A Bonds, the 2007 Series B Bonds and the Unrefunded 1997 Series A Bonds and any other Series of Bonds designated as Senior Lien Bonds in a Supplemental Indenture authorizing such Series of Bonds. "Series" means, when used with reference to the Bonds, all of the Bonds authenticated and delivered on the date of original issuance and identified pursuant to the Indenture or the Supplemental Indenture authorizing such Bonds as a separate Series of Bonds (including any subseries within a Series), and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to the Indenture, regardless of variations in maturity, interest rate, Sinking Fund Installments, or other provisions. "Series 2007 Refunded Bonds " means, collectively (a) the 2007 Series A-1 Bonds, and (b) the 2007 Series A-2 Bonds. "Series 2019 Bonds " means, collectively (a) the Series 2019 A Bonds, and (b) the Series 2019 B Bonds. "Series 2019 Closing Date " means the date upon which the Series 2019 Bonds are delivered to the Series 2019 Original Purchaser. "Series 2019 Continuing Disclosure Agreement " means the Continuing Disclosure Agreement, dated as of April 1, 2019, by and between the City and the Trustee, as originally executed and as it may be amended fromtime to time in accordance with the terms thereof. "Series 2019 Costs of Issuance Fund " means the fund by that name established and held by the Trustee pursuant to the Indenture. B-13 "Series 2019 Original Purchaser " means the original purchaser of the Series 2019 Bonds from the Authority. "Series 2019 Participating Underwriter " has the meaning ascribed thereto in the Series 2019 Continuing Disclosure Agreement. "Series 2019 A Bond Insurer " means Build America Mutual Assurance Company, or any successor thereto. "Series 2019 A Bond Insurance Policy " means the municipal bond insurance policy issued by the Series 2019 A Bond Insurer that guarantees the scheduled payment of principal of and interest on the Series 2019 A Insured Bonds. "Series 2019 A Bonds " means the Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A, issued under the Indenture. "Series 2019 A Bonds Account " means the account by that name within the Debt Service Fund established and held by the Trustee pursuant to the Indenture. "Series 2019 A Insured Bonds " means the Series 2019 A Bonds maturing September 1, 2030 through September 1, 2036. "Series 2019 A Rebate Instructions " means those calculations and written directions regarding the payment of rebate required to be prepared and delivered pursuant to the Series 2019 A Tax Certificate. "Series 2019 A Rebate Requirement " has the meaning ascribed to the term "Rebate Requirement" in the Series 2019 A Tax Certificate. "Series 2019 A Reserve Account " means the account by that name within the Reserve Fund established and held by the Trustee pursuant to the Indenture. "Series 2019 A Reserve Requirement " means, as of the date of any calculation, the least of (a) 10% of the original aggregate principal amount of the Series 2019 A Bonds (excluding Series 2019 A Bonds refunded with the proceeds of subsequently issued Refunding Bonds), (b) maximum annual debt service on the Series 2019 A Bonds, and (c) 125% of average annual debt service on the Series 2019 A Bonds. "Series 2019 A Reserve Surety" means the municipal bond debt service reserve insurance policy issued by the Series 2019 A Reserve Surety Provider in satisfaction of the Series 2019 A Reserve Requirement. The Series 2019 A Reserve Surety is a Financial Guaranty for the Series 2019 A Bonds. "Series 2019 A Reserve Surety Costs " means repayment of draws under the Series 2019 A Reserve Surety, plus all related reasonable expenses incurred by the Series 2019 A Reserve Surety Provider, plus interest thereon at the Series 2019 A Reserve Surety Rate. "Series 2019 A Reserve SuretyProvid er " means Build America Mutual Assurance Company, or any successor thereto. "Series 2019 A Reserve SuretyRate " means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (the "Prime Rate") (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank), plus 3. 00%, and (ii) the then applicable highest rate of interest on the Series 2019 A Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Series 2019 A Reserve Surety Rate will be B-14 computed on the basis of the actual days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate, the Prime Rate will be the prime or base-lending rate of such other national bank as the Series 2019 A Bond Insurer will designate. "Series 2019 A Tax Certificate " means the Tax Certificate executed by the Authority and the City at the time of issuance of the Series 2019 A Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may be amended from timeto time in accordance with the terms thereof. "Series 2019 B Bonds " means the Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 B (Taxable), issued under the Indenture. "Series 2019 B Bonds Account" means the account by that name within the Debt Service Fund established and held by the Trustee pursuant to the Indenture. "Sinking Fund Installments " means with respect to Bonds of a Series maturing on a specified date, the payments, if any, so designated and specified in the Indenture or the Supplemental Indenture, as applicable, authorizing such Series of Bonds to be applied to the payment of such Bonds on or prior to maturity. "Site " means those parcels of real property described in the Lease Agreement. "Site Lease " means that certain Site and Facility Lease by and between the City and the Authority dated as of February 1, 1997. "Special Reserve Fund" means the fund so designated and established pursuant to the Indenture. "Stadium" means the Angel Stadium of Anaheim (formerly known as Anaheim Stadium) in Anaheim, California. "Stadium Lease " means the Amended and Restated Lease Agreement, dated as of May 15, 1996, by and between the City and the Tenant, as amended and supplemented fromtime-to-t ime. "State " means the State of California. "Subordinate Lien Bonds" means the 1997 Series C Bonds and any other Series of Bonds designated as Subordinate Lien Bonds in the Supplemental Indenture authorizing such Series of Bonds. "Supplemental Future Hotel Rooms" means the first 250 Hotel Rooms newly built or caused to be built by Disney, in excess of the 750 Future Hotel Rooms constructed on the Disney Property pursuant to The Disneyland Resort Specific Plan; provided that construction of such Hotel Rooms is commenced within five years of the Opening Day, and construction is diligently and continuously pursued to completion and opening. Supplemental Future Hotel Rooms will not include Existing Hotel Rooms. "Supplemental Indenture " means any indenture after the date of execution of the Indenture duly authorized and entered into between the Authority and the Trustee, supplementing, modifying or amending the Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized by the Indenture. "Supplemental Reimbursement Fund " means the fund so designated and established pursuant to the Indenture. B-15 "Surety Reimbursement Fund " means the fund so designated and established pursuant to the Indenture. "Surplus Fund " means the fund so designated and established pursuant to the Indenture. "Tax-Exempt Bonds " means the Series 2019 A Bonds, the 2007 Series A Bonds, the Unrefunded Series 1997 A Bonds, the 1997 Series C Bonds and any other Series of Bonds designated as Tax-Exempt Bonds in a Supplemental Indenture authorizing such Series. "Tenant " means Angels Baseball L. P. and its permitted successors and assigns. "Term of the Lease Agreement" means the time during which the Lease Agreement is in effect, as provided in the Lease Agreement. See 'THE LEASE AGREEMENT-Term; Occupancy. " "The Disneyland Resort Specific Plan Area " means the area of approximately 549.5 acres within the boundaries of the Disneyland Resort Specific Plan. "The Disneyland Resort Specific Plan " means The Disneyland Resort Specific Plan No. 92-1 (including zoning and development standards), as approved by the City and as amended on or before the effective date of the Finance Agreement. "The Walt Disney Company" means The Walt Disney Company, a Delaware corporation. "TO T" means the transient occupancy taxes levied and collected pursuant to Chapter 2. 12 of Title 2 of the AMC, as the same may be amended from time-to-time, and any successor ordinance. "Trust Estate " means, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, (a) the Revenues; (b) all amounts on deposit in the funds and accounts established pursuant to the Indenture other than the Rebate Fund and the Policy Payments Account (as defined in the Indenture); (c) all of the Authority 's right, title and interest in and to the Lease Agreement; and (d) all of the Authority's rights under Section 3. 3.2 of the Finance Agreement (as expanded pursuant to the Implementation Agreement) together with all of the Authority 's enforcementrights with respect thereto under the Finance Agreement. "Trustee" means The Bank of New York Trust Company, N. A. , (successor to BNY Western Trust Company), a national banking association duly organized and existing under the laws of the United States of America having a principal corporate trust office in Los Angeles, California, or its successor as Trustee as provided in the Indenture. "2007 Bond Insurer " means Financial Guaranty Insurance Company, doing business in California as FGIC Insurance Company, a New York stock insurance company, or any successor thereto or assignee thereof. "2007 Bond Insurance Policy" means the municipal bond new issue insurance policies issued by the 2007 Bond Insurer guaranteeing the scheduled payment, of the principal of and interest on the 2007 Bonds. "2007 Bonds " means, collectively, the 2007 Series A Bonds and the 2007 Series B Bonds. "2007 Rebate Instructions " means those calculations and written directions regarding the payment of rebate required to be prepared and delivered pursuant to the 2007 Tax Certificate. B-16 "2007 Reserve Surety " means the debt service reserve fund policies issued by the 2007 Reserve Surety Provider in satisfaction of the 2007 Series A and 2007 Series B Reserve Account 's relative Reserve Requirement. "2007 Reserve SuretyProvider " means Financial Guaranty Insurance Company, doing business in California as FGIC Insurance Company. "2007 Series A Bond " or "2007 Series A Bonds " means collectively, the 2007 Series A-1 Bond or Bonds and the 2007 Series A-2 Bond or Bonds. "2007 Series A-1 Bond" or "2007 Series A-1 Bonds" means the Authority 's Senior Lease Revenue Bonds (Capital Improvement Project) 2007 Refunding Series A-1 Bonds authorized by the Indenture. "2007 Series A-2 Bond" or "2007 Series A-2 Bonds" means the Authority 's Senior Lease Revenue Bonds (Capital Improvement Project) 2007 Refunding Series A-2 Bonds authorized by the Indenture. "2007 Series B Bond " or "2007 Series B Bonds " means the Authority 's Senior (Taxable) Lease Revenue Bonds (Capital Improvement Project) 2007 Refunding Series B Bonds authorized by the Indenture. "2007 Tax Certificate " means the Tax Certificate and Agreement, to be dated June 13, 2007, executed by the Authority and the City in connection with the 2007 Series A Bonds and relating to the requirements of the Code. "Unrefunded 1997 Series A Bonds " means $37,465,000 aggregate principal amount of the 1997 Series A Bonds maturing on September 1, 2024. "Voluntary" means any action or act by a party which is initiated, agreed to, consented to or approved by such party. Voluntary will not include any act pursuant to the electorate's exercise of the rights of initiative or referendum, any act required by order of a court, or any act necessary to comply with any law, regulation, ruling or order of the State of California or the United States of America or any agency or department of either of them. THE INDENTURE Pledge and Assignment of Revenues 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 Bonds) held in any fund or account established pursuant to the Indenture (other than the Rebate Fund) are pledged to secure the payment of the principal or Accreted Value of, premium, if any, and interest on the Bonds and amounts due to the 1997 Reserve Surety Provider under the 1997 Reserve Surety, amounts due to the 1997 Bond Insurer under the 1997 Bond Insurance Policy, and amounts due to The Walt Disney Company as obligee under the Reimbursement Agreement in accordance with their terms and the provisions of the Indenture. Said pledge constitutes a lien on and security interest in such assets and will attach, and be effective, binding and enforceable from and after delivery by the Trustee of the Bonds, without any physical delivery thereof or further act, and the Trustee will have no continuing obligation to file any further documents to evidence its interest. B-17 Pursuant to the granting clauses of the Indenture, the Authority has transferred in trust, and has assigned to the Trustee, for the benefit of the Owners from time to time of the Bonds, the 1997 Bond Insurer, the 1997 Reserve Surety Provider and the benefit of The Walt Disney Company with respect to the rights under the Reimbursement Agreement, all of the Revenues and other assets pledged pursuant to the previous paragraph and all of the right, title and interest of the Authority in the Lease Agreement and under certain provisions of the Finance Agreement (as expanded pursuant to the Implementation Agreement) together with all of the Authority's rights of enforcement with respect thereto under the Finance Agreement. The Trustee will be entitled to and will collect and receive all of the Revenues and other amounts included in the Trust Estate, and any Revenues and other amounts included in the Trust Estate 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 take all steps, actions and proceedings 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 and The Walt Disney Company under the Lease Agreement and all of the rights of the Authority and all of the obligations of The Walt Disney Company under the Finance Agreement (as expanded pursuant to the Implementation Agreement). All Revenues will be promptly deposited by the Trustee upon receipt thereof in the Revenue Fund and applied as provided in the Original Indenture; provided, however, that all payments made by The Walt Disney Company pursuant to the Finance Agreement will be promptly deposited by the Trustee upon receipt thereof in the Series A Bonds Account and Series B Bonds Account of the Debt Service Fund, as applicable, and applied as provided in the Original Indenture; provided further, however, that all payments made by The Walt Disney Company pursuant to the Finance Agreement ( as expanded pursuant to the Implementation Agreement) will be promptly deposited by the Trustee upon receipt thereof in the Special Defeasance Fund and applied as provided in the Original Indenture; and provided further the amounts paid by the City as Special Lease Payments pursuant to the Lease Agreement will be promptly deposited by the Trustee upon receipt thereof in the City Supplemental Subaccount in the Disney Managed Public Improvements Account in the Construction Fund and applied as provided in the Original Indenture. Funds and Accounts Pursuant to the Indenture, the followingfunds and accounts are established with the Trustee: (a) Series 2019 Costs oflssuance Fund; (b) Revenue Fund; (c) Debt Service Fund, consisting of: (i) 1997 Series A Bonds Account; (ii) 1997 Series C Bonds Account; (iii) 2007 Series A Account; (iv) 2007 Series B Account; (v) Series 2019 A Bonds Account; (vi) Series 2019 B Bonds Account; and (vii) Redemption Account; B-18 (d) Administrative Fund; (e) Reimbursement Fund; (f) Supplemental Reimbursement Fund; (g) Reserve Fund consisting of: (i) 1997 Series A Account; (ii) 1997 Series C Account; (iii) 2007 Series A Account; (iv) 2007 Series B Account; and (v) Series 2019 A Reserve Account; (h) Rebate Fund consisting of: (i) City Account; and (ii) Disney Account; (i) Insurance and Condemnation Fund; (j) Special Reserve Fund; (k) Surplus Fund; and (1) Surety Reimbursement Fund consisting of: (i) 1997 Series A Account; (ii) 1997 Series C Account; (iii) 2007 Series A Account; (iv) 2007 Series B Account; and (v) Series 2019 A Account. Costs of Issuance Fund (Series 2019 Bonds) The moneys in the Series 2019 Costs of Issuance Fund will be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Request of the Authority and a Request of the City stating (i) the Person to whom payment is to be made, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment is a proper charge against the Series 2019 Costs of Issuance Fund, and (v) that such amounts have not been the subject of a prior disbursement from the Series 2019 Costs oflssuance Fund, in each case together with a statement or invoice for each amount requested thereunder. On the last Business Day that is no later than six months after the Series 2019 Closing Date, the Trustee will transfer any amount remaining in the Series 2019 Costs of Issuance Fund to B-19 the Series 2019 A Bonds Account and, upon making such transfer, the Series 2019 Costs oflssuance Fund will be closed. Revenue Fund All Revenues deposited with the Trustee will be held, disbursed, allocated and applied by the Trustee only as provided in the Indenture. Except as otherwise provided in the Original Indenture, Revenues received by the Trustee will be transferred by the Trustee from the Revenue Fund into the following respective funds and accounts, in the following amounts, in the following order of priority, and 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 will be satisfied before any transfer is made to any account subsequent in priority; provided, however, that (a) moneys representing payments under the Municipal Bond Insurance Policy will be held in trust solely to pay principal of and interest on the Series of 1997 Series Bonds with respect to which such payments were made, and (b) moneys representing payments under the Series 2019 A Bond Insurance Policy will be held in trust solely to pay principal of and interest on the Series 2019 A Bonds with respect to which such payments were made: First: to the Series A Bonds Account, the Series 2019 A Bonds Account and the Series 2019 B Bonds Account in the Debt Service Fund, an amount such that the balance in each such Account available for such purpose is equal to the Principal Installments of and interest on the Senior Lien Bonds becoming due on the next succeeding Bond Payment Date, and to the Series A Account, the Series C Account and the Series 2019 A Account in the Surety Reimbursement Fund (a) the amount due to the Reserve Surety Provider under the Reserve Surety for the 1997 Series A Bonds, and (b) the amount due to the Series 2019 A Reserve Surety Provider under the Series 2019 A Reserve Surety; Second: to the Series C Bonds Account in the Debt Service Fund, an amount such that the balance in such account available for such purpose is equal to the Principal Installments of and interest on the 1997 Series C Bonds becoming due on the next succeeding Bond Payment Date, and to the Series C Account in the Surety Reimbursement Fund the amount due to the Reserve Surety Provider under the Reserve Surety for the 1997 Series C Bonds; Third: to the City Account and the Disney Account in the Rebate Fund, the amount required to be deposited therein pursuant to the Rebate Instructionsor the Series 2019 A Rebate Instructions; Fourth: to the Administrative Fund an amount set forth in a Certificate of the Authority equal to the reasonable Administrative and Operating Costs to be paid by the Authority with respect to the Leased Premises, the Indenture or the Lease Agreement; Fifth: if amounts transferred from the Special Reserve Fund are insufficient to cause the amount on deposit in each Account established in the Reserve Fund for a Series of Senior Lien Bonds to equal the Reserve Requirement with respect to such Series of Senior Lien Bonds, then to each such Account, an amount so that the amount on deposit therein is at least equal to such Reserve Requirement; provided, however, that if the amount available in the Revenue Fund is not sufficient to make a deposit in such amount to each such Account established for a Series of Senior Lien Bond, then to each such Account on a parity pro rata basis; Sixth: if amounts transferred from the Special Reserve Fund are insufficient to cause the amount on deposit in the Account established in the Reserve Fund for the 1997 Series C Bonds to equal the Reserve Requirement with respect to the 1997 Series C Bonds, then to such Account, an amount so that the amount on deposit therein is at least equal to such Reserve Requirement; B-20 Seventh: to the Reimbursement Fund, an amount such that the balance therein is equal to the amount then due under the Reimbursement Agreement as a reimbursement foramounts paid by The Walt Disney Company under the Disney Credit Enhancement Agreement and the Finance Agreement (as expanded pursuant to the Implementation Agreement); Eighth: if any Bonds remain Outstanding, to the Special Reserve Fund, the balance of such Revenues for application as set forth in the provisions of the Indenture related to the application of moneys in the Special Reserve Fund; Ninth: if there are no Bonds Outstanding and amounts are due and payable to The Walt Disney Company under the Reimbursement Agreement, the balance of any Revenues to the Supplemental Reimbursement Fund for application as set forthin the provisions of the Indenture; Tenth: if there are no Bonds outstanding and no amounts are due and payable to the Supplemental Reimbursement Fund, to the Surplus Fund, any remaining Revenues. Debt Service Fund The Trustee will pay out of each of the Series A Bonds Account, the Series 2019 A Bonds Account and the Series 2019 B Bonds Account in the Debt Service Fund to the Paying Agent for the Series of Bonds for which such Account was established, on or before each Bond Payment Date for such Series of Bonds, the amount required to pay the Principal Installments of and interest on the Bonds of such Series payable on such Bond Payment Date. The Trustee will pay out of the Series C Bonds Account in the Debt Service Fund to the Paying Agent for the 1997 Series C Bonds, on or before each Bond Payment Date for the 1997 Series C Bonds, the amount required to pay the Principal Installments of and interest on the 1997 Series C Bonds payable on such Bond Payment Date. The Trustee will provide the City with notice at least 15 days prior to each Bond Payment Date of the amount due and owing on such Bond Payment Date. If on any date any amounts are due and payable with respect to the Principal Installments of and interest on the Senior Lien Bonds and amounts available in the Accounts in the Debt Service Fund established for Senior Lien Bonds are insufficient to pay in full such amounts, then the Trustee will make up the deficiencies in such Accounts by transferring thereto amounts from the following accounts, in the following order of priority, or if the amount available in any such account is not sufficient to make up such deficiencies, all amounts in such account: first, from the Special Reserve Fund, second, with respect to each Series of Senior Lien Bonds, from the Account in the Reserve Fund established for such Series of Senior Lien Bonds and, third, from the Series C Bonds Account in the Debt Service Fund; provided, however, that if the amount available in the Special Reserve Fund or the Series C Bonds Account is not sufficient to make such transfers in an amount sufficient to make up such deficiencies in each such Account, then to each such Account on a parity pro rata basis pro rata based on the Principal Installments and interest coming due on all Senior Lien Bonds. The Trustee will pay out of the Redemption Account in the Debt Service Fund all available moneys to be applied to the redemption of Bonds in the following order of priority or if such Bonds are then not subject to redemption in accordance with their terms, to the provision of payment for such Bonds (the particular Bonds of a maturity to be so paid will be selected by the Trustee in the manner set forth in the Indenture for the selection of Bonds of a maturity for redemption) to the earliest date on which such Bonds are subject to optional redemption: first, Senior Lien Bonds that are not Tax-Exempt Bonds, on a pro rata basis from each Owner thereof, second, Subordinate Lien Bonds that are Tax-Exempt Bonds, in inverse order of maturity and, third, Senior Lien Bonds that are Tax-Exempt Bonds in inverse order of maturity. B-21 Administrative Fund The Trustee will pay out of the Administrative Fund, upon receipt of a Certificate of the Authority, the amounts therein to pay the reasonable Administrative and Operating Costs to be paid by the Authority with respect to the Leased Premises, the Indenture and the Lease Agreement which are not otherwise paid. Rebate Fund The Trustee will pay out of the Rebate Fund to the United States of America the rebate amounts due as rebate. Reimbursement Fund The Trustee will pay out of the Reimbursement Fund within one Business Day after any Bond Payment Date during the period when any Bonds are Outstanding and within three Business Days of receipt thereof during any period when no Bonds are Outstanding, the amounts then due under the Reimbursement Agreement to The Walt Disney Company or Disney as a reimbursement for amounts paid under the Disney Credit Enhancement Agreement or pursuant to the Finance Agreement (as expanded pursuant to the Implementation Agreement). Surety Reimbursement Fund The Trustee will apply moneys in the Series A Account of the Surety Reimbursement Fund to the payment of amounts due to the Reserve Surety Provider pursuant to the Reserve Surety. The Trustee will apply moneys in the Series C Account of the Surety Reimbursement Fund to the payment of amounts due to the Reserve Surety Provider pursuant to the Reserve Surety. The Trustee will apply moneys in the Series 2019 A Account of the Surety Reimbursement Fund to the payment of amounts due to the Series 2019 A Reserve Surety Provider pursuant to the Series 2019 A Reserve Surety. Reserve Fund Requirement. There must be maintained at all times a Reserve Fund with Accounts for each Series of Bonds that satisfy the Reserve Requirement for such Series. The Reserve Requirement may be satisfied through (a) a deposit of cash or Investment Securities; (b) the 1997 Reserve Surety, the 2007 Reserve Surety or the Series 2019 A Reserve Surety, as applicable; or (c) a Financial Guaranty or Financial Guaranties in an amount equal to the difference between the Reserve Requirement for any Account and the sums, if any, then on deposit in such Account or being deposited in such Account concurrently with such Financial Guaranty or Guaranties. Payments From Reserve Fund. The Trustee will pay out of the Account of the Reserve Fund established fora Series of Bonds (through a draw on the Reserve Surety as provided in the Indenture, so long as the Reserve Surety is in place, or through a draw on a Financial Guaranty or Guaranties as provided in the Indenture, if a Financial Guaranty is in place) the Principal Installments of and interest on Outstanding Bonds of such Series to the extent moneys are not available therefor in the Account of the Debt Service Fund established for such Series of Bonds; provided, however, that whenever any amounts are paid out of any Account of the Reserve Fund, the Trustee will, on that date if an Interest Payment Date, or otherwise on the next succeeding Interest Payment Date, transfer an amount from the Special Reserve Fund to such Account of the Reserve Fund so that the amount on deposit in each such Account is at least equal to the Reserve Requirement for the Series of Bonds for which such Account was established and, provided, further, that if the amount in any Account of the Reserve Fund on any Interest Payment Date exceeds the Reserve Requirement with respect to the Series of Bonds for which such Account was B-22 established, such amounts will be transferred to the Account in the Debt Service Fund for such Series of Bonds. Whenever the amount in any Account of the Reserve Fund is sufficient to pay in full all Outstanding Bonds of the Series of Bonds for which such Account was established in accordance with their terms (including Principal Installments and interest thereon) (except while the Reserve Surety is in place or as provided in the Indenture), the funds on deposit in such Account will be transferred to the Account of the Debt Service Fund established for such Series of Bonds and applied to the payment of the Bonds of such Series. The Trustee will provide the Municipal Bond Insurer and the Series 2019 A Bond Insurer with notice of any draw upon the Reserve Fund within two Business Days after the occurrence thereof; provided, however, that no such notice will be required in connection with (i) transfers of amounts in accordance with the preceding paragraph, and (ii) withdrawals in connection with the refunding of the Bonds. Draws Under Financial Guaranty. If a Financial Guaranty or Guaranties (including the 1997 Reserve Surety, the 2007 Reserve Surety and the Series 2019 A Reserve Surety) is provided to satisfy the Reserve Requirement for any Account in the Reserve Fund, then the Trustee will draw upon or otherwise take such action as is necessary in accordance with the terms of the Financial Guaranties to receive payments with respect to the Financial Guaranties (including the giving of notice as required thereunder); (a) on any date on which moneys will be required to be withdrawn from any Account in the Reserve Fund and applied to the payment of a Principal Installment or redemption price of, or interest on, any Bonds to be paid from such Account in the Debt Service Fund and such withdrawal cannot be met by amounts on deposit in such Account of the Reserve Fund; and withdrawal cannot be met by amounts on deposit in such Account of the Reserve Fund; and (b) on the first Business Day which is at least 30 days prior to the expiration date of each Financial Guaranty, in an amount equal to the deficiency which would exist in such Account of the Reserve Fund if the Financial Guaranty expired, unless a substitute Financial Guaranty with an expiration date not earlier than 180 days after the expiration date of the expiring Financial Guaranty is acquired prior to such date or the Authority deposits funds in such Account of the Reserve Fund on or before such date such that the amount in such Account on such date (without regard to such expiring Financial Guaranty) is at least equal to the Reserve Requirement forsuch Account. If at any time that a Financial Guaranty is delivered pursuant to the Indenture, there will be any amount in an Account of the Reserve Fund in excess of the Reserve Requirement for such Account, such excess amount may be applied to the cost of acquiring such Financial Guaranty and, to the extent not so applied, will be transferred to a separate subaccount in the related Debt Service Account to be established by the Trustee and applied to the purchase or redemption of Bonds as directed in writing by an Authorized Authority Representative and an Authorized Disney Representative. Insurance and Condemnation Fund Application of Net Proceeds of Insurance Award. Any Net Proceeds of insurance against accident to or destruction of any part of the Leased Premises collected by the City, or, with respect to the Public Parking Facilities, collected by Disney, or, with respect to the Stadium, collected by the Tenant, in the event of any such accident or destruction will be paid to the Trustee by the City or Disney pursuant to the Lease Agreement and the Parking Operating Lease and deposited by the Trustee promptly upon receipt thereof in the Insurance and Condemnation Fund, and will be applied by the Tenant in accordance with the Stadium Lease. If the City or Disney determines and notifies the Trustee in writing of its determination, within 90 days following the date of such deposit, that the replacement, repair, restoration, modification or B-23 improvement of the Leased Premises is not economically feasible or in the best interest of the City, or, with respect to the Public Parking Facilities, Disney, then such Net Proceeds will be transferred to the Redemption Account in the Debt Service Fund to be applied to the prepayment of Lease Payments pursuant to the Lease Agreement and the redemption of Bonds pursuant to the Indenture, in the following order of priority: first, Senior Lien Bonds which are not Tax-Exempt, on a pro rata basis from each of the Owners thereof; second, Senior Lien Bonds which are Tax-Exempt Bonds, in inverse order of maturity; and third, Subordinate Lien Bonds which are not Tax-Exempt, in inverse order of maturity; provided, however, that if such determination would result in an abatement of Lease Payments pursuant to the Lease Agreement, then such Net Proceeds will nevertheless be applied to the prompt replacement, repair, restoration, modification or improvement of Leased Premises, to the extent of such Net Proceeds. All Net Proceeds deposited in the Insurance and Condemnation Fund and not applied to redemption of Bonds will be applied by the City, or, if received with respect to the Public Parking Facilities, by Disney, to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Leased Premises. Net Proceeds deposited in the Insurance and Condemnation Fund will be applied for such purpose by the City or Disney, as applicable, upon submission to the Trustee of requisitions signed by an Authorized City Representative or an Authorized Disney Representative. Any balance of the Net Proceeds remaining after such work has been completed will be paid to the City; provided that if such Net Proceeds relate to the Public Parking Facilities, any such remaining balance will be paid to Disney. Notwithstanding the foregoing (including without limitation the last provision of the second paragraph of this subheading), if the period of replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Leased Premises will exceed the period of time for which rental interruption insurance, if any, will be available for the payment of Lease Payments, such Net Proceeds will not be applied for such purposes but will be applied to the prepayment of Lease Payments and the redemption of Bonds, unless the City (or, with respect to the Public Parking Facilities, Disney) will elect to deposit moneys to the Revenue Fund to pay Lease Payments in excess of the amount of rental interruption insurance, if any, for the full period of such replacement, repair, restoration, modification or improvement. Application of Net Proceeds of Eminent Domain Award. The Net Proceeds from any eminent domain award will be paid to the Trustee by the City or Disney, as applicable, pursuant to the Lease Agreement or the Parking Operating Lease and will be applied and disbursed by the Trustee as follows: (a) If the City (or, with respect to the Public Parking Facilities, Disney) has given written notice to the Trustee of its determination that (x) such eminent domain proceedings have not materially affected the operation of the Leased Premises or the ability of the City or Disney, as applicable, to meet any of its obligations with respect to the Leased Premises under the Lease Agreement or the Parking Operating Lease, as applicable; and (y) such proceeds are not needed for repair or rehabilitation of the Leased Premises, the City or Disney, as applicable, will so certify to the Trustee and the Trustee, at the written request of an Authorized City Representative or an Authorized Disney Representative, will transfer such proceeds to the Redemption Account in the Debt Service Fund to be applied to the prepayment of Lease Payments pursuant to the Lease Agreement and the redemption of Bonds pursuant to the Indenture, in the following order of priority: first, Senior Lien Bonds which are not Tax-Exempt, on a pro rata basis from each of the Owners thereof; second, Senior Lien Bonds which are Tax-Exempt Bonds, in inverse order of maturity; and third, Subordinate Lien Bonds which are not Tax-Exempt, in inverse order of maturity. (b) If the City (or, with respect to the Public Parking Facilities, Disney) has given written notice to the Trustee of its determination that (x) such eminent domain proceedings have B-24 not materially affected the operation of the Leased Premises or the ability of the City or Disney, as applicable, to meet any of its obligations with respect to the Leased Premises under the Lease Agreement or the Parking Operating Lease, as applicable, and (y) such proceeds are needed for repair, rehabilitation or replacement of the Leased Premises, the City or Disney, as applicable, will so certify to the Trustee and the Trustee, at the City's or Disney's, as applicable, written request, will pay to the City, or to its order from said proceeds such amounts as the City may expend of such repair or rehabilitation, upon filing with the Trustee requisitions of an Authorized City Representative or an Authorized Disney Representative. (c) If (x) less than all of the Leased Premises will have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City (or, with respect to the Public Parking Facilities, Disney) has given written notice to the Trustee of its determination that such eminent domain proceedings have materially affected the operation of the Leased Premises or the ability of the City or Disney, as applicable, to meet any of its obligations with respect to the Leased Premises under the Lease Agreement or the Parking Operating Lease, as applicable; or (y) all of the Leased Premises will have been taken in such eminent domain proceedings, then the Trustee will transfer such proceeds to the Redemption Account of the Debt Service Fund to be applied toward the prepayment of the Lease Payments pursuant to the Lease Agreement and the redemption of Bonds pursuant to the Indenture, in the following order of priority: FIRST, Senior Lien Bonds which are not Tax-Exempt, on a pro rata basis from each Owner thereof; SECOND, Senior Lien Bonds which are Tax-Exempt Bonds, in inverse order of maturity; and THIRD, Subordinate Lien Bonds which are not Tax-Exempt, in inverse order of maturity. (d) In making the determination under the subsection of the Indenture summarized herein, the City may, but is not be required to, obtain at its expense, the report of an independent engineer or other independent professional consultant, a copy of which will be filed with the Trustee. Any such determination by the City will be final. (e) The Net Proceeds from any eminent domain award received with respect to the Stadium will be applied by Tenant in accordance with the Stadium Lease. Surplus Fund To the extent consistent with the 1997 Tax Certificate, the 2007 Tax Certificate and the Series 2019 A Tax Certificate, the Trustee will pay out of the Surplus Fund to City for application to any lawful purpose, within one Business Day of deposit therein, all amounts deposited to the Surplus Fund. Application of Moneys in the Special Reserve Fund As set forth in the Indenture, the Trustee will apply moneys in the Special Reserve Fund available for such purpose to the purchase of Bonds tendered to the Trustee for the purchase, the redemption of Bonds or the payment of Bonds, or will retain such moneys in the Special Reserve Fund, in each case as directed in writing by an Authorized Authority Representative and an Authorized Disney Representative. B-25 Application of Moneys in Special Reserve Fund to Purchase, Redeem or Pay Bonds (a) The Indenture as summarized herein under the caption "Application of Moneys in the Special Reserve Fund" provides that, subject to the provisions of the Indenture as summarized herein under the captions Debt Service Fund" and "Reserve Fund," on the fifth Business Day of each month, the Trustee will apply moneys in the Special Reserve Fund available for such purpose to the purchase of Bonds tendered to the Trustee for purchase, the redemption of Bonds or the payment of Bonds, or will retain such moneys in the Special Reserve Fund, in each case as directed in writing by an Authorized Authority Representative and an Authorized Disney Representative. (b) In order to cause moneys in the Special Reserve Fund to be applied to the purchase, redemption or payment of Bonds, the written direction of an Authorized Authority Representative and Authorized Disney Representative provided pursuant to the Indenture as summarized herein under the caption "Application of Moneys in the Special Reserve Fund" will specify the amount of such moneys to be so applied, the principal amounts and maturity dates of the Bonds to be purchased, redeemed or paid with such moneys and the Person, fund or account (which may be an escrow fund or account) to which such moneys are to be transferred or paid; provided, however, that if such moneys are to be applied to the redemption of Bonds, the Bonds selected for redemption will be in the order of priority specified in the Indenture related to the redemption of Bonds at the direction of the Authority." (c) If the Bonds to be redeemed or paid with such moneys in the Special Reserve Fund are to be defeased and deemed to have been paid pursuant to the Indenture, at the time of the transfer of such moneys therefrom, the Authority (i) will deliver (A) a report of an independent firm of nationally recognized certified public accountants or other accountants, as provided in the Indenture," (B) an escrow deposit agreement, as provided in the Indenture," and (C) an Opinion of Bond Counsel, as provided in the Indenture, and (ii) will have complied with the other provisions of the Indenture relating thereto. Application of Moneys in Surety Reimbursement Fund The Trustee will apply moneys in the Surety Reimbursement Fund to the payment of amounts due to the 1997 Reserve Surety Provider pursuant to the 1997 Reserve Surety, amounts due to the 2007 Reserve Surety Provider pursuant to the 2007 Reserve Surety, and amounts due to the Series 2019 A Reserve Surety Provider pursuant to the Series 2019 A Reserve Surety. Investments Authorized All moneys in any of the funds or accounts established pursuant to the Indenture will be invested by the Trustee in Investment Securities as directed pursuant to the Indenture maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in the Indenture; provided, however, that any moneys held in trust for the payment or redemption of Bonds will be invested as provided in the Indenture. The Trustee will make all such investments by following the instructions from the applicable party as set forth in the Indenture: (a) as directed by an Authorized City Representative with respect to moneys on deposit in the City Managed Public Improvements Account and the Convention Center Expansion Account in the Construction Fund, the 1997 Series A Account in the Reserve Fund; (b) as directed by an Authorized Disney Representative with respect to moneys on deposit in the 1997 Series C Account in the Reserve Fund; and (c) as directed by an Authorized Authority Representative after consultation with Disney with respect to moneys on deposit in all other funds and accounts established pursuant to the Indenture. B-26 Investment Securities may be purchased as directed by an Authorized City Representative, an Authorized Disney Representative or an Authorized Authority Representative, as applicable to the fund or account relating to such investment. Notwithstanding any other provision in the Indenture, in the absence of written investment instructions from the Authorized City Representative, Authorized Disney Representative or Authorized Authority Representative, as applicable, directing the Trustee by noon of the Business Day preceding the day when investments are to be made, the Trustee is directed to invest available funds (other than moneys held in trust for the payment or redemption of Bonds pursuant to the provisions of the Indenture regarding defeasance which will be invested as provided in the Indenture) in investments described in clause (g) of the definition of Investment Securities. The Trustee will not be liable for any consequences resulting from any investments made pursuant to the Indenture except for its own negligence or willfulmisconduct . The Authority may, with any funds available therefor, purchase the Bonds on the open market and may hold, pledge, cancel or resell the Bonds in its discretion. All interest, profits and other income received from the investment of moneys in any fund or account will be deposited as follows: (a) earningsin the Accounts and Subaccounts within the Construction Fund will be retained therein, except that earnings on the Convention Center Expansion Account and the City Managed Public Improvements Account may be transferred between such Accounts as directed in written instructions by an Authorized City Representative; (b) earningson the 2007 Costs of Issuance Fund will be retained therein; and (c) earnings on all other Funds and Accounts will be transferred to the Revenue Fund. Notwithstanding anything to the contrary contained in this paragraph, earnings on all Funds and Accounts (other than Bona Fide Debt Service Funds, as defined in the 1997 Tax Certificate, the 2007 Tax Certificate and the Series 2019 A Tax Certificate and earnings on the Taxable Bonds Subaccount within the Disney Managed Public Improvements Account in the Construction Fund above the yield on the Tax-Exempt Bonds, as defined in the 1997 Tax Certificate, the 2007 Tax Certificate, and the Series 2019 A Tax Certificate) Bonds will be transferred to the Rebate Fund, an amount of interest received with respect to any Investment Securities equal to the amount of accrued interest, if any, paid as part of the purchase price of such Investment Securities will be credited to the fund, account or subaccount from which such accrued interest was paid. For the purpose of determining the amount in any fund, all Investment Securities credited to such fund will be valued at the lower of cost or market value of such Investment Securities, except that Investment Securities credited to the Reserve Fund will be valued annually at the amortized cost thereof. The Trustee may act as principal or agent in the making or disposing of any investment. The Trustee may sell at the best price obtainable in the Trustee's sole discretion, or present for redemption, any Investment Securities so purchased whenever it will be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Investment Securities is credited, and the Trustee will not be liable or responsible for any loss resulting from such investment except for its own negligence or willful misconduct. Certain Covenants of the Authority Punctual Payment. The Authority will punctually pay or cause to be paid the principal, premium, if any, and interest to become due in respect of all the Bonds and all obligations owed The Walt Disney Company under the Reimbursement Agreement, in strict conformity with the terms of the Bonds, of the Indenture, and of the Reimbursement Agreement, according to the true intent and meaning thereof, but only out of Revenues and other assets pledged forsuch payment as provided in the Indenture. Against Encumbrances. The Authority will not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Trust Estate while any of the Bonds are Outstanding or any B-27 amounts remain due and owing under the Reimbursement Agreement, except the pledge and assignment created by the Indenture and the Reimbursement Agreement. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Act, and reserves the right to issue other obligations for such purposes. Events of Default and Remedies of Bondholders Events of Defa ult. Each of the following events will constitute an "Event of Default" under the Indenture: (a) defaultin the due and punctual payment of the principal or Accreted Value of, or premium, if any, or interest on, any Bond when and as the same will become due and payable, whether at maturity as therein expressed, by proceedings for redemption, or otherwise; (b) failure by the Authority to perform or observe any other of the covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, and the continuation of such failure for a period of 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, or to the Authority and the Trustee by the Owners of not less than 25% in aggregate principal amount of the Bonds at the time Outstanding, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer or by The Walt Disney Company; or (c) the occurrence and continuance of a Lease DefaultEvent . No default specified in clause (b) above will constitute an Event of Default unless the Authority will have failed to correct such defaultwithin the applicable period; provided, however, that if the default will be such that it cannot be corrected within such period, it will not constitute an Event of Default if corrective action is instituted by the Authority within the applicable period, diligently pursued and corrected within 60 days (or such longer period as will be approved by the 1997 Bond Insurer). Institution of Legal Proceedings by Trustee. If one or more Events of Default will happen and be continuing, the Trustee (upon the direction of the 1997 Bond Insurer) will (a) upon the written request of the Owners of a majority in principal amount of the Senior Lien Bonds then Outstanding, if there are any Senior Lien Bonds Outstanding, or, if there are no Senior Lien Bonds Outstanding, then upon the written request of the Owners of a majority in a principal amount of the Subordinate Lien Bonds then Outstanding, or, if there are no Subordinate Lien Bonds Outstanding, then upon the written request of The Walt Disney Company; (b) in case less than all of the several Series of Bonds then outstanding are affected by such Event of Default, upon the written request of the Owners of a majority in principal amount of each separate Series so affected then Outstanding; or (c) if no Bonds remain Outstanding but obligations remain to The Walt Disney Company under the Reimbursement Agreement, at the written request of The Walt Disney Company and upon being indemnified to its satisfaction therefor will, and in any event with the prior written consent of the 1997 Bond Insurer, proceed to protect or enforce its rights or the rights of the Owners of Bonds and The Walt Disney Company under the Act or the Indenture or the Lease Agreement, the Reimbursement Agreement or the Finance Agreement, as applicable, by a suit in equity or action at law, either forthe specific performance of any covenant or agreement contained in the Indenture or therein, or in aid of the execution of any power in the Indenture or in such documents granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee will deem most effectual in support of any of its rights or duties under the Indenture. B-28 Application of Revenues and Other Funds After Default. If an Event of Default occurs and is continuing, all Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of the Indenture will be applied by the Trustee as follows and in the following order: (a) to the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Owners of the Bonds and payment of reasonable fees and expenses of the Trustee and the 1997 Bond Insurer, the 2007 Bond Insurer and the Series 2019 A Bond Insurer (including reasonable fees and disbursements of its counsel) incurred in and about the performanceof its powers and duties under the Indenture; (b) to the payment of the principal of and interest on all Outstanding Senior Lien Bonds or making provision for such payment in accordance with the provisions of the Indenture (upon presentation of the Bonds to be paid, and stamping thereof the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of the Indenture; (c) to the payment of the principal or Accreted Value of and interest on all Outstanding Subordinate Lien Bonds or making provision for such payment in accordance with the provisions of the Indenture (upon presentation of the Bonds to be paid and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of the Indenture; (d) to The Walt Disney Company to satisfyall obligations under the Reimbursement Agreement; and (e) to the Authority for any lawfulpurp oses. Trustee To Represent 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 (and, upon payment in full of all Bonds, if so requested by The Walt Disney Company, as the lawful attomey in-fact forThe Walt Disney Company), forthe purpose of exercising and prosecuting on their behalf such rights and remedies to payment thereunder as may be available to such Owners or the Trustee, or, if applicable, The Walt Disney Company, under the provisions of the Bonds, the Indenture, the Lease Agreement, the Finance Agreement, the Act and applicable provisions of any other law. Subject to the provisions of the Indenture with respect to the rights of the 1997 Bond Insurer, the 2007 Bond Insurer, and the Series 2019 A Bond Insurer, upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Owners, the Trustee in its discretion may, and ( a) upon the written request of the Owners of not less than 25% in aggregate principal amount of the Senior Lien Bonds then Outstanding, or, if no Senior Lien Bonds are then Outstanding, upon the written request of the Owners of not less than 25% in aggregate principal amount of the Subordinate Lien Bonds then Outstanding or, if no Subordinate Lien Bonds are then Outstanding, upon the written request of The Walt Disney Company; (b) in case less than all of the several Series of Bonds then Outstanding are affected by such Event of Default, upon the written request of the Owners of not less than 25% in aggregate principal amount of each separate Series so affected then Outstanding; or (c) if no Bonds are Outstanding and The Walt Disney Company chooses to request the Trustee to act as its lawful attomey in-fact, at the written request of The Walt Disney Company, and upon being indemnified to its satisfaction therefor (except with respect to certain specified actions where no indemnification is required), proceed to protect or enforce its rights or the rights of such Owners or, if applicable, The Walt Disney Company, 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 in the Indenture, or for the enforcement of any other appropriate legal or equitable right or remedy vested in B-29 the Trustee or in such Owners or, if applicable, The Walt Disney Company, under the Indenture, the Lease Agreement, the Finance Agreement, the Continuing Disclosure Agreement, the Act 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, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insuerer and The Walt Disney Company, subject to the provisions of the Indenture. Owners ' Direction of Proceedings. Subject to the provisions of the Indenture with respect to rights of the 1997 Bond Insurer, the 2007 Bond Insurer and the Series 2019 A Bond Insurer, the Owners of a majority in aggregate principal amount of the Senior Lien Bonds then Outstanding, or, if no Senior Lien Bonds are then Outstanding, the Owners of a majority in aggregate principal amount of the Subordinate Lien Bonds then Outstanding or, if no Senior Lien Bonds or Subordinate Lien Bonds are then Outstanding, The Walt Disney Company, will have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, to direct the method of conducting all remedial proceedings taken by the Trustee; provided that such direction will not be otherwise than in accordance with law and the provisions of the Indenture, and that the Trustee will have the right to decline to follow any such direction forwhich it has not been provided adequate indemnity to its satisfaction. Limitation on Owners' Right To Sue. No Owner of any Bond 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 Lease Agreement, the Finance Agreement, the Continuing Disclosure Agreement, the Act or any other applicable law with respect to such Bond, unless (a) such Owner will have given to the Trustee written notice of the occurrence of an Event of Default; (b )(i) the Owners of not less than 25% in aggregate principal amount of the Senior Lien Bonds then Outstanding or, if no Senior Lien Bonds are then Outstanding, the Owners of not less than 25% in aggregate principal amount of the Subordinate Lien Bonds then Outstanding; or (ii) in case less than all of the several Series of Bonds then Outstanding are affected by such Event of Default, the Owners of not less than 25% or each separate Series so affected then Outstanding, will have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such Owner or said Owners will have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and ( d) the Trustee will have refused or omitted to comply with such request for a period of 60 days after such written request will have been received by, and said tender of indemnity will have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are declared under the Indenture, 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 such Owners' 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 Indenture, the Lease Agreement, the Finance Agreement, the Continuing Disclosure Agreement, the Act 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 therein provided 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, contained will affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon B-30 call for redemption, as therein provided, but only out of the Revenues and other assets therein pledged therefor, 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 or affect the rights of The Walt Disney Company under the Reimbursement Agreement. No Remedy Exclusive. NO REMEDY IN THE INDENTURE CONFERRED UPON OR RESERVED TO THE TRUSTEE OR TO THE OWNERS OF THE BONDS OR THE WALT DISNEY COMPANY, 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. Removal and Resignation of Trustee The Trustee may at any time and for any reason be removed by an instrument or concurrent instruments in writing appointing a successor Trustee filed with the Trustee so removed and executed by the 1997 Bond Insurer or by the Owners of a majority in aggregate principal amount of the Senior Lien Bonds Outstanding or, if no Senior Lien Bonds are then Outstanding, the Owners of not less than 25% in aggregate principal amount of the Subordinate Lien Bonds then Outstanding, or, if no Senior Lien Bonds or Subordinate Lien Bonds are then Outstanding, The Walt Disney Company. Under certain circumstances described in the Indenture, the Trustee may be removed by an instrument in writing, consented to by the 1997 Bond Insurer, the 2007 Bond Insurer and The Walt Disney Company which may be executed by the Authority, appointing a successor Trustee filed with the Trustee so removed; provided that the Authority may not remove the Trustee during the occurrence and continuance of an Event of Default. Notwithstanding the foregoing, the Trustee may not be removed until a successor Trustee has been appointed and has assumed the duties and responsibilities of successor Trustee under the Indenture. The Trustee may at any time resign by giving written notice of such resignation to the Authority and by giving the Owners, the 1997 Bond Insurer, the 2007 Bond Insurer and The Walt Disney Company notice of such resignation by mail at the addresses shown on the registration books maintained by the Bond Registrar. Upon receiving such notice of resignation, the Authority will promptly appoint, with the consent of the 1997 Bond Insurer, the 2007 Bond Insurer and The Walt Disney Company, a successor Trustee by an instrument in writing. The Trustee will not be relieved of its duties until such successor Trustee has accepted its appointment. Any successor Trustee appointed under the provisions of the Indenture will be a trust company or bank having the powers of a trust company with a principal corporate trust office in San Francisco, California, Los Angeles, California, or New York, New York, authorized to perform all duties imposed upon it by the Indenture, with a rating on its long-term debt from Moody's of at least "Baa3" and a short term rating of at least "P-3," or as otherwise approved by the rating agency then rating the Bonds, having a combined capital and surplus (or the parent holding company of which has a combined capital and surplus) of at least $50,000,000, and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this paragraph the combined capital and surplus of such bank or trust company will be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Amendments to Indenture The Indenture and the rights and obligations of the Authority and of the Owners of the Bonds and of the Trustee may be modified or amended from time-to-time and at any time by an indenture or B-31 indentures supplemental thereto, which the Authority and the Trustee may enter into when the written consent of the Owners of a majority in aggregate principal amount of all Senior Lien Bonds then Outstanding, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer and The Walt Disney Company will have been filed with the Trustee or if less than all of the Outstanding Bonds are affected, the written consent of the Owners of at least a majority in aggregate principal amount of all affected Bonds, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer and The Walt Disney Company will have been filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any particular maturity remain Outstanding, the consent of the Owners of such Bonds will not be required and such Bonds will not be deemed to be Outstanding for the purpose of any such calculation of Bonds Outstanding for such purpose. No such modification or amendment will (a) extend the fixed maturity of any Bond, or reduce the amount of principal thereof, or extend the time of payment, or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the Owner of each Bond so affected; or (b) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effectany such modificationor amendment, or permit the creation of any lien on the Revenues and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture, or deprive the Owners of the Bonds of the lien created by the Indenture on such Revenues and other assets (except as expressly provided in the Indenture), without the consent of the Owners of all of the Bonds then Outstanding; or (c) adversely affect the interests of the Trustee without its prior written consent. It will not be necessary for the consent of the Owners to approve the particular form of any Supplemental Indenture, but it will be sufficientif such consent will approve the substance thereof. The Indenture and the rights and obligations of the Authority, of the Trustee and of the Owners of the Bonds may also be modified or amended from time-to-time and at any time by an indenture or indentures supplemental to the Indenture, which the Authority and the Trustee may enter into without the consent of any Owners but with the consent of The Walt Disney Company, the 1997 Bond Insurer, the 2007 Bond Insurer and the Series 2019 A Bond Insurer, but only to the extent permitted by law including, without limitation, forany 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 forthe Bonds, or to surrender any right or power reserved to or conferred upon the Authority in the Indenture; (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 regard to matters or questions arising under the Indenture, as the Authority may deem necessary or desirable which do not adversely affect the rights of the Owners under the Indenture; (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 federalstatute; (d) to make such provisions for the purpose of obtaining a rating on the Bonds which do not adversely affect the rights of the Owners under the Indenture; (e) to modify, amend or supplement the Indenture in such a manner to permit the Authority, the Trustee, the City or any other responsible party to comply with the requirements of S. E. C. Rule 15c2-12, as it may from time-to-time be amended or supplemented, with respect to the Bonds; and B-32 (f) to modify, amend or supplement the Indenture in any other respect which does not adversely affect the rights of the Owners under the Indenture. The Trustee will give notice of any such modification or amendment to each rating agency then rating the Bonds. The Trustee may in its discretion, but will not be obligated to, enter into any such Supplemental Indenture authorized by clause (a) or (b) above which materially adversely affects the Trustee's own rights, duties or immunities under the Indenture or otherwise. Defeasance Discharge of Indenture. The Bonds may be paid by the Authority in any of the followingways; provided that the Authority also pays or causes to be paid any other sums payable under the Indenture by the Authority: (a) by paying or causing to be paid the principal (or Accreted Value) of, interest and premium, if any, on the Bonds, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, money or securities in the necessary amount to pay or redeem all Bonds then Outstanding; or (c) by delivering to the Trustee, forcancellation by it, the Bonds then Outstanding. If the Authority also (a) pays or causes to be paid all other sums payable under the Indenture by the Authority, including without limitation, all sums due or to become due to the 1997 Bond Insurer, the 2007 Bond Insurer and the Series 2019 A Bond Insurer and all sums due or to become due under the Reimbursement Agreement; (b) deliver a report of an independent firm of nationally recognized certified public accountants or such other accountants as will be acceptable to the 1997 Bond Insurer, the 2007 Bond Insurer and the Series 2019 A Bond Insurer verifying the sufficiency of the escrow established to pay the Bonds in full on their maturity or redemption date; (c) deliver an escrow deposit agreement in form and substance satisfactory to the 1997 Bond Insurer, the 2007 Bond Insurer and the Series 2019 A Bond Insurer; and ( d) deliver an Opinion of Bond Counsel addressed to the Authority, the Trustee, the 1997 Bond Insurer, the 2007 Bond Insurer and the Series 2019 A Bond Insurer to the effect that the Bonds are no longer Outstanding, then and in that case, at the election of the Authority (evidenced by a Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to discharge all such indebtedness and the Indenture), together with the written consent of The Walt Disney Company and notwithstanding that any Bonds will not have been surrendered for payment, the Indenture and the pledge of Revenues and other assets made under the Indenture and all covenants, agreements and other obligations of the Authority under the Indenture will cease, terminate, become void and be completely discharged and satisfied except only as provided in the Section of the Indenture summarized below. Discharge of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of money or Defeasance Securities in the necessary amount (as provided in the Indenture) to pay or redeem all Outstanding Bonds (whether upon or prior to the maturity or the redemption date of such Bonds); provided that, if any of such Bonds are to be redeemed prior to maturity, notice of such redemption will have been given as provided in the Indenture or provision satisfactory to the Trustee will have been made for the giving of such notice, then all liability of the Authority in respect of such Bonds will cease, terminate and be completely discharged, except only that the Owners thereof will thereafter be entitled to payment of the principal or redemption price, as applicable, of and interest on such Bonds by the Authority, and the Authority will remain liable for such payment; but only out of such money or securities deposited with the Trustee as aforesaid for their payment, and such moneys will be pledged to such payment; provided, further, however, that the provisions of the Indenture will apply in all events. Notwithstanding anything stated in the Indenture to the contrary, all obligations of the Authority under B-33 the Indenture to support payment in full of amounts due to The Walt Disney Company under the Reimbursement Agreement will continue under the Indenture until satisfied pursuant to the provisions of the Indenture and of the Reimbursement Agreement. Deposit of Mo ney or Securities With Trustee. 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 (exclusive of the Construction Fund) and will be: (a) moneys in an equal amount to the principal amount or Accreted Value 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 will have been given as provided in the Indenture or provision satisfactory to the Trustee will have been made for the giving of such notice, the amount to be deposited or held will be the redemption price of such Bonds and all unpaid interest thereon to the redemption date; or (b) Defeasance Securities the principal of and interest which when due will provide money sufficient to pay the principal or redemption price, as applicable, of, all unpaid interest to maturity, or to the redemption date, as the case may be, on the Bonds to be paid or redeemed, as such principal and interest become due; provided that, in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption will have been given as provided in the Indenture or provision satisfactory to the Trustee will have been made for the giving of such notice; and provided further that Defeasance Securities purchased pursuant to this paragraph will not be subject to redemption prior to their maturity other than at the option of the holder thereof unless the moneys to be available from the redemption of such securities on the earliest date on which such securities are subject to redemption, other than at the option of the holder thereof, will be at least equal to the amount of money expected to be derived in connection with such Defeasance Securities in determining that the provisions of this paragraph have been satisfied; provided, in each case, that the Trustee will have been irrevocably instructed (by the terms of the Indenture or by Request of the Authority) to apply such money to the payment of such principal or redemption price, as applicable, and interest with respect to such Bonds. Payments After Discharge of In den ture. When there are no longer any Bonds Outstanding, and all obligations due to The Walt Disney Company under the Reimbursement Agreement have been paid or provided for, and all fees, charges and expenses of the Trustee and any Paying Agents have been paid or provided for, and all expenses of the Authority relating to the Indenture have been paid or provided for, and all other amounts payable under the Indenture and under the Lease Agreement have been paid, and the Indenture has been discharged and satisfied, the Trustee will pay any moneys remaining in any fund established and held under the Indenture to the Authority. Certain Rights of the 1997 Bond Insurer The 1997 Bond Insurer will be deemed the sole Owner of the Unrefunded 1997 Series A Bonds and the 1997 Series C Bonds insured by the 1997 Bond Insurer for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the Unrefunded 1997 Series A Bonds and the 1997 Series C Bonds insured by the 1997 Bond Insurer are entitled to take pursuant to the provisions of the Indenture relating to events of default and remedies of bondowners and the Trustee. The rights of the 1997 Bond Insurer to direct or consent to Authority, Trustee or Bondholder actions under the Indenture will be suspended during any period in which the 1997 B-34 Bond Insurer is in default in its payment obligations under the 1997 Bond Insurance Policy ( except to the extent of amounts previously paid by the 1997 Bond Insurer and due and owing to the 1997 Bond Insurer) and will be of no force or effect in the event the 1997 Bond Insurance Policy is no longer in effect or the 1997 Bond Insurer asserts that the 1997 Bond Insurance Policy is not in effect or the 1997 Bond Insurer will have provided written notice that it waives such rights. Amounts paid by the 1997 Bond Insurer under the 1997 Bond Insurance Policy and not otherwise paid by The Walt Disney Company under the Disney Credit Enhancement Agreement will not be deemed paid for purposes of the Indenture and will remain Outstanding (as defined in the 1997 Bond Insurance Policy) and continue to be due and owing until paid in accordance with the Indenture or otherwise reimbursed under the Disney Credit Enhancement Agreement. The 1997 Bond Insurer will, to the extent it makes any payment of principal of (or Accreted Value, as applicable) or interest on the Unrefunded 1997 Series A Bonds and the 1997 Series C Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the 1997 Bond Insurance Policy, unless otherwise paid or reimbursed in accordance with the Disney Credit Enhancement Agreement. The 1997 Bond Insurer will be entitled to pay principal ( or, in the case of Capital Appreciation Bonds, Accreted Value) or interest on the Unrefunded 1997 Series A Bonds and the 1997 Series C Bonds that will become Due for Payment but will be unpaid by reason of Nonpayment by the Authority (as such terms are defined in the 1997 Bond Insurance Policy) in accordance with the Indenture, whether or not the 1997 Bond Insurer has received a Notice (as defined in the 1997 Bond Insurance Policy) of Nonpayment or a claim upon the 1997 Bond Insurance Policy. The 1997 Bond Insurer will be a third-party beneficiary to the Indenture. The 1997 Bond Insurer will have the right to advance any payment required to be made by the Authority in order to prevent an Event of Defaultunder the Indenture and the Trustee agrees to accept such advance. Certain Rights of the 2007 Bond Insurer The 2007 Bond Insurer will be deemed the sole Owner of the 2007 Bonds insured by the 2007 Bond Insurer for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the 2007 Bonds insured by the 2007 Bond Insurer are entitled to take pursuant to the provisions of the Indenture relating to events of default and remedies of bondowners and the Trustee. The rights of the 2007 Bond Insurer to direct or consent to Authority, Trustee or Bondholder actions under the Indenture will be suspended during any period in which the 2007 Bond Insurer is in defaultin its payment obligations under the 2007 Bond Insurance Policy ( except to the extent of amounts previously paid by the 2007 Bond Insurer and due and owing to the 2007 Bond Insurer) and will be of no force or effect in the event the 2007 Bond Insurance Policy is no longer in effect or the 2007 Bond Insurer asserts that the 2007 Bond Insurance Policy is not in effect or the 2007 Bond Insurer will have provided written notice that it waives such rights. The 2007 Bond Insurer will be entitled to pay principal or interest on the 2007 Bonds that will become Due for Payment but will be unpaid by reason of Nonpayment by the Authority (as such terms are defined in the 2007 Bond Insurance Policy) in accordance with the Indenture, whether or not the 2007 Bond Insurer has received a Notice (as defined in the 2007 Bond Insurance Policy) of Nonpayment or a claim upon the 2007 Bond Insurance Policy. The 2007 Bond Insurer will be a third-party beneficiary to the Indenture. The 2007 Bond Insurer will have the right to advance any payment required to be made by the Authority in order to prevent an Event of Defaultunder the Indenture and the Trustee agrees to accept such advance. B-35 Provisions Relating to Series 2019 A Bond Insurer Rights of the Series 2019 A Bond Insurer. The Series 2019 A Bond Insurer will be deemed the sole Owner of the Series 2019 A Insured Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the Series 2019 A Insured Bonds are entitled to take pursuant to the provisions of the Indenture related to events of default and remedies of bondowners and the Trustee. The rights of the Series 2019 A Bond Insurer to direct or consent to Authority, Trustee or Owner actions under the Indenture will be suspended during any period in which the Series 2019 A Bond Insurer is in defaultin its payment obligations under the Series 2019 A Bond Insurance Policy (except to the extent of amounts previously paid by the Series 2019 A Bond Insurer and due and owing to the Series 2019 A Bond Insurer) and will be of no force or effect in the event the Series 2019 A Bond Insurance Policy is no longer in effect or the Series 2019 A Bond Insurer asserts that the Series 2019 A Bond Insurance Policy is not in effect or the Series 2019 A Bond Insurer will have provided written notice that it waives such rights. Th ird Party Beneficiary. The Series 2019 A Bond Insurer will be a third-party beneficiary to the Indenture. The Series 2019 A Bond Insurer will have the right to advance any payment required to be made by the Authority in connection with the Series 2019 A Insured Bonds in order to prevent an Event of Default under the Indenture and the Trustee will accept such advance. Claims Up on Series 2019 A Bond Insurance Policy and Payments by and to the Series 2019 A Bond Insurer. (i) If, on the third day preceding any Interest Payment Date for the Series 2019 A Insured Bonds there is not on deposit with the Trustee sufficient moneys available to pay all principal of and interest on the Series 2019 A Insured Bonds due on such date, the Trustee will immediately notify the Series 2019 A Bond Insurer and any fiscal agent appointed by the Series 2019 A Bond Insurer of the amount of such deficiency. If, by said Interest Payment Date, the Authority has not provided the amount of such deficiency, the Trustee will simultaneously make available to the Series 2019 A Bond Insurer and to the Trustee the registration books for the Series 2019 A Insured Bonds maintained by the Trustee. In addition (A) the Trustee will provide the Series 2019 A Bond Insurer with a list of the Owners entitled to receive principal or interest payments from the Series 2019 A Bond Insurer under the terms of the Series 2019 A Bond Insurance Policy and will make arrangements for the Series 2019 A Bond Insurer and the Trustee (I) to mail checks or drafts to Owners entitled to receive full or partial interest payments from the Series 2019 A Bond Insurer, and (II) to pay principal of the Series 2019 A Insured Bonds surrendered to the Trustee by the Owners entitled to receive full or partial principal payments from the Series 2019 A Bond Insurer, and (B) the Trustee will, at the time it makes the registration books available to the Series 2019 A Bond Insurer pursuant to clause (A) above, notify Owners entitled to receive the payment of principal of or interest on the Series 2019 A Insured Bonds from the Series 2019 A Bond Insurer (I) as to the fact of such entitlement, (II) that the Series 2019 A Bond Insurer will remit to them all or part of the interest payments coming due subject to the terms of the Series 2019 A Bond Insurance Policy, (III) that, except as provided in paragraph (ii), below, in the event that any Owner is entitled to receive full payment of principal from the Series 2019 A Bond Insurer, such Owner must tender such Owner's Series 2019 A Insured Bond with the instrument of transfer in the form provided on the Series 2019 A Insured Bond executed in the name of the Series 2019 A Bond Insurer, and (IV) that, except as provided in paragraph (ii), below, in the event that such Owner is entitled to receive partial payment of principal from the Series 2019 A Bond Insurer, such Owner must tender such Owner's Series 2019 A Insured Bond for payment first to the Trustee, which will note on such Series 2019 A Insured Bond the portion of principal paid by the Trustee, and then, with an acceptable form of assignment executed in the name of the Series 2019 A Bond Insurer, to the Trustee, which will B-36 then pay the unpaid portion of principal to the Owner subject to the terms of the Series 2019 A Bond Insurance Policy. (ii) In the event that the Trustee has received written notice that any payment of principal of or interest on a Series 2019 A Insured Bond has been recovered from an Owner pursuant to the United Stated Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee will, at the time it provides notice to the Series 2019 A Bond Insurer, notify all Owners of Series 2019 A Insured Bonds that in the event that any such Owner's payment is so recovered, such Owner will be entitled to payment from the Series 2019 A Bond Insurer to the extent of such recovery, and the Trustee will furnish to the Series 2019 A Bond Insurer its records evidencing the payments of principal of and interest on the Series 2019 A Insured Bonds that have been made by the Trustee and subsequently recovered fromOwners, and the dates on which such payments were made. (iii) The Series 2019 A Bond Insurer will, to the extent it makes payment of principal of or interest on the Series 2019 A Insured Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Series 2019 A Bond Insurance Policy and, to evidence such subrogation (A) in the case of subrogation as to claims for past due interest, the Trustee will note the Series 2019 A Bond Insurer's rights as subrogee on the registration books maintained by the Trustee upon receipt from the Series 2019 A Bond Insurer of proof of the payment of interest thereon to the Owners of such Series 2019 A Insured Bonds, and (B) in the case of subrogation as to claims for past due principal, the Trustee will note the Series 2019 A Bond Insurer's rights as subrogee on the registration books for the Series 2019 A Insured Bonds maintained by the Trustee upon receipt of proof of the payment of principal thereof to the Owners of such Series 2019 A Insured Bonds. Notwithstanding anything in the Indenture or the Series 2019 A Bonds to the contrary, the Trustee will make payment of such past due interest and past due principal directly to the Series 2019 A Bond Insurer to the extent that the Series 2019 A Bond Insurer is a subrogee with respect thereto. Defa ult Provisions. (i) In determining whether a payment defaulthas occurred or whether a payment on the Series 2019 A Insured Bonds has been made under the Indenture, no effect will be given to payments made under the Series 2019 A Bond Insurance Policy. (ii) The Series 2019 A Bond Insurer will receive immediate notice of any payment default and notice of any other default of which the Trustee or the Authority has actual knowledge within 30 days of the Trustee's or the Authority's obtaining such knowledge thereof. (iii) For all purposes of the provisions of the Indenture governing the events of default and remedies, except the giving of notice of default to Owners, the Series 2019 A Bond Insurer will be deemed to be the sole holder of the Series 2019 A Insured Bonds for so long as it has not failed to comply with its payment obligations under the Series 2019 A Bond Insurance Policy (iv) The waiver of any event of default by the Trustee will be subject to the prior written consent of the Series 2019 A Bond Insurer. Amendments and Supplements. Any amendment or supplement to the Indenture or any other principal financing document will be subject to the prior written consent of the Series 2019 A Bond Insurer. Any rating agency rating the Series 2019 A Bonds must receive notice of each amendment and a copy thereof at least 15 days in advance of its execution or adoption. The Authority will cause the Series B-37 2019 A Bond Insurer to be provided with a full transcript of all proceedings relating to the execution of any such amendment or supplement. Series 2019 A Reserve Surety Provisions (a) If the Authority will fail to repay any Series 2019 A Reserve Surety Costs, the Series 2019 A Reserve Surety Provider will be entitled to exercise any and all remedies available to it at law or in equity, other than remedies that would adversely affectOwners of the Series 2019 A Bonds. (b) If any Series 2019 A Reserve Surety Costs are owed to the Series 2019 A Reserve Surety Provider, no Refunding Bonds may be issued under the Indenture without the Series 2019 A Reserve Surety Provider's prior written consent. ( c) The Trustee will ascertain the necessity for a claim upon the Series 2019 A Reserve Surety and to provide notice to the Series 2019 A Reserve Surety Provider in accordance with the terms of the Series 2019 A Reserve Surety at least two Business Days prior to each Interest Payment Date. ( d) The Series 2019 A Reserve Surety Provider will be given written notice of the resignation or removal of the Trustee and of the appointment of a successor thereto. ( e) The Trustee will be the custodian of the Series 2019 A Reserve Surety and will hold such Series 2019 A Reserve Surety in trust for the Owners of the Series 2019 A Bonds in respect thereof. (f) The Series 2019 A Reserve Surety will terminate on the earlier of the scheduled final maturity date of the Series 2019 A Bonds Outstanding as of the issuance date of the Series 2019 A Reserve Surety or the date on which no Series 2019 A Bonds are Outstanding under the Indenture. (g) Notwithstanding anything in the Indenture to the contrary, the Series 2019 A Reserve Surety will be used only to pay for disbursement to Owners of the Series 2019 A Bonds that portion of the principal of and interest on the Series 2019 A Bonds that is then due for payment and which the Authority will have failed to provide. The term "due for payment" means (i) with respect to principal of a Series 2019 A Bond, the stated maturity date thereof or the date on which principal will have been duly called for mandatory sinking fund redemption, and does not refer to any earlier date on which the payment of principal of the Series 2019 A Bonds is due by reason of call for redemption, other than mandatory sinking fund redemption, and (ii) with respect to interest on a Series 2019 A Bond, the stated date forpayment of such interest. (h) The Indenture will not be deemed discharged until all Series 2019 A Reserve Surety Costs owing to the Series 2019 A Reserve Surety Provider will have been paid in full. The Authority's obligation to pay such amounts survives payment in full of the Series 2019 A Bonds, and is payable solely from Revenues. Tax Covenants (Series 2019 Bonds) (a) The Authority will not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Series 2019 A Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, the Authority will comply with the requirements of the Series 2019 A Tax Certificate, which is incorporated in the Indenture as if fully set forth therein. This covenant will survive payment in full or defeasance of the Series 2019 A Bonds. B-38 (b) In the event that at any time the Authority is of the opinion that for purposes of the Indenture summarized in this section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the funds or accounts established under the Indenture, the Authority will so instruct the Trustee in writing, and the Trustee will take such action as may be necessary in accordance with such instructions. ( c) Notwithstanding any provisions of the Indenture as summarized in this section, if the Authority will provide to the Trustee an Opinion of Bond Counsel to the effect that any specified action required under Indenture summarized in this section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Series 2019 A Bonds, the Trustee may conclusively rely on such opinion in complying with the requirements of the Indenture summarized in this section and of the Series 2019 A Tax Certificate, and the covenants under the Indenture will be deemed to be modified to that extent. Continuing Disclosure (Series 2019 Bonds) Pursuant to the Series 2019 Continuing Disclosure Agreement, the City has undertaken to provide certain annual financial information with respect to the Series 2019 Bonds. The Authority has no obligation or responsibility with respect thereto. The Trustee will comply with and carry out all of the provisions of the Series 2019 Continuing Disclosure Agreement applicable to it. Notwithstanding any other provision of this Indenture, failure of the City or the Trustee to comply with the Series 2019 Continuing Disclosure Agreement will not be considered an Event of Default; provided, however, that the Trustee may ( and, at the written direction of the Series 2019 Participating Underwriter or the Owners of at least 25% of the aggregate principal amount of Outstanding Series 2019 Bonds, and upon receipt of indemnification reasonably satisfactory to the Trustee, will) or any Owner or Beneficial Owner of the Series 2019 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performanceby court order. THE LEASE AGREEMENT Access to the Leased Premises The City agrees that the Authority and any Authorized Authority Representative, and the Authority's successors or assigns, will have the right at all reasonable times to enter upon and to examine and inspect the Leased Premises. The City further agrees that the Authority, any Authorized Authority Representative, and the Authority's successors or assigns will have such rights of access to the Leased Premises as may be reasonably necessary to cause the proper maintenance of the Leased Premises in the event of failureby the City to perform its obligations under the Lease Agreement. Lease of Project The Authority leases the Leased Premises to the City and the City leases the Leased Premises from the Authority pursuant to the terms and conditions of the Lease Agreement; subject, however, to all Permitted Encumbrances. The leasing of the Leased Premises by the City to the Authority pursuant to the Site Lease will not affect or result in a merger of the City's leasehold estate pursuant to the Lease Agreement and its feeestate under the Site Lease. Term; Occupancy The Term of the Lease Agreement will commence on the date thereof, and will end on March 1, 2037, unless such term is extended as provided in the Lease Agreement. If, on March 1, 2037, the Indenture will not be discharged by its terms or if the Lease Payments payable under the Lease B-39 Agreement will have been abated at any time and for any reason, or any amounts remain due and owing under the Reimbursement Agreement or the Finance Agreement to The Walt Disney Company or any amounts remain due and owing to the 1997 Bond Insurer under the Indenture, then the Term of the Lease Agreement will be extended for a period of 10 years to March 1, 204 7, or such earlier time as may be required, (a) to pay any unpaid principal of or interest on Outstanding Bonds, and all other obligations under the Indenture; and (b) to pay all reimbursement obligations due under the terms of the Reimbursement Agreement. If, prior to March 1, 2037, the Indenture will be discharged by its terms and no amounts are due under the Indenture to the 1997 Bond Insurer or to The Walt Disney Company under the Reimbursement Agreement or the Finance Agreement, the Term of the Lease Agreement will thereupon end. Lease Payments Obligation To Pay. Subject to the provisions of the Lease Agreement, the City agrees to pay to the Authority, its successors and assigns, as rental for the use and occupancy of the Leased Premises during each Rental Period during the Term of the Lease Agreement, Lease Payments in an amount equal to the Lease Payment Measurement Revenues received during such Rental Period calculated in accordance with the Lease Agreement. The Lease Payments with respect to each Rental Period commencing on and after July 1, 2001 will be paid in multiple installments with each installment of Lease Payments to be due and payable on the fifth Business Day following the end of each month during such Rental Period in an amount equal to the difference between: (a) the Lease Payment Measurement Revenues received during such Rental Period to and including the last day of the month immediately preceding the installment payment date, and (b) the Lease Payments previously paid with respect to such Rental Period. In determining the amount of each such installment after July 6, 2001, the Baseline Measurement Revenues for purposes of clause (i) of paragraph (a) of the definition of Lease Payment Measurement Revenues will be deemed to be equal to one-twelfth of the Baseline Measurement Revenues, as adjusted pursuant to said clause (i) to the commencement of such Rental Period, for each month in the Rental Period preceding the installment payment date; and provided further that in determining the amount of each such installment, the Baseline Measurement Revenues for purposes of clause (i) of paragraph (b) of the definition of Lease Payment Measurement Revenues will be deemed to be equal to 50% of the Baseline Measurement Revenues, as adjusted pursuant to said clause (b) to the commencement of such Rental Period, for all months in such Rental Period prior to April and 100% of the Baseline Measurement Revenues, as adjusted pursuant to said clause (i) to the commencement of such Rental Period, for all months on and after April 1 in such Rental Period. Reduction in Taxes In cluded in Lease Payment Measurement Revenues. The City agrees that any Voluntary changes made by the City to the TOT rates, sales tax rates and/or property tax rates utilized to determine the Lease Payment Measurement Revenues will not result in any changes in the calculation of Lease Payment Measurement Revenues. If at any time the rates of and/or methodology for calculating the TOT, sales tax or property tax that is used to determine Lease Payment Measurement Revenues are changed by any act or for any reason other than a Voluntary act of the City (a "Non-Voluntary Reduction"), and a substitute revenue source is provided or identified in conjunction with such Non-Voluntary Reduction, then the City will apply such substitute revenue source to offset such reductions in Lease Payment Measurement Revenues; provided, however, that if no such substitute revenue source is provided or identified in conjunction with such Non-Voluntary Reduction, then the Lease Payment Measurement Revenues will be decreased in accordance with such Non Voluntary Reduction. Effe ct of Prepayment. In the event that the City prepays all remaining Lease Payments in full pursuant to the Lease Agreement, and satisfies all amounts owed to the 1997 Bond Insurer under the 1997 Bond Insurance Policy and owed to The Walt Disney Company under the Reimbursement Agreement, the City's obligations under the Lease Agreement will thereupon cease and terminate including, but not limited B-40 to, the City's obligation to pay Lease Payments under the Lease Agreement; subject however, to certain provisions of the Lease Agreement in the case of prepayment by application of a security deposit. Fair Rental Va lue. The Lease Payment due and payable in each Rental Period will constitute the total rental for the Leased Premises for each such Rental Period and will be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy, and the continued quiet use and enjoyment, of the Leased Premises during each Rental Period. The City and the Authority agree that the amount of the Lease Payment Measurement Revenues will serve as a measure of the value of the Leased Premises. The use and occupancy by any permitted sublessee of the City of all or any portion of the Leased Premises will constitute use and enjoyment of such Leased Premises by the City under the Lease Agreement. The City and the Authority acknowledge that the Public Improvements located on City property, other than the Convention Center Expansion itself, are an integral part of the development of the Convention Center Expansion and the Public Parking Facilities, that such Public Improvements directly benefit those portions of the Leased Premises located in proximity to such Public Improvements, and that such Public Improvements permit the full utilization and benefit of the Leased Premises by the City. Therefore, as such Public Improvements are to be financed with the proceeds of the Authority's Bonds as provided in the Indenture in furtherance of the improvements included in the Leased Premises, the City and the Authority agree that the value of all such Public Improvements is a proper element in considering the fair rental value of the Leased Premises. The parties to the Lease Agreement have agreed and determined that the total Lease Payments for the Leased Premises for each Rental Period do not exceed the fair rental value of the Leased Premises for such Rental Period. In making such determination, consideration has been given to the obligations of the parties under the Lease Agreement, the uses and purposes which may be served by the Leased Premises, the total amounts which have been expended on and in connection with the Leased Premises, the value of the Site and the benefits from the development and improvement of the Leased Premises as described in the Lease Agreement which will accrue to the City and the general public. Source of Payments; Budget and Appropriation. The Lease Payments will be payable from any source of available funds of the City, subject to the provisions of the Lease Agreement. The Lease Payments made with respect to any Fiscal Year will be made by the City with funds allocable to such Fiscal Year, including any available balances carries forward to the City's funds and accounts from prior Fiscal Years. The City covenants to take such action as may be necessary to include all Lease Payments due under the Lease Agreement in each of its budgets during the Term of the Lease Agreement and to make the necessary annual appropriations for all such Lease Payments in an amount equal to the Lease Payment Measurement Revenues, subject only to provisions in the Lease Agreement regarding the abatement of the Lease Payments. The covenants on the part of the City contained in the Lease Agreement will be deemed to be and will be construed to be duties imposed by law, and it will be the duty of each and every public official of the City to take such action and do such things in the performance of the official duty of such public officials as are required by law to enable the City to carry out and perform its covenants and agreements on the part of the City contained in the Lease Agreement, including, without limitation, the payment of all Lease Payments in the amount of the Lease Payment Measurement Revenues, as provided in the Lease Agreement, subject, as to such payments, to the provisions of the Lease Agreement regarding abatement. The obligations of the City to make Lease Payments as provided in the Lease Agreement will not constitute an indebtedness of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. Abatement of Lease Payments. Lease Payments will be abated during any period in which, by reason of damage, destruction, condemnation or defect in title, there is substantial interference with the B-41 use and occupancy by the City of the Leased Premises or any material portion thereof to the extent to be agreed upon by the City and the Authority. The parties agree that the amount of the Lease Payments under such circumstances will not be less than the amount of the unpaid Lease Payments as are then scheduled to be paid, unless such unpaid amounts are determined, upon consultation with the 1997 Bond Insurer and The Walt Disney Company, to be greater than the fair rental value of the portions of the Leased Premises not damaged, destroyed, condemned or affected by such title defect, based upon the opinion of an appraiser satisfactoryto the 1997 Bond Insurer with expertise in valuing such properties or other appropriate method of valuation, in which event the Lease Payments will be abated such that they represent said fair rental value. Such abatement will continue for the period commencing with the date on which any substantial interference with the City's right to use or possession of the Leased Premises, or any material portion thereof, as a result of such damage, destruction, condemnation or defect in title, and ending with the restoration of the Leased Premises, or the affected portion thereof, to tenantable condition. In the event of any such damage, destruction, condemnation or defect in title, the Lease Agreement will continue in full force and effect and the City waives any right to terminate the Lease Agreement by virtue of any such damage, destruction, condemnation or defect in title. Notwithstanding the foregoing, there will be no abatement of Lease Payments under the Lease Agreement, to the extent that the proceeds of rental interruption insurance are available to pay Lease Payments which would otherwise be abated under the Lease Agreement, it being declared that such proceeds constitute special funds for the payment of the Lease Payments. Quiet Enjoyment During the Term of the Lease Agreement, the Authority will provide the City with quiet use and enjoyment of the Leased Premises and the City will, during the Term, peaceably and quietly have and hold and enjoy the Leased Premises without suit, trouble or hinderance from the Authority, except as expressly set forth in the Lease Agreement. The Authority will, at the request of the City and at the City's cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Title During the Term of the Lease Agreement, the Authority will hold a leasehold interest pursuant to the Site Lease in and to the portion of the Site on which the Facilities (other than the Public Parking Facilities) are located and to all improvements thereon and any and all additions which comprise fixtures (other than the Public Parking Facilities), repairs, replacements or modifications to the such Facilities. The Authority will hold a leasehold interest, pursuant to the Parking Ground Lease, of that portion of the Site on which the Public Parking Facilities are located and will hold title to the Public Parking Facilities as permitted, and for the period, set forth in the Parking Ground Lease, and except for those fixtures, repairs, replacements or modifications which are added to the Leased Premises by the City or Disney, as applicable, at its own expense pursuant to the Lease Agreement. If the City prepays the Lease Payments in full pursuant to the Lease Agreement or makes the security deposit permitted by the Lease Agreement, or pays all Lease Payments during the Term of the Lease Agreement as the same become due and payable, all right, title and interest of the Authority in and to the Leased Premises will be transferred to and vested in the City except that the right, title and interest of the Authority in the Public Parking Facilities and that portion of the Site which the Public Parking Facilities are located will revert to Disney in accordance with the terms of the Parking Ground Lease. The Authority agrees to take any and all steps and execute and record any and all documents reasonably required to consummate any such transfer of title. B-42 Maintenance, Utilities, Taxes and Assessments Throughout the Term of the Lease Agreement, as part of the consideration for the rental of the Leased Premises, all improvement, repair and maintenance of the Leased Premises will be the responsibility of the City and the City will pay, or otherwise arrange for the payment of, all utility services supplied to the Leased Premises which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and will pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Leased Premises resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof; provided, however, that all improvement, repair and maintenance of the portion of the Leased Premises comprised of the Public Parking Facilities will be performed by Disney pursuant to the Parking Operating Lease; and Disney will pay or otherwise arrange for the payment of, all utility services supplied to the Public Parking Facilities which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and will pay or otherwise arrange forthe payment of the cost of repair or replacement of the Public Parking Facilities resulting from ordinary wear and tear or want of care on the part of Disney or any assignee or sublessee thereof; provided further, however, that all improvement, repair and maintenance of the portion of the Leased Premises comprising the Stadium will be performed by the Tenant pursuant to the Stadium Lease, and the Tenant will pay, or otherwise arrange for the payment of, all utility services supplied to the Stadium which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and will pay or otherwise arrange for the payment of the cost of repair or replacement of the Stadium resulting from ordinary wear and tear or want of care on the part of the Tenant or any assignee or sublessee thereof. In exchange for the Lease Payments provided in the Lease Agreement, the Authority agrees to provide only the Leased Premises, as set forth in the Lease Agreement. The City will also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Leased Premises or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City will be obligated to pay only such installments as are required to be paid during the Term of the Lease Agreement as and when the same become due; provided, however, that all such taxes and assessments with respect to the Public Parking Facilities will be paid (or contested) by Disney pursuant to the Parking Operating Lease; provided further, however, that all such taxes and assessments with respect to the Stadium will be paid (or contested) by Tenant pursuant to the Stadium Lease. The City may, at the City's expense and in its name, in good faith contest any such taxes, assessments, utility and other charges payable by it and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority will notify the City that, in the opinion of counsel, by nonpayment of any such items, the interest of the Authority in the Leased Premises will be materially endangered or the Leased Premises or any part thereof will be subject to loss or forfeiture, in which event the City will promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result fromnonpayment, in form satisfactory to the Authority and the Trustee. Modification of Leased Premises The City will, at its own expense, have the right to remodel the Leased Premises (except for the Stadium, so long as the Stadium Lease is in force, and the Public Parking Facilities) or to make additions, modifications and improvements to the Leased Premises (except for the Stadium, so long as the Stadium Lease is in force, and the Public Parking Facilities). Disney will, at its own expense, have the right to remodel the Public Parking Facilities or to make additions, modifications and improvements to the Public B-43 Parking Facilities. The Tenant will, at its own expense, have the right to remodel the Stadium or to make additions, modificationsand improvements to the Stadium so long as the Stadium Lease is in force. All additions, modifications and improvements to the Leased Premises, will thereafter comprise part of the Leased Premises and be subject to the provisions of the Lease Agreement. Such additions, modifications and improvements will not in any way damage the Leased Premises, substantially alter its nature, cause the interest on the Tax-Exempt Bonds to be subject to federal income taxes or cause the Leased Premises to be used for purposes other than those authorized under the provisions of State and federal law; and the Leased Premises, upon completion of any additions, modifications and improvements made thereto pursuant to the Lease Agreement, will be of a value which is not substantially less than the value of the Leased Premises immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic's or other lien to be established or remain against the Leased Premises for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City pursuant to the Lease Agreement; provided that if any such lien is established and the City will first notify the Authority of the City's intention to do so, the City may in good faith contest any lien filed or established against the Leased Premises, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and will provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City. Public Liability and Property Damage Insurance Except as otherwise provided in the Lease Agreement with respect to the Public Parking Facilities and the Stadium (see "-Rights and Obligations Regarding Public Parking Facilities" and "-Rights and Obligations Regarding Stadium Lease" below), the City will maintain or cause to be maintained, throughout the Term of the Lease Agreement, a standard comprehensive/commercial general insurance policy or policies insuring against loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Premises. The Authority, the City and the Trustee will be named as additional insureds on such policy or policies. Said policy or policies will provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $150,000 for damage to property resulting from each accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and such insurance may be maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of the Lease Agreement, or in the form of a memorandum of coverage issued pursuant to the participation by the City in a joint powers agency, or other program providing pooled insurance coverage duly formed and operated pursuant to applicable state and/or federal law. The proceeds of such insurance/coverage will be applied toward extinguishment or satisfaction of the liability with respect to which the proceeds of such insurance/coverage will have been paid. Fire and Extended Coverage Insurance Except as otherwise provided in the Lease Agreement with respect to the Public Parking Facilities and the Stadium (see "-Rights and Obligations Regarding Public Parking Facilities" and "-Rights and Obligations Regarding Stadium Lease" below), the City will procure and maintain, or cause to be procured and maintained, throughout the Term of the Lease Agreement, insurance against loss or damage to any structures constituting any part of the Leased Premises caused by fire, lightning, vandalism and malicious mischief, such perils as are typically covered under an extended coverage endorsement B-44 insurance, and earthquake and flood insurance (but, with respect to such earthquake and flood insurance, only if such insurance is commercially available under reasonable terms), which may be maintained in conjunction with any other fire and extended coverage and earthquake and flood insurance maintained by the City. In the event such earthquake or flood insurance will at any time during the Term of the Lease Agreement not be commercially available under reasonable terms, the City will not be obligated to maintain earthquake or flood insurance during the period of such unavailability; provided, however, that in the event of any uninsured loss to the Leased Premises resulting fromearthquake or flood, the City will apply for and use its best efforts to obtain financial assistance from the United States of America and the State to be used forthe repair, reconstruction or replacement of the Leased Premises. Said property insurance will, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other perils as are normally covered by such insurance. Such insurance will be in an amount equal to the greater of (a) the aggregate principal amount of the Outstanding Bonds (to the extent obtainable), or (b) 100% of the replacement cost of any structures constituting any part of the Leased Premises. Such insurance may be subject to a deductible of not to exceed $250,000 for any one loss; provided, however, that with respect to the Public Parking Facilities such insurance may be subject to a deductible of not to exceed $250,000 in property damage plus not to exceed $250,000 for business interruption. As respects the above-reference flood coverage, such insurance may be subject to a deductible of not to exceed $250,000 for any one loss. As respects the above-referenced earthquake coverage, such coverage may be subject to deductible of not to exceed 10% of said replacement cost for any one loss; provided, however, that in the event of any insured earthquake loss to the Leased Premises, the City will apply for and use its best efforts to obtain financial assistance from the United States of America and the State of California to be used for the payment of such deductible. The coverage required to be provided by the City will be written on a deductible basis and not on a self insured retention basis. The Net Proceeds of any insurance award resulting from any damage to or destruction of any structures constituting any part of the Leased Premises caused by any of the perils covered by such insurance will be paid to the Trustee by the City and deposited by the Trustee promptly upon receipt thereof in a special fund to be designated the "Insurance and Condemnation Fund" and established pursuant to the Indenture. The application of any such Net Proceeds will be determined in accordance with the terms of the Lease Agreement, the Indenture and such policy or policies. If the City (or, in the case of the Public Parking Facilities, Disney and in the case of the Stadium, the Tenant) determines and notifies the Trustee in writing of its determination, within 90 days of the such deposit, that the replacement, repair, restoration, modification or improvement of the Leased Premises is not economically feasible or in the best interest of the City (or, in the case of the Public Parking Facilities, Disney and in the case of the Stadium, the Tenant); then such Net Proceeds will be, to the extent permitted by the insurance policies themselves, considered a prepayment of rent pursuant to the applicable Section of the Lease Agreement, transferred to the Redemption Account in the Debt Service Fund and promptly applied to the redemption of Bonds, in the priority established pursuant to the Indenture and the insurance policy or policies; provided, however, that if such determination would result in an abatement of Lease Payments pursuant to the Lease Agreement, then such Net Proceeds will nevertheless be applied to the prompt replacement, repair, restoration or modification of the Leased Premises, to the extent of such Net Proceeds. All Net Proceeds deposited in the Insurance and Condemnation Fund and not so transferred to the Redemption Account in the Debt Service Fund will be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of any of the structures constituting any part of the Leased Premises by the City, upon receipt of requisitions signed by an Authorized City Representative stating with respect to each payment to be made (a) the requisition number; (b) the name and address of the person, firm or corporation to whom payment is due; (c) the amount to be paid; and (d) that each obligation mentioned therein has been properly incurred, is a proper charge against the Insurance and Condemnation Fund, has not been B-45 the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation, accompanied by a bill or statement of account for such obligation. Rental Interruption Insurance Except as otherwise provided for in the Lease Agreement with respect to the Public Parking Facilities and the Stadium (see "-Rights and Obligations Regarding Public Parking Facilities" and " Rights and Obligations Regarding Stadium Lease" below), the City will procure and maintain, or cause to be maintained, throughout the Term of the Lease Agreement rental interruption or use and occupancy insurance (but, with respect to earthquake and flood exposures, only if such insurance is commercially available under reasonable terms) to cover loss, total or partial, of the use of any structures constituting any part of the Leased Premises during the Term of the Lease Agreement as a result of any of the hazards covered in the fire and extended insurance required by the Lease Agreement in an amount at least equal to the annual payments of principal of, Accreted Value and interest scheduled to be paid on the Bonds in the next two succeeding years. Such insurance will be subject to deductibles, depending on the hazard covered, in such amounts as set forth in the provisions of the Lease Agreement relating to fire and extended coverage insurance. The Net Proceeds of such insurance will be paid to the Trustee and deposited in the Revenue Fund to be applied to the payment of amounts coming due on the next Bond Payment Date. Insurance Net Proceeds; Form of Policies Each insurance policy or other form of coverage required by the Lease Agreement will provide that all proceeds thereunder will be payable to the Trustee. On or before November 1 of each year, the City will certifyor cause to be certified to the Trustee, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer and The Walt Disney Company that all policies of insurance and any statements of self insurance are in conformance with the requirements of the Lease Agreement. If the City will maintain any self insurance in satisfaction of the requirements of the Lease Agreement, this will be by way of an actuarially based, funded self insurance program and the City will supply annually to the Trustee, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer and The Walt Disney Company a certificate of sufficiency of such self insurance (a) by an independent consultant retained by the City, or (b) by the City's ARM certified risk manager. The City will pay or cause to be paid when due the premiums for all insurance required by the Lease Agreement. All policies or other evidence of insurance will provide that the Trustee, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer and The Walt Disney Company will be given 30 days' notice of any intended cancellation thereof or reduction of the coverage initiated by the insurer or insured and not as a result of claims activity. The Trustee will not be responsible for the sufficiency or adequacy of any insurance required under the Lease Agreement and will be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. Installation of City's Equipment The City may, at any time and from time-to-time in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon any portion of the Leased Premises. All such items will remain the sole property of the City in which neither the Authority nor the Trustee will have any interest and may be modified or removed by the City at any time; provided that the City will repair and restore any and all damage to the Leased Premises resulting from the installation, modification or removal of any such items. B-46 Liens The City will not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Leased Premises, other than the respective rights of the Authority and the City as provided under the Lease Agreement and Permitted Encumbrances. Except as expressly provided in the Lease Agreement, the City will promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same will arise at any time. The City will reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. Rights and Obligations Regarding Public Parking Facilities Upon the execution and delivery of the Parking Operating Lease and during the term thereof, notwithstanding anything for the contrary contained in the Lease Agreement, the City and the Authority agree that all rights given to the City in the Lease Agreement with respect to the Leased Premises will inure to the benefit of and be exercisable by Disney with respect to the Public Parking Facilities and the Authority agrees to look to Disney, and not to the City, for the performance and satisfaction of all obligations of the City under the terms and conditions of the Lease Agreement with respect to the Public Parking Facilities; provided, however, that the amount of coverage required to be maintained with respect to the Public Parking Facilities will be representative of the percentage of value represented by the Public Parking Facilities with respect to the value of the entire Leased Premises. Disney will have the right to self-insure for fire and extended coverage insurance and rental interruption insurance; provided that the certificates required under the Lease Agreement have been delivered with respect to any such self insurance. The City covenants to enforce Disney's obligations under the Parking Operating Lease on behalf of the Authority and the 1997 Bond Insurer. Rights and Obligations Regarding Stadium The City and the Authority agree that, in accordance with the Stadium Lease, all rights given to the City under the Lease Agreement with respect to the Leased Premises will inure to the benefit of and be exercisable by the Tenant with respect to the Stadium and the Authority agrees to look to the Tenant, and not to the City, for the performance and satisfaction of all obligations of the City under the Lease Agreement with respect to the Stadium; provided, however, that the required amounts of such insurance will be governed by the Stadium Lease. The Tenant will have the right to self-insure for fire and extended coverage insurance and rental interruption insurance as specifically provided in the Stadium Lease. The City covenants to enforce the Tenant's obligations under the Stadium Lease on behalf of the Authority and the 1997 Bond Insurer. Eminent Domain If all of the Leased Premises will be taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of the Lease Agreement will cease as of the day possession will be so taken. If less than all of the Leased Premises will be taken permanently, or if all of the Leased Premises or any part thereof will be taken temporarily under the power of eminent domain, (a) the Lease Agreement will continue in full force and effect and will not be terminated by virtue of such taking and the parties to the Lease Agreement waive the benefit of any law to the contrary; and (b) there will be a partial abatement of Lease Payments as a result of the application of the Net Proceeds of any eminent domain award to the prepayment of the Lease Payments under the Lease Agreement, in an amount to be agreed upon by the City and the Authority with the consent of The Walt Disney Company and the 1997 Bond Insurer such that the resulting Lease B-47 Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Leased Premises. The Net Proceeds of any eminent domain award will be deposited with the Trustee in the Insurance and Condemnation Fund established pursuant to the Indenture and will be applied and disbursed as set forth in the Indenture and as follows: (a) If the City has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Leased Premises or the ability of the City to meet any of its obligations with respect to the Leased Premises under the terms and conditions of the Lease Agreement; and (ii) such proceeds are not needed forrepair or rehabilitation of the Leased Premises, the City will so certifyto the Trustee and the Trustee, at the written request of the Authorized City Representative, such proceeds will be credited towards the prepayment of Lease Payments pursuant to the Lease Agreement and applied to the redemption of Bonds pursuant to the Indenture, in the priority established pursuant to the Indenture. (b) If the City has given written notice to the Trustee of its determination that ( i) such eminent domain proceedings have not materially affected the operation of the Leased Premises or the ability of the City to meet any of its obligations with respect to the Leased Premises; and (ii) such proceeds are needed for repair or rehabilitation of the Leased Premises, the City will so certify to the Trustee and the Trustee, at the City's request, will pay to the City, or to its order, from said proceeds such amounts as the City may expend for such repair or rehabilitation, upon the filing with the Trustee of requisitions of the Authorized City Representative, in the form and containing the provisions set forthin the Indenture. (c) If ( i) less than all of the Leased Premises will have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City has given written notice to the Trustee of its determination that such eminent domain proceedings have materially affected the operation of the Leased Premises or the ability of the City to meet any of its obligations with respect to the Leased Premises under the Lease Agreement; or (ii) all of the Leased Premises will have been taken in such eminent domain proceedings, then the Trustee will transfer such proceeds to the Redemption Account of the Debt Service Fund to be credited toward the prepayment of the Lease Payments pursuant to the Lease Agreement and applied to the redemption of Bonds pursuant to the Indenture, and in the priority established pursuant to the Indenture, and the reimbursement of all amounts due to The Walt Disney Company under the Reimbursement Agreement. ( d) In making any determination under the Lease Agreement the City may, but will not be required to, obtain at its expense, the report of an independent engineer or other independent professional consultant, a copy of which will be filed with the Trustee. Any such determination by the City will be final. Public Parking Facilities-Eminent Domain. Upon the execution and delivery of the Parking Operating Lease and during the term thereof, notwithstanding anything for the contrary contained in the Lease Agreement, the City and the Authority agree that all rights given to the City in the Lease Agreement with respect to the Leased Premises will inure to the benefit of and be exercisable by Disney with respect to the Public Parking Facilities and the Authority agrees to look to Disney, and not to the City, for the performance and satisfaction of all obligations of the City under the Lease Agreement with respect to the Public Parking Facilities. B-48 Stadium-Eminent Domain. The City and the Authority agree that, in accordance with the Stadium Lease, all rights given to the City under the Lease Agreement with respect to the Leased Premises will inure to the benefit of and be exercisable by the Tenant with respect to the Stadium and the Authority agrees to look to the Tenant, and not to the City, for the performance and satisfaction of all obligations of the City under the Lease Agreement with respect to the Stadium. Assignment and Subleasing by the City The Lease Agreement may not be assigned by the City. Subject to the terms and conditions of the Permitted Encumbrances, the City may sublease the Leased Premises or any portion thereof, but only with the written consent of the Authority and the 1997 Bond Insurer and subject to all of the following conditions: (a) the Lease Agreement and the obligations of the City to make Lease Payments will remain obligations of the City; (b) the City will, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease; (c) no such sublease will cause the Leased Premises to be used for a purpose other than as may be authorized under the provisions of the Constitution and laws of the State; (d) the City will furnish the Authority and the Trustee with a written opinion of nationally recognized bond counsel, stating that such sublease does not cause the interest on any of the Tax-Exempt Bonds to be included in gross income for federal income tax purposes; and (e) any sublease of the Leased Premises will explicitly provide that such sublease is subject to all rights of the Authority under the Lease Agreement. Substitution of Site or Facility The City will have, and has been granted, the option at any time and from time-to-time during the Term of the Lease Agreement to substitute other land (a "Substitute Site") and/or a substitute facility or substitute facilities (a "Substitute Facility") for the Site (the "Former Site"), or a portion thereof, and/or the Facility (the "Former Facility"), or a portion thereof; provided that the City will satisfy all of the following requirements which have been declared to be conditions precedent to such substitution: (a) the City will file with the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee an amendment to the Site Lease which adds thereto a description of such Substitute Site and deletes therefrom the description of the Former Site; (b) the City will file with the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee an amendment to the Lease Agreement which adds thereto a description of such Substitute Site and deletes therefrom the description of the Former Site; (c) the City will file with the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee an amendment to the Site Lease which adds thereto a description of such Substitute Facility and deletes therefrom the description of the Former Facility; B-49 (d) the City will file with the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee an amendment to the Lease Agreement which adds thereto a description of such Substitute Facility and deletes therefromthe description of the Former Facility; (e) the City will certify in writing to the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee that such Substitute Site and/or Substitute Facility serve the purposes of the City, and constitutes property which the City is permitted to lease under the laws of the State; (f) the City delivers to the Trustee, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Authority evidence that the Substitute Site and/or Substitute Facility are of equal or greater value and equal or greater useful life than the Former Site and/or Former Facility; (g) the Substitute Site and/or Substitute Facility will not cause the City to violate any of its covenants, representations and warranties made in the Lease Agreement and in the Indenture; (h) the City will obtain an amendment to the title insurance policy required pursuant to the Lease Agreement which adds thereto a description of the Substitute Site and deletes therefrom the description of the Former Site; (i) the City will certify that the Substitute Site and/or the Substitute Facility is of the same or greater essentially to the City as was the Former Site and/or the Former Facility; and (j) the City will obtain the prior written consent of the 1997 Bond Insurer and The Walt Disney Company and notice of such consent will be given to any rating agency then rating the Bonds. Release of Site or Facility The City will have, and has been granted, the option at any time and fromtime-to-time during the Term of the Lease Agreement to release any portion of the Facility and/or the Site; provided that the City will satisfy all of the following requirements which are declared to be conditions precedent to such release: (a) the City will file with the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee an amendment to the Site Lease which describes the Site, as revised by such release; (b) the City will file with the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee an amendment to the Site Lease which describes the Facility, as revised by such release; (c) the City will file with the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee an amendment to the Lease Agreement which describes the Site, as revised by such release; (d) the City will file with the Authority, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Trustee an amendment to the Lease Agreement which describes the Facility, as revised by such release; B-50 (e) the City delivers to the Trustee, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company and the Authority evidence (in the form of an appraisal) that the Site and/or the Facility, as revised by such release, is of a value at least equal to the value of the Site and/or Facility as of the Closing Date; (f) the City will obtain an amendment to the title insurance policy required pursuant to the Lease Agreement which describes the Site and the Facility, as revised by such release; and (g) the City will obtain the prior written consent of the 1997 Bond Insurer and The Walt Disney Company and notice of such consent will be given to any rating agency then rating the Bonds. Release of Portion of Public Parking Facilities The City and the Authority agree that, at the request of Disney, with respect to the parcels of the Site on which the Public Parking Facilities are located, they will exercise their right to substitute and/or release any portion of such parcel of the Site on which the Public Parking Facilities are not located so long as the requirements of the Lease Agreement are satisfied prior to the effectiveness of such substitution or release. Events of Default and Remedies Events of Default Defined. The following will be "Events of Default" under the Lease Agreement and the terms "Events of Default" and "Default" means, whenever they are used in the Lease Agreement, any one or more of the following events: (a) failure by the City to pay any Lease Payment required to be paid thereunder at the time specified therein; (b) failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed under the Lease Agreement or under the Indenture, other than as referred to in clause (a) of this Section, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority, the Trustee, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer, The Walt Disney Company or the Owners of not less than 25% in aggregate principal amount of Bonds then outstanding; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority, the Trustee, the 1997 Bond Insurer, The Walt Disney Company and such Owners will not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until the Defaultis corrected; and (c) the filingby the City of a Voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Act, as amended, or under any similar acts which may hereafter be enacted. In determining whether a default has occurred under clause (a) above, no effect will be given to payments made under the 1997 Bond Insurance Policy or the 2007 Bond Insurance Policy. B-51 Remedies on Defa ult. Whenever any Event of Defaultreferred to in the Lease Agreement will have happened and be continuing, the Authority will have the right to (with the consent of the 1997 Bond Insurer), at its option, without any further demand or notice, so long as the Authority does not terminate the Lease Agreement or the City's right to possession of the Leased Premises, and will, at the direction of the 1997 Bond Insurer, to enforce all of its rights and remedies under the Lease Agreement, including the right to recover Lease Payments as they become due under the Lease Agreement pursuant to Section 19 51.4 of the California Civil Code, by pursuing any remedy available at law or in equity, whether now existing or hereafter made available, including specific performance of each of the City's obligations, except as expressly provided in the Lease Agreement; provided, however, that notwithstanding anything in the Lease Agreement or in the Indenture to the contrary, there will be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in Default to be immediately due and payable. In the event of such Default, the City will continue to remain liable for the payment of the Lease Payments and the performance of all conditions contained in the Lease Agreement, but said Lease Payments will be payable only at the same time and in the same manner as provided in the Lease Agreement, notwithstanding the exercise of any other remedy by the Authority. The Authority waives any right it may have, including, without limitation, its rights pursuant to Sections 1951.2 and 1951.4 of the California Civil Code, to terminate the Lease Agreement, re-enter the Leased Premises and eject the City therefrom, or to re-enter the Leased Premises, eject the City therefrom and, without terminating the Lease, to relet the Leased Premises forthe account of the City. No Remedy Exclusive. No remedy in the Lease Agreement conferred upon or reserved to the Authority is intended to be exclusive and every such remedy will be cumulative and will be in addition to every other remedy given under the Lease Agreement now or, except as limited in the Lease Agreement, hereafter existing at law or in equity. Trustee and Bond Owners To Exercise Rights. Such rights and remedies as are given to the Authority under the Lease Agreement have been assigned by the Authority to the Trustee under the Indenture, to which assignment the City has consented. Such rights and remedies will be exercised by the Trustee, the 1997 Bond Insurer, The Walt Disney Company and the Owners of the Bonds as provided in the Indenture and in the Lease Agreement. Prepayment Security Deposit. Notwithstanding any other provision of the Lease Agreement, the City may, on any date, secure the payment of all or a portion of the Lease Payments remaining due by an irrevocable deposit with the Trustee or an escrow holder under an escrow deposit and trust agreement as referenced in the Indenture, of either (a) cash in an amount which, together with amounts on deposit in the Revenue Fund, the Insurance and Condemnation Fund and the Reserve Fund, is sufficient to pay all Outstanding Bonds and amounts due under the Indenture, the Lease Agreement and the Reimbursement Agreement; or (b) Defeasance Securities in such amount as will, in the written opinion of a firm of independent certified public accountants or other firm of recognized experts in such matters, together with interest to accrue with respect thereto and, if required, all or a portion of moneys or Defeasance Securities or cash then on deposit and interest earningsthereon in the Revenue Fund, the Insurance and Condemnation Fund and the Reserve Fund, be fully sufficientto pay all Outstanding Bonds and all amounts due under the Indenture, the Lease Agreement and the Reimbursement Agreement. In the event of a deposit pursuant to the Lease Agreement as to all Outstanding Bonds and all amounts due under the Indenture, the Lease Agreement and the Reimbursement Agreement and the payment of all fees, expenses and indemnifications owed to the Trustee, all obligations of the City under the Lease Agreement will cease and terminate, excepting only the obligation of the City to make, or cause to be made, all payments from the deposit made by the City pursuant to the Lease Agreement, and B-52 all interest of the Authority in and to the Leased Premises will vest in the City on the date of said deposit automatically and without further action by the City or the Authority; provided, however, that with respect to the Public Parking Facilities, the Authority's interest will vest in Disney. Said deposit and interest earnings thereon will be deemed to be and will constitute a special fund for the payments provided for by the Lease Agreement and said obligation will thereafter be deemed to be and will constitute the installment purchase obligation of the City for all interest of the Authority in and to the Leased Premises, other than the Public Parking Facilities, which in such event will revert automatically and immediately to Disney. Prepayment Op tion. The City may, at its option, prepay, from any source of available funds, all or any portion of Lease Payments by (a) depositing with the Trustee moneys or Defeasance Securities as provided in the Indenture sufficient to retire or redeem Bonds when due or redeemable, and (b) satisfying the other requirements of the Indenture. The City agrees that if following such prepayment the Leased Premises are damaged or destroyed or taken by eminent domain, it is not entitled to, and by such prepayment waives the right of, abatement of such prepaid Lease Payments and will not be entitled to any reimbursement of such Lease Payments. Mandatory Prepayment From Net Proceeds of In surance, Title Insurance or Eminent Domain. The City will be obligated to prepay the Lease Payments allocable to the Leased Premises, in whole on any date or in part on any Interest Payment Date, from and to the extent of any Net Proceeds of an insurance, title insurance or condemnation award with respect to the Leased Premises theretofore deposited in the Redemption Account in the Debt Service Fund for such purpose pursuant to the Lease Agreement. The City and the Authority agree that such Net Proceeds will be applied first to the payment of any delinquent Lease Payments, and thereafter will be credited towards the City's obligations under the Lease Agreement. Net-Net-Net Lease The Lease Agreement will be deemed and construed to be a "net-net-net lease" and the City agrees that the Lease Payments will be an absolute net return to the Authority, free and clear of any expenses, charges or setoffs whatsoever. Amendments Neither the City nor the Authority will alter, modify or cancel, or agree or consent to alter, modify or cancel any of the terms of the Lease Agreement, or consent to any such amendment, modification or termination, without the written consent of the Trustee, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer and The Walt Disney Company. The Trustee will give such written consent only if (a) in the opinion of the Trustee, in reliance upon the advice of counsel, such amendment, modification or termination will not materially adversely affect the interests of the Owners of the Bonds or result in any material impairment of the security given for the payment of the Bonds; or (b) the Authority first obtains the written consent of the Owners of a majority in principal amount of the Bonds then Outstanding, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer and The Walt Disney Company to such amendment, modification or termination; provided that no such amendment, modification or termination will reduce the amount of Lease Payments to be made to the Authority or the Trustee by the City pursuant to the Lease Agreement, or extend the time for making such payments, without the written consent of all of the Owners of the Bonds then Outstanding, the 1997 Bond Insurer, the 2007 Bond Insurer, the Series 2019 A Bond Insurer and The Walt Disney Company. B-53 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX C BOOK-ENTRY-ONLY SYSTEM The information in this appendix has been provided by DTC for use in securities offering documents, and the Authority takes no responsibility for the accuracy or completeness thereof The Authority cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute the Beneficial Owners either (a) payments of interest, principal or premium, ifany, with respect to the 2019 Bonds or (b) certificatesrepresenting ownership interest in or other confirmation of ownership interest in the 2019 Bonds, or that they will so do on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will act in the manner described in this OfficialStatement. 1. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository forthe 2019 Bonds (the "Securities"). The Securities 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 Security certificate will be issued for each maturity of the Securities, in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificatewill be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. 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 UniformCommercial 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 forDTC, 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 informationabout DTC can be found at www.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in tum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmationfrom 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, fromthe Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of C-1 BeneficialOwners . Beneficial Ownerswill not receive certificatesrepresenting their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitatesubsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. , or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effectany change in beneficialownership . DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible forkeeping account of their holdings on behalf of their customers. 5. 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 governedby arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefithas agreed to obtain and transmit notices to BeneficialOwners . 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. 6. Redemption notices shall be sent to DTC. If less than all of the Securities 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. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Securities 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 the Securities are credited on the record date (identifiedin a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co. , or such other nominee as may be requested by an authorized representative ofDTC. DTC's practice is to credit Direct Participants' accounts, upon DTC' s receipt of funds and corresponding detail informationfrom the Authority or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer formor 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. 9. DTC may discontinue providing its services as depository with respect to the Securities 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, Security certificatesare required to be printed and delivered. C-2 10. 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, Security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility forthe accuracy thereof. C-3 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT CONTINUING DISCLOSURE AGREEMENT by and between CITY OF ANAHEIM and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., AS TRUSTEE Dated as of April 1, 2019 Anaheim Public Financing Authority Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project) (Anaheim Public Improvements Project) Series 2019 A Series 2019 B (Taxable) D-1 CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"), dated as of April 1, 2019, is by and between the CITY OF ANAHEIM, a municipal corporation and chartered city organized and existing under and by virtue of its charter and the laws of the State of California (the "City"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N. A. , a national banking association organized and existing under and by virtue of the laws of the United States of America, as Trustee (the "Trustee"). WITNESSETH: WHEREAS, pursuant to the Indenture of Trust, dated as of February 1, 1997, by and between the Anaheim Public Financing Authority (the "Authority") and BNY Western Trust Company, as trustee, as modified and amended by the First Supplemental Indenture of Trust, dated as of June 1, 2007, by and between the Authority and The Bank of New York Trust Company, N. A. , as successor trustee, and the Second Supplemental Indenture of Trust, dated as of April 1, 2019, by and between the Authority and the Trustee (as so modified and amended, the "Indenture"), the Authority has issued $169,065,000 aggregate principal amount of its Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A (the "Series 2019 A Bonds"), and $6,500,000 aggregate principal amount of its Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 B (Taxable) (the "Series 2019 B Bonds" and, together with the Series 2019 A Bonds, the "Series 2019 Bonds"); WHEREAS, the Series 2019 Bonds are payable from lease payments payable by the City pursuant to the Lease Agreement, dated as of February 1, 1997, by and between the Authority and the City; and WHEREAS, this Disclosure Agreement is being executed and delivered by the City and the Trustee for the benefitof the owners and beneficial owners of the Series 2019 Bonds and in order to assist the underwriter of the Series 2019 Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b)(5); NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the receipt whereof is hereby acknowledged, the parties hereto agree as follows: Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Agreement have the meanings herein specified. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. "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 the last day of the sixth month after the end of the City's Fiscal Year, which date, as of the date of this Disclosure Agreement, is December 31. "Authority" means the Anaheim Public Financing Authority, a joint exercise of powers authority organized and existing under and by virtue of the laws of the State, and any successor thereto. "City" means the City of Anaheim, a municipal corporation and chartered city organized and existing under and by virtue of its charter and the laws of the State, and its successors. D-2 "Dissemination Agent" means the Trustee, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the City and which has filed with the Trustee a written acceptance of such designation. "Financial Obligation" means (a) a debt obligation of the City, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the City, or (c) a guarantee of (i) a debt obligation of the City, or (ii) a derivative instrument described in clause (b ), above; provided, however, that the term "Financial Obligation" shall not include "municipal securities" (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a "final official statement" (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule. "Indenture" means the Indenture of Trust, dated as of February 1, 1997, by and between the Authority and BNY Western Trust Company, as trustee, as modified and amended by the First Supplemental Indenture of Trust, dated as of June 1, 2007, by and between the Authority and The Bank of New York Trust Company, N. A. , as successor trustee, and the Second Supplemental Indenture of Trust, dated as of April 1, 2019, by and between the Authority and The Bank of New York Mellon Trust Company, N. A. , and as it may be further modified or amended from time to time in accordance with its terms. "Listed Events" means any of the events listed in subsection (a) or subsection (b) of Section 4 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. "Official Statement" means the Official Statement, dated April 17, 2019, relating to the Series 2019 Bonds. "Participating Underwriter" means the original underwriter of the Series 2019 Bonds required to comply with the Rule in connection with the offeringof the Series 2019 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. "Series 2019 Bonds" means, collectively (a) the Series 2019 A Bonds, and (b) the Series 2019 A Bonds. "Series 2019 A Bonds" means the Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A, issued under the Indenture. "Series 2019 B Bonds" means the Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 B (Taxable), issued under the Indenture. "Trustee" means The Bank of New York Mellon Trust Company, N. A. , as Trustee under the Indenture, or any successor thereto as Trustee thereunder, substituted in its place as provided therein. Section 2. Provision of Annual Reports. (a) The City shall, or shall cause the Dissemination Agent to, provide to the MSRB an Annual Report that is consistent with the requirements of Section 3 D-3 hereof, not later than the Annual Report Date, commencing with the report for the 2018-19 Fiscal Year. The Annual Report may include by reference other informationas provided in Section 3 hereof; provided, however, that the audited financial statements of the City, if any, may be submitted separately from the balance of the Annual Report, and later than the date required above for the filingof 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) of this Section for the providing of the Annual Report to the MSRB, the City shall provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the City and the Dissemination Agent to determine if the City is in compliance with the first sentence of this subsection (b). (c) If the Trustee is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a) of this Section, the Trustee shall, in a timely manner, send a notice to the MSRB in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) provide each Annual Report received by it to the MSRB, as provided herein; and (ii) file a report with the City and (if the Dissemination Agent is not the Trustee) the Trustee certifying that such Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided to the MSRB. Section 3. Content of Annual Reports. The City's Annual Report shall contain or incorporate by reference the following: (a) The City's audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City's audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to subsection (a) of Section 2 hereof, the Annual Report shall contain unaudited financial statements, in a format similar to that used for the City's audited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available. (b) The following information: (i) The principal amount of Series 2019 A Bonds and the principal amount of Series 2019 B Bonds Outstanding as of the December 1 next preceding the Annual Report Date; (ii) The principal amount of all Senior Lien Bonds and the principal amount of all Subordinate Lien Bonds Outstanding as of the December 1 next preceding the Annual Report Date; (iii) A table, substantially in the format of Table 1 in the Official Statement (Debt Service Requirements), updated as of the December 1 next preceding the Annual Report Date; D-4 (iv) A table, substantially in the format of Table 2 in the Official Statement (Historical Summary of TOT Receipts - City of Anaheim), updated as of the June 30 next preceding the Annual Report Date; (v) A table, substantially in the format of Table 3 in the Official Statement (Summary of Significant TOT Hotels), updated as of the June 30 next preceding the Annual Report Date; (vi) A table, substantially in the format of Table 5 in the Official Statement (Total Historical Amount of Lease Payment Measurement Revenues From All Sources), updated as of the June 30 next preceding the Annual Report Date; (vii) A table, substantially in the format of the table in the Official Statement entitled, "City of Anaheim, Building Activities," updated as of the June 30 next preceding the Annual Report Date; (viii) A table, substantially in the format of the table in the Official Statement entitled, "City of Anaheim, Taxable Retail Sales, Number of Permits and Valuation of Taxable Transactions," updated as of the June 30 next preceding the Annual Report Date; (ix) A table, substantially in the format of the table in the Official Statement entitled, "City of Anaheim, All Governmental Fund Types, Summary of Revenues, Transfers and Other Financing Sources," updated as of the June 30 next preceding the Annual Report Date; (x) A table, substantially in the format of the table in the Official Statement entitled, "City of Anaheim, All Governmental Fund Types, Summary of Expenditures," updated as of the June 30 next preceding the Annual Report Date; (xi) A table, substantially in the format of the table in the Official Statement entitled, "City of Anaheim, Assessed Valuation and Tax Collection Record," updated as of the June 30 next preceding the Annual Report Date; and (xii) A table, substantially in the format of the table in the Official Statement entitled, "City of Anaheim, Largest Property Taxpayers," updated as of the June 30 next preceding the Annual Report Date. 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 that have been made available to the public on the MSRB's website. The City shall clearly identify each such other document so included by reference. Section 4. Reporting of Significant 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 Series 2019 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 reflectingfinancial difficulties . (iii) Unscheduled draws on credit enhancements reflectingfinancial difficulties . D-5 (iv) Substitution of credit or liquidity providers, or their failureto 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. (ix) Bankruptcy, insolvency, receivership or similar event of the City. (x) Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties. For purposes of the events identified in paragraph (ix) of this subsection, 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 governmentalauthority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing 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 confirminga plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. (b) 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 Series 2019 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, material notices or determinations by the Internal Revenue Service with respect to the tax status of the Series 2019 A Bonds or other material events affectingthe tax status of the Series 2019 A Bonds. (ii) Modifications to rights of holders of the Series 2019 Bonds. (iii) Series 2019 Bond calls. (iv) Release, substitution, or sale of property securing repayment of the Series 2019 Bonds. (v) Non-payment related defaults. (vi) The consummation of a merger, consolidation, or acquisition involving an City or the sale of all or substantially all of the assets of the City other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms. D-6 (vii) Appointment of a successor or additional Trustee or the change of name of a Trustee. (viii) Incurrence of a Financial Obligation, or agreement to covenants, events of default, remedies, priority rights or other similar terms of a Financial Obligation, any of which affect holders of the Series 2019 Bonds. (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 law. ( 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 law, the City shall, or shall cause the Dissemination Agent to, file a notice of the occurrence of such Listed Event with the MSRB, within ten business days of such occurrence. ( e) Notwithstanding the foregoing, notice of Listed Events described in paragraph ( vii) of subsection (a) of this Section or paragraph (iii) of subsection (b) of this Section need not be given any earlier than the notice (if any) of the underlying event is given to holders of affected Series 2019 Bonds pursuant to the Indenture. Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Agreement must be submitted in electronic format, accompanied by such identifying informationas is prescribed by the MSRB. Section 6. Termination of Reporting Obligation. The City's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Series 2019 Bonds. If such termination occurs prior to the final maturity of the Series 2019 Bonds, the City shall give, or cause to be given, 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 Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing 30 days' written notice to the City. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City and the Trustee may amend this Disclosure Agreement (and the Trustee shall agree to any amendment so requested by the City, so long as such amendment does not adversely affect the rights or increase the obligations of the Trustee), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of subsection (a) of Section 2 hereof, Section 3 hereof or subsection (a) or (b) of Section 4 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 Series 2019 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 Series 2019 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and D-7 (c) the proposed amendment or waiver (i) is approved by Owners of the Series 2019 Bonds in the manner 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 Owners or BeneficialOwners of the Series 2019 Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement, 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 informationor 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 Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Agreement, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event or any other event required to be reported. Section 10. Default. In the event of a failure of the City, the Trustee or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee may ( and, at the written direction of any Participating Underwriter or the Owners of at least 25% of the aggregate principal amount of Outstanding Series 2019 Bonds, shall, upon receipt of indemnification reasonably satisfactory to the Trustee), or any Owner or Beneficial Owner of the Series 2019 Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City, the Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the City, the Trustee or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. Article IX of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture. The Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee thereunder and shall not be liable hereunder except for its negligence or willful misconduct. Neither the Trustee nor the Dissemination Agent shall be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement. To the extent permitted by law, 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 in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees and expenses) of defending against any claim of liability, and which are not due to its negligence or its willful misconduct. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and the termination of this Disclosure Agreement. D-8 Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Trustee, the Dissemination Agent, the Participating Underwriter and the Owners and Beneficial Owners from time to time of the Series 2019 Bonds, and shall create no rights in any other person or entity. Section 13. Governing Law. This Disclosure Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date firstabove written. CITY OF ANAHEIM THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., AS TRUSTEE D-9 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name oflssuer: Anaheim Public Financing Authority Name oflssue: Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A, and Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 B (Taxable) Date of Issuance: April 30, 2019 NOTICE IS HEREBY GIVEN that the City of Anaheim (the "City") has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of April 1, 2019, by and between the City and The Bank of New York Mellon Trust Company, N. A. , as Trustee. [The City anticipates that such Annual Report will be filed by .] Dated: ------The Bank of New York Mellon Trust Company, N. A. , as Trustee, on behalf of the City of Anaheim cc: City of Anaheim D-10 APPENDIX E PROPOSED FORM OF OPINION OF BOND COUNSEL Upon delivery of the 2019 Bonds, Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, proposes to render its final approving opinion with respect to the 2019 Bonds in substantially the following form: [Date of Delivery] Anaheim Public Financing Authority Anaheim, California Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A and Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 B (Taxable) (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel to the Anaheim Public Financing Authority (the "Authority") in connection with the issuance by the Authority of its $169,065,000 aggregate principal amount of Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 A (the "Series 2019 A Bonds"), and $6,500,000 aggregate principal amount of Anaheim Public Financing Authority Senior Lease Revenue Refunding Bonds (Anaheim Public Improvements Project), Series 2019 B (Taxable) (the "Series 2019 B Bonds" and, together with the Series 2019 A Bonds, the "Series 2019 Bonds"). The Series 2019 Bonds are being issued pursuant to the Indenture of Trust, dated as of February 1, 1997, by and between the Authority and BNY Western Trust Company, as trustee, as modified and amended by the First Supplemental Indenture of Trust, dated as of June 1, 2007, by and between the Authority and The Bank of New York Trust Company, N. A. , as successor trustee, and the Second Supplemental Indenture of Trust, dated as of April 1, 2019, by and between the Authority and The Bank of New York Mellon Trust Company, N. A. , as successor Trustee (the "Trustee") (as so modified and amended, the "Indenture"). Capitalized undefined terms used herein have the meanings ascribed thereto in the Indenture. In such connection, we have reviewed the Indenture, the Lease Agreement, the Tax Certificate, opinions of counsel to the Authority, the City, the Trustee and others, 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 E-1 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 Series 2019 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 delivery thereof by, and validity against, any parties other than the Authority and the City. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Lease 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 Series 2019 A Bonds to be included in gross income forfederal income tax purposes. We call attention to the fact that the rights and obligations under the Series 2019 Bonds, the Indenture, the Lease 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 joint powers authorities 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 opinions with respect to the state or quality of title to or interest in any real or personal property described in or as subject to the lien of the Indenture or the Lease Agreement, or the accuracy or sufficiency of the descriptions contained therein of, or the remedies available to enforce liens on, any such property. 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 Series 2019 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 Series 2019 Bonds constitute the valid and binding special obligations of the Authority, payable solely from the Revenues and the other assets pledged thereforunder the Indenture. 2. The Indenture has been duly executed and delivered by, and constitutes a valid and binding 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 Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established pursuant to the Indenture, except the Rebate Fund, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. 3. Interest on the Series 2019 A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. Interest on the Series 2019A Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Interest on the Series 2019 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 Series 2019 Bonds. Faithfully yours, E-2 APPENDIX F SPECIMEN MUNICIPAL BOND INSURANCE POLICY F-1 [THIS PAGE INTENTIONALLY LEFT BLANK] MUNICIPAL BOND INSURANCE POLICY ISSUER: [NAME OF ISSUER] MEMBER: [NAME OF MEMBER] BONDS: $ in aggregate principal amount of [NAME OF TRANSACTION] [ and maturing on] d, here y UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or ds named above (as set forth in the documentation providing for the issuance and securing of the the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includ he principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by son of On the later of the day on which such prin the first Business Day following the Business Day on which BAM shall have received Notice of Non t without plication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owne f principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of 'pt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right to receiv ue for Payment and (b) evidence, including any appropriate instruments of assignment, that all o of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice ofNonpay ess Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it wil y. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have b eding sentence, and BAM shall promptly so advise the Tr ustee, Paying nded Notice of Nonpayment. Upon disbursement under this Policy in respect of a owner of such Bond, any appurtenant coupon to such Bond and right to receipt of lly subrogated to the rights of the Owner, including the Owner's right to receive ustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on AM under this Policy with respect to said Nonpayment. ly modified by ndorsement hereto, the following terms shall have the meanings specified for all purposes of y day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or th ed herein) are authorized or required by law or executive order to remain closed. "Due for Payment" means (a) d, payable on the stated maturity date thereof or the date on which the same shall have been duly called for s not refer to any earlier date on which payment is due by reason of call for redemption ( other than by tion), celeration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such tion together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, ment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient s no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such so include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Paymen ich payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. "Notice" means delivery to BAM of a notice of claim and certificate, by certified mail, email or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds. F-1 BAM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy by giving written notice to the Trustee, the Paying Agent, the Member and the Issuer specifying the name and notice address of the Insurer's Fiscal Agent. From and after the date ofreceipt of such notice by the Trustee, the Paying Agent, the Member or the Issuer (a) copies of all notices required to be delivered to BAM pursuant to this Policy shall be simultaneously delivered to the Insurer's Fiscal Agent and to BAM and shall not be deemed received until received by both and (b) all payments required to be made by BAM under this Policy may be made directly by BAM or by the Insurer's Fiscal Agent on behalf of BAM. The Insurer's Fiscal Agent is the agent of BAM only, and the Insurer's Fiscal Agent shall in no event be liable to the Trustee, Paying Agent or any Owner for any act of the Insurer's Fiscal Agent or any failure of BAM to deposit or cause to be deposited sufficient funds to make payments due under this Policy. To the fullest extent permitted by applicable law, BAM agrees not to assert, and hereby waives, only for t efit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense offra whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to BAM to avoid payment obligations under this Policy in accordance with the express provisions of this Policy. This Policy may not be canceled or revok This Policy sets forth in full the undertaking of BAM and shall not be modified, altered or affi cted by including any modification or amendment thereto. Except to the extent expressly modified by an end t heret this Policy is nonrefundable for any reason whatsoever, including payment, or provision being THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECU NEW YORK INSURANCE LAW. THIS POLICY IS ISSUED WITHOUT CONTINGENT In witness whereof, BUILD AMERICA MUTUAL ASSURANCE COMP A behalf by its Authorized Officer. F-2 Notices (Unless Otherwise Specifiedby BAM) Email: clairns(w.buildamerica.com Address: 200 Liberty Street, 27th floor New York, New York 10281 Telecopy: 212-962-1524 (attention: Claims) F-3 CALIFORN This Policy is not covered by the California Insurance icle 15.2 of Chapter 1 of Part 2 of Division 1 of the California Law. Nothing herein shall be construed to waive, other section of the Policy. If found contrary to the Policy language, the terms ofthis Endorsement super IN WITNESS WHEREOF, BUILDAM has caused this policy to be executed on its behalf by its Authorized Officer. BUILD AMERICA MUTUAL ASSURANCE COMP ANY By Authorized Officer F-4 APPENDIX G SPECIMEN MUNICIPAL BOND DEBT SERVICE RESERVE INSURANCE POLICY G-1 [THIS PAGE INTENTIONALLY LEFT BLANK] MUNICIPAL BOND DEBT SERVICE RESERVE INSURANCE POLICY ISSUER: ISSUER_NAME, STATE_NAME Policy No: MEMBER: MEMBER_COMPANY, STATE NAME Date: BONDS: $---- in aggregate principal amount of Ku;�J�revrr.�n�m�mu. $ ___ ....:ei11Prih 1 c $ --- $ ___ Maximum Policy Limit: $ BUILD AMERICA MUTUAL ASS�fCE �QiAP�llt\ ("�AM"), for consideration received, hereby UNCONDITION M\ AN RRE,li ABI}Y agrees to pay to the trustee 1 X:. �kJ �� (the "Trustee") or paying agen fhe. "Paying ��£ t") f011 : \tlle Bonds named above under the \tf .\ Security Documents, subject onll;· to the terms of th{,>Policy (which includes each endorsement hereto), that portion of th prin�fl?al of and inte est the Bonds that shall become Due for �. . { ./ Payment but shall be un1}Jitt 'Qy r ···· ofNonpayrpentby the Issuer. BAM will make pa){ ;�;ii��tfyto the Trustee or Paying Agent on the later of (i) the Business Day oti ).ch pripc1plil and interest becomes Due for Payment and (ii) the first Business Busi s Day on which BAM shall have received a completed Notice of ably satisfactory to it. A Notice of Nonpayment will be deemed re ss Day if it is received prior to I :00 p.m. (New York time) , otherwisej: twill be deemed received on the next Business Day. If any received by BAM is incomplete, it shall be deemed not to have been es of this paragraph, and BAM shall promptly so advise the Trustee submit an amended Notice of Nonpayment. '·>�: Payment by :�t�,.;,ii the Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, iif;charge the obligation of BAM under this Policy. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, (a) BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner's right to receive payments under such Bond and (b) BAM shall become entitled to reimbursement of the amount so paid (together with interest and expenses) pursuant to the Security Documents and Debt Service Reserve Agreement. G-1 The amount available under this Policy for payment shall not exceed the Policy Limit. The amount available at any particular time to be paid to the Trustee or Paying Agent under the terms of this Policy shall automatically be reduced by and to the extent of any payment under this Policy. However, after such payment, the amount available under this Policy shall be reinstated in full or in part, but only up to the Policy Limit, to the extent of the reimbursement of such payment (after taking into account the payment of interest and expenses) to BAM by or on behalf of the Issuer. Within three (3) Business Days of such reimbursement, BAM shall provide the Trustee or the Paying Agent with Notice of Reinstatement, in the form of�{hibit A attached hereto, and such reinstatement shall be effective as of the date BAM gives sucfi if@!ice. ::y,\. Payment under this Policy shall not be available with respect to (a) a �'·' erit\�gat occurs � �Q:ij��(� prior to the Effective Date or after the end of the Term of this Pol.ic§ or'i(e�l.,l;i\.. :\ij . re not outstanding under the Security Documents. If the amount pa e. undet,;,.this Uct •,E1lso payable under another BAM issued policy insuring the Bonds · mentfirst sfilH,be made under this Policy to the extent of the amount available under this u t3f;;i!b: Polic,r...,.k�tp.it. In no event shall BAM incur duplicate liability for the same a, J'Witlirespectte the Bonds that are covered under this Policy and any other BAM is olicy. Except to the extent expressly modified by an.. endorseni�rr eto, tn ;i;,\,JI.6wing terms shall have the meanings specified for all purpose�. · :!.§ Policyl, ' ·nessYDay" means any day other than ( a) a Saturday or Sunday or (1?fa day"t.,p'twl@i in ' stitutions in the State of !} 1'\. " New York or the Insurer's Fiscal Agent pereirn1t'lyr ��! are authorized or required by law or executive order to remain c � "0'�, Servi�t .. eser�e Agreement" means the Debt l,.� �\ :�, \ :1l Service Reserve Agreement, if a ifclatedas oftl� fe ctiv�i �te hereof, in respect of this Policy, �l tj.[ ::� as the same may be amended or .®fpplemented from ottlme. "Due for Payment" means (a) �: .� ; · when referring to the princ!pal o,� Bond, payabl� o�: f,/stated maturity date thereof or the date on which the same shall !}JV�" .. . bee" uly· called fottma1{ datory sinking fund redemption and does ment is ghe by reason of call for redemption ( other than pti ;��.i!�flition or other advancement of maturity (unless hon, 't?p�y . such principal due upon such acceleration together e date ,, acceleration) and (b) when referring to interest on a for Bfffuent of interest. "Nonpayment" means, in respect of a Issuer t ,;y,ye provided sufficient funds to the Trustee or, if there is no · •·····� Agent fo;ipayment in full of all principal and interest that is Due for "Nonpayment" shall also include, in respect of a Bond, any payment by ·behalf of the Issuer of principal or interest that is Due for Payment, eerp ecovered from such Owner pursuant to the United States Bankruptcy Code in accordanc ;;',:. ith a final, nonappealable order of a court having competent jurisdiction. "Notice" mea,ij.� •. �.i�1very to BAM of a notice of claim and certificate, by certified mail, email or telecopy as setl9tih on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by the Trustee or the Paying Agent, which notice shall specify ( a) the person or entity making the claim, (b) the Policy Number, ( c) the claimed amount, ( d) payment instructions and ( e) the date such claimed amount becomes or became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer, the Member or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds. "Policy Limit" means the dollar G-2 amount of the debt service reserve fund required to be maintained for the Bonds by the Security Documents from time to time (the "Reserve Account Requirement"), or the portion of the Reserve Account Requirement for the Bonds provided by this Policy as specified in the Security Documents or Debt Service Reserve Agreement, if any, but in no event shall the Policy Limit exceed the Maximum Policy Limit set forth above. The Policy Limit shall automatically and irrevocably be reduced from time to time by the amount of or, if this Policy is only providing a portion of the Reserve Account Requirement, in the same proportion as, each reduction in the Reserve Account Requirement, as provided in the Security Documents or D 'Service Reserve �.�l. Agreement. "Security Documents" means any resolution, ordinance, trusfI �feement, trust indenture, loan agreement and/or lease agreement and any additional or supplemln�� document executed in connection with the Bonds. "Term" means the peri��.'''it .and inb:lµding the Effective Date until the earlier of (i) the maturity date for the Bo s an ' . which .�� the Bonds are no longer outstanding under the Security Docume11:t:S'.·"' ,- ·,-·{,'. BAM may appoint a fiscal agent (the "Insurer's Fiscal Age for pq�rses of\t�i� To the fullest extent per11!itt1g by licable law,\.:I3AM agrees not to assert, and hereby waives, only for thebenef it of ch Owner, ights (w�lther by counterclaim, setoff or otherwise) and defenses (including{ out li�Jf,�tio ;p,·�j,{tfl� e of fraud), whether acquired by subrogation, assignment or otherwiseJ.c t }extent teat §uch rights and defenses may be available to BAM to avoid payme bli ,�ns under ·,�e is Policy in accordance with the express provisions of this Policy�, canc'led or revoked. This 9iti s b� .. •ssued unde d pursuant to and shall be construed under and governedby .f� �. . i the faws of the Stat .. � ew York, without regard to conflict of law provisions. },,_;,· . l This ' th 1�f1'f&11 the undertaking of BAM and shall not be modified, altered or affected by any o r agreement or instrument, including any modification or amendment ! thereto. Exc t jeM extent expressly modified by an endorsement hereto, any premium paid in :Si�!.. �s.l respect of thrs.t:Poficy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. THIS POLICY IS ISSUED WITHOUT CONTINGENT MUTUAL LIABILITY FOR ASSESSMENT. G-3 In witness whereof, BUILD AMERICA MUTUAL ASSURANCE COMP ANY has caused this Policy to be executed on its behalf by its Authorized Officer. BUILD AMERICA MUTUAL ASSURANCE COMPANY G-4 Schedule Notices (Unless Otherwise Specified by BAM) Email: claim�@lbuildamerica.com Address: 200 Liberty Street, 27th floor New York, New York 10281 Telecopy: 212-962-1524 (attention: Claims) G-5 EXHIBIT A NOTICE OF REINSTATEMENT [DATE] [TRUSTEE][PAYING AGENT] [INSERT ADDRESS] Reference is made to the Municipal Bond Debt Service ____ (the "Policy"), issued by Build America Mutual terms which are capitalized herein and not otherwise ctetm<;:;:cr s in the Policy. BAM hereby delivers notice that it is in receipt of pay pursuant to the Security Documents or Debt Service Rese date hereof, the Policy Limit is $ , �I •. to redu Requirement for the Bonds is reduced in ac;�orda· Documents. ASSURANCE Name: Title: G-6 ANAHEIM PUBLIC FINANCING AUTHORITY • SENIOR LEASE REVENUE REFUNDING BONDS (ANAHEIM PUBLIC IMPROVEMENTS PROJECT), SERIES 2019 A AND SERIES 2019 B (TAXABLE) l� ��- "'� � � S E 11.x ;e 5 h� ::!i: Ii lf.,t:! li 11 .Er ;m.. ;,;.-5 :hh �I c:t ·E